Etsy Inc (ETSY) September 2026 Conference Transcript

Okay, with that, we're back on the clock for our next fireside chat. It's my pleasure to have the team from Etsy here this year to Communicopia. Krutin, it's your first Communicopia. Thank you. I really appreciate the opportunity to have the conversation. Before we get started, I am just going to say that the relevant Safe Harbor language can be found on Etsy's investor relations website. Please go there if you want to look at the Safe Harbor. And with that, why don't we kick off our conversation? So, look, Krita, you've now stepped in to the CEO role after helping shape Depop in your role as an operator there. Talk to us a little bit about how you're thinking about the evolution of the strategic initiatives for Etsy broadly through the lens of what you've done and how you think about where the company is going in the next couple of years.

Sure. First, thanks for having me. I will say that I have been at Etsy through its evolution through many eras. I started at Etsy in 2011. The business is obviously a very different scale than where we are today. At that time, I think we were at about 500 million in GMS, less than a million sellers, less than 10 million buyers. And in contrast to where we are today, over 11 billion in GMS, over 5 million sellers around the world, 87 million buyers around the world. So we're operating at a fundamentally different scale. And I've had the privilege and the opportunity to lead various parts of SE during that time. So I've had the chance to see SE through a lot of different perspectives from running products, running our seller team, but also through different stages of growth and challenges. So, you know, from the early high growth startup years through IPO, from the reset of 2017 through the high growth years of the pandemic. Then, as you noted, I went to Depop where I oversaw really exciting growth, doubling the size of the business there. And now I'm back for this next chapter of, you know, reigniting Etsy's growth. And one thing as I reflect back on all of these experiences that has been a common thread in terms of what drives growth is a really consistent and deep understanding of our customers and their needs. And then building an organization that can execute with that focus, with discipline over time. And so, you know, not surprisingly, when I returned to Etsy last year, the first thing that we did was conduct a deep dive into the business to really understand what was challenging the growth of the business and what our customers, our buyers, and our sellers fundamentally needed from us. And there were a lot of really great insights that we got from that diagnostic, but a couple that have really deeply informed our strategy are, you know, first is that as Etsy scaled and as our inventory grew, what we were hearing from buyers was that they were having trouble navigating the breadth of Etsy and understanding what was on Etsy and why. And that was leading to a softening of perception of the differentiation of our marketplace. Then, while that analysis reaffirmed the value that buyers had for the value proposition of Etsy, they were telling us that as their shopping habits changed, Etsy was showing up too late, and sometimes not at all, where they were starting their shopping journeys. And this was even more pronounced for younger users. And then the third thing that I'll call out from that diagnostic is that as we've gotten really good over the years at driving from visits to conversion, one of the results of that was that, you know, it has really narrowed the definition of our relationship with our buyers and sellers to a pretty narrow transactional one. One that, you know, where buyers said that Etsy was really great when they knew exactly what they wanted to purchase or sellers found Etsy to be a great place to start their businesses and to acquire new buyers, but beyond that was a bit fuzzy. And so this diagnostic, understanding our customers and their needs and the gaps that we had in delivering on those, was really formative to developing the priorities that we're executing on today. And it's led us to really start transforming Etsy into a much more discovery-focused, app-centric, personalized experience. And the other thing that's changed, of course, is technology. And so AI is enabling us to execute on this transformation in a way that just wasn't possible before. So we're really pleased with the progress that we've made executing against our priorities. I mean, I've been at Etsy for 15 years, but I've been in the seat for just eight months. And when I started, the question was, can Etsy grow again? And we've now delivered three quarters of consecutive GMS growth, over 10 percentage points of improvement year over year. And when you peel back from the GMS growth and you look at the drivers of GMS, the marketplace is fundamentally healthier than it was just a year ago. So as I look forward, I feel more confident in the direction and our understanding of our buyers and sellers, in the direction that we're investing in, and just the opportunity to continue to execute going forward.

There's a lot to mine in there. You're a lot at me, so we're going to get through, I think, all of that. That was a very comprehensive answer. Thank you so much. Let's start with buyer trends. You've seen progress made on buyer trends improving. Can you unpack for us a little bit of what you're seeing underneath the hood driving buyer trends improving and how your confidence interval might be building around the sustainability of those trends for the longer term.

