ETSY - Earnings call transcript Q1 2020

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Debra Wasser

Hi everyone, and welcome to Etsy's First Quarter 2020 Earnings Conference Call. I'm Deb Wasser, Vice President of Investor Relations and joining me today are Josh Silverman, CEO; Rachel Glaser, CFO; and Gabe Ratcliff, our Director of Investor Relations.

So we are trying something a little different, given our work from home status.

Our first ever video earnings call.

For quality purposes, our prepared remarks have been pre-reported along with the accompanying slides. been our has reference. for deck slide posted website on your The we and live to session. Josh finished video presentations, Q&A Once with transition Rachel are we will webcast a laid the chat by submitted be screen. can window Question just on your Q&A time, free remain it call. open Feel conference will entire as at the use it to any throughout many and can. your I'll help try we be questions reading to as me will Gabe get to as

and of statements XXXX strategy, mind impact future and and results, that COVID-XX key changes foreign level of and top ongoing volatility the our related forward-looking our metrics, to in financial global include for on our may spending settlement on keep overall operating economy and in cash pandemic The Please business second certain of intercompany thereof. the the flows today exchange quarter and drivers investments condition, the profitability balances impact guidance financial remarks in volatility. have on impacts of consumer that growth rate key line of

Our actual materially. differ results results - may

the that Forward included and with GAAP call. is this our both IR website we'll and our non-GAAP subsequent we release the measures Any are uncertainties, of press described our don't filed you the have today's financial non-GAAP in XX-K any and filed can our beliefs statements replay this them. release, Also GAAP on today which based and present to on and reconciliation on obligation the call, earnings risks to statements we with along during find that update measures, assumptions press of in February forward-looking XXth SEC involve reports we which and make are looking on SEC. call with

over to I'll Josh. that, With turn it

Joshua Silverman

hello and Thanks Deb, everyone.

of more that in we the crisis ever And start that's the that the touched our of and purpose I sellers, by and how of that it's of our been to and and we take saying important crisis. mission are our by and and buyers, team, demonstrating Etsy hope everyone agility we model we're course the the it's responsibility in and this in with this seriously to reminded COVID crisis Etsy think see of and that are rise resiliency acting the our the hearts urgency in this this let call out the I go lives moment, also to you'll really me

in of changes software first that's personal to has them. and releases without a see not work in and entirely We the stood undertaken seriousness the COVID up task we on February, it's I'm hard that testament the work tested fact the really are all an we've force in XX% the stress in year-over-year a were they slide prepared up hold say could we you'll productive home January. home in well work from environment, really productivity to continuing real seen in and take quarter and that be to urgency crisis spite so We that as on the their and as quite from up so work and be far team and the that pleased

I their work. hard do team So take thank to a want the for all to moment of

dive And in. let's with that,

this time and talking spend the all because the we've to quarter of want to that. first very future about we're trends seen for hit let's headlines is very But April know I quickly. anxious the earnings So I call, our discuss in thoughts and bulk the our my

a disciplined and and quarter, you about more going in about quarter sales Revenue in in million the growth. first adjusted detail into about We standalone was XX% Rachel delivered take merchandise consolidated was $X.X way. $XX first gross delivered Etsy and GMS. year-over-year million year-over-year to growth the XX% billion is in through EBITDA go that $XXX

hit So I'll to and those move now headlines just April. on

April the very were very extraordinary and sense in big mean two extraordinary there very, extraordinary was it and I in unusual April. of an separate and month things happening

First and sold in worth in face Separate million the $XXX of Etsy the masks April, fabric of core robustly grew end, month very, Etsy the year-over-year sale marketplace to fabric of face of about effect was April. in masks the that, very growth. addition XX%

to away site. surge April, changed the early wear of a face we tremendous demand CDC fabric right face Americans for In guidelines saw on its our recommend and masks fabric that masks

one extremely just it that was Monday, fact, and up everyone waking world was product like except was Cyber one to supply. discovering an limited it In that the wanted product and that of

to we needed things were so do, a within really search that And we change results. there was first And to that to had of to quickly reality. respond the new hours our extremely set

So you you search face masks, that fabric saw masks. when for actually

would masks, masks Previously their Halloween about be thinking or for when would be someone face. search for they cream may

thousands lack been days. has within incredibly masks Google we able on put within And to rankings get were and our call all of to SEO, Google and hours begin to good a of So to quickly supply matter that. sudden then in relevant implementation early which very meeting respond to more very the sellers a making literally retrained sellers a for results on demand, of had important big we've part that But us Cloud needed respond earned out thanks and much engine future. the having to search to a we was able been our a so to of be what

delivery. at Etsy. make that sure too were, that to few only fact expectations making needed need manage that sellers and so we could customer needed In we and selling it point, there recruit could delivery We what distribute to sellers we understand so on to is concentrated on make to not masks, over a sellers we demand just their times XX,XXX did this mask in on. and But on mask wasn't

face Etsy. month the alone. truly of at was over We It single an masks all team XX in deck. on April almost every This effort hands touched million sold

face April. of in In been fact category standalone have category, if it biggest on were the a second month would masks the Etsy

opportunity look is we our a then fabric to these they as buyers, them for our with so forward, work on just lot that do sell can engagement more masks. face So Etsy deepening them understand that really obviously,

and why convinced an I not cohort come. am are masks may going months into So of that to I'm so about category detail not buyers this much because be it's for nor new They going be we that convinced to months masks, are enduring learn their and going hard their really behavior over to be time. have see for is way. going We're and highly to to we'll is active to years what come work to with earn loyalty a us in to try

dynamism story Etsy the April I marketplace our Etsy about XX% and reason tell so The and to demands. how just on they're meet fact was core much to non-mask able the model masks, new year-over-year. highlights Etsy the were wanted to because up more in But it really than sellers think shift rapidly I of the so is sales

closed craft the the toys gifting, players of including having a ground e-commerce came living, from two the combined categories self-care, shipping games, sales marketplace delays sometime a So and home demand chain alternatives with Etsy really and disruptions. swell or stores across and factors, in strength of of fewer many supplies, set retail and with first was supply

the for of to Etsy the the of the team communicate but and the opportunity responsibility how step often not this marketplace, that could to way, world how think and created at really them when think up and dynamism have macro to for enduring be time Etsy. what and fill and there those they be thought needs, in void can I of a factors our both it's Etsy a sellers fill combination we can in meaningful might we step Etsy And an Etsy we really

