ETSY - Earnings call transcript Q3 2024

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Debra Wasser

Hi, everyone, and welcome to Etsy's Third 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, our CEO; and Rachel Glaser, our CFO. Once we have finished with the presentation, we'll 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 statements will that in periodic update our statements be in today, uncertainties, risks we of Form on disclaim this on make and based and reports the we forward-looking and updated that which Forward-looking most SEC. file described to recent are obligation some are today's we and and Any them. any beliefs with XX-Q future call our assumptions

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

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

Joshua Silverman

consolidated good revenue guidance. with have roughly afternoon, Etsy to marketplace line everyone. overall pleased despite Thanks, million, GMS adjusted take approximately from billion, was expansion, year-over-year. very rate quarter benefiting the GMS a our we with profit Deb, and posted challenging continued in EBITDA X.X% and to margin and for about We're consolidated performance Revenue healthy X.X% grew $X.X of $XXX solid delivered XX%. down a

We approximately continued mind million. it's see despite our to and $XX multiple encouraging strong active and GMS year-over-year, remain this marketplace share X% Etsy levels solid about quarter. headwinds While at down was revenue macro buyer events profitability maintained flow-through

to consideration in to year, possible. elevate our quality, strongly in gifting, customers reliability. the around quickly Etsy's value as investing we're we've today, about get to launched forward enhanced driving and purchases truly discipline us tell created centered said showcase quality among and commitment millions goals. repeat we charges as and the shipping estimated things diverse differentiate delivered search gifting and and to growing higher global We've We believe improve foster program times of algorithms excited to I'm prioritize beta shipping. more our a to loyalty quality this we'd more more search loyalty encourage focus how on you and and that highlighting experience, outlined Fast on Insider Earlier order we intuitive items. those reduced Etsy Etsy our and listings with

we're things that these are, prices on else choosing like bottom. of everyone focused a part bigger our a when markedly the is steep things our in simply best are better. restarting At time the a and the to lies engine. Achievements sellers slashing a it not to strength that know who feels markedly direction, differently. retail We we are. different we're approaching in It's not offering story. double discounts, down like Instead, choosing to as our not Etsy path who growth and on it's make different race

been to and has And in engagement work talk than so success to done banking in core our improve metrics better you've customer journey incremental A as and about other of believe more year us experience heard evolve holistically Throughout I the customer nature. the conversion GMS historical team. year, in-period a on infuse our experiences focus from for tenure. lot foundational of we've this in to my far year, any this

we on deploy Etsy the how we product shifted technology hire, of app related been to and shift see growth. start necessary within X some even our are our and to and We've cost taking as moved this how the across a measure goal portfolio steps we investments springboard that how manage people, opportunity with you'll areas and the future success teams we we believe manage We've platform. ways build urgency, initiatives, development our to these there's where operate search. are for

download early increases For getting than it's app, making days, Etsy half transacted real to the buyer GMS a Etsy progress. yet least is on while of their started app our by lifetime app. less at the we've XX%, the spend on

of untapped potential. tasked tons revamping new big app That estate with to real more dedicate teams the far was to there's undertaking. without to hurting So We've conversion. our alone inspiring missions, but shopping screen a so homepage do

what fresh, a past time looking those exactly in by impressions. for. Instead, we rearview mirror inspiration, now millions improved see items a XX% the for reduction exciting just without we're And clear with arrived influenced dramatically your users you shopping When holidays, perfect missions. idea real offer who show shopping in to of of a they're we estate experience that for using call what

showed secure We at by willing app mission efforts shoppers led these Boulder journey. we rate the downloads the to downloads, overall visits, prompts up increasing app also experiences. is experiments stepped intervened to we in app shopper's prompting in mobile lifts to download briefly believe which very better promising. the interrupt mid incremental to incremental the Initial web which to current We're promote more

to one optimize presence we and prompt downloads Store. App placement testing signed on learning while from We're million listing the web. in in our drive X experiment, a out example, and drove page on also the placing For downloads we incremental paid with mobile app ads

intentionally specific building The to other algorithms historically is where they're engagement more that our major thing for. we've search, looking built find within we're buyers help area the

that have taking show to wide range and working Now X-pronged of on we're that, do approach a we're offer. quality we also To focused diversity, items to the agency.

