Etsy is cutting approximately 220 jobs, representing 12 per cent of its workforce, as part of a restructuring announced on Wednesday that the online marketplace said will simplify its organisation and speed up decision-making following the sale of Depop.

According to a US Securities and Exchange Commission filing reported by Reuters, the redundancies will primarily affect employees in Etsy's product and engineering teams, reducing the company's workforce to around 1,600 people. The restructuring is expected to be largely completed by the end of the third quarter and will result in charges of around $35 million, largely covering severance payments and employee benefits.

Kruti Patel Goyal, Etsy's chief executive, said the changes were intended to improve the company's operating model rather than reduce costs. "Cost savings are a consequence of these changes, but they are not the objective. We didn't start this work with a cost reduction target or a goal of making Etsy smaller," she said. Affected employees will receive at least 16 weeks of severance pay, additional compensation based on length of service and healthcare support for up to 12 months.

CNBC reported that Patel Goyal told employees the restructuring was designed to prepare Etsy for its next phase of growth rather than respond to artificial intelligence. "Our ultimate goal, though, has always been to take Etsy to the next level of growth so we can fully deliver on our mission and our potential," she said. The company said it would continue recruiting in strategic areas while adapting to the changing skills required as AI reshapes product development.

The announcement came alongside Etsy's second-quarter financial results, which showed improving performance in its core marketplace. Revenue increased 9.3 per cent year-on-year to $668.3 million, while gross merchandise sales on the Etsy marketplace rose 7.5 per cent to $2.58 billion. Active buyers fell 0.4 per cent to just under 87 million, although active sellers increased 5.9 per cent to 5.7 million and spending per buyer rose 2.8 per cent to $124 over the previous 12 months.

The restructuring follows Etsy's recent $1.2 billion sale of fashion resale platform Depop to eBay, leaving the group focused on its core marketplace for handmade, personalised and vintage goods. Etsy's board has approved a new share buyback programme authorising up to $2 billion in additional stock repurchases.

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