Slide 1: Q2 2022 Financial Results
Q2 2022 Financial Results July 27, 2022
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 2022 and key drivers thereof; our opportunity; the impact of our “Right
Slide 3: Etsy top and bottom line show strong performance despite meaningful growth headwinds
3 Etsy top and bottom line show strong performance despite Q2 22 Consolidated GMS Q2 22 Consolidated Revenue Q2 22 Consolidated Adj. EBITDA¹ meaningful growth $3.0B $585M $163M headwinds -0.4% Y/Y, +2.6% +10.6% Y/Y 28% Adj. EBITDA Margin currency neutral basis 3 Yr Etsy marketplace GMS growth² 1 Rec
Slide 4: Kruti Patel Goyal to Depop Chief Executive Officer; Nick Daniel to Etsy Chief Product Officer
4 Kruti Patel Goyal to Nick Daniel to Depop Chief Executive Officer Etsy Chief Product Officer
Slide 5: Our ambition is for Etsy to become a starting point for many of your ecommerce journeys
5 Our ambition is for Etsy to become a starting point for many of your ecommerce journeys To get there, Etsy has to be more inspirational, efficient and reliable to our buyers; and offer more agency and scalability to our sellers
Slide 6: With ~100M unique items, world class search is critical
6 With ~100M unique items, world class search is critical to ‘get you the good stuff’ and make Etsy feel made for you We intelligently blend results from multiple search engines that are good at solving different problems - including the ability to leverage in-session context plus personalization to
Slide 7: We've improved search so much that some people are ready to buy without needing the listing page
7 We’ve improved search so much that some people are ready to buy without needing to go to the seller’s listing page Images from U.S. search results
Slide 8: We're testing and iterating on visual experiences that make Etsy more inspirational
8 We’re testing and iterating on visual experiences that make Etsy more inspirational Live 2-day event tested Explore Video Reviews in June More opportunities to engage with sellers Gaining confidence & inspiration from buyers
Slide 9: Etsy Purchase Protection program launch: striving to make Etsy more reliable
9 Etsy Purchase Protection program launch: striving to make Etsy more reliable Landing Page Seller Educational Email
Slide 10: Doing more than ever to help our sellers grow
10 Doing more than ever to help our sellers grow Sell on Etsy Global Availability Star Seller Program Updates
Slide 11: Etsy Ads continues to scale rapidly, allowing sellers to invest in their own growth
11 Etsy Ads continues to scale rapidly, allowing sellers to invest in their own growth - a win-win-win for sellers, buyers and Etsy We’ve improved Ad relevance and added Ads to 5 Year Etsy Ads Revenue 5 Year Etsy Marketplace non-search real estate (i.e. home page) growth GMS growth +516% > +253% Sel
Slide 12: We're continuing to focus on buyer engagement & frequency
12 We’re continuing to focus on buyer engagement & frequency… Prompting signed-out buyers Saved items now on sale Home page iterations Prompting signed-out buyers on shop home led to large Sale related updates continue to work well prompting Showing more variety to buyers ‘above the fold’ has app do
Slide 13: Strategies targeted at engaging and expanding our buyer base outside the U.S.
13 …with specific strategies targeted at engaging and expanding our buyer base outside the U.S. X-Walk launched for non-US Search Progress in non-US Fulfillment Buy Now; Pay Later (Expected Delivery Date Coverage)* Now available in 13 countries 2Q 2021 2Q 2022 72% 91% Data for fulfillment progress refle
Slide 14: Our marketing strategies are nimble, disciplined and creative
14 Our marketing strategies are nimble, disciplined and creative to drive engagement and keep Etsy ‘top of mind’ Key focus areas: • “Extraordinary. Affordable.” • Today’s most relevant categories.
