ETSY - Earnings call transcript Q2 2024

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Debra Wasser

Hi, everyone, and welcome to Etsy's Second 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 presentations, we will take questions from our publishing sell-side analysts on video.

slide that financial today our guidance, as in mind related forward-looking operating in our noted our to to our the keep our your include remarks statements results, website Please for posted reference. deck business and

may results materially. differ actual Our

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

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

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

Joshua Silverman

everyone. came our high that consolidated XX%. and pleased Etsy's we approximately X% good Deb, basis, GMS revenue was results adjusted guidance. or afternoon, end about $X.X very million, margin billion, EBITDA grew consolidated X.X% Thanks, posted and $XXX down of the year-over-year We're ahead at to in a of

type XXX was very well Marketplace of in another Etsy X.X% marketplace goods. active quarter QX up held of level our million buyers a basis down point of our year-over-year, high negative GMS from a is improvement Etsy about performance X.X%. approximately for XX challenging

get believe to to curve beginning the we Etsy customer While to stiff face we to headwinds, growth. our meaningful continue to are back journey along the making macro experience, which we're improvements inflect

results, has and strategic regard. Rachel the success has every that much tremendous key retire. be announced wants I measured today also to so that We XXXX. since to to on in is be planning to a achieved put CFO believe and She's a been partner Rachel Etsy

of a has operational our Beyond craft helping strong serve grateful she our the her and culmination She with leads Rachel I'm excellence. culture team, chose to built impressive numbers, team's and the career. Etsy optimism and as

benefit impact focused together, she community entire Etsy's going and will have continue to more Our to from time success. we'll stay on some the driving We're

ample we the a chat her search over all for launch appropriate with have with And the as we'll of share months her coming to time successor. time. You'll you at updates course,

XXXX to into Etsy shopping more to As the for easier of makes is build initiatives great are by We're on do particular, making make best there excellent to in go-to Etsy to convenient. often help destination. that what and deals really working to it for that. think a Etsy, just consideration on reminder, key of find us stuff association our continue a our buyers to special. and more lean And focus to we're making different make shopping progress in Etsy Etsy bold more And driving

on-site been we've As of building truly including well were moments and contributor to in to to XXXX, of and improvements know, model working off. very maintain key experience. evolved remarkable a of a better tasked our investing being our And way large incremental to GMS been the to disciplined incrementally in gains. for in has the worked quite more valuable you customer to very part able the believe way engaging experiences to drive pandemic focus operating This from bank shift XXXX customer creation bang, I unique Etsy's extraordinary teams experiences our extremely big Since some has and our a success, us. of

experiences allocating backwards our conversion. product e-commerce a that bold look just Given on marketing working improvements driving great ways. are not landscape, significant portion like we're scale engagement, the of our and combine novel crowded and customer integrated increasingly buyer We're promotional larger and to much efforts laser-focused now and from initiatives what

excited really way of several the is of in working key new success this XXXX driving about you gifting. update I'm how to initiatives, including

Our Insider program center make App to on of work Etsy our our customer loyalty highlight plans our Etsy work new and for quality to experience. the Etsy,

gifts gifting, performance strategic with better as new which engaging with messages, and for worked innovations proving meaningfully competitors deliver purposes. combined that outpaced And X% year-over-year Day and Starting second surpassed Site-wide and Further, on initiatives clear gifting on-site performance to to experiences tracking winning is specific investment forecasted a performance and the Mother's marketplace. our campaigns video the Etsy's graduation events. together area. a the and Etsy teaser for GMS gift gifting as been purchases pure-play in product Day, NRF's be U.S. we've our this seasonal identified for of these excellent overall gifting quarter performance grew basis marketing significantly benchmarking for outperformed theme, such for evergreen Father's

launched We the allowing Video and event anniversaries, you and our for you the like messages reminders new so And loved product reminding ideas gift purchase. to track gift then, teaser a pages, birthdays one in innovation special things make quarter. you for to and weren't occasion have on. course, lists second of only curated

strategies. Etsy an In this a tracking surveys prompted that We're Etsy significant in addition perceptions for in makes increase utilizing it we're great gift. to of increase buyer gifts. monthly consideration also to our GMS to data find gauge a growth, impact gifting year-over-year easy the And of U.S. shows

the holiday front initiatives we move all-important center course, Of remain will as and season. gifting into

keeping We of else conviction tremendous in making ensure the in stand ourself commoditized and these initiatives one in Moving And a that best bold differentiating no for we're very this highlight that on we enormous unlock represent have important a doing can of consideration. that human. Etsy, buyer initiatives quality, a advantage, to merchandise. commerce to competitive way in an for we sea

organizing our key violate curating Suppressing our as removing up inventory last our using techniques our areas: you're search that as quality sellers' and items both on listings and these language mission large ranking marketplace. and that well GenAI X understand policy, to mentioned we're shopping and models recommendations We call better better and along the on and focus better

on the I'm anywhere fantastic in is our move of best and focus and the extremely find relevancy beyond new To when you and for feature also it diversity sellers to to our proud can't our search you historical meant uniqueness want making team the merchandise. search highlight know on progress solving else. report what initiatives to Etsy incredible

more In on the past, often to too resulted ranked buyers convert, each similar a our set. based many seeing listing algorithms individually than in likelihood items holistic rather which far search

excited where Page X are powerful in listings seller. of on have a of Here's cut listings about the they We this We listings Etsy. by as that the set each might more buyers half that XX%. visit seen We're over appear percentage quality future roughly or of for may a some more high see the time higher what visitation of X incredibly percentage mean diverse identical data. reduced percentage searches searches and

