Earnings call transcript Q2 2023

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Deb Wasser

Hi, everyone, and welcome to Etsy's Second Quarter 2023 Earnings Conference Call. I'm Deb Wasser, VP of Investor Relations. And joining me today are Josh Silverman, Chief Executive Officer, Rachel Blazer, our Chief Financial Officer, and Jessica Schmidt, Senior Director of Investor Relations.

Today's prepared remarks have been prerecorded. This 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 as use at the to conference call. remain free Feel entire any time open it it throughout will as reading to as be to and your will questions, help I'll we try can. me Jessica get many

them. which in our some our and we in today, today's described periodic statements Forward-looking disclaim most Form we the which recent of update file involve updated based make assumptions risks statements SEC. and are this will XX-Q, that obligation reports Any on any and release call and are future that uncertainties and be on and with beliefs earnings we forward-looking to

both in call. of the our to posted Also and reconciled IR with we'll measures website, are which deck replay the non-GAAP appendix available GAAP this measures, call, financial when along on to present GAAP today's slide measures financial during a

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

Josh Silverman

Thanks, flat was line Consolidated GMS billion adjusted million margin with our $X results and GMS the strong marketplace revenue was Deb, this our year. about landed in prior and everyone. quarter, for billion good about last X.X% to the past expectations. year, EBITDA grew $XXX about and XX.X%. Etsy was again to Etsy's afternoon, $X.X flat with

of metrics positively trending key again. many our seen we've deeper, Digging

a important well. buyers in healthy when GMS and basis. million Our negative we Quarterly and all-time XX year-over-year year-over-year reached July additions in improved new buyer reactivated growth buyers an grew rate adding more June even on growth saw active year-over-year and and May sequentially, in together, as high

sea and discretionary habitual category up and of proven Etsy of from resiliency. spending. GMS just cycle. believe in something buyer our growth sameness of included consumer that especially move metrics. continue improvement the performance early pandemic for this in quite headwinds tremendous face this to a and GMS set encouraging Economic we growth we've given stabilization signs I'm cyclical. shoots and we're U.S., growth are is gains per as trends through the stiff buyer the maintained our future The green Overall, Additional we've for I outside in in well stands in brand continued we've to that cycles confident our different important

and roadmap sellers On call, on when welcoming product coming our trust joy love that buyers platform Etsy Etsy, buyers us instilling keep XXXX new sell of to is the last Etsy's on. to the elevating back, explained being we of best the to with transacting focused

the most that As marketplace even year, initiatives prioritize our we biggest, progress through more investments and we impactful boldest, the funding reliable. and to roadmap make ensure our continue curated, on to our organized, we're to

or buyer, to are so which to examples Etsy We’ve so we new set, Regardless what you relevant the search of identify next habitual the is better technologies this slide. what frontier searched best much that know mind our bring whether each of much have opportunity you're the we you so of of very to explained top. result calls, quality prior in featured for. these some listing, We've this Etsy from in The improving the experience, to of to find results, more ability our wallet gain made relevant progress search share. your meant to compared we and the

times other better value attract than more buyer than data attract average that over most X often importantly, quality listings, buyers, and habitual high a Our listings. they convert higher our shows listings repeat and

curation. work starting organization here, lot we're in a of have We and progress I couldn't of making, with more be and excited opportunity the some about our already

of abundance continues Etsy's sale well greatest over listings have be With one over a X,XXX average where much our and also This not million for we potential. Etsy, result search but yielding so greatest on strengths, XXX one incredible of items only our challenges and to

buyers and training and navigate are and discovery the Our best to the with it unlock These amount growth while advances surfacing Etsy. more of and depth guidance our own I combined easily which AI is helping scale, improve from terms in the inspiration team product an of enormous talented the come. leveraging our of breadth possible experiences, to very our years teams superhuman the can latest of organizing sellers' latest making technologies, curating in inventory believe

items to us better have from of I’m encouraging quality Etsy search. of as over helping predict results best models expert visual an that One and by in by our surface merchandisers best seeing We're this apparent of these the to of now quarter, the this our first past appeal, of we've models size great on will perceived a uniqueness, more and impact We're every than library iterations using to humans. based optimistic on which Etsy the material curated craftsmanship example, of is doubled library, item. train the work ML

Finding two and on the occasions. home our living, stuff comes good to in highlighting second as and product style quarter light does focus launches, also purchase other gifting

the launched home on and we our Shop Look First, living conversion drove which home in curated rate. higher page, a

end strong Etsy month. the from value success expansion live growth buzz GMS launch this has to Second, May purchased. and and registry, June, participation of seeing order social we've than new categories in tracked new our through from more XX% fast buyers Since for will registry including baby media, only average has wedding come buyer be and the items this we're launch, from a that which our steady earned Etsy of not about driven of showed through initiative registry the higher

starting preferences, on There's addition find to working will for better which is this we're compelling also for promotional specific in We're a merchandising seller our elevate several to budget. a buyer's an as interest. already to new And initiatives great a deals buyers merchandise, such on tastes solving no which on app, In deals items buyer's environment. Etsy, and the question feature help promotional very on-site highlight Etsy they've prominent homepage. developing we're shown an through individual on Etsy fits which

out all our the sellers win. team is and So to help compete Etsy stops pulling

journey been on is our reliable trust doubling shopping policy our and our number and have to joyful on a human and safety enabled ML to doing seller combined meaningful focusing up an make We're impact detect starting marketplace with work, violations, Etsy's this the capabilities have more selling by support. ever more models on enforcement than and increasing advances in buyer enforcement knowhow Specific on down to of a quality, experience. to customer in before. leveling and which

that lot in this, you'll build We've AOV of we touch about more know goes about time resolution we've moments. reduced The that the Etsy. customers approximately conviction the sellers of ago, messaging cases can is now more Demonstrating opportunity and issue us buyers is and XX%, our rare by their on key increase in see got was customer even streamlining embed protection to we consumer purchase which experience a occasion Etsy we confidence as launched ensure both have and points. to something wrong. service year that a the these why purchase protection that for Since dramatically backs frequency