on touch Let's each one.

diversity. with Starting

and inspiring AI engaging experience. repetitive to less shopping are teams our and and creating search results, know, more a you Gen variety increase As leveraging

here. of to those believe matches. an search least we're that shared reduction not images. results, just We increased we retrained frequency search to from visit last this further of expose work even listings that we feature and turn, diversify over be to we've to have similar will time. on with better incorporate On drastically to year, and offerings seeing where now To leading algorithms, quarter, net identical improve at listings expectations, in service. the images, As shops the exact buyer X/X a search XX% like, return customer in with consideration like our results charge and having level high-caliber results casting wider been providing a aligns approximately of Etsy, We're that quality. our items reduced the incredible adding This of buyers the policy also of indicators look working we impact shipping breadth to

not We appears delightful to we're search purchase as signs to better affects match ought reviews frequency decreases key consistently an that buyer stars the increase to encouraged what buyers are rate are and over an job mouth. of are These ingredient reviews at leading lower better to item these you is you're an as efforts but delivering purchase love. you're experimentation that doing life and word in experiences quality of Etsy, bring which more agency even that to the to believe which giving great be in request sellers and we on of areas even their X- A experience buying both We're refunds. more ranking. to the buy, number lead with likely to want likely overall X with an number to well in just X-star our these

their search, actions within August, seller as the So in sellers times page policies, features in to domestic message tailored listing improve take late visibility dashboard. launched and This search quality shipping charges position image can we page for the quantity, new such response return Etsy and listings.

shipping In real make the since to buyer better time. changes, one example on in charges million track improvements meet ability they'll have X.X As work lowered in items expectations. action, sellers approximately have these of this sellers to launch,

and able we've and to people. in already adoption to for target place. place pulled exactly being positioning beating creativity Etsy highlighting and standards makes know to to July, our on on action it the introduced ourselves real what by as uptake items first shopping position our We overall item in to to you come excellent being we after seeing evolve to find to the seller belongs what marketplace also place sellers Etsy. In fact, what you taking you want approximately on that you XX%. each descriptors we've item the in you making experience, our inspiration these internal what an Connected underscore fortify standards to seen for creativity played elsewhere from in want or different and the for adding been come focus role the original the suggested, from designing through show they're help early the special, buyers discover why that haven't We're

rather in in creating short-term the Etsy human throes involving dozens will focusing be towards updates like staff campaign buyers. marketing to to that new much and experience search, on are by benefit consider run conversion product We what explore resonated the most and spent long-term featuring and development and accuracy the quarter accompanied metrics customer campaign date, prioritizing discovery like Etsy long I our year's were in their to GMS. profoundly with rate This These shift The how refining label exemplifies experiences. changes primarily to effort marketing real fundamental buyers sellers improvements, this than third areas bespoke of continuing items. to highlight them marketing of of

one align our made was along Our among recalled originally of and Etsy research small These the there's sellers. goods. no tell than supporting with shows what better world positioned belief the to creativity findings top that messages our themes that with handcrafted and means

on through began the loyalty. offering shop sign-ups rewards occasional to buyers beginning with us insights In our first us Etsy their to best often. so and that Insider formulate a pique far. buyers is program glean just officially We're on-site inviting think platforms evolve group uniquely beta to interest. way of e-mail, to how driving and the Now the targeted We highly Etsy approach we plan push and majority and join along encourages let's of of prompts mid-September, as we across more buyers app with talk to a

giving that Our tripling increased gifting gifts improvements adoption ideas with discover the number quarter. buyer on also existing number available We've of to buyers. product the We've gift to gift this while a introduced browse ways and features. of is strategy unique keeps gifting new of

been incremental came visits to a the from For gift X.X have directly million million went site. and then who people lists and gift teaser instance, created approximately received X.X

cards purchase more the in directly gift help peer GMS of Etsy specialty cards head physical GMS holidays. than and retailers. to less estimates out a we our people including the X% as And retailers. represent at few way rolling consumers started percent of perfect compared can than ship just and today, Gift U.S., U.S. another for stores of XX,XXX major cards gift from give into industry starting to etsy.com, also pharmacies physical We've also the

