BROOKLYN, N.Y., Oct. 28,
2020 /PRNewswire/ -- Etsy, Inc. (NASDAQ: ETSY), which operates
two-sided online marketplaces that connect millions of passionate
and creative buyers and sellers around the world, today announced
financial results for its third quarter ended September 30,
2020.
"We delivered very strong results during the third quarter, with
consolidated GMS and revenue growth up 119% and 128% respectively,
evidence of our focused execution, engagement with our buyers and
sellers, and our strong brand, underpinned by the unique inventory
in our marketplace," said Josh
Silverman, Etsy, Inc. Chief Executive Officer. "Consumer
shopping habits have been greatly influenced by the events of 2020,
and Etsy truly stands for something different. We've been able to
sustain growth by driving retention and frequency of our existing
buyers as well as becoming an important shopping destination for
new buyers. While early, our incremental investments in product and
marketing - specifically focused on search and frequency - are
driving improvements in the customer experience. We are proud of
our momentum, built on the strength of our business model and with
the support of our engaged and focused team."
Third Quarter 2020
Financial Summary (in thousands, except percentages;
unaudited)
|
|
The unaudited GAAP
and non-GAAP financial measures and key operating and financial
metrics we use are:
|
|
|
Three Months
Ended
September
30,
|
|
%
Growth
(Decline)
Y/Y
|
|
Nine Months
Ended
September
30,
|
|
%
Growth
(Decline)
Y/Y
|
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
GMS (1)
|
$
|
2,633,927
|
|
|
$
|
1,200,371
|
|
|
119.4
|
%
|
|
$
|
6,676,001
|
|
|
$
|
3,319,228
|
|
|
101.1
|
%
|
Revenue
|
$
|
451,478
|
|
|
$
|
197,947
|
|
|
128.1
|
%
|
|
$
|
1,108,270
|
|
|
$
|
548,381
|
|
|
102.1
|
%
|
Marketplace
revenue
|
$
|
341,623
|
|
|
$
|
141,628
|
|
|
141.2
|
%
|
|
$
|
829,575
|
|
|
$
|
403,995
|
|
|
105.3
|
%
|
Services
revenue
|
$
|
109,855
|
|
|
$
|
56,319
|
|
|
95.1
|
%
|
|
$
|
278,695
|
|
|
$
|
144,386
|
|
|
93.0
|
%
|
Net income
|
$
|
91,761
|
|
|
$
|
14,801
|
|
|
520.0
|
%
|
|
$
|
200,708
|
|
|
$
|
64,603
|
|
|
210.7
|
%
|
Adjusted EBITDA
(Non-GAAP)
|
$
|
151,443
|
|
|
$
|
42,076
|
|
|
259.9
|
%
|
|
$
|
357,127
|
|
|
$
|
131,644
|
|
|
171.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
sellers
|
3,681
|
|
|
2,592
|
|
|
42.0
|
%
|
|
3,681
|
|
|
2,592
|
|
|
42.0
|
%
|
Active
buyers
|
69,649
|
|
|
44,807
|
|
|
55.4
|
%
|
|
69,649
|
|
|
44,807
|
|
|
55.4
|
%
|
Percent mobile
GMS
|
62
|
%
|
|
59
|
%
|
|
300
|
bps
|
|
61
|
%
|
|
59
|
%
|
|
200
|
bps
|
Percent international
GMS
|
35
|
%
|
|
36
|
%
|
|
(100
|
) bps
|
|
34
|
%
|
|
38
|
%
|
|
(400
|
) bps
|
(1)
|
GMS for the three
months ended September 30, 2020 and 2019 includes Reverb's GMS
of $205.1 million and $76.9 million,
respectively. Etsy.com GMS for the three months ended
September 30, 2020 and 2019 was $2.4 billion and $1.1
billion,
respectively. GMS for the nine months ended September 30, 2020
and 2019 includes Reverb's GMS of $600.4 million and
$76.9 million, respectively. Etsy.com GMS for the nine months ended
September 30, 2020 and 2019 was $6.1 billion and
$3.2 billion, respectively.
|
For information about how we define our metrics, see our
Quarterly Report on Form 10-Q for the quarter ended June 30,
2020.