We're always thrive. focused grow on helping sellers and our

a tools suite, seller area in their group investing they in business of to in way. to excited end, I'm sellers sustainable grow personalized designed programs a need give really growth our this One we're their the tests Towards of utilizing new promotions data about use running to sellers we're and or mix. demand best price buyer price to might about, a think part as items of discovery they when how help their functionality insights how

this another is their Our items turn items in program improve on vintage matches buyers recently enhances our the to And of items the are seller currently our don't sellers as investments especially buyer launched appropriately, an Make on Etsy sellers as in we help example and challenging Offer and have task between U.S. sellers. facilitate our experience, MSRPs. appropriately, we world priced better where experience focused a price

quarter, the engineers During our connect, second engineering learn week new share to ideas, annual and held skills, for designed technologies. we our

recommendations, and we queries, cetera, every with Technologies opportunities to trust and of assisting was potential the customer et to ML much course, facing further the point almost ways search in the touch focus buyer seller Of myriad like tools continue and harness the with customer models, process enhancing the fraud safety endless. and can nearly and listing transform like AI are detection answering improving experiences streamlining on

ago. as streamline automate instead to ML But organizing this that's long team relies own And a model, mighty model of takes effort could initiative of then highly and of ML been and and it can We team new we from is of ML major specialized by four production a have the that obviously and all their also scientists. ML created over Etsy with and of putting as that a matter of kicked process models small, the so call innovation new the relatively of data months. in to days goal take creating demand. into cleaning full models time data all year virtually the on Historically, training but deploy work, democratizing engineer a talent in any high this this why testing off much months, experts, our

I'm to now. from live prototypes we're first thrilled effort see the And this that report come to starting

ML work create it’s that more new For modeling example, build we significant as to and team can a the recommendations you, without we the will longer example you great that we've brand for infrastructure drop get medium on scale. pay needing been as investments of now and recommendations, use we module making team dividends over of, believe working kind buyer or even on term Etsy drag very term efficient if you're faster to the, a model to tool a

winning in Initiative wonderful Creator above This Etsy's buzz driving indications from other decor and seen and Xth value our Etsy John gifting performing U.K., association engagement, we've has and are style Jessica awareness, for it that purchase the for in and early deliver well We've staples occasions. handpicked year the and emphasize Etsy with this Dayna brand entrepreneur, that strong collection Johnson. and the by Isom the are wardrobe and campaigns handcrafted underrepresented with Collab partnership Germany communities. home Etsy. a artist order Uplift winners annual living, with Awards has again Etsy to And once home The Design U.S., Sarah frequency. released Parker To-date, Turning these produced and created award marketing. and Legend, female and featuring new sellers

better for stabilization, this purchased quarter metric While new their is signs buyer has GMS early who purchase, coming points, to work buyers per campaigns, priority taking our buyers, leaning we XXXX, offers. We're within of second-half heights purchase can purchase. bring next a outreach again leveraging seller shown GMS their improvements XX days of influence promotional top post a this way for platform one and of back to into funded faster prior from us. the this touch is over With metric to to the in including of and

make purchase has a highly more significantly buyers shop of much to days that than all with Etsy confident offer, Etsy Given we per spend want more we're place to a than average our can us and where three year. $XXX

our a an Brazilian company, we an Moving of handmade to clothes Brazil our two EloX for weeks based ago, which to announced operates marketplace Brands, Enjoei goods House marketplace, online and agreement furniture. sell to

well macroeconomic different past company's conditions that brand Brands given years, part a the House evaluate case marketplaces became standalone for and approach by case accelerate unique each their performance small each We on we for to of as over Etsy the philosophy operate Inc. scale, needed and that EloX's value as a due two in that it has Our business. been basis, Brazil, creation together in clear performance to

a moment. and is compelling to will scale invest our We it’s a best and Rachel We sellers expected to to with sustain long-term what doing shared the we'll for growth the for and considered to local discipline determined in shortly, committed marketplace like-minded that further review our The various would remaining transaction its global and remain X,XXXs financial force close mission. alternatives with best in implications EloX marketplace. marketplaces be and join that is of plans

remained has customer The more encouraging XX the We growth we Etsy, the efficiency, result end believe and is operations this focus share. structure, signs is degree experience Depop points in year-over-year performance direct strong, and narrowing revenue believe taking transforming organizational improvements by from a is and team powered by U.S. has great over second been to see very effect. marketplace a significant expertise their Depop the the since Depop the business marketing GMS starting streamlined of Kruti Depop accelerated team Product reignite focus, where basis. growth. by velocity the and quarter, and of success, to to leveraging processes. both Patel CEO, percentage a of XXXX, on delivered development core Depop growth improving to In Goyal’s, GMS deep

are building a business branded data marketing. events, feeds and and driving including seeing Offer such a recommendations, as for examples profitability shops, search is signs new driven Some really capabilities. marketing new shown drive in is influencer expanded marketing, the also slide, recapturing relevance, Depop on performance buyer marketing mojo improved and Depop We're to personalized Make its with greater opportunity significant scale playbook to community over increase the time. strong encouraging pop-up its listings, paid additional an contribution.

