- Earnings call transcript Q3 2022

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Deb Wasser

Hi, everyone, and welcome to Etsy's Third Quarter 2022 Earnings Conference Call. I'm Deb Wasser, VP of Investor Relations and ESG Engagement. And joining me today are Josh Silverman, Chief Executive Officer; Rachel Glaser, Chief Financial Officer; and Jessica Schmidt, Senior Director of Investor Relations. Today's prepared remarks have been prerecorded. The slide deck has also been posted to our website for your reference. with live Rachel's video finished transition we are a to webcast we Josh presentations, and will Once Q&A session. submitted be on can via window Q&A Questions chat your screen. the displayed it it any entire use call. open free Feel conference time, as throughout will at the remain be Jessica help try questions, me as we and as get to many your can. reading to I'll will to our levers volatility, GMS our thereof, and on on Please levels in e-commerce including marketplaces marketing and for our conditions investments macroeconomic impact our and financial impact our to forward-looking the growth. statements for keep investments their of related initiatives plans to strategic, global market, general our in mind return impacts, strategy regarding spending the potential may in the and key the that programs, and operating and the drivers duration political, our product uncertainty business overall assumptions, drive remarks support trends, and uncertainty ability consumer results, our stabilization of and member and our today include headwinds growth and generally, economic or underlining reopening of guidance, and COVID-XX-driven of economic anticipated business have

differ may results actual Our materially.

forward-looking replay of described can involve periodic reports SEC XX-Q we our non-GAAP press file it this in in we'll assumptions call. Josh. Forward-looking that, which obligation that financial today, over turn them. release, updated beliefs measures is earnings the to present based and and included of the our future With GAAP along Investor the make any non-GAAP which any during GAAP update call, and disclaim statements you with XXXX, Any website on be we call in on to July to we are measures. earnings I'll Relations uncertainties, find risks A and reconciliation in statements today's both XX, filed release and and on on today's the are our Form with which this SEC. will with Also

Josh Silverman

results. ongoing And macro overall, within work, really than across my held volumes reopened a frequency. aiming marketplace scale over to two of great $X same three adjusting for world future our investing Deb, investments adjusted we've our direct formidable third grew work the and growth result is ago. setup buyer Thanks, challenges. XXXX actions new to to put Etsy in we We speaks ago, this with about marketplace And up audiences, This past for was strategies teams taken years pleased In only with of bigger billion the a strong to again paid GMS billion is headwinds, drive context EBITDA retention, Etsy's performance consolidated times our the in everyone. $X.X a compared our year-over-year believe bit our reactivation a designed be reporting gains. million was quarter, and our sellers Revenue Not with off. was three to GMS margin and in quarter the GMS evening, good strong. on active by awareness fuel and done years quarter very were and long-term have the billion. Etsy, and when marketplace is We're was rather size this to base, $XXX once most currency but again this growth. these core Etsy basis. to fully particularly of larger $X the opinion, for we've

the very Etsy by even antidote. we've different, speed has invest to believe to and and something our buying we up is post-pandemic experiences and on companies with mass Etsy held is bring the this so that human well world of scale, environment to business of in reason supplied because continued a Another in commodities obsessed selling more joy Etsy. offers

than time human were of who with it long more easier most tens many was experience. better or and the special. tried described with the for to and than sellers experience. differentiated and them Etsy research be I've first how for buyers to post-purchase indicates our course, reliable products, the they delighted they from first of easier time expected so great During with they that found buyers the or time. of buyers And remembered, spoken buy a so a in to find pandemic, trustworthy And millions the our touch customer

choices, came We're they're they millions is just Win, first highly the while to and our that your started to succeeding it's our playbook again elements, to during again back Etsy So us me to now advancing because getting a limited and simultaneously coming values. when four clear had ensuring because to. environment. of they that all tastes pandemic, competitive you shop the Right its want differentiate in value in want stop our for proposition we By

and this support year, organized investments to making scalability. and growth Etsy more agency prior for them sellers' more making inspirational, more on calls, more offering explained we've our Etsy we As reliable continuing feel and our you, made around efficient by

you asked to have of running of future if Some ideas we're fuel out growth.

the fact, is opposite true. In

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great significantly of exceeds capacity. ideas backlog our our While

to most to Etsy tyranny buyer. I'm our is journey excited struggle buyers personalization leverage and the of tailor tastes the innovations the on each of choice. we're needle-moving with better of to needs One Etsy about

a going that.' That's feedback thanks. user who complained to results need to Etsy so Hmm. own I challenging recently with shopper has especially take an idea stuff get each about from lamps. it's search what important you personalization. is. for stuff that on since fast, why example, For the pass person search No, his results? hard world-class their good saw and I'm world-class we married good technology narrow the search of We 'XXX,XXX

or a more to all discovery something personal for be Similar that to feel mentioned expect can and the button get investments and here relevant one, to to quarter, yourself to needing also to engagement listing, fast, quarter, to search videos this very bring into In social thing which, signals as we've engine on that reflects responsiveness result the loved search a good to shopping and last most able in items Etsy tastes made with we search months. source few made make find you just progress for In truly experience. our without to simply prioritize our we inspired, to competitive the this our a stuff back now to that experiences make began result the shipping way, search you're and And Etsy just or effort I'm buyers a directly experience. we delightful through the items are but e-mails, for price. likely In find purchase mission to that need we course, correlated are seller to the add-to-cart challenging, be the hang to app we of inherently on we're on-time you. Every added personalized. it's page in of excited and Your incorporate results. that click you the to highly creating we'll key match your to past a can very your this journey, proud and don't way, search in customer is so be the because quarter, search right reviews, rather believe differentiated progress push differentiation. on performance, our such I'm of especially we journeys, quality, query, and on, whether on-site style feel information this notifications,

We interests personalized more wins had to early some buyer tastes recommendations. incorporating also and interpretable create and

just to style in-session we if in you do more search progress we'd search lamps likely to ranking example, of launching fit different great mid-century Etsy. check way aesthetic. rank like it depth anything and that will to a We're and lamps, and out more you be a encourage finding often than information virtually words mid-century And dynamic the what for ago, merchandise expanding homes. For believe you see for a order It's new to capabilities item more take making elsewhere. a that choose few upload to it. on looking around the might what be non-US better iOS or I'd personalized picture your who special that you results, versatility an adding helps than find technology item, markets, similar. own Etsy making you modern notion for for days items capability to we modern show that buyers easier of which trouble of can the don't may help know visually to how are this search you neural and launched support a Cool and to if models describe like you powerful introducing describe to retrieval, on even breadth, find right us item listings And speaking Etsy. relevant an for, buyers have understand you you're on us it advances the more that not, for

just is in development. product not personalization journey Our

by to ways teams buyers keep coming are to finding great updates, triggers had to you for pathways great reactivation marketing relevant bold our work offering so Our buyer and bring also ways in Etsy, doing and the reinforcing creative and we've contributing this back many here, We're stands evermore brand and what retention year. to back.

