BROOKLYN, N.Y., Nov. 1, 2023
/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
results for its third quarter ended September 30, 2023.
"Etsy's consolidated results were in line with expectations for
modest top line growth and very strong profitability," said
Josh Silverman, Etsy, Inc. Chief
Executive Officer. "While we are undoubtedly operating in a
challenging environment for spending on consumer discretionary
items, we believe that we are at least holding our share gains in
our top categories. We are making great progress, through focused
and impactful product launches and marketing programs, to highlight
Etsy's high quality merchandise, at great value, that is reliable
and convenient, and believe that these efforts will enable us to
build buyer consideration. We believe that our TAM is
enormous, our market share remains small, our
value-proposition is highly differentiated, and we are
solving for something no one else is - Keeping Commerce
Human."
Third quarter 2023 performance highlights include:
- Consolidated GMS was $3.0
billion, up 1.2% year-over-year and largely flat on a
currency-neutral basis. Headwinds to consolidated GMS included a
still dynamic macroeconomic environment that impacted consumer
discretionary product spending, as well as a small headwind from
the mid-quarter divestiture of Elo7.
- Etsy marketplace GMS was $2.7
billion, up 1.0% year-over-year and down 0.3% on a
currency-neutral basis.
- Growth in active buyers accelerated again this quarter with
a 4% year-over-year increase, setting a new all-time high of 92
million. United States active
buyer trends returned to modestly positive year-over-year growth
for the first time in seven quarters, and international active
buyer growth remained strong. We reactivated 6 million buyers, up
19% from the prior year period, and acquired 6 million new buyers.
Our retention of active buyers improved from the prior year and
remains above pre-pandemic levels on a trailing twelve month
basis.
- While GMS per active buyer on a trailing twelve month
basis for the Etsy marketplace declined 6% year-over-year to
$127 in the third quarter, trends in
this metric continued to show signs of stabilization on a
sequential basis. Our number of habitual buyers was unchanged on a
sequential basis at 7 million, an encouraging sign of continued
stabilization in this metric due in part to strength in
Germany, France, and several non-core Western European
countries.
- GMS ex-U.S. domestic for the Etsy marketplace was 47% of
overall GMS, with GMS ex-U.S. domestic up 7% year-over-year as
positive trends accelerated in the third quarter.
- Consolidated revenue was $636.3 million, up 7.0% versus the third quarter
of 2022, with a take rate (i.e., consolidated revenue divided by
consolidated GMS) of 20.9%. Solid revenue growth was primarily
driven by growth in Etsy Ads, payments revenue and transaction fee
revenue from Offsite Ads.
- Consolidated net income was $87.9
million, up $1.1 billion
year-over-year, reflecting an impairment charge in the third
quarter of the prior year of $1.0
billion in aggregate to the goodwill of Depop and our former
subsidiary, Elo7. Consolidated net income margin (i.e., net income
divided by revenue) was approximately 13.8% and diluted net income
per share was $0.64.
- Consolidated non-GAAP Adjusted EBITDA was $182.2 million, with consolidated non-GAAP
Adjusted EBITDA margin (i.e., consolidated non-GAAP Adjusted EBITDA
divided by consolidated revenue) of approximately 28.6%.
- Etsy ended the third quarter with $1.1 billion in cash and cash equivalents and
short- and long-term investments. Under Etsy's stock repurchase
program, during the third quarter of 2023, Etsy repurchased an
aggregate of approximately $297
million, or 3,915,279 shares, of its common stock. These
shares were purchased pursuant to a 10b5-1 plan or in open market
purchases.
