Slide 1: Q4 2023 Financial Results
Q4 2023 Financial Results February 21, 2024
Slide 2: Forward-looking Statements
2 Forward-looking 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 first quarter 2024 and related assumptions and commentary; full ye
Slide 3: Cyber 5 contributed to a solid holiday season
3 Cyber coupons, Deals tab, and Cyber Sales Hub all had strong Record-setting impact on our results CYBER 5 contributed to a solid holiday season Best-ever ‘Cyber Monday’ & ‘Giving Tuesday’ All stats on this page reflect Etsy Marketplace performance only. Cyber 5 is the shopping days from Thanksgivin
Slide 4: Essentially flat GMS, yet record revenue and adjusted EBITDA dollars
4 Essentially flat FY 23 Consolidated GMS FY 23 Consolidated Revenue GMS, yet we delivered record $13.2B $2.7B -1.2% Y/Y and -1.2% Y/Y +7% Y/Y revenue and currency neutral basis adjusted EBITDA dollars, and very strong FCF in 2023 FY 23 Consolidated Adj. EBITDA¹ FY 23 Consolidated FCF¹ Etsy marketpla
Slide 5: Etsy is a much more meaningful e-commerce player than a few years ago
5 By any measure, Etsy is a much more meaningful e-commerce player than just a few years ago We have more buyers: Buyers are shopping Etsy more frequently: 45.7M 92.0M 41% 48% 2019 Active Buyers* 2023 Active Buyers*, 2019 Repeat Buyers* 2023 Repeat Buyers*, +101% Y/4Y +660 bps Y/4Y Buyers are spendi
Slide 6: Challenging to re-accelerate growth in a tepid macro climate
6 After many years of over-performing our sector, it's been challenging to re-accelerate growth in a tepid macro climate for our type of goods Etsy marketplace GMS Growth vs. Euromonitor E-commerce Growth in Core Markets Etsy marketplace GMS only. *Euromonitor International Ltd; Retail 2024 edition,
Slide 7: We stand for something more.
7 We stand for something more.
Slide 8: Gaining share vs. pure play U.S. e-commerce peers in most top categories
8 Within our categories, we believe we are largely gaining share vs. ‘pure play’ U.S. e-commerce peers in most of our top categories 2023 GMS Generated from Etsy marketplace U.S. Buyers (Actual) vs. U.S. ‘Pure Play’ Peer Company1 Sales (Y/Y) 1 See Appendix slide 31 for a list of peer companies inclu
Slide 9: Bold 'Vital Few' initiatives in 2024 and beyond
9 WIP Design To gain share and drive buyer Consideration & Frequency… we’re launching some bold ‘Vital Few’ initiatives in 2024 & beyond.
Slide 10: Consideration
10 Consideration Get buyers to think of Etsy more often Gift ModeTM + Loyalty Program Quality Great Value Reliability Make it easier to find Drive association that there Make shopping on Etsy ‘the good stuff’ on Etsy are great deals on Etsy more convenient Machine learning investments in Highlighting
Slide 11: Becoming the indispensable partner for all gifting missions
11 Evolve Etsy from being one of the places you can go to find a gift to being the indispensable partner for all your gifting missions.
Slide 12: Gifting is an always-on opportunity for Etsy
12 Gifting is not just a seasonal buyer need. It’s an always-on opportunity for Etsy to add value. ~90% of total gift purchases are split about evenly between Holidays and Personal Events 45% Holidays + Occasions 45% Personal Events 10% ● Holidays ● Easter ● Birthday ● Pet ● Just ● Christmas ● Fathe
Slide 13: We're all in on Gifting! A fragmented and large market opportunity
We’re all in on Gifting! 13 A fragmented & large market opportunity Etsy Share of US “Gifting & Events” Spend Only about Etsy has ~1%1,2 of $200B 3 Avg annual US Avg annual Etsy Gifting TAM.1 A 1% increase in share = 10% consumer spend buyer spend on gifts of US buyers on gifts1 purchased on Etsy2 $
Slide 14: Reverb and Depop performance and 2024 focus
14 2023 GMS $600M, up 9% Y/Y 2023 GMS $942M, flat Y/Y Significantly better performance in Top-line accelerated in Q4 23; 2023; exciting plans for 2024 positioned for profitability in 2024 ● Momentum continues to build in U.S. ● Q4 23 GMS grew in the mid-single digits Y/Y; 2023 revenue up Y/Y ● Q4 23 GM
Slide 15: Our mission and strategy remain relevant and sound
15 Our mission and strategy remain relevant and sound. Mission Best-in-Class Human A Trusted Search and ✕ ✕ Connections Brand Discovery Our Sellers’ Unique Items Right to Win
Slide 16: Solid Q4 consolidated financial results
16 Solid Q4 23 consolidated financial results Consolidated Results Q4 23 GMS Q4 23 Revenue Q4 23 Adjusted EBITDA* $4.0B $842M $236M -0.7% Y/Y, -1.6% currency neutral basis +4.3% Y/Y 28.0% Adj. EBITDA Margin *Reconciliation of non-GAAP financial measures is contained in the Appendix. Note: Elo7’s dives
Slide 17: Incremental revenue bridge Q4 vs Q4
17 Incremental Revenue Bridge Q4 22 vs Q4 23 Etsy Ads, Payments and higher Offsite Ads revenue drove healthy Y/Y revenue growth in Q4 23 FY 2023 Consolidated take-rate 20.9% Incremental Revenue Q4 2023 Consolidated take-rate was 21.0% Q4 23 Consolidated Revenue $842M, up 4% Y/Y *Other revenue primar
Slide 18: Q4 consolidated adjusted EBITDA higher than any quarterly period
18 Q4 23 consolidated adjusted EBITDA was higher than any quarterly period, including pandemic peaks Quarterly Consolidated Adjusted EBITDA ($)* *Reconciliation of non-GAAP financial measures is contained in the Appendix.