"2020 demonstrates the scalability and value of our marketplace
business model," said Rachel Glaser,
Etsy, Inc. Chief Financial Officer. "We have a very disciplined
approach to our investments with a goal to deliver profitable
long-term growth. Our investments in marketing have contributed to
encouraging progress in buyer retention and frequency which will
serve as a foundation for the future. Etsy is uniquely positioned
to leverage our strong balance sheet, dynamic business model, and
solid fundamentals to capitalize on our large addressable
market."
Third Quarter 2020 Highlights
Select highlights of our third quarter operating performance and
business initiatives are outlined below:
- Of the 138 million all time buyers on the Etsy marketplace,
approximately 50% have now purchased at least once in the last
year, with approximately 69 million active buyers in the third
quarter. In addition, the Etsy marketplace saw an influx of 14.8
million new buyers and reactivated buyers during the third quarter
- the latter being those who haven't purchased in a year or more.
We have implemented various strategies to engage and target new and
existing buyers on and off-site, with personalized and consistent
messaging across many channels, driving repeat visitation.
- The majority of Etsy's GMS is driven by existing buyers, and we
have experienced a significant change in buyer cohorts in terms of
the frequency with which they shop and the amount they are spending
on Etsy. In terms of third quarter 2020 GMS per buyer, when using
data for our 2018 buyer cohort as a proxy for how our historical
cohorts have performed, existing buyers have increased their GMS
per buyer by more than 50% in the third quarter of 2020 when
compared to the third quarter of 2019, even when excluding face
mask purchases.
- We have also seen an increase in the value of our recent new
buyer cohorts when measured by GMS per buyer. For example, a buyer
in the second quarter of 2020, whose first purchase was not
a face mask, spent 50% more in their subsequent purchases in the
first 90 days on Etsy than a new buyer in the second quarter of
2019. New buyers in the second quarter of 2020 whose first purchase
on Etsy was a face mask are similarly valuable in GMS per
buyer in terms of subsequent 90-day purchases, although they are
primarily returning to Etsy to buy more face masks.
- We made additional progress in search and discovery by
relieving friction in the search journey to make the site more
browseable, increasing site performance, and improving the
relevance and engagement of recommendations. We removed guided
search icons, which had a neutral impact as we've made improvements
to organic search, and launched Single Page App pagination to
create faster, more responsive search pages. In addition, we began
to incorporate buyer characteristics into our ranking algorithm for
in-cart recommendations, which drove incremental GMS in the third
quarter.
- We leveraged reviews to help buyers make more informed purchase
decisions on items they are searching for. By incorporating machine
learning we are now able to prioritize the most helpful reviews
which are those that have substantial text, images, and are similar
to the target listing.
- We deepened the human connections in our marketplace by
launching listing videos, which help sellers showcase their
products to buyers in ways they previously could not with photos,
showing their expertise in making and bringing their products to
life. As of September 30, 2020,
approximately 1.5 million sellers videos were uploaded.
- Through our product development efforts we built trust in our
marketplace by focusing on the core buying experience, improving
shipping transparency and post-purchase experiences. We are helping
buyers better understand when they should expect an item to arrive
by expanding listing coverage of expected delivery dates. We
launched a tool to help sellers adjust their processing times, a
key input for expected delivery dates, based on their historical
performance for time to ship.
- We added enhancements to our Etsy Ads (formerly Promoted
Listings) service, improving the relevance of ads in search and the
speed of incorporating changes in a seller's budget. We also made
our Etsy Ads infrastructure more efficient, providing better search
results while simultaneously using fewer cloud resources. To add to
the seller experience, we launched performance graphs in the ads
dashboard, helping to make advertising on Etsy as easy as possible
for our sellers. These efforts contributed to the 91.4%
year-over-year growth of on-site advertising revenue in the third
quarter.