Third Quarter 2023 Financial Summary
(in thousands,
except percentages; unaudited)
The financial results of Elo7 have been included in our
consolidated financial results until August
10, 2023 (the date of sale). The unaudited GAAP and non-GAAP
financial measures and key operating metrics we use are:
|
Three Months
Ended
September
30,
|
|
%
Growth
(Decline)
Y/Y
|
|
Nine Months
Ended
September
30,
|
|
%
(Decline)
Growth
Y/Y
|
|
2023
|
|
2022
|
|
|
2023
|
|
2022
|
|
GMS (1)
|
$ 3,039,930
|
|
$ 3,002,450
|
|
1.2 %
|
|
$ 9,153,792
|
|
$ 9,284,614
|
|
(1.4) %
|
Revenue
|
$
636,302
|
|
$
594,469
|
|
7.0 %
|
|
$ 1,906,055
|
|
$ 1,758,870
|
|
8.4 %
|
Marketplace
revenue
|
$
460,922
|
|
$
443,489
|
|
3.9 %
|
|
$ 1,381,395
|
|
$ 1,310,729
|
|
5.4 %
|
Services
revenue
|
$
175,380
|
|
$
150,980
|
|
16.2 %
|
|
$
524,660
|
|
$
448,141
|
|
17.1 %
|
Gross profit
|
$
447,475
|
|
$
420,068
|
|
6.5 %
|
|
$ 1,333,137
|
|
$ 1,240,053
|
|
7.5 %
|
Operating
expenses
|
$
358,919
|
|
$ 1,374,848
|
|
(73.9) %
|
|
$ 1,168,754
|
|
$ 2,037,957
|
|
(42.7) %
|
Net income
(loss)
|
$ 87,850
|
|
$
(963,068)
|
|
109.1 %
|
|
$
224,302
|
|
$
(803,836)
|
|
127.9 %
|
Net income (loss)
margin
|
13.8 %
|
|
(162.0) %
|
|
17,580 bps
|
|
11.8 %
|
|
(45.7) %
|
|
5,750
bps
|
Adjusted EBITDA
(Non-GAAP)
|
$
182,219
|
|
$
167,761
|
|
8.6 %
|
|
$
518,797
|
|
$
489,663
|
|
5.9 %
|
Adjusted EBITDA margin
(Non-GAAP)
|
28.6 %
|
|
28.2 %
|
|
40 bps
|
|
27.2 %
|
|
27.8 %
|
|
(60)
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
Active sellers
(2)
|
8,802
|
|
7,396
|
|
19.0 %
|
|
8,802
|
|
7,396
|
|
19.0 %
|
Active buyers
(2)
|
97,343
|
|
94,149
|
|
3.4 %
|
|
97,343
|
|
94,149
|
|
3.4 %
|
Percent mobile
GMS
|
68 %
|
|
67 %
|
|
100
bps
|
|
67 %
|
|
66 %
|
|
100
bps
|
Percent GMS ex-U.S.
Domestic (1)
|
45 %
|
|
43 %
|
|
200
bps
|
|
45 %
|
|
44 %
|
|
100
bps
|
|
|
(1)
|
Consolidated GMS for
the three and nine months ended September 30, 2023 includes
Etsy marketplace GMS of $2.7 billion and $8.0 billion,
respectively. Percent GMS ex-U.S. domestic for the Etsy marketplace
for both the three and nine months ended September 30, 2023
was 47%.
|
|
|
(2)
|
Consolidated active
sellers and active buyers includes Etsy marketplace active sellers
and active buyers of 6.7 million and 91.6 million, respectively, as
of September 30, 2023.
|
|
|
To provide
consistency with our calculation of GMS, beginning in the first
quarter of 2023, we have reported our mobile GMS, GMS ex-U.S.
domestic, and Non-U.S. domestic GMS as a percentage of GMS net of
refunds. We did not apply this change to prior periods as the
impact was immaterial to such periods. For information about how we
otherwise define our metrics, see our Quarterly Report on Form 10-Q
for the quarter ended June 30, 2023.
|
"It's encouraging to see many of our Etsy marketplace GMS
metrics improve during the third quarter," said Rachel Glaser, Chief Financial Officer.