And team has the message and so to communicate hard to the been really at then that marketing work develop market.

some Etsy the asked would buyer, we three pillars a open with they centered job but to that strategy, to team are and directly business. core the brand that value with messages brand first brand did enduring our great think around with have the sellers moment, to come speak this real for campaign really I up Starting

Etsy on a And Etsy, small shopping a some Second familiar, there small time. that's be businesses, everyday when was supporting on strategy third, our of shopping supporting were core might businesses. that pillar that's been is you're you that And need. Etsy, for message when essentials you messaging

a can live maybe think that of we Etsy Etsy of And disrupt Etsy a of really really are of great we commitments. moment and idea way. up to a those we and understanding truth that are be Etsy that idea that But reliable messages that and needs, buyers, is to that newer - know the think many in this every job can our meet everyday when positive the do may people's is I some can those

exceptionally kinds merchandise all which responsive, ability has we're important have to happening them, the your our to think which to and as dynamic demand, in Etsy. Our super take that have our our data we we're and think search real more time, has in singular, that ever, at merchandising sellers back strength we we consumer of we a been and within hours, is query actions the able Look it's this of iterate communicating their on we and that now strategy, we demonstrate site taking of know reflect real to that message are back. team to the currently showing at time be what's been is than almost

small that fact sellers sales All the you're our that to this shopping and supporting of ship, moment. have realities underpinned speak at evergreen items that and on right economic ready messaging, running facing core now this like is we're to that when we many are promotions many really by some Etsy, are of the businesses

TV talked into the back the campaign call, our April TV how communicate develop May. asked Xnd in about and buzz We team then that a we that remember to we you'll to pushed

any new the phone get a again strategy TV and the loud take had to that getting into the create and new bring were a mid-April, negotiate new creative, campaigns without in cut with way on TV. alive new we and pretty buys reflecting and way shoot the new new stations to days ad new find they entirely others existing this within by on by studio TV prominent brand creative So way, with both into had to TV any to all marketing the - and footage, actors footage team and all and

We're proud running campaign that not does TV unique is right think it's speak other every of in out We stands just it creative, Etsy. and now. think as the way this same a to TV that's we really

a second to to the like creative show you I'd So now. take TV

Presentation) (Video

point make to a and more message of us this to to in doing to way are have us shop touch So before, that on that before is these these millions Offsite very with the messages. or deepen then shopping channel, might ahead any shopped onsite, much with not now those task across to the or each can tools our loyalty team Etsy an other obviously of of is we've us that's might we engagement and not same and set in that advertising, start new and entirely have any task CRM that April and via for segments earn rapid Ads loyalty tools our email, specifically with way, we their segments in have capable that we allow target create over even the time of paid are and fortunately, people push and going just have app, segments launched us

now COVID-related and four a of of our on key and of doing that sellers' don't mattered been collection I out that win all executing anyone our built laid strategy matters and at been centered much and of been think items. pillars, against we enduring a around deliver each discovery, the work to that human that a want way is that But pillars has the work, true only hard strategy unique four quarter-after-quarter trusted to foundation we've continuing before on it search bit connections, team to as every brand, our these we've

cemented search the can starting push and very launched it's great in four, with results the one meaning word learning the results our and dress in and that's of to for deep gown And to and meaningful quick highlight each And of step just dress QX, these and examples and in word give more to we GAAP model experience team relevant. of search that a frontiers example actually use in many gowns. the gown the quality determine search make for is that relevance dresses another identical the forward to that close a and doing continue just work search for of our results the search

team richer Trust been get a buyers and trust and gain more working has talked reviews. lot very about the We've leave to reviews, to hard more

of items, a to examples our of so needs this We're our the ever. sellers' responding highlights so current many more meet agile that in seeing to and didn't exist let month collection them. sellers this of a that environment is than A to that you're demands is that and thinking sellers loved are favorite now to a them send innovating hug, you a about Speaking unique ago. great of consumers them pocket a example know even hug of little mine one virtual trinket give

well. are And last Ads. is perform the about first mention which far. listings to It so the least, to how quarter course, in launch it's Ads, formally very I we going Etsy Offsite and as known is not very, feel also And but certainly want promoted continuing launched of successful great of

there when and about companies to are a take of swell the both first-time the that musical a buyers might many great many even is Reverb, a open a an having whom harder They're seeing meeting challenge Reverb trends not coming Etsy before and and seeing. I doing many also retail to up is want to first quick instrument new benefiting in is rising ground are job time many shipping, a minute to their same strategies. not at coming instrument are or from of And tick operations with buyers time of talk Reverb. played a have it's of instrument so and needs to of buyers its existing lot innovative the e-commerce Reverb

way job manufacturers sell some consumers directly communicate that ready bringing and brand I and In of to the particular, great are things having ship brands, successful. directly very right on did how a been think a and they innovating to those available site in to also the that's now

April month a up result As of year-over-year. XX% in the was Reverb's GMS over

the challenging our fewer time a stressors buyers responsibility times personally So community close times. many proud Etsy sellers, needs many be to helpful the team, model the us who on The a and that in the let and important of the times our take that proud they by challenging me times spite for hard live to lot personally acknowledging challenging at our team we're our I when challenging for when of are too to of too able many were of that really are They we serving this responsibility. to be really proud that risen we're of many buyers day need yet, fact the really our are to these of very and allows really of really, single fact really helpful and and many many of at am really for sellers income, a Etsy up these have maybe have alternatives really really the every of personal time seriously challenge. working the people they

it turn to I'll that, over with And Rachel.