- We significantly increased our investments in marketing, and
our optimization of spend across our marketing channels, with a
particular focus on increasing the percentage of spend to mid and
upper funnel channels. Upper funnel marketing spend, including
television and digital video, was 18.1% of our overall marketing
spend, or approximately $23 million,
in the third quarter. During the quarter, the teams also worked to
finalize our holiday plans, which include a sales hub, earlier
visibility of holiday onsite, and gift guides.
- We're also investing to drive frequency and buyer engagement.
During the quarter, we launched a new buyer offer to target buyers
through a series of emails after their initial purchase. We
leveraged our CRM capabilities and machine learning to incentivize
buyers to return to the site for a subsequent purchase.
- Our team remains highly productive while working remotely.
During this time we allocated resources to critical infrastructure
improvements to more accurately categorize our inventory and are
investing in longer-term initiatives such as search and frequency
and are seeing encouraging data from our recent product
launches.
- Reverb launched a new feature that enables sellers to offer
more competitive shipping rates to buyers that purchase multiple
qualifying items. Reverb also made investments in customer support
that are shortening response times for buyers and sellers.
Additional GMS highlights for the third quarter of 2020
include:
- GMS excluding mask sales for the Etsy marketplace was
$2.2 billion, up 93% year-over-year,
and 11% of the Etsy marketplace's overall GMS was from mask
sales.
- Etsy marketplace's GMS per active buyer on a trailing 12-month
basis grew 8% year-over-year and 4% excluding masks.
- In the third quarter, the Etsy marketplace delivered 9.6
million new buyers and 5.2 million reactivated buyers who have not
purchased in a year or more. Habitual buyers, buyers with 6 or more
purchase days and over $200 in spend
in the trailing 12-months, grew 104%, outpacing overall active
buyer growth, and repeat buyers, buyers with 2 or more purchase
days in the trailing 12-months, grew 70% in the third quarter.
- GMS from paid channels was 19% of overall GMS in the third
quarter of 2020, expanding 500 basis points compared to the third
quarter of 2019.
- Consolidated active buyers grew 55.4% year-over-year in the
third quarter, and active sellers grew 42.0% year-over-year.
Third Quarter 2020 Consolidated Financial Results
- Total revenue was $451.5 million
for the third quarter of 2020, up 128.1% year-over-year, driven by
strong growth in both Marketplace and Services revenue.
- Consolidated take rate was 17.1% for the third quarter of 2020,
up 60 basis points year-over-year, driven by Etsy Ads,
Offsite Ads, and the expansion of our Etsy Payments Platform.
- Gross profit for the third quarter of 2020 was $331.3 million, up 156.8% year-over-year, and
gross margin was 73.4%, up 820 basis points compared with 65.2% in
the third quarter of 2019. The expansion in gross margin was
primarily driven by our shift to Offsite Ads, which drives revenue
growth without an equal offset in cost of revenue, and to a lesser
extent revenue growth from Etsy Ads.
- Income from operations was $118.2
million in the third quarter of 2020, up 730%
year-over-year, compared to a decline of 24% in the third quarter
of 2019. The increase in income from operations was driven by an
increase in gross profit coupled with leverage in operating
expenses. Operating expenses were up 85.7% year-over-year driven
primarily by our investments in marketing initiatives, including
our shift to Offsite Ads where Etsy leverages its expertise and
marketing budget to drive growth for sellers.
- Net income for the third quarter of 2020 was $91.8 million, with diluted earnings per share of
$0.70.
- Non-GAAP Adjusted EBITDA for the third quarter of 2020 was
$151.4 million and grew 259.9%
year-over-year. Non-GAAP Adjusted EBITDA margin (i.e., non-GAAP
Adjusted EBITDA divided by revenue) was 33.5% in the third quarter
of 2020, up 1,220 basis points year-over-year. Adjusted EBITDA
performance was driven primarily by year-over-year revenue
growth.
- Cash, cash equivalents, short- and long-term investments were
$1.6 billion as of September 30,
2020 in addition to a $200 million
revolving credit facility that is currently undrawn. During the
quarter, we issued $650.0 million of
7-year convertible senior notes. A portion of the proceeds were
used to repurchase $301.1 million of
our 0% Convertible Senior Notes due 2023 ("2018 Notes") and to
enter into $74.7 million of capped
call instruments.
