Etsy layoffs 2026: 220 roles cut as company reshapes product and engineering

Etsy layoffs 2026 will affect about 220 employees, roughly 12% of the company’s workforce, after the online marketplace announced a restructuring on Aug. 5 alongside its second-quarter results. Most of the reductions are expected to fall in product and engineering, Etsy said, as it seeks to simplify its organizational structure and move faster.

Chief executive Kruti Patel Goyal told employees the changes were intended to build the organization Etsy needs for its next phase of growth, CNBC reported. In its shareholder communication, Etsy said it aimed to execute with greater focus during what it described as a period of strong momentum.

The company said it does not describe the plan as a cost-cutting measure. An Etsy spokesperson also told CNBC that artificial intelligence did not drive the reductions. Those are Etsy’s stated reasons and objectives, rather than confirmed outcomes of the restructuring.

Why is Etsy laying off employees?

Etsy said the workforce reduction is intended to streamline its structure, improve the speed of its work and support future growth. The company operates a marketplace known for handcrafted and artisanal wares, and it has faced competition from Amazon, Walmart, TikTok Shop and Temu, CNBC reported.

The announcement came with results for the quarter ended June 30. Etsy reported second-quarter sales of $668.3 million and said sales on its core marketplace rose 9.3%, according to CNBC. The platform had 87 million active buyers, down 0.4% from a year earlier, while its seller base increased 5.9% to 5.7 million.

Etsy also lifted its outlook for full-year gross merchandise sales growth to the mid-single-digit range, from a prior low-single-digit forecast. Gross merchandise sales measure the dollar value of items sold on the marketplace. The revised outlook is forward-looking and reflects the company’s expectations, not a guarantee of future performance.

In its earnings release, Etsy cautioned that the restructuring’s expected benefits, charges, cash and non-cash spending, and timetable are subject to risks and uncertainties. The company said its estimates of restructuring costs remain preliminary and may change as it makes further decisions. It also identified possible legal and other delays, as well as potential disruption to operations during implementation.

The job cuts follow a period in which Etsy has sought to focus more closely on its core marketplace business. Whether the restructuring produces the faster execution and growth Etsy anticipates will depend on the plan’s implementation and broader demand conditions, both of which the company identified as uncertain.

This story draws on original reporting from CNBC.