Slide 1: Q2 2023 Financial Results
Q2 2023 Financial Results August 2, 2023
Slide 2: Forward-looking Statements
2 This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include Forward-looking statements relating to our financial guidance for the third quarter of 2023 and underlying assumptions; our short- and long-term growth potenti
Slide 3: Maintained our GMS gains, grew revenue and delivered strong profitability in Q2 23
3 Maintained our GMS gains, grew revenue and delivered strong profitability in Q2 23 Q2 23 Consolidated GMS Q2 23 Consolidated Revenue Q2 23 Consolidated Adj. EBITDA $3.0B $629M $166M -0.6% Y/Y and -0.4% Y/Y on +7.5% Y/Y 26.4% Adj. EBITDA Margin a currency neutral basis Y/Y reflects Q2 2023 vs. Q2 202
Slide 4: Many key Etsy Marketplace metrics trended positively during the quarter
4 Many key Etsy Marketplace metrics trended positively during the quarter Quarterly GMS May, June (and July) Active buyers GMS Reached a new Y/Y growth rate improved sequentially Grew Y/Y all-time high GMS ex-U.S. GMS/buyer & Buyer additions* domestic Habitual buyers Up 7% Y/Y Positive growth rate E
Slide 5: Big, bold and impactful investments to make Etsy more organized, curated and reliable
5 Big, bold and impactful investments designed to make Etsy more organized, curated and reliable Welcome new Elevate the best of Instill trust when Be the platform buyers to the Etsy and keep transacting with sellers love to joy of Etsy buyers coming back us sell on A few key examples: A few key exa
Slide 6: Utilizing multiple search engine technologies to make search results more relevant
Utilizing multiple search engine We’re now focused on ensuring that technologies, we’ve been able to Relevant results are the very best make Etsy search results more Quality for YOU! Relevant Visual Appeal Quality of Service Exact | Text-based: Priced Appropriately Do the words you searched for appe
Slide 7: Excellent progress on 'Curation at Scale' initiative
7 Excellent progress on 'Curation at Scale' initiative to leverage human curation in our ML data sets With a goal of having millions of curated We’re scaling our human-curated Already doubling the number of listings used to train ‘high quality’ merchandise library quality listings our ML data sets
Slide 8: Helping buyers 'Find the Good Stuff' aligned with individual tastes
8 Helping buyers ‘Find the Good Stuff’ aligned with individual tastes and preferences… ‘Shop the Look’ Inspires Buyer Purchases Successful Launch of Etsy Wedding Registry Highlighting Quality Items …next up Baby!
Slide 9: Solving for a buyer's individual budget; elevating great deals
…while also solving for a buyer’s individual budget; elevating ‘great deals’ available from Etsy sellers! h 9
Slide 10: Continuing to make Etsy more reliable & joyful
10 Continuing to make Etsy more reliable & joyful Improving how we highlight Doing a better job living up Dialing up awareness of our sellers’ unique items to fulfillment expectations Etsy Purchase Protection We have removed 29% more Added local delivery signals to Customer touch-points, listings for
Slide 11: Helping sellers expand their business in a sustainable way
11 11 Helping sellers expand their business in a sustainable way Just one example of various Price Discovery functionalities we are currently evaluating & testing ● Rolling out extensive ‘Seller Growth Suite’ including price discovery functionality ● New ‘Make an Offer’ program to expand beyond Vint
Slide 12: Harnessing AI & ML technologies to improve customer experiences
12 Harnessing AI & ML technologies to improve customer experiences Improving the ● Member Enhancing the Seller Experience Support Buyer Experience ● Fulfillment ● Easier on-boarding ● Easier Search & ● Trust & ● Improved listing Discovery Safety information and variations ● Better understanding of ●
Slide 13: 'Democratizing' ML to enable our teams to move much faster
13 ‘Democratizing’ ML to enable our teams to move much faster! Goal is that virtually any Etsy engineer will be able to deploy their own models PRE-WORK ML MODELING SERVING & DEPLOYMENT ONGOING Concept Developed Production Close the Gap Close the Gap Stage 1: Develop Model from Concept Stage 2: Prod
Slide 14: Creating brand sizzle attracts new buyers and builds loyalty
14 Creating brand sizzle attracts new buyers and builds loyalty JOHN LEGEND ON HIS ETSY COLLABORATION “It’s important for me to fill my home with high quality pieces made by people who approach their craft with intention.”
