Q2 Preview: Constructive, as durable growth initiatives take hold; PO to $90

Research evidence excerpt

Q2 Preview: Constructive, as durable growth initiatives take hold; PO to $90

Etsy Q2 Earnings Preview

Etsy has not yet announced its earnings date, but heads into its Q2 2026 print with a

constructive setup, and a run of improving third-party data points. The key nuance on

growth comparisons for the year is that management flagged that Q1 growth was the

likely high water mark for FY growth cadence, so a solid Q2 GMS acceleration would

exceed the base expectation coming out of the prior print. With multiple data points

showing upside beyond just Q1, and possibly lasting in 2H’26, the stock has rallied in

recent weeks. To us, the bigger question will be the durability of growth into 4Q and

2027, which is why mgmt’s four key priorities for reinvigorating growth are most critical

to our constructive stance.

Key Themes to Watch on the Print

1. Mobile app updates. With only 47% of GMS through the app and roughly half

of buyers not yet on it, the app remains a multi-year lever. App users carry

roughly 40% higher LTV, an uplift our A/B testing read indicates is causal rather

than a selection artifact. Management attributes the app strength to a

revamped, AI-driven home feed that builds buyer profiles and surfaces more

relevant inventory, lifting frequency and conversion. Sustained double-digit app

GMS growth and continued penetration gains would validate the frequency

recovery thesis.

2. Marketing efficiency driving margin improvement. The margin story hinges on

owned-channel leverage. Richer AI and ML preference capture is driving stronger

push and email GMS despite disciplined messaging volume, while Amazon's exit

from PLAs since Q3 2025 (plus broader Google PLA SERP changes) is opening more

slots and improving CPCs, giving Etsy more efficient "shots on goal". Within R&D, AI