Etsy Reports First Buyer Growth in Two Years as AI Crackdown Bites

Etsy's quarterly active buyers grew for the first time in two years, and the marketplace credited a crackdown on AI-generated junk for turning the tide.

The company reported the milestone on Wednesday. Revenue rose 11% to $692.5 million, beating Wall Street expectations. Gross merchandise sales, the value of goods sold on the site, climbed 9% to $2.65 billion. The number of active sellers grew the most since 2024, and Etsy shares jumped 4% on the news.

The results mark early progress for Kruti Patel Goyal, named CEO at the start of 2026 with a mandate to stop the bleeding after the buyer base had been shrinking for two straight years.

Why did Etsy start losing buyers?

Etsy launched in 2005 and built a devoted following around its "keeping commerce human" ethos and its focus on small vendors selling original products. That identity eroded as the Brooklyn-based company chased growth.

Listings multiplied that were not genuinely handmade or unique, or at least did not appear to be. Many items were resold products shoppers could find on eBay or Poshmark, or mass-produced in overseas factories.

Artificial intelligence amplified the problem. AI-generated art and bot-created listings eroded buyer trust and dulled the personality that had been the site's secret sauce. Etsy's active-buyer count peaked at around 93 million in 2023, then fell to 86.5 million by the end of 2025.

Sellers pushed back too. They complained that AI-supported listings often outranked their original offerings in search results and undercut them on price, and many sellers left the site altogether.

What is the new CEO doing about it?

Goyal knows the company from the inside. She joined Etsy in 2011 and most recently served as president and chief growth officer, a role that put her in charge of engineering, marketing, strategy, seller support, and cultivating buyer trust.

Last week Etsy announced changes to its AI policy to rein in the technology's harmful effects. The company now requires most listings to include at least one unedited photo of the product against a real background. Sellers must also disclose their use of AI more fully, even when that use meets Etsy's standards.

"We've become clearer about what truly differentiates Etsy, the creativity of our sellers, the care and craftsmanship behind what they make, and the human connection that gives those items meaning," Goyal told analysts on the earnings call.

How is Etsy using AI to fight AI?

The flood of low-quality listings has also hampered search on the site, and Goyal is fixing that problem with the very technology causing it. AI and machine learning can infer customers' tastes and help buyers sift through the piles of listings to find the items best suited to them.

Etsy is also deploying an AI shopping assistant to handle more complex, specific searches. The company sees a further role for AI in detecting inappropriate use of AI and removing listings that violate its rules.

On the seller side, Etsy says AI now helps with drafting listings, managing inventory, searching for images, optimizing for search, and promoting products to influencers.

What's the bet behind the strategy?

Goyal frames the tightening rules as a competitive position, not just a cleanup. AI makes it easier to create and replicate products at scale, and she argues that dynamic raises the value of what Etsy alone can offer.

"There's an interesting paradox here," Goyal told investors. "As AI makes it easier to create and replicate products at scale, we believe the human creativity, craftsmanship and connection that have always made Etsy special will matter even more."

One quarter of buyer growth does not restore the 6.5 million shoppers Etsy lost since 2023. But the combination of rising revenue, returning sellers and a 4% share jump suggests the bet on enforced authenticity is starting to pay.