buyers, support In addition it best also important these helping how is the our we sellers, given to of that our seller across initiatives base. Etsy

like up Later giving visibility search sellers search show completeness impact shops medium experiments agency increasing ever the and having and more from more them share in impressions before resulted empower in can with quality listing nearly Our that by search shops this than in how small and actionable XX%. XX% by of approximately they into search. of we'll factors insights summer, latest

the understands for to sellers' items could for who our that not lack made and distinction and special. wasn't different businesses with and original to to relevance. Active some We offers own and of original that items past, hands. to drivers why personalized goods we're in the the people that Etsy a for know and as were the unique our any label what shine, people, love or Etsy by both inclusion bold offers place further policies vintage being Even supports a comes This listing supply. but while Yet made represents to applied consideration was this are real reinforce marketplace that to craft that of confusing work sellers. everyone the allow Etsy's their who be designed allow our which top made Etsy changes seller, we've default so by or to marketplace is, items that buyers Handmade small and

personally our the seller and with two, the by X, virtually three, collections a the items July along of for nature announced or items on be by vintage craft seller Etsy designed all along designs items series a sourced items, seller using categories One, a of personal in items, items of labeled making produced seller production yet tools; we made of to labels physical are own or clearer on to specifically from the handpicked their listing partner; listings in hand a by certain by of and sale; supplies, and updates party that X So which role supplies seller, standards: that can items items belong computerized why We've a creativity seller. or include personalized Etsy's process. a items four, using curated about

amplified creation of We've on spaces. In our sellers boldly, as and quality, their sellers the and related our most differentiation feature seller's meaningful social a changes and moving and sellers' the spirit love these quality, with standards in reinforce these already the community new channels. we in and even overall to engagement We marketing channels from make seen the inventory lots earned humanity. of Many each touching paid owned, sentiment the campaign positive of to originality item. high news and the media shared diversity campaign role to launched simultaneously XXX-degree highlight of unique our Etsy's

When of where Chad Etsy, buying Tiffany. is handmade The know With built by stitched the is you're is table our by glassware who Jessica. don't by you competitors, or shop and from. the many you

We've on dozens Our assets in of range tells on a platform and the audience a goal. creative story that their new role their the craft. style based ourself created love deeper social for and of

spot for our Here's our and YouTube, TV, magical. Hero a brand so spotlight new shines what makes which sellers on streaming

[Presentation]

Joshua Silverman

about excited made this as step The initiative one, I at to of albeit the is couldn't the the come. important about believe large be this factors how just readied team Note changes one we've with our look that back I much and telling quality in we're growth. we and which more journey will world Etsy's that most them. firmly

investments we significant active existing convert app quarter turn in and believe last capture help and making mentioned sales. and we're browsing, to will that buyers more buyers engagement our engage more into encourage loyalty our new in We which

XX% traffic low-cost, converting highest Our platform. acquisition, Mobile excellent terms particularly GMS for and opportunity an about app GMS of continues in providing both and represented the quarter, of our native the it's to second lead growth desktop given web in

desktop, on prompts our optimizing We've ads our website paid customer Etsy launched our working leaning for make We're and experience, running are app utilizing mobile CRM. and download in position, to marquee store featuring downloads, channels than our clear most into app owned shopping the shifting buyer inspiration, who app app or and the intent a lower to come are just convert rather with mobile usage and looking frequency to engagement ideas on and drive shoppers for continuing app mission. buyers who while web

that and far, highlight Etsy's competitive emotional on excited mid-September. to of in inform be roll including value XXXX. Etsy and and the focused And program, launch. many We've new speaking engagement, out. beta occasional and our to a developing buyers We in targeted group rounds loyalty process frequency of only move buyers so our unveil lot characteristics pricing in form program audits of unique I'm for proposition another and are Insider, U.S. details rational benefits will key in our invitation buyer finalizing Etsy to bold both launched a of the accomplished the of for highly of some strategy research for

domestic iterate. fee and items, test, over Our is of of based And optimistic Insider We'll access beta U.S. discounts, buyer millions free first and a mover will program that are merchandise needle Etsy item shipping love. time, include Etsy more. and on buyer driver and be can learn frequency

breadth from investing unlock that and especially be uniqueness talent area been slide years this This across move leading-edge than advances systems Etsy to building sellers' of strong gain ML to almost of more fortunate peers, with base of in our the our before and And to we've has highlights many quickly. data product in our investment use e-commerce incredible inventory. AI value given upon I've every infrastructure most XX-plus in believe cases to I development and allowing of a business. us alone. said We're

engagement foundation key work A and been discovery our investments of powered I've today discussed the in by has AI.

