ETSY - Earnings call transcript Q1 2024

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Debra Wasser

Hi, everyone, and welcome to Etsy's First Quarter 2024 Earnings Conference Call. I'm Deb Wasser, VP of Investor Relations. Today's prepared remarks have been prerecorded.

Joining me today are Josh Silverman, CEO; and Rachel Glaser, CFO. Once we are finished with the presentation, we will take questions from our publishing sell-side analysts on video. Please keep in mind that our remarks today include forward-looking statements related to our financial guidance, our business and our operating results as noted in the slide deck posted on our website for your reference.

differ may results actual materially. Our

non-GAAP be any obligation risks Forward-looking today's present to make and update with measures, the to are Form during reconciled the we'll that, and some periodic or earnings slide on will in which SEC. disclaim them. Also both deck beliefs our Any call, that GAAP call GAAP Josh. uncertainties, in statements the XX-K that today's with I'll posted we file this which we recent this along involve our replay described financial release most earnings of measures call. With are it our which turn on are to assumptions future on and financial website, statements and today, release of we in updated IR forward-looking and press reports over and based

Joshua Silverman

to very and a have cost very low often X.X% consumer while XX child rent unemployment range, have up which record-high us of by to prior in point, everyday there's in than wallets can cyclical we the squeezed Consumer GMS we able of challenging have in improve other sales. Thanks, top work drive well these platforms a consolidated at than Stiff and headwinds remains last to type buyers afternoon, less everyone. our as Germany. significant depressed, delivered of goods, good quite marketplace's to quarter care. grew the the adjusted anticipated. appear headwinds money. abating shipped year XX%. Etsy structural. To Etsy's some speculate e-commerce U.S. mean year. with initiatives margin primarily shopped trends results, shy $XXX That active had Revenue was that just up the inflation disappointment signaling level some high to sentiment was a GMS. I'm impacting our are impacting while mixed, first be did very that $XXX of them paying marketing adjusted not also to growth. guidance comfort said, bit markets, that food, X.X% within million, down data wanted to that essentials gas, $X rather even so is GMS as of trends of while remain challenging is Deb, for not In X.X% Etsy for attributed grow period, our data U.K. March been billion, conditions low left we indicating from encouraged where us And the experience, buyers harder they largest quarter, not prices. Macroeconomic selling to that to bit and another we little did very the the real, million held and that are there's healthy EBITDA after and be a our are be continue and product were These approximately do GMS marketplace and million year-over-year, to improvements bit a our in down customer we EBITDA, positively meaningful a be.

had our increased offset per leaner pleased off well engineer annualized business headwinds learning particularly of our double-digit the to to the development Etsy And performance. I'm the was utilize marketplace enough to the organization growth in not Just that per XX%. more baseline experiments. that as product GMS and run as gross We nimble engineer machine total experiments product experiments in of number number our from races.

a can year to These confidence to bold to told and build about directly that last get to tied customer metrics growing give play we you experience improve again. the be Some of Etsy role this progress ML. key moves over me democratize time can what

marketing Expanding of activations paid the testing [ mid-funnel engaging and product ] also across creative efforts search users showing across in-sourcing channels. feed full-funnel and kicked inventory [indiscernible]. we're developing scaling Etsy improve gear, social our quality to Our and team PLA high into and paid

something combined creative indispensable of we're destination, all like a Etsy places of of from start to marketing good we've Our Organized great build all deals a Etsy. outpacing peers seeing breadth the that key of just on such Etsy of Etsy single to person articles report key problem. And a on gifting focus research impressions. Gift in consideration Etsy, as our help Etsy the utilized data it making are and can that football's consumer that more not find set big a as for being We're think by an to estimated importantly, inventory is than XXXX campaigns continue it in find Etsy, We world us stuff, tell buyers low driving around easier association gifts. of to much full more shopping shopping new making final online more engaging we're grew for there is that site-wide at gifts, and Gift to over strategies an is quarter-over-quarter to generated gift tells securing as off very and saw Gift key Etsy social there to advertising help on to about tracking curated to this as the the for often not team helpful more news XXX% prior shopping site-wide campaigns, best gifting so partner product far you're easy first performance go kicking your initial and making great missions. Gift in significantly position select the most year. initiatives XXX gifting us a great of declines. buyer We year-over-year expands one to in plus of our bold made buyer offering, the consumer you with items value PR course, the destination many find year-over-year, the is we've launch quarter making Etsy's million marketing we and on and Etsy launch thing. We're convenient. of for channels and Mode, we're digits being raise perceptions our understanding gifting-focused gift that. Thanks our of a of achievable, around Gift visible changing compared Mode you believe our ideas evolving GMS go-to off and over eminently excellent to work volume as, by to Xx and ever toward total that last perceptions to awareness gifting feel to of subset you who unique progress pleased game, time in just most did making varied order was Mode's conversation increase a Mode our had in and any just shown a U.S. increases in do the the Mode for U.S. the

was As not and got occasion we've gifty and in brand said from we're robust of a this and mic recently profiles, to map the get road mode funnel, capabilities, new and more gifts. We've gift additional into Etsy pages of more. audio the driving message a Gift days kick drop, to much off, optimized reminders, teasers mind experience improve awareness video early the and buyers for more make for before, top to the

focused too which aisles buyers. All shopping to towering highlight initiatives, most the buyer cleaner for human. showing believe very tremendous quality-focused way our to Etsy. you for you creating on keeping similar, search We consideration. that for your drive often, We're that feel this believe stand is And too strength we represent visit competitive can in advantage. items incredible that unlock no one load important increasing failing our cognitive a doing many else commerce Etsy, a Turning that is diversity while cluttered, when a to is

each as of not might on items you these Etsy. clear addition, be belong In why to

by seller which seller, example, by personalized customized production with and/or which which in the but designed produced seller. themselves, are handmade partner and collaboration are by the the For close the are

shopping of on Etsy the buyer's of great While there's categories demand depends deal on these it for items, each mission. a

