Slide 1: Q3 2022 Financial Results
Q3 2022 Financial Results November 2, 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, key drivers thereof and underlying assumptions; the global macroeconomic uncertainty and volatil
Slide 3: Strong performance during an uncertain time
3 Strong performance during an uncertain time Q3 22 Consolidated GMS Q3 22 Consolidated Revenue Q3 22 Consolidated Adj. EBITDA¹ $3.0B $594M $168M -3.3% Y/Y, +11.7% Y/Y 28% Adj. EBITDA Margin +0.7% currency neutral basis Etsy marketplace GMS was $2.6 billion in Q3 22 compared with $1.1 billion in Q3
Slide 4: Investments have really paid off
4 Investments have really paid off: tremendous gains since 2019 Buyers are shopping Etsy We have more buyers: more frequently: 88.3M 49% Active Buyers*, +100% Repeat Buyers*, +800 bps Buyers are spending more with Etsy: We’ve become ‘more of a habit’: $135 7.6M TTM GMS per Active Buyer, +33% Habitua
Slide 5: We offer something different
5 87% of buyers surveyed say ‘Etsy has items I can’t find anywhere else’* We offer something different *2021 Etsy buyer survey.
Slide 6: We are advancing our Right to Win
6 We are just getting started advancing our ‘Right to Win’ Best-in-Class Search Human Connections A Trusted Brand and Discovery ● Continued improvement of ● Launched Purchase Protection ● Enhanced personalization utilizing messaging between buyers ● Improved delivery transparency multiple search eng
Slide 7: A journey to make Etsy Made for You
7 On a journey to make Etsy ‘Made for You’… a few examples of our progress Pricing and Quality Signals Listing videos in Search results More personalized recommendations
Slide 8: Search by image
8 Just launched! A new way to ‘search by image’ to find items you may not have the words to describe
Slide 9: Personalization of marketing efforts
9 Personalization of Marketing efforts also contributing to buyer retention and reactivation …personalizes …resulting in a fully 1: 1 content… personalized message! 1. Shop your favorited listing now on sale Personalization Buyer Engine Buyer has specific Determines the next behaviors and best action
Slide 10: Investing more than ever to help sellers grow
10 Investing more than ever to help sellers grow Continuing to support and lift our community ● Over 150% Y/Y growth in Star Sellers ● Etsy Seller App fully launched globally ● Supporting sellers impacted by Hurricane Ian
Slide 11: On a multi-year journey to build buyer loyalty
11 On a multi-year journey to build buyer loyalty and trust Cost of Shipping Delivery Transparency Listing Level (Non- U.S.) Return Policies 2021 2022 2019 2022 2022 Onward! Delivery Transparency Etsy Purchase (U.S.) Protection
Slide 12: Etsy for Holiday 2022
12 12 Etsy for Holiday 2022: Extraordinary, Handmade and Affordable
Slide 13: Focus on the vital few
13 will focus on the ‘vital few,’ utilizing the Etsy playbook to drive improved performance 1. Focus on scaling conversion and influence user engagement 2. Deliver a trusted product experience 3. Increase product experimentation velocity and hit rate
Slide 14: Building some momentum in 2022
14 Building some momentum in 2022 1. Rebuilding top of mind awareness 2. Improving search algorithms 3. Optimizing performance marketing 4. Better shipping arrangements
Slide 15: Responding to challenging economic times
15 Responding to challenging economic times by helping music makers find great deals
Slide 16: Strong top and bottom line performance continues
16 Strong top and bottom line performance continues Consolidated Results Q3 22 GMS Q3 22 Revenue Q3 22 Adjusted EBITDA¹ $3.0B $594M $168M -3.3% Y/Y, +0.7% currency neutral basis +11.7% Y/Y 28% Adj. EBITDA Margin +150% Y/3Y ¹ Reconciliation of non-GAAP financial measures is contained in the Appendix.