"Consolidated top line revenue growth of 7.0% was driven primarily
by continued strength from Etsy Ads and payments. Even with
significant investments in product and marketing, our consolidated
adjusted EBITDA margin expanded on a year-over-year basis to 28.6%,
our highest level since the fourth quarter of 2021."
Third Quarter 2023 Operating
Highlights
Etsy
Etsy marketplace's product roadmap remains aligned with our
long-term 'Right to Win' strategy, which is focused on delivering
best-in-class search and discovery, improving human connections
between buyers and sellers, making Etsy a trusted brand, and
highlighting our sellers' unique items. Select third quarter 2023
product development, marketing, and other operational highlights
are outlined below.
Product Highlights
Making Etsy More Curated and Organized
- We continued to invest in Search & Discovery to
make Etsy more curated and organized. We made meaningful progress
on elevating the best of Etsy in our Search results, with new
initiatives to identify various tiers of the 'visual appeal' and
quality of an item to inform Search results and aid conversion. We
also tested a new GenAI enabled 'Etsy Guided Search' feature, as we
develop ways to move search functionality from keywords to
conversations. While early results of the pilot indicate that
Guided Search provides highly creative, specific, and relevant
suggestions, we'll continue to study how buyers engage with these
types of features and how conversion rate compares to classic
search.
- We improved the buyer experience by enhancing our
overall value messaging in a highly promotional retail environment.
Several initiatives during the quarter positively impacted our
conversion and average order value, including promotional events
(flash sales, 'Best of Home' at 40% off sale, 5-Star gifts under
$30, among others), which increased
visibility of our seller funded offers. We also added sale-ending
signals to the listing page and highlighted abandoned cart coupons,
which drove increases in conversion. We launched a new 'Deals' tab
in our App, elevating personalized deals and providing additional
visibility to our sellers with sales.
- We made progress creating category experiences and
building brand association in Home & Living, Style, and
Gifting purchase occasions. For example, we launched a new and
improved 'Gift Finder,' now available in our App and featured more
prominently on mobile web, that utilizes curated search, and
we redesigned our Home & Living category landing pages. We
now offer three Registries - Wedding, Baby, and Gift - to continue
building experiences for specific purchase occasions. Early
indications suggest our 'Etsy has it' campaigns, which emphasize
Home & Living, Style, and Gifting, are beginning to drive brand
association for these purchase occasions.
Making Shopping on Etsy More Reliable and
Joyful
- We are focused on building trust with our sellers and
buyers. Leaning into our reliability message, we'll be
marketing 'On Time or Your Money Back' in the United States this holiday season. We also
incorporated reminders about purchasing shipping labels in seller
communications, to help increase shipping label adoption, which is
helpful for transparency to buyers.
- We continue to enforce our Etsy seller 'House Rules' which
establish what can and cannot be sold on our marketplace. In the
third quarter, we removed over 120% more listings for violations of
our Handmade Policy than in the same period in 2022. We're also
focused on how often buyers are seeing merchandise that may break
through our enforcement. In just a few months of work, we have cut
these experiences nearly in half based on our constant sampling of
the marketplace.
Helping Sellers Sustainably Expand their
Business
- As part of our effort to help our sellers set sustainable
pricing strategies, we began initial limited testing of a
'Pricing Optimizer' that provides real-time information on market
prices for similar items, as well as a 'Cost Recovery Insight'
feature, which helps sellers who are heavy users of sales and
offers to more sustainably set their prices. We also published a
new 'Pricing Guide' in our Seller Handbook, which provides
practical tips and guidance on various factors to consider in
setting a sustainable pricing strategy. Additionally, we expanded
our 'Make an Offer' ("MAO") feature to all United States sellers and began highlighting
these items to buyers. To date, we have seen MAO positively impact
our average order value.
- Etsy Ads remained an important driver of revenue growth.
