Slide 1: Q3 2024 Financial Results
Q3 2024 Financial Results October 30, 2024
Slide 2: Forward-looking Statements
2 This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include but are not limited to: statements relating to our financial guidance for the fourth quarter 2024 and full year 2024 and underlying assumptions; our ability ma
Slide 3: We delivered solid consolidated revenue and profit
3 We delivered solid consolidated revenue and profit despite a challenging GMS quarter for the Q3 24 Consolidated GMS Q3 24 Consolidated Revenue Q3 24 Consolidated Adj. EBITDA Etsy marketplace $2.9B $662M $184M Etsy marketplace GMS -6% -4.1% Y/Y and -4.4% +4.1% Y/Y 27.7% Adj. EBITDA Margin Y/Y,* with
Slide 4: Strong progress improving customer experiences in 2024
4 Strong progress improving customer experiences in 2024 Consideration Get buyers to think of Etsy more often Gifting Destination + Loyalty Program; Investing in more engaging App experiences Quality Great Value Reliability Make it easier to find Drive association that there Make shopping on Etsy ‘th
Slide 5: Optimizing operations to drive future growth
Optimizing operations to drive future 5 growth PEOPLE ● Recalibrating our Prod Dev squads for a more balanced portfolio of short and longer-term investments ● Fortification and expansion of ML, Analytics, and Design talent PROCESS ● Transformation in how we measure and denote “success” - incremental
Slide 6: Building better app experiences and driving more buyers to use it
6 Building better app experiences… …and driving more buyers to use it 33% reduction in “rear-view mirror” +3M incremental app downloads impressions - more room for inspiring content 1 from signed out listing page prompt on mobile web² Before After Bolder download prompts, testing paid app downloads,
Slide 7: Leading indicators that our Search initiatives are working
7 Leading indicators that our Search initiatives are working DIVERSITY Expanding work ~40% reduction to items with similar images, in search results where ≥25% not just exact matches of listings look alike QUALITY Improved Positive trends in experience reviews decrease in the rate at which ↑ 4 and 5
Slide 8: Search Visibility Dashboard provides sellers with more insights
8 Search Visibility Dashboard provides sellers with more insights into how they appear in Search Includes suggestions for how to make their shops, listings, and customer service even better Beat our Q3 24 seller adoption goal by ~60% The additional visibility, combined with tools that make it easy f
Slide 9: Clearer about why items belong on Etsy; sellers front and center in marketing
9 We got clearer about why items belong on Etsy, and we put sellers front and center in our marketing Etsy CEO says company is escaping ‘race to the bottom’ and getting back to its artisan roots Etsy’s Ad Is a Love Letter to Human Craft in a Tech-Obsessed World Etsy’s CEO says the human touch gives
Slide 10: Etsy Insider beta loyalty program
10 In mid-September, we started inviting a targeted cohort of U.S. buyers to our ‘Etsy Insider’ beta Loyalty program Paid program with enticing benefits1: ● Free U.S. domestic shipping on millions of items ● Deep discounts and limited time merchandise ● Annual gift + birthday coupon Email Invitation
Slide 11: Investments to make Etsy the shopping destination for gifts
11 Investments to make Etsy the …including expanded digital & shopping destination for gifts this physical gift card experience to holiday season… bolster offerings for last-minute gifting GIFT MODE V1 1.6k Gift Ideas NOW ~5k Gift Ideas Browse by Browse by Purchase / ship physical gifts Launched phy
Slide 12: Depop has been a stellar top-line performer
12 Depop has been a stellar top-line performer - with GMS accelerating on a sequential basis ● Since removing U.S. seller fees, U.S. listings have accelerated¹ by 26 percentage points ● U.S. marketing campaign amplified the ‘no selling fees’ value proposition to +70 million people ‘Repop’ allows buye
Slide 13: Reverb continues to differentiate with used and like-new gear
13 Reverb continues to differentiate with used and like-new gear ● Used and like-new music gear remain popular on the marketplace ● Launched Fender’s first-ever Certified Pre-Owned program ● Enhanced listing management tools for sellers ● Launched protection plans to give buyers added piece of mind an
Slide 14: 7 million Small Businesses