all tremendous Etsy models challenge is both growth provide the so gen best our sure much understand you and more of techniques imagined rate. just the in better XXX% handmade listings listing mission remove violative powerful language areas: news focus in perspective particularly year, the in up about more we're listings about stuff the our are suppress offense few show lives promise policy Etsy doing great sellers about now here. the challenge in shopping you're violating to us this as [ along and complex. The removed well from to we've and In And as the views to more listings we key have view make and on experienced has And violate inventory these for Buyer inventory. violate opportunity ML an a total policy advances talk that our large going AI the ways just bigger than quality enablers the and over this the to we With percentage we're prior ] that year. And for in our you've have years way our handmade than few of few last couldn't ago. This policies. gotten an ever inventory even first, years, on X points heard that first views. quarter, been as real a

capabilities sellers. improved the enforcement of thousands resulted and listings active have in millions Our of of removal cumulative of tens

more level to any very made to removal has marketplace, XX this Etsy we X significant more heightened the listings to strong GMS. different initiated last do investment on special and see even but a a there's of with represented future We estimate to in our and the about in X fill annualized basis important factor replacement headwind over that takedowns our point we've making While Etsy. still our progress as for keep seller to a of months

represent elevate listings of Second, we need the Etsy. best that to

improved huge quality attributes as We organic by past the listing shipping our opportunity algorithms. to reviews more the the dramatically easily and years, buyers price believe for. into work a build search looking reliability there's photography, they're Over customer can what search of and on we've relevance, ensuring find our several that factoring such and this

something this that's not will All buyers relevant lead they're purchase also experience help will a find love. but only to likely to of

better and what exactly more. work sellers items sales more improve this even on know their tab an page showing so Mode, the Gift actions from through landing empower sellers and Deals on curation and like our experiences, transparency whether to home visibility education together opportunity best initiatives and they on the organization, category newest to want also they for third shopping, creating to and do We job Etsy. And slide, available Etsy, take merchandise can and fourth through

significant areas products of We your to I'm very that between us more sellers' large again to our shopping friction and We something a human. Better creativity, We're inherently incredible to always of made the on to Etsy diverse our expand when that so much love imagination, feels of strength will to engaging, This our that It's to have Etsy, keeping your engaging and base, highlighting our reestablishing our opportunity directed make to special gap during message, consideration, of clear area team's want great we've While minutes differentiation hot and better and times, know listings widen to and strides enable coming think aisles believe organizing are great inspiring, other site in an declutter just preferences this deals the come imperative you with have you'll we understanding continue drive In reliability. be available buyers to making where even capture different, impact. entertained, and get focus also and we value to spare merchandise, is Etsy. incredible buyer intend to fresh, search again. And in in spark offering we planning signals with Creating and significant our this our on brand supporting we by to our keep to find to our tastes and that competition continuing harder, get less small ways. We're of buys, with experiences buyer the GMS and key loud shopping. first site focus you on fun, Etsy into the strongest happen. that from them our buyers Etsy and quite levers cleaner back compelling with the your more our goods to quarter, they to sellers making more point we confident so surprising. business progress window fight impulse often. drive promoted discount-related back. be X breadth more unique come special Etsy's can with

such to introduced business profitability. to as for various new sellers, insights sellers growth a into page the can functionality with also they grow their earnings actions to calculator We their in as understanding a new inform go inputs assist use customer that such

In to that grow tighten report our as terms well improve I'm our already of of effort shipping initiative are GMS to believe reliability dates, as timeliness, which estimated off. pleased delivery important are perceptions to an we buyer paying to

sales, increase days able including our apple Our new per non-app goals lapsed buyers to to our or estimate engage by day, existing users. and an million app show and more purchasing whom the buyers the of usage every for our improve still the our working nearly help greater app users. to this show fulfillment for get and now XX% and of of orders which to buyers to delivery recently to in estimated user percentage launched than Etsy framework buyers. Within strategies days Etsy Since XXX are all active with active we've app model, opportunity year. of downloads, more a increasing And than our experience how team to buyers, one resulting retain is set the eligible at machine user app, prompts, convert the and reactivate compelling our only messages date sits on learning download on X and a some USPS we reach less. Driving which per more times bite new inflecting tripling app transit XX% X time our app. consideration another is incremental effectiveness of browsers half a year, reduced curve, higher shop the of of drive Etsy where our for penetration ambitious to first-time XXXX improving and further of to capture of only than use about push Buy very to expand

back a and to far, have We what as positively we for proving have we fuel are that Etsy cyclically the e-commerce buyers a strategies to own accomplish the top be traffic is confident Owning makes path. a growth period massive is ahead. engines to more areas an important road us. In for assured these lost while than pools working challenging on bit us. Etsy, Rest need search Etsy. what XXXX priority impact some destiny, excited to players, are and ahead. still of clear-eyed to We're Etsy our potency of We're drive to so leaning particularly months on set years in about for about closing, ever we're will that in their

I've frankly said are you, We as And wrong deterred. to is not doubters us. of energizing some proving for quite

turn Rachel. the Etsyversary seventh now grow. I'll many encouraged so to month, still over I Even call remain celebrate my as have this that opportunities we I to

Rachel Glaser

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

As on divested we a August reminder, XXXX. EloX XX,

when headwinds roughly and margin. similar into to year-over-year year-over-year million, that quarter, line growth that EBITDA accretive in take results. Etsy's quarter consolidated expectations $X year-over-year adjusted of GMS increased EloX's modestly the EBITDA approximately with consolidated revenue FX was Revenue but million please and with GMS compare in our first adjusted to in was to XX down year. Note consideration divestiture XXXX resulted $XXX $XXX bit basis small a and last consolidated was benefit. our points So to X.X% billion, you