deliver its increased quickly with terms the experiment discretionary has wins. instruments are Reverb’s factors buyer of number product on its affordability best focus Depop, macroeconomic good Although ever of to experiences seller pressuring to sector outperform the consumer deals velocity quarter musical all. Similar to better more helping has continued. Reverb has over and musicians and Reverb product continued find spend, in

example, launched save making year. For range we tools, a money of wide to buyers and new on easier it offer for negotiation

with has years, and grew the from period we to back a tailwinds tremendously at Etsy period of our a many gone headwinds conditions. so Over few stiff last macroeconomic uncertain where

the cautiously We're climate very moment. for Consumers least to fighting macroeconomic get sellers money, and for for we're hard remains up their and at our optimistic near-term, spend their share. we're challenging, challenge. the continue the make tough help where to on to choices how While the

of to We in already speed, an world-class growth and energized our are our industry team, now focus, X% be Etsy have proud GMS boldness all is on that lasty beyond. increased and above and X% engagement grow. We're helping work year and sellers in acting the who XXXX couldn't the employee and more We our high second-half with benchmark. score reignite from

is better see to see this you'll fact, on-site year, to accomplice. great arrive will theme, our that these quality more year. shop Etsy connect even big working and gifting more heroes. time. In to gifts Buyers become holidays other some the moves helping be the some confidence special ways In ones making us a brand AI that a crafted to at value buyers gifting gifts this will on so your our on find for new experiences Etsy our even we're Building loved words, place better for and to assisted with has

buyers goal will Our in be better to help gift XXXX.

important We enormous days and continue the early to believe that we're doing different something and unpacking Etsy's potential. truly are of very in

now Thank you Rachel. to and for over your time, call I'll turn the

Rachel Blazer

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

the quarter Last capital of light, our highly waters, quarter, business, through ability I proud $XXX profitable a strong of further GMS of one benefit roughly and of We demonstrated commented of $XXX billion business choppy X.X% things the and I'm team's healthy delivered EBITDA to million with execution. navigate that our margin. to consolidated the increased and million second Revenue most second flat strong quarter $X performance year-over-year. is our XX.X% resiliency EBITDA adjusted year-over-year was Etsy's adjusted our model,

XX% noting worth challenging has investing We also quarter since are of through CAGR this at future in strong grown growth. pleased second that delivered have cycle, to EBITDA adjusted It's XXXX. business while profitability the our a

Etsy several made buyers. in GMS turned by marketplace driven year-over-year continued of growth in and and negative positive markets While primarily our in April, consolidated growth trends active in growth May June, international were strong

quarter. driven to basis to softness points largely basis GMS flat offset GMS points, which XXX was our Depop, was at the for EloX. return in second first subsidiaries a and some headwind FX the in softened by three quarter, Reverb at down from XX growth by year-over-year

solid revenue continued in to be growth X% which can revenue, attributed year-over-year. increased Our marketplace growth our

transaction transactions contribution fee positive benefited some revenue of Etsy the fees international shift impact lapped payments also higher yield the subsidiaries. that that mix from to fully often to from marketplace a we and the quarter, addition marketplace our In during change more

in smaller due with a standout quarter revenue ‘XX. was highest continued Etsy revenue overall, growth percentage QX year-over-year rate services XX% key While of was the driver optimization. a the to this component the product in driver ads growth our increase, since of here

For show rate our take rate our in example, more the we impacting the without including at XX.X%, to negatively consolidated utilized guidance. multiple increase retrieval paid to integrating results midpoint engine. modestly search systems real allowed us relevance XWalk, of ads, contributions ahead our of enhancements of drove retrieval take the quarterly implied conversion to These rate. These ads time

we have bit growth pleased strong we even gained continue drivers quarter see both our leaning investments areas, of our the we where for strength We product are productivity, have very ahead. are another value in and development investments was the and opportunity more further returns creation, of as see excellent development in getting differentiation have a in making product be you'll and scaled. velocity and returns the with significant QX little as market the into to we we profitability We believe both and long-term we as will that marketing. we unpack are leverage on

in getting have yield, which areas revenue focus we faster why our count the some resources I of talent increased will product alluded consolidated bolder great highest We we year-over-year. our that A bigger. have highest per is to, XX% to year-over-year on over peer and realign $XXX XX% the the despite launches continuously for set. amongst believe quarter. just increased marketplace, development product as sign the Meanwhile, our getting million the And spend we're second to Etsy

XXXX few are true strong the on have growth. and enable vital XXXX working teams We to that conviction our

million, to spend and a markets in our style, it X% by X% has increased three and $XXX driven campaigns purchase consolidated year-over-year We Our living, consolidated leaned into gifting our brand highlighting home spend. in year-over-year top increase occasions. Etsy marketing

flat Our in and performance was models last selectively spend performance channels. to ROI on marketing pulled year spend tests largely as several our ran marketing on incrementality we back key

Overall, with basis we on of decreasing the points leverage quarter, percentage to year-over-year gained in a revenue spend our marketing XX%. XXX as second marketing

of think investors utilize to to and to how the we marketing primarily specifically use CAC marketplace. understand for you on this could our should thought LTV we spend, opportunity ROI While metric drive our view model focus Etsy we about this provide

CAC. of have the total growth that of with marketing start is concluded you outpaced spend has Many marketplace growth. new Let's rate That our correct. Etsy of buyer our

incorrect In ads XXXX And off-site considering about to this seen a spend. fact, portion after revenue revenue customer OSA from is new And XXXX, omitting as increased revenue. ads important when CAC calculations. leads acquisition your our XX% to blended buyer Effectively, performance conclusions. off-site such, for marketing accounting cost factor that offsets of we've

marketplace's fee marginal Etsy XX% establish worldwide. And higher all LTV, LTV stated impressive about reflects ads strong then deeper threshold our moving efficiencies. per of a GMS philosophy This CAC increase and period, value same driven active increases, to while spend that marketing spend very our was growth, ROI over buyer, to which a transaction stability customer very long our the expansion. to LTV Etsy investing in maintaining to we of increased in the payments The by for us Etsy also lifetime allowed

help we say view. efficiencies? that very maintained this slide mean strong clarify we So think have what should our when we do We

our LTV drove ROI more new to marketing has increase was CAC of our blended following. and held due channels paid XXXX, since marketing expansion Successful countries increased XX% steady, the to over an our to the While and evolved, believe as performance has reactivating spend performance in GMS encouraging increase frequency. we marketing buyer paid buyers and that retaining of contributed in non-U.S. amount significant which purchase we to to our goes mix and growth GMS has

as have to maintain we challenging reopening gains the the We macro worked hard through pandemic period, as achieved during and conditions. well

a as has and investment GMS as of rate, And LTV this the healthy our assume well our we retention our as a believe retention models well made. significant scale Given been Etsy, reminder, comes of buyer drives retention payback lifetime acquisition, future is the first of the within majority after tail the which which XX-days on there investment, is the the a frequency, and that L, but value.

