Online marketplace provider Etsy (NYSE: ETSY) continues to attract more consumers who are seeking to purchase unique artisan products.
The company has been working to appeal to younger shoppers and make better recommendations based on their previous purchases and searches. Etsy’s efforts to attract more consumers and sellers are starting to demonstrate results.
The number of active shoppers rose year-over-year during the third quarter for the first time in the past two years. Etsy’s new and improved personalization efforts produced the fastest pace of the number of active sellers in the past two years.
Etsy generated revenue growth of 11% to $692.5 million during the third quarter, beating an estimate of $668 million in revenue from Wall Street analysts.
Gross merchandise sales increased by 9% to $2.65 billion as the per-buyer metric rose by 3.9%. Etsy’s net income grew to $853.5 million, up from $75.5 million in the same quarter a year ago.
Shares of the company have gained 41% during the past year.
Personalization efforts, social media paying off
Etsy has been working to improve its search function so that shoppers can find more relevant items quicker while also showing higher quality items. The company is also promoting holidays and special occasions to buyers.
A growing number of consumers are seeking to buy items that can not be found from big box retailers. Those shoppers account for 30% of Etsy’s sales.
The marketplace provider is investing more into social media in an effort to attract younger buyers who primarily look to these channels for recommendations. Etsy is advertising more on TikTok, a shift from its much lighter presence six months ago, executives said during an earnings call. Etsy is also investing more on YouTube to attract younger and new buyers.
“I think half of our impressions on TikTok reached people in the 18 to 29-year-old demographic,” said CFO Lanny Baker during an earnings call. “That’s not an area that we were really even spending in, importantly, six months ago. I would say changes to the channel are helping us reach younger, new audiences.”
The company is working to regain the interest of its former shoppers, he said.
“As we’ve gone into social media, that has really proved to be a very effective channel for us in reactivating prior buyers,” he said. “Just because the attention span of so many people is dedicated to social media, refining our game there, our mid-funnel and lower-funnel game, has really helped us on, as we’ve said in the past, going back and tapping people on the shoulder, reminding them of Etsy and bringing them back to Etsy.”
Management now estimates that gross merchandise sales will rise by 7% during the full year, compared with its prior estimate of a mid-single-digit percentage growth range.
The company estimates it will reach $3.46 billion to $3.52 billion in gross merchandise sales during the current fourth quarter, beating analysts’ projections of $3.42 billion.
In an effort to keep shoppers on Etsy’s website longer, the company has worked to provide better recommendations by using artificial intelligence. Personalization efforts include suggesting similar items by different sellers.
Etsy also started providing a shopping agent for general searches that consumers are likely to use when they are purchasing items for friends and family members.
Both the AI improvements and personalization efforts have added two percentage points to Etsy’s annualized year-over-year gross merchandise sales rate, said CEO Kruti Goyal.
Higher revenue and a larger number of shoppers demonstrate a good turnaround for Etsy under Goyal’s leadership. Goyal began serving as CEO in January and had served as chief product officer for three years for Etsy from 2019 to 2022.
“What’s especially encouraging is that we’re seeing improvement across both sides of the marketplace,” she said during an earnings call.
The company has also shed a prior acquisition. The company sold its 2021 purchase of Depop, a second-hand clothing marketplace, to eBay (NASDAQ: EBAY) in February 2026.
Etsy is estimated to continue “capturing greater wallet share by leveraging its improved personalization and search to surface its inventory,” wrote Brett Husslein, an equity analyst for Morningstar. “This supports our higher 10-year average order value growth per user of 4.2% (from 3.8%), lifting our annual sales growth forecast to 7.7% (7.2%).”
Improved personalization efforts, a greater presence on social media and more marketing will likely lead to more shoppers turning to Etsy to find creative handmade and vintage products and gifts.
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