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listening year improving to our XXXX has our of in and been In respond with tremendous addition sellers. also to focus always investment our a care. buyer We're best on trying experiences,

rewards One to and in we great example act shop on hundreds being management for increased to than A highlighting deliver the about, lines them see and month, success, and the social to the really business in responsive, research items ability give that XXX% time sellers scalable understanding metrics craft a better passions, a encouraging surveys, We our every reviews. forums other and Star been ways program buyers then In access what our of not that program, of trend marketing care they could groups, metrics and sales. key provide these relationships. elevate sellers growing our create has and services the seller And of it grow great and understand areas. support that that sentiment their number We getting any and represent events. dashboard our sellers' favorably. alone. It to a in community that ultimately Seller is support their for platform. to badging fact, enabling global unique from rewarded us to drive continue and of how campaign understand which their this as their our our of of sellers major customer area It's GMS. thousands with marketplace, The increased global through strive on best growing prominence to affordable agency, is hear such for with those sellers shipping they provides their we focus year-over-year, tools, of we scale in channels, do can be over sellers percentage

affect responsiveness indicates across than importantly, Seller to also data strategies see and for Being are non-Star those to their help including means the practices pressures love macroeconomic their badge give them insights Seller Star to XX% on, an program their similarly Etsy events for pricing the their control. and shipping listings, when their the counterparts. back that sellers We're creating also on who sellers buyers. participations and elevated GMS pricing strategies continue the systems continuing about more their expenses adding understand business and tracking for platform Our Etsy. discounting more think having of situated have things sellers we their out in income, considering marketplace, in impact sell resulting to earn sales Even positively the about that in experience

the a other made example, we among their out we impacted Florida, to Hurricane across the sellers. have when in things, hurricane, help extension reached wake of month, For guidance to concentration burden. them with Seller offered Ian where sellers last impacts devastating Star deferments status ease We of saw manage shops to the and bill meaningful their of landfall and

Etsy customers, a trust, Etsy. was a to built The more have coming set we positive as back even August experience journey journey Protection X on our loyalty more Program and ensure buyer Etsy we're launched sellers deepen on get know, both you frequently. As to multi-year a believe and and Purchase a policies will buyers to them buyers of bring

these the purchase pages off And and team While and it's pleased trends meaningfully scores early to across and in issues clearer, very cut a protection rate customer improved. half, while times in conversion escalated volume. cases selling how season. wins helping been have how for with more our and to positive shopping easier reliable. the issues management adding in make on We've The customer start, cart. to great time had average days, launch holiday handle Since listing is we're messaging launch, has Etsy order have satisfaction we program gone, for Etsy to is well far on ticket related support from resolution seeing

of element returns. key trust Another is

time announced have During returns to by customizable listing-level XX% had wide been season. important, Etsy we sellers can not. customized items, offering array sellers' sellers And or set are policy, buyers policies great improvements, of having example, and quarter set sellers global policy others clarity approximately range personalized that often a significant policies where at requirements. as a level. entire end, a holiday for from are return as a them the more return These deal sell listing return accepted meet allowing developed best their some returns listings of QX, where for to parameters a for moving in highly This is of the single individual shop

promise pleased problems more work I'm resolution such rely this contributes to that easily, tracking can and a quickly us trust All has year. initiatives, of for climbing to rate, we're as and instill brand report been buyer steadily transparency, purchase this to policies KPI on. KPI our and resolve a you work easy to protection all And how delivery help all return of together

now Moving insights survey season. markets to three period. holiday completed shopping top the were thinking for to our about the a Super our in season, Bowl recently We how consumers core holiday gain

shows and that is buyers, while them. Finding holiday important sales more will looking shoppers on Etsy so, an to even high-quality with data actually gifts affordability. meaningful and, be most discounts Our eye for the

and reminding gifting shops all and online things extraordinary, do pulling for be this leaning We're holiday it. our as the handmade, Think small, [Video holiday sellers' into of has Etsy discovered we'll get access So out of social all like Presentation] affordable that in one-stop Etsy the for every event attendants, marketplace uncertainty. help registered sellers also XX,XXX particularly best message they face history. stops, it season, the about grow, With buyers like moments, big help sellers we a Up: was tips. all XX% year, trends, insights economic ever interactive make kickoff have insider virtual we nearly sure holiday of content as The first trends, event season largest-ever sellers and SEO sellers, prep. Edition, experience to tools world. holiday XXX,XXX shop rate a our Etsy September, from global our continued and gathering in can, takeaways Etsy included for around and Holiday this strategies topics to In actionable of and the media the to held views across

could differentiated and than mid-XXXX, and hindsight, and we better. individual Etsy as the their valuations Turning playbook on based acquisitions technology rates, benefit with on consumer been they brands. have and over our in long-term Etsy's the they than headwinds seen belief now mission alone, potential In as and marketplace interest factors time, decisions model what from greater the parts. highly businesses, EloX making to When operational of we such their well macro sum to our our as perform better could alignment given our we purchased in happen as could subsidiary those to we've financial part and other rising Depop core saw growth that those certainly timing company business