focus during we in were of which name moved our that, household summary, as In a also being generated, to ago. than future. significantly connection great as scales materially our contributing marketplace awareness up the the expanded spend we period, to we core our investments have about marketing we years brand and will continue has brand with invest this markets, Etsy In several have returns more reported and we in with now the feel discipline

now to GMS marketplace, review Moving Etsy and buyer our of metrics.

to During GMS the marketplace $X.X declining second flat year-over-year Etsy just billion. nearly quarter, X.X% was

growth ago markets. While to These including to results growth several volatility, week-to-week FX moderating experience the factors, be order select positive we year-over-year continue and comparisons, trends headwinds, attributed during easier positive healthy international turned in can quarter. growth, year

average using lows by growth to above We code, $X,XXX order to where by average household GMS buyers have delineation income basis. when share year-over-year Etsy seen a headwinds we and lower saw marketplace U.S. declines. household census pressured spending, that continue values GMS discretionary on that trends our from we suggests remains a clear also below ZIP goods incomes, GMS where experienced income level and of for see services meaningful with Data to consumer particularly we shifts consumer between remain largely unchanged wallet data

of slide a despite This the performance Etsy GMS encouraging where since an the growth we year, positive headwinds. beginning have marketplace monthly macro the shows of seen towards view stiff trajectory

increasing or the of third both GMS, outside trends U.S. second In domestic, the of fact, returned where year-over-year in excluding the XX% was was marketplace were July, the perspective growth. in second year-over-year the Etsy seller buyer from U.S. X% GMS our consecutive marginally either in a of quarter or Etsy quarter. marketplaces month positive the positive transactions GMS From geographic making

we including had reported a While year-over-year growth Germany decline core the markets, and we U.K., of in in our modest year-over-year France. some

our growing European to and awareness marketing we markets. these carefully spend, our with particularly expand countries, overall have in as strength improve saw performance those very in Western targeted select markets, also and capabilities encouraging an discovery our search testament limited, in We non-core

of to of pleased sequentially trends this slide. the on our are living, supplies, as craft improve categories: and three top home We report left in apparel, side that and GMS year-over-year shown

year-over-year and destination. categories our a we great such being have We improve We day our and mother's categories, market extremely had and to items of father's merchandise also unique to share remain excited horizontal as as Etsy personalized awareness Etsy specific as occasion where top purchase for growth gifts in long-term ability gain in with well about offer. so much great

marketplace first quarter as year-over-year active new The still active in positive in the our second with our of majority the to the trends active quarter. outpace X% accelerated non-U.S. a buyers, million sequentially U.S. the Growth XX.X U.S. Etsy in continued rate the buyers in from all-time high are X% ended of our and buyers growth to

to We X% who increased also see year-over-year. continue strength in identify buyers, men, active which as

for basis active trailing year-over-year Etsy marketplace XX-month $XXX a in second declined X% quarter. While buyer to per our on the the GMS

in stabilization a buyer the second of long-term, Internationally. and signs as continued pandemic We over gains. basis per ability up see in XX% our our Overall, nearly has up remain per early the XXXX. maintain our since of inflect seeing are again once fairly well, of And to the U.S. all on we to sequential chart. GMS optimistic the both from held quarter We GMS buyer you can

quarter, a pre-pandemic we new second in higher on number the than We the over is basis quarterly XX% acquired added buyers buyers periods. which in billion average new of X

job trend active buyers We done up our saw second year-over-year in lapse million first Overall, also buyers, X% in year-over-year. quarter, good compared We buyer nearly decline a negative moderate the X to the engaged. year-over-year new to XX% keeping quarter. X% we've a the really of reactivated

fact, as sequential habitual buyers, the basis year our pre-COVID buyers with up the second on largely X habitual basis million from on ended Encouragingly, levels. pandemic-related In the periods quarterly prior out trends quarter. of rate improved On down year-over-year. a flat basis, rolled but were We and trailing XX-month prior retention XX-month of quarter trailing a the XXXX, quarter the buyer's X% fully active both strong XXX% figure. our from a retention remained above

growth. Germany, France, strong and buyer several non-core habitual markets experienced Western European

We year we men. also vast as who a year-over in decline trend previously saw buyers can of the reported number the habitual habitual Continuing of in identify majority the increase year-over-year buyers, the these moving with be also X% into purchase year-over-year lapsing repeat in entirely. repeat contributed the Western few buyers buyers increase attributed to Europe to Strong of performance category very a buyers. in

to recorded balance non-cash and charge $XX impairment our related moving to charge which quarterly EloX. Before impact share. assets the of tax offset to by a earnings fully net to impairment neutral we the was intangible income to benefits sheet, tangible long-lived This to related million EloX, netted per and a

billion and in June of we cash and had As equivalents $X.X cash, XX, short long-term investments.

which available On XXXX authorized Board the $XXX June a second repurchase June During billion XXth, the our remained million as program. million XXth. $X stock quarter, Board of $XXX we authorized repurchased repurchase approximately share in under program, $XX million new May of

healthy flow $XXX million. was free-cash quarter this a Our

minimal EBITDA marketplace on cash convert to as requirements. a to nearly free continued We XX% our with adjusted operates trailing our XX-month basis cash of flow