Yeah, I'll get started there and maybe Lanny can follow up. Look, when we think about buyer growth, there are really three main ways to buy pro buyers, acquire new buyers, reactivate lapsed buyers, and retain existing buyers. The progress, the greatest progress that we've seen to date has been in those first two, acquiring new buyers and reactivating last buyers. And the result of that is that we've seen our gross additions grow up by 7% year over year this last quarter. Where the opportunity is going forward is to continue to invest in retaining existing buyers, and the combination of those two will really allow us to drive sustained growth in that trailing 12-month metric of active buyers that we have.

Yeah, the recent strength in our trailing 12-month buyer is more about success today than rolling off soft periods a year and a half ago. Whereas if you go back a little bit earlier, it was a little bit more of a matter of comps. Today we've got some good momentum, and you see that momentum on the top of the funnel. Kuthi talked about adding 7% growth in the number of new and activated buyers. I think it was 12 million new and reactivated buyers came in this quarter compared to the prior quarter. And that number has been accelerating. So we've been opening up the top of the funnel. And then for the first time since 2023, at the bottom of the funnel, we started to see the number of habitual buyers grow on a trailing 12-month basis, quarter over quarter. So, you know, I'd say kind of top to bottom in that buyer stack, The things that we've done to reallocate or sort of refocus our marketing efforts a little bit more around social media, around our owned and operated email and push notification channels, and some big improvements we've seen actually in the tried and true search channel have really helped us sort of open up the top of the funnel. And then work that we've been doing as quickly described on personalization and on the app has really helped us start to build some stability into like retention.

So maybe just sticking with you, though, and building this into a broader question about GMS drivers, you know, you've got this buyer momentum that's been building. Can you talk to us a little bit about not just buyers and growth and buyers, but also buyer frequency and AOV and how investors should be thinking about the building blocks of growth translating into GMS more broadly for the platform of the medium term?

Yeah, I think, like, just from a fundamental perspective, one of the remarkable things that's happened this year is that we have seen an acceleration in GMS per buyer and an improvement in the number of buyers at the same time. And that really is a pretty healthy dynamic, and that reflects, I think, in many ways the work we've been talking about in the marketplace to improve the customer experience, to improve the relevance of the matching that we do, to improve our recommendations, to improve the personalization, to improve the visual aesthetic of the landing pages, and also all the way through the customer support that we provide. And those things are really helping us out. Our basic business model from a GMS growth dynamic is pretty simple. How many people come to Etsy, how frequently do they purchase, and what do they spend per purchase? This year, we're seeing, for the first time in a number of years, outsized growth in average order value. And I think that reflects the fact that tariffs went into place in May of last year and then the de minimis expiration took place in September of last year, and then sellers got through the holiday season and decided to, I think, ingest some of the tariff and inflation cost dynamics in their business and raise prices. So we've seen listings prices kind of step up a number of times. And looking forward, I think we will maintain those newly established listings price levels. I don't think even if inflation slows down or tariffs go away, I think we'll probably see that be a pretty sustainable level. Now, over time, we have also contributed a little bit to the momentum that we're seeing in average order value. And it hasn't been necessarily intentional efforts to drive average order value. But as we have surfaced more relevant, higher quality items, as we've gotten better and better at the match that we make between the consumer and what they're looking for and what the occasion is and what inventory we have, and we select amongst that inventory really the most unique and special and handcrafted or whatever it may be, those items often sell at a little bit higher price. So our efforts to build the relevance and the quality of the search results is having a small, also a lift on average order value. So I talked about earlier what's going on with the buyer dynamic. The total buyer count is pretty healthy. In between those two is probably the biggest long-term lover for us, and that is the frequency with which people come back to Etsy. It's a very simple number, but it's also a very complex and complicated dynamic in there. You have higher prices probably mean a little bit of pressure on purchase volumes. You have new buyers growing a little bit faster, and they don't tend to buy quite as much initially as the established loyal buyers do. So there can be all kinds of makeshifts in there. But we feel really good about the levers that we're pulling to drive more loyalty, more top-of-mind awareness, more repeat purchase behavior on Etsy. So things we look at, like how's our weekly average users? How are weekly average – what's the engagement of weekly users? How many weekly users are monthly users? What's the 10-day or 7-day revisit rate? What's the 30-day repurchase rate? All these things are really early indicators of how we will do in the long term on order frequency, and we like what we're seeing there.