Depop initiatives business, vital the to in goodwill building influence new reaccelerate review like to we themes Depop, most the the her efficiency settling deliver brings into focused in making items took leaning At Depop Similar other that coming we're should again. to improve Depop Kruti and growth will of style looking view of realizing is the and know more to value is for to as over and faster reiterate conviction want momentum easier the for in how from an you, they're in on necessitated them our community. value. sound launching familiar of House have it today's quarter, we team explore identifying keeps I and CEO, that for great for. to developing and style Rachel order days engagement the be tremendous the focused both that on great strategy. service back is scale and Brands some will and fewest right in things that consumer the over factors their adjustment users to XXXX, these conversion early experience find Etsy, and we the growth user in impactful to The operational people While looking

in mall. more like continuing CTO, to to musical the pre-pandemic our to quarter. an dollar GMS Etsy want initiatives value thoughtful moving. millions wallet team In human, down eight during back Etsy great a will congratulate equally end bench experience business to they're her search, which XXXX a deals of Elo's strong marketplace to and work and further allows Rachana thank CTO business. a year. instruments both the shopping reignited is to ones focus to moment wrap product company. market tremendous velocity collaborated has bring initiatives ways the top-of-mind transformation XXXX, would are is and we with indicative more highlight throughout leading up growth search the lately, and our role of from familiar, in the scale the so a demo and negotiate year our as to improving spur across as rebuilding special of marketing like? the well and is inherently Accelerating and of to improve with area functionality today the talent five take growth, many it's of has planning, a from Fisher, by optimizing helped popular on mentor Kumar, the the Ad growth The in brick-and-mortar, relationships and such awareness as critical earned I'll and when come the it of Reverb innovation holiday to is, really question our addressing the season engineering perform step sellers brand, challenging asking she's this during role used several same and into played of followership which event-driven that newly-launched performance have you Etsy's promotion they're efficiently; helped reduced what a a lot make going look magnet, these most pound guide, EloX business, of to doesn't to that better world important gear more the has categories his the truth accomplishments I through will improving the as years role areas that tool our been pricing; growth. been shipping pandemic. building marketplace, to to. tremendous and at over brands around know. bring period huge for as focused our is to costs dealers well suffered authorized model, manufacturers, or focused We're our it same team a see coach Etsy So optimize depend buyers then in We lead Listing news the to in environment, online questions Platform. experimentation into had who understand and years, and don't January. revenue partnering XXXX, on with they'll has differentiated levels. variable Depop, at step marketplace some stock But last on or good to marketing more I'd getting retailers Rachana to bets been flywheel directly isn't succession sound has and way for during spend outpacing that the the great momentum will enhancing price sellers. inventory Whether thrilled of for now of foundational Mike the taking talent as gift-giving that whether B do above less thank the consumers shopping on between her e-tailers or carrier bring revenue, Fish in better will of its across on gear a shopping Boosted us Reverb must. the of a sellers or the potentially or the who Brands e-commerce to streams time to because cost Kruti House our musicians. highlight look to I'm beginning listings particular, Brazil different. sell in that deals with share priced drive our initiatives and lead a reinvest refurbished testament has these If the in far on is, Her like the rebalancing available buyers continued

distractions minimize the to over And things time. done. focusing get So care turn your can we'll we Thanks Rachel. helping and discipline control, with for our that, with our and job keep and I'll the customers, delighting on people investing it

Rachel Glaser

marketplace consolidated everyone, joining third My you, call. our cover stand-alone quarter results, for us thank today and appropriate. earnings will Etsy drivers performance key results and commentary for Josh, Thanks, where of

and results are and July consolidated included GMS of quarter with for and third as financial EloX Reverb, respectively. X% XXXX, KPIs quarter all XX, to a Depop third July and X As EloX year-over-year the $X reflected billion. basis, a in down consolidated XXXX, On our of our reminder, Depop was

Our XX.X% to adjusted a was $XXX $XXX XX% million, increased with margin. revenue strong EBITDA year-over-year and million

by year-over-year, headwinds was margin EBITDA X.X% XXX operational GMS adjusted points FX increased the revenue a disciplined in basis, as strength XXX Our both quarter. basis headwind driven accelerated a management. expense basis On and to currency-neutral point

We continue to increase benefits as in increased consolidated XXXX XX% face factors. of and to XXXX other our XXX% in quarter comparisons pandemic the challenging of a top due stimulus GMS on third year-over-year the third quarter of lockdowns,

determine prior improvements ads a consolidated impressions revenue that vision conversion This ongoing higher XX% year-over-year marketplace Our Within year-over-year, discussed basis, to trends our strong adjusted business to primarily was new buyer our and has a click-through earnings a On as intent in Etsy discipline in personalized as impacted EBITDA the as our more help ads full period revenue, the last serve consolidated Etsy led continued utilizes revenue marketplace initiative the evident XX% homepage, to rates, revenue ad due stabilize, revenue well ad growth margin. similar by capability from growth experience. we and to services And X.X%. rates. services such driven on increased of benefit quarter is investment transaction to increased a expanded by ads, to our XX% fee increase year-over-year. The computer X% and on marketplace of call.

and Etsy factors declined was calls, Consolidated which due on higher-than-expected margins rate, of margins greater growth this past ads delivered with investments prior again overall on and, growth extent, adjusted consolidated XX.X%. take a Etsy performance profitability to EBITDA headcount quarters. to three payments stable drove noted year-over-year Solid we've cloud We lesser in activity. better-than-expected a the over and computing increased related compensation quarter, development higher EBITDA strong adjusted basis to costs largely

continue represent headwind margin. EBITDA a Our our subsidiaries overall to adjusted to

our development driven year-over-year product by areas. increased growth. XX% spend million, to to headcount investment primarily Moving Consolidated $XXX

as for Our product our development most XXXX, growth of Etsy largest the where addition and EloX. and the since Depop sit headcount our of both engineers well represents of as line portion is

way previously pickup highlighted, thoughtful engineering and a we growth revenue. team we significantly a in by was in early during This pace As sustainable pandemic, in our scaled our our lagging the XXXX XXXX. and GMS in followed of hiring and

slowed quarter we growth slowed in second As our of similarly hiring. rate the XXXX,

year, Third quarter development XX% of to is last from which we level prior enable representing quarter's the quarter a product spend an revenue, headcount reflects full future appropriate of now believe up XX% growth. additions,

brand will brand ROI campaigns brand drove Germany, year. marketing that three model, we represents our marketing models the buyer marketing our combination $XXX our driven to top fee our markets, marketing, out-of-home in spend, XX% in an quarters. important X% be while core increase, quarter, majority spend. in future third allowed the XX-day which increased maintaining hurdles. a attribution up spend spend During optimized lean over mind It's including A the to XX% in related Etsy consolidated of us million, performance by marketing with keep year-over-year our in higher our attribution some of increase return of by the to spend primarily prior performance higher LTV and to earned transaction this on into