Building on the prior quarter's integration of XWalk into Etsy Ads,
we optimized our XWalk functionality to better value potential
listing conversion and pricing into our ads ranking system. This
enhancement drove a meaningful increase in revenue and GMS.
- We launched the Etsy Share & Save program, a new way for
sellers to save on Etsy fees for sales they drive to their Etsy
shop. As of the end of the third quarter, over 500,000 active
sellers had adopted the program.
Marketing Highlights
- As part of our increased focus on value, we held an
Etsy-funded 48-hour site-wide promotion in North America and Europe. This promotion drove meaningful GMS
and delivered positive ROI. This 'GET5' promotion led to an
increase in average order value as buyers spent more than the
$25 minimum needed to achieve the
discount. The North American sale was popular among existing loyal
customers and also helped reactivate lapsed buyers, and our
European sale drove increased GMS from new buyers.
- We remain focused on bringing buyers back to the platform
faster and for more shopping missions. During the quarter, we
leveraged our enhanced CRM capabilities to expand awareness of our
promotional events through new email campaigns, which drove
incremental GMS. We also added a new email that notifies buyers
when a package is close and included a navigation bar to Etsy.com
in emails that alerts buyers of a new seller message. Both
initiatives drove incremental visits and repeat purchases.
- We continue to invest in building brand awareness. For
example, we ran Etsy brand campaigns in the United States, United Kingdom, and Germany, and we tested TV advertising in
Austria and Switzerland to compliment favorable growth
trends we are seeing in these markets. Our Holiday Gift Guide press
and influencer events, which took place in September and October in
North America, the United Kingdom, France, and Germany, attracted well over 200 lifestyle
journalists, exceeding our attendance goals and generating
significant leads for earned media coverage heading into holiday
season.
Impact Highlights
- We made progress on our Impact strategy, reflecting
the positive effect we want to have on the world. As an
outgrowth of our initiative to understand the impact of climate
change on our sellers, we launched resource guidelines for small
business owners to help makers prepare for and recover from natural
disasters. These guidelines can be found in our Seller
Handbook.
Subsidiary Marketplace Highlights
Reverb
Reverb enhanced the buyer experience, expanding
search filters in select categories, as well as adding new category
filters and attributes to help buyers find the perfect piece of
gear. Reverb made checkout easier and faster, which drove an
increase in GMS. Reverb also continued tofocus on deals and
affordability, introducing new negotiation tools, providing
greater guidance on pricing competitively, and increasing
prominence of promotions and price drops to buyers.
Depop
Depop continued to focus on product development velocity
during the quarter, while maintaining its overall win rate.
Meaningful product wins included enhanced search relevance with new
rankings and personalization features, as well as improved
personalized recommendations. The 'I got it on Depop'
campaign encouragingly delivered strong brand awareness. Depop also
expanded its performance marketing feeds to additional listings,
driving a solid increase in paid marketing contribution. Depop
enabled a 'buy now, pay later' option in the United Kingdom and, in an effort to provide a
streamlined and efficient experience for buyers and sellers,
announced plans to fully transition to Depop Payments.
Financial Guidance and Outlook
GMS for Q4 2023 is currently estimated to decline in the
low-single-digit range on a year-over-year basis. However, if
trends worsen, that could become a mid-single-digit decline, and if
trends improve GMS could be flat or even up slightly
year-over-year.
We estimate Q4 2023 take rate to be approximately 20.8%, down
slightly on a sequential basis due to normal seasonality. This can
be used to estimate revenue range for the quarter.
Adjusted EBITDA margin for Q4 2023 is currently estimated to be
between 26-27%.
Please note that our guidance assumes currency exchange rates
remain unchanged at current levels.
With respect to our expectations under "Financial Guidance and
Outlook" above, reconciliation of Adjusted EBITDA margin guidance
to the closest corresponding GAAP measure is not available without
unreasonable efforts on a forward-looking basis due to the high
variability, complexity, and low visibility with respect to the
charges excluded from Adjusted EBITDA; in particular, stock-based
compensation expense, foreign exchange gain, acquisition and
divestiture related expenses; and other non-recurring expenses can
have unpredictable fluctuations based on unforeseen activity that
is out of our control and/or cannot reasonably be predicted.