this mid-price for better attributes curate purity buyer to to experts material, new example, listings jewelry most infer think it GenAI modules to For search, jewelry having GMS. find human on-site search incorporate determine then drive trends, for are and experiences easier create quality making merchandise utilizing attributes the as what known We're gold buyers by buyer's experience discovery those improve pages. to a and landing as pathways into or hot important to and such Demi-fine

much very improved search media is year-over-year shopping experiences, combined a marketing as and search GMS organic contributed this tailored to data in progress. in initiatives better Well, and curation X% These jewelry the with such efforts content, quarter. CRM for Demi-fine feed social increase in targeted on-site

as more nowhere years I'm really to as months We're be. our ever confident can meaningfully in on team makes than as successful we areas working what big being proud or We're and impact strides XXXX. come. in the the believe will Etsy of near is in the we're Etsy leaning that I making We're to

our us motivating near potential. inspiring Nowhere This all. achieving to full and

the call Rachel. over turn now to I'll

Rachel Glaser

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

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

and a small that million, basis that basis headwinds year-over-year point ahead consolidated that consolidated adjusted margin, was margin. our growth XXX GMS year-over-year take $X.X was you resulted billion, representing a when headwind. revenue to Revenue GMS our million adjusted quarter and with $XXX X% Note consideration quarter healthy guidance. XX results. Etsy's was consolidated please X.X% accretive and approximately FX EloX's EBITDA second to compare year-over-year increased So a EBITDA XXXX year-over-year up down modestly by XX.X% to $XXX divestiture in into of

the GMS in a the and Etsy marketplace than macroeconomic with a on yet better tough basis GMS first environment, Etsy face headwinds X.X% continued $X.X the year-over-year in to marketplace ongoing came than decline a in had from The decline bit representing better results anticipated, billion quarter. X.X% we

Depot in more detail a nice strong performance GMS. Etsy cover tailwind consolidated contributed In addition, later. I'll to GMS performance marketplace

growth attributed payments year-over-year, revenue and by of X.X% Marketplace consolidated ads. growth Our solid can our in year-over-year to driven increased be X% revenue, which offsite and primarily

We continue Etsy XX% was new at about revenue increase which our payments onboarding penetration a fraudulent Marketplace with GMS. We fee protecting to platform regions beginning second nominal helping drive out Etsy stronger rolled expansion of our existing saw of in from and to is When trust now quarter. sellers. Payments our seller and the this both combined additional at the with of efforts, reduce new safety onboarding, marketplace fees,

and Depop Consolidated of and shipping grew [ their services to X% revenue drive ], by on led label boosted by higher Depop label the visibility ads adoption continued ads revenue shipping improve marketplace. as

and all, rate the ranking approximately in our QX the product XX.X% last the above XXXX, sellers core our retrieval quarter same All for of XX%, the Nevertheless, featured in models we above relevance. by reported growth our moderated saw period refining strong significant efforts. consolidated year-over-year and unlocked year. still our Etsy improve engines rate we to growth Marketplace, Ads ads improved as during to take guidance of ad XX.X% Etsy modest For as which comped take expansion revenue optimization value

This result strong growth. revenue the mentioned previously performance primarily of is marketplace

performance quarter was margin costs consolidated by marketing was about higher which year-over-year up of ahead points a quarter. last second year. and guidance EBITDA level this XX%, of We basis of Our our partially employee revenue, and gained from XXX on leverage offset cost adjusted investment

end in quarter effective Just net was a our expense Canada services quick retroactive by have a nonincome ruling second in and PR you to impacted income tax digital may for noticed of note, that June XXXX. tax the our

EBITDA GAAP did an net our impact have G&A on not our consolidated did it this income. results, and adjusted impact While

product $XXX our year-over-year leverage decreased drive expense employee to to workforce within due million X% quarter, the which consolidated with during We development second to spend, productions. XXXX decreased primarily continue compensation connected

of even right scale. You size count that can a grow per above Etsy for continues see well and from larger our the significantly the basis, many to and marketplace chart peers remains on of head on year-over-year those revenue the

buyer support can our expanded half ROI-positive this spend into to leaned XX% quarter newer of new social this particularly retention PLA. the will The marketing to shortly. than metrics consolidated paid retargeting and since within outline and of Etsy where mix the and million. the which social, how largest buyer we channels year, performance Most this and expect we we the into our year-over-year is continue shows second buyers, we channel in existing the trend we and you Marketplace, Second social as of first second in be this in performance paid reflected buyer half. $XXX advertising mid-fund more increased into attributed I'll left a social, shift Keep will the paid channels, on have leaned behind that chart that that believe acquisition, increase mind frequency see in is lot towards paid further

the of period year reduced our across when the a performance comped temporarily testing In spend. second quarter, we in lower prior channels also investment

than ads reminder, offsets spend. the back this we brand and revenue of as in marketing year-over-year mode. sequentially, X/X our significant XXXX of XX% from to investment XX% performance launch Consolidated a our off-site QX declined more following pulled area As program support marketing gift our spend

can to we Easter acceleration now timing X/X we believe be of which the second our XXXX that year-over-year and tailwinds X holiday our results. GMS our the attributed to to a GMS noted the improved attributed be saw Etsy first, performance biometrics. first Let's headwind move We versus can sequential was factors: Marketplace quarter QX quarter shift, about results to from

and spending. ongoing father's on investing pressure believe by we've discretionary drove of purchases been in improvement, product sequential portion this remaining consumer in mother's we the this macro initiatives despite year year, the the stronger Second, part demonstrated

year-over-year basis basis, GMS, perspective, domestic, about a our declined slightly sequentially. points improved geographic but U.S. XXX a on excluding From

saw some of We were a categories, performance basis improved as QX. year-over-year you which, may on down recall, also a few our all in in

and year-over-year supplies flat and toys and games here see You can was that party paper grew.