our in on stage we marketing with off. So center of holiday here. opportunity gifting see creative And naturally, lineup site content amazing this significant and season takes an

selection. share percentage U.S. of our Turning market This buyers stellar points. its Since more to its marketing million August, U.K. And made has GMS a in position been sequential House performer, the listings the marketplace In a amplifying U.S. biggest XX launch, change by on basis. growth of accelerating removed following buyer to increasing model. XX Depop fee top accelerated has as building selling in giving line to resale. out and more campaign strength Depop a wider fees July, selling and introduced listing proposition fees U.S. marketplace on than sellers a small ever has appealing rolled Brands. a their no gainer U.S. growth people Depop with

and the to sales double-digit with Reverb, August, exclusive for new Fender to and Reverb growth music partnered operational trusted certified directly sales Fender, outlet music drive leading launch gear musicians its On music continues profitability affordable growth. a to brand. the preowned Reverb to services outpace Reverb, world's access in seeing efficiencies and focus community. manufacturers U.S. year-over-year guitar from preowned of continued In used on is helping one gear gear on gear value-added

closing, extremely differentiated. year we've made more make In I'm proud to Etsy this even progress of so far the

towards flywheel by to more important is to our our work energy long-term restart cohesive as shifting right engaging growth ever experiences. Our than we win

doing obsessed promotions, and make with discounts While promise keep so, even of human. is we customer commerce our world our obsessed better the with In to making Etsy on with experience making even good Etsy. the rest we're more

comes and products, at as now sell is in. even for is tide work tide further we're right the large ensuring to and hard boat While discretionary our strong, ready faster the out

Rachel Glaser

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

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

Etsy marketplace quarter third consideration X.X% And FX basis consolidated point performance top a and consolidated billion, U.S. performed nice XXXX and you into the GMS results. as down delivered consolidated year-over-year that contributed growth in year-over-year. to year-over-year also X% a take was please tailwind. So benefit Strong Australia. compare when in GMS Etsy's Depop with excellent was GMS line down approximately XX they $X.X well

revenue. year-over-year, resulted modestly into by Third of $XXX but million, $XXX quarter. of quarter growth to accretive X.X% our to basis driven and cost revenue down level margin, the year-over-year representing consolidated GMS healthy by leverage in offset this consolidated was XX.X% guidance. divestiture in spend a to a and EBITDA small fee which was that on million and EBITDA gained We marketing very growth, higher ahead revenue by increased payments year-over-year revenue, revenue increased of consolidated headwind consolidated and was X.X% Digging year-over-year margin. revenue adjusted marketplace quarter, primarily employee points XX Note costs a EloX's the our adjusted

continue We XX% payments expansion to GMS penetration drive now with XX% prior at Etsy platform compared Etsy corresponding of to Payments marketplace our year in period. of the about

setup fee ads off-site seller revenue to contributed new marketplace fees and expansion. also Our

revenue in increase the transaction and our services to was fee Depop The X%. an at was marketplace resulting growth in GMS consolidated performance. for tailwind a faster addition, even revenue In consolidated

basis. across seller revenue and strides add in the maintaining made behalf of consistent all The bid resulted ROAS. Marketplace while accelerated how segments, balancing a significant sequential in ads performance year-over-year sellers, For our better which we of core Etsy value on seller seller on optimizing result

led rates. incorporated We features conversion embedding capturing and an representations, more in into ranking ads which models, listing our multimodal to image improvement also

the while rate All the in XXX take above the points XX% above XX.X%, in all, XX.X% how demonstration chart revenue the in QX strong have of manner. win-win to right, year. more higher last as guidance our you can year-over-year see take This improved a period and and approximately Etsy improved of reported to able a on 'XX our also basis drive our and great in consolidated by we truly for experiences sellers same and performance value is been our for rate delivering a

has Josh spend marketplace. in able described, challenging proud our initiatives with to also are We Etsy for that core a invest Etsy bold while macroeconomic discipline during our been time managing

decreased year-over-year expense XXXX primarily quarter, development $XXX spend For consolidated million which workforce reductions. continue example, the employee we to decreased compensation within connected our approximately X% during drive leverage product third to with due to