Okay. Lenny, I want to stick with you with one more question, you know, because you guys as a company have been on a journey with marketing overall, and now you're at a point where, you know, you're improving or changing the mix of your marketing dollars, and you're also getting more return out of this marketing spend. Talk a little bit about what you've learned about marketing and how it's translated into the momentum you have from a return standpoint today.

I think our marketing dynamic is really one of the success stories for Etsy of 2026. At the highest level, we have shifted our marketing mix to, as in our strategic priorities, we talk about showing up where customers discover, where buyers discover and start their purchase activities. And that means showing up in social media more than we have in the past. It means taking advantage of what's happening in agentic commerce and really trying to be in the front row and at the starting line of all that activity. It means sharpening our push notifications and emails to be more personalized and relevant and moving TV dollars toward streaming. We've been doing things like Spotify and Duolingo and more advertising on TikTok. We have kind of modernized our marketing mix in a way that has really helped us this year. Then alongside that, the technology and the systems that we use to determine what to bid, when to bid, what to bid on, that's like a never-ending mission. It's a project that's never done for us, and we've had some really nice successes there this year as well. So what's happening this year has been, I think, really exciting, is that the GMS growth rate has accelerated, while the percentage of revenue going into marketing has been going down. So the leverage that we're getting out of marketing is really strong right now. Okay, super interesting.

Kruthi, you talked earlier in your strategic priorities about sort of aligning your platform with where the buyer is and where the buyer wants to transact. Talk to us a little bit about AI and the role it can play in terms of relevance, discovery, personalization, all these elements that improve the buyer experience on the platform?

Yeah. Well, first, it might make sense to just recap what our strategic priorities are. We didn't really go into that, but we have four strategic priorities that were directly developed from that diagnostic that I shared earlier. Showing up where shoppers discover. They're showing up much earlier in the shopping journey. Getting meaningfully better at matching our buyers and our inventory. That's largely driven by machine learning and the power of AI. Third is amplifying human connection. This is really our core differentiation. And fourth is investing in our most valuable buyers and sellers to really drive retention and loyalty. And so when you think about that, there are a lot of opportunities for investment in making the experience better, leveraging AI. The biggest of which, as you mentioned, are in search, relevance, recommendations. And so we are really excited about the opportunity of AI on platform, and largely because, look, the magic of Etsy is in the 100 million plus really unique inventory listings that we have. But historically, that puzzle of matching buyers and the right inventory has been really, really challenging. AI helps us solve that puzzle in a way that was not possible even a few years ago. And so in order to do that really well, particularly for a business like ours with the breadth and the uniqueness that we have in our inventory, is we need to do three things really well, all of which are enabled, really enabled by AI. First is depth of inventory understanding, right? We have unique items on Etsy that aren't searchable in a catalog. So historically, we've been limited to the information, the text data that our sellers have input about those listings. Now, leveraging language and vision models, we're able to really more deeply understand inventory in a way that makes us less dependent on popularity signals and allows us really to make use of that long tail of inventory in a way that we haven't before. The second is buyer understanding. And really, there are two parts to this. Understanding our buyers and their interests, so who you are, what you care about, what you might be interested in next, and separately, intent. So what you're interested in, in this moment, in this session. And so buyer understanding, we've made real progress here as well, leveraging AI. And we've recently introduced or we've recently deepened the signals that we use to inform buyer profiles and expanded those buyer profiles across over 65 million buyers on the platform. And if you haven't had a chance to look at my buyer profile, it was in our last shareholder letter, I'd encourage you to do so. You can get a sense of like the richness of our understanding of a buyer, you know, what you're interested in, what categories, what you've looked for before, what you might be looking for next. And we're able to understand not just that, not just from what you looked at, but from this series of actions that you've taken on the platform. Anyway, the third is understanding intent. This is also very tricky because you could purchase for yourself. You could be purchasing for someone else. And of course, purchase intent ranges in a session from discovering, you know, looking for something that you might buy months from now versus something that you're looking for right now. But marrying all of these three meaningfully changes our ability to match the right buyers at the right time with the right items from the right seller across that full range of inventory that we have. And so we're very excited about the potential impact of that as we continue to make the experience more relevant, more personalized, more engaging, and we're seeing that, as Lanny mentioned, across search, across recommendations, and really throughout the user experience.