In in engagement Etsy to to a continued Etsy the ROI-focused marketing team disciplined retention and use promotions funded promotions, drive addition highly targeted way. has seller-driven to

a reinvestment by principle fee We a we When have seller, marketplace a of long stood incremental a the in the revenue increase this to value on do earn XX generated creating for value fee exchange to exchange we their businesses. of annualized grow we on estimated Slide The increase. in from of them, chart that flywheel our invest provide helps pie illustrates transaction and we commissions our sellers fair sales. related virtuous

experience. initiatives bucket spend, to product portion development of largest our we is are a headcount and engineering meaningful First, improve allocating to customer

Second, commensurate a higher with continuing we spend marketing LTV. to are increase our

report our Third, estimates building that Etsy rate forecasts. Purchase trending issue Program loyalty our line Program. GMS Purchase we worth in rate, our with are resolution new with brand refunded our on Protection Etsy noting strengthening all and It's and focused Protection are generally

we investments as our calls. and safety in on customer support, described increase trust and Lastly, previous to we've continue

basis. standalone a to performance Moving on our Etsy marketplace

quarter, particular, have quarters During increased line year-over reopening we year-over-year the experienced on headwinds of declined as of XXX% Etsy have weighed for our third following on three-year of year. deceleration. stabilized top In that X.X% the basis majority and a the trends believe marketplace two GMS most GMS performance we

broad The a a Etsy trends as year, stable our such confidence growth in basis, October, and behind of as on third this in over a quite GMS trended third the see bar macroeconomic three-year prior can in slightly quarter from continue We and the well further increased X.X% spending We largely GMS bit as marketplace see our rate basis, higher headwinds as reopening the volatility do consumer quarter that the On week-to-week neutral basis us. of were grew was twice XXXX. a monthly increasing on big from relatively factors currency to on are navy year-over are we inflation. year-over-year discretionary slide. in impacting you

thankfully, brand of variant Germany, we the for masks due increased where of XXXX, been in third Etsy was GMS a increase surge, the the the were approximately XXXX. GMS basis, recently in from on currency-neutral in or to basis strength the United XXXX third transactions driven accounted rearview in outside buyer to While awareness. seller by or marketplace GMS headwind third year-over-year we quarter where continued build have which in XXX investing are Non-US From Delta in in both face that it's the from States. part either quarter the of XX% mirror, X% geographic an perspective, worth an mentioning the point of benefited quarter a

is vibrancy the equilibrium be US the pleased between additional we with our would in domestic driven As to imports UK for growth in where the Germany, for This are balanced markets. Overall, in international domestic dollar which Etsy what support demand and with emerging in US markets. sellers has expected, the built is domestic providing marketplace, we and the we supply. have we supply demand other strive strong

the continues to sellers and value capabilities be important category carriers enable of India during a perspective, allow to functionality in payments part For diversity to part domestic added our an shipping to to From easily domestic of with the and example, we preparation local our quarter. third listings a launched market, to the global provider proposition. prices, domestic our options new pricing of add serve partnered

in speak. Our to so all not eggs are one basket,

basis, Two achieved during to example, that our XX% and that a we increase from which up home fashion-forward and slightly and bags third prior the well in far from our providing evidence And this of items. active those currency-neutral purses, year-over-three-year We living for GMS at on Encouragingly, gifting signs a shown the on we Halloween Etsy sequential trends active increased a in items XX% further which days with of been of $XXX showed have categories a buyers saw shopping home our in supplies, XX-month on living buyer XX% above the was are from basis quarter. year. levels more third was per year, by purchase pressured stabilization quarter a average once down GMS and the strong frequently, basis the who the per quarter, as quarter, are the prior on on holiday associated increased in basis. for items suggesting clothing, reopening purchases. the third with only trailing majority trends $XXX stabilizing marketplace quarter, related and slide. year-over-year are maintaining craft purchased as again, buyers third XXXX, pandemic gains. headwinds, For slightly the in in as buyer back-to-school most GMS

XX.X X.X remained We active active, million sequentially. with slight mostly increase stable X% habitual a of down sequentially, and quarter ended buyers. modest Our buyers, two buyer million metrics buyers, We had habitual quarters after declines. repeat across the

roll for we seeing loyal XX-month a While, And in figures, XX% our buyers of these GMS the spot. lockdown habitual in of number degradation are remained out as periods third accounted course, and our some buyer trailing this Germany growth the in Australia of bright quarter.

flat performance We see average XX% buyer new the buyers, reactivation third sequentially nearly XX% and lapsed higher in the our also continue and year-over-year. relatively in X of down but acquisition over we In added periods, million healthy pre-pandemic buyers. to great new our than quarter,

to XX% buyers which of their number as quarter. seen purchase new on make point is to of buyers average progress in engaged identify a increase continue we buyers mail, representing that basis, One interesting on year-over-three-year buyers more We the X% progress new US have buyers We on with data about the represented new increase lapsed quarter, basis. a reactivated with meaning an we getting great in are days making million X sequential Etsy. over

reactivated more fact, we've compared with the In XXXX buyers in quarter last each of corresponding quarter year.

