Etsy Beats Q1 Revenue, Sells Reverb Amid GMS Drop

Etsy reported Q1 2025 revenue of $651.2 million, exceeding analyst forecasts but marking its sixth consecutive year-over-year drop in gross merchandise sales (GMS), which declined 6.5% to $2.8 billion. The company posted a net loss of $52.1 million, or $0.49 per share, largely from a $101.7 million impairment charge related to its Reverb subsidiary, which Etsy has agreed to sell for $105 million. Operating margin fell to -3.4% and free cash flow margin saw a significant decrease. CEO Josh Silverman highlighted AI-driven personalization and app improvements but noted persistent macroeconomic pressures. Analyst sentiment remains cautious, with Needham lowering its price target to $55 due to demand uncertainty, though some retain Buy ratings based on Etsy's growth initiatives. Etsy projects Q2 GMS to decline at a similar or slightly improved rate, with revenue expected to remain flat over the next year.