The e-commerce platform is cutting 12% of its workforce, with most job losses hitting product and engineering teams
Etsy announced Wednesday it’s laying off approximately 220 employees, roughly 12% of its workforce, as the Brooklyn, New York-based e-commerce company restructures to move faster and compete in a market that’s grown significantly more crowded.
The cuts were revealed alongside second-quarter earnings results for the period ending June 30, 2026, that beat analyst expectations. Product and engineering teams are bearing the brunt of the reductions. An Etsy spokesperson confirmed the layoffs aren’t driven by artificial intelligence (AI), distinguishing the company from U.S. tech firms that have cited AI adoption as the primary driver of workforce reductions throughout 2026.
In its second-quarter shareholder letter, Etsy said the restructuring is intended to help it “lean in during a period of strong momentum so that we can move faster and execute with even greater focus.”
A CEO’s blueprint for the next phase of growth
Etsy chief executive officer Kruti Patel Goyal, who took the helm at the start of 2026, laid out her thinking in a staff memo.
“You’ve heard me say that our first priority was to get the business growing again,” Patel Goyal wrote. “Our ultimate goal, though, has always been to take Etsy to the next level of growth so we can fully deliver on our mission and our potential. We are now at the point where we need to make that shift - to build the team, culture, and organization that will make that possible.”
The announcement reflects a dynamic that’s emerged across multiple U.S. tech companies reporting strong financial results alongside workforce reductions this year, where headcount changes are framed as organizational investment rather than financial distress.
The business case behind the job cuts
Etsy’s second-quarter financials show the business gaining traction. Revenue reached $668.3 million for the quarter, surpassing analyst estimates of $649.1 million compiled by LSEG. Core marketplace sales grew 9.3% year over year. The company raised its full-year guidance for gross merchandise sales to mid-single-digit growth and projected third-quarter gross merchandise sales of between $2.53 billion and $2.58 billion, ahead of the $2.49 billion consensus from FactSet.
Active sellers on the platform grew to 5.7 million, up 5.9% year over year, the second consecutive quarter of merchant growth. Active buyers stood at 87 million, down a marginal 0.4% from a year earlier.
A leaner portfolio in a tougher market
Etsy has been streamlining its brand portfolio at the same time. It completed the sale of second-hand fashion marketplace Depop to eBay in July 2026 for $1.2 billion, roughly a year after paying $1.6 billion to acquire it. The company had previously offloaded musical instrument marketplace Reverb in June 2025.
The restructuring comes as Etsy faces intensifying competition from Amazon and Walmart, as well as newer platforms including TikTok Shop and Temu. In June 2026, the company launched a “Shop Other Jeffs” ad campaign during Amazon’s Prime Day, spotlighting its independent sellers as an alternative to the retail giant.
Patel Goyal is betting that a smaller, more focused team can outmaneuver the competition and return Etsy to sustained growth. The results of that bet will become clearer in the quarters ahead.
