Etsy (NASDAQ:ETSY) just dropped its Q4 2024 earnings, and it's a mixed bag. Revenue hit a record $852.2 million, up 1.2% year over year, but still fell short of the $861.8 million analysts expected. On the bright side, EPS came in at $1.03, beating the $0.93 forecast. The real standout? Net income surged 56% to $129.9 million, driven by cost efficiencies, while adjusted EBITDA hit a record $250.6 million with a solid 29.4% margin. That said, gross merchandise sales (GMS) took a hit, dropping 6.8% to $3.7 billion, as consumers pulled back on discretionary spending.

Despite the slowdown, Etsy is pushing forward. Depop, its resale marketplace, just hit its highest GMS since being acquired, signaling strong momentum in re-commerce. Meanwhile, active buyers dipped 2.6%, but Etsy pulled off a major win by reactivating 9.8 million lapsed buyers. The company is doubling down on AI-driven personalization and its Etsy Insider loyalty program to boost repeat purchases and keep customers engaged. With consumer spending still shaky, management is bracing for another quarter of GMS declines, but they're betting big on long-term marketplace improvements.

Looking ahead, Etsy expects a take rate of around 23% and an adjusted EBITDA margin between 25%-26% for Q1 2025. CEO Josh Silverman is keeping the focus on refining the shopping experience, improving reliability, and driving engagement. While economic headwinds persist, Etsy is leaning into tech investments and strategic cost management to solidify its position in the e-commerce space. If its personalization efforts pay off, the marketplace could be primed for a stronger rebound in the back half of the year.

This article first appeared on GuruFocus.