XXXX categories. addition, In in QX trends improved versus of XXXX QX X in year-over-year X

approximately metric We flat active bag. a down X% of resilience, metrics are growing buyers year-over-year that Drilling lapsed of we a were reactivated is Marketplace to buyers. Etsy We Collectively, and X% and new million the the up year-over-year, year-over-year. X new X% demonstrated bit, buyer added a quarter. buyers on this And million continued million in And we roughly report buyers. to over last X the down XX reactivated pleased mixed XX.X approximately while moderated added decline over bit basis sequentially. a quarter, remaining million

buyers Habitual year-over-year. X% decreased by

our rate year-on-year retention However, slightly of buyers a better basis. habitual was on

earlier empower GMS growth, from U.S. selling and fee effective steps based wardrobes, by in people because introduced similar millions their small totality, in GMS changes evolved sector. change X.X% budgets, per these stabilization we this no for into Depop XX spending relevant to need discretionary their The continues highly driven In offer sellers continue fill to a of we down else. quarter for of a deliver market. that half. and Lastly, market in the buyers They Etsy fee, opportunity once it U.S. indicate the apparel metrics a the value consumers in be show structure a improved to buyer less to year-over-year U.K. follows remains more a buyer first year. marketplace a make earn sequential active to take again despite Depop $XXX, of and source made to bit removed easier to like signs albeit and basis. designed choice e-commerce continuing the second sellers one of to the was July fees on tens for growth believe

and highlighting the of Reverb. to outpace the to turning by sector instrument They performance the music And affordable gain musical of experience. gear share continue

which For brands. and trusted or June, example, of and launched new the sold Reverb from retailers and discounts Reverb showcases more at music like outlet in new authorized gears XX%

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

authorized remained a XX. we quarter, June available ] total stock $XXX of repurchased [ billion the of in XXXX our June which second approximately as repurchase Board million $X program, of $XXX under million During

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

free We share also on 'XX. of And free continued commitment trailing to flow XX-month how our shareholders a EBITDA our can flow have of adjusted through a cash continued into approximately to to you here return to our significant convert see we repurchases cash XX% portion basis.

to our Turning outlook.

quarter expected have a we We of quarter already seen to May. of the second from GMS are modest consolidated ahead pleased in first acceleration to in XXXX, the what

Our year-over-year in single-digit quarter that will is low third basis. on the range consolidated guidance a decline GMS

As with consumer consumer. volatile product trends discretionary know, U.S. mixed signals of you the health remain spending about the

business that is guidance worse expectations based from impact our which this upon the macro So conditions, current get don't here.

seller-focused take timing similar to paid brand for incremental our into approximately continuing new investments. The including estimated the two, relatively to of EBITDA of consolidated more creative marketing channels EBITDA social; from the the moved exploratory second consolidated of our year. lead attributed sequential can stable And the margin third quarter will rate rest the and support to in quarter and select XX%. Marketplace, quarter; Etsy adjusted into primarily 'XX app unlocking be second be QX hiring from some which remain third, to adjusted cost campaign, the the be is margin shift for currently QX X to factors: A on pressure

be The EBITDA Etsy the adjusted subsidiaries has results. to relative are to continue in should share a full seasonal at of quarter our expected the QX efficiencies larger XXXX historically Marketplace also to consolidated continue year will consolidated about year. and We least fourth to adjusted level benefit at volume our margin performance be cost of this who basis our revenue EBITDA expect points as XXX to margin XXXX and

want and about my Working alongside shoulders partner, an be be Josh, for years, privilege in to be and past I who, and said to I perhaps I a a know has years I has importantly, plans think and not we the part important And who Etsy's mentor this has carry from years. missing accomplished to have have equal we career, capstone friend, truly X will I X comment Financial closing, especially team last to retire It accomplished Chief to my want joy been honor Etsy. could the my of In proud a over acknowledge been executive Officer. beat the stand and on at I enough without I and most life about moved of of confident on been world-class parts ahead. on. Etsy. they will a the a be financing organization, am once spectacular I have can't the

help and to I'm and my Chair. role my I'll travel Committee and identify And will continuing Audit maybe their after remain to company. more excited a including to service, transition forward Times serving responsibilities look little husband on a more York that, current New successor. board huge looking Board in of as buyer downtime, champion Etsy the but assured and are I I habitual a be a My forward the

words our It's mission Etsy my human. to now sweet sellers. and colleagues advance our experiences deliver and product growth sustainable, saying commerce strategy confident outstanding these keeping and for our buyers continue of for can profitable bitter ambitious that be I'm will

your turn I to take for your now call will today. operator you questions. the time over to Thank the

Operator

with question [Operator Oppenheimer. Instructions] will from come Jason Our first Helfstein

Jason Helfstein

I third this before to probably I want rodeo. is ask So what question, the say, our

a So fourth. be maybe they'll

[indiscernible] or to back is move right? Store, Home Home.com think as it I going

Rachel Glaser

yes. So,

Jason Helfstein

the been it's blast So years. definitely a over

So question.

thoughts the it then more timing buyer prices? confidence think lean just marketing kind you I which just tell you sellers be to getting that's to Josh, any into a going? ultimately, When you'll So and flywheel on in, get to want question. their ultimately Back presumably when -- conversion, raise of program. if gives new your dig seller able So improves the do into classification

Joshua Silverman

actually hope it I I raise one, first the rates turtle not On converge, will frequency. --

you that So variance really an is historically our box for now likely it And to for for you're example, If optimized the you, going served right great actually if broader wanted of are often. the thing. that on is this session why things be that item. black similar you drives to to thing them other of of variety come same who they're XX% whether thing, But that's multiple better search going buy algorithm ready back really the about most people show it roughly a thinks so to X% is who we understand to offer, and or very they or engine what would a buy, we much what of show experience variance have the really everything was buy shown ready conversion, weren't the more buy necessarily we might this, a have conversion. which X%

