Etsy’s Board of Directors Approves a new $1B Stock Repurchase Program
BROOKLYN, N.Y., Oct. 30, 2024 /PRNewswire/ — Etsy, Inc. (NASDAQ: ETSY), which operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world, today announced results for its third quarter ended September 30, 2024.
“Our third quarter consolidated results came in roughly as anticipated, with some incremental pressure on Etsy marketplace year-over-year GMS, healthy growth in revenue, and continued strength in our adjusted EBITDA profitability,” said Josh Silverman, Etsy, Inc. Chief Executive Officer. “We made excellent progress improving Etsy marketplace customer experiences – from Gifting, to Quality, a new loyalty program, investing in our app, and more – all of which we believe will drive engagement and frequency over time. While 2024 has been a challenging period for discretionary goods, we are investing with discipline and focus to make Etsy even more Etsy – which we believe will lift our boat when the tide comes back in again.”
Third quarter 2024 performance highlights include:
“We continue to balance long-term growth investments with delivering strong and sustainable profitability,” said Rachel Glaser, Chief Financial Officer. “Third quarter adjusted EBITDA margin was about 28%, ahead of our guidance, with excellent revenue flow through – benefiting primarily from healthy growth in both our Marketplace and Services segments, and continued cost efficiencies. We continue to drive leverage in product development, offset somewhat by increased marketing spend in the quarter as Etsy expanded investments in paid social and newer performance marketing channels, and Depop leaned in to both performance and brand marketing aligned with its growth opportunity.”
Earlier today, Etsy’s Board of Directors approved a new stock repurchase program authorizing the repurchase of up to an additional $1 billion of our common stock.
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1 Etsy Gifting GMS: Estimate based upon word ‘gift’ in the listing title, shipped with a gift message, or other signal the item was purchased as a gift.
Third Quarter 2024 Financial Summary
(in thousands, except percentages; unaudited)
The financial results of Elo7 have been included in our consolidated financial results (“Consolidated”) until August 10, 2023 (date of sale). The unaudited GAAP and non-GAAP financial measures and key operating metrics we use are:
Three Months Ended
September 30,
% (Decline)
Growth
Y/Y
Nine Months Ended
September 30,
% (Decline)
Growth
Y/Y
2024
2023
2024
2023
GMS (1)
$ 2,915,256
$ 3,039,930
(4.1) %
$ 8,851,010
$ 9,153,792
(3.3) %
Revenue
$ 662,410
$ 636,302
4.1 %
$ 1,956,170
$ 1,906,055
2.6 %
Marketplace revenue
$ 476,075
$ 460,922
3.3 %
$ 1,413,434
$ 1,381,395
2.3 %
Services revenue
$ 186,335
$ 175,380
6.2 %
$ 542,736
$ 524,660
3.4 %
Gross profit
$ 476,770
$ 447,475
6.5 %
$ 1,399,307
$ 1,333,137
5.0 %
Operating expenses
$ 389,953
$ 358,919
8.6 %
$ 1,174,231
$ 1,168,754
0.5 %
Net income
$ 57,366
$ 87,850
(34.7) %
$ 173,375
$ 224,302
(22.7) %
Net income margin
8.7 %
13.8 %
(510) bps
8.9 %
11.8 %
(290) bps
Adjusted EBITDA (Non-GAAP)
$ 183,587
$ 182,219
0.8 %
$ 530,897
$ 518,797
2.3 %
Adjusted EBITDA margin (Non-GAAP)
27.7 %
28.6 %
(90) bps
27.1 %
27.2 %
(10) bps
Active sellers (2)
8,522
8,802
(3.2) %
8,522
8,802
(3.2) %
Active buyers (2)
96,707
97,343
(0.7) %
96,707
97,343
(0.7) %
Percent GMS ex-U.S. domestic (1)
46 %
45 %
100 bps
45 %
45 %
— bps
(1)
Consolidated GMS for the three and nine months ended September 30, 2024 includes Etsy marketplace GMS of $2.5 billion and $7.6 billion, respectively. Percent GMS ex-U.S. domestic for the Etsy marketplace for the three and nine months ended September 30, 2024 was 49% and 48%, respectively.
(2)
Consolidated active sellers and active buyers includes Etsy marketplace active sellers and active buyers of 6.2 million and 91.2 million, respectively, as of September 30, 2024. Consolidated active sellers and active buyers as of September 30, 2023 includes Elo7 marketplace active sellers and buyers of approximately 52 thousand and 1.5 million as Elo7 was included in our consolidated financial results until August 10, 2023 (the date of sale).