Slide 15: Doubling down on initiatives to drive frequency & GMS/buyer
15 Doubling down on initiatives to drive frequency & GMS/buyer Leverage Post Better Outreach Improved Seller Purchase Touchpoints & Promos Funded Offers
Slide 16: U.S. GMS growth has accelerated; strong business momentum
16 U.S. GMS growth has accelerated by over 25 percentage points from Q4 22; strong business momentum Product ● Strong experimentation velocity; healthy win rates ● New personalized recommendations incorporating a user’s prior actions ● Greater search relevance across a range of search types ● Seller
Slide 17: Improved customer experiences; focused on long-term growth
17 17 Improved customer experiences; remains focused on driving long-term growth Product ● Increased conversion from newly listed items on search, listing and home pages ● Simplified checkout process ● Launched significant changes to catalog and taxonomy ● Continued to emphasize affordability Marketin
Slide 18: Making Etsy Even More Special by Holiday 2023
18 Making Etsy Even More Special by Holiday 2023 This year, we’re working to become everyone’s ‘gifting accomplice.’ Making all the hard gifting missions easy as pie. So whatever your gifting mission, Etsy has it. Quality Shop well crafted, customized gifts they’ll love Value Shop well crafted, cust
Slide 19: Solid Q2 23 consolidated financial results
19 Solid Q2 23 consolidated financial results Adj. EBITDA 4YR CAGR¹ of Consolidated Results 43% Q2 23 GMS Q2 23 Revenue Q2 23 Adjusted EBITDA $3.0B $629M $166M -0.6% Y/Y, -0.4% currency neutral basis +7.5% Y/Y 26.4% Adj. EBITDA Margin 1 CAGR from Q2 2019 - Q2 2023.
Slide 20: Strong revenue growth drives healthy profit flow through
20 Strong revenue growth drives healthy profit flow through Consolidated Results Incremental Revenue Bridge Adjusted EBITDA and Adjusted EBITDA Margin Q2 22 vs Q2 23 +7.5% Etsy Incremental Transaction Revenue Fee Increase Q2 23 Revenue $629M, up 7.5% Y/Y Take rate ~20.9%
Slide 21: Great returns on product development spend
21 We are seeing great returns on product development spend even as we’ve scaled investment Consolidated Product Development Etsy Marketplace product launches investment has increased continue to accelerate % Y/Y >50 Up
Slide 22: Gained leverage on consolidated marketing investments in Q2 23
22 Gained leverage on consolidated marketing investments in Q2 23 Performance and Brand Marketing Spend Marketing Spend (Consolidated) (Consolidated) ~flat Y/Y +1% Y/Y
Slide 23: ROI from performance marketing spend grew 40%
ROI from performance marketing spend grew 40%* as our marketing 23 mix has shifted to new channels, as well as buyer retention, reactivation & frequency Share of GMS Attributed to Performance Marketing Spend Active Buyer Mix (% of GMS; Etsy Marketplace) (%; Etsy Marketplace) +33% Y/3Y 59% 67% We’ve
Slide 24: Etsy Marketplace quarterly Y/Y GMS trended in the right direction
24 Overall, Etsy Marketplace quarterly Y/Y GMS Etsy Marketplace GMS (Y/Y) performance has trended in the right direction
Slide 25: More positive trend when looked at monthly for 1H 23
25 …and shows an even more positive trend Etsy Marketplace GMS when looked at (Y/Y) monthly for 1H 23 We reported positive Y/Y GMS growth in May and June, as well as in July
Slide 26: Solid GMS growth in non-U.S. geographies
26 Solid GMS growth in non-U.S. geographies Etsy Marketplace GMS (by Geography %) Etsy marketplace performance only Q2 22 vs. Q2 23 GMS Ex-U.S. Domestic Y/Y growth +5% 47% 53% Solid Y/Y GMS growth in Germany and France Encouraging Y/Y GMS growth in select non-core Western European countries GMS Ex-U
Slide 27: Strength in 'horizontal' categories
27 Y/Y GMS trends improved …and we saw strength in sequentially in several top ‘horizontal’ categories (i.e. categories… purchase occasions) Home & Living Apparel Craft Supplies GMS from gifts and Y/Y up Y/Y up mid-single personalized items grew low-single digits high single digits Y/Y digits Y/Y ~fl
Slide 28: New all-time high in active buyers
28 We reached a new all-time high in active buyers Etsy Marketplace Active Buyers +3% Y/Y Active buyers are buyers who have made at least one purchase in the last 12 months.