I back I more of a about. there's to we're So what in I'm say, diversity that's and for a improvements "Wow, come more now dramatic they're I to going lot to categories Etsy, what I Etsy, showing with people to end lot than stuff think, really up for on going we're think that often." sale we're diversity realize items on sellers more the going showing more excited the and sale of realized. There's drive of items is

sellers to do of give prices, price. prices, raise we're help market terms their to and getting to telling We information sellers price. them we're not and set In how their marketplace own them the a

can Etsy we the seller, rightful emphasize the give more artisanal the the do that think of Etsy to I power. her and more humanity was pricing craft the we played, role seller the can

quarters come, I to our And you her so item their making seller, the is. it. artisanal how think more really excited things the sellers understand to like thing, you going Etsy should of is actually her to process, in the really in in the and about pricing support making so that power, I'm and in expect us doing role see video And the center more to

Rachel Glaser

to drives can note add can get going you frequencies because marketing so I when the think. And way label I get asked obviously to more to the made the led what a Increased frequency going about again. comment just could frequency you actually that we

Operator

comes next Jian from Our Evercore. question Li with

Jian Li

ago? And of QX First, I GMS that the versus into where shape Rachel Has why marketing a of all worse gotten half have months congrats X things, in like changed and these GMS in question better I on leaning really couple ago? the stood more X sequentially continue in run recovery back on you're expect has just versus here. half? guess, wouldn't you it year. back growth given of we months macro how to or product initiatives a good the the like recovery

Rachel Glaser

the it's start we're can that of I say sort sledding pretty macro I'd with tough volatile. seeing. been

same -- What see we look a probably to at when experienced guidance we in the seen QX about Does QX, the gave. data, would were macro. we've expect things or of forecast -- external there's get the going we've we the things lot rest of on the we it's If direction, to it So amount -- worse, other same going negative to positive on pressure that direction. mind a we see addition going that in a for have. it's year? of the that share in we We about influence

assassination. now. a -- and democratic had had So going we We on competition volatile presidential right volatile a pretty pretty exciting

We have Olympics.

European about our our those Cup Wimbledon the at the to outcomes. we've We always to addition same in things we CNN to effect -- talked I tend And what and one think, soccer on going World influence other call have, time. macro influence

mode keeps really launches, in new with just fighting planning we're in those go and getting talked investments and ready QX, holiday great as gift product things particularly But one So we're better which season. the getting about meantime, Josh the direction. that with for better against for quality,

lot cautious this a about, excited just with environment. be there's to So

Operator

Morgan Stanley. question will from Nathan come Our Feather next with

Nathaniel Feather

going been Congrats, on Rachel. working you. into It's great A quick questions loyalty the few program new with beta.

habitual maybe how is primarily And bring that you that you Is yet, line? then customer you who thinking the do customer first talk profitability? off, program can about pricing the repeat think primary you're the targeting over that here? for could goals them isn't So it you're through and

Joshua Silverman

question. Great Yes.

all So questions. great

times shop So of is it. paying, you're who think or paid Once shop want the people to people a the X on program. having by only target year. get Etsy, customer is a occasionally out value idea you X And loyalty who

sort And it. rewards. think the to on to -- my let to Etsy, what who Etsy idea away. we're my asking costs shopping will people of then will not would happen every excited So and went to me or into fees interesting experiment. they're start emotional We're can is, be very missions of of be on take missions this we're also into start would shipping a lot obviously, time want on buyers charge Etsy's particularly the we them turn And something, this, a help people shopping the and Etsy. shopping that fund test for clear, if I many fund those leaning funding But all

missions. cost shoppers shop deals ready targeting but we know of per special most occasional if and month the to kind of of not already pricing buyers think and we're them. that thinking something I most range We the We're we're people for value-conscious more yet, don't this, for think many have to We customers. drops, can new We all value very announce are again, releases we -- Etsy many, and of now. very product our So in a to upgrade specific things. right create can targeting exciting. And come we're seeing habitual who

something think about probably in is of we late of the cost So right. the range

Rachel Glaser

his it said now. in an prepared josh it's remarks, -- invitation-only just but right beta -- And

there. So we'll and it's limited very and people group a then learn of iterate from

Joshua Silverman

profitability. profitable be to Obviously, do, everything time. And we about asked want in we you

I years beginning, American many partners evolve. of the way. programs but other membership spent the loyalty -- a X.X so we're not would its expect it to test in think I program at rewards, loyalty And program and Starwood, this all and and Delta only learn on massive Express, the to think with runs I which going I one. program

learning expect to on a time. here. the had make I'm I curve excited at of a and we're the And work. quite chance future. can I've the really that, a loyalty for long bit market typically, look this to about be what you firms evolve be going And a learn to I'm about how a in lot about So these optimistic and economics

Debra Wasser

because yes, And invited get don't we we're

Rachel Glaser

XXXX. in margins to impact minimis De

Operator

next Wolf comes Khajuria with question Research. Shweta Our from

Shweta Khajuria

is to all at One high sad go, a But we'll definitely, side, Two about, you. from please. you and talk level, around around, exciting wish these of XXXX? the as There all most back pulling best. Josh, is, et the and it's you're if what think least that you you is launching about cetera. you lot everything for consumer do a just Rachel, I questions, concern miss think could initiatives see my at you spend different competition,

the for did actually. So -- is prior then now year? launching could the are And who decide And positive a strategy your the was follow-up -- be next reason on that subscription? on next what on on second, question, there now? those what you to it this would on growth the say you -- Why doubting in for

