Slide 1: Q3 2023 Financial Results
Q3 2023 Financial Results November 1, 2023
Slide 2: Forward-looking Statements
This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include 2 statements relating to our financial guidance for the fourth quarter of 2023 and underlying assumptions, including our long-term Adjusted EBITDA Forward-lookin
Slide 3: Q3 23 results in-line with expectations for modest growth
3 Q3 23 results in-line with expectations for modest growth; strong profitability continues Q3 23 Consolidated GMS* Q3 23 Consolidated Revenue* Q3 23 Consolidated Adj. EBITDA* $3.0B $636M $182M 1.2% Y/Y and -0.1% +7.0% Y/Y 28.6% Adj. EBITDA Margin Y/Y on a currency neutral basis Y/Y reflects Q3 2023 v
Slide 4: Etsy marketplace remains pressured by a variety of external factors
4 Etsy marketplace …but we continued to see green shoots remains pressured by a in our performance variety of external factors… Active buyers grew to Y/Y GMS growth rate 92M, new all-time high; ● Consumers focused on essentials; improved sequentially including modest pulling back on discretionary ca
Slide 5: Focused on expanding buyer Consideration for Etsy by competing on quality, value and reliability
5 Focused on expanding buyer Consideration for Etsy by competing on quality, value and reliability Consideration Helping buyers think of us more often Quality Great Value Reliability Making it easier to find Driving association Making shopping on the good stuff on Etsy that there are great Etsy more
Slide 6: Highlighting quality merchandise in a more organized, curated way
Doing a better job highlighting quality QUALITY merchandise in a more organized, curated way BEFORE: EVOLVING TO: Overwhelming Inspire buyers with a broad queries representative selection with ‘endless’ of high quality & high versions of diversity items virtually identical representing the best of i
Slide 7: We pivoted our roadmap to help sellers compete in a highly promotional environment
We pivoted our roadmap to help sellers GREAT VALUE compete in a highly promotional environment Initial limited testing of new features Seller sales, coupons and urgency signals drove >$100M in including a pricing optimizer and cost incremental GMS during Q3 23 recovery insights 7
Slide 8: Etsy funded promotions successfully impacted GMS and achieved positive ROI
GREAT VALUE Etsy funded promotions successfully impacted GMS and achieved positive ROI as we test and optimize new marketing approaches “As a seller I want to send a HUGE thank you to @Etsy for the $5 off promo they ran this weekend. It helped boost my sales a lot <3.” 8
Slide 9: Great progress becoming more reliable and convenient
RELIABLE AND Great progress becoming more reliable and convenient CONVENIENT Percentage of listings with an Delivered on-time in the U.S. last Expected Delivery Date Holiday season 98%+ 69% 99% Q3 20 Q3 23 Percentage of U.S. domestic Percentage of listings (excluding orders >$10 that have tracking d
Slide 10: Building consideration for specific purchase occasions
Building consideration for specific purchase Consideration CONSIDERATION occasions 10
Slide 11: Making you a 'Gifting Hero'
11 Making you a ‘Gifting Hero:’ the exact right, quality gift, at great value, for the special people in your life NEW! NEW! Gift Finder for App with more Deals Tab Select Etsy-funded offers Gifting Landing Pages prominence on mobile web
Slide 12: Delivered on time or your Money Back!
12 Delivered on time or your Money Back! Buyer Unveil CRM Banners Homepage
Slide 13: Depop continues to see strong growth in U.S.; Reverb outperforming musical instruments category
13 Depop continues to see strong growth in U.S.; Reverb outperforming musical instruments category ● Double digit Y/Y GMS & revenue growth; ● GMS was down modestly Y/Y, outperforming the active buyer growth musical instrument category ● Higher transaction velocity and improved ● Strong product exper
Slide 14: Solid Q3 consolidated financial results
14 Solid Q3 23 consolidated financial results, despite challenging and dynamic consumer discretionary product spending Consolidated Results Q3 23 GMS Q3 23 Revenue Q3 23 Adjusted EBITDA $3.0B $636M $182M +1.2% Y/Y, -0.1% currency neutral basis +7.0% Y/Y 28.6% Adj. EBITDA Margin GMS 4YR CAGR1 of 26% R
Slide 15: Growth in Etsy Ads, payments and Offsite Ads were primary drivers of revenue expansion
15 Growth in Etsy Ads, payments and Offsite Ads were primary drivers of solid revenue expansion, enabling excellent profit flow through Consolidated Results Incremental Revenue Bridge Adjusted EBITDA and Adjusted EBITDA Margin Q3 22 vs Q3 23 /Y +8.6% Y +7.0% Incremental Revenue Q3 23 Revenue: $636M, u
Slide 16: Disciplined product investments result in increased product launches
16 Disciplined product investments result in year-over-year increases in Etsy marketplace product launches aimed to fuel future growth Etsy marketplace increased Consolidated Product Dev Spend Growth in Revenue per Headcount product launches reflects leverage in employee comp for our Etsy marketplace
Slide 17: Creative marketing investments focused on delivering positive ROI
17 Creative marketing investments focused on delivering positive ROI Consolidated Performance & Consolidated Quarterly Marketing Trend Brand Marketing Spend For the Etsy marketplace: ● Expanded spending +16% Y/Y with select social media partners ● Ran brand campaigns in top 3 markets -4% Y/Y ● Small
Slide 18: Etsy marketplace GMS trendline improved
18 While Etsy marketplace’s GMS trendline improved, Etsy Marketplace GMS (Y/Y) positive trends moderated throughout the quarter
