Etsy to cut 12% of workforce despite strong quarterly results

### Etsy to Cut 12% of Workforce Despite Strong Quarterly Performance

Etsy is planning to eliminate approximately 220 jobs, representing about 12% of its workforce, as the online marketplace begins a major organizational restructuring aimed at simplifying operations and improving the speed of decision-making. The workforce reduction comes shortly after the company reported stronger-than-expected second-quarter financial results, making the announcement a notable shift as Etsy prepares for its next phase of growth. According to a regulatory filing, the layoffs will primarily affect employees working in product and engineering roles. Chief Executive Officer Kruti Patel Goyal, who assumed leadership of the company earlier this year, said the restructuring is intended to create a simpler and more effective organization rather than being primarily focused on reducing expenses. Goyal told employees that cost savings would result from the changes but were not the main reason behind the restructuring. She also rejected the idea that the layoffs were directly driven by artificial intelligence, although she acknowledged that AI will continue to influence how Etsy develops products and improves the shopping experience. Following the workforce reduction, Etsy expects to have approximately 1,600 employees by the end of the third quarter. Employees affected by the cuts are expected to receive at least 16 weeks of severance pay, along with additional compensation based on their length of service. The company is also providing healthcare coverage for up to a year and other transition-related benefits as part of the separation package. The announcement came as Etsy reported a strong second quarter, with revenue reaching approximately $668.3 million and exceeding Wall Street expectations. Sales through Etsy’s core marketplace also increased 9.3% compared with the same period a year earlier, indicating continued demand for products sold through its platform. The company subsequently raised its full-year outlook for gross merchandise sales, now expecting growth in the mid-single-digit percentage range compared with its previous forecast for low-single-digit growth. Despite these positive financial indicators, Etsy faces an increasingly competitive online retail environment. Large companies such as Amazon and Walmart continue to expand their e-commerce businesses, while newer platforms including TikTok Shop and Temu are attracting consumers and sellers with aggressive strategies. Goyal said Etsy’s earlier priority was to restore growth, but the company must now build an organizational structure capable of supporting its longer-term ambitions. The restructuring is part of a broader effort to concentrate resources on Etsy’s core marketplace and simplify the company’s overall portfolio. In July, Etsy completed the sale of secondhand fashion platform Depop to eBay for approximately $1.4 billion, further demonstrating its strategy of focusing on its primary business. At the same time, Etsy authorized an additional $2 billion share repurchase program, signaling that the company remains confident in its financial position and long-term prospects despite reducing its workforce. Etsy expects third-quarter gross merchandise sales to fall between approximately $2.53 billion and $2.58 billion, suggesting that the company continues to anticipate steady activity on its marketplace. Investors initially responded cautiously to the restructuring announcement, with Etsy shares declining in after-hours trading. The company now faces the challenge of balancing organizational efficiency with continued investment in technology, product development and customer experience. While the layoffs will reduce the size of the workforce, Etsy’s stronger quarterly performance and increased sales outlook suggest that management remains focused on returning the business to sustainable growth. The restructuring ultimately reflects Etsy’s attempt to create a leaner and more focused organization while preparing to compete in an increasingly crowded digital commerce market.