ETSY Inc Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Maria Ripps - Canaccord - Analyst : Kruti, congrats and George, best of luck with the transition. I guess I just wanted to ask about your Open AI partnership. So is this integration available to sort of to all US sellers? And how do you prioritize sort of listings that are included? And maybe secondly, can you maybe help us think through sort of the performance fee since Etsy's covering this fee, is it fair to think about this sort of an extension of your offsite ads? Or are there any sort of transaction cost on your end that you will not be incurring sort of to compensate for the additional fee? How should investors think about this?

Question: Steven Forbes - Guggenheim Securities LLC - Analyst : Congrats all around. Maybe for Kruti and Josh, maybe love to hear maybe from Kruti on this one. Given the recent changes, you mentioned sort of improvements in engagement on the app. I'd love for you maybe to just expand on that, sort of what you've seen on the engagement front, given the changes in screen real estate towards discovery. And then curious, any initial thoughts on how the recent learnings are impacting or informing your product development plans for next year as we continue this journey -- this return to growth journey and hopefully continue to see GMS trends improve next year.

Question: Anna Andreeva - Piper Sandler - Analyst : Great. And let me add my congrats as well to Kruti and Josh. Josh, you will be missed. But yes, congrats guys. We had a follow-up on the guide for the fourth quarter. So great to hear about the sequential improvement at core Etsy GMS. Are you seeing further improvement here in 4Q, just given the momentum of the initiatives and the easy compares that the business is lapping? And just curious, talk about maybe how you approach the holiday. Any specific opportunities for the business. We had a shortened holiday last year, which was not a positive, what could Gift Mode due this year? So curious on that. And then, Kruti, maybe it's early for this question. But Etsy's profitability is some of the highest among the peer set. Just strategically, do you think there's an opportunity to invest more just to reignite growth even faster? Or do you think it's important to preserve profitability?

Question: Bryan Smilek - JPMorgan Chase & Co - Analyst : Congrats on seeing the good improvement in execution overall. Kruti, as you step into the CEO role, can you just elaborate a bit more on how you strategically are thinking about driving sustained GMS growth here? Is it more of the same execution or leveraging the Depop playbook across product marketing? Or is there just anything else to keep in mind?

Question: Eric Sheridan - Goldman Sachs Group Inc - Analyst : Just wanted to come back to loyalty and rewards and sort of build on that as a broader conversation piece, what have been your key learnings so far as you rolled out more loyalty on the platform, how do those learnings inform the innovation or iteration of loyalty you're announcing today that looks like it's going into beta this week? And how should we think about the GMS opportunity attached to loyalty over the longer term?

Question: Youssef Squali - Truist Securities - Analyst : Congrats all around. So maybe first question for Josh or Kruti, and this is really a follow-up to the prior question. But how do you balance the push for traffic from these Gen AI platforms versus maybe direct/mobile, where arguably the value that accrues to Etsy over time is higher. And then, Lanny, can you maybe unpack a little bit more the nature of the investments planned for Depop in Q4, which will compress margins near term? Is this a one quarter type of phenomenon around the holidays? Or is this more structural going forward?

Question: Nikhil Devnani - Bernstein Autonomous LLP - Analyst : And Josh, thank you for all the help over the years, and congrats to Kruti as well. I wanted to follow up on the open AI theme. I think there's clearly some benefit that you and other marketplaces can realize in terms of incremental traffic and engagement in GMS. But investors are starting to worry longer term about what this means from a retention and buyer perspective and what it means for direct traffic and core profit pools for businesses like yours with on-site ads. So when you evaluated this partnership, how did you kind of think about the risk/reward longer term of something like this?

Question: Ygal Arounian - Citibank Cameroon SA - Analyst : All right. Josh, we'll certainly miss working with you and Kruti, congrats on the new role. Let's see, maybe just a quick follow-up first on the agentic AI opportunity. And first, do you think -- well, actually, I guess, first of all, I know it's super early, this might just be a very annoying question, but are there any early insights to what you've seen with the partnership so far? Things like convert rates or average selling price, things like that? And is there an Etsy Ads -- your offsite ads opportunity with this as well? And then a follow-up question, just with the trends overall getting better here and starting to see some nice progress, and then we've moved away sort of in the house of brands mentality. But just wanted to get updated thoughts on M&A capital allocation. If there's more opportunities is kind of the resale market grow here to kind of tag along with Depop.

Question: Robert Coolbrith - Evercore ISI Institutional Equities - Analyst : Josh and Kruti, congratulations to both of you on the transition. A couple of questions. So just on the agentic commerce, Kruti, you spoke during the call about the tailwinds you're seeing from improved buyer understanding. Just wanted to ask if you think there's a continued opportunity there in agentic context. Do you think there's going to be a meaningful sort of agent to agent communication and associated optimization opportunity in those channels over time? And then, Lanny, a quick follow-up. Can you just maybe help us size a bit the exogenous factors, the de minimis impact to the extent you saw over the course of Q3? Thank you.