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

Third spend quarter $XXX million. year-over-year marketing XX% to increased consolidated

in performance year increases Marketplace large its In of last addition had in versus spend a to spend, change its Etsy U.S. Deo support up in announcement. fee step marketing

in channels, can the of this particularly lower chart the last call, as expanded from we newer performance meaningfully, social, portion which increased As you slide. our highlighted on and within we see mid-funnel also paid right

buyer our family impact having onesie. addition of in us XX% as buyer. our into the test find it in is than is spend a and new This spends beneficial but been matured more our since have generalized next a positive months your such discovery rather throughout buyer solving is investment with push buyers social We social for optimized. reactivation, on a we baby fully personalized reactivated overall yet needs, our year is paid you Paid a the learn, a as not recent and the aligned than well specific and with inspiration XX new more helping increasing which

XX% connected of level Deep spend. increased Consolidated higher ops year-over-year, to brand spend also

spend we seller for call, the brand incurred QX also Etsy campaign. costs our includes last creative As previewed focused on our

Moving We well our Digging our there this to U.S. trade international GMS performance, related route see categories We in trade performance into Etsy marketplace our as domestic-only metrics. in as nondomestic trade a X and as are well as growth in imports. top and at factors GMS modest play. had non-U.S. did year-over-year down route primary decline routes. some U.S. was

on share conditions, overall win. are continue wallet budgets influence able which we weigh First, to the consumers' macro to

going you spend see discretionary personal chart, COVID from peaks. As decline consumption of to the percentage to continues the can this versus U.S.

and U.S. were elections share the created election Helene we additional included general the the headwinds tied believe a U.K. and discrete for These during Second, of few hurricane end there which of including in politics our business. quarter, popular the events the host at a events, mind general we sporting up creating and France, leaning GMS. on events to European cohesive September. football, major Olympics, These and in run really experience, quality they app. as third, in modest item some focused have making pressure a And and headwinds and Etsy in-session the large company marketplace core are the sure pretty putting are some described, shifts we conversion the on shoring great especially to into we've Josh how highly

to been some the we said, GMS That drive pleased able quarter. pockets of in strength are to have

to with GMS up birthdays brand and seen grew gift and merchandise We've also customized focus making X% U.S., as calendar-driven resulted as fill featured to Our items Father's second site-wide Mother's and driving such Day. the in destination for we continuing year-over-year. which growth, continue Day evergreen our X% experienced again quarter will year-over-year, the And very in such focus purchases one can on To performance, gifting strong in GMS the anniversaries. reinforcing holiday personalized site-wide buyers. way albeit for Etsy gifting not more on resonate in such occasions help important gaps, outpace that as as back-to-school

reactivated slightly only to on we We over up have $XX.X XX% fire new lapse the quarter, added a fires million X taking our which Marketplace year-over-year buyers count, resilience quarter, X million to around down in in active Etsy year. close down the We year-over-year. And basis. see per over X% in million approximately continued was

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

habitual retention buyers very a was basis. our XX% However, habitual of slightly healthy of year-over-year remain rate a on and GMS. buyers better our

down Lastly, decline predominantly been less frequently per a talk take purchasing. GMS buyer have in seeing about active while, per X.X% to us we a the fire for spending a the the year-over-year to keeping bit I visiting was quarter seller and want in to trends $XXX. per active due buyers with moment is In to Etsy quite GMS community. less

recent hurricanes. hard goes out by to hit heart Our those regions

adjusted extended status As is have proactively break their relevant guidance seller taking in their to Star schedules, a need, managing as from and disaster course, provided sellers we grants our normal offer billing businesses. around or

Our hope sellers with safety. provide need they impacted is that flexibility these and steps focus the on their to health

the year you release, have sequentially. million, and noticed prior seller X.X% As may marketplace count press versus Etsy our for the was the X.X active in down down

have when seller, given asserted a lose the that lose available. we We we long of a amount rarely substitution sale large

win. very markets. such the other the as pockets count we will of been actually direction fact, which the that fee of in point, Ukraine seller in believe our strong is our a and To has the who right we year. made are sale skill we're decline percentage including helpful see a seller seller In growth sellers, quality succeed in focus actions to right with to increase active in Etsy taking third stepped-up ensure to enforcement and other setup and see of a a also on during those moving the quarter, can actions sellers the we this that new And that byproduct emerging year-over-year and pleased metric our on