Etsy provided our the to subsidiaries tailwind year-over-year solid results. GMS GMS marketplace external first consolidated at quarter, headwinds trends a growth strong pressured throughout While

safe in marketplace benefit new had billion Etsy related X.X%, openings revenue GMS attempts. consolidated in out in our it payments cover early indicated launched and rolled increased new and of a seller our offset transaction and in shops. in on resulted we part a on outcome, decrease represented a year-over-year in decline efforts X% experiment contributor. in in growth successful shop our fraud new year-over-year a offsite revenue, it fee late nominal February, eligible ads being later. Within significant facilitating This $X.X this given Based decline with detail countries ad quarter. We primary in GMS lower declines to keep basis. I'll by to introduce X.X% continued services setup meant our revenue of Etsy Our consolidated secure. our this fees all checks friction this flat, the with expected was more is Tests platforms an healthy growth to process, marketplace for in revenue enhanced security fee and into support April. Consolidated

quarter, budgets retrieval spend improved engines we continued the ad to Etsy predictions that including conversion day. and to Ads, refinements sellers' of During the enhance throughout our for pace a data

First XX.X%, XX.X% guidance consolidated in reported of was first of the last and rate quarter quarter XXXX take year. slightly ahead above the

year. Our adjusted expense, guidance, of by with first on costs in leverage was basis our down points XX%, employee advertising. EBITDA XX higher from We quarter variable offset primarily gained from consolidated last margin revenue line year-over-year marketing big our cost game and

Our our our healthy effectively discretionary that adjusted EBITDA structure while basis point make us and efforts profitability subsidiaries important to goods. to challenging approximately for margin. We're manage helping efficiencies encouraged through look headwind our also an are to represented environment cost this delivering very our XXX investments consolidated for

restructuring. consolidated year-over-year result of spend marketplace million, During product $XXX to X% a as the decreased December our quarter, first Etsy development primarily

this in slide. we see P&L can gaining this on from fact, are, leverage you So line, as

approximately consolidated quarter on was basis. year-over-year X,XXX, count down first XX% a head Our

about with X,XXX, revenue a Etsy the year-over-year. per was count head down under head year-over-year marketplace, For increasing count X% X% approximately to bit

make significant focused for best opportunity selective and on decisions hiring, judicious We ahead. continue talent and our deliberate our skills related the to very to

game year-over-year support driven in increased XX% increase primarily Mode. launch year-over-year Etsy the marketing XX% marketplace's spend our our First consolidated related in spend of $XXX quarter million, to big by consolidated to brand largely above-the-line a Gift of campaign

performance tailwind for we testing Our core push marketing mix. Etsy to of social. marketing similar GMS mid-funnel as spend consolidated diversify then in our February conducted paid line. scaled headwind marketplace about XX% was notifications it March became optimizations a And Etsy a product X% and channel total, year-over-year. Performance January we our increased trend and expanded to marketplace and across up as portfolio our was marketing PLA and feeds paid normal investments both

marketplace declined X.X% Etsy the Moving and in metrics. quarter, we marketplace GMS first January experienced in the trends through buyer February GMS to March. with negative Etsy continuing and

volatility to experiencing. timing helpful bit a a QX It shift April, of March. guidance. Diving I'll also we provided Easter the a further saw with and from to pressured by While GMS X were was from our related consumer tailwind our impact harder to positive informative factors consumer initiatives the around moment. Further, quarter, discretionary to in performance has curve, it to on been baseline and GMS in a the we product in on particularly made here, most the our spending marketing Well, March. disappointing. this in macro headwind bend cover we specifically saw which GMS for continued than April explain us the that these was headwinds greater-than-expected pressure we pleased to we've probably levels really our categories, the be which seeing, overall we in are expected charts help discretionary More are the that product

Edge's Consumer except result. These positive anticipating mid-single-digit that in which peer our for X pure-play spending in set U.S. see supports we the were supplies, than a the been on top categories QX, belief see including as low a much trend first goods. And of category total every the deceleration quarter our for can you our declines in for craft of and sales in with discretionary for guidance data percentage quarter consumption stiffer consumer the that had discretionary expenditures, to left, right, was which decline line personal the headwinds in we the quarter. On had XXXX, of larger when steady slightly through the with you can

the in to on see jewelry that and the apples as Here, remember types the inflation of and we per top the merchandise we generally a you is living, not we GMS experienced categories. keeping retailers Germany. Consumer our When growth of believe excluding categories: and weakness a home markets in toys the and domestic, tale map the prior data in declined X.X% sellers and macro U.S., peers U.S. prices have similarly, performed a our can if that our down oranges and we taken But we sell. We'd did broad with board our X with to particular U.K. Edge bit prior Etsy supplies was not in performance overall, do. Consistent Austria encourage weakness marketplace better, from year on in basis across that Etsy Netherlands. a in of we this the see that top Etsy up than We paper and marketplace underperformed with in bit apparel, you the to in comparison party Switzerland, games, craft and of GMS, this pressure we of and X year-over-year the supplies. slide, see as

decline a of climate, year-over-year. above that marketplace X% type levels. Habitual in on still on healthy million fourth year-over-year healthier domestic XX our active see point imports reactivated over in encouraging we by basis, up U.K., a from new U.S. X the year-over-year year-over-year. While share GMS we X import pre-pandemic percentage buyers quarter are X% sellers route our Etsy the in Canada X now active buyers. million continue year-over-year, year-over-year for performance And additions consecutive macro million added quarters, quite well decreased quarter, the the very buyers outside seeing U.S. continues and on trade healthy a and with basis, in have nearly first active we bit grown buyers X% down but lapse grew flat Turkey. It's and buyers, buyers high proof about basis a to to a U.S. We roughly U.S. to of this

fewer where slightly trend some habitual to longer or definition habitual and our buyer spent observe moving the a no buyers meeting slightly less, to buyer continue category. repeat items purchased We

and in slightly in prior We also our the the fourth buyers quarter retention versus retained quarter the period. first habitual more year of habituals

Lastly, was X.X% the active GMS per in quarter. buyer down

Etsy appendix presentation, posted the Additional can charts website. on trend IR which of marketplace and in be is metrics this our found

the our growth year-over-year be Our set continuing lift Both Reverb establishing delivered with the to to to discounted good growing value-oriented GMS And Depop businesses merchandise start are and subsidiaries to behavior both comparable Reverb shoppers more outpace had negotiate. players. exposure musical to year. [ appeal ] encouraging resale highlighting in Reverb a buyer momentum news continuing results, with affordable instruments consolidated home the with purchase outlet than affordable destination fair with industry faster users U.S. music as affording prices great and their Depop discovering They success fashion, marketplace. Both and core to easily and providing to Depop for deals, different gear. a helping categories for and itself and than