Slide 19: GMS growth in key international markets for Etsy Marketplace
19 GMS growth in key international markets for Etsy Marketplace Etsy Marketplace GMS (by Geography %) GMS Ex-U.S. Domestic Y/Y growth Q3 22 vs. Q3 23 +7% 47% 53% Positive Y/Y GMS growth resumed in the UK Solid Y/Y GMS growth in Germany and France Encouraging Y/Y GMS growth in select non-core countri
Slide 20: Gaining share vs. pure play U.S. e-commerce peers
20 Within our categories, we believe we are gaining share vs. ‘pure play’ U.S. e-commerce peers and holding our own compared to mass merchants Top 4 categories Q3 23 GMS Generated from Etsy marketplace U.S. Buyers (Actual) represented vs. U.S. ‘Pure Play’ Peer Company1 Sales >75% (Y/Y) of Total Etsy
Slide 21: Active buyers grew Y/Y for the third consecutive quarter
21 Active buyers grew Y/Y for the third consecutive quarter Etsy Marketplace Active Buyers to new all time high +4% Y/Y Sequential acceleration in Y/Y growth Modest growth in U.S. for the first time in seven quarters International growth remained strong 9% Y/Y increase in active buyers who identify a
Slide 22: Healthy new buyer acquisition and very strong reactivation
22 Driven by healthy new buyer …and very strong reactivation acquisition… trends New Buyers Reactivated Buyers New and reactivated +19% buyers Y/Y +6% Y/Y New buyer acquisition in Q3 23 over 40% above pre-COVID average quarterly new buyers A buyer is considered new if they use a unique e-mail addres
Slide 23: Habitual buyer trends largely unchanged and repeat buyers continued to grow
23 On a sequential basis, habitual buyer trends were largely unchanged and repeat buyers continued to grow 133% Habitual Buyers 200% Repeat Buyers1 Y/4Y Y/4Y Retained a slightly larger portion of our prior Upgraded more prior year active and lapsed year habitual buyers in Q3 23 vs. Q2 23 buyers to r
Slide 24: GMS per active buyer trendline continued to stabilize sequentially
24 GMS per active buyer trendline continued to stabilize sequentially Etsy Marketplace TTM GMS per Active Buyer (Q/Q) $136 $135 $131 $129 $128 $127 Q3 23 GMS/active buyer of $127 is 25% higher than in Q3 19 ($102)
Slide 25: Capital light business model delivers a healthy balance sheet and strong cash flow
25 Capital light business model delivers a healthy balance sheet and strong cash flow Trailing Twelve Month Consolidated Free Cash Flow ($M) Cash Balance 09/30/231 $1.1B Q3 23 Consolidated Free Cash Flow $208M In Q3 2023, we converted approximately 90% of our Adj. EBITDA to free cash flow on a trailin
Slide 26: Q4 23 Guidance as of Nov 1, 2023
26 Q4 23 Guidance as of Nov 1, 2023 GMS is currently estimated to decline in the low-single-digit range on a year-over-year basis. However, if trends worsen, that could become a mid-single digit decline, and if trends improve GMS could be flat or even up slightly year-over-year. We estimate Q4 2023 t
Slide 27: Q&A
27 Q&A
Slide 28: Appendix
28 Appendix
Slide 29: Condensed Consolidated Balance Sheets
29 Q3 2023 Financial Results Condensed As of September 30, 2023 As of December 31, 2022 Consolidated (in thousands) Cash and cash equivalents $ 741,958 $ 921,278 Balance Sheets Short-term investments 234,930 250,413 Accounts receivable, net 19,410 27,888 Funds receivable and seller accounts 221,958
Slide 30: Condensed Consolidated Statement of Operations
30 Q3 2023 Financial Results Condensed Three months Three months Consolidated ended 09/30/23 ended 09/30/22 (in thousands) Statement of Revenue $ 636,302 $ 594,469 Cost of revenue 188,827 174,401 Operations Gross profit Marketing 447,475 160,936 420,068 147,242 Product development 113,932 108,040 Gen
Slide 31: Condensed Consolidated Statement of Operations (Nine Months)
31 Q3 2023 Financial Results Condensed Nine months Nine months ended 09/30/23 ended 09/30/22 Consolidated (in thousands) Revenue $ 1,906,055 $ 1,758,870 Statement of Cost of revenue 572,918 518,817 Gross profit 1,333,137 1,240,053 Operations Marketing 498,120 465,590 Product development 351,844 299,6
Slide 32: Condensed Consolidated Statement of Cash Flows
32 Q3 2023 Financial Results Condensed Nine months ended 9/30/23 Nine months ended 9/30/22 Consolidated (in thousands) Net income (loss) $ 224,302 $ (803,836) Statement of Net cash provided by operating activities 410,408 391,862 Net cash used in investing activities (53,983) (29,936) Cash Flows Net
Slide 33: Reconciliation of Quarterly Net Income to Adj. EBITDA
33 Q3 2023 Financial Results Reconciliation of Quarterly Net Income to Adj. EBITDA 3Q23 2Q23 1Q23 4Q22 3Q22 2Q22 (in thousands) Net income (loss) $ 87,850 $ 61,915 $ 74,537 $ 109,548 $ (963,068) $ 73,123 Excluding: Interest and other non-operating (income) expense, net (5,430) (5,934) (5,689) (2,865
Slide 34: Reconciliation of Operating Cash Flow to Free Cash Flow
34 Q3 2023 Financial Results Reconciliation of Operating Cash Flow to Free Cash Flow Free cash flow is considered to be a non-GAAP financial measure. We believe that free cash flow, which measures our ability to generate cash from our business operations, is an important financial measure for use in eva
Slide 35: Reconciliation of Operating Cash Flow to Free Cash Flow
35 Q3 2023 Financial Results Reconciliation of Operating Cash Flow to Free Cash Flow Free cash flow is considered to be a non-GAAP financial measure. We believe that free cash flow, which measures our ability to generate cash from our business operations, is an important financial measure for use in eva