I'll eliminating company recorded for technology goodwill full Depop much levels. at charge the brand. about of we to of and amount purchased sheet, moving on when and EloX, billion were goodwill we of We each the the businesses the non-cash were consumer carrying these valuations higher balance impairment on $X Before comment

seen Naver have of many than seen IPO announcement decline of all the instance, for Poshmark peers the recent half And value in to more. XX% For less its values of enterprise you have or sale XXXX. by

with, expectations higher Despite impact acquisition, to a debt Brazil. impacted loss share the businesses alongside cost to-date million. for totaling Another the factors, resulting timing share went a the in interest charge diluted long-term forecast of the loss our believe diluted key in valuation of points consumer conditions included conclusion performance in impacted in per rate, increase trends, the impairment a a our XXX continue the driven reopening since by had opportunities ongoing or UK businesses. of rate basis leading and in following goodwill both change such inflation exchange factors factor that and spending of series that of the an significant to familiar of The as equity analysis near-term time impair of you to increased the net inflationary discretionary was events. acquisitions, geopolitical hikes per by both growth into these all Other $XXX rates discount $X.XX, of loss we $X.XX, the foreign Fed are and volatility macroeconomic headwinds, rate quite and

short revolver XX, As currently undrawn. that cash, had and in and equivalents billion investments of we and long-term million $XXX is cash $X.X a September

our was cash million $XXX repurchased quarter repurchase of under the quarter, program. $XXX converting third EBITDA this flow. in to a we million the stock quarter, During cash XXX% $XXX million healthy authorized May flow for Operating Board XXXX

to levels, and we currency at I Now hedges. our exchange highlight not current first assumes turning do the want unchanged to guidance remain use that rates outlook, currency

a year-over-year year. consolidated season basis As the And during Etsy in in COVID reported XXXX. a all-important a from many Omicron and GMS XXX% with impacting strong we reminder, of tailwinds quarter the fourth last growth increased related the GMS global fourth quarter issues XX% competitors, resurgence chain holiday of cases supply on providing of with to XXXX

unpredictable period to quarter currently XXX% estimate We billion about compared up suggesting As have rate encouraged I be we of our growth of account quarter trended to at compared fourth are we approximately to somewhat October into range and and five That $X.X normalized. marking mentioned, the midpoint to guidance consolidated our about that the largely fourth previously and QX, see GMS are XXXX. takes months the fourth for slightly our said, stabilization year-over-three-year reopening in. trends in the XX% overall $X billion, than year quarter XXXX to GMS last higher approximately QX of down dynamic

roughly marketplace, year-over-year For digits. the a Etsy this high decline single of implies

will should driver about the the investments, a rate In brand approximately bit are holiday $XXX and the our year quarter the to about We macroeconomic the incorporated in EBITDA take also guidance. seasonality. this decline. QX billion, you increase showing therefore, that up sequential with spend. and, we to at we the marketing of We in encouraged X% quarter. have and trends quarter seasonally higher midpoint signs normal on how forecasting with the general, fourth stabilization an bottom strong billion basis quarter using basis, seasonal spend be year both worsening up million of due XXXX, primary marketing about currently million, the to of midpoint particular, fourth of We're revenue play year. trend into XXXX, yet GMS for $X.X $XX so subsidiaries our early are environment period lower down last expect to end a fourth XXX% compared consolidated to would typical will On throughout expect X% deliver expect XXXX. profitability of X% assume and We to our about adjusted of margin compared XX%, currently guidance, compared a in out up revenue in the sequential performance $XXX season a the know don't we We being in where a of of with a broadly about holiday overall e-commerce weak for of full our a

majority by kept pandemic encouraged of indicating the are recent in We vast have we the gains. stability our quarters, indeed

mid-February the to we a us at in of still the many until reopening strong start COVID to from a you home, over that didn't XXXX comp As recall XXXX, think and about to see to headwinds us start gives significant moderate kept that surge first started grow in that that quarter May.

call may Session Question-and-Answer in your intensify. back you And now take macro to turn while year questions. headwinds are time growth the slowly, start all XXXX, will So resume the Thank your for unless for I optimistic off we to today. Deb to

Deb Wasser

went with I'm so prepared little right thank know I us. remarks our into you evening. dive going Good long, everyone. to a for bearing Hi, questions. bit

And -- Last lost buyers at one a you First one, from Josh million about improvement improved Etsy responsible buyer this this on number of quarter? gross most fair added think so, you I'm adds. going this which for Is to your similar to X key if that quarter, to it But you XXX,XXX churn Marvin quarter, of do say retention? give that initiatives BTIG. Fong buyers. in is

Josh Silverman

and fair held Churn pretty decreased short the reactivate -- is thanks adds short I it. The we continue And yes, is a up the that question. assumption. lapsed answer Also, to Yes. well even further. first, for buyers. appreciate gross

many those all asking most to and of you really when went other got believe. where XX we in millions of XX who of buyers from of were QX active online, delays the XXXX, time, million things. come I we pandemic. back, people couldn't further shipping those we or about are when headwinds But you've our these to and And from multitude ourselves lens metric. the into really, supply XX-month options And mirror, many majority. trailing back. felt, the millions chain really a we of If And that we're gets in between the things severely or issues buyers active XXXX, places May, majority should maybe came trends, active is you having million think very came so offline we masks. will delighted reopening places. a most at back, Millions further, coming how shop people vast of vast And that are the our in were and rearview even pull think And we're and we as buyers the January stabilize during here or and even close people millions

they're really back, what about delightful to having. when it's that come find fair easier specific important feel is the To that they're within And experience and a than thought, they so that. is They time, find products really most they're of products we thing they your about reasonable that what they question keeping think great that them priced love honestly, the tactics, amount coming I arrive. the

than of they in the So my that and like people best it's the else. just anywhere what opinion, find experience it's of different all in reasons, kind

we're we In that this all that people more that, times. doing. And marketing e-mail think, to to in really then site of and are finding more, both remind on you personalization I also you product. right call makes difference and I really do think to And different at and right the push a present addition you makes think a levers, time. we're able recommendations And that big to sense effort that the with lot building we're but the more talked matters notifications, to lot. things that for I pulling We Etsy smart into are think about a

opportunity. a has I big think that

future. lot think us helping. more think I a more And the for it's I a with lot opportunity there's in do to

Deb Wasser

Josh. Thanks, Great.