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

first program, we a stock $XXX remains repurchased $X our March June Board-authorized repurchase XX. the of under During quarter, in million $XXX million of as which billion available XXXX total of

Our free approximately $XX this flow million. cash business us deliver of strong model allowed to capital-light quarter

basis. EBITDA flow We also approximately to adjusted on free trailing XX% to a our XX-month convert continue of cash

our turning outlook. Now to

our effect our ahead April, on larger-than-anticipated the was pacing about March GMS X% Etsy headwinds for timing in consolidated the earlier, As of inverse mentioned the break consolidated shift QX Easter due marketplace and down year-over-year, to experienced in had results. which spring the

consolidated expect performance, in consolidated While for be been decline for have lot actual with which adjusted the top to each performance. We challenging to GMS consolidated how the downside a quarter about quarter the has we to Depop are the our and and the end and for and quarter low encouraged within quarter. to modest predict second and currently rate we a product cautious our are expected anticipate our of again this EBITDA be a single-digit given a being to second first margin certainly GMS first stack investments, being upside conviction to similar year-over-year provide quarter, for marketing the outlook actual of decline. Reverb by mid-single-digit our decline we business. We the tailwind remain similar take performance, the performance the

adjusted full a XXX headwind continues a year, range are year-over-year the to GMS in lower post our second acceleration a current modest potential in through flow Our at subsidiaries consolidated outcomes basis suggests margins to to EBITDA of their expected about half. view point revenue the as for margins. With

You know we'd like see really just like us to and right call for it's tough it we call it, to now. it

As adjusted margin. we rate take Etsy for slide, addition our we setup seller Payments are you described China plans, on recent revenue and can see about year into commentary expansion prior full XXXX, this our and of EBITDA the reiterating take earlier. Built the rate expectation including

value, us to invest As we growth. which opportunities continue to build of exchange exciting initiatives, we will look in for to fair deliver a enable

on will we now will take I turn the our questions. prize. Thank and over your energized, call continue and to engaged all eye today. your highly to the keep for you is team time operator to Our the

Operator

with first question will Instructions] Our Ripps [Operator Canaccord. Maria come from

Maria Ripps

spending, right that ask So for competitive just sort consumer to yes, first, kind tough I a environment. the of wanted in about environment we're now of understanding

[indiscernible] [ the more aggressive competitors like throughout seems ] sort last it a little of So bit becoming year. QX started of

So as we more move that the a is stable little do we becoming anticipate as headwind through of start more to -- second maybe kind of backdrop a half lapping that, of less competitive you year? or the a favorable maybe bit

Joshua Silverman

possible. It's

is all are symptoms a than Chinese that think that I root along competitors the saying think we've more what we cause. been

I pressured of really deep and many discounts in others seeking economy, our again they consumers think both feel what feel in at [ ] and observing we're so commentary seeing spite in healthy space, we're Etsy from is pressured and again, generally and a so that about promotions. in what the really are we read value deep consumers what

prices. are competitors happening offer And essentials able but there's And are in offering Chinese like that driving of that's are, low the too. are too. at that, the growth yes, Amazon people Walmart so and there, everyday e-commerce And consolidation looks very it trip some most are people to probably that the

price, Walmart you're you pick groceries into your a at some to you up well cheaper While go buy as there. while may items other

in no think Chinese a So aggressively ton discounts what the competitors pressure are Chinese else It them I to root a and, so a regardless players in do. feeling everyone deep not see think the marketing. great been doubt. e-commerce. cause I headwind, be of therefore, the of remain to They've us of But would seeking will competitive investing that and consumers headwind to

to the really, so Etsy, they to best the offer have of the that the Our focus in on different lot Etsy. more them the wonderful going And very we can incredibly things. Etsy place and the really the elevate and really chase all really to call. on that I'm special. -- excited not to bottom, to talked things. the is cheapest of try very people not the that find cheap Etsy about to buy Etsy that to what aisles we make shop lean a into suppress the make more and to things easier the and have we are initiatives about best is makes to It's disposable not that It's products be see

this that will an crave and more use that as determined the bound even they to to to get alternative we're and stronger think I moment alternative.

Maria Ripps

impact you most turning which you kind -- driving increased program? your to of of of kind repeat customers of road any there of timing what loyalty I can turning of And sort of And and structure of have for Great. with color this into Is you repeat program of just wanted additional loyalty my follow-up, share of buyers product about sort sort the the buyers map. ask to it or then Is expected sort then your into think buyers tangible sort sort frequency? habituals? onetime will sort cohort on of maybe do regards

Joshua Silverman

turn year. shop second great the The we occasional is going I launch specifics Yes, really those have into track on the people to is loyal but of shoppers focus in good Etsy and to more on how in announce, questions. form half people be any beta we on are do progress. take the team that and And making buyers. don't occasionally to

Operator

him. comes My Our next for apologies, I'm Securities. from JMP with Jones question waiting Nick

Debra Wasser

I some think having before. he was issues

can't you him, the if can next. So we to go get

Operator

Our next Loop. with Champine question comes from Laura

Laura Champine

-- was now. And we're I working got think it. That

So what And know QX. what year? through if the saying that upon that's of kind about macro the you're move is question as not predicated, for you implication the But I any? that improves GMS changes

Joshua Silverman

I am this on year. initiatives working team very about excited the is the

a we've known I lot about think getting for of The really going into place really stacks. of the leaning work gifting, we've things with Etsy. even as good gifting. about that with more things talked quality and There's work the differentiation talked the

Headwinds current more So likely that. environment that expectation more of of in right discretionary half gets even that would it just have would volatile our it's as a challenged. Things result is second to week-to-week And not, we if the been even consumer year grow the now. the hard. be pretty

it's how hard to that's know to So pretty going up. shape

Laura Champine

what of we're to to initiatives. of sort impact sure fair? starting just that similar now, own macro I'm a but to Is experiencing that right So your see the understanding make correct,

Joshua Silverman

this That's what am very year. doing fair. we're excited I And about

really it's think very relevant. I

$X.X to going of an year. last be The it's engineering work very teams incremental impactful. great And think work GMS generated billion year. from they the the I did team alone did product and last

I be that. work So we're going I even lapping this that. is believe impactful. more And to doing the we're think year

on that. I think for we're track

so in our And can to and accelerated think believe growth That's will it we that the second we lead hope half. happen.