Super interesting, just the concept of going from a lot of unstructured data to more structured data and, you know, obviously improving.

And the tools really are amazing, you know, like our ability to map and discover connections or insights about people with the benefit of AI is at a different level than it was previously.

Understood. One of the conversation points around the conference so far has been the rise of agentic commerce. And you just talked very positively about what you can do on site. So when someone comes to your app, comes to your site, they can experience AI, it can inform a better experience. There's also a rising trend in the industry of connecting with some of these agentic tools. or rather you guys are at the forefront of a lot of those types of connections with some of the announcements you made earlier this year. Talk to us a little bit about how much of this will be done externally through partners like that, how much of it will be about striking a balance of what people experience when they come and experience your brand direct and how to think about striking that balance over time.

Yeah, so when I zoom out and think about the potential of AI for Etsy, I really think about three things. AI has the potential to make Etsy more personal. That's what we just talked about. to make Etsy more discoverable and to allow us to actively learn about the next generation of shopping engagement and behavior. So we talked about personalization on-site. Our partnerships with the Gentic platforms really allows us to – it's really about playing in that second space, discovery. And, you know, one of our core jobs is to make sure that our sellers and their inventory are showing up wherever shoppers are Discover. And so as new platforms emerge to enable people to do that, it's really important for us to show up there, and we think that our brand is a real advantage in those spaces to really convey trust in the items and in the shops, which in those contexts are often largely indistinguishable. And so we've invested early in these platforms, both because it's strategically aligned and because we think the best way to learn is to be in there early, seeing how consumer behavior is evolving versus sitting on the sidelines and waiting to see what happens. Now, we believe, you know, it's still very early days. We're seeing good growth from these channels, but it's still very small, less than 1% of our total traffic. But what we're seeing in the early days continues to give us confidence that over time, agentic platforms can be a valuable incremental discovery channel for us and our sellers. And, you know, one of the reasons for this is the kind of things that you buy on Etsy are higher consideration purchases. So the places that you want to hand off a decision to an agent are places where it drives a lot of convenience, where you don't want to spend time or thought on a purchase, restocking household supplies, you know, Oh, you had a flight canceled and rebooking on the next flight. But when you're buying something for your child's birthday party, you know, when you're buying a gift, these are the places where you actually want to dig in further because there's higher consideration. So that's how I think about these, you know, that's really important. That underlying consumer behavior is really important to how we think about how agentic shopping platforms are going to benefit Etsy. And then the third piece of this is really actively learning how shopping experiences are evolving. And so we're also actively experimenting with conversational interfaces enabled by AI on platforms. So we're testing both a buyer experience and a seller experience, a gifting assistant for buyers, a shop assistant for sellers, to really help us learn really actively. And those are in early days, but lots of really interesting learnings from that as well.

Okay. I'm sure that's going to be an area we're going to continue to mine on earnings calls in the years ahead. There was actually quite a lengthy conversation across a lot of chats yesterday about even text-based moving to conversational audio input and audio output could be an interesting dynamic for the industry overall. Lenny, I'll bring you back in, but I'll want both your opinions if you want to weigh in. You guys have been on a journey with respect to your app strategy, and you're showing a lot of success now on getting people to engage in the mobile app, especially among the cohorts of buyers that you're trying to grow the most. Talk a little bit about where you sit now with the mobile app strategy and how it's sort of convenient to evolve as a percentage of the mix of the business.