Joshua Silverman

you. on to It's Congrats see your nice new

Okay. Two questions.

we economists, and what get XXXX. is on you opinions. if outlook be you're and going I I'd with, X guess for first their am excited should X The about XXXX, to I excited why start ask economic opinion

to what highly control experience. control. customer can and can having differentiated And we trying control So we're an we amazing

the is we're a in So upstream position I we're I And world think, going in We're And part really graduation. in swimming downstream. quality I'm We're me We're to a excited the to The in We're economy, is more some first, things seeing than encouraging. think that, most that encouraged are doing. leading showing encouraging Day even like feel we're which to getting get state, asking going Father's into even green excited position really where And bottom. about I upstream. pulled the maintaining shoots about than us race shoots. that gifting. the performance when lot work we're that we're Etsy may our to Mother's I'm then not some swimming we're what not that doing you be it Etsy. here am of makes importantly, leading Day, into green going so about better. strategy differentiation.

fewer be a have from have seller, preponderance one appear XX% XX% that high fewer multiple seeing largely identical. we searches to searches items When

over past we've the ton a in what to done experience do that policy. violate the our that customer time, can think I to suppress that items

we're on on quality items focused Etsy. elevating Now highest really the

service dashboard of the sellers for more the and how we'll be sellers. to level, showing score creating them quality So the quality even their top of race to a the of we launching our items a

better agency makes that search, the Etsy, about elevating have super they buyers to buyer of and differentiating the best role in really over our rank and seller So process understand letting made that better. in very helping that and Etsy. how only excited the experience our I higher am the sellers shine,

the we're start and right I by path, really I'm think on now. early exciting it's an encouraged

Rachel Glaser

XXXX here. giving not we're so And guidance

part competitors quarter, other about with of were we verticals. question each next was in the this growth every along down categories, the to on many -- show of call where did So see your other our year. We talked data in one of major categories that those we've seen last

quarter, of of actually all flat those categories, saw except improvement This in we X them X were for and positive. and

that So we're starting the to green important see the categories want most to that are shoots see we us. to in

Debra Wasser

think Shweta, a was there loyalty I which second from why question was now.

Joshua Silverman

better And I think that. when that. and -- to but only want loyalty of Etsy to you haven't at anywhere we we a gotten for it else. at is of mean when amazing know experience can't only been at showing way is you you you huge great us. And us place the the what, they you you a And we've want, we've on gotten I go we've consideration focus find it it. Etsy, better if what and -- very at love know they're Etsy. think they think we're now, Why People

And place of of all from else with when find being you the time, there period GMS the that I to when Etsy. We think, a want to go you you was for your at we beginning start anywhere anything couldn't process, years, And done, we've remarkable were But find at replacing here other job your a time can't the else. that end beneficiary. Since of a Etsy. at we almost anywhere few of to it the want move to almost process.

I a wedding, we And start I'm become to my you have we've really really this opportunity corpus want We so by beginning, LOMs navigate an point. redecorating great opportunity help help to there. Etsy, to I have organize we there. planning we home. think not And think had just on a we much been great be and understandable starting great it enormous it baby. going make know to and have listings At are the we humans there. very I'm that a of to

saying, program "Hey, start loyalty So a our commerce loyalty program join of is your and missions." a way

want the we suggested But free. you're tend program.; to money to something little And We think evolve. tested of better free you consumer buying pay start saying best a a on if you you're don't now saying, together. tends bit test. going start to online, made you and to every that that mission with we to why you've cannibalize research commitment, I'm And launch do cannibalize together, never to paid free they if thought the our paid, to to paid, with start task every would it not We're them Etsy. going want to We that month. you paid time going we're

Operator

come will Colantuoni John Our next question from Jefferies. with

John Colantuoni

marketing. to add on Just wanted

XX%, XXXX. the since performance that's So marketing on the up side, biggest increase

just once the a that won't the about confidence GMS? see is Given pullback gives significantly that recalibrate GMS, and to growth performance of better talk currently of you trajectory faster that, marketing you balance trajectory big in than profitability what you that

Rachel Glaser

Can spend on I QX, year during start back last all, we were quarter. did first with -- of tests that in pull we running incremental because marketing

was normal So of the base sort base. not a

-- the one marketing So reasons in year's that's QX spend. marketing growth performance the of for this

throughout on total into that addition. and test talking paid to us, for that's a able we've up a showed been and channels ROI of optimize marketing shows we've and bring an we We increasing new until instead way of that's And spend. that are able other bit we not positive, percentage them Those PLAs video. performance been be in this been paid that are will they about chart to happy social our our for And test channels existing to very positive. -- to can and while we've time spent of and get and a new to channels, we've also social the we done

those and outside that's of in the investments then those And of some seen well. countries so we we've top we're to positive other -- ROI thing in U.S. get more some of point. really some the that them and where this as are of So as the X, confident testing feel markets actually those that phase of positive the producing are in noncore to at incubating them are and optimizing --

second those, of part, his the to part time? The do confidence guess, Do you I that to second have how not want over was question? we dilutive take John, be margins