Now turning our outlook. to

only quarter. the our complete We in that shortly, EloX half of included is so expect for divestiture the business to guidance

slightly last XXXX margin $X.XX consolidated reminder, all up year. midpoint, our a last at to than EloX be about million year. less As approximately GMS billion $X.X adjusted so $XX consolidated of our in to of We estimate currently GMS. reported EBITDA the represented to headwind billion, basis $X.XX total to billion compared for a third EloX XX GMS XXXX, point our X.X% quarter consolidated

impact consumer influence fall those External credits. student third of quarter consumer high that levels factors could savings, we're wind-down discretionary this keeping of an spending loan on for payments discontinuation and include resumption of the child tax previously from of the including potential eye negative

the for landing are data U.S. the On you are the economy. a soft about reading same the potential plus side, all for we

forecasting given to what July. our a performance guidance continued in we year-over-year are similar with positive delivered uncertainty, the So we slightly the midpoint of to land

to compared in on $XXX third see nearly rate. of are last fourth third quarter $XXX the million the is and for of we slightly We to pressure sequentially, take revenue please quarter seasonal year. X% our keep million, take that implied The down sometimes midpoint, up the forecasting at rate quarter mind

currently We to currently margin expect slightly to at GMS sequential positive to XX%. our the of of guiding GMS in adjusted a margin quarter. an midpoint EBITDA quite the for another very QX our third be another quarter improvement guidance, trendline strong with encouraging for anticipated It's with XX%

fares it's to We macro-environment from predict the how economists, hard so aren't here.

product we creation But strong as on Josh of investments we and continued strongly reaccelerate an to path return where pipeline right initiatives marketing impressive to on value growth. and believe are highlighted, we the see and have

all and the time I questions. turn you now your take to your Deb for Thank will today to back call

Deb Wasser

Good Hey, to into for you Q&A. right Thank going us. dive joining evening. everyone. I'm

one, I'm give from Josh at Morton Nathanson. to going to Moffett Mike First

beyond growth, Looking for category discuss buyer softer to expansion in the the the see this and in or home you XXXX curation, categories biggest in do domestic improved GMS XXXX, can and such software growth you contributors expectations as -- example, for recovery Etsy's from living? international

Josh Silverman

question. the take Thanks Happy it. to for

of opportunity that it's We're a think and talking don't growth happy of we because second, buyer domestically growth think quarter have of We want level have about about do international. I lot fact I we buyers it's First, the domestic think and to both without a the highest-ever domestic active for important. days. look beyond buyer we early this

one people XX men identify most on and in shopped XX months last the last months. who United still in in identify as as about women the Etsy States have XX States. people, who many not shopped As we've times in have Etsy the said, United have before, the on Only

be buyers opportunity to you that, to buyers, of and new we active the great continues continue think million know, saw lapsed to buyers evidence big this in United and so quarter. XXX both in States, a reactivating there a that, pool grow we of And

for to you And we're this seeing again as very promising a big there of Internationally. quarter. And say, grow, is that opportunity very signs Etsy

in an PLAs ROI we're markets, markets, Google So, you Etsy, do way and to outside the just Germany, we're core seeing that outside our began of to U.S., positive that the immediately. able recently, know, buy U.K., in and of

products out You it many know, site languages, Etsy example. the parts Europe, Western and of demand for there's Etsy many turns translated is in for into

able cost those in can collectively, efficient big. And be a markets. pretty And to we're way so grow markets in those very

States, U.S. beyond GDP United example, population to core, markets that's even You the our XX have a larger than the equal the the U.S. know, can have the of GDP for and

So we're encouraged by very that.

over that service there's In opportunities, policies results finding drive to I search like, not X,XXXs do are per rate the the a to have drive have meaningful that opportunity very your we lots us just the I enforce most that and to of and that, do even that traffic GMS active conversion to that to said priced results think of with addition I what relevant. see most talked that. more of to that, that buyer visually understand scalable search time, to up, doing from still for on past with the the about done case our way. really the appealing all and the ones we in relevancy we are deliver sure great to and is It you job much quality at to appropriately, can you most excited of so ones call of for years the ever better quality really chapter the keyword, meant, call you're in in choose And what the of part that and recorded about the you a Etsy. We've ones feel give six to next quality. better likely about course, making do really I'm this a

means the you, make to a more that up, further of rate drive delightful conversion drive enhance to of we're highest Etsy brand. to do things think, is going frequency appeal even to a up, to, quality to serving experience which I lot All the only the

I right come talked in tools the to that to about with recorded the and pricing we help our up do have -- the sellers part price.

and the the and sellers make way, example we right that's We that promotions, run compete sure more the right help to than And even successful. time our the win. sellers our tooling be now promotions want conversion more think can I like to investing another in that's to we're rate in where more things sellers the of at site make ever. improve really right then can of help important

of to around running you Etsy homepage big going bold the items promotions at look that's right are, right that know, go you're you If banners now, see new. now, some

We haven't in with done the times. fitting the think I past, in something appropriate that bold it's

a there's think I lot quality continue the to of can levers of experience. will pull, rate, that we drive conversion the drive

right collapsing can look see When the of same conversion more job better want of time. you items. a those into, search think different thing, of would Oh, do the We to is the that organizing best each very experience and better just the many at set versions set of I of and those customer you'll different a and do that results I curation. often of that page many you quality lot Etsy same a about rate, of now, one of thing. know, very also variants similar drive are can And showing things in you a to perception a talk

about right further So, that Etsy. a roadmap, really differentiate our excited to got we've lot I'm think can even and and really help improve I underway now

Deb Wasser

total Okay. Laura to Rachel. and you take the Great, at be basis? to ceiling this is to divested on going be being Josh. that one the one expect from give climbing seems EloX rate to organic on rate do next Loop. naturally Champine now is What I'm an

Rachel Blazer

for you the Thank Laura. Hi, question.