Slide 17: Strong revenue and expense management
17 Strong revenue and expense management yields solid profit flow-through Consolidated Results Incremental Revenue Bridge Etsy Consolidated Adjusted Q3 21 vs Q3 22 EBITDA Margin (%)* +12% Incremental Revenue Q3 22 Consolidated Revenue $594M, up 11.7% Y/Y Consolidated take rate 19.8% *Reconciliation of
Slide 18: Investments in product and engineering
18 Intentional, disciplined investments in product & engineering to support future growth Annual Product Development Spend (Consolidated) Quarterly Product Development Spend (Consolidated)
Slide 19: ROI focused marketing investments
19 Disciplined ROI focused marketing investments remain a priority Performance and Brand Marketing Spend (Consolidated) Marketing Spend (Consolidated) +8% Y/Y +25% Y/Y
Slide 20: We are investing to benefit the Etsy marketplace
20 We are investing to Annualized Reinvestment benefit the Etsy of Incremental Revenue by Type (estimated) marketplace Trusted Marketplace community Initiatives* Marketing Spend Engineering Etsy Purchase Headcount Protection *Trusted Marketplace denotes investments in Customer Support and Trust & Saf
Slide 21: Over 2X bigger than 2019
21 We’re over 2X Etsy Marketplace GMS ($B) bigger than we were in 2019; and Q3 22 +134% Y/3Y1 GMS grew slightly Y/Y on a currency neutral basis 3 Yr Etsy marketplace GMS growth1 134% 1 Y/3Y reflects Q3 2022 vs. Q3 2019
Slide 22: GMS per active buyer remains high
22 Etsy Marketplace Etsy Marketplace GMS per Active Buyer1 GMS per active buyer remains +33% above year ago Y/3Y3 levels and meaningfully higher than pre-pandemic Historical Average2 1 TTM GMS per Active Buyer on the Etsy marketplace 2 Historical average represents periods Q1 19 to Q3 22 3 Y/3Y refle
Slide 23: Overall stability in buyer trends
23 Overall stability in buyers trends Active Buyers Habitual Buyers Repeat Buyers1 100% 223% 125% Y/3Y Y/3Y Y/3Y Metrics presented are for the Etsy marketplace on a Trailing-Twelve Month basis and do not include Reverb, Depop, or Elo7. 1 Repeat Buyers exclude Habitual Buyers on this slide.
Slide 24: New buyer acquisition and reactivation
24 New buyer acquisition is staying …and buyer reactivation well above pre-pandemic improved sequentially averages… Reactivated Buyers New 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.
Slide 25: Capital light business model
25 Our capital light business model delivers strong operating cash flow Cash Balance 9/30/221 Q3 22 Quarterly Operating Cash Flow $1.1B $206.6M 1 Cash and Cash Equivalents, Short-term and Long-term Investments Consolidated results
Slide 26: Q4 2022 Guidance for Consolidated GMS, Revenue
26 Q4 22 Guidance for Consolidated GMS, Q4 22 Guidance November 2, 2022 Revenue and Adj. EBITDA GMS Margin $3.6B to $4.0B Revenue $700M to $780M Adj. EBITDA Approximately 27% Margin Reconciliation of non-GAAP financial measures is contained in the Appendix. We are not able at this time to provide GAA
Slide 27: Q&A
27 Q&A
Slide 28: Appendix
28 Appendix
Slide 29: Key factors impacting Q4 22 Guidance
29 Key factors impacting our Q4 22 Guidance We anticipate that the key factors impacting Q4 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 and stabiliza
Slide 30: Condensed Consolidated Balance Sheets
As of September As of December 31, Q3 2022 Financial Results 30, 2022 2021 30 (in thousands) Condensed Cash and cash equivalents $789,990 $780,196 Short-term investments Consolidated 251,165 204,416 Accounts receivable, net 21,765 27,266 Balance Sheets Funds receivable and seller accounts 195,493 22
Slide 31: Condensed Consolidated Statement of Operations
Q3 2022 Financial Results 31 Three months Three months ended 9/30/22 ended 9/30/21 Condensed (in thousands) Consolidated Revenue $594,469 $532,429 Statement of Cost of revenue 174,401 153,660 Gross profit 420,068 378,769 Operations Marketing 147,242 131,928 Product development 108,040 73,521 General
Slide 32: Condensed Consolidated Statement of Cash Flows
Q3 2022 Financial Results 32 Condensed Nine months ended 9/30/22 Nine months ended 9/30/21 Consolidated (in thousands) Statement of Net (Loss) Income $(803,836) $331,950 Cash Flows Net cash provided by operating activities 391,862 361,092 Net cash used in investing activities (29,936) (1,534,861) Ne
Slide 33: Reconciliation of Quarterly Net Income to Adj. EBITDA
Historical Quarterly Financial Results 33 Reconciliation of Quarterly Net Income to Adj. EBITDA 3Q22 2Q22 1Q22 4Q21 3Q21 Net (loss) income $(963,068) $73,123 $86,109 $161,557 $89,930 Excluding: Interest and other non-operating expense, net 230 2,557 3,290 3,323 2,640 Provision (benefit) for income ta
Slide 34: Reconciliation of Annual Net Income to Adj. EBITDA
Historical Annual Financial Results 34 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 inc
Slide 35: Buyer GMS Retention Data
35 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.