Laura Champine

friction that was called would row have to something rather a it's a Rachel of been it quick see And incremental for sellers think, follow-on, search that gap? quarters positive in with improve. XX tougher your buyers. making it. I you your narrowing outgrowing And fee. this that Is Got that out with been, A sellers

Joshua Silverman

Yes, that's question, such Laura. a good

want So lot yes, enough of inventory, sellers we have time and sure been quite saying have that that some lot supply. quite a demand of quite make match and we to a have for we we to

we've that sellers particularly the data sellers low have more give platform, or the on more the not we may to folks. is skill got have will so process, to seeing And to handholding effort, come

having very I most platform We sellers have the that's helpful. of to are so think likely anyway. And sellers skill succeed these group and think the that will, on higher a that are higher

to shop up get So to the from invest on small skill really early your succeed. having will if set a may not $XX not a of the have $XX prepared going results the on to you to Etsy, fee just shop Etsy, you're or

seeing we're So that be a helpful. of little a bump speed bit

Rachel Glaser

not Josh see then lower the better and suppressing stuff, you getting first talked that that's stuff or elevating things about and a good the few quality. things finding about our really quality the uploading and to at curation

initiatives quality marketplace at keeping time not on So same but about being on a of a really keeping there's stuff. the secure, that's going focus good lot able and only to the all find safe -- and the

our things talk we So don't actively also that policy. with removing comply handmade about

that on do of help downstream with ]. efforts best things quality [ we these on the invest and of us organization upfront that really the we to the focus of sites in some want So to

Joshua Silverman

or talked about And I we X? And the easier give we that very we for with to can stuff you that's catalog. the are much very, you it's just understand thousands page relevant XX for we these in substantially doing very a virtually to be harder diversity I learning help between the And to help about on real the might And results lot also pile one this. is, in Etsy AI think different that identical, But machine of fewer first similar gen on you the but look supply thousands look but tens well. a the in trade-offs And things. And offer map XX buyers where Instead really that and a what's I'm what load. If techniques Etsy. that the cognitive things can't to the more of the don't and on understand easier that, a best. offer does us results. things start When are to is life? can fact, something, have more usually for lot what and passionate choices a versions, that's search because as can't We've offerings of similar. us have of try what are to just of lot, XX buyer, search what And and which like often really just me of latest best really breadth them? abundance similar tell of of

experience that So not have. but more realize offer back satisfying more breadth often might the they purchase only have of this come we they'll because time, they a

Operator

question next MoffettNathanson. comes from with Morton Our Michael

Michael Morton

could. actually created merchants being removal, the if spoke margin at comments looking gross fraud you a year. questions, the behavior poor last last a some that from was I in seller bit X was think, It Perfect. noncompliant of of headwind a could year I gross like to margin interpretation be like Jeff, our headwind. some of that

as some just protection curious, off through tailwind could process. work to of elevated this get be a So maybe you you this returns gross margins like If outside noncompliant the of levels to of sellers as like program. Etsy's

Joshua Silverman

Yes.

just meaning of late. not but So sellers of consistently particular, possibly, noncompliant, higher ship And it that be handmade, yes. that refund margins, in are gross levels not sellers or have in terms may

to do we engine very very favor buy. focused on Is going the what purchase reviews, get on to item So we a relevance. you're get rarely you ship have person love. How sellers very time, that just get we returns, to engine closely going consistently to experience think when the a initiative, been consistently say within that to X-star product you're the to that but want explicitly is we to buy, quality search has related our search likely don't this

was been comments And items it out job really the to lower come you've relevance, that be through easier that and there's and important. who what to that, should revenue to know I easier addition was specifically is doing buyers quality satisfied agree back purchase often I there lower referring with more handmade to taking technologies off And better not us, to of the refunds. Separately, that cost my And we make even we experience and be in really think, new going spot. about Etsy that I very important want of it's site. be an lead more to Etsy. In the talking couldn't more

right For example, does AliExpress, on mass produced now, if it also on down. item it's same item And that we we exists take this exist AliExpress. and we assume assume

that, And and the AliExpress. seller it it sometimes. how way, you as ended us You by a you made can can appeal still that's yourself, tell up on true

down. make And then more I one be, items that at that's seller the to truly AI default to that that. knowing And think, the lot You can to appeal that, is and helpful added but a I just think, more our also, we that in where going particular product. that where production going to exactly we now how make is value the prioritize be produce are original this really I example. Gen understanding much seller satisfying. did more it, And it And a and seller really take to is buyer looking personalize can partner, did think experience to are explain add themselves, able seller value design we're think the actually and did explicit. I lot interested value. add make they they buyers that the Did a the more Etsy did buying with it it

Rachel Glaser

for real to on. quarters how but just X exactly I I quickly or takedowns, don't comment least wanted been know really doing And the now, leaning at last X was it We've many into weeks.

it. So the about gotten effect. at successively often we've better talked We've substitution

GMS. we're not down down, for many substitute similar can but on things loss take but necessarily that of that, that low-quality taking it we So it we when hopefully site, we very mean customers the one-to-one have listings GMS often items do does a because does mean there's so

impact thing doesn't come charges, GMS [ So or chargeback to need as margin high therefore that offset I -- second from some a we're the that was revenue going lower be our or by own the quality doesn't may in getting hits fraud amount site. call gross with improvements is the the of of unpaid here. And we that -- it the on sellers of ] sorry, say cost