14 We grew revenue, protected profitability, and invested in better customer experiences despite a challenging macro environment. 7 million Small Businesses We’ve made Etsy more elevated and differentiated as we work to reignite a long-term growth flywheel. Our Right to Win is more relevant than ever…
Slide 15: Q3 consolidated results roughly where we expected to be
15 Q3 24 consolidated results roughly where we expected to be Consolidated Results Q3 24 GMS Q3 24 Revenue Q3 24 Adjusted EBITDA* $2.9B $662M $184M -4.1% Y/Y, -4.4% Y/Y +4.1% Y/Y 27.7% Adj. EBITDA Margin currency neutral basis *Reconciliation of non-GAAP financial measures is contained in the Appendi
Slide 16: Solid revenue performance with Y/Y growth in Marketplace and Services
16 Solid revenue performance with Y/Y growth Driving value for sellers and improving buyer in both Marketplace and Services experiences, while also expanding take rate for Etsy: a win-win Incremental Revenue Bridge Incremental Consolidate Take Rate Bridge Q3 23 vs. Q3 24 Q3 23 vs. Q3 24 22.7% 20.9%
Slide 17: Leverage in product development spend, increasing revenue per headcount
17 We continue to drive leverage in product development spend, while also increasing revenue per headcount Consolidated Q3 24 Product Dev spend Continued growth in Revenue per reflects leverage gained as a % of revenue Headcount for the Etsy marketplace* -5.9% +8.6% Y/Y Y/Y Peer Group Average $0.5M 1
Slide 18: Planned increases in consolidated marketing spend during Q3 24
18 Consolidated Performance & Brand Marketing Spend Planned increases in consolidated marketing spend during Q3 24: +31% Y/Y Etsy continues to test and learn in paid social; Depop leans in to support growth, with increases in performance and brand investments +21% Y/Y Consolidated Marketing Spend as
Slide 19: Top categories and geographies came under pressure during Q3 24
19 Top categories and geographies came under pressure during Q3 24… Etsy marketplace Category GMS (%) Etsy marketplace Geography GMS (%) 4% Our Top categories declined on a Y/Y basis Top 6 categories represented ~87% of GMS US Domestic and Ex-US Domestic GMS both declined Y/Y Metrics presented repre
Slide 20: Macro headwinds and discrete events weighed on GMS
20 …driven by macro headwinds and discrete events which weighed on Etsy marketplace GMS U.S. Discretionary Goods Spend as a % of Total Personal Consumption Expenditures (per BEA.gov, nominal dollars, TTM) The percentage of U.S. personal consumption going to discretionary spend continues to decline v
Slide 21: Gifting once again a highlight
21 ‘Gifting’ once again a highlight, along with other pockets of GMS strength Sitewide ‘Gifting’¹ GMS grows Y/Y… …partially driven by our focus on Birthdays and other important ‘evergreen’ purchase occasions Personalized / customized items outpace sitewide performance (up 4% Y/Y) In the U.S., ‘Back-
Slide 22: Relative strength in active and reactivated buyers
22 Relative strength in active and reactivated Etsy marketplace buyers; growth in repeat buyers Q3 24 Active Buyers Q3 24 New Buyers Q3 24 Reactivated Buyers 91.2M 5.3M 6.4M -0.4% Y/Y -12.8% Y/Y +5.6% Y/Y Q3 24 Repeat Buyers Q3 24 Habitual Buyers Q3 24 GMS / Active Buyer1 36.9M 6.8M $123 +0.7% Y/Y -
Slide 23: Helping sellers with the skill and will to succeed
23 Helping sellers with the skill and will to succeed 6.2M Active Etsy marketplace sellers from nearly every country; 82% are businesses of one¹ ● Active seller count declined 8.5% Y/Y - which we believe is the direct result of stepped-up enforcement actions, including new seller set up fee ● With 1
Slide 24: Capital light business model delivers healthy balance sheet and strong cash flow
24 Capital light business model delivers a healthy balance sheet and strong cash flow Trailing Twelve Month Consolidated Free Cash Flow ($M) Cash Balance 9/30/241 $1.2B Q3 24 Consolidated Free Cash Flow $204M In Q3 2024, we converted approx. 90% of our Adj. EBITDA to free cash flow on a trailing twelv
Slide 25: Consolidated Guidance as of October 30, 2024
25 Consolidated Guidance as of October 30, 2024 Q4 24 Guidance FY 24 Implied Guidance GMS We currently anticipate that consolidated Q4 24 Based upon Q4 24 guidance, for the full year our GMS will decline in the low to mid single digit consolidated GMS will have declined roughly in the percentage ran
Slide 26: Q&A
26 Q&A
Slide 27: Appendix
27 Appendix
Slide 28: Etsy Marketplace Active Buyers
28 Etsy Marketplace Active Buyers -0.4% Y/Y Slight decline in U.S. Modest growth in International Active buyers are buyers who have made at least one purchase in the last 12 months.