Rachel Glaser

I uncertain comfortable Thanks doing and time. all this well and Josh, during you're and hope staying hello safe everyone.

will performance, Etsy's where as stand-alone as today commentary of appropriate. results which well consolidated results includes drivers My key cover

and contributions get find I press can be our make to be my few XX-Q. are up, a them right. select prepared to in You remarks details I'm soon to all and I since Reverb's numbers Heads quite on there sure reading want filed release going

performance, during adjusted first. go headwinds revenue to and a EBITDA $X.X GMS financial but caused delivered nearly quarter the XX%. of you QX we primarily QX about a quarter of we Etsy's there, very walk results was strong margins On you tell to growth by lot those solid billion, want a million basis, month Despite at got We've a before and million COVID-XX, grew through XX% I the XX% grew delivered $XXX or $XX consolidated of March, to quarter. first I

the was last April, February As January January and on in for at mentioned to growth deceleration March was with and strong growth GMS Etsy's early compared strong first last our a a update significant quarter. for trending and very during quarter standalone GMS in reflecting quarter. call XX% the XX%, consolidated February year

services both to the advertising, growth contributed about was as Shopping up revenue and reported in driven our quarter. Google which XX points XX% million approximately year-over-year. advertising to We intake revenue, consolidated rate in is strong marketplace to expanded revenue sequentially $XX revenue XX.X%. by basis QX growth related for

revenue. the we an in of Etsy in cost reminder, quarter, equal it first was the products a As margin as our accounting are as recorded old for model, carried which offset Google Ads Shopping revenue zero

new planned transitioned a As successful we resulted and Ads the ad that product March April. of to half and now sale have the Ads the introducing action. transaction into This sellers. stands product advertising during fee Offsite product the the that standalone see of in quarter, our in chance product every Etsy during second the Sellers the on ramped their listing products was early had for separating to

first provide to seller on Ads promoted COVID-XX forward, a for going listings on product in now I'll of Etsy billing financial the first Reminder of Xth, of month our began the community. our whole the the impact is fees this environment. of products. name a the advertising basket waived some We is having month we in Waiving fees for during May implemented for to few Etsy minutes. relief turbulence touch sellers basket initiatives of the of part

performance In QX of was GMS. was Of that, and revenue, overall Marketplace from million delivered marketing to performance XX% $XX compared XXXX. which the QX, million XXXX. QX testing incrementality excluded in marketing $XX Etsy XX% of expense which in of or marketing flat quarter. our spend we effect did tested the had our channel, has we PLA This the the been from reducing was

Reverb points margins XXX QX sequentially. and in we our into the adjusted in GMS expanded financials, Despite the basis March our of deceleration consolidation described EBITDA

of and base measures cost variable revenue structure is Our detail more about scale shortly. more and our expenses and to continued to in highly we've to cost variability operating I'll optimize business. take the talk our

in $X.X diluted income million or income million earnings primarily non-cash Net was of the $X.XX $XX.X losses foreign $X.XX. by share. impacted with first Net was loss per share quarter of per exchange

are Foreign QX foreign intercompany and exchange we these ongoing P&L. entities, our on future fluctuations on the volatility US related primarily foreign which did settlement our in exchange our of reduces activity between balances, to P&L

to frequency on our Key a operating grew were during the metrics GMS We compared a in stacked and flat basis for grew trailing X% XX% million. XX-month grew the constant active to XX% per and maintained quarter. over basis. Present XX% active year-over-year buyer last GMS, Etsy's On approximately X% driving QX, XX% on the year-over-year consolidated increased active Marketplace basis stable $X.X quarter. international Etsy the relatively GMS was in platform. a total up momentum first sellers of basis currency $XX X-year on buyers on million

has going April an and Now to extraordinary to you. months been as said, for dimensionalize April turning that Josh I'm

resulting also have demand and purchased new face this $XXX the of engagement that impact standalone were on financials. month, saw a buyers other standalone the GMS month the significant Etsy's March a QX not had in million month. GMS. and Etsy self-care seeing and in increase GMS products we We're of our of for for on was masks XXX% During the demand and for growth more. masks over for buyers April Of driving XX% or that, for masks year in GMS with

Overall, was XXX% re-engaged additional to which of to of year in related buyers. came in X.X XX% up also April, growth buyer returned from free. of more, We've GMS month increase days who QX the from buyers, a of mask in accelerated new have XX purchased April. over year-over-year; through new XXX% GMS new million acquired nearly is face or an channels, within mask XXX% was million we which that and X% Year-over-year a Etsy's majority make from year-over-year. purchase buyers buyers XX% the During an overall for four purchased not direct

now cohort change have shown Slide experiencing the we and basis on don't acquired during and older to to the an will but to are and you existing historically, been believe time we're This brand As and We've our similarly in positive. new is perform predictable, they've XX, cohorts inflection higher extraordinary cohorts. disruptive cohorts new April. they a shown sign any before stable our

when future With that could and in a for This unprecedented us future. stabilize are said, to trends these is the tailwind provide time growth. they we unsure an

seeing masks, April. mask in to face addition categories, additional growth In we're other related of standalone GMS momentum during excluding XX% items, was month also Etsy's the