Regarding the company's outlook, Mr. Silverman commented,
"There's no doubt that this is an incredibly challenging
environment for spending on consumer discretionary items. It's
therefore important to acknowledge that this volatile macro climate
will make it challenging for us to grow this quarter. While there
are many things we can't control, there is still a lot we
can — so we are obsessively focused on those. All of us at Etsy
feel a great responsibility to deliver profitable growth —
growth for our millions of sellers, for our shareholders, and all
of our stakeholders. Our team is working passionately and with the
highest level of urgency; and I'm more excited about the current
roadmap and the progress we've made this year, than at any
time in my tenure. We are confident we are working on areas that
will positively impact Etsy in the months and years ahead. We are
keeping our eye on the prize and look forward to getting back to
strong growth again as we move through this cycle."
Ms. Glaser added, "We are guiding to a consolidated adjusted
EBITDA margin of 26-27%, with seasonally higher marketing spend and
a more competitive advertising landscape being the primary drivers
of the sequential decline. Core Etsy marketplace margin implied in
our guidance approaches our previously provided long-term target of
30%, and consolidated EBITDA dollars are expected to be up
sequentially. In fact, on a full year basis for the Etsy
marketplace, we expect to finish the year just a bit shy of being a
'rule of 40' company, which many see as best-in-class
performance."
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 our Investor Relations
website (investors.etsy.com) under the Events section. 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. These marketplaces share a mission to "Keep Commerce Human,"
and we're committed to using the power of business and technology
to strengthen communities and empower people. 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.
Etsy, Inc.'s "House of Brands" portfolio also includes fashion
resale marketplace Depop, and musical instrument marketplace
Reverb. Each Etsy, Inc. marketplace operates independently, while
benefiting from shared expertise in product, marketing, technology,
and customer support.
Etsy 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 and ESG Engagement
ir@etsy.com
Jessica Schmidt, Sr. Director,
Investor Relations
ir@etsy.com
Media Relations Contact:
Kelly Clausen, Sr. Director,
Communications and Strategic Partnership
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 2023 and underlying
assumptions; our ability to build buyer consideration and gain a
greater share of our total available market opportunity; the impact
of our "Right to Win" strategy and our product development and
marketing goals; our ability to get Etsy back to strong growth
again as we move through this cycle; our investments to
re-accelerate our top line and gain market share; our Etsy
marketplace margin and consolidated EBITDA dollar targets; and our
aspiration regarding 'rule of 40' performance. Forward-looking
statements include all statements that are not historical facts. In
some cases, forward-looking statements can be identified by terms
such as "aim," "anticipate," "believe," "could," "enable,"
"estimate," "expect," "goal," "intend," "may," "outlook," "plan,"
"potential," "target," "will," or similar expressions and
derivative forms and/or 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) the level of demand for our services or products sold in our
marketplaces and our ability to support our recent growth; (2) the
importance to our success of the trustworthiness of our
marketplaces and our ability to attract and retain active and
engaged communities of buyers and sellers; (3) the fluctuation of
our quarterly operating results; (4) our failure to meet our
publicly announced guidance or other expectations; (5) if we or our
third-party providers are unable to protect against technology
vulnerabilities, service interruptions, security breaches, or other