It's funny. When you said app strategy, I was like, what app strategy? Because our strategy is really across all platforms. It just happens to manifest with, like, home field advantage on the app. It's all logged in behavior. It's a great place to be able to showcase items, and the interactive nature of an app is really suited well to things we're trying to do with the user experience. Also, demographically, it skews to a great demographic. So while our GMS from the mobile app is about 47% of the total mix, it is growing. Last quarter, our GMS through the mobile app grew about five points faster than the overall. So if you looked at app versus non-app, it's even growing by a bigger margin than that. And the source of that margin of advantage on app growth, you know, people often ask the question, well, you're just moving money from the desktop pocket to the mobile app pocket. Sure, there's a bit of that happening as we're investing in this app. It's becoming better and better, and people are becoming habituated to it. But the number one and number two drivers of growth on the mobile app in terms of GMS growth are existing mobile app buyers coming back more often and purchasing more frequently and brand new to Etsy buyers coming into the app on day one, mostly out of social media. And that was not a thing in the past. Really, our path historically was acquire people in search, and then after they convert, say, hey, next time you come back, download the mobile app and come back. And now we're using the app really as one of the front entryways to the business. So I expect that we'll continue to see the app become a greater share of our GMS. That's really not that important. and it's not any more profitable than website, GMS, except that the LTV of somebody who's buying on the mobile app is about 40% higher than the people who are not buying on the mobile app. So all the progress we're making today to get people to use the mobile app a little bit more, to go on various wandering mission expansions on the mobile app where we're capturing that data, And those things are, I think, predictive of, or at least they set the stage for capturing better long-term value in the future. So, I mean, app is in many ways, like, what's happening on app is just a microcosm of everything we're trying to do in the bigger strategy. That's my point about there's not, like, really a separate app strategy. It's just the tenderloin of the animal right now.

But, Chrissy, bringing you back in, when you articulated the strategic priorities earlier, you mentioned human connection. Can you talk about not only maintaining human connection, but possibly even strengthening and scaling human connection and how it could feed into being a competitive advantage for Etsy as a platform?

So, look, we've been on a mission to keep commerce human since Etsy was founded. The human connection is core to who we are and the value that we deliver in the world. And, you know, particularly right now, at a moment where AI is becoming a more prominent part of people's lives, where it's easier than ever to create products and content and distribute them everywhere, and it's hard to distinguish what's what, the value of something coming from a human and understanding the role that a human played in that item that you're buying is becoming more rare and more valuable than ever. And it's something that we can uniquely deliver on and own. And so how we do that, I think, is effectively in two ways. One is by bringing the seller front and center in the buying experience, really end-to-end, helping make clear to our buyers not only that there's a real person behind every item that they're purchasing, but what their story is, what role they played, what process went into making that item. And we've seen from our research that by elevating the seller in the experience drives trust, drives trust in the transaction, it drives trust in the platform. them. You know, the other way that I think that we are investing in delivering more human connection is actually by investing in our sellers and making the tools and the insights that we offer them, helping invest in those tools and insights that reduce the amount of work that sellers have to do, you know, seller toil, you know, reducing the time that they spend on tedious, time-consuming tasks so they can really focus their time and energy on things that only our sellers can do, which is create new inventory and connect with and provide great service to buyers. So really through both of those dimensions, we think we can really reinforce that human connection that Etsy stands for in a way that really differentiates us and creates greater or strengthen that differentiation over time, particularly as technology evolves.

Okay, super interesting. Look, I'll direct this at Lanny, but I've got a few I just want to get through in the last couple of minutes we have. But obviously, you've sold Depop. You have the capital that's come in from that transaction. The first question would be, now that it's the Etsy core marketplace, what's the broader messaging, maybe even coming back to what we talked about during the last earnings, about how to think about the margin profile of the Etsy marketplace post that divestiture?

Well, I think the way we think about the margin profile is we love it. It's a super profitable business. It's a capital-light business. In periods of strong GMS growth like last quarter, 50% of the revenue growth went down to the bottom line, the EBITDA line, and 90% of the EBITDA turns into free cash flow. So I think I'd start with the margins are really attractive. Now, there's a separate question that is, you know, which do we like better, margins or revenue growth or GMS growth? And I think as we think about the long-term cash flows of Etsy, there is a bigger, more promising path to substantially more cash flow through faster GMS growth than there is through margin expansion. And so at the margin, we are very, very focused on GMS growth. So we recently did a reorganization that will take out some operating expenses from the business for sure, the goal was not to drive margins up. It was to free up capacity to continue to add talent and resources and structure in the areas that support the parts of our strategy that are new, that are really working, so that we can keep up the growth and accelerate even the growth rates that we're now seeing in GMS. So our margin thought is, like, we love it. We're going to protect that level of profitability and use it to propel faster GMS growth in the long term.

