Etsy generates revenue through four primary mechanisms that together produced $2,883.5 million in FY2025, up 2.7% from $2,808.3 million in FY2024. The first and largest revenue stream is Marketplace Revenue, which totaled $2,007.2 million in FY2025 and accounted for 69.6% of total revenue. This stream consists of three components: transaction fees (6.5% of the final sale value, up from 5% in 2022), listing fees ($0.20 per item for a four-month listing period), and payments processing fees. Etsy mandates that sellers use Etsy Payments in most markets, processing $11.9 billion in payment volume in 2025 and earning a fee on each transaction. The second revenue stream is Services Revenue, which generated $876.3 million in FY2025, up 11.3% year-over-year, and represented 30.4% of total revenue. Services revenue breaks down into on-site advertising (Etsy Ads and Offsite Ads), where sellers pay cost-per-click fees for prominent placement, and shipping labels, where Etsy provides discounted shipping to sellers and records revenue net of costs. The consolidated take rate — revenue divided by gross merchandise sales — reached 24.2% in FY2025, up 190 basis points from 22.3% in FY2024, demonstrating Etsy's ability to extract more value per dollar of GMS even as GMS itself declined 5.3% to $11.9 billion. The third revenue stream is Other Revenue, a minor category including fees from third-party payment processors in markets where Etsy Payments is not available. The fourth, now discontinued, was Reverb revenue until the June 2, 2025 sale. Etsy's business model is capital-light: it does not hold inventory, does not operate warehouses, and does not manage fulfillment. Its cost of revenue is primarily payments processing costs, hosting infrastructure, and customer support, totaling $817.8 million in FY2025, yielding a gross profit of $2,065.7 million and a gross margin of 71.6%. Operating expenses consumed $1,799.5 million in FY2025, with marketing being the largest single expense at $914.8 million (31.7% of revenue), followed by product development at $450.2 million and general and administrative at $332.8 million. The company's operating margin compressed to 9.2% in FY2025 from 13.5% in FY2024. If Etsy's marketplace revenue stream disappeared, the company would lose 69.6% of its revenue and its entire profit engine, as services revenue depends entirely on marketplace activity. The model's vulnerability is its dependence on seller success — if sellers leave or buyers stop purchasing, both revenue streams collapse simultaneously. Etsy mitigates this through network effects: more buyers attract more sellers, and more sellers create more inventory that attracts more buyers. In FY2025, the company acquired 27.4 million new buyers and reactivated 38.9 million lapsed buyers across its marketplaces, but habitual buyers (those spending $200+ on 6+ days per year) declined to 5.9 million from 6.4 million in Q4 2024. The average GMS per active buyer on a trailing twelve-month basis was $121 in Q4 2025, down 0.5% year-over-year but stabilizing sequentially. Etsy's monetization strategy centers on increasing take rate through higher ad adoption, expanded payments processing, and fee increases — the transaction fee rose from 5% to 6.5% in April 2022, directly boosting revenue per dollar of GMS.