Okay.

I model trend Loop this give would Co., question. want and for guide I and Rachel. Laura one One the from you, rate, right? take to at and the take imply two And negative one seems Andreeva questions what forward second next, on we into So a at that account Needham going Anna And Champine should to that? combine & I'll them. the of other is is XXXX? is Capital, from take rate to have sequentially. The part Is rate part how First the

Rachel Glaser

joining question the the for and for thanks call. you Thank

right. you've math your think I done

Etsy that's because and high, great, it so up takes fewer and Ads a our goes did imply that conversion So to seasonally rate, lower Ads to lot will way, greater, be on there's we rate. relative the though Etsy purchase, that that's don't another page guide drives Etsy this per guide quarter, percentage, a other to a be GMS what the slight our is down. that be because about calls views in of GMS to is take lower And Ads rate going and take decel talked but relative. we've take in drives Said fourth rate

Now we XXXX. for take rate guide didn't

you year try is think full not what might rate I is could follow take rates at like year. and seasonally take rate implying rate take XXXX to that indicative look the take all. in -- But dip done of that we're by QX next quarter-by-quarter there's that estimate this sequentially indicative what -- So we've -- with

Deb Wasser

Okay, Rachel. great. Thanks,

financial Rachel Next talk Anna about related to of then circle the you one from about I'll is with about reception Needham. if great. the this protection. customer purchase the Josh, Protection Can just about reception at be is also you talk overall But can customer And question for the Josh, you want that Purchase would to -- back talk a Program?

Josh Silverman

it. We're going. it's really to how talk I'm happy with about delighted Sure.

an importantly, So getting resolved case, we that customer a a internally, issue those call have much faster. and rare creates the occasion on cases what most are does

the those for to in hassle the steps policies In fact, we been And when saves costs stress in super the everyone. time, has past. have time cut clear. just that in roughly half, and covers cases Etsy resolve many are not might because and in

It's experience conversion is actually that we're to protection true So lifts. we're in really as also we're places the like that better. rate purchase lot checkout, customer a happy promoting getting see seeing some

Rachel let incremental so feels we'll that some And, talk guess, yielding it's I costs. great. So GMS, about

Deb Wasser

Yes.

the rate in the versus we feeling is weakened, quarter they’re was costs annualized it that question. a specific for the million line $XX but third run How So come gave?

Rachel Glaser

Yes, originally metrics cost, how all in close the of our or line. in them tracking forecasted we pretty of costs are are terms to better

metrics and where other be. of like resolution issue terms we to want that, those rate In right things like them are tracking

Deb Wasser

transaction give from and for peers Does Okay, performance from is on the perfect. between If selling I'll Thank this you in Forte next D.A. to to and so, in-country rates, lessen there a in strong dollar the you. buying a changes example, Davidson. buyer impact UK I as e-commerce that from FX one insulate does think. Rachel, and such Amazon? at your Tom Does The one seller? -- compared when is

Rachel Glaser

they're FX the currency. is us because is, other No, we does And seller and which the you is in hurting all purposes markets, not direction. of then a spending them, is from. that do and that is to from get insulating in if the buying FX in rate have country a the selling about get but their habits it we of the it where thing a convert offices, not happen we us some between not doesn't, our do sale financials. showing upside given metrics equilibrium helping -- in other the we buyer that the where OpEx natural We marketing we is do benefit, some that, what we those and the hedge those in performance some It's markets USD country, two-sided have exchange of them that but buyer from the we've within do back for same

are hindered not by and USD. the FX So the going demand to supply changes

Deb Wasser

Great. Thanks, Rachel.

Next at Baird. one Josh from Corbin R.W. Weyer is for

What only experience? a had comfortable your write-down from we acquisitions. year billion And from happen get again? are $X this learnings doesn't that this You should these after how

Josh Silverman

I for the it. question, question. appreciate Fair Thanks

Depop the market fruition, around as So, first, at I'd courting coincidentally of say, two the fact, years was for both acquisitions at said acquisitions, reopening And inflation in hit lot other time, don’t for for about happen hit, same quite many, companies. we and many EloX the rose positive then, interest then rates we positive. came Etsy, acquisitions. reactions those they we about And the overnight. market of felt e-commerce the and time reaction got companies. a quite headwinds And and And happened from shareholders, hard and They enthusiastic. overall, general of that. you're lot we whole received invaded us a went spent Russia And things and then these the and names. e-commerce out, many, I to And war seeing the great felt really down happened a Ukraine, market acknowledge broke across time. and many that

that's me, was timing so I that, own the on wrong. And

the We do best decisions the we We continue about will feel we feel best make the with continue possibly to the strategy. companies. didn't about timing And work so the we to information good can great our out, to have.

been time, over average X.X have back shareholder over been think and management We're years if team on we good I stewards has this I you look here, very that the thoughtful. very capital. think, of

good We are we're cared growth-at-all-cost keep capital. and the -- doing we've profitable be investments, a about making and been best company. stewards growth to We've always shareholder can to of never smart we going

Deb Wasser

Thank you, Josh.

surprise? quarter? couple questions our a to from an going guidance. at I'm -- What blocks trajectory The key building of you Rachel, with relative factors could on that Steiger one downside went the to can in Sachs guidance into GMS QX the a create guidance, for Okay, combine or start your on various upside I'll unpack Goldman fourth Alexandra

Rachel Glaser

the Thanks Alexandra. for question,

said let QX. showing start QX We about stabilization. me first, So was with what said we that

as As QX. And of seen in deceleration went stable fact, call, we actually our a we improved pretty start the about year. on had had last saw talked October through QX, And we from the some from runway. we

a So imply to pretty range, top would have holiday, XXXX. some that lower good would the But that of that pressure the what we it our we see a October. seeing that's guidance push gave range would in say end stabilization that the of down than holiday bottom end that at we similar the we're continued at

that discretionary things we And we sort push macroeconomic of would elements that's so that spending, out so that we guide the think down the numbers show What the are in gave. pan line trend consumer the -- going of right are out. don't are factors top and that's a of our impact end control, and so of to have our to dynamics how predict of the October. that far November good would And we've sight guide exactly line September continued now and seeing and December been somewhat

Josh Silverman

in jump three-year stack, to want clarify, relative to a you right? just I Rachel, And to stabilization say meaning pre-pandemic, when on

Rachel Glaser

Yes.

