Amid Tariff Fallout and 'Fluid' Consumer Confidence, Etsy Vows to Remain Nimble

Etsy Inc. reported its first-quarter financial results early Wednesday, revealing that it is taking a flexible approach to managing challenges such as ongoing global tariff tensions and shifting consumer sentiment. Despite these headwinds, the Brooklyn-based online marketplace managed to deliver better-than-expected revenue growth for the quarter ending March 31, 2025.

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Etsy posted quarterly revenue of $651.12 million, reflecting a modest 0.8% increase from the same period a year earlier. This figure came in ahead of the FactSet consensus estimate of $642 million. The company attributed the growth to a few key factors, including strong performance in its on-site advertising business across both the core Etsy platform and its secondhand clothing subsidiary, Depop. The quarter also benefited from the full impact of a seller setup fee that Etsy implemented, along with continued expansion of the company’s payments infrastructure.

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However, not all of Etsy’s metrics were as positive. Gross merchandise sales (GMS), which reflect the total value of goods sold across all of Etsy’s platforms, dropped by 6.5% compared to the year-ago quarter, totaling $2.79 billion. This figure was largely in line with analysts’ forecasts. The decline in GMS suggests ongoing pressure on consumer spending, possibly linked to economic uncertainty and global trade issues.

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Etsy also reported a swing to a net loss for the quarter. The company posted a loss of $52.1 million, or 49 cents per share, compared with a profit of $63 million, or 48 cents per share, in the same quarter last year. This loss was primarily driven by a $101.7 million impairment charge related to Etsy’s previously announced sale of its Reverb marketplace, which focused on music gear. Without that impairment charge, analysts surveyed by FactSet had expected Etsy to earn 47 cents per share.

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Commenting on the quarter, Etsy Chief Financial Officer Lanny Baker said, “The first quarter of 2025 played out largely as expected.” He emphasized that the company is continuing to invest in its platforms to improve performance and customer experience. “We have a rich portfolio of investments planned to support GMS improvement while evolving the Etsy marketplace customer experience to better serve buyer and seller needs,”

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Baker said. He added that the company remains focused on its long-term potential while staying agile in the face of unpredictable market conditions. He specifically noted the impact of recent tariff developments and variable consumer confidence in Etsy’s core regions.

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Looking ahead, Etsy offered some cautious guidance for the second quarter. The company expects consolidated gross merchandise sales to continue declining at a pace similar to or slightly better than what was seen in the first quarter. Etsy also projected that its take rate—defined as consolidated revenue divided by consolidated gross merchandise sales—will remain consistent with the first quarter's level of 23.3%.

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Despite the mixed financial performance, Etsy’s stock edged up 0.8% in premarket trading following the earnings announcement. Still, the stock has dropped 12.8% so far in 2025, underperforming the broader market.

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By comparison, the S&P 500 index has declined 5.5% during the same period, signaling that investors have been more cautious about Etsy’s outlook relative to other large-cap stocks.

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Etsy’s first-quarter report arrives during a busy week for the e-commerce sector, with other major players also releasing earnings. Rival eBay Inc. is scheduled to announce its first-quarter results after Wednesday’s market close, while Amazon.com Inc., the dominant force in online retail, will report earnings after the close on Thursday. These updates will give investors a broader view of how the e-commerce space is holding up amid macroeconomic uncertainty and shifting global trade dynamics.

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In summary, Etsy’s first-quarter results were a mixed bag. While the company surpassed revenue expectations and continues to expand its advertising and payment services, it faces headwinds in overall merchandise sales and profitability.

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Management’s focus remains on long-term growth and adaptability as it navigates an uncertain economic landscape. As other e-commerce players report earnings this week, investors will be closely watching to see whether Etsy’s cautious optimism is shared across the industry or if more challenges lie ahead.

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