Third Quarter 2024 Operating Highlights
Etsy
Our “Right to Win” is centered on key elements that we believe make the Etsy marketplace a better place to shop and sell and, which, in turn, will bring more buyers, lead to increased frequency and size of purchases, and build trust in the Etsy marketplace. In 2024, we are focused on building buyer consideration by making it easier to ‘find the best stuff’ on Etsy, driving association that Etsy sellers offer great value, and making shopping on Etsy more reliable and dependable. The below highlights some of our key initiatives:
Product Highlights:
In order to drive buyer Consideration, we are making progress in our efforts to position Etsy as an indispensable partner for Gifting, with broad based investments positively impacting our performance. We:
To help buyers ‘find the best stuff on Etsy,’ we invested in the following Quality initiatives:
Aligned with our efforts to make shopping on Etsy more reliable and dependable, we began testing new ways for buyers to access support more easily through prominent support links in user profiles and conversational AI within the Help Center.
We deepened investments in the buy on Etsy app as part of efforts to make the app our marquee shopping experience. We introduced bolder prompts on mobile web, with a focus on driving buyers to download the app.
Due to significant strides made in optimizing how we bid on behalf of our sellers, which resulted in better balancing of seller ad value across seller segments, Etsy Ads revenue performance accelerated on a year-over-year and sequential basis. We also incorporated more features and multimodal embeddings into our ranking models (capturing listing image representations), which led to an improvement in ads conversion rates.
Marketing Highlights:
We invited highly targeted groups of occasional U.S. buyers to join our new Etsy Insider Loyalty program. Etsy Insider is buyer-fee based, offering free U.S. domestic shipping on millions of items, item discounts, first access merchandise and other benefits. The program, which currently offers seasonal and annual options, has been launched in beta form, and we will be testing and iterating to determine its impact on frequency and loyalty over time.
We ran full funnel marketing campaigns in the United States and United Kingdom, which featured real Etsy sellers and highlighted our unique positioning. Our buyer research shows that the campaign’s top themes of ‘supporting small,’ ‘originally made,’ and ‘handcrafted’ resonated with buyers.
We continued to scale mid-funnel paid social channels to diversify our channel portfolio mix. In line with our Quality efforts, we leveraged machine learning models to adjust offsite marketing feeds, making more room for the very best of Etsy by suppressing or removing listings with patterns of poor service quality.
Reverb
Depop
Consolidated Q4 24 Financial Guidance
Q4 24 Guidance
FY 24 Implied Guidance
GMS
We currently anticipate that consolidated Q4 24
GMS will decline in the low to mid single digit
percentage range on a year-over-year basis.
Based upon Q4 24 guidance, for the full year our
consolidated GMS will have declined roughly in the
low single digit percentage range compared to FY 23.
Take Rate
22.3 %
~22%
Adjusted EBITDA Margin
28-29%
27.4-27.7%
Please note that our guidance assumes currency exchange rates remain unchanged at current levels.
With respect to our expectations under “Consolidated Q4 24 Financial Guidance” and outlook for the remainder of 2024 above, reconciliation of Adjusted EBITDA margin guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity, and low visibility with respect to the charges excluded from Adjusted EBITDA; in particular, stock-based compensation expense, foreign exchange loss (gain), interest and other non-operating income, net, provision (benefit) for income taxes, acquisition, divestiture, and corporate structure-related expenses, and other non-recurring expenses.
Webcast and Conference Call Information
Etsy will host a video webcast conference call to discuss these results at 5:00 p.m. Eastern Time today, which will be live-streamed via our Investor Relations website (investors.etsy.com) under the Events section. A copy of the earnings call presentation will also be posted to our website.
A replay of the video webcast will be available through the same link following the conference call starting at 8:00 p.m. Eastern Time this evening, for at least three months thereafter.
About Etsy
Etsy, Inc. operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world. These marketplaces share a mission to “Keep Commerce Human,” and we’re committed to using the power of business and technology to strengthen communities and empower people. Our primary marketplace, Etsy.com, is the global destination for unique and creative goods. Buyers come to Etsy to be inspired and delighted by items that are crafted and curated by creative entrepreneurs. For sellers, we offer a range of tools and services that address key business needs.
Etsy, Inc.’s “House of Brands” portfolio also includes fashion resale marketplace Depop, and Reverb, the largest online marketplace dedicated to music gear. Each Etsy, Inc. marketplace operates independently, while benefiting from shared expertise in product, marketing, technology, and customer support.