Slide 15: Focused on improving long-term growth and profitability for subsidiary brands - Depop
15 Focused on improving long-term growth and profitability for subsidiary brands - Depop 1. Increase product velocity and roll out experimentation platform 2. Improve customer experiences via product investments 3. Martech tooling and ROI-focused marketing strategies
Slide 16: Reverb and Elo7 responding to challenging macro environment
16 Reverb and Elo7 responding to challenging macro environment with strategies to drive long-term engagement My Collection Improve shipping interface Making it easier to inventory your gear collection To improve the seller and buyer experiences
Slide 17: Highly differentiated, two-sided peer to peer marketplaces are the best business models for uncertain times
17 We believe that our highly differentiated, two-sided peer to peer marketplaces are the best ecommerce business models for uncertain times Buyers Go-to shopping More More destinations for unique and Buyers GMS special goods Invest in More the Buyer Sellers Experience Sellers More Helping sellers s
Slide 18: Solid performance in a challenging macro climate
18 Solid performance in a challenging macro climate Consolidated Results Q2 22 GMS Q2 22 Revenue Q2 22 Adjusted EBITDA¹ $3.0B $585M $163M -0.4% Y/Y, +2.6% currency neutral basis +10.6% Y/Y 28% Adj. EBITDA Margin +177% Y/3Y ¹ Reconciliation of non-GAAP financial measures is contained in the Appendix.
Slide 19: Healthy revenue growth drives strong profit flow-through, despite subsidiary brand headwinds
19 Healthy revenue growth drives strong profit flow-through, despite subsidiary brand headwinds Consolidated Results Incremental Revenue Bridge Etsy Consolidated Adjusted Q2 21 vs Q2 22 EBITDA Margin (%) +11% >400 bps drag Q2 22 Consolidated Revenue from subsidiaries in Q2 22 $585M, up 10.6% Y/Y Conso
Slide 20: ROI focused product investments support future growth opportunities
20 ROI focused product investments support future growth opportunities Product Development Spend (Consolidated) • Consolidated product development spend was 17% of revenue in Q2 22, now including Depop and Elo7 in current period • 2022 consolidated product development spend as a % of revenues has ‘c
Slide 21: Improving efficiencies continued to drive disciplined and nimble marketing investments
21 Improving efficiencies continued to drive disciplined and nimble marketing investments Performance and Brand Marketing Spend (consolidated) Marketing Spend (consolidated) -18% Y/Y +4% Y/Y
Slide 22: The Etsy marketplace has retained the vast majority of gains achieved during the pandemic
22 The Etsy Etsy Marketplace GMS ($B) marketplace has retained the vast +141% Y/3Y1 majority of gains achieved during the pandemic surge Etsy.com marketplace GMS 1 Y/3Y reflects Q2 2022 vs. Q2 2019
Slide 23: Mobility and pandemic related factors largest year-over-year headwinds to Etsy marketplace growth
23 So far in 2022, Etsy GMS Y/3Y View mobility and Mid-Jan 2022 vs. June 2022 pandemic related factors have represented the +200% Y/3Y largest year-over- year headwinds to Etsy marketplace growth We estimate that since +134% Y/3Y January, there has been a very high inverse correlation between our GM
Slide 24: Pandemic related categories accounting for >40% of GMS face reopening headwinds
24 Despite breadth of merchandise, reopening headwinds pressure pandemic related categories accounting for >40% of GMS Q2 22 Etsy Marketplace top 6 categories approximate % GMS Y/Y down double Y/Y largely flat Y/Y up double Y/Y down double Y/Y up double Y/Y up single digits Y/3Y up >100% digits digit
Slide 25: Etsy Marketplace GMS per active buyer was down slightly sequentially
25 Etsy Marketplace Etsy Marketplace GMS per Active Buyer1 GMS per active buyer was down slightly on a sequential basis Historical Average2 1 TTM GMS per Active Buyer on the Etsy marketplace 2 Historical average represents periods Q1 19 to Q2 22
Slide 26: Pandemic buyers remain more valuable than pre-pandemic buyers on GMS retention
26 From a GMS retention perspective, our pandemic buyers remain more valuable than pre-pandemic buyers Etsy Marketplace GMS % Retention by Cohort Metrics presented are for the Etsy marketplace and do not include Reverb, Depop, or Elo7. Quarter 2 represents the first quarter after initial purchase. 20
Slide 27: Encouraging stability during uncertain times
27 Encouraging stability during uncertain times Active Buyers Habitual Buyers Repeat Buyers1 106% 248% 134% Y/3Y Y/3Y Y/3Y Metrics presented are for the Etsy marketplace and do not include Reverb, Depop, or Elo7. 1 Repeat Buyers exclude Habitual Buyers on this slide.