Now for of external to industry magnified likely shift retail by data, specifically to tailwinds major course, marketplaces these in industry a have online offline April. online. dramatically from are risen sales According broader results

for On related accounted the supply mask the GMS. platform of April side, new sellers XX% join that in

Cloud. Etsy Over adjust so we expenditures response the makes the shifted past dynamically took In our rapidly years, Both line the where environment structures, for of one playing macro an actions at and to variable offense top have long-term cost expenses growth large Reverb costs, our of to see implemented to we in operating to it growth to three reduce with we where look largest highly where portion opportunity. invest and continuing thorough sense, changing contracts, fixed a environment, variable migration a simultaneously expenses growth. with while Google and can the

doing consumer of change while inflection it. about think can how newer habits for as where the are we of for potential this is uniquely variable leaning that? cohorts, point a buyers seen hope and millions and plan volatility our into and sellers. slope want very that a costs moments are needs the embrace Etsy, of and that meeting the We're invest of for investments we the into to moment we recognize and being engage but worst. the behavior best, for curve times careful exceptional these that currently We We're so fixed we we We

time than investment before, many have are as top marketing yielding ever we purchase we Television believe great to engage more marketing with Etsy increased of mind buyers affording QX. of new are that people per marketing click. not XX% is marketing more than being planned in whom ROIs or year we've makes more at normal. able and is CPMs who millions With XX% than and to is consumed at First, placement in screen Performance into leaned a now. home sense, higher a buyers cost for for lower brand we right lower

performance flexes marketing when high, naturally we demand more. is in with before, mentioned demand spend we've As

In addition, Offsite us our into will Ads program heavily enable channel. this to lean

take So them together, talking the buyers top if we're the to the we're funnel you catching bottom. at both at them and of

product exercise potential. we undertook we see the Second, highest also a prioritization double down in the areas where

Some nature not of hot expected may have these they areas horizons are returns. more and term, time to in-period returns, deliver longer experimental in so yield

areas We work drive that progress frequency to to over seller drive as one-time and during area search investments expect help will made also enable to community this our difficult time. in will significant longer growth such the We've this us important term. be in

fees supplies. seller operations hardest weddings total deferring These Offsite Ads incurred to mask support categories in early approximately be providing the payments for in until credits include like ad majority sellers of our member $XX and These million, waiving months May, QX. some hit as which party listing as bill and in will to sellers well increasing credits $XX of for listing

support disclosures. our our growth of and employed sustain investments face hospitals masks thousands our by we supported despite have the contracted and Overall, conviction of and in us they'll believe making we're community small donated time. them to We over own office enable vendors many have keeping to

short long-term almost had that's of investments in and equivalents addition million we revolver XX/XX, to and undrawn. cash, million cash currently $XXX of $XXX As

and we capital needs, environment. of our working In adjusted light into cash to the of XXX,XXX cost $XX, million share repurchases high repurchased of first CapEx shares current weeks in With deliver average free of at investment. very a continue believe we EBITDA can the flow. price an QX, on We've macro $XX minimal we margin percentage now a

Before forecast cohort business. and let me easy up guidance, trends data our in look models I which right how to investments at drive our No impact background some and our growth. layer internal own provide about all baseline now. task We given and uncertainty incremental marketing built discuss in the establish of the product, we

data, and develop dynamic a there In of been It's play of from an lot headwinds range tailwinds external months. addition, scenarios that of we incredibly and out. economic evaluate we could closely monitoring couple a

up recall You'll March then the April. GMS in over XXX% than we told third down of was more that consolidated on you basis that week in a X% and

more a color our To give April. Thursday of Etsy public highest And you ever of our as time and recent performance, highest of company month week. Friday of the delivered last the Marketplace two GMS on were GMS all bit in a days

we remains performance May far, so April. in consistent And what with saw

in of which shop. and many widespread some online stimulus who channels, checks. so may shift enabling environments, There are landscape, benefits a of to commerce, strong for tailwinds client and attractive from course, April competitive us in to of fewer offline and unique spend have including a CPMs Dislocations as such including sales contributed The year packages to be number the of temporary to many purchased limited of that believe face more. we buyers mask, not not to but to this categories or our increased relief leveraging deeper, government millions new buyers only places

and things that So there's things not we that we there's do know. know

monitor possibility other yet macro business potentially small For a experienced instance, closures, very we and many factors. which economic continue to headwinds, losses, broad as we deep job such consumer fragile downturn, mounting and the confidence, of real haven't

but strong line for but to growth strength year. for of Our QX, demand we're able support likely provide that will April we're the surge the not full top best recent guidance view uncertainty, GMS in provide ease, is the is in Because the to guidance for quarter. today going to

million and May $XX strong the adjusted each implies rates and a the but to XX% to to up growth with June, quarter to to XX% of $XXX in QX for to XX% compared QX last GMS XX% of million, consolidated million up year. estimate currently $X.X EBITDA range We of billion, is margin $XX XX% overall. for in of This the billion Revenue of which in deceleration XXX% of XX%. to range $XXX $X a

own and to during quarter deceleration lead implications and of consumers the hardship the the retail back as combination would assumes this about both this choice year. on you of and two We encourage for model of through meaningful more Our we internal to for and tailwinds go in to half discussed announced creating your their then the A time. year. growth economic in could potentially thoughts couple the headwinds think The begins reopen, that the we model.

given you from a prior quarter to of model, from Offsite cost marketing May, can marketing expense. margin the will in the our from early beginning Ads we shifting trial transitioned offset revenue benefit expect partial to as reflect revenue gross free period,