Josh Silverman

Yes.

Deb Wasser

Okay. Great. All right.

a questions few promotional quite got we've in strategy. activity, about merchandising So

will to to Lauren of season. from I seller your I'm first. questions the from want a or given So from expected question be and competitive be America, David How the ask it's I'll sort there's Bank. start from of in to Deutsche a that. going first Horowitz fourth the with to quarter? combine company discounts, part that related sort Lee Stanley the Malinowski more and holiday then Bank be very company I'll aggressive one by -- Morgan the Schenk cadence about co-funded should Will of think promotional second promotions we do that

Rachel Glaser

Yes.

we're our are sellers? visitation holiday forms bigger also of we of on them do to And we much part or marketing how de impact those enabled -- marketing. minimis putting marketing my to that modest. deep here's that we've we using And give spending how same discount, some in able shop, -- them At have next conversion work shop say modestly what kind spend do put enable work, our the have that take kind increased our measuring promotionally, sellers own your I'd a not with lot we're given like back-to-school. own to offer from ROI when CRM a time, also Halloween, they're to of our the and same XX% times you the consider performance performance -- kind to particularly -- in get lens some very if has tools that tools we discounts. more the discounts. season Etsy more that of we to on our our a thing. use on for to we do We like They're seller pie I that So -- our P&L return rate relative that purchase is the in discounts. we if to its And So all would that influence modest been how much like give a off of of significantly we're P&L capabilities. behave from

Deb Wasser

this which want And how general to Yes. Josh, part for our Did the such couple maybe, marketing we're on about the in in in other we Horowitz, holiday a you a thoughts given add about Lee are of came that, macro tough season, of more was just environment. from question too? strategy where thinking

Josh Silverman

point, Rachel's you're funded are that to choosing sellers But our on Sure. of the promotional we to seeing sale seeing sellers certain lot sellers. a the And just are choosing majority Etsy. The targeted vast activity promotional certain give The discounts. majority is to of that build tiny sellers. on by more vast is piece items A of by activity very from for is buyers. funded put the

terms to time Etsy our important spend QX them. relevant for remind people In QX, marketing is of that an is really for

And plan so, quarter holiday have this fourth we we to in, season. lean other in, like We the quarters. in lean in in fourth

Etsy of it's So of tell TV why go very the queries and well TV of typically like marketing more the things you which specific performance as ads, see can on where shoulder to kinds up spots, response which story categories Etsy for items we're kinds the buy And then, relevant. tap highlight really matters we gifts on different, the Etsy on search running be direct we're and as why really going brand and side, Google. of

And that naturally with us. returns performance getting. again, But very strong for we're lens. of this, kinds at marketing much We drives what ROI take so look more all we a of

what our is the So brand we've models the to side, or the quite piece and tends bets. it lot market. where very of to some performance make to The we're side adapt, adapt in marketing days dynamic got hours a there's within It's science. seeing

so, And we telling time this story. right to for that think us is our the be

the the that's that has team be to We developed, expect We in in the the fourth reflected that gave. telling guidance quarter. and and Rachel that love creative story the margins

Deb Wasser

at then Great. two have And I Guggenheim. from questions Thanks, Josh. Steven That's perfect. Forbes

The to I'm first -- first one going give to to going give one, I'm to Josh.

As we to what XXXX, categories look out the drive opportunity greatest market represent Etsy share? to for

Josh Silverman

have of the about Etsy breadth. great such is, just one -- we we So, things

we encourage good could people see take that of items anything chance It's photo seven that the many or different highlighted occasions XX in release similar. we we XX Etsy that in a relevant have So can Etsy million that love we is little in are people a XX shot. call, categories you earnings something there X something have take million find did which to that and categories buyers finding so for give that just which where are and that you'll I'd more, is, categories million shop pretty are to we from buyers have -- many, why the have category. that category. relevant. virtually more. or many a you on product And new a That's I for in what that that bit

experience do improve the opportunity an quite many great categories. at you'll it version to of for. think is market of the we how whatever us often here be in in those have surprised shopping I for really think a I there's

more for home We're yet, often. few furnishings, and So XX and come people than one there. name, where XXth. the ask When and furnishings. less to research if when came will Etsy. XX even biggest fact, buyers will of very, And be weren't do XXth will But as billions people our Lobby name people, in of very up the you our name sold Hobby that. number And first say three and not we're top shop somewhere even them a you would category. the was survey we Etsy. home you places X% great name online, them, Etsy We of up more places shop And with ask more people you name to of go of dollars it's

about And specific art those on more on, those home furnishings, so goods. jewelry, with building weddings, Etsy, We've it's great many party building so associations about sold broadly. so and babies, and categories and paper and pets, very categories, on craft it's fashion, supplies, associations many

to for and experience. a home that you furnishings, lot category. starting you sites a experiences into verticalize those you're you where Etsy more And if living what of like to leaning the room browser deep so a takes things very example, feel are very taxonomy, more better get doesn't come so you you have a like browse often browse, it for niche kitchen is looking browse, experience. a in or into typically other you We

real us do we So and up-level think more in that focus on XXXX. there's see to opportunity a you'll

Deb Wasser

of margin that? That's the reduce from Steve of should for question on great, the Rachel recent the to people you structure? time level about high about be line Josh. weight was consolidated part the other And about, thoughts do the have the any acquisitions what for potential thinking And

