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Etsy is laying off roughly 12% of its workforce, while also authorizing a $2B stock repurchase program, moves announced alongside a second-quarter earnings beat.
The cuts fall mostly on product and engineering teams, according to CEO Kruti Patel Goyal's note to staff.
"Cost savings are a consequence of these changes, but they are not the objective."
Kruti Patel Goyal, Etsy
Patel Goyal, who took over as CEO at the start of 2026, framed the restructuring as a push for speed rather than savings.
She said Etsy will continue to hire in areas tied to its long-term strategy. Laid-off workers receive at least 16 weeks of severance, plus healthcare support for up to 12 months.
The company also said the cuts weren't AI-driven, even as Patel Goyal acknowledged that AI is changing how products get built.
The timing matters because the numbers back up the confidence. Second-quarter revenue came in at $668.3M, ahead of analyst estimates of $649.1M. Sales on the core marketplace grew 9.3%.
Etsy also raised its full-year guidance for gross merchandise sales, now projecting mid-single-digit growth, up from a prior low-single-digit forecast. For Q3, the company guided GMS of $2.53B to $2.58B, above the $2.49B consensus.
The adjusted loss of 36 cents per share looks worse than last year's 25-cent gain, but Etsy said that reflects the impact of selling Reverb, its musical instrument marketplace, in June 2025.
Etsy has been narrowing its portfolio deliberately. It recently completed the sale of secondhand clothing platform Depop to eBay for $1.2B, a loss from the $1.6B it paid to acquire the brand.
The strategy is to protect what makes Etsy distinct. It's doubled down on handcrafted and artisanal goods, improved personalized search results, and taken aim at Amazon with a "Shop Other Jeffs" campaign that ran during Prime Day.
Competition remains intense. Etsy faces pressure not just from Amazon and Walmart, but from newer platforms like TikTok Shop and Temu.
The $2B buyback signals that management believes the stock is undervalued even as it invests in restructuring, a notable show of confidence from a company that's spent years trying to recapture its pandemic-era momentum.