Michael Morton

dynamic the sitting having great. due that That's is guest of type like [ revenue just underneath these is safe merchant auction to there's impact assume to a ]? that of it right the And on-site that removal any merchants

Joshua Silverman

willing Most able instead. sale we take item, there's that ready, and remove another of the time, when an seller to

-- XX the call, in focus. items We we've is impact so XX been a lot we've Etsy taken and not tens as are XX happy site, thousands it most for of been That's basis it's we've a hit, But bear. been we listings talked is as meaning And frankly, when headwind, millions investing we down always the is leading Etsy. great with basis better about down, handmade. a always we technology points And in taken said that. sure complying, about and to, is. And replaced, point think it and investment that of that but we've to a to getting really of not in not that we and has time it had of our -- bp of sometimes, sellers, than think, making different in Etsy

Rachel Glaser

keep Mike, so out we quick, you'll I a publishing all are an that. just I'm for mention next it. transparency sure real want to eye over report week, be

Operator

next question Securities. with B. comes Our Naved Khan Riley from

Nikhil Devnani

hear me? you Can

Joshua Silverman

Yes.

Naved Khan

Okay.

of noise. some to kind tease Maybe just out of the X [ So questions. ]

also potentially this [ refunds. year. from tax refunds tax were said some an extra QX, you impact day. And up that you ] X% have heard then I So

of terms should So in we How improving it year-on-year similar a baseline, actually interpret if you're been talking mean about is trend-wise? that? does as it [indiscernible] growth, has

Rachel Glaser

and ways things Leap to ] Mother's the to QX that of went XX QX. amount. Day, say QX QX repeat additional things one that won't in that an -- we that was were happen [ beneficial that beneficial There's both -- didn't are Day in of like

sheets to actually small benefit. a in in refunds could minimis, bit. X up that longer-term it later It be a and came could say, So accounting people's de pretty goes of the QX. Tax a it's potentially so benefit point balance actually the be were than less -- quarter, let's replenish bank

current it, we expectation. So about and you're doesn't guide in ] in But similar versa. to think our I QX the gave -- thought on thinking said, about that we -- QX that [ granularly vice way QX don't we repeat that in we the what's that's it

Joshua Silverman

quarter. a harder point You month as of true, many the out know you think I also some comps fair get is each little It things. this that

So -- and little year, May stronger April a is was than a is stronger little than little June a May May. last

of business that's So we good the lot to doing well. And things think important as customer And consider the a better, we we're better. make also that. make experience

even could So particularly end be could will single roughly net-net, digits, what as gets we if similar or said is more it the top mid-single be high as think we low be of discretionary digits pressured.

Naved Khan

Understood. And then maybe quick a follow-up.

the So at I terms in priority. about think you app talked What of are Josh a look things as driving downloads those downloads?

Joshua Silverman

so Yes. for Thank you Great that. question. much

who find that first, app who's somebody more produces and is someone we XX% So about an GMS not app user than an user.

app. into estate is us So we real can we why things a XXXX, to desktop, And and and think we someone -- do more is having on use a promoting again. And XXXX be the to first, focus focus someone thing. it or for wasn't screen in amount big we a in XXXX,, try valuable that's to downloading benefits app something in some fair kinds the being be right you could more the to this big should really frankly, about in priorities. trade-off we're at to the we make richer. estate It's with always drive screen moments, there's to web When ways that, leaned a in competing talk of drive we is, the you on to a how using going real mobile, the be now looking using from We're of it a of perspective, app, can right value be good of the to space the the make trade-off. it to benefits app the more right add course, because in download. We using app think lifetime to And sale. and the try more that sell valuable, on app

the package have certain specials app. the things to [indiscernible] or powerful track download you drops app, been just has to that Why sales to seen us the you've action. to can purchase are made. package do call like deals and like specific need app have and you the that So app-only on very you first and so a

that some downloading developing on the the got peers, we people when Etsy app really make now we've Etsy [ spots find more. that to is using promoting than are sure lower So focused compare many propositions ] right propositions our app our just and value on value penetration And the peers. the we are that and to

]. that will we LTV, gap that's drive And and that's a think [ in doing think we think very can that we more we frequency, healthy close. more So

Operator

next question from Trevor Young Barclays. Our comes with

Trevor Young

Great. Okay.

in Or by still to that be negative interpreted guide you get the the year-end? commentary do on XH. full Just GMS Is to that back in year accelerating slightly clarify half? and to flattish be we'll think we'll

Rachel Glaser

QX not we that range worse we slightly guide the that than positive, very of QX, not be than could better than know was the So helpful. positive, better which guide we or the slightly said slightly gave slightly QX, I is

Our you lot current the view a the is narrower, is cushion, But some our see we seeing. you the are year. that which cautiously some gotten we perspective giving go some giving why current very sees forecast that through margin what we has error we on as acceleration of

that range optimistic the downside. We're could narrow we cautious initiatives that a of can as or you and further go kind year. positive because range without QX end? great get how have the product And a it's the they specifically marketing modestly go So much on way the planned they at you all through saying, from really upper flat and stack given you to we've

to our enough guidance. forecasting And keep in confident so give that felt to internal we be able

Joshua Silverman

the what second think said a of is the we I half acceleration in modest year.

Rachel Glaser

to would And say not. to it positive whether we or be get didn't

Joshua Silverman

Yes.