ceiling we've on anything you're that know, rate right. never said a take You about

services improve rate the from has naturally bring done offering, every this take expanded and able in we've team take that in been up. since, place. increases almost to actually that have in single part transaction been from And We year management part fee rate

couple It where years increases incremental sponsored and just At ad, our not to through optimization we the for new product, the therefore ads, of was rate, increase. which of revenue. better transaction service ability or a continuation increases results on click a making instance, particular a even was that drive search past fee of the in keep

stick on value. you haven't on, not take will nor for I'm marketplaces, rate we know, price a highest take of here. fixed we we for and I always of our are to exchange neither the rate ceiling lowest fair in, say a marketplaces credo So, the a really take going so rate to do

product see sellers a a our will service products we that or needs benefit are provide where or that that will there can them. or So benefit will and services we

a that, and fair scenario, fee that will boats We lots arise so. opportunities and for of in see we do charge to we feel that all

Deb Wasser

Thank at going Josh. and is I'm Forte divest to And the our that for had an your right and this the you, time be just and would few to Brands, about you move Josh. from end Can -- on related one think questions strategy House it, going strategy it there. Tom you was to provide of of those D.A. we'll kind address Rachel. it just update, next can going why also to quite a I forward? Alright, question of We've Davidson great. I'll two to be Thanks, if factors M&A the EloX?

Josh Silverman

Sure.

So each basis, of we on stand-alone a we look have acquisitions and a at thesis. our

cetera. that tailwinds like through And from activities the we've when is lot a with things of birthday we've pandemic, see since which centers growth. not happen we coming And et merchandise a seen come thesis, the the EloX and to so that weddings, been and years that Kinzinetas, now pandemic, we've events out two it's would around business. EloX expected we real the bought growth EloX's parties, rates EloX's offline,

they've of quite a doing good lot team work, it's headwinds. think a I but faced good

And out. thesis so the played hasn't

see thoughtful acknowledge we've that it call but and what on it. it, We're also And expected, take I think a is to call we thought risks, to the that's seen part we to as want time prepared work We're calculated And we we're be haven't great of taking business, progress. this risk and We core. our so risks. clear excited when in our fantastic to We're its opportunities to the keep to what things. about focus, do. in on. out think, want that's when industry. and seeing continues doing didn't move really going Reverb, and share gain is Depop it we we

Debra Wasser

Thank give me second. I'm Josh. next to second. one Okay. Great. a this Give going one on Hold you. to

points. Bank. of Lee Okay, of questions. XX The couple The actually, high -- the guidance for at Horowitz In a from suggests Deutsche growth Rachel it's on quarter-over-quarter end guidance high from of to Why past supported back are past, growth continued it it no you seasonality? low demand to the longer the in school is pressure that mid-single-digit macro has environment? Is range. replicating the basis

Rachel Glaser

the we of get high the they growth, midpoint that We would -- assume guidance, range, remain the we as don't slightly better, They headwinds, today, same. able growth that that guidance X.X% the headwinds talk we that of seen is worsen. that in the for the of are you worse. macro the rather. have the implies that range. about to that question. The let's the At improve say what's thank end would guidance far gave. And don't of get And about as So macro implied high-end conditions would the low the we we -- so roughly end hit they X.X%

have volatile. our crystal We It's very to market. still actually get don't volatile a less ball or say more they'll

we're to find all many point. occasion retailers so and able at you August about, leaning opportunities, stand worse we Day ever to of will guidance the and a market. really little are back-to-school things e-commerce the do sequentially that Etsy think July. be an does been, fair more talked than -- promotional which talk do similar a we bit Josh as get than done as to We've can shopping about and be excited very for And that imply So has into September more special to people We Labor before. for many, much share back-to-school this

Debra Wasser

at was really any to was we had another that that macro Curtis question about answered of another thinking the there categories as There how the There where product the one BofA. about were part was it we Did was from and -- one a already -- you you, whether guidance. it related our Nagle And answer thank categories guidance midpoint actually terms Rachel. well? was to in impact, But want in factors. hitting was about product about

Rachel Glaser

quite actually talk Well, and nicely. categories, we've some what are said about we that of growing specifically so that occasions gifting the things are our is -- horizontal did

little growth. And other a under see our like category actually some some to bit we're to be Home we do for have opportunity gifting into Living, see continued like improvement. the strong categories while of larger so pretty feel from categories of holiday, And when and we headwinds those a sequential starting & pressure, are heading

Debra Wasser

us Maria Can Thanks, reserve company's to want Rachel. distributing for withholding right. from All Josh, of Ripps important funds. with next give what and addressing comment system this with to it's the how one payment refresh that current unhappy And the around on there you first reserves you on its reports some are you the of the Canaccord. issue have sellers cohort are who health maybe why the overall sellers policy. of Recently, been policy and marketplace? I taking at process is and

Joshua Silverman

the for Yes. Thanks question.

buyer going on unusually has historically, news that a that faith right an away. buyer. ship sometimes, most payment not an relative that ramp and a the to to really has when and And the that Etsy the can good policy of than the the time, and seller And item, of Etsy so majority great go are things in XXX% seller happens. to vast seller the marketplaces. for of sales faster Etsy, that. buyer example, transferred they So it course, sellers' is is is the the that those that on, generous We to reputations take the hurt the wrong. in brand make money item But buys deliver And to things gap is held steps do go other sure to by wrong, brand whole times

of overall will back. the we can stand that have always have marketplace their always So a and health every single Etsy behind confidence it's for buyers important the of lot really that sale

a in risk, some payment sellers. high of are that where very we predicted high then small to reserve, risk, be sellers be the high we of that withhold from payment a XXXX of part to perceived number As introduced those risk,

And we continue iterate. to

they're and that We we how need with better smallest how amount make withhold precise, why communicate that about in on the what how to that do do program, continue are, we program not. to we do sellers we the more thresholds learn models the and

going in we holding vast We majority of actually announced program. being the sellers. improvements from the about yesterday the just in so even with some clearer to we're why be announced And they're amount we're reducing sellers

So we continue to listen.