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

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

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

XX% basis. gain cash convert foreign to continued adjusted foreign noncash in also the year. was net of Related, EBITDA free noncash XX-month compared our loss on a currency income by flow prior to We a to approximately a currency trailing impacted

We program Etsy have we have significant see our authorizing our earlier $X value confidence today, our a common and our growth addition, additional we repurchase an in plans of approved stock In of to stock. Board up and repurchase in Board underway. shares, to billion Directors the new

level repurchases business. have new the billion investments it's free not such do Given flow, $X.X cash that already flexibility in the beyond will worth noting we cash expense us authorization strong that important this come high our to And of share go in at our potentially of give repurchase. and these generate

Turning outlook. to our

range Our for the guidance reason consolidated optimism. best We're is on that percentage gives low is gifting, quarter the Etsy for we've GMS will basis. year-over-year been which decline ever fourth holiday that us confident in to a mid-single-digit

stands tight on running also appear know core cyber spending pressure is of With psyche is sales front site We in great the deep highly value highlighting within to may said, will differentiated markets, present and our lot value and cheap that general prioritizing we consumer on gifting unique they and how the or in and other discounts and will impact holiday the there off, a product. and and special consumer for be brand be U.S. deals. Etsy and sellers One our center trends. budgets. our rather unknown than election

QX tied the range year XX% will buyer spend QX of The in to be as trend Depop prior 'XX campaign. sequential and can normal coming higher quarter. the QX consolidated 'XX seasonal and attributed up of adjusted scaling earned quarter revenue rate to our marketing from well the seasonal be volume result, into Consolidated cost fourth margin to estimated ads slight sequential Etsy EBITDA as to to levels we performance. is relative the versus XX% the GMS in adjusted efficiencies back ahead spend performance and in with fee of after step play the improvement the down QX year be currently with brand from and a on QX but take higher-than-normal in XX.X%, organic EBITDA prior

digits, roughly of midpoint still respectable believe the in and all commitment growth least for reignite year, for GMS we using value we've single revenue, full a than profitability down our So good, investments this as host low better, the have driving stiff for as guidance, can EBITDA delivered macro and made strong the consolidated year. fair critical of withstood we in growth our we the at very will that sellers adjusted headwinds, future not created exchange if

if with While is we're time of can call we business the indeed. will period, an your GMS what for not this the that in extremely deliver satisfied lack you our the bright expansion, comfort your I over the take all questions. to will today. Thank be turn now future challenging Etsy for operator to take

Operator

will Instructions] First [Operator Jones from question come Securities. from JMP Nick

Nicholas Jones

maybe development? kind you speak the you your what of of accelerating in lot pointed arms headcount be of with lower a want of GMS cycle kind to point product you platforms. around and lift to think of of get new should at to more. bigger to as leverage in out to over you're kind growth a lot order past as Could kind particularly needle that How you you a some do relatively in do rank the time. invest driving eye potential you're kind a potentially this other we And I a you thinking about move the investment able technology

Joshua Silverman

know, value, really going We're bottoms-up process of of GMS the we work tasks. say, roughly squads unit uplift want that revenue. the based translate and to decide that how the year. Yes. to next squad right into what go many what we experiences to we approach XX And through end Etsy then at a dedicate we now a best through more you of lifetime your ideas beginning are more well And year. at team to the And have we more question. the to on year the at with it What at are And of for people. top-down to are the the think quality Thanks, ideas. is Great those a challenge where we going customer as Nick, Nick. are the X

good. And really really The can so usually those velocity units operate is quickly. atomic

you've improve empower got we in to, to by this hey, those experience So customer times. much them this

the You're year at company. right seeing leverage is thing. growth and focus last some believed that always that that product cost a we never all we've reduction in that on force scarcity this focus development are we've did we believed great in breeds a year, always We've been based