Joshua Silverman

that's for the To here's planning a consideration right? higher that already really get us. lean down cases, really but most level better whole opportunity PLA, us. in And and know think then organized area looked to everywhere to an mean highly make by from to and I return dollar sense I case way going getting new targeting landing having what a going down the that way YouTube, way items to have for is the in. I on for helpful discipline right we marginal a social. mid-funnel curve. we all what for that talk want you've high-level And you exactly like paid the you're much about make to return I here's we you on we we're we of unlocks Google. takes when it back I've down all think starting buy, I'm all from the I'm exactly I'm really a that's that after and invest now you those generally meaningful few the use are these I users a the to What a are encouraged know use else lot And that's want places Yes. the experience better and wedding, always can at for, a searched when very much you it's is go a looking these to want, place progress what generalized

a encouraged we're going to social. paid always We're strong progress in eye ROI. I'm have So making by for the

then loyalty, for sure really once that other get The to going And really you doing to on pushing for be we're make back engage and that again quality, is again that that's come to unlock big build frequency app we've we're in and example, us. on on work loop. and you abstract to you, the another engaged

Rachel Glaser

expect that is we reiterate we high note full to margin. last year one least as that at margins as did just last year's be our And

for So us the those we able to are that the flow have achieve confidence in year going for of way rest the be margins. to to

Operator

Rick will from Our Raymond Patel come next question James. with

Rakesh Patel

emphasize career. your amazing an congrats on Sath for you next you chapter. Rachel, on efforts talk the value about really to your us, happy marketplace. Can for in

price terms So of and how execute you you discounts? the buyers? are the deals you sharper secondly, making do offering working importance with sellers right And points to how of front that in of in right communicate put sure the

Joshua Silverman

Yes.

can in in So they a offer customer. so robust continue place toolkit discount the terms returning efforts having sellers, a their had for in items They a can past on of to put the sale. we've

to an you in checkout, to can and continue a sellers get left we you see item back adopt If and come those you coupon tools. offer close. they use to And

thing into buyer to the more Etsy, of we're We all it. put on is the the search we highlight to really as are a how we how this that we as And our an just the to a big differentiation But think that we're value emphasize that what And better like going mind area think the a is effort the job be in her more are value. cool to Who's do want discovery that's I main the part a in think and where in user pricing her want emphasize we we the it keyword cool don't lean have give is, item in And power loyalty I quarters to us for And and lot example, and in the in into lean and special We item that. drops, have, the really program, item? to highlighting want coming the elevating things her for things that, can centering have human seller for behind this we the was think in really and and much this role. of there's investing call Etsy. doing role deals process on for value really opportunity more to I deserves. special experience she -- well.

it's I important. think

Debra Wasser

want Another just demi-fine. do was good -- the example for the you might to on prerecord is it

Joshua Silverman

Yes.

time $XX And category, we there of of if under jewelry when under at a right was malls a So look look, closed. period now. were pressure, jewelry is lot our

shine. many obvious $XX, have isn't shipping. jewelry And And jewelry to Etsy not the we're Etsy There saying under of so $X $XX, you I'm going lot it to but going other buying be a or couldn't there is under where on on under It's is. places, jewelry and Etsy. place $XX they wonderful buy sold that not

have sellers items and sell between growing value wonderful We of, amazing let's And say, But who $XXX, are that. $XXX demi-fine there. jewelry quite nicely. we those have value

what you For for you area example, specifications fraction differentiation. to the Etsy, That's buy your we often a competitive on just ring of real you in range engagement mall. could pay where an for a at a have engagement beautiful price

those make a get have chance really And get that elevated a and to we to We shine. want sure right to real win.

there. So more leaning we're in a lot

about talk another LLMs. actually It's to place

LLMs all has getting such quite been those of for of we the well. attributes the diverse a That's have of for inventory us. One of set are accurately labeled that a a chance doing historically there challenges is all task items

LLMs and So we tell and What are starting what's a nice expect, very what's we've doing weight carrot, what's and apply attributes allow seeing our those the of a and after jewelry, a nice would material, to job more do a jewelry asked do and that the in whole it's us we're there how organized us shopping effect. the create filter. to customer LLMs go the category have filters it then

Operator

UBS. question Our will come from next Chris with Kuntarich

Christopher Kuntarich

the this about And XX% willingness EBITDA Or a engagement app Could XX% the from Josh, is different buyers using against buyers? sustaining were you the really pre-COVID Is new today? maybe just dynamic? talk a then, Who's versus this margin on XX just really there in X backdrop? for that of 'XX? really a we How to revisit can a app? differ material very is GMS is amount.

Just you kind can that any on that. share of

Rachel Glaser

our base cost a costs. model we about relative very love that fixed is to we variable our have What

addition and quarters when pandemic. bottom of demonstrated tremendous line. our So a continued flows the from drove Etsy showing our we since for to large that when to much that margins, flow through we've we subsidiary. were We GMS seen We were through most And of then, revenue, the of EBITDA. stand-alone we've in to has peak the come higher many contraction maintain of percentage the

down we've contraction subsidiaries revenue. to margin. the really steady, doing And the and spite So and that in been of our those we've in both of amount flat amount of kept from increases things GMS modest Etsy

in GMS revenue holiday this because quarter we we going have to -- we expect what of year, part So last see sales. traditionally into is the a of fourth higher expect

that the against base. high happens cost of So backdrop this variable relatively

year. we that to So our cost those spend, there into we that of sure on working than line sequential our year. things while we really our trust things this make also through And during see been costs we've of we on year, don't last period see as low instance, fraud favor we above-the-line a to as year, saw QX had for like safety time. And some that in hard to organization related that bottom keeping year, QX Last higher where expect from bigger revenue see keep we and higher expecting flow last in increase possible working marketplace was we're versus safe. this to

very margins. feel comfortable we our the of So about level

We our deck think even results. slide cost organization, this we in if engineering such count. ROI for the product showed because head it asked GMS very head lean margins, and when and the in manage past reduce and an lean be that, per that further We and showed a And we expand we we did your very are of been would revenue organizations not productive to in every a about positive revenue single why organization. are a cost at we've

how we're base profitability our that pretty managing the feel we good So cost about we're and delivering.

