Etsy: Raising Estimates Above Guidance Into 2Q Earnings; Focus on Social Commerce Initiatives, GMS Growth, & Frequency; Neutral w/$85 PT

Research evidence excerpt

Etsy: Raising Estimates Above Guidance Into 2Q Earnings; Focus on Social Commerce Initiatives, GMS Growth, & Frequency; Neutral w/$85 PT

2026 GMS estimates Quarterly Forecasts (FYE Dec)

+1% each & we now project Etsy Marketplace GMS growth of +6% in 2Q & Adj. EPS ($)

+4% in 2026 — both above mgmt’s guidance — along with 2026 Adj. EBITDA 2025A 2026E 2027E

margins of 29.7%. Our conversations suggest that investor sentiment skews Q1 0.20 1.30A

Q2 0.72 1.26

positive, though lower Y/Y AOV tailwinds, less favorable FX, & tougher Y/Y Q3 1.09 1.35

comps likely drive GMS growth deceleration through the year. We believe Q4 1.42 1.90

investors expect Y/Y 2Q GMS growth of +6%-7%, 3Q GMS growth guidance of FY 3.38 5.77 6.47

+3-5%, & ETSY to modestly raise the full-year GMS growth outlook to +L-MSD

Style Exposure

%. Investors are expecting commentary around capital allocation, w/the Depop

sale to EBAY for ~$1.2B cash expected to close by the end of 3Q, & ~$828M

separately authorized share repurchases. Beyond fundamentals, we believe ETSY

remains well positioned as an AI & agentic commerce beneficiary (deep dive here),

w/the company using the combination of traditional ML and LLMs to complement

each other, build more complete Active Buyer profiles, & improve matching and

relevancy. ETSY will utilize a combination of self-hosted LLMs & external 3P

models to accelerate product velocity, move faster, & synthesize its large corpus

of data. While a small driver of total traffic, agentic traffic maintains higher AOVs

& intent while serving as a channel for Active Buyer acquisition, re-engagement,

retention, & greater frequency. Etsy is bullish on the opportunity to utilize on-site

agentic experiences, & the company will continue to build adoption of its Gifting

Assistant.