QX a the Offsite impact rate increase a charges contract in for GMS seller without delayed take fee bit large certain given in of services. Our corresponding and increase will the the temporarily Ads

As TV. for mid-point last Offsite QX. of to marketing a the with QX the balance second million community, seller to on mentioned basis now the increase sequential for costs guidance will in were adjusted quarter, EBITDA present in XXX are million non-recurring margin to Ads our we Of and approximately spend of transition These and also our the and in points significantly support due incremental incurred $X million costs quarter. our in after QX approximately basis investment to $XX $XX

execute that well believe guidance, we'll are on our mind environment. Reverb XXXX Also our we we to performance in extremely and Based on situated a keep reflecting the acquisition this QX that quarter. strategy lapping partial in QX QX be in

allows to marketplace investments our model rapidly. very the and conditions to changing us scale respond that With

superbly. and an team our We have challenge rising a approach, to agile the of and current disciplined environment executing for investment

live is Thank Q&A going our moderate Deb session. to you. now

Debra Wasser

see Madhukar I'll at we from Kunal all a Bank. Hi everyone, question, you're start hope with doing Deutsche well.

you strategy social versus regard search Ad QX, what about brand spend Josh. with think TV, to I for think own then supported performance, marketing versus Offsite is versus That in As your is versus one, and your spend.

Joshua Silverman

Great.

Okay.

me rises because a let disciplined all natural as with falls we how that make we try a marketing to shock with so around consumer So our and with of start investments absorber marketing performance and framework those demand. really investments, have very is performance

just good at the next all looking and see is and ROI very And dollar deliver performance dollar our So a on going whether marketing spends in both spend and Google performance spend now we've as we a as of places. the to a marketing Facebook we're include would before did that of we continues about couple talked and our the that marketing well budgets it crisis other have return. lot for next our as threshold performance that disciplined spend

of a a terms where in of a question is seller marketing versus about the which there comes that that in number overall performance budget performance still to funded, ways. back the of the part is and portion subsidy paying gets billed the marketing Offsite Advertising, Etsy is in Etsy And different

store. they If from not to search different a buy see someone they from buy goes may that Etsy a result click-through, Google, and may store, they for and particular they

something for that So that case, gets offside of advertising. eventually seller charged, in sellers was those That's funds. Neither place the purchase sellers shown that neither was the nor neither Etsy who's billed the on gets ad the Google of made.

new customer which for with partnership will the cost gaining seller of and our product Ad also the that great Etsy. that's So a selling that seller Etsy customer, that's is there where from pays the seller, for again But something but gaining is think higher Etsy a Offsite times - a an what be is Offsite and advertising the subsidizes. a great may is again, sellers, because and great and new we than be

will we broadly well. bit to with So the funded performance vary funded But is we the seller a marketing that as expect will would in spend terms portion elevated. consistent the guidance demand the because performance naturally spend do right portion marketing demand it. Etsy be of I Offsite with of say funded versus Etsy now is the it and before is versus I Ad gave elevated crisis think of the kinds vary that

brand, look upper talk Now are the and frequency. is about advertising. look and let's the way at it They we reach funnel at mid we the

think in we the having but to So number than we have audiences the just something, we - where seller target we a of an the to that haven't GRP, really that noise before. look is at reach opportunity a that's And our want be creative rather do do they help really what great We're that to a GRP into from lean points want enough point story to opportunity above saw and to that the really things this creative high the buy and turn a and create is our the people they're experience, them trying and think time view. them frequency you against trying on that special. and is for first land you for way the Etsy a that of story Etsy could tell seen they site we or realized to line, that be to for our really with TV communicating having and connection that to may emotional Etsy the really above really sellers' the Etsy the our telling they hadn't great millions be for on understand to moment connection

are during the at to doing dimensionalize been of kinds reach the frequency traffic we quarter is spend kinds and we've appropriate. fourth of similar implement that that the seeing, that's that holiday meaningful we we'll looking think And given of peak so, for in frequency be again, kind that periods. reach that you, And and

channels The rapidly of other to these us, have time, targeted video different resonating helpful is to and that in to tell reach that place very a we then and we're I going test and audiences. we even funnel really of can would and on we which how creative we're is iterate in about TV messages think the there what over terms and with and again, social frequency, do consider new for message opportunity about A-B is audiences, test mid better opportunity also creative new to a spending our front how we as think

how change pull back that's to to is this and pull really Etsy for appropriate are framework, I thinking - easy conditions us to for a these time our it's at speaking, these spend, that think investment be that if broadly should we're time. that by leaning it's we fantastic to if quite significantly, saying about question in But investments. variable so So back I'll close think this level investment just

Debra Wasser

Josh. Thanks

the costs RBC. top please talk about you to can to Khajuria Next still to and line savings. COVID this are you the understand do general doing cost talked we seeing places, those you plan update, about what to where I some be our guiding you'll back costs, areas one the respect the from from continue plan intra-quarter more scenarios be it year and Will but pull of how growth to stands. with manage to scenarios lean is aren't you year, three on philosophy into that full Shweta strategy and