Trevor Young

on XX that throughout continue And expected in? baked removing Okay. points that that to basis policies. bp what's the expected then year? listings the violate from Is just headwind that clarify to Is XX -- this

Joshua Silverman

put a been in about months. but leading there rate. sense we're for And that there's give X point the a data to some replacement to X quite So lot, still is happening that high has reason we that just in

can generally another we see make it has to to and slight be our headwind. I keep is enforce, It a things always and and number. in to non-X sale, able see said more try but that bit We've willing [indiscernible] there surprised wouldn't as ready, there it as leaning even more we a that down could we we are that a things some as -- as controls. even get continue. seller So through grow but little take far It we more. small

is that think I with prior pretty consistent bps commentary. XX so And

Operator

Our next question comes Fargo. Wells from Ken Gawrelski with

Kenneth Gawrelski

growing. Can you me I yourselves haven't ask you -- And company, unfortunately, it's right? clear to a been that see growth as

what we move question coming for spending because or aggressive So better have to bet like And the to To from macro, where you we going a trying loyalty is, the certainty where your more maybe it just aggressive, doesn't excessive feel not marketing in back stomached know micro the initiatives. are to now -- right? that of suggesting I looks back real like but have take real the I'm the we've landscape in the enough and alpha get to right? T-move in quarters. don't different And even either like, beta a to we're willing hear to opportunity to is, it half, And get bit ], we you making have macro a the and around for the is [ factors what be attempts you. it what have yet do be you growth. But feels -- is I multiple make coming there's much or a kind bolder and not. I for is at at you're not getting guess on that I'm I'm consumer to feel the spend more now say feel

you is more to back So get talk about to to like how about be that, me growth? feel you the prepared think organization how to do aggressive

Joshua Silverman

Yes.

been are tension grabbing of that what's to fast. predictable think more driving and we step fewer we in very the bolder, more and progress to X have a going looking on move and of incremental to eye-catching change of steps past the more -- the year a the releases catch is ROI last ton mantra very and we consumer have we years way drive not function That want that bigger, is internal I for for positive that bold that kind for. attention been

experience Mode us what proud team steadily versus we of have very that's of example, launched do in kinds new very MVP time. whole so in experience very the that leading into, we're Etsy, you're one that a been to a we And going form. Gift much being better I'm where now was continue the And amount quickly things see that of it on and of short much to really the the able make market. differentiate rest to launching

to interesting. different. like beta to a you're we're party And economics in year, program think I and through our in half going model fact, which third-party a different the launching the that you'll I work a impactful. quality, be see the than second see to doing think very think, we as little work it's making in going looks be seller, I trying when do we're pretty of first is bold. loyalty economic roll you'll And the is launch,

in You're us going to lean really see there.

can just going So important. What to a it's catching think and grabbing we frame for that which more terms customer attention answer. [ don't are breaking, pros we bit by in cons, bit, has lot I launch whole attention, cloth experiences but is I spending ] often of is be and consumer really less more very think much the looking

dollar, think the cost lot very we more So you get and cost What we have back. rational invest think time how I more about We amount of of capital? a you And of marketing, every lot invest a money a do a what around we We, make of rational if discipline our lean than -- that. we science do we're is marketing, into of spent think, when we capital marketing. the if dollar? sure like lot we hear our on get

value I'll really minimizing have other waste that dear. say a is we thing important The is always held

year every are our of at in now. dollar single spend. efficiency quarter, Every we single look We seventh we

run the a to pretty to our if business you and is KTLO, the our scale, a an keep material of complexity. scale the organization so activity at of on and size lights size, look support effort required it And

They're We have resources to not infinite. grow.

every lean resources. few really into those so we pick with battles, we a year, And our and

idea. a You before, download could download. on rightly say app focused is the not you're why last year more and great year App where

they're relative agree didn't were are growth. By we things couldn't what what a are think around make decisions other really bold, the from year that we lean a want It's drove way, we the s**t the think very And it to be it. smaller we even conviction, year team incremental that this measurement year. measurement to And sorry, tough the making have really that going ton year, last a to of we lot should do And $X.X last shipped a few XX% doing -- billion the think have I value going have of me, -- to we more. of shipping conviction things the we are going more. a great year, drive we You last team of every idea cut. that drive into team a did are it lot lot excuse work of we the to to products with measurement say is

So want about to they to gets that get to didn't think things customers and keep think come we driving to you ROI. And think we're you more It's growth. often. into here's we're know the know they Etsy, leaning work strong Etsy going doing driving meaningfully back back is we come things that reconsider,

Rachel Glaser

a of quick want in just couple points. slip I data to

is valuable... MVP all, First definition the of most of

Joshua Silverman

product. viable It's minimum

Rachel Glaser

waiting fully for hand to thing short the our be that's -- not So agile, baked. shipping whole being for not

just mean of going winds data -- well we're that really straight the Second with that initiatives, the when again, offering of think when on be poised into phenomenal really at we bearing -- shift, I we strength. are a great when we I these and are of couple a marketing feel couple product out point other I the and And from would have income point to we continued see us. we down walking above differentiation players the there. And product, there's uphill pressures to actually very was we for look great things wind We one and is on a household the we're differentiation income, our building between points all, highest have of internally incomes we lower household are separation and $XXX,XXX. especially upper that it higher household incomes terrific a data and so to points household growing. macro

are And household the so lower when incomes not.

health food, care, highly things gas just quite for behavior essentials discounts. on don't So and are you like spending can are that their account that that left money see discretionary. whatever. And for clearly looking in bank things They're they people have

buyer our in XX% spending spend it's discretionary to the higher -- and in still call, than important look XXXX. it XX% not if and that than And a down if down. higher Secondly, And slide got the X% after but down can you we it is the at whole to in -- was down levels was yet It's but than then, way don't reason our per GMS a was is higher buyer still you've GMS know per look you all is that's showed chance it and was coming I it the then. is XXXX. to about consumer listen shows

like strong giant So -- we're amongst still it is a among...