Joshua Silverman

as haven't investing and in team. a and appropriately year the we productivity. we're always And mean don't we year about efficiency guidance. make not -- going sure Every This to future. guidance. business that efficiency, care. quarter give I XX%. to been want is a of about I team forward when we given quarter has every cared year we Yes. said want and for core we're to has a cared a forward been this The for There's margins the screw are never always don't

You can't all per find the are looking a count, margin leverage and of the ours. of with look at scale ours size to close you our of that businesses multiples And start head to you've comps revenue that. get cost get anywhere to they at to when like got marketplace getting fixed that

as for that testament appropriately investing we sure want And it's how opportunity make have. thinking feel we're much our to about very stakeholders. and value balance always a always the grow that we to we we efficiency, the make think possibly I So to how as large of cared about much can real we have to carefully we're all

Debra Wasser

answer Do second you quick using in it who question the squeeze to want and... to is Chris'

Joshua Silverman

Absolutely.

that user now their it's So lot but lifetime on when and often, users visiting have quarter app, start active us downloaded growing of the GMS XX% our XX% about it's up. a download quarter. a of value It's more -- our app they goes about

otherwise, the only app our who the most We've is had to that before skews time app. been can are a download But for with users. willing most In them are anything. more a It get people bought users. value-accretive app are fact, the that the the they've thought user time app finding lately we users lifetime a even little you downloading first long young thing habitual

we on I your in it's think the of migrate a that place times. historically, place has been behavior really have center have Etsy an they've where wanting been first and op opportunity the app once shopped and the make So experience to to onboarding consumer several changed the people

that's very us. think for exciting I

Operator

question Michael final come Nathanson from MoffettNathanson. with Our will

Michael Nathanson

Fraud, you've Congrats in you the can. a I highlighted again, about One, on gross XX-K. margin Two if comment I Hope to as questions, follow time. quick up Rachel. that headwind, Richard, the enjoying your believe,

expect we speed something if the So effectiveness like of I if And wondering that's to that it's the you forward? quantify was maybe gross could been going margins. should and onboarding bump how lift

Josh. comps. think, than sellers you towards question, maybe second to my spoken geared that's some for a And that just factors And may the talking then And little on-site you at try we're more that about the give I to more just money limiting you've be bit ads. Service some of against can the has granted decelerated GMS to allocate. But as grow opportunity type structural about to ad growth of tough a revenue limitation trying percentage think or load?

Rachel Glaser

the fraud, first all done. On I we're think, I think don't of say, ever

same credit and in all I the any cards take think all thing. they're large subscription marketplaces all businesses experiencing or way, that have models

in rate to a that ship because it refunding never sometimes they an broad fraudulent, job buyers or which other of results things. done promised never in effective us we've chargebacks but think I shipped that getting was -- has our -- result mostly we've So seller something

very with then and and QX in and the of comes for So way last QX high learned what that -- then wait rate year, was we fraudsters season, is these the it rampant.

was of I the fraud things, speed impact things. we've and -- that was up on revenue, but I in we've very sophisticated it's really of Did place many I'm reason think additive -- year, to not did create been us And forecasts So sellers have I other we the I sorry, we to come things the the many in helpful. done been for reduce give modestly multiple seller don't done stat. a fraud one And allowed we were think we modestly last what onboarding fraud, it's that that's fee it's main and onboarding for than to whole we're in seller onboarding, remember it down. think portfolio put of the but reserves our

we're and I'll we're shape QX, hand on is think open great to. for wide in we So

Joshua Silverman

the still Etsy on slowed, ad rate but modestly take of as of Ads, result rate And growth actually a expanded Ads. Etsy

Ads. continue a opportunity I think to of Etsy there's in lot So

of budget big are most for giving can but to the shared, we sellers we've of enough than As are, be Ads some use. more using Etsy us them

are giving Some budget of them can use. less than us we

So this experience focused because nudging biggest bigger some something sellers the keeps the for better. ad advertising It win-win-win. money, of seller them continues for right be makes obviously, always budget sure buyer to it's to of making give investment. right that's a very on great lever get value put us in and to roll the money the high, the is the off It buyer front that's And a lever. on, The we're get picking shareholders.

showing the that's still to and the get we're take up us right for Etsy from So rate to at buyer, we room going to where of to continue there is continue. ad drive think to right continue better plenty the I Ads

search to better. get going search engine, is to related also very better. It's keeps the Ads Just continue as engine which getting to our

Rachel Glaser

a We few Thank went you. by over minutes. Great.

So call to I going it. we're think

Joshua Silverman

together not done. you next left I just I for privately, want has really shoes told is again, We'll I seated. a CFO close Rachel saying, you have But great the been as continue to know wonderful partnership. until we're large working by small

Rachel Glaser

joy be here. Thank you. likewise, to it's just been And

Debra Wasser

while, So you be all. and so I'll you all thank -- here for a see

Rachel Glaser

care. Take

Joshua Silverman

very much. you Thank Thank you.

Etsy (ETSY) 31 Jul 242024 Q2 Earnings call transcript