Etsy beat Wall Street on revenue, raised its outlook, and told investors it would buy back $2bn of its own shares. Then it said it was cutting 12% of its staff.

The craft marketplace announced a restructuring on Wednesday that removes roughly 220 roles, most of them in product and engineering, CNBC reported. That leaves about 1,600 employees. Etsy expects the work to finish by the end of the third quarter, at a cost of around $35m in severance and related charges.

Chief executive Kruti Patel Goyal was blunt about the framing. The cuts are “not a cost cutting move,” she wrote in a shareholder letter. They are meant to help the company “move faster and execute with even greater focus” while business is strong.

A growth layoff, not a rescue

The numbers back the momentum, up to a point. Second-quarter revenue was $668.3m, ahead of the $646.7m analysts expected. Gross merchandise sales reached $2.6bn, up 7.5% on the year, a third straight quarter of growth. Etsy raised its full-year sales outlook to mid-single-digit growth.

So this is not a company in retreat, cutting to survive. It is a profitable one trimming its ranks while trade improves. That is the shape of the modern “growth layoff.” Etsy is not the first to make the move. Zillow framed its own 500 cuts as a bet on becoming faster and more AI-native, not a cost drive.

The reinvestment target is telling. Chief financial officer Lanny Baker said the company would deepen its expertise in product, engineering and customer operations. He named one focus in particular: “expanding and strengthening our team’s machine learning skills.” The cuts fall hardest on the same teams Etsy says it wants to rebuild around AI. Visa made a similar swap, shedding 2,600 jobs to fund an AI and stablecoin push. PwC has openly shifted its hiring toward AI skills over raw headcount.

The catch under the beat

The bottom line looked worse than the top line. Etsy’s continuing operations earned $114.3m in net income, up sharply on the year. But the reported result swung to a loss once the sale of Depop was counted. Per-share earnings came in at minus 49 cents, against the $1.18 profit analysts had pencilled in.

Depop is the reason. Etsy bought the resale app for about $1.6bn in 2021, near the top of the pandemic e-commerce boom. In February it agreed to sell Depop to eBay, a deal that brings roughly $1.4bn of cash into Etsy this quarter and books a loss on the way out. The buyer count tells a similar story. Active buyers stood at 87 million, down 0.4% on the year.

Investors shrugged. The stock closed 0.7% lower on Wednesday and slipped a further 1.6% after hours. That is a mild reaction to a 12% cut. A $2bn buyback tends to soften the blow.

The people behind the percentage

The 220 workers losing their jobs will read the framing differently. Etsy joins a long 2026 list, from Google down, of profitable technology firms shedding staff while spending freely on AI and buybacks. The language of speed and focus is now standard cover for it.

Patel Goyal thanked departing staff and promised to treat them “with care and respect.” She also made the harder claim: that cutting a tenth of the company, while beating forecasts, is how Etsy grows. The people left behind tend to test that logic.

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