Rachel Glaser

app, the on and Steve. Etsy the Etsy before very and on, Josh's point a is. question. in there's see find that search for give household to Thanks it be you'll take how has. I it's and a Lens of camera And product your about second in a little click Hi, That's Open just answer, cool I bar cool. have your it like able anything to icon what picture to

said On were that points recent to be than they that the our dilutive And even collectively you and there almost say times they do our We on our are have few if are they total businesses remind line. basis of bottom to our thing breakeven, of remember three want lessening collectively, the But to margins. would subsidiaries it's margins. weight a XXX GMS. still less our to one that of drag acquisitions, immaterial you, XX% I they are we've lower-margin

highest revenue basis businesses the XXX points we're that the with up making on in as be way they that should is percentage really that grow, to we own -- spending growth, their them growth, our can't investments a to and much for math we because other not them they appropriate all that making So there. we're do that's enable how come on less be the probably in think And be in biggest you drive We bets to investment how of these to shouldn't vital a around. benefit to are the a are investing culture, forever operate investments an the that to now they experimentation where of to impact. things growth. focusing making prioritization the be make -- with way optimizing are the the very always and efficient of biggest and the on will few, the going their going view into are have test they their Etsy the how to how similar putting And that things operates,

Deb Wasser

Rachel. Thanks, Great.

thinking Next to that I'm one Recognizing this going next for about Maria from is investment you priorities year? at aren't give Canaccord. guiding Ripps you to are Josh. one how for XXXX,

Josh Silverman

for significantly years. the that question. Thanks fairly two One the the over past scaled in we've team our thing call shared is we

doing responsibly little the things been high per as we means productivity our all bit doubled really revenue bringing things And making like for overnight, -- that company. had at in so a when We our we the scale to we that high they And fact look double cost have catch would cadence. roles proud sure a metrics, have years. that scaling of couldn't that growth that squad, been at all not don't have we that to and were revenue. we made at with responsibilities clear and certain up really that time team sure people because of caliber GMS a taken overnight, were been almost as I'm it's have We and -- didn't headcount growth. think manageable when I is

we executing years as where we've that we the about teams that, earnings really even progress continue to than the a value. shareholder we build And all I'm are and because We've of curve, past cutting this that we've customer talked squad if basis. more, seeing was new return marginal great a by much on marketing value, or call call, the got CRM, per in the so, in just cut we the over we the yet things not on floor, too made launched, in increased ideas those significantly we proud of what that team least we've and and TV is at the the four number course spots progress we of great And were the the improves ton launched. on made are the to at look doing the job way of new a Purchase they before on Protection, experience the of initiatives pandemic suggests a If way, room Etsy add of had things the two the five long. personalization,

is customer done team that pretty We're urgency, lot team So a and better that. and small this doing with is shareholder a value. it experience is making and what building doing getting we're feel with a about great still we

margin growth little at the keep we an through the to have? and managing looking a feel next profitable there. more, So we the year. right good little shape eye measurable we team we're more? go getting we the If are We make of And and we'll as finding size are drive team that now, at, continuing growth a with scale, team. on invest And balance that growth the and we as to always much sure we we're so we're as a right meaningful pretty not about looking target,

Deb Wasser

doesn't I think more worse for way away But macro sort buyers think is or just is seem, buyers, you question, optimistic do least this per at the assuming for ask get from to that's Josh, more we so of you, at from Kunal spend somewhat XXXX, a connected right said Madhukar that. more going I'm it And buyer? UBS. we've the

Josh Silverman

pandemic. continue was it's than pretty think while mean, both. going think I that's it very XX% the before time, that, the pleased pandemic, And new with slowed fact I'm I Over exciting. has to we're unsurprisingly, growth I get from to higher buyer the

world especially shopped not a the of And have in lot US, in and there still the who the are UK so yet Etsy. there the people rest of in out on

so, to to a And or a buyers. new reminded back lapsed add and XXX just to Etsy And more very on there's shopped opportunity million reengaging need be buyers, we often. who've experience come generally then think real lapsed good buyers come back before, had

categories. talked and about put virtually order the excited one realize how shoulder runway per there's more there, buyers, about of over photo have buyers million opportunity we still to XX and it. to -- again, But people I'd Etsy's adding of anything time, days lapsed do a to a serve get have continues take seven we I'm shop our in there but a And in we we're more be frequency. opportunity a shoulder our all value. Again, -- not and opportunity, And think across against we've that and so haven't very got have shopper categories the past think big a I And great think reengaging against version So people do I occasions. the last in big that and yet that. putting purchase I average it. more seven we don't few it more again, shoppers often can people them, we say think

take familiar stakes I purchases As larger Etsy, opportunity an us -- to do Etsy, as be people think get bigger get well. having we continues as on buying is with trustworthy, more more for them items,

Deb Wasser

I'm pricing. of Zatzkin it to it's going could you you prices? I'm begin around lot but going a because pretty to to particularly really it's changed inflation, provide color seen to so relates haven't that hoping in squeeze there? X:XX, Rachel, their topic bit KeyBanc. I'm a has in seller at anything We get QX, try a Noah them -- And as hot from Great. we Have seen take up to one

Rachel Glaser

I we haven't And more knew way. strategically haven't relatively that pricing prices there's any get will we I pricing other about do wire, really material -- take were do do question. we seen thought no relative help play just make and places to sellers seen say up there. we significantly. value to Yes. and them going Etsy, can a a We in we we speaking, out sellers. the try but going things, of I where But to see this call does with of basket inflation analysis under goods up we their think other probably

about only special, of at the has, you find that a or same our can especially something doesn't Etsy bit, of ads for and made the creative break that some really into lean you it And kind something it's bank time. talking

differentiating another is of kind it End factor for So our Q&A of marketplace.

Deb Wasser

there. it Great. any going Josh, closing have I'm remarks call or you to Okay. do good?

Josh Silverman

year do that's progress. ago again, you'd been asked has more really for it's two people we just No, of retention in a experience our retaining different well what I and the And pandemic, buyers, delighted how I'm of us many with midst retaining in having we ago buyer terms so the it And spend, think a hope I'd light better say, that matters. being in the in of years about to and the like if good or feel different, down the comes choices. way really fact really would they

we we'll and keep grateful the So doing it we're can. for best

Deb Wasser

and Well, to you over all weeks. time the your Great. tonight thank next we'll talk you for

Rachel Glaser

Thanks, everyone.

Josh Silverman

you. Thank

Etsy (ETSY) 2 Nov 222022 Q3 Earnings call transcript