Financial Guidance
and Outlook
|
|
Below is Etsy's
guidance for the fourth quarter of 2020.
|
|
|
|
Q4 2020
Guidance
|
|
|
October 28,
2020
|
GMS Year-Over-Year
Growth
|
|
65% - 85%
|
|
|
~$2.7B -
$3.1B
|
Revenue
Year-Over-Year Growth
|
|
70% - 90%
|
|
|
~$459M -
$513M
|
Adjusted EBITDA
Margin*
|
|
24% - 27%
|
|
|
~$117M -
$131M
|
|
*Assumes the midpoint
of our revenue guidance.
|
"We are making significant investments today that reflect our
strong conviction that Etsy has considerable opportunities for
further growth - and that investments in technology, marketing,
product, and people will yield both near and long-term benefits,"
continued Mr. Silverman. "We're focused on driving seller growth
and bringing joy to buyers this holiday season. So far, October GMS
growth trends for both Etsy and Reverb have been similar to what we
experienced in September. Looking further out, 2021 is extremely
hard to predict and we will be lapping enormous 2020 growth. We are
confident that investing in Etsy's 'Right to Win' strategy will
enable us to capitalize on our large market opportunity and unique
position in e-commerce."
Webcast and Conference Call Information
Etsy will host a video webcast conference call to discuss these
results at 5:00 p.m. Eastern Time
today, which will be live-streamed via the Company's Investor
Relations website (investors.etsy.com) under the events section.
Those interested in submitting questions during the earnings call
can do so by using the Q&A chat window, which will be available
during the webcast. A copy of the earnings call presentation will
also be posted to our website.
A replay of the video webcast will be available through the same
link following the conference call starting at 8:00 p.m. Eastern Time this evening, for at least
three months thereafter.
About Etsy
Etsy, Inc. operates two-sided online marketplaces that connect
millions of passionate and creative buyers and sellers around the
world. Our primary marketplace, Etsy.com, is the global
destination for unique and creative goods. Buyers come to Etsy to
be inspired and delighted by items that are crafted and curated by
creative entrepreneurs. For sellers, we offer a range of tools and
services that address key business needs. In addition, Etsy, Inc.
owns Reverb, a leading global online marketplace dedicated to
buying and selling new, used, and vintage musical instruments.
Etsy's mission is to "Keep Commerce Human," and we're committed
to using the power of business to strengthen communities and
empower people. Our company was founded in 2005 and is
headquartered in Brooklyn, New
York.
Etsy has used, and intends to continue using, its Investor
Relations website and the Etsy News Blog (blog.etsy.com/news) to
disclose material non-public information and to comply with its
disclosure obligations under Regulation FD. Accordingly, you should
monitor our investor relations website and the Etsy News Blog in
addition to following our press releases, SEC filings, and public
conference calls and webcasts.
Investor Relations Contact:
Deb Wasser, Vice President,
Investor Relations
ir@etsy.com
Gabriel Ratcliff, Director,
Investor Relations
ir@etsy.com
Media Relations Contact:
Sarah Marx, Senior Manager,
Corporate Communications
press@etsy.com
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains or references forward-looking
statements within the meaning of the federal securities laws.
Forward-looking statements include statements relating to our
financial guidance for the fourth quarter of 2020 and key drivers
thereof; the impact of our investments on topline and profitable
growth; our ability to capitalize on our large market opportunity;
and the uncertain impacts that the COVID-19 pandemic may have on
our business, strategy, operating results, key metrics, financial
condition, profitability, and cash flows and changes in overall
level of consumer spending and volatility in the global economy.
Forward-looking statements include all statements that are not
historical facts. In some cases, forward-looking statements can be
identified by terms such as "anticipates," "believes," "could,"
"estimates," "expects," "intends," "may," "plans," "will," or
similar expressions and the negatives of those words.