How do you both think about making sure you strike the right balance on margins while also not missing some of the growth investment opportunities at the business phase? It's sort of a process question around how you think about continuing to maintain the right balance and get that more rapid.

We'll spend $400 million plus on our product this year. That feels like a pretty sizable level of investment. And if you looked at the, you know, kind of one quirky way to look at it is if you looked at our product and technology investment this year as a percentage of last year's GMS, it was at one of the highest ratios. So what that would kind of say is, like, what you're spending for future growth is higher relative to where you've been than it has been for a number of years. And so the way we evaluate those products, we look at, you know, what are the cases, what are the hypotheses for, you know, various things that we might want to try. We are very willing to experiment and to test, to take some big swings on things. And, you know, we're not looking for things that generate high certainty, $1 million more GMS. It's a little bit more toward a, it's not, I wouldn't say speculative, but it's a little bit more of like a, let's get hundreds of millions of dollars to GMS, maybe with a little bit lower level of certainty. And you just monitor those things and measure them, you know, and keep trying to come up with new ideas, which we feel like we have a lot of. And AI gives us an ability to execute on those faster and probably more efficiently than we would have been able to in the past. On the marketing side, we think about the investment we make there with a pretty clinical return on invested marketing spend kind of approach. And our goal is not to set an ad budget and try and drive a GMS goal. The way we operate is we set a return on ad spending target, and then we task the teams with coming up with the right media mix, the right messaging mix, the right marketing technology, the right conversion experience on the back end to drive the return on ad spending up for that level of dollars, and then we spend into that benefit by spending a little bit more on marketing. So that's the investment philosophy we take on those two. And if you tie it back to what you said about the Depop proceeds, I think we're making a pretty healthy level of investment, an adequate level of investment in the marketplace right now. And we've been able, as Gruthi said earlier, improve the growth rate by 10 percentage points plus over the last 12 months. and that's sort of the payoff on the investment we've been making.

Yeah, the way that I think about it is our focus is entirely on growing GMS. That is the most durable, valuable way to create value in the marketplace and we have built a really strong muscle around disciplined investing in that growth, which we will continue to do, but the focus is on growth.

Okay, so very clear on growth, very clear about how do we think about growth investments. Just as an ending question, because we've only got about two minutes left here, capital allocation beyond that, obviously the divestiture leaves you with a capitalization that's different than what the company had prior to that divestiture. How should investors think about capital allocation beyond investing in the business, driving GMS, whether it's elements of capital return or other ways in which you do that?

Earlier this year, we tried to telegraph just how we think about capital planning and capital allocation, and it starts with a couple pretty simple basic principles. Like we want to have enough cash to protect the business and operate the business, so we need to have a certain amount of liquidity on hand. We want to have leverage where it's appropriate to enhance the equity holder returns. We want to make sure that none of those, like the debt that we may put on the business is ever like a constriction where we have to make an operating decision because of that financial decision, so we'll maintain an amount of cash. And then everything else, we've been returning to shareholders through buybacks of late. So what that means in practical terms is we're trying to run a debt level around three times EBITDA, and we'd like to have cash on hand to cover any debt maturities in the next 12 to 18 months. So that's like kind of out of sight, out of mind. And then we'll buy back stock with what's left over after that. And so we just got a $2 billion incremental authorization. Last quarter, I think we bought back $250 million worth of stock, and that was about 35%, 40% more than we had been buying in previous quarters. We like the momentum in the business. We like the value in the equity, and we love the cash flow generation of our business. And so if you take $2 billion of forthcoming share purchases on our current market capitalization, and I expect there will be quite a few fewer shares in the company, even as the value of the marketplace is rising.

Thanks to both of you for being part of the conference. Please join me in thanking Etsy for being part of the conference this year.

Thank you.