Joshua Silverman

already our to... I've messed up language enough analogy, your Pick

Rachel Glaser

brick we're and strong, we're strong by initiatives these laying brick quite [ just these get that getting facing aren't demand ] to not they still once the We're pressures. we really the down expect consumer of true would benefit network

Kenneth Gawrelski

have quick kind it, said super days One spending. follow-up almost to spending. the just But think XX I BM name. now game, the I impact you of brand judge ], big Understood. to the XX of call the [ you on all

you into as has leaned it? Is spending. buyers, brand really hasn't You it is what worked? frequency, what new -- have it seen it What Where the Where buyers, worked? impact? occasional

Joshua Silverman

in ad of about about talking Mode -- are big we So we're game if generally. the of more kind or talking Gift kind particular

Kenneth Gawrelski

I'm also talking push advertising, I'm that game, about brand. no, No, talking on big like big about brand but the

Joshua Silverman

game, and do, a we goal. it that Etsy's the ignite big and happy am Mode, during about I conversation ad viewed to complement what around which the wanted breakthrough the our So it. was the secure tested did the it product, game we want for like Gift nation in We I things and to was well try. to did new entire managed generating to spot recall interest team. to super big and most single

on this did job, it big significant GMS increase in And is But mentioning gifting gifting in we game So good. and people the call goal and Etsy if associating we ad data the about look place have at in to place the as a site-wide than is I that shared some quarter. I grew really gifts. And and that to faster good that help the execution was think go increase find launching we're and XXX% the significantly GMS, first Etsy, we was a conversations for say, to think new was thing. that team's of strategic something positive Etsy

be now the single this we story XXXX helpful again this really team really built to And are I I that But I'm better kind Mode Etsy the something you I next meet mic summer announce. Josh, day. fast? place I'll because Do in we in about. halls data would this work what a to going a said, to proud and prepared we would going it think Gift you're we're to way has of this getting you We XXXX. a kick we urgency of would do it of drop. and it's example. -- want is halfway and It's shipped prepared a taken And I'm months. back on I can it and that. that amazing. we Does said the mean And it's we bold. X better. great And it. in the it's do be of going for that Is do those, happen The as that bold? talking to great. Mode. Gift think And name something it a It's it launch to lot it's to have me that's little great willingness and have of that, off, question, not I idea that really team big want think bet root. game to we we be not going first sure. did. year? the behind to if in depend bold do the to points. to Is have All think, we fast say. But and more team your bold, And do be said, in we to to exactly every It that bold pitched the really work There's hear XXXX. And the make propose think better big and be of of am we're

million spot we launch having that few on we We're not quarter, putting company learn. to that It fine. or talk some be we is betting do next work. company. really next would the it big into dollars works the game things. but do important the and it's about. We're a not or going to whether Now want don't on extra predicated a doesn't it these not, We it from we'll ad or in a And see make year break it

Debra Wasser

to we want get over, in to I more did to. the but know went we have queue. try one We

give So the can operator, one. us last you

Operator

Our from Mark with final question comes Kelley Stifel.

Mark Kelley

the remarks, and through was prepared -- bit would exact day little a I some last the of question, start. in of me occurred you walk I and it some just a the just maybe first in of like dynamics shipments as know a Is bit? quarter there but be to can guess QX. My helpful you the tailwind because on the maybe of this was little touched Easter it much it not dynamics

Joshua Silverman

Okay.

can't but March So to I and between Easter hypotheses validate headwind to in, so we it headline we equal might than to impact impact a matters forecasted equal expected. And [indiscernible] for expected. mattered. was It and tailwind for the been we April it several size. to fell bigger this, expected looks is great it a what it and have I opposite bigger an can like QX. we it data. other why, was, see but from no a others, March a all from was wouldn't reason of It and truth tailwind have candidly only that to obviously bigger than as If April it is knew than just obviously is right we roughly March, a in better was when than wouldn't because us have people. and matter The it And data. it and smack QX headwind really the We was

it spent trying dissect So of something ultimately shift. just timing time enormous what But a that to we an was haven't that's was. amount

Rachel Glaser

they're It's people on break. would is shopping. Easter. so had a traveling, break more And happens travel And we It's spring money go Etsy, not spending on that than not spending also thought shift, pretty money big impact when instead they're think, just on of and what it spring so March. we on they're

year were tailwind in on we and they're because -- why because a get traveling, focusing that's they're last April them it's it to when way, anymore was traveling back so they And and now commerce. a not

is sounds huge I'm it's It's like huge a that for holiday holiday. -- [ a gifting ] Etsy. Jewish, not Also, not I'm Easter told, but -- not

kids speak. their baskets for and Easter a and that, not and buy things the and holiday, Mother's But that. do so for things dinners to or stuff people So branches like like their apparel like it's a Day winter

So the way spent it [indiscernible]... was shopping more really in and of we the it time forecasted

Joshua Silverman

that choices. to They've And tougher and the dollars. they're fewer if spend that having during holiday macro to make it Yes. discretionary travel on others. ours just And to hypothesis speaks said, period of just it's see that what budget are impacted And to product. again less traveling to make the the choices than have then people leading Rachel going to discretionary just tougher this spending family, more got they're

Mark Kelley

you perfect. making yourself, sorry. I and right, Okay. that All repeat clarifying you appreciate

just talk to R&D language That in like about the about Can large little on just seems else [ is one Second a ]? maybe commentary efficient could team future around the using side. months. short pretty window you a models in bit more more think Mode Gift building what there the the X be and we

Joshua Silverman

for Mode. Yes. large were models helpful language Well, Gift really

and machine learning, persona, machine thousands this We best of for So within use for persona The what's machine there then productivity ask for work of off, in tens X gift and example, quite key X to language And us large as use we large models, and a Mode. ideas what are quickly. are are starting examples each Etsy. ideas to a coding on that. does start help head talked XXX amongst we a Etsy, loves I'm lot on is democratizing on of ability examples it different there's idea XXX to an simple, learning. Once idea X learning that, the you might this X lot language with gift, all productivity gains, that different it more come give of X opportunities what we paths wasn't learning. travel, are machine to also with to to large paying different Gift well. that. If not But but but very last model buy addition Etsy, it about help a persona models ideas for in is language that And does things gifts year the have who of on foodie of I of up our like

those make allowing teams in investments do off. really steady And to We pay learning machine more helpful. the so democratization quickly has the also of been work and

of am move the that culture I teams quickly. our So to allows engineering at proud Etsy really

a entrepreneurial and at very really that. great have Etsy, this culture development agile, is of We fast and example a really

Debra Wasser

operator, I it tonight. think that's think, I And for

Joshua Silverman

Thank all. you

Etsy (ETSY) 1 May 242024 Q1 Earnings call transcript