The company announced the layoffs on August 5, with the cuts affecting approximately 12% of its workforce. Most of the impacted positions are in product and engineering, according to reports. Etsy said the restructuring is designed to simplify its organizational structure, improve coordination and accelerate decision-making.

Layoffs Follow Strong Second-Quarter Performance

The workforce reduction came alongside Etsy’s second-quarter results, which showed continued growth in its core marketplace.

Etsy Marketplace revenue increased 9.3% year over year, while gross merchandise sales (GMS) rose 7.5% to approximately $2.6 billion. The company also reported comparable net income of $114 million, representing an increase of more than 50% from the previous year.

The results suggest that the layoffs are not simply a response to deteriorating marketplace performance. Instead, Etsy is positioning the restructuring as part of a broader effort to make the company more focused and efficient.

CEO Kruti Patel Goyal said cost savings would be a consequence of the restructuring rather than its primary objective. She also said the layoffs were not driven by artificial intelligence, although Etsy continues to use AI in product development and other areas of the business.

$1.4 Billion Depop Sale Adds to the Restructuring Story

The timing of the layoffs has drawn particular attention because Etsy completed the $1.4 billion sale of Depop to eBay on July 30, only six days before announcing the workforce reductions.

The transaction is part of Etsy’s broader strategy to streamline its portfolio and concentrate resources on its core marketplace. The company previously sold Reverb, another marketplace business, in 2025.

Rather than using the proceeds primarily to expand its workforce, Etsy is simultaneously restructuring its organization and returning capital to shareholders. The company has authorized an additional $2 billion share repurchase program.

Etsy Refocuses on Its Core Marketplace

The latest moves highlight a broader shift in Etsy’s strategy: moving away from operating multiple marketplaces and toward strengthening its flagship Etsy platform.

The company expects the restructuring to be substantially completed by the end of the third quarter of 2026. Employees affected by the cuts are expected to receive severance packages, including at least 16 weeks of pay and extended healthcare coverage, according to the company’s disclosures.

For Etsy, the combination of marketplace growth, portfolio divestments, workforce restructuring and a major share-buyback authorization signals a more focused phase of its business strategy.

The company is now betting that a leaner organization and greater concentration on its core marketplace can translate recent financial momentum into sustainable long-term growth.

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