We continue learn. to

in stays to around continue make buyers are that right it's $XX we recognize now. have XX% for want than -- sure sellers a reserve. those sellers And can less payment We put reserve of and that in single digits in marketplace just payment I together being every in to sellers don't seller dimension low the this, be with the is to safe. some And reserve work of -- to hardship.

the necessary, want to only we as well we as as be do mount when it necessary, to only of want one So quickly we out them get with communicating reserve and sellers as can possible. the and

improvements to hard working all happen. sure make those we're so And

Debra Wasser

talk Can pricing Josh. Okay. I'll you, have inflation, Great. Ed to Josh. the from help the observed give pricing you this could that Piper sellers Sandler. they Does drive understand help when GMS? one And at power? Yruma on tool marketplace? One if about any, Thank

Joshua Silverman

how question. about see we opportunity. a helping lot And hadn't the Thanks few Sure. we've pricing want we for yet one a to. set years better for and talked think sellers Yes, it's leaned big we of but into, I opportunity, a that is

we really are. Now

really there's focused that a we two So what we've and kicked on. we're sustainable areas off call couple focused of on squads pricing, separate

right first so the the the do sellers is listing right their at The can get part they for set price data start. help we how

appear are items just right? our and those and example that, no that probably, And do getting how iterate of context. going sellers launching. a see. are We'll that test them, underpricing that that, final to But really to MSRPs, some right exactly to unique and how what the for with we the been so item market, for we there is But the and seller. some price example, it Every a And some there can overpricing are in are sellers screenshot showed has and right. that about sellers really are of items. theirs give made by to be be similar selling We'll we're to that of an data share learn

to And I to helpful sellers be it's, give able so context. think, particularly

winging second price so pay of we're lot think is not. are initial appropriately how promotions. having piece do see of and and when just a when, research it, should set The when your a if And you to doing lot promotions I off use they sellers and do

will. a XX% buy, to get you is sale, Maybe For a promotion to it? enough of promotion wasting XX% you're example, just so that a kind if seller worth isn't

doesn't more to sense. it promotion much how giving about when So may use promotion makes make sense insight make sense what and and them

we of also to us I insights the through share opportunity and for get those an think marketplace gather that's then that a lot back. insights

do, to better. give So make informed sellers, so the their to business but them that decisions we what always up they better it's they can build insights sellers want

Debra Wasser

Okay. I to Evercore. Great. Rachel, Shweta Khajuria from you want give one from

July clarify to just Just was worse important one you and think that's that comment September worse that, clarify. we She guidance the up made. the than an and following guidance I August Does to August? assume want than on

Rachel Glaser

Yes.

all, midpoint the actually our X.X%. is of first not So guidance X.X%, of

and to want that So first clarify foremost. I

the we Second, to guide months. don't

as the and times guide or was comment call. August decel at imply said So say in guidance, individually. low positive, we we in August to several September. point our don't would My July some some meant was imply of it our September It would to decel.

Debra Wasser

opportunity? one. going going Thank give drove you else? comment to right load, growth growth also. Where since an to once rate another again something on you, to Rachel. It's Rachel exciting ads from clear That's revenue more sellers, have driving it that perfect. maybe And expansion. to one the here. I'm Etsy too. take Is then ad see wants do and her give relevance, And Josh Shweta one, I'm I

So Rachel go you first.

Rachel Glaser

able we're lot relevant the Yes, engines. release. and continued a able algorithm say, the want our same certain better the increases them lot -- as machine better, to Thanks organically, question, don't making get And work sellers, for minimum increase ads, for CPC, to grow we revenue without learning so ROAS we ad ROAS. maintaining you be know, amount spend because amount results hard Smart of to it lot a Shweta. of to we buyer's and our the of also but not which it's time, the to sellers. make Etsy a we've give the engineers I able and a our a are from a from we budget at of if to And can't query, retrievable

So buyer's the a budget query product, the a we seller's more utilize. to we that match more can of that can

So continued we opportunity Etsy see some and growth Ads. for

actually, rate we out gift see the called we our We see And quarter, I the the it's giving will remind that fourth it's on call. that because the softer that's keeps even is growth in -- Etsy that in Ads, you GMS Etsy fourth the though usually relative do on quarter. take in to lower.

that's about seasonality one So thing product. is think the the to that of

Debra Wasser

and both Ygal for you of and from want Josh? Are one AI do sort Citi. What to that bit from Okay. I'm impacting talk are proof of to -- tools points investments? then good? quantify perhaps Fabulous. to the Okay. are you product I'll Rachel, yet a and the margins? the questions. for development velocity? driving to AI Great. develop anything, you we're And And they're do Josh any Did you are Rachel. you with go then to then… have able you better and GMS the start? add Arounian want from about of ML AR connected they to little growth? I'll And that, have Or And how benefits going it's whether your seeing both Gen helping And start

Rachel Glaser

time. at Sure. long We've doing Etsy learning a Ygal. Thanks, for been machine very

of So sort is throughout our in service into of machine own can to and their that company that base. suite are themselves we AI things for embedded And on focused capability leverage of and cost have leverage that separate having group. democratizing as Josh that's the already the of without that a learning and is doing from for learning, ask one many ML, what so the -- a lot that technology machine we the talent of described company and do tools that people

leverage base have organization, engineers maybe having like finance our be people machine investments that entire will leveraging capabilities others, there that hire machine means been to many us. them able installed of really the of people that and learning. are So to do in even my already armies learning of go in the to without partners for existing companies, invested other We've also

that point, at And the of so we're other moment, with and to doing cost us. testing very lot companies. imagine low And We is experimentation beta at coming some not fee But a a we kind that would some arrangement. license unless at investment. will for there ROI a high be are do we we -- of see invest anything typically, in that

opportunities and to decide if GMS language measure we be to know, So that as out different carefully. into would you own pretty doing heavily be license so. machine large lean to significant more there our able because to we we see in that models, invest workforce from learning tools or are And everything

any say, measure those return investments and XX-month an would new development on well. things about we product that that, expect as kind We way of