Forward-looking statements involve substantial risks and
uncertainties that may cause actual results to differ materially
from those that we expect. These risks and uncertainties include:
(1) risks related to the ongoing COVID-19 pandemic, which
continues to impact our GMS, other key metrics and results of
operations in numerous ways that remain volatile and unpredictable;
(2) the fluctuation of our quarterly operating results; (3) our
failure to meet our publicly announced guidance or other
expectations; (4) our ability to successfully execute on our
business strategy or if our strategy proves to be ineffective; (5)
our ability to attract and retain an active and engaged community
of sellers and buyers; (6) our ability to continue our rapid
growth; (7) macroeconomic events that are outside of our control;
(8) our ability to recruit and retain employees; (9) the importance
to our success of the trustworthiness of our marketplaces and the
connections within our community; (10) our ability to enhance our
current offerings and develop new offerings to respond to the
changing needs of sellers and buyers; (11) the effectiveness of our
marketing efforts; (12) the effectiveness of our mobile solutions
for sellers and buyers; (13) our ability to expand our business in
our core geographic markets; (14) regulation in the area of privacy
and protection of user data; (15) our dependence on third-party
payment providers; (16) acquisitions that may prove unsuccessful or
divert management attention, including our acquisition of Reverb;
and (17) the potential misuse or disclosure of sensitive
information about members of our community and the potential for
cyber-attacks. These risks and uncertainties are more fully
described in our filings with the Securities and Exchange
Commission, including in the section entitled "Risk
Factors" in our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2020, and subsequent reports that we file with
the Securities and Exchange Commission, including our Quarterly
Report on Form 10-Q for the quarter ended September 30, 2020.
Moreover, we operate in a very competitive and rapidly changing
environment. New risks emerge from time to time. It is not possible
for our management to predict all risks, nor can we assess the
impact of all factors on our business or the extent to which any
factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements we may make. In light of these risks, uncertainties and
assumptions, we cannot guarantee future results, levels of
activity, performance, achievements, or events and circumstances
reflected in the forward-looking statements will occur.
Forward-looking statements represent our beliefs and assumptions
only as of the date of this press release. We disclaim
any obligation to update forward-looking statements.
Etsy,
Inc. Condensed Consolidated Balance Sheets (in
thousands; unaudited)
|
|
|
As
of
September 30,
2020
|
|
As
of
December 31,
2019
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,144,974
|
|
|
$
|
443,293
|
|
Short-term
investments
|
379,586
|
|
|
373,959
|
|
Accounts receivable,
net
|
16,311
|
|
|
15,386
|
|
Prepaid and other
current assets
|
43,590
|
|
|
38,614
|
|
Funds receivable and
seller accounts
|
113,370
|
|
|
49,786
|
|
Total current
assets
|
1,697,831
|
|
|
921,038
|
|
Restricted
cash
|
5,341
|
|
|
5,341
|
|
Property and
equipment, net
|
118,141
|
|
|
144,864
|
|
Goodwill
|
139,740
|
|
|
138,731
|
|
Intangible assets,
net
|
189,120
|
|
|
199,236
|
|
Deferred tax