cyber incidents; (6) our dependence on continued and unimpeded
access to third-party services, platforms, and infrastructure; (7)
macroeconomic events that are outside of our control; (8)
operational and compliance risks related to our payments systems;
(9) our ability to recruit and retain employees; (10) our ability
to compete effectively; (11) our ability to enhance our current
offerings and develop new offerings to respond to the changing
needs of sellers and buyers; (12) our ability to demonstrate
progress against our environmental, social, and governance Impact
strategy; (13) our efforts to expand internationally; (14)
acquisitions that may prove unsuccessful or divert management
attention; (15) regulation in the area of privacy and protection of
user data; and (16) litigation and regulatory matters, including
intellectual property claims. These and other 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,
2023, and subsequent reports that we file with the
Securities and Exchange Commission. 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,
2023
|
|
As of
December 31,
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
741,958
|
|
$
921,278
|
Short-term
investments
|
234,930
|
|
250,413
|
Accounts receivable,
net
|
19,410
|
|
27,888
|
Prepaid and other
current assets
|
125,605
|
|
80,203
|
Funds receivable and
seller accounts
|
221,958
|
|
233,961
|
Total current
assets
|
1,343,861
|
|
1,513,743
|
Restricted
cash
|
—
|
|
5,341
|
Property and equipment,
net
|
245,806
|
|
249,744
|
Goodwill
|
137,461
|
|
137,724
|
Intangible assets,
net
|
452,881
|
|
535,406
|
Deferred tax
assets
|
146,380
|
|
121,506
|
Long-term
investments
|
76,600
|
|
29,137
|
Other assets
|
46,208
|
|
42,360
|
Total
assets
|
$
2,449,197
|
|
$
2,634,961
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
14,150
|
|
$
28,757
|
Accrued
expenses
|
271,973
|
|
331,234
|
Finance lease
obligations—current
|
5,221
|
|
4,731
|
Funds payable and
amounts due to sellers
|
221,958
|
|
233,961
|
Deferred
revenue
|
14,984
|
|
14,008
|
Other current
liabilities
|
20,531
|
|
19,064
|
Total current
liabilities
|
548,817
|
|
631,755
|
Finance lease
obligations—net of current portion
|
101,114
|
|
105,699
|
Deferred tax
liabilities
|
25,496
|
|
44,735
|
Long-term debt,
net
|
2,282,751
|
|
2,279,640
|
Other
liabilities
|
113,547
|
|
120,406
|
Total
liabilities
|
3,071,725
|
|
3,182,235
|
Total stockholders'
deficit
|
(622,528)
|
|
(547,274)
|
Total liabilities and
stockholders' deficit
|
$
2,449,197
|
|
$
2,634,961
|
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,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
$
636,302
|
|
$
594,469
|
|
$
1,906,055
|
|
$
1,758,870
|
Cost of
revenue
|
188,827
|
|
174,401
|
|
572,918
|
|
518,817
|
Gross profit
|
447,475
|
|
420,068
|
|
1,333,137
|
|
1,240,053
|
Operating
expenses:
|
|
|
|
|
|
|
|
Marketing
|
160,936
|
|
147,242
|
|
498,120
|
|
465,590
|
Product
development
|
113,932
|
|
108,040
|
|
351,844
|
|
299,611
|
General and
administrative
|
84,051
|
|
74,544
|
|
250,699
|
|
227,734
|
Asset impairment
charges
|
—
|
|
1,045,022
|
|
68,091
|
|
1,045,022
|
Total operating
expenses
|
358,919
|
|
1,374,848
|
|
1,168,754
|
|
2,037,957
|
Income (loss) from
operations
|
88,556
|
|
(954,780)
|
|
164,383
|
|
(797,904)
|
Other income,
net
|
8,411
|
|
5,763
|
|
19,269
|
|
8,036
|
Income (loss) before
income taxes
|
96,967
|
|
(949,017)
|
|
183,652
|
|
(789,868)
|
(Provision) benefit for
income taxes
|
(9,117)
|
|
(14,051)
|
|
40,650
|
|
(13,968)
|
Net income
(loss)
|
$
87,850
|
|
$ (963,068)
|
|
$
224,302
|
|
$ (803,836)
|
Net income (loss) per
share attributable to common stockholders:
|
|
|
|
|
|
|
|
Basic
|
$
0.72
|
|
$
(7.62)
|
|
$
1.82
|
|
$
(6.33)
|
Diluted
|
$
0.64
|
|
$
(7.62)
|
|
$
1.62
|
|
$
(6.33)
|
Weighted-average common
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
121,807,908
|
|
126,349,250
|
|
123,341,417
|
|
126,985,731
|
Diluted
|
138,890,567
|
|
126,349,250
|
|
141,046,041
|
|
126,985,731
|
Etsy,
Inc.