Joshua Silverman

customers about Gen then the how external And that. would affect and AI customer, for might talk I internal on

continues right set value per really and excited much benefits call about earnings better, just get about in example, continues to from there's spite in squad of a velocity we're to Velocity software per And we potential the come creation now. the pleased for of how by getting this we're for that seeing I'm really improve So our better. productivity developers. shared Gen data squad AI,

be to are every at focus another creation get of I more constantly more looking helpful, value a nimble testing, going think help that think CoPilot obsessed our in bigger. but get squad. always we how think measure bullet. value more with be we AI, excited we're more making not processes, we even it, We've per Gen and more our with on part been can efficient that. do going I would It's productivity creation and of and as agile only about to to tool I company the like how caution, the be we streamline that. continue Etsy out squad and that we don't this silver and we I secret So things it's it's we're actually in way can how sauce. not is We're can thing. we're to leaning and

can I really a be tool can think it that our help sellers.

still look seller want to from that, they So that on But to going suggested generate for before example, some send at the answering queries Can it. put it eyes to auto help is responses? buyers.

and into So help generate save be listings It time, like help the be to it And want things makes it so helps maybe. every auto over very way time, about will we helpful that. anything sales more listings be for could to good if them again sellers can, sellers that them, we Yes, that's great. cycle doesn't want going careful do to We more for wouldn't Etsy. that. though, we're necessarily homogenous boring, or translate that

in. lean if we'll So sellers, it's useful for

and most about Etsy people. ago very think, idea store a walk earnings deal and For two can more linen, sales I for to shout, the a buyers, for into Dress Etsy, maybe be don't blue, big for to a talked you conversational, more than can experience calls how agent. become now that the I search

have conversation more them context. especially no like from XXX that catalog. million think You place with has a listings in to a got Etsy, actually I And that's where important choose and we've

context be really and So a of lot the think, can it I idea conversational, give can that help.

do gains yield right What to tent, interact over things? having look curve. think for need do enter interacting lot to I they decades And lot a they but testing my we're they time, becoming people expect? really leadership, consumer chatbots? like adoption UI of like? think the the is a to get And -- adoption consumer long used to technology technology that the expect bar? consumer curve something how going the self-problem. to into now, in big What's can do behind do that I often be the And we're And going search think a few what's a How I is customers And is now. What when something the a with us. with of experience pole in that's longer

Debra Wasser

to Great. get Thanks, one and Josh. Steiger Josh. Alexandra I give I'm going think Sachs, from this one to I'll from Goldman

how seeing cohort can positive to buyer, talk growth that level In the once can we GMS terms that you about gives metric? of should at confidence you're And per macro conditions think about declines what you return that you in actually GMS provider normalize?

Joshua Silverman

Thanks question. for the Yes. Great.

down during So that well, we in the United let the me the buyer were time, stock, the the grow of and -- enormous happened, by world, when buyer out or And over shut XX%. Etsy pandemic had you U.S., per GMS active GMS international. States tailwinds. and places about in could In per most U.S. talk around shop saw

we're opportunity a other are than in GMS international. of Since GMS little and faster be an in are active seen games. inflation mad in almost in to a about, the things a declines all that the buyer buyer international. onslaught growing lot international and in been There's in the that all not productive in of pullback added us has there's I'm and about yet been in everyone international. same. lot seeing GMS growing There's international. we've U.S., we're proactive exactly buyer buyers faster stayed of per the of those in of bit we knows We've The the There's time, U.S. competition. held almost

in came that then. of buyer amounts job it, U.S. they spite really spend per a today and these of active done to says, they headwinds, in and fact in good back all as it with now same and continuing maintaining spend the was the lot GMS more spite loved to a And to to roughly spend a we've the different. are were it the people such wow, new competition and back come they something And lot fewer places in a dollars Etsy

of from confidence drive excitement, As I lot which growth, a platform a to take further that. optimism, from

not having even make We're people people pressure hard question more seem getting under can encouraging. first essential, having we households pretty very under to in think think and households results, around proactive considering XXX,XXX, prioritizing times at the in Rachel does may then amount do And be difference enormous the are households very, like all not that's we right in. I XXX,XXX the grow we of as absolutely something buyer see I I part Etsy it's seeing life. good for some time XXX,XXX. a And of of take over they're her in we that difficult feeling the still that. things -- there. and in it between trade-offs to very call talked if from under a just drive talked and just that, all now GMS call XXX,XXX about But the about and this under the that from but we're we're

But say the of feels are there's and core optimistic better business this pandemic XX, margins in a are and that. we at I maintaining we're being through now to to what we go, I'm of cycles putting would And XX% and still of the the gain pretty good they cycles a much that are tougher come. a is part over times if like, And cycles lived and cycle, are GMS myself, a times the very look the few the in come They up cycles. EBITDA like bad in cycle. tougher and time having part

Debra Wasser

in about the in which North at rest European of from and Josh. buyers at capture Europe? Securities. Thanks, in be performance thinking I'm for accelerate one active to you and Europe? more release you slip U.K. in help Etsy share America Rachel particular. the indicated going press will the can Great. win How which pace in at pace The noncore just more markets JMP there Jones Can in -- can Nick investments are marketing success

Rachel Glaser

GMS been of our yield European marketing Germany noncore in the internationally, U.K. and performance and we're from especially we lovely growth in these we've spend, of from going what in brand with to our We've investing was call able with marketing we're as performance profitably markets. in with about seeing markets I on excited lots -- and marketing also visits coming really this invest we've within some markets Western seen noncore, been where super And X%. core that what's we're non-U.S. And markets. on said up the well. that getting

talk we'll it. to stay spend so with intervention good tuned adjustment. ROI more our nonhuman and look, We'll things, a of kind for light about on It's fairly So lift that. able a we're there with

Debra Wasser

Thank Okay. Rachel. Great. you,

I we're and we went attention, it minutes, by for going a there. to over you and time all we'll Thank soon. few to very end you talk think so your

Etsy (ETSY) 2 Aug 232023 Q2 Earnings call transcript