Joshua Silverman

took fast I Thanks I the saying start Shweta. fill and one peer our headcount disciplined any in our talked that go and start about I'd per I'll operating we've structure. the call, we from in costs at call we group. always Xnd quarter, Maybe gaps. pretty the And back to in very our look if then guess and you can we about look at April mean of of - Yeah, have been that prior out in pointed cost some earnings our revenue you we're fill some the highest Rachel by action always how we

core quite crisis waste of is looking a that make And entered company. can purpose, we get already better to going continuously best and its every this fiscal we and can we of how values, are discipline lot is dollar sure minimizing one at how highest so, a we as with our and

to doing on fantastic we in events we take that I just said March. to a we April. also the meant our that glad levels of fact of did in that rising to the the appropriately invest boy, side, actions week short-term the third capacity think in, investment not we not am in I had on to we're oh trends very over very, to short-term the that the react needed and based continuing step we going were that Because take the challenge We in and, April, were when the about the team resources to job were month did busy

fixed to the lot So fixed our going a her to cost. plan continue we're Rachel mean around to the hope of by for do cost, the will have what to our hold. best, and hard prepared careful we're because be it's going predict what in taking we said worst remarks, eye going to on for that, just, discipline that future but We're we mean we very

make payback, for a Etsy investments in positive an into want advantage. think point of we this take that to But really think now we leaning really embrace and sure are terms could in variable good are that variable and investments, a because way going right we full we inflection to have we be

on put I we've we done, as out product to with said our that our last lot of coming be window four because all the strange thought of work. and a think entered thing at important of year, continue The would just win, not and what over, We a that's clearly we it's to thrown in roadmap. started fact underway, got into that really XXXX we've that those vast product really we're projects May say we the this our was of continues and into in would everything and is align roadmap we very to lot think right high working value pillars work if majority

strange time if are a of current same as directions. that changed haven't the that the there we we in At do thing, that we the things to fact, crisis need two would and be in said result also

speak the look the and go moment and the have So proud at in a those that team really lot team have to pivots and product has to our that we we I'm of both made took things urgent. a that now, are urgency responded. respond some way what and to important are things the of And

this moment longer make to time of much some platform slightly pieces our when and fundamental stronger we looked us investing in hey, also going some have do horizons. might for We've actually that are the opportunity that have a said, is the business future, to

or give data one example are that we data, and of expect all are would that data Etsy of recommendations much the medium are get have of the X are pipelines, make to can... Etsy the that search And our that we're the in would within that's clean, much much I and we they opportunity to to right now we something payback data. opportunity going quality search embracing and capturing Rachel for better term and deeper long-term X in a is for think the usable there, is right teams better months, can going to the right there result stronger next and which but an And give opportunity there I is to investing in it's taking use how are formats, we And those now. not I the and tools right the

Rachel Glaser

specifically jump margins. I'll additional few notes, around can, a I If with in Yes.

So to now which I want people year. margin speaks revenue on we've we creates that our the said I be zero even expect - line for consolidate Reverb want them and into a just past top financials, as have remember to the now, more to lot with about we breaking potentially exit the

revenue as so - quarter, as In a the Etsy and also into margins, will margin, QX beyond. dragging shift of Ads first cost down we a that zero we revenue, that's with get for as accounted now sorry with QX

we this television quarter. of marketing, Josh which spend year year we're, prior we're leaning on in QX as brand spent talked the the into and didn't in also pretty We that about, QX heavily in second

expense P&L, cost bottom in mind, impact keep been that so was last so reduction the question we element labor, where capitalizing we're you, product also - that the and and So I year your is this we've can, were our to of year, margin than thing as line. we'll our to would development team and puts advertising takes continue it is to but are what our it last those those more other television less is parked a on judicious spend relates about specifically we I know remind lot about

Debra Wasser

Roth. Thanks, is to Darren Rachel. I'm give The next Aftahi one you going from at

category category, have been would X masks its April, it if in the was X. number said You was number so what own

Joshua Silverman

often historically the as case Living. and one, Number been was Home

no category on it's Living like that is the number around only that world think comfortable to Home was opportunity a can about again for people now the very enormous can this, lot category everything can get right I it's in in how get for and how and it's do and this in thinking categories. and way categories and quarter that Other that the and toys a make their and home category very name, home do, one one self-care. else your were that one large large craft category right Etsy, moment, robust top still were can really of card only they a that things now Etsy, really our many nesting our cozy, of of Etsy, but So office Etsy games, up them our they more more there it's is tam a included categories, speaks of home one supplies, like and to a

a that are this is categories different moment. really gifting deal relevant, really many in So big Etsy on

think delivering now had relevant job do for products and particular are historically challenge I So delighting right the suddenly, really are a bigger know that those and categories what before and great that those been our opportunity is the a in we to have sellers for of than customers. to Etsy we've has doing people and getting many way us

And me future. makes optimistic the for so that

Debra Wasser

are Next one what Services' GMS should Champine the than from QX, comes faster from Laura drivers? Loop. and revenue grow or In slower

Joshua Silverman

is a reason what a expect in slower So I for this to unique would than QX Services' revenue grow of moment. to slightly GMS kind

improve nicely averages, same we're improve AOV is obviously from of AOV rarely GMS seeing we're visits rapidly, conversion So is rapidly and GMS over fact historical Etsy then a really is we its seeing on grow the course time its the right of function and a rate, things - grow Marketplace really, down rate historical and rate now very averages. visits, visits slightly obviously three factor, see But and really and conversion conversion AOV a growing very is significantly. third the at

for positive Etsy. very that's So

driven by call promoted Ads, really What we now we views. used Etsy to is call listings what

but we Ads overall. a slower visits if It's actually slower second Etsy than in growing we it I are great. a may GMS great Ads particular. So trajectory, then emphasize little then see than that overall we not GMV, slightly think is may Etsy visits than means if growing in is the And see GMS, that want quarter Ads grow doing GMS again slightly grow slower slower to Etsy slightly than

Rachel Glaser

add we the is in that the of first now thing listings I surge on Etsy are were we took the mask to it's to when to April, part also no promoted Ads portion sales, of that just month which may mask there the there. of out - seeing a point promoted And of one pages, back in Josh's formerly off April, for known but the listing listed as response,