assets
|
1,819
|
|
|
14,257
|
|
Long-term
investments
|
36,679
|
|
|
89,343
|
|
Other
assets
|
25,834
|
|
|
29,542
|
|
Total
assets
|
$
|
2,214,505
|
|
|
$
|
1,542,352
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
22,130
|
|
|
$
|
26,324
|
|
Accrued
expenses
|
174,206
|
|
|
88,345
|
|
Finance lease
obligations—current
|
8,345
|
|
|
8,275
|
|
Funds payable and
amounts due to sellers
|
113,370
|
|
|
49,786
|
|
Deferred
revenue
|
10,508
|
|
|
7,617
|
|
Other current
liabilities
|
12,383
|
|
|
8,181
|
|
Total current
liabilities
|
340,942
|
|
|
188,528
|
|
Finance lease
obligations—net of current portion
|
47,147
|
|
|
53,611
|
|
Deferred tax
liabilities
|
63,448
|
|
|
64,497
|
|
Long-term debt,
net
|
1,054,604
|
|
|
785,126
|
|
Other
liabilities
|
41,697
|
|
|
43,956
|
|
Total
liabilities
|
1,547,838
|
|
|
1,135,718
|
|
Total stockholders'
equity
|
666,667
|
|
|
406,634
|
|
Total liabilities and
stockholders' equity
|
$
|
2,214,505
|
|
|
$
|
1,542,352
|
|
Etsy,
Inc. Condensed Consolidated Statements of
Operations (in thousands, except share and per share
amounts; unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue
|
$
|
451,478
|
|
|
$
|
197,947
|
|
|
$
|
1,108,270
|
|
|
$
|
548,381
|
|
Cost of
revenue
|
120,168
|
|
|
68,949
|
|
|
313,965
|
|
|
180,212
|
|
Gross
profit
|
331,310
|
|
|
128,998
|
|
|
794,305
|
|
|
368,169
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Marketing
|
126,779
|
|
|
50,098
|
|
|
289,991
|
|
|
131,536
|
|
Product
development
|
45,908
|
|
|
32,465
|
|
|
128,923
|
|
|
86,177
|
|
General and
administrative
|
40,454
|
|
|
32,203
|
|
|
112,717
|
|
|
86,733
|
|
Total operating
expenses
|
213,141
|
|
|
114,766
|
|
|
531,631
|
|
|
304,446
|
|
Income from
operations
|
118,169
|
|
|
14,232
|
|
|
262,674
|
|
|
63,723
|
|
Other expense,
net
|
(27,776)
|
|
|
(4,143)
|
|
|
(50,272)
|
|
|
(5,828)
|
|
Income before income
taxes
|
90,393
|
|
|
10,089
|
|
|
212,402
|
|
|
57,895
|
|
Benefit (provision)
for income taxes
|
1,368
|
|
|
4,712
|
|
|
(11,694)
|
|
|
6,708
|
|
Net income
|
$
|
91,761
|
|
|
$
|
14,801
|
|
|
$
|
200,708
|
|
|
$
|
64,603
|
|
Net income per share
attributable to common stockholders:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.75
|
|
|
$
|
0.12
|
|
|
$
|
1.68
|
|
|
$
|
0.54
|
|
Diluted
|
$
|
0.70
|
|
|
$
|
0.12
|
|
|
$
|
1.59
|
|
|
$
|
0.51
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
121,978,272
|
|
|
120,351,095
|
|
|
119,666,841
|
|
|
120,090,291
|
|
Diluted
|
137,560,385
|
|
|
126,243,168
|
|
|
134,376,695
|
|
|
126,471,364
|
|
Etsy,
Inc. Condensed Consolidated Statements of Cash
Flows (in thousands; unaudited)
|
|
|
Nine Months
Ended
September
30,
|
|
2020
|
|
2019
|
Cash flows from
operating activities
|
|
|
|
Net income
|
$
|
200,708
|
|
|
$
|
64,603
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Stock-based
compensation expense
|
47,664
|
|
|
31,056
|
|
Depreciation and
amortization expense
|
45,088
|
|
|
32,760
|
|
Provision for
expected credit losses
|
9,572
|
|
|
7,464
|
|
Foreign exchange
loss
|
8,559
|
|
|
25
|
|
Non-cash interest
expense
|
26,326
|
|
|
10,500
|
|
Deferred income
taxes
|
5,755
|
|
|
(6,708)
|
|
Loss on
extinguishment of debt
|
16,855
|
|
|
—
|
|
Other non-cash
expense (income), net
|
3,231
|
|
|
(664)
|
|
Changes in operating
assets and liabilities
|
71,531
|
|
|
(10,697)
|
|
Net cash provided by
operating activities
|
435,289
|
|
|
128,339
|
|
Cash flows from
investing activities
|
|
|
|
Acquisition of
businesses, net of cash acquired