We foundational team. really we've you we through critical to also as to a focused the the come are ourselves and quarter. getting growth measuring think the the year This course care not grinding more up experiences as decided invest lot in that are setting productivity of the in of the incremental team years the the about year, some productivity of for that to in GMS to out on know,

marketplace we Some are lot that examples thing they leading the customers buy do improvements do we with adding the That's tremendous future to spot foundational and pairing growth a going job score drive really to not a a products in higher products search. they love. to is search, Q and they with better as think a GMS in can know what to sellers a more earn just in

but multiple GMS that do really investment, able times So work from have getting of neutral. neutral or Everything times, been we think in incremental. and months to to months about be it that's a it to normal really has and other squads been has In not we're be the foundational took goal.

existing think I on to lot well be work more foundational additive. of on and I work have from made squads We're positioned done our that. we've we've this a of a next year of lot the this year, the think progress

hiring. we will doing I are incremental say other some thing The is

about we don't We enough continue example, to making experience the But be have app Etsy, cautious we for engineers. that. very decided app, on the premier

So engineers. hiring we are more app

think there's tremendous creation for machine we're learning. and I us value, The value seeing other is place much so more

have we more learning. machine hire so people And to up more some in opened recs

our working drive but about strike So in where balance. going investments, we'll always right lean we to disciplined always think to it's been continue to we're the growth. We've real

Rachel Glaser

Just of being the sure add full-time cost optimized to disciplined about employee. means a in make trying of we're investments terms

up where U.S. about Dublin balance addition a there. before the in have and that open cost in that have not the are compensation paying U.S. the to we're markets only So in City in we centers places we like of try the different Mexico rate is to load can the not the we've where talent same get the aperture and development United talked we of per levels States, FTE talent but also that outside the

lower every need, of needed level always that price make the the So year to we the down looking per competitively. we're paying we up as be single talent assessment and right we're to get cost at able FTE. the we we that make sure and market adjustments same At effective or what's that to time, do for

Operator

Our next Piper. from question Yruma Avi come will from

Edward Yruma

Thanks so search and to us. couple hear see to and much, in great about profitability. Great. A from guys. progress the Good you

any any card pretty you It how the could on helpful. plan the as physical then incremental, in December, If you high November of then seeing gift be color upside the in end just launch improved year, that the business that then mode the the not guide of in the but you the you fourth have just started marketing Etsy but business share implied quarter-to-date? sounds I'm that's curious, that and And what what's GMS you're if elaborate and And can interesting. quarter. at Curious low to Just gift tougher, should be last off this quarter? versus which the for end guide. October mistaken, a implied follow-up,

Joshua Silverman

I and not holiday Well, is say the so going later October year this to quarter-to-date season has will shorter that give we're normal But far. gone than normal. than how

Obviously, are It's probably particularly do, going So large we but mid- they in event mindshare even United distracting case the in necessarily election an that December November and this That's the of lots late more States. particularly and have so part people shopping think incredibly thinking in loom November an quarter. aren't to going December the about always and quarter. the to we on November. where early of in

goes. that how see we'll So

have Of We shorter how Christmas. up consider coming course, that that hard exactly that in will though to guide, a know and we have that we election we but an certainly have do a shorter things. the affect it's we consider

is it card into gift In baked guide. terms the of the

time, be Etsy. it's, think exciting to I over going for really

retailers, a that do takes are has the party I relationships awareness share mind We and to it it building retailers, with deep for time. but think marketing third

our gift we a or bit us less think GMS, many points. said, even of cards X% we or as it's and maybe percentage peers, for little So X X maybe that, of

So upside. we a all be happens builds over that's there that I once. real think of top. it little bet could I bit something doubt at

Rachel Glaser

redeemed. remind I get about for card don't because just you recognize quickly revenue gift want gift card And accounting a that from the until the is to to we

people the period cases, part immediately. get to some it some over then desk takes of recognizing the in sits it have a some in In cases, and time. redeemed we're door breakage will and and So time somewhere,

a not it's the P&L So directly. of straight sales hit card to gift

Joshua Silverman

people new about it's we to opportunity gift I'll people the thing that's that more of think do bring We cards gift other more also the than say opportunity The what a to value a great buy Etsy. is gain who great redeem gift to card frequency. to a find think is tend We card.