Debra Wasser

John a guidance and related, June. that to full from a QX Can hope go that have level that are in this of from questions going Colantuoni, I key high We one Jefferies. you get implies right forecast. couple I May John, of model said to you assumptions quarter I'm GMS your talk of the internal growth the guidance with some in about

Joshua Silverman

we we is and start not. to that, happy be transparent can can, before, always about start a we to there's emphasizing you giving we whether now, And of over we broad transparent as as it's helpful a promising. range can or forecast guidance. be been without it's with conversations guidance we really and as know I had to of and not and hard I'm people to giving as which wanted would guidance to by as We try give right Rachel as lot said what

central is a think what that months you to set is is giving we're in and we warehouses just able there like alternatives. I are those we're on Etsy's two - lots like that logistic it's others. products to a and the produce sellers range currently rapidly fact tailwinds currently and to demand. a raising fact and not are reliant range, a the that we so logistics, left in the benefiting if in speaks pretty about things being so other you fair to of things range, masks, very think demand only time broad fulfillment gave tailwinds, fewer And broad and demand and materially from speaks pivot you of there just XX-point not The that quarter

There headwinds anticipate. we also a that set is of

their seen background that very But much more or and a months if job headwind come. - So we out could that hearts to much haven't who's feeling to we it's lost economic show go the in insecurity yet. and economic will up think we that everyone get tough our real

you We everyone's expect We feet for reopen. than retail hope that know the sake gets will back sooner that economy its on rather later.

headwinds so and at tailwinds how And or will headwinds we start to feel and continued feel to hard we when not. will to counteract to it's what very those those pace, might them start model

within want So anticipate if Rachel, to we more best there's I there. don't say range the guidance trends. those did you'd our to know,

Rachel Glaser

point couple things. out Yes. only a I just would of

holding seen we've that, attest planning the to so of of some First of you not we're you get daily, all, - trends we we first told expect days the we couple but gave May, don't in June. the - we too of you and because update you decelerate accelerating into that and follow May, then May numbers end numbers to we again assume the the given thought we that you in May of we've will could through line quarter back said trend tolerate

will Etsy's obviously quarter. lastly for guidance and two deceleration our And performing that is information into consolidated there guidance, the understand but a the you help the is of you, we're Reverb's total forget, given I will marketplaces, don't strongly, percentage the Reverb higher giving have respective so total a you think smaller we've some weight we gave

Debra Wasser

about The are Okay. you you is days habitual occasional of from what Thanks, growing. and it these your one at early still Though Jones seeing Citi. trends next is Rachel. each buyers, are crisis, buyers, your learning active Nick that in are this early buyers, your groups

Joshua Silverman

habitual down, our I habitual Yes, love starting with and buyers break to it buyers. mean our we

the will of habitual much we they seen that You folks about which improve, what can of in already that have kind so coming offer, the and sauce is you they because group buyers the already are that grew But have are they of so Etsy again. and but are out great, Etsy. number already habitual, to frequency they see figured us frequently know secret

think big they have they're is only for before specific they're lot about very this product never maybe one there's might who category of shopped other for have on us The moment Etsy occasionally only now of shopped a thinking and product coming now who opportunity or people us in Etsy on very and categories.

really that we to but the seeing a and the its dynamic we we're us moment that be occasional really that's the really buyers opportunity in engaging about a about days, We're way earn a able quickly And very cohort encouraged lapsed looks remarks this and really from do have cohort different - excited them on new gains to and way are new April, gave new the so and of continue we now job that in and to to we're brand so buyers. frequency and the tools segments data identify early you investing ahead brand and well, those prepared we're our communicate we to the some great task healthy focused is really that in frequency that. in this in personalized different loyalty by also very segments that very excited allow that as future, their the so

Debra Wasser

Okay.

can more. seems versus with talk QX must the from is new about this Next of talk be Maria lot customers, but you you When Canaccord. visibility, guidance, you from customers. your can Ripps your bit seeing just much from a you customers activity engagement from like one existing think relative about It contribution of a about little existing

Joshua Silverman

use and feel Rachel, start other different on, - to we - but I'd Etsy we're that there's I'd lot around and new that ID, don't so And a say have least to there's a haven't that means guess course, when shopped who ourselves, are of say XXXX, have as that having of we buyer people lot first people a a remind brand a Etsy. I before and strong never shop Yes. at aware online just in new in we lot pile of of not very definition, people still And of seeing uses everyone customer people define we We that. and much. definition at while. free on we that excited have by seen new, and many a new been in using mean growth they ever are buyers new of

and exciting. those really shopping people up now showing on Etsy of And are so and it's some

is growth really make buyer about that that over we've better experience new And I'm the we're few the I strong to done to shipping much feel build past to now. trust. So right very good make fact work like the excited well the really years search feel hard prepared,

experience, of suddenly they when that the just front often, a but had for a is first of of number bought shipping they business They've and smaller us different they lot before, about These set open the we're infrequent great talked marketplace more is we're know finding and we're they they're in think there great one well we've organized of want. of fondly, don't proud such and a do mind, a one large that a us Etsy we are places very they but Etsy shipping think and very might job people marketplace, of the onto and - buyers. where trusted and that time are us to that coming sellers don't as on think a of of for see is that of delighting before, them, products

from who people or frequency haven't improvements course also then community the higher are point who frequently site high, people that already seeing of a for shop and we're I Rachel, occasional lapsed So anything because else is as not started with if improvements they than it's year. buyers, the just shop the to. more definitely don't you the been with And and on seeing know, already. delta with we a want there's just buyers

Rachel Glaser

- companies point those or month not million been add would buyers of mean, site that mean, - about that's half definition out X.X two buyers to to the want this redundant, the days or the of I I'm We really other being buyers but you use have more, our just groups together, and about had just new we most I for half if XXX then I the just by probably in I'm reactivate. April new for of April buyers.

