Etsy reported third-quarter 2026 results on October 28, and the shareholder letter shows buyer growth for the first time in two years. Gross merchandise sales reached $2.6 billion, up 8.8% from a year earlier. Revenue rose 10.9% to $692.5 million.
For self-employed makers and resellers, the numbers cut both ways. More shoppers can mean more sales, but Etsy also keeps a bigger slice of each dollar.
What The Etsy Results Actually Show
Etsy counted about 88 million active buyers over the trailing twelve months, up 1.0%. The company says its active seller base grew at the fastest rate in two years, though it gave no seller count. These figures cover continuing operations and leave out Depop, which Etsy sold in July.
The take rate, which measures the share of sales Etsy collects as revenue, hit 26.2%. That is up 50 basis points from last year. Etsy credits mainly Etsy Ads, with a smaller lift from Offsite Ads.
Net income from continuing operations came to $113.6 million, and free cash flow reached $236.4 million. Etsy also spent about $394.6 million on share buybacks during the quarter. Shop owners should read that as a sign of a healthy platform, not a sign of lower costs for sellers.
Why This Matters For Self-Employed Sellers
Advertising now drives much of Etsy’s revenue growth. The letter says most Etsy Ads revenue comes from sellers with under $100,000 in annual sales. Small shops are paying for visibility, and that shows up in the take rate.
Etsy announced no fee changes in the letter. Still, a rising take rate means your costs can climb even when listing fees stay flat. Ad spending is the lever you control, and it deserves a monthly review.
The letter also lists new seller tools. These include shared shop access, a wider appeals process, easier Etsy Ads management, and AI tools for listings and buyer messages. Etsy is testing an AI assistant that offers shops personalized insights and recommendations.
What Self-Employed Sellers Should Do Next
Check how much of your monthly profit goes to Etsy Ads and Offsite Ads. Compare ad cost to the sales each ad produces, then cut campaigns that fail to earn their keep. Do this before the holiday season starts.
Next, test the new tools. If you work with a helper or partner, set up shared shop access instead of sharing a password. Read the expanded appeals process now, so you know your options before anyone flags a listing.
Etsy also stressed stronger AI policy clarity and enforcement. Review your listing photos and descriptions for compliance so a policy check does not pause a bestseller. Keep records of how you make each item, since proof of your process can help in an appeal.
What To Watch Next
Etsy guided fourth-quarter gross merchandise sales to between $3.46 billion and $3.52 billion, up 5% to 7%. It expects a take rate near 25.6%, slightly below the third quarter. Holiday traffic will test whether buyer growth lasts.
Watch for details on the AI assistant test and any change to ad pricing. Etsy has already tested capped shipping rates this month, so more seller-facing experiments may follow.