occasion, is testing in We also someone get they rare happy and have the a refund. not credit refund started and

Sometimes they're refund to happy and lot credit, behavior, get too. a purchase to a of incremental drives actually that

gift there's the investing to I value think for really to stored and as. place a Etsy So interesting cards is generally years in be come

Rachel Glaser

to our gift our have the season. shorter load. gift in Just We point more do teaser shopping one

because something So on gift as Christmas where the lot they're people I and gist. helps the for or getting actually they'll think that not if it really even you to get still a can get buy time

that. about excited we're So

Operator

Our from Wedbush. next comes Scott question from Devitt

Scott Devitt

question. Just one

the of related well in I category in. part business be the which at sellers think do to Etsy the seems to recovery just growth

initiatives over than will care And so itself maybe of that time. And you then gifting about are right bit these loyalty have when search you're you does take and now. that happen, more talk stimulative a that it can be And shipping, pushing they and app. that

where or areas of stand out you different move you're X consumer enhance the If investing X to those the kind those ways, look at you really were needle. what to categories, the would that be like in X experience think X that could are

Joshua Silverman

most site But I'm the and consideration excited experience itself. kids, about What is I'm amongst consideration I'm is to the on don't most in your then the honestly, excited normally thing most excited way pick the build hedge.

missions inspire to on. we're a new that mission I think shopping advances AI to show I lot shopping we to the have already more think they're are addition the the in opportunity that fulfilling Gen people in And seeing really really, helpful.

a is also topper X wedding, person cake that on, planning Aha, a someone cake for understand related or weddings and to is be in the Cake For people a AI probably an Topper planning process tower. is And suddenly us popular type would would very Gen here's in for that's can term know to search this common wedding want. wedding example, it's interesting common kick very context of copper it other to things

missions frame the stage real what requiring also rig show you wedding did you're spark to opportunity I are so can just scapes particularly the real screen you're of the refactor table And that that It shopping planning existing in us other table huge buying at are missions addition stage estate up as stakes, to gifts. And by is on, that screen the people that to even say, think not of the our Gen I topper, to that at good the think, is do new the opportunity. a estate. things at you're relevant. stationary of use cake just toppers And [indiscernible] but realize we cake blending is where way, if AI

available real So that. to estate can that we do make the

into to took we've to on can so for the that estate now holiday thread really away It learn the the a without loss I'm from pick leaning said missions. It real drive And use on we app, of did. thread screen we we've recently the up how more this to a excited out lot freed up meaningful a screen estate, X/X more fair iteration season it figure got that conversion. to amount to real a pick But thing flat. so that of or call on consolidate based home get took discovery we to you shopping that of page, up example, about what how work most recommendations the -- and lot

place for year think think to us talked for we've a on time I'm And make of done the the long is work about excited consideration time, I work about. and Over more people foundational that we've really this that of having site. really things, a lot

Operator

Devnani next will Our come question from from Nikhil Bernstein.

Nikhil Devnani

down exact pool if to you road. margin the in intensity right Not seller backdrop. macro seems profit Depop, to think room dollars incremental bit it picture, feel this plans. growth margin. Etsy of to that fees a do be do more and wondering the the better it's is a seen playbook right of even it to trade-off on you it lean back when same just Josh, need deploy -- is there. step means aggressive big you into structure investment you bigger for margin if I the like for Etsy rethink how hiring the hear and about profile level quite for a there even trading it's if working well the and you of Etsy, off level experience means But and Is the inspiration How encouraging the that like here? I'm we've

Joshua Silverman

things flow, Yes. been a a grow things and obviously, about of grow of profitability than And the of really what free we've thinking fair growth. translate incredibly be hiring growth like I business we investing the into that, number this believe to going cap proof year, sense. it to could and I expect in to more care about have position as to is powerful may but lot growth. we we're see to well market the would foundational into cap trying the leaning market that -- make the us about future And cash been of more And we to we care business. see those that start for see. leaning

we You of invest to us, and know like very behind shoots, at green then we proof see are data least that. ROI, and driven,