So as reactivated and are that of cohort, us new our for ones are to for things. portion top and into the mind material we of the marketing capture and that lean is a opportunity be growth, and other they're the

Debra Wasser

Okay. Thank you.

due you SunTrust. kind spend Next from in to one Naved uplift stimulus. think lift at government you spend is seeing Khan from consumer - do may What the support be of

Joshua Silverman

Yes.

growth you as out behalf have that recent. would good gave think May what We can the we to pretty it's growth, people kind been helpful. that on we economy all is say parse of it's now specific see looking sustained we've I see well. But feel were the trending, data continued American stimulus been and that the that. checks they've American on you have for early But at so and hard been to of We yourself the that because so about And fairly that helpful. certainly and it's true probably how right April again,

Now as all get know even get But for bit us the just stimulus the past that hard the checks hardships it's people's and economic we more little real decelerate, will that growth puts savings that get a time over will takes we very anticipate worn for as precisely. that people. down to

Debra Wasser

Next one is way demand from Jason for and/or any products, Helfstein quantify that. at seller Are re-engagement products ad seeing new those OpCo. with seller better you your to

Joshua Silverman

if start very we with. I'll to happy want in, but are then, and Rachel, you jump

Ads. Etsy ad had we've So we seller we've got Offsite two products, and basically got Ads

model, think getting is with a actually on and came X really pivot a environment with sense new the to couldn't I fit So way, then this really in. we're more a great we that the start, By times, the for we're more even they pleased is even these and better we a Version real launch. nice did Ads we that's team but had off have that second Offsite made Ads how the and X is the that we're they I'm think team to they and to also these take Offsite a for that I ready think appropriate job biased version launched just do action, product when times, anticipated to to think launched even Version too, new current they came

It's technology, they with really pleased launch nicely so right the to strategy in being is having community the on very it's we're are are on days, what and the metrics how complicated hearing and are the we early encouraged And to early we addition sellers there. things very which opt-out but what metrics from very messaging with very Ads. enlarge to by encouraging see seller churn, by and rates early the and the we're in like the willing Offsite we're gone, both encouraging executed pleased pivot, around and days, is

called very used we see promoted a be popular continue be Ads, Etsy to what on listings, to that And product.

it And and so it they're delivers good really our sellers them. like value investing in for it,

pleased also we're what Ads. seeing we're on Etsy with So

Rachel Glaser

as for it what is everybody feedback days, sales for share economically, were several would had to if that product the one not product very, not now, listing one of now we've line so whether they relief and their pleased they And and is would ads, see - we've these gotten it of a and daily billing the and waive, expected I had but we certainly I I that that so considerations talked, months and we that the have say other collecting I listed whether on to as we to see would seeing, to start been a then and what it's of may product so was they was they to they have a what so have performing fee and said, modeled of start or performing calculate was could the the out a live I was performing our that everything them in several was think one is actually doesn't mean Josh raised, and with product being perform. just how opportunity early also we it, read, see actually but made be before very that basket we get for the like what and for days have notes, been that it's would this add they that - had of exactly strike-through, live we've on seller we've started how could paid we to since issues designed couple had part with it's because very and sellers it weeks product bill, were of but loves gotten - sales nothing

Debra Wasser

Thank the time to one high else and went you. here you. sure who's get question we back queue, questions little make We a stuck anybody I'm squeeze going are over level in more we'll in bit, that to

This Forte one is of Tom from Josh Davidson. D.A. for

Coronavirus what home coming for XX% the thoughts term next of outbreak e-commerce industry How near are the as long-time hold about out on physical reopen? a mix As year. stores participant, is mix increase does today XX% much the online category last your example versus

Joshua Silverman

for an point much of they as years suddenly of online it's and convenient have well lasting not turning for discovering I that some offline to places. that think it think and in think want people and I it's is e-commerce going moment - us are are of a really native think been in that inflection to create shop brands people for XX,XXX I large really or that that inflection works to a that when and I of online behavior the think them many, and world remember I want and for don't online to mean shops really aren't shop and to or if online I two only economy I is our think still or be going be this and that most lasting lot that point many changes could to and very X,XXX this shopping very and one that I meaningful going is a segment Yeah, as think XX,XXX purchases,

alternatives getting few needs a of is the a for your in a all and lot Etsy almost which any Amazon to because innovating and but time, needs everyone's when at to different into meaningful our alternative on actually Amazon where importantly, Amazon embracing that be handwritten and are stands the to meets we're investing job day, I can they're what moment rising, is positioned you place. every moment think touch world this get to So range demonstrate you're that going super we're the personal sellers that something and is of really are get think times, they're notes, I one the they're well of the going Amazon, moment most great that a one to truly meet delivering people never and fantastic that a that on of to lot wide doing than of other delights, products from cool, a we're

lasting think winner going and going our and Etsy be think think term that to change in I and over for that this is all behavior over the create exciting, a - I and term is moment the most So of incredibly do buyers. that to I medium a the long for that's sellers that's

all prepared support am said important and people how to has the everything But all of this lot by again, means the really do as I'm for And really of so team stakeholders it's community, it. to to a our I all close time is their try to lives. the in understand Etsy my I saying in the for remarks, lot and when a our I how I'd team, stops, stress guess to they they can grateful grateful pulling like on that out a it are so

Debra Wasser

you We to joining talk stay thank And you hope so you us. Josh. Thanks Great. you for Thank and we'll much. everyone soon. safe,

Etsy (ETSY) 7 May 202020 Q1 Earnings call transcript