Slide 19: Product Development delivered ~$1.5B in incremental annualized GMS
19 For the full year, Etsy marketplace Product Development delivered ~$1.5B in incremental annualized GMS Growth in Revenue per Headcount for Consolidated Q4 23 Product Dev Spend Etsy marketplace increased Product Dev the Etsy marketplace since 2019 reflects modest leverage launches % Y/Y ~30 Up $1.3
Slide 20: Leaned into brand marketing during Q4 23
20 Leaned into brand marketing during Q4 23; while marketing spend as a percent of revenue increased modestly versus Q4 22 Consolidated Performance & Brand Consolidated Quarterly Marketing Trend Creative marketing Marketing Spend strategies contributed to solid Etsy marketplace Holiday performance ●
Slide 21: Billions of dollars of incremental GMS from marketing investments
21 Drove billions of dollars of incremental GMS from our marketing investments in 2023, while also delivering 10 bps of leverage ~$2.6B Annual Total Marketing Spend (Consolidated) Annualized GMS benefit from Etsy marketplace performance marketing in 2023 GMS from Paid Channels1 Offsite Ads Revenue2 2
Slide 22: Continued healthy growth in international markets in Q4 23
22 Continued healthy Etsy marketplace GMS growth in international (by Geography %) markets in Q4 23 Etsy marketplace GMS Ex-U.S. Domestic Y/Y growth Q4 22 vs. Q4 23 +4% 47% 53% ● Positive Y/Y GMS growth continued in the U.K. ● Flat Y/Y GMS trends in Germany ● Encouraging Y/Y GMS growth in select Wes
Slide 23: 2023 category performance: Apparel and Paper & Party growth offset softness
23 2023 Growth in Apparel and Paper & Party was offset by softness in Home & Living, Jewelry & Accessories and Craft Supplies 2023 Etsy marketplace top 6 categories approximate % GMS Top 6 categories represented ~87% of GMS in 2023 Y/Y down Y/Y down Y/Y up mid- Y/Y down Up slightly Y/Y ~flat Y/Y low-
Slide 24: Active buyers reached an all-time high in Q4 2023
24 Active buyers We continued to attract many reached an all-time millions of new buyers and reactivated high in Q4 2023 even more lapsed buyers Q4 23 Active Buyers1 Q4 23 New Buyers2 Q4 23 Reactivated Buyers3 92M 8.4M 9.7M +3% Y/Y; +101% Y/4Y -12% Y/Y; +41% Y/4Y +13% Y/Y; +122% Y/4Y # of Male buyer
Slide 25: Habitual buyer trendline continued to stabilize sequentially
25 Habitual buyer trendline continued to stabilize sequentially; number of repeat buyers ticked up slightly 126% Y/4Y 1 Habitual Buyers 184% Repeat Buyers Y/4Y Habitual buyers accounted for ‘Upgraded’ a larger portion of our prior year repeat nearly 40% of GMS in Q4 23 buyers to habitual buyers in Q
Slide 26: Capital light business model delivers a healthy balance sheet and cash flow
26 Capital light business model delivers a healthy balance sheet and strong cash flow Trailing Twelve Month Consolidated Free Cash Flow ($M) Cash Balance 12/31/231 $1.2B Q4 23 Consolidated Free Cash Flow $283M In Q4 2023, we converted nearly 90% of our Adj. EBITDA to free cash flow on a trailing twelv
Slide 27: Significant portion of free cash flow returned through share repurchases
27 Etsy has returned a significant portion of our free cash flow to shareholders through share repurchases Etsy Share Repurchases ($M) & Share Repurchases as % of Free Cash Flow On average, we have used over 60% of our FCF from the past 6 years for share repurchases
Slide 28: Q1 24 Consolidated Guidance
28 Q1 24 Consolidated Guidance as of Feb 21, 2024 GMS for the first quarter of 2024 is currently estimated to decline in the low-single-digit range on a year-over-year basis. This guidance reflects our slow start to the quarter, and our current expectation that GMS for the core Etsy marketplace improv
Slide 29: 2024 Consolidated Outlook
29 2024 Consolidated Outlook as of Feb 21, 2024 We currently expect the first quarter to be our low point in year-over-year growth in GMS and revenue as we begin to see the expected benefits of our Etsy marketplace product and marketing investments kicking in starting in the second quarter. We expect
Slide 30: Q&A
30 Q&A
Slide 31: Appendix
31 Appendix
Slide 32: Notes for Slide 8: Consumer Edge Data
32 Notes for Slide 8: Consumer Edge Data Top 15 pure-play U.S. companies* in each relevant category ● Home & Living: Wayfair, Pottery Barn, Ikea, Bed Bath & Beyond, West Elm, Restoration Hardware, CB2, William Sonoma, Nectar Sleep, Pottery Barn Kids, Empire Today, Dyson, Ruggable, Saatva, Ashley Fur
Slide 33: Q4 Etsy marketplace GMS +142% from Q4 2019
33 Q4 23 Etsy marketplace GMS Etsy Marketplace GMS (Y/Y) 4 Yr Etsy marketplace GMS growth +142% from Q4 2019
Slide 34: Q4 Etsy marketplace GMS category performance
34 Q4 23 Etsy marketplace GMS category performance Q4 23 Etsy Marketplace top 6 categories approximate % GMS Y/Y down Y/Y down Y/Y up high- ~flat Y/Y Y/Y up low- Y/Y down low-single digits low-single digits single digits single digits low-single digits
Slide 35: Active buyers reached a new all time high
35 Active buyers Etsy Marketplace Active Buyers reached a new all +3% time high Y/Y Modest growth in U.S. International growth remained strong 6% Y/Y increase in active buyers who identify as men Active buyers are buyers who have made at least one purchase in the last 12 months.
