Etsy, Inc. (ETSY): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed assessment of Etsy, Inc.'s portfolio, and the BCG Matrix is defintely the right tool to map where capital should flow in 2025. We've mapped the business units: high-growth Stars like Ads are driving revenue with a 24.0% consolidated take rate, while the Cash Cows-the core Marketplace-still yield a 25.1% Adjusted EBITDA margin even as its GMS slips 5.4%. This dynamic forces a clear choice: fund the high-potential Question Mark, Depop, which saw 35.3% GMS growth, while strategically cutting Dogs like the recently sold Reverb. Keep reading to see the precise allocation strategy this map demands for your next move.

Background of Etsy, Inc. (ETSY)

You're looking at Etsy, Inc. (ETSY) as of late 2025, and the story is one of navigating a tricky macroeconomic environment while boosting monetization. For the third quarter ending September 30, 2025, Etsy, Inc. reported consolidated revenue of $678.03 million, which represented a 2.4% increase year-over-year. This performance beat analyst consensus estimates. The company's earnings per share (EPS) for that same quarter was $0.63, exceeding the expected $0.57.

Looking at the trailing twelve months ending September 30, 2025, Etsy, Inc.'s revenue totaled $2.85B, marking a 1.98% growth over the prior year period. This follows the full-year 2024 revenue of $2.81B. Honestly, the revenue growth is being driven by a higher take rate, which is the percentage of Gross Merchandise Sales (GMS) the company keeps. For instance, the take rate reached 24.0% in the second quarter of 2025, and guidance for the fourth quarter of 2025 anticipated it to be 24.5%.

However, the top-line revenue story is complicated by the underlying sales volume. In Q2 2025, consolidated GMS actually fell by 4.8% year-over-year to $2.8 billion. Even in Q3 2025, the total GMS was only up 0.9% year-over-year, following a decline in Q1 2025 of 6.5%. This suggests Etsy is successfully extracting more value from fewer transactions, at least for now. The active buyer base reflects this pressure, with the trailing twelve-month count sitting at 86.6 million as of Q3 2025, a 5% decrease from the year prior.

Strategically, Etsy, Inc. has been refining its portfolio. A defintely important move was the completion of the sale of Reverb on June 2, 2025. On the flip side, one of its other brands, Depop, showed significant strength, reporting Q2 2025 GMS of $250 million, a massive 35.3% year-over-year increase. The core Etsy Marketplace GMS in Q2 2025 was $2.4 billion, down 5.4% YoY. The company is heavily focused on AI and personalization to re-engage buyers; they were aiming for near-total personalization in marketing messages by year-end 2025, up from about 40% in Q2 2025.

Etsy, Inc. (ETSY) - BCG Matrix: Stars

You're looking at the engine that's keeping the top line moving even when the overall marketplace volume is softening. In the Boston Consulting Group framework, the Stars are those business units operating in a high-growth market where Etsy holds a strong relative market share. For Etsy, Inc. (ETSY) as of mid-2025, that clearly points to the advertising and services segment, specifically Etsy Ads and Promoted Listings.

This segment is the primary driver of overall revenue growth, effectively offsetting the declines seen elsewhere. For instance, in the second quarter of 2025, the Services revenue, which is heavily weighted by advertising, showed a year-over-year growth of 15.3%. This growth is happening while consolidated Gross Merchandise Sales (GMS) actually decreased by 4.8% year-over-year in the same period. That divergence is the textbook definition of a Star product line succeeding in a high-growth sub-market (digital advertising) while the core market (e-commerce marketplace volume) slows.

The monetization effort here is intense, and it's working. The high-margin on-site advertising performance drove the consolidated take rate to a record 24.0% in Q2 2025. CFO Lanny Baker noted this strong take rate was primarily driven by the expansion of Etsy Ads revenue from continued improvements to their bidding algorithms. This is where the company is pouring resources because keeping this market share leadership is crucial for future Cash Cow status.

The company is definitely investing heavily here to improve relevancy and monetization. You can see this reflected in the marketing spend. For Q2 2025, marketing expenses rose 15.9% year-over-year to $212.1 million, representing 31.5% of total revenues, as the company focused on performance marketing and paid social. This investment is necessary to maintain the leadership position in ad monetization.

Here's a quick look at the Q2 2025 financial snapshot that frames this Star's performance:

The focus on the app experience is directly tied to supporting this Star. The app is where a lot of the engagement and monetization improvements are landing. Consider the user engagement metrics that feed into this advertising engine:

• App GMS grew year-over-year and sequentially.
• App GMS represented approximately 45% of Etsy marketplace GMS.
• Active buyers decreased 4.6% year-over-year to 87.3 million.
• The company acquired 4.8 million new buyers in the quarter.

The strategy here is clear: invest heavily in the high-growth advertising business to offset the market share loss in the core GMS, which is what you'd expect for a Star. If they can sustain this monetization success until the overall marketplace growth reaccelerates, this segment will transition into a Cash Cow, generating significant free cash flow without the same level of reinvestment. Finance: draft the Q3 2025 capital allocation plan focusing on AdTech spend by next Tuesday.

Etsy, Inc. (ETSY) - BCG Matrix: Cash Cows

You're analyzing the core engine of Etsy, Inc. (ETSY), the segment that generates the cash to fund everything else. This is the classic Cash Cow: a business unit with a high market share in a mature space that requires minimal new capital to maintain its position, letting it passively generate significant returns.

The core Etsy Marketplace, centered on Handmade and Vintage goods, fits this profile perfectly. It commands the dominant share in its niche, but the overall market for these specific goods is not expanding rapidly, hence the low growth prospects. This segment is where Etsy has achieved competitive advantage, translating into strong, consistent profitability that you see reflected in the consolidated margins.

