Dive Brief:
- Etsy’s investments in better buyer profiles and real-time personalization are helping build loyalty and drive frequency as it pursues a turnaround, executives said on a Q2 2026 earnings call last week.
- The number of active buyers remained roughly flat year over year at 87 million while growing 350,000 quarter over quarter, CEO Kruti Patel Goyal said. Purchase frequency was down year over year, but the decline moderated from the first quarter, which is “an early encouraging signal that we're improving the overall customer experience."
- Another area where CX changes are having an impact is the Etsy app, where gross merchandise sales rose 12.5% year over year, according to Patel Goyal. Visitors per monthly active user and orders per visit are up year over year as well.
Dive Insight:
Etsy’s overall results were mixed, layoffs and a net income loss dampening the strength in its mobile app and revenue growth.
Revenue rose 6.2% year over year in the second quarter of 2026, according to the shareholder letter. However, the company reported a net loss of $46.7 million, down from net income of $28.8 million in the second quarter of 2025.
Despite some improving metrics, Etsy is planning on laying off 220 employees, about 12% of its workforce, according to a letter to shareholders.
Neither cost cuts nor a push to replace workers with AI were responsible for the downsizing, Patel Goyal said in a memo to employees. Instead, the layoffs are an effort to reshape the workforce towards the next phase of growth and deepening investments in discovery and personalization, according to Patel Goyal.
The changes are “going to be about building really strong cross-functional teams and deepening our machine learning expertise so we can translate advancements into better experiences at scale,” Patel Goyal said on the call. “So we really see this as an investment in execution and in concentrating our talent where we can have the greatest impact.”
Improvements to the content on the app home screen and push notifications designed to bring customers back into the app are working, according to Patel Goyal. The app’s feed is improved as well, and the increase in diversity of content is driving engagement.
“The team made a really big shift in terms of reducing the prevalence of things that were recently viewed or engaged and in place of showing you much fresher, newer listings,” Patel Goyal said.
Etsy is working to better understand customers as well. Etsy now has buyer profiles for more than 65 million users, with three times more signals per customer profile than earlier this year, according to the shareholder letter.
“If you think about it, that means every subsequent visit that these buyers make is more relevant and more personalized, and that creates a flywheel that gets stronger over time,” Patel Goyal said.
Etsy is continuing to experiment with AI as well. Agentic experiences account for less than 1% of overall traffic, but they result in higher average order value traffic, according to Patel Goyal.
In May, the marketplace launched an app on ChatGPT in beta. Etsy will continue partnering with the major AI platforms “because we want to be in there and learning and evolving our experience as consumer behavior and adoption evolves,” Patel Goyal said.