Condensed
Consolidated Statements of Cash Flows
(in thousands;
unaudited)
|
|
|
Nine Months
Ended
September
30,
|
|
2023
|
|
2022
|
Cash flows from
operating activities
|
|
|
|
Net income
(loss)
|
$
224,302
|
|
$
(803,836)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Stock-based
compensation expense
|
216,082
|
|
166,533
|
Depreciation and
amortization expense
|
68,290
|
|
73,908
|
Provision for expected
credit losses
|
14,390
|
|
7,621
|
Foreign exchange
gain
|
(4,113)
|
|
(17,585)
|
Deferred benefit for
income taxes
|
(45,255)
|
|
(25,955)
|
Loss on sale of
business
|
2,630
|
|
—
|
Asset impairment
charges
|
68,091
|
|
1,045,022
|
Other non-cash
expense, net
|
327
|
|
6,519
|
Changes in operating
assets and liabilities (net of impact of sale of
business)
|
(134,336)
|
|
(60,365)
|
Net cash provided by
operating activities
|
410,408
|
|
391,862
|
Cash flows from
investing activities
|
|
|
|
Cash paid for
intangible assets
|
(12)
|
|
(6,400)
|
Purchases of property
and equipment
|
(7,740)
|
|
(8,351)
|
Development of
internal-use software
|
(19,594)
|
|
(16,912)
|
Purchases of
investments
|
(288,226)
|
|
(205,841)
|
Sales and maturities
of investments
|
261,589
|
|
207,568
|
Net cash used in
investing activities
|
(53,983)
|
|
(29,936)
|
Cash flows from
financing activities
|
|
|
|
Payment of tax
obligations on vested equity awards
|
(58,008)
|
|
(48,018)
|
Repurchase of
stock
|
(483,987)
|
|
(275,308)
|
Proceeds from exercise
of stock options
|
8,448
|
|
8,212
|
Payment of debt
issuance costs
|
(2,215)
|
|
(25)
|
Settlement of
convertible senior notes
|
(90)
|
|
(33)
|
Payments on finance
lease obligations
|
(4,723)
|
|
(4,755)
|
Other financing,
net
|
(259)
|
|
(2,483)
|
Net cash used in
financing activities
|
(540,834)
|
|
(322,410)
|
Effect of exchange rate
changes on cash
|
(252)
|
|
(29,722)
|
Net (decrease) increase
in cash, cash equivalents, and restricted cash
|
(184,661)
|
|
9,794
|
Cash, cash equivalents,
and restricted cash at beginning of period
|
926,619
|
|
785,537
|
Cash, cash equivalents,
and restricted cash at end of period
|
$
741,958
|
|
$
795,331
|
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 / (decline) for the
periods presented below are as follows:
|
Quarter-to-Date
Period Ended
|
|
Year-to-Date Period
Ended
|
|
As
Reported
|
|
Currency-
Neutral
|
|
FX
Impact
|
|
As
Reported
|
|
Currency-
Neutral
|
|
FX
Impact
|
September 30,
2023
|
1.2 %
|
|
(0.1) %
|
|
1.3 %
|
|
(1.4) %
|
|
(1.1) %
|
|
(0.3) %
|
September 30,
2022
|
(3.3) %
|
|
0.7 %
|
|
(4.0) %
|
|
(0.1) %
|
|
2.7 %
|
|
(2.8) %
|
Non-GAAP Financial
Measures
Adjusted EBITDA and Adjusted EBITDA Margin
In this press release, we provide Adjusted EBITDA, a non-GAAP
financial measure that represents our net income (loss) adjusted to
exclude: interest and other non-operating (income) expense, net;
provision (benefit) for income taxes; depreciation and
amortization; stock-based compensation expense; foreign exchange
gain; acquisition and divestiture related expenses; asset
impairment charges; and loss on sale of business. We also provide
Adjusted EBITDA margin, a non-GAAP financial measure that presents
Adjusted EBITDA divided by revenue. Below is a reconciliation of
Adjusted EBITDA to net income (loss), the most directly comparable
GAAP financial measure.
