Etsy is doubling down on its agentic AI strategy and mobile-first engagement to restart growth, as the marketplace reports improving buyer activity and its first positive year-over-year gross merchandise sales (GMS) comparison since 2023.

The company’s fourth-quarter earnings, released Feb. 19, show Etsy shifting resources toward artificial intelligence-powered discovery and personalization to strengthen long-term marketplace expansion.

Etsy Agentic AI Strategy Focuses on Discovery and Growth

At the center of Etsy’s growth plan is its agentic AI strategy, which focuses on enhancing product discovery rather than replacing its marketplace model.

CEO Kruti Patel Goyal told analysts during the earnings call that agentic traffic rose nearly 15 times year over year in the fourth quarter, though it still accounts for less than 1% of total traffic. Users arriving through AI-driven platforms demonstrated higher purchase intent and generated higher average order values.

Orders originating from ChatGPT showed stronger value compared to more established acquisition channels. The company views early participation in agentic platforms as an opportunity to shape buyer experiences alongside technology partners.

Etsy expanded integrations with Microsoft Copilot and Google and signed an agentic payments agreement with Stripe. According to the company, these partnerships function primarily as discovery engines, guiding users from AI-generated recommendations to Etsy listings before completing transactions.

AI Personalization and Seller Productivity

The Etsy agentic AI strategy also extends to personalization and operational efficiency. Machine learning now powers a significant portion of customer engagement tools.

More than three-quarters of Etsy’s push notifications and email communications are personalized, compared with less than one-quarter previously. The company reported a 14% increase in app homepage clicks per visit, while app-based GMS growth accelerated to 6.6% in the fourth quarter.

Beyond customer engagement, Etsy is using AI to improve seller productivity by automating routine processes and strengthening trust, safety, and support systems.

Mobile and Younger Buyers Drive Marketplace Reset

Mobile engagement plays a central role in Etsy’s broader strategy. The company reorganized its operations around four priorities: earlier discovery, stronger buyer-item matching, deeper loyalty among high-value customers, and a renewed focus on human connection.

Mobile app transactions accounted for 46% of GMS in the fourth quarter, up five percentage points since the end of 2023. According to Etsy’s internal data, app users generate roughly 40% higher lifetime value and visit the platform more frequently than non-app users.

The company also increased spending on social platforms to reach younger consumers. Investment in TikTok doubled sequentially while maintaining comparable returns, and buyers acquired through social channels skewed younger.

Etsy added 6.8 million new buyers and reactivated 10.4 million previously inactive users in the fourth quarter. Gross buyer additions increased year over year for the first time in more than two years.

Etsy Marketplace Performance and Financial Results

Despite improving engagement, marketplace growth remains modest. U.S. buyer GMS increased 0.3% year over year — the first positive comparison in four years. Trailing 12-month GMS per active buyer stabilized at $121, supported by higher average order values, although purchase frequency remains slightly below prior-year levels.

Consolidated fourth-quarter GMS reached $3.6 billion, representing a 2.4% year-over-year increase. Excluding Reverb, currency-neutral GMS rose 1.3%. Etsy marketplace GMS grew 0.1% year over year, marking its first positive comparison since the third quarter of 2023.

Active buyers totaled 86.5 million, remaining largely unchanged sequentially. Revenue reached a record $882 million, rising 6.6% year over year.

For the first quarter of 2026, Etsy forecasts GMS between $2.38 billion and $2.43 billion, representing 2% to 4% year-over-year growth. The company expects a take rate of approximately 25.5% and an adjusted EBITDA margin between 28% and 30%. For the full year, Etsy anticipates modest GMS growth with positive comparisons across each quarter.

Key Trends and Market Signals

Several marketplace trends highlight both opportunities and challenges for Etsy’s growth strategy.

Habitual buyers declined 8.6% year over year, indicating that purchase frequency recovery remains incomplete. Advertising also remains underutilized, with sellers expressing greater willingness to spend on Etsy Ads than current monetization levels reflect.

App usage continues to expand, with downloads increasing 4% year over year and mobile contributing 46% of total GMS. Management noted that some competing marketplaces generate nearly 90% of sales through apps, suggesting further growth potential.

Personalized product categories also supported performance. The Home and Living category returned to positive growth, driven by higher-value segments such as vintage decor, rugs, and lighting, with demand shifting toward differentiated and less price-sensitive products.