Etsy laying off 12% of staff in bid to streamline business, position for growth

August 6, 2026 - 02:50

Etsy confirmed on Wednesday that it is cutting about 12 percent of its staff, a move the company says is aimed at simplifying operations and setting up for long-term growth. The announcement came alongside the release of its second-quarter earnings report.

The online marketplace for handmade and vintage goods said the layoffs will affect roughly 225 employees across various departments. In a memo to staff, CEO Josh Silverman described the decision as difficult but necessary, noting that the company had grown too complex in recent years and needed to refocus on its core mission of connecting buyers with unique, creative products.

Silverman emphasized that the restructuring is not a response to financial distress. Etsy reported revenue of $647 million for the quarter, up about 3 percent from the same period last year. However, the company has faced slowing growth and increased competition from mass-market retailers and other e-commerce platforms. Gross merchandise sales, a key metric for the platform, dipped slightly compared to the previous year.

The layoffs are part of a wider effort to cut costs and improve efficiency. Etsy also said it would reduce spending on marketing and pause certain non-essential projects. The company expects to incur one-time charges of roughly $25 million to $30 million related to severance and other costs.

This is not the first time Etsy has reduced its workforce. In late 2022, the company laid off 11 percent of its staff amid a broader tech industry slowdown. Since then, leadership has been working to streamline decision-making and invest in areas like artificial intelligence and seller tools.

Etsy said the affected employees will receive severance packages, extended health coverage, and career transition support. The company also plans to hold town hall meetings this week to address questions from remaining staff.

Despite the cuts, Silverman expressed confidence in the company's direction. He pointed to recent improvements in search functionality and a renewed focus on customer loyalty as signs that Etsy can regain momentum. The company maintained its full-year revenue outlook, though it slightly lowered its forecast for gross merchandise sales growth.

Investors reacted cautiously to the news. Shares of Etsy moved modestly lower in after-hours trading following the earnings release. Analysts noted that while the restructuring may help margins in the near term, the bigger challenge remains reviving growth in a crowded online retail market.