|
—
|
|
|
(271,353)
|
|
Cash paid for asset
acquisition and intangible assets
|
—
|
|
|
(1,898)
|
|
Purchases of property
and equipment
|
(388)
|
|
|
(5,889)
|
|
Development of
internal-use software
|
(3,685)
|
|
|
(6,242)
|
|
Purchases of
marketable securities
|
(300,880)
|
|
|
(318,221)
|
|
Sales of marketable
securities
|
346,596
|
|
|
395,348
|
|
Net cash provided by
(used in) investing activities
|
41,643
|
|
|
(208,255)
|
|
Cash flows from
financing activities
|
|
|
|
Payment of tax
obligations on vested equity awards
|
(19,811)
|
|
|
(23,605)
|
|
Repurchase of
stock
|
(191,162)
|
|
|
(154,790)
|
|
Proceeds from
exercise of stock options
|
18,486
|
|
|
8,934
|
|
Proceeds from
issuance of convertible senior notes
|
650,000
|
|
|
650,000
|
|
Payment of debt
issuance costs
|
(9,764)
|
|
|
(11,142)
|
|
Purchase of capped
calls
|
(74,685)
|
|
|
(76,180)
|
|
Settlement of
convertible senior notes
|
(137,166)
|
|
|
—
|
|
Payments on finance
lease obligations
|
(7,056)
|
|
|
(8,177)
|
|
Other financing,
net
|
(8,268)
|
|
|
3,148
|
|
Net cash provided by
financing activities
|
220,574
|
|
|
388,188
|
|
Effect of exchange
rate changes on cash
|
4,175
|
|
|
(3,488)
|
|
Net increase in cash,
cash equivalents, and restricted cash
|
701,681
|
|
|
304,784
|
|
Cash, cash
equivalents, and restricted cash at beginning of period
|
448,634
|
|
|
372,326
|
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
|
1,150,315
|
|
|
$
|
677,110
|
|
Currency-Neutral GMS Growth
We calculate currency-neutral GMS growth by translating current
period GMS for goods sold that were listed in non-U.S. dollar
currencies into U.S. dollars using prior year foreign currency
exchange rates.
As reported and currency-neutral GMS growth for the periods
presented below is as follows and include the operations of Reverb
since August 15, 2019 (the date of acquisition):
|
Quarter-to-Date
Period Ended
|
|
Year-to-Date
Period Ended
|
|
As
Reported
|
|
Currency-Neutral
|
|
FX
Impact
|
|
As
Reported
|
|
Currency-Neutral
|
|
FX
Impact
|
September 30,
2020
|
119.4
|
%
|
|
117.4
|
%
|
|
2.0
|
%
|
|
101.1
|
%
|
|
100.9
|
%
|
|
0.2
|
%
|
June 30,
2020
|
145.6
|
%
|
|
146.7
|
%
|
|
(1.1)
|
%
|
|
90.8
|
%
|
|
91.6
|
%
|
|
(0.8)
|
%
|
March 31,
2020
|
32.2
|
%
|
|
32.6
|
%
|
|
(0.4)
|
%
|
|
32.2
|
%
|
|
32.6
|
%
|
|
(0.4)
|
%
|
December 31,
2019
|
32.8
|
%
|
|
33.0
|
%
|
|
(0.2)
|
%
|
|
26.5
|
%
|
|
27.5
|
%
|
|
(1.0)
|
%
|
September 30,
2019
|
30.1
|
%
|
|
31.1
|
%
|
|
(1.0)
|
%
|
|
23.6
|
%
|
|
26.1
|
%
|
|
(2.5)
|
%
|
Non-GAAP Financial Measures
Adjusted EBITDA
In this press release, we provide Adjusted EBITDA, a non-GAAP
financial measure that represents our net income adjusted to
exclude: interest and other non-operating expense, net; (benefit)
provision for income taxes; depreciation and amortization;
stock-based compensation expense; foreign exchange loss;
acquisition-related expenses; non-ordinary course disputes; and
loss on extinguishment of debt. Below is a reconciliation of
Adjusted EBITDA to net income, the most directly comparable GAAP
financial measure.
We have included Adjusted EBITDA because it is a key measure
used by our management and Board of Directors to evaluate our
operating performance and trends, allocate internal resources,
prepare and approve our annual budget, develop short- and long-term
operating plans, determine incentive compensation, and assess the
health of our business. As our Adjusted EBITDA increases, we are
able to invest more in our platform.
