Etsy will lay off about 220 employees, or roughly 12% of its workforce, as the online marketplace restructures its organization to speed decision-making and support long-term growth, even after reporting stronger-than-expected second-quarter results.
The job cuts will primarily affect the company’s product and engineering teams, according to a filing with the U.S. Securities and Exchange Commission.
Chief Executive Kruti Patel Goyal, who took over earlier this year, told employees the restructuring is intended to simplify the company’s operations rather than reduce costs.
“Cost savings are a consequence of these changes, but they are not the objective,” Goyal said in an internal memo. She added that the layoffs “weren’t driven by AI,” although artificial intelligence will continue to influence how Etsy develops products and improves its marketplace.
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The restructuring is expected to leave Etsy with about 1,600 employees by the end of the third quarter. Workers affected by the layoffs will receive at least 16 weeks of severance pay, additional compensation based on tenure, healthcare coverage for up to a year and other transition benefits. The announcement came alongside Etsy’s second-quarter earnings report, which exceeded Wall Street expectations.
Revenue rose to $668.3 million, topping analysts’ forecasts, while sales on Etsy’s core marketplace increased 9.3% from a year earlier. The company also raised its full-year gross merchandise sales outlook to the mid-single-digit percentage range, up from its earlier forecast of low-single-digit growth.
Despite the stronger financial performance, Etsy continues to face intense competition from Amazon, Walmart, TikTok Shop and Temu, all of which have expanded their e-commerce offerings recently. Goyal said the company’s initial priority had been restoring growth, but its next objective is to build the organization needed for Etsy’s next phase of expansion.
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The restructuring follows a broader effort to sharpen Etsy’s focus on its core marketplace. Last month, the company completed the sale of secondhand fashion marketplace Depop to eBay for $1.4 billion, continuing a strategy of streamlining its portfolio.
Etsy also authorized an additional $2 billion share repurchase program, signaling confidence in its long-term prospects despite the workforce reduction. The company said it expects third-quarter gross merchandise sales to range between $2.53 billion and $2.58 billion, reflecting continued momentum in its core business. Investors initially reacted cautiously, with Etsy shares slipping in after-hours trading following the announcement.