Here's a quick look at the key financial indicators for this segment as of the second quarter of 2025:

The strategy here is to 'milk' these gains passively. Investments are focused on efficiency and infrastructure to keep the cash flow high, not on massive promotional spending to drive top-line growth in a slow-moving market. You see this in the expense structure where Product Development expenses decreased year-over-year as a percentage of revenue, while marketing spend increased, likely focused on performance to maintain current levels rather than broad expansion.

The core marketplace provides the necessary capital foundation for Etsy, Inc. (ETSY). This cash flow is what supports the Question Marks (like Depop's aggressive growth phase) and funds the Stars (if any emerge) or covers corporate overhead. The stability is key.

Key characteristics supporting the Cash Cow classification include:

• Marketplace revenue in Q2 2025 was $468.2 million (a segment of the total).
• Consolidated Adjusted EBITDA margin was 25.1% in Q2 2025.
• Etsy marketplace GMS was $2.4 billion in Q2 2025.
• The core marketplace GMS declined 5.4% year-over-year in Q2 2025.
• The company ended Q2 2025 with $1.5 billion in cash and investments.
• The company repurchased approximately $335 million in shares during Q2 2025, using this internally generated capital.

The focus remains on maintaining the current level of productivity. If onboarding takes 14+ days, churn risk rises, which directly impacts the cash flow from this unit, so infrastructure support is critical for efficiency.

Etsy, Inc. (ETSY) - BCG Matrix: Dogs

Reverb, the musical instrument marketplace, was strategically sold on June 2, 2025. This divestiture followed non-core focus concerns and clear underperformance, evidenced by a $101.7 million goodwill impairment charge recognized in Q1 2025. That charge was the primary driver behind the reported consolidated net loss of $52.1 million for the first quarter of 2025, compared to a net income of $63.0 million in the prior year period. The unit held a low relative market share in the broader musical instrument retail space, which necessitated the decision to exit. Its sale allows for a sharper focus on the core Etsy and Depop platforms.

The Q1 2025 financial snapshot illustrates the relative scale of the unit being divested, even though its specific revenue and GMS contribution for that quarter are embedded within the consolidated figures. The consolidated Gross Merchandise Sales (GMS) for Q1 2025 was $2.8 billion, while the core Etsy marketplace GMS was $2.3 billion. The decision to divest signals that the capital and management attention tied up in Reverb were not generating sufficient returns relative to the core business, fitting the profile of a Dog unit that consumes cash or breaks even without significant growth prospects.

Here's a quick look at the Q1 2025 consolidated metrics that frame the context of the divestiture decision:

• Consolidated Revenue: $651.2 million.
• Consolidated Net Loss: $52.1 million.
• Consolidated Non-GAAP Adjusted EBITDA Margin: approximately 26.3%.
• Active Buyers (Consolidated): decreased 3.4% year-over-year to 88.5 million.
• Active Sellers (Consolidated): decreased 11.3% year-over-year to 8.1 million.

To better illustrate the unit's performance leading up to the sale, here is a comparison of the Q2 2024 and partial Q2 2025 figures for Reverb, noting that the Q2 2025 figures only cover the first two months before the June 2, 2025, closing date:

The strategic actions taken regarding this unit are clear indicators of its BCG classification. Expensive turn-around plans were effectively abandoned in favor of a clean exit, which is typical for a Dog. The financial events surrounding the unit include:

• Goodwill impairment charge recorded in Q1 2025: $101.7 million.
• Date definitive agreement to sell Reverb was signed: April 21, 2025.
• Date of sale closing: June 2, 2025.
• Cash purchase price agreed upon: $105.0 million.

Etsy, Inc. (ETSY) - BCG Matrix: Question Marks

You're looking at the Question Marks quadrant of Etsy, Inc. (ETSY) portfolio, and right now, that's where we place the fashion resale marketplace, Depop. These are ventures operating in markets that are definitely growing fast, but where Etsy, Inc. (ETSY) still holds a relatively small piece of the pie. For Depop, the growth story is clear: its Gross Merchandise Sales (GMS) expanded by an impressive 35.3% year-over-year in the second quarter of 2025, signaling high market growth potential in the resale space.

Still, when you stack Depop's contribution against the main engine, the scale difference is stark. In Q2 2025, Depop's GMS was approximately $250 million. Compare that to the core Etsy marketplace's GMS, which hit about $2.4 billion in the same period. That low relative share in a high-growth segment is the textbook definition of a Question Mark; it consumes cash to fuel that growth but hasn't yet delivered the returns of a Star.

The strategy here is straightforward but requires serious capital commitment. Etsy, Inc. (ETSY) needs to pour accelerated investment into Depop to rapidly capture market share, particularly in the United States, with the goal of transforming it into a Star. If we don't gain traction quickly, this venture risks sliding into the Dog quadrant as market growth slows or competition wins out. To fund this aggressive push, the company is managing the core Etsy margins to stay in the high 20% range, effectively using the profitability of the mature business to bankroll the high-growth potential of Depop. This balancing act is critical for the next 18 months.

Here's what managing a Question Mark like Depop entails for Etsy, Inc. (ETSY):

• Invest heavily to increase market share quickly.
• Focus investment on key geographic areas, like the US.
• Accept high cash consumption in the near term.
• Monitor growth trajectory to decide on future divestment or continued funding.
• Maintain core business profitability to support the investment.

You've got to be decisive with these assets; they are either going to become future Stars or they become a drain you need to cut loose. Finance: draft 13-week cash view by Friday.