Slide 29: New Buyers, Reactivated Buyers
29 New Buyers Reactivated Buyers A buyer is considered new if they use a unique e-mail address that has never been used for a purchase on *Average reactivated buyers pre-COVID is average of quarterly data for the periods Q1 2017 through the Etsy marketplace. Metrics presented are for the Etsy market
Slide 30: Habitual Buyers, Repeat Buyers
30 Habitual Buyers Repeat Buyers1 (Buyers in M) (Buyers in M) 186% 134% Y/5Y Y/5Y 1 Metrics presented are for the Etsy marketplace on a Trailing Twelve Month basis. Y/5Y represents Q3 19 vs. Q3 Repeat Buyers exclude Habitual Buyers on this slide. 24.
Slide 31: Etsy Marketplace TTM GMS per Active Buyer
31 Etsy Marketplace TTM GMS per Active Buyer (Q/Q) $135 $131 $129 $128 $127 $126 $125 $124 $123
Slide 32: Condensed Consolidated Balance Sheets
32 Condensed As of September 30, 2024 As of December 31, 2023 Consolidated (in thousands) Cash and cash equivalents $ 818,939 $ 914,323 Balance Sheets Short-term investments Accounts receivable, net 226,022 8,644 236,118 24,734 Funds receivable and seller accounts 172,562 265,387 Property and equipm
Slide 33: Condensed Consolidated Statement of Operations (Three Months)
33 Condensed Three months Three months Consolidated ended 9/30/24 ended 9/30/23 (in thousands) Statement of Revenue $ 662,410 $ 636,302 Cost of revenue 185,640 188,827 Operations Gross profit Marketing 476,770 196,526 447,475 160,936 Product development 107,251 113,932 General and administrative 86,1
Slide 34: Condensed Consolidated Statement of Operations (Nine Months)
34 Condensed Nine months Nine months Consolidated ended 9/30/24 ended 9/30/23 (in thousands) Statement of Revenue $ 1,956,170 $ 1,906,055 Cost of revenue 556,863 572,918 Operations Gross profit Marketing 1,399,307 571,400 1,333,137 498,120 Product development 331,590 351,844 General and administrativ
Slide 35: Condensed Consolidated Statement of Cash Flows
35 Condensed Nine months ended 9/30/24 Nine months ended 9/30/23 Consolidated (in thousands) Net income $ 173,375 $ 224,302 Statement of Net cash provided by operating activities 437,510 410,408 Net cash used in investing activities (36,759) (53,983) Cash Flows Net cash used in financing activities (
Slide 36: Reconciliation of Quarterly Net Income to Adj. EBITDA
36 Reconciliation of Quarterly Net Income to Adj. EBITDA 3Q24 2Q24 1Q24 4Q23 3Q23 (in thousands) Net income $ 57,366 $ 53,005 $ 63,004 $ 83,266 $ 87,850 Excluding: Interest and other non-operating income, net (3,808) (3,947) (5,310) (4,904) (5,430) Provision for income taxes 16,444 25,972 16,651 25,
Slide 37: Reconciliation of Operating Cash Flow to Free Cash Flow
37 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 evaluating the company's finan
Slide 38: Reconciliation of Operating Cash Flow to Free Cash Flow
38 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 evaluating the company's finan