Quick Facts
- Etsy will lay off approximately 220 employees, about 12% of its workforce, leaving a headcount of roughly 1,600.
- The cuts will primarily hit product and engineering teams and are expected to be complete by the end of Q3 2026.
- Second-quarter revenue rose to $668.3 million, beating analyst estimates, but the company swung to a net loss of $46.7 million.
Etsy is cutting 220 jobs, or about 12% of its workforce, CEO Kruti Patel Goyal announced Wednesday in a letter to employees made public alongside the company’s second-quarter earnings report. The restructuring will leave Etsy with roughly 1,600 employees and is expected to generate $35 million in charges.
Patel Goyal said the cuts are not about cost reduction or artificial intelligence. The goal is to build “flatter, faster teams” with “fewer silos” capable of solving broader problems. “Cost savings are a consequence of these changes, but they are not the objective,” she wrote.
The layoffs land six days after Etsy completed the sale of Depop to eBay for $1.4 billion. Patel Goyal said the Depop sale would allow Etsy to focus exclusively on its core marketplace. Product and engineering are the primary teams affected.
Mixed Quarter
Q2 revenue reached $668.3 million, topping analyst estimates. Core marketplace sales grew 9.3% year over year. Active buyers came in at 87 million, down 0.4% from a year earlier but up sequentially. Sellers grew 5.9% year over year to 5.7 million.
Despite the revenue beat, Etsy reported a net loss of $46.7 million, compared to net income of nearly $29 million in the same period last year. The company posted a loss of $0.49 per share against analyst expectations for a profit of $1.18 per share. Shares fell 7.20% in after-hours trading.
Etsy raised its full-year gross merchandise sales growth forecast to the mid-single-digit range and guided Q3 GMS to between $2.53 billion and $2.58 billion. The company’s audit committee also approved a $2 billion stock repurchase program.
AI Stance
Etsy’s position on AI stands apart from much of the tech sector. Several major U.S. companies have cited AI adoption as a primary driver of workforce reductions in 2026. Patel Goyal pushed back on that framing directly. “Our future depends on the creativity, judgment, and expertise of our people,” she told employees. “The opportunity is to combine talented people with powerful new technology and not replace one with the other.”
She acknowledged AI is changing how the company builds products but framed it as a tool alongside human talent, not a substitute for it.
Competitive Pressure
Etsy faces intensifying competition from larger platforms. Amazon’s third-party marketplace generates an estimated $300 billion in annual sales. Temu hit roughly $22 billion in U.S. GMV in 2025. TikTok Shop reached $15 billion. Etsy’s U.S. GMV sits at approximately $6 billion.
Patel Goyal, who became CEO on January 1, 2026, after succeeding longtime chief Josh Silverman, framed the restructuring as an offensive move rather than a defensive one. “The progress we’ve made gives us the chance to act from a position of strength,” she wrote. “This means we can shape our future proactively rather than react to it.”
Departing employees will receive at least 16 weeks of severance, additional pay based on tenure, up to 12 months of continued healthcare, a cash payment toward 2026 incentive compensation, and near-term equity vesting.