Slide 28: New buyer acquisition well above pre-pandemic averages; buyer reactivation remains healthy
28 New buyer acquisition is well …and buyer reactivation remains above pre-pandemic averages… very healthy New Buyers Reactivated Buyers A buyer is considered new if they use a unique e-mail address that has never The Etsy marketplace supports a community of approximately 90 million buyers. In 2021,
Slide 29: Capital light business model delivers strong operating cash flow
29 Capital light business model delivers strong operating cash flow Cash Balance 6/30/221 Q2 22 Quarterly Operating Cash Flow $1.1B $125.8M 1 Cash and Cash Equivalents, Short-term and Long-term Investments Consolidated results
Slide 30: Q3 22 Guidance for Consolidated GMS, Revenue and Adj. EBITDA
30 Q3 22 Guidance for Consolidated GMS, Q3’22 Guidance July 27, 2022 Revenue and Adj. EBITDA GMS Margin $2.8B to $3.0B Revenue $540M to $575M Adj. EBITDA Approximately 26% Margin Reconciliation of non-GAAP financial measures is contained in the Appendix. We are not able at this time to provide GAAP t
Slide 31: Etsy Marketplace GMS Y/3Y deceleration has slowed in recent months
31 Etsy Marketplace Etsy Marketplace GMS Y/3Y Growth* Deceleration slowed beginning in June GMS Y/3Y deceleration has slowed in recent months Q3 22 Guidance Range July results are close to final estimates. Dotted lines for August and September represent implied monthly performance contemplated by our
Slide 32: Q&A
32 Q&A
Slide 33: Appendix
33 Appendix
Slide 34: Key factors impacting our Q3 Guidance
34 Key factors impacting our Q3 22 Guidance We anticipate that the key factors impacting Q3 GMS and revenue will be: ● Headwinds and tailwinds, including but not limited to the following macro factors: the shift between offline and online, continued uncertainty from the COVID-19 pandemic, economic fac
Slide 35: Condensed Consolidated Balance Sheets
Q2 2022 Financial Results 35 As of June 30, As of December 31, 2022 2021 Condensed (in thousands) Cash and cash equivalents $758,874 $780,196 Consolidated Short-term investments 247,816 204,416 Balance Sheets Accounts receivable, net Funds receivable and seller accounts 20,133 180,544 27,266 220,206
Slide 36: Condensed Consolidated Statement of Operations
Q2 2022 Financial Results 36 Three months Three months Condensed ended 6/30/22 ended 6/30/21 (in thousands) Consolidated Revenue $585,135 $528,900 Statement of Cost of revenue 171,421 148,969 Operations Gross profit 431,714 379,931 Marketing 164,068 167,474 Product development 102,095 61,753 General
Slide 37: Condensed Consolidated Statement of Cash Flows
Q2 2022 Financial Results 37 Condensed Six months ended 6/30/22 Six months ended 6/30/21 Consolidated (in thousands) Statement of Net Income $159,232 $242,020 Cash Flows Net cash provided by operating activities 185,298 270,162 Net cash used in investing activities (26,472) (80,203) Net cash (used i
Slide 38: Reconciliation of Quarterly Net Income to Adj. EBITDA
Q2 2022 Financial Results 38 Reconciliation of Quarterly Net Income to Adj. EBITDA 2Q21 3Q21 4Q21 1Q22 2Q22 Net income $98,254 $89,930 $161,557 $86,109 $73,123 Excluding: Interest and other non-operating expense, net 1,079 2,640 3,323 3,290 2,557 (Benefit) provision for income taxes (12,500) (6,131)
Slide 39: Reconciliation of Annual Net Income to Adj. EBITDA
2021 Financial Results 39 Reconciliation of Annual Net Income to Adj. EBITDA 2021 2020 2019 2018 (in thousands, except percentages) Net income $493,507 $349,246 $95,894 $77,491 Excluding: Interest and other non-operating expense, net 7,748 34,923 11,121 13,221 (Benefit) provision for income taxes for
Slide 40: Buyer GMS Retention Data
40 Buyer GMS Retention Data* *Data represents a correction to an immaterial error in New Buyer Year 1 GMS data on page 13 of Etsy’s 2021 Annual Report on Form 10-K filed February 25, 2022.