Etsy was founded in 2005 and is headquartered in Brooklyn, New York.
Etsy has used, and intends to continue using, its Investor Relations website and the Etsy News Blog (etsy.com/news) to disclose material non-public information and to comply with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website and the Etsy News Blog in addition to following our press releases, SEC filings, and public conference calls and webcasts.
Investor Relations Contact:
Deb Wasser, Vice President, Investor Relations and ESG Engagement
Sarah Marx, Director, Investor Relations
Media Relations Contact:
Kelly Clausen, Vice President, Communications & Community
Cautionary Statement Regarding Forward-Looking Statements
This press release contains or references forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include statements relating to our financial guidance for the fourth quarter of 2024 and outlook for the full year of 2024 and underlying assumptions; our ability to improve customer engagement and frequency; our ability to invest in strategic growth while delivering on profitability; and the impact of our “Right to Win” strategy and our product development and marketing efforts. Forward-looking statements include all statements that are not historical facts. In some cases, forward-looking statements can be identified by terms such as “aim,” “anticipate,” “believe,” “could,” “enable,” “estimate,” “expect,” “goal,” “intend,” “may,” “outlook,” “plan,” “potential,” “target,” “will,” or similar expressions and derivative forms and/or the negatives of those words.
Forward-looking statements involve substantial risks and uncertainties that may cause actual results to differ materially from those that we expect. These risks and uncertainties include: (1) the level of demand for our services or products sold in our marketplaces; (2) the importance to our success of the trustworthiness of our marketplaces and our ability to attract and retain active and engaged communities of buyers and sellers; (3) the fluctuation of our quarterly operating results; (4) our failure to meet our publicly announced guidance or other expectations; (5) any real or perceived inaccuracies in our operational metrics; (6) if we or our third-party providers are unable to protect against technology vulnerabilities, service interruptions, security breaches, or other cyber-related events; (7) our dependence on continued and unimpeded access to third-party services, platforms, and infrastructure; (8) macroeconomic events that are outside of our control; (9) operational and compliance risks related to our payments systems; (10) our ability to recruit and retain employees; (11) our ability to compete effectively; (12) enforcement of our marketplace policies; (13) our ability to enhance our current offerings and develop new offerings to respond to the changing needs of sellers and buyers; (14) risks related to our environmental, social, and governance activities and disclosures; (15) our efforts to expand our operations outside of the United States; (16) acquisitions that may prove unsuccessful or divert management attention; (17) failure to deal effectively with fraud; (18) compliance with evolving regulations, including in the area of privacy and data protection; and (19) litigation and regulatory matters, including intellectual property claims. These and other risks and uncertainties are more fully described in our filings with the Securities and Exchange Commission, including in the section entitled “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur.
Forward-looking statements represent our beliefs and assumptions only as of the date of this press release. We disclaim any obligation to update forward-looking statements.
Etsy, Inc.
Condensed Consolidated Balance Sheets
(in thousands; unaudited)
As of
September 30,
2024
As of
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$ 818,939
$ 914,323
Short-term investments
226,022
236,118
Accounts receivable, net
8,644
24,734
Prepaid and other current assets
94,514
129,884
Funds receivable and seller accounts
172,562
265,387
Total current assets
1,320,681
1,570,446
Property and equipment, net
242,889
249,794
Goodwill
138,622
138,377
Intangible assets, net
443,943
457,140
Deferred tax assets
144,408
137,776
Long-term investments
107,046
86,676
Other assets
44,617
45,191
Total assets
$ 2,442,206
$ 2,685,400
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable
$ 19,589
$ 29,920
Accrued expenses
298,995
353,553
Finance lease obligations—current
6,081
6,079
Funds payable and amounts due to sellers
172,562
265,387
Deferred revenue
17,097
14,635
Other current liabilities
38,636
41,207
Total current liabilities
552,960
710,781
Finance lease obligations—net of current portion
95,044
99,620
Deferred tax liabilities
7,101
13,192
Long-term debt, net
2,287,016
2,283,817
Other liabilities
124,385
121,705
Total liabilities
3,066,506
3,229,115
Total stockholders’ deficit
(624,300)
(543,715)
Total liabilities and stockholders’ deficit
$ 2,442,206
$ 2,685,400
Etsy, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts; unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Revenue
$ 662,410
$ 636,302
$ 1,956,170
$ 1,906,055
Cost of revenue
185,640
188,827
556,863
572,918
Gross profit
476,770
447,475
1,399,307
1,333,137