Slide 29: GMS per active buyer showing early signs of stabilization
29 GMS per active buyer Etsy Marketplace GMS per Active Buyer (TTM Metric) (Q/Q) trendline is showing early signs of stabilization on a sequential basis Q2 23 GMS/active buyer of $128 is 28% higher than it was in Q2 19 ($100) $137 $136 $135 $131 $129 $128
Slide 30: Solid new buyer acquisition and reactivating lapsed buyers
30 Solid new buyer acquisition …and we are reactivating lapsed continues… buyers at very high rates New Buyers New and Reactivated Buyers reactivated buyers up 7% Y/Y A buyer is considered new if they use a unique e-mail address that has never been used for a purchase on the Etsy marketplace. Metric
Slide 31: Habitual buyer trends stabilizing; repeat buyers ticked up
31 On a sequential basis, habitual buyer trends are seeing signs of stabilization, and repeat buyers ticked up slightly Habitual Buyers Repeat Buyers1 140% (represent ~43% of GMS) Y/4Y 218% Y/4Y Metrics presented are for the Etsy marketplace on a Trailing Twelve Month basis. 1 Repeat Buyers exclude
Slide 32: Capital light business model delivers healthy balance sheet and strong cash flow
32 Capital light business model delivers a healthy balance sheet and strong cash flow Trailing Twelve Month Consolidated Free Cash Flow ($M) 1 Cash Balance 06/30/23 $1.2B Q2 23 Consolidated Free Cash Flow $128M In Q2 2023, we converted nearly 90% of our Adj. EBITDA to free cash flow on a trailing twel
Slide 33: Q3 23 Guidance
33 Q3 23 Guidance Q3 23 Guidance August 2, 2023 GMS $2.95B to $3.10B Revenue $610M to $645M Adj. EBITDA 27-28% Margin We are not able at this time to provide GAAP targets for net income or net income margin or to reconcile Adjusted EBITDA margin to those amounts because of the unreasonable effort of
Slide 34: Q&A
34 Q&A
Slide 35: Appendix
35 Appendix
Slide 36: Condensed Consolidated Balance Sheets
36 Q2 2023 Financial Results Condensed As of June 30, 2023 As of December 31, 2022 Consolidated (in thousands) Cash and cash equivalents $841,512 $921,278 Balance Sheets Short-term investments 235,263 250,413 Accounts receivable, net 22,594 27,888 Funds receivable and seller accounts 221,147 233,961
Slide 37: Condensed Consolidated Statement of Operations
37 Q2 2023 Financial Results Condensed Three months Three months Consolidated ended 06/30/23 ended 06/30/22 (in thousands) Statement of Revenue $628,876 $585,135 Cost of revenue 188,638 171,421 Operations Gross profit Marketing 440,238 165,870 413,714 164,068 Product development 121,988 102,095 Gener
Slide 38: Condensed Consolidated Statement of Operations (six months)
38 Q2 2023 Financial Results Condensed Six months Six months ended ended 06/30/23 06/30/22 Consolidated (in thousands) Revenue $1,269,753 $1,164,401 Statement of Cost of revenue 384,091 344,416 Gross profit 885,662 819,985 Operations Marketing 337,184 318,348 Product development 237,912 191,571 Gener
Slide 39: Condensed Consolidated Statement of Cash Flows
39 Q2 2023 Financial Results Condensed Six months ended 6/30/23 Six months ended 6/30/22 Consolidated (in thousands) Net Income $136,452 $159,232 Statement of Net cash provided by operating activities 191,902 185,298 Net cash used in investing activities (42,713) (26,472) Cash Flows Net cash used in
Slide 40: Reconciliation of Quarterly Net Income to Adj. EBITDA
40 Q2 2023 Financial Results Reconciliation of Quarterly Net Income to Adj. EBITDA 2Q23 1Q23 4Q22 3Q22 2Q22 1Q22 (in thousands) Net income (loss) $61,915 $74,537 $109,548 $ (963,068) $73,123 $86,109 Excluding: Interest and other non-operating (income) expense, net (5,934) (5,689) (2,865) 230 2,557 3
Slide 41: Reconciliation of Operating Cash Flow to Free Cash Flow
41 Q2 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 42: Reconciliation of Operating Cash Flow to Free Cash Flow
42 Q2 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