Slide 36: Healthy new buyer acquisition and record reactivated buyers
36 Healthy new buyer acquisition… …and record reactivated buyers +13% New Buyers Reactivated Buyers Y/Y 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
Slide 37: Sequential GMS per active buyer trends remained largely stable
37 Etsy marketplace sequential GMS per active buyer trends remained largely stable Etsy Marketplace TTM GMS per Active Buyer (Q/Q) $135 $131 $129 $128 $127 $126 Q4 23 TTM GMS/active buyer of $126 is 22% higher than in Q4 19 ($103)
Slide 38: Condensed Consolidated Balance Sheets
38 Condensed As of December 31, 2023 As of December 31, 2022 Consolidated (in thousands) Cash and cash equivalents $ 914,323 $ 921,278 Balance Sheets Short-term investments Accounts receivable, net 236,118 24,734 250,413 27,888 Funds receivable and seller accounts 265,387 233,961 Property and equipm
Slide 39: Condensed Consolidated Statement of Operations (Quarter)
39 Condensed Three months Three months Consolidated ended 12/31/23 ended 12/31/22 (in thousands) Statement of Revenue $ 842,322 $ 807,241 Cost of revenue 255,757 225,775 Operations Gross profit Marketing 586,565 261,076 581,466 244,809 Product development 117,488 112,787 General and administrative 92
Slide 40: Condensed Consolidated Statement of Operations (Twelve Months)
40 Condensed Twelve months Twelve months ended 12/31/23 ended 12/31/22 Consolidated (in thousands) Revenue $ 2,748,377 $ 2,566,111 Statement of Cost of revenue 828,675 744,592 Gross profit 1,919,702 1,821,519 Operations Marketing 759,196 710,399 Product development 469,332 412,398 General and adminis
Slide 41: Condensed Consolidated Statement of Cash Flows
41 Condensed Twelve months ended 12/31/23 Twelve months ended 12/31/22 Consolidated (in thousands) Net Income (loss) $ 307,568 $ (694,288) Statement of Net cash provided by operating activities 705,513 683,612 Net cash used in investing activities (73,307) (30,024) Cash Flows Net cash used in financi
Slide 42: Reconciliation of Quarterly Net Income to Adj. EBITDA
42 Reconciliation of Quarterly Net Income to Adj. EBITDA 4Q23 3Q23 2Q23 1Q23 4Q22 3Q22 (in thousands) Net income (loss) $ 83,266 $ 87,850 $ 61,915 $ 74,537 $ 109,548 $ (963,068) Excluding: Interest and other non-operating (income) expense, net (4,904) (5,430) (5,934) (5,689) (2,865) 230 Provision (b
Slide 43: Reconciliation of Quarterly Net Income to Adj. EBITDA
43 Reconciliation of Quarterly Net Income to Adj. EBITDA 4Q23 4Q22 4Q21 4Q20 4Q19 (in thousands) Net income $ 83,266 $ 109,548 $ 161,557 $ 148,538 $ 31,291 Excluding: Interest and other non-operating (income) expense, net (4,904) (2,865) 3,323 10,818 6,372 Provision (benefit) for income taxes 25,902
Slide 44: Reconciliation of Annual Net Income to Adj. EBITDA
44 Reconciliation of Annual Net Income to Adj. EBITDA Year ended December 31, 2023 (in thousands) Net income $ 307,568 Excluding: Interest and other non-operating income, net (21,957) Benefit for income taxes (14,748) Depreciation and amortization 91,323 Stock-based compensation expense 284,558 Forei
Slide 45: Reconciliation of Operating Cash Flow to Free Cash Flow
45 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 46: Reconciliation of Operating Cash Flow to Free Cash Flow
46 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