We believe that Adjusted EBITDA can provide a useful measure for
period-to-period comparisons of our business as it removes the
impact of certain non-cash items and certain variable charges.
Adjusted EBITDA has limitations as an analytical tool, and you
should not consider it in isolation or as a substitute for analysis
of our results as reported under GAAP. Some of these limitations
are:
- Adjusted EBITDA does not reflect other non-operating expenses,
net of other non-operating income, including net interest
expense;
- Adjusted EBITDA does not reflect tax payments that may
represent a reduction in cash available to us;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future, and Adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements or for new capital
expenditure requirements;
- Adjusted EBITDA does not consider the impact of stock-based
compensation expense;
- Adjusted EBITDA does not consider the impact of foreign
exchange loss;
- Adjusted EBITDA does not reflect acquisition-related
expenses;
- Adjusted EBITDA does not consider the impact of non-ordinary
course disputes;
- Adjusted EBITDA does not consider the impact of the loss on
extinguishment of debt; and
- other companies, including companies in our industry, may
calculate Adjusted EBITDA differently, which reduces its usefulness
as a comparative measure.
Because of these limitations, you should consider Adjusted
EBITDA alongside other financial performance measures, including
net income and our other GAAP results.
Reconciliation of
Net Income to Adjusted EBITDA (Unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
Net income
|
$
|
91,761
|
|
|
$
|
14,801
|
|
|
$
|
200,708
|
|
|
$
|
64,603
|
|
Excluding:
|
|
|
|
|
|
|
|
Interest and other
non-operating expense, net (1)
|
9,457
|
|
|
2,194
|
|
|
24,105
|
|
|
4,749
|
|
(Benefit) provision
for income taxes
|
(1,368)
|
|
|
(4,712)
|
|
|
11,694
|
|
|
(6,708)
|
|
Depreciation and
amortization (2)
|
15,754
|
|
|
12,808
|
|
|
45,088
|
|
|
32,760
|
|
Stock-based
compensation expense
|
17,128
|
|
|
12,137
|
|
|
47,664
|
|
|
31,056
|
|
Foreign exchange loss
(3)
|
1,464
|
|
|
1,949
|
|
|
9,312
|
|
|
1,079
|
|
Acquisition-related
expenses (4)
|
392
|
|
|
1,735
|
|
|
1,701
|
|
|
2,941
|
|
Non-ordinary course
disputes
|
—
|
|
|
1,164
|
|
|
—
|
|
|
1,164
|
|
Loss on
extinguishment of debt (5)
|
16,855
|
|
|
—
|
|
|
16,855
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
151,443
|
|
|
$
|
42,076
|
|
|
$
|
357,127
|
|
|
$
|
131,644
|
|
|
|
(1)
|
Included in interest
and other non-operating expense, net is primarily non-cash interest
expense, including
amortization of debt issuance costs, related to our convertible
debt offerings, which were entered into in
March 2018, September 2019, and August 2020.
|
(2)
|
Included in
depreciation and amortization is depreciation expense related to
our headquarters lease, which
is accounted for as a finance lease. Additionally, the three and
nine months ended September 30, 2020 and
2019 include amortization expense of acquired intangible assets and
developed technology related to the
acquisition of Reverb in the third quarter of 2019.
|
(3)
|
Foreign exchange loss
is primarily driven by the change in U.S. Dollar, Euro, and Pound
Sterling exchange
rates on our intercompany and other non-functional currency cash
balances.
|
(4)
|
Acquisition-related
expenses are expenses related to our acquisition of
Reverb.
|
(5)
|
During the third
quarter of 2020, the Company repurchased $301.1 million aggregate
principal amount of
its outstanding 2018 Notes. The Company recognized a non-cash loss
on extinguishment of debt of $16.9
million as a result.
|
View original
content:http://www.prnewswire.com/news-releases/etsy-inc-reports-third-quarter-2020-financial-results-301162113.html
SOURCE Etsy, Inc.