We have included Adjusted EBITDA and Adjusted EBITDA margin
because they are key measures 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
platforms.
We believe that Adjusted EBITDA and Adjusted EBITDA margin can
provide useful measures for period-to-period comparisons of our
business as they remove the impact of certain non-cash items and
certain variable charges.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as
analytical tools, and you should not consider them 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 gain;
- Adjusted EBITDA does not reflect acquisition and divestiture
related expenses;
- Adjusted EBITDA does not reflect asset impairment charges;
- Adjusted EBITDA does not reflect loss on sale of business;
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 and Adjusted EBITDA margin alongside other financial
performance measures, including net income (loss), revenue, and our
other GAAP results.
Reconciliation of
Net Income (Loss) to Adjusted EBITDA and the Calculation of
Adjusted EBITDA Margin
(in thousands, except
percentages; unaudited)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income
(loss)
|
$
87,850
|
|
$ (963,068)
|
|
$
224,302
|
|
$ (803,836)
|
Excluding:
|
|
|
|
|
|
|
|
Interest and other
non-operating (income) expense, net
|
(5,430)
|
|
230
|
|
(17,053)
|
|
6,077
|
Provision (benefit)
for income taxes
|
9,117
|
|
14,051
|
|
(40,650)
|
|
13,968
|
Depreciation and
amortization
|
22,172
|
|
24,127
|
|
68,290
|
|
73,908
|
Stock-based
compensation expense (1)
|
70,118
|
|
52,905
|
|
216,082
|
|
166,533
|
Foreign exchange
gain
|
(5,611)
|
|
(5,993)
|
|
(4,846)
|
|
(14,113)
|
Acquisition and
divestiture related expenses
|
1,373
|
|
487
|
|
1,951
|
|
2,104
|
Asset impairment
charges
|
—
|
|
1,045,022
|
|
68,091
|
|
1,045,022
|
Loss on sale of
business
|
2,630
|
|
—
|
|
2,630
|
|
—
|
Adjusted
EBITDA
|
$
182,219
|
|
$
167,761
|
|
$
518,797
|
|
$
489,663
|
Divided by:
|
|
|
|
|
|
|
|
Revenue
|
$
636,302
|
|
$
594,469
|
|
$
1,906,055
|
|
$
1,758,870
|
Adjusted EBITDA
margin
|
28.6 %
|
|
28.2 %
|
|
27.2 %
|
|
27.8 %
|
|
(1) Stock-based
compensation expense included in the Condensed Consolidated
Statements of Operations for the periods presented below is as
follows:
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cost of
revenue
|
$
8,105
|
|
$
6,089
|
|
$
23,522
|
|
$
16,545
|
Marketing
|
5,763
|
|
5,083
|
|
17,132
|
|
14,552
|
Product
development
|
37,842
|
|
34,106
|
|
112,771
|
|
88,656
|
General and
administrative
|
18,408
|
|
7,627
|
|
62,657
|
|
46,780
|
Stock-based
compensation expense
|
$
70,118
|
|
$
52,905
|
|
$
216,082
|
|
$
166,533
|
View original
content:https://www.prnewswire.com/news-releases/etsy-inc-reports-third-quarter-2023-results-301974725.html
SOURCE Etsy