I the a We fair capable same a have think number team that things is a in of approach. we're prudent investing time. of at do very taking

few. we too not think But many, good a not too number,

were continue the to going strike people right now investing here. ago, that few not try to much worried are enough. maybe investing were And we're worried that so A we're balance maybe quarters to we people too

so going we're Maybe the to... reimplant. just And we're maybe or

Debra Wasser

any think and about question another which we Nikhil's the how relevance? question, There within fees that was in was and about had seller that Depop that if

Joshua Silverman

more growing like look shout the GMS if mean guide more year-over-year. Depop mean do would Depop at XX% to that, than just is faster XX% substantially you than within growing baked say U.S. Depop XX% growing year-over-year. our year-over-year. than will that I within Depop for I at I for Yes. a out I

think I has think what's there. And team to it's leadership providing. it's really exciting the testament of going a I on been that

some some been think we're portfolio we've to the exposure benefits validation in, resale, than a more our great resale is I investors, with apparel popular it others of invested gaining is from seeing always but now. sector, which also thought sometimes strategy we've that

in is clothing to environment promotionally discount an Depop at now is And exceptionally in driven. because a right lastly, we And buy deep opportunity winning the brand the products that it's just what relatively you're really we secondhand those And from this else. buying name promotions focused people so see and kinds someone think are where them on discounting. products are are of market

we're the portfolio pleased into So Depop, work the think Of team that with Brands. doing is of the plays and I Etsy is really House performance it and that the

Operator

Our Maria will next question Ripps from come Canaccord. with

Maria Ripps

the number the bit more of a terms of terms are you measuring success first in drive mode, buyers. in gift of you terms are what the marketing of as active of expectations on approach in season to front maybe sort of expand on your And So how on it the offering? can And little for your you this of holiday GMS offering? doing of of you're here? Is percent what with awareness sort sort

Joshua Silverman

Sure.

benefit. GMS. So real substantially that's absolute second making in the it quarter, we showing gifting than in the did the GMS also faster validation it grew been on are the based quarter. that We're overall investments we've measuring are We as think some that third marketplace pleased

times people great by lists at are features adoption the gift some different best ideas, teaser -- The a of more time. finder has time us that to teaser last shorter, a shopping when X,XXX gifts the are thing great, giving great still have launched to this gift gifting the think The is gift minute and up for the product experience we've wish the way, ideas. season so arrive more set more teaser we And on gift Xx who is many gift the have year.

are our we're fourth marketing great, talk about investments we a you in quarter. in us making and lot all the of think the So channels, gifting all will hear

launches to a being that days just above-the-line we think couple really that super seeing gift someone and a like. seeing that you're expression in think on that an going is and focused your in really cool, campaign of great is have person a way we We of

Debra Wasser

else We you're if on that a you tracking start gift Mario, a the there's if little buy gift actually gift and mode, We're clarify, to question. just then we've because X and in want me. just buyer don't can in mode of bit site. I you the gift I mode track part can a out talked in GMS about gifting past. I somewhere your active mentioned buyers think in

So wanted that. to just clarify

Rachel Glaser

the gift measure they items for with part mode engaging them Our just can exactly. the tracking funnel, which best somebody of leads is they if is to a select that is for so this a just gift other else

Operator

Riley come Securities. will Naved from question Khan next B. with Our

Unknown Analyst

It's for Ryan on Naved.

Etsy So monthly takeaways. of numbers and reaction Etsy Insider initial I seasonal can and versus to kind wanted subscription to you clarity seller then anything or that ask on. get on also the Insider Maybe

Joshua Silverman

inning. early very We're

been early only of to. not a people In Yes, have in that beta been invited We're for earliest It's We're fact, training. weeks days. training. in like was inning. live Spring of are think first think in I the in spring population we X the limited we're design a I by in

economics price is that really trying loyalty happens to that to of to are of What value learn are we're a So want -- look -- what's when kinds shipping make people to to want the away, program? -- subscribe, what what subscribe goes propensity the props the what the like.

will, with the to we intentionally uptake limiting we can if a population so play sandbox, and have the that. So are you

it's launched. pleased we're so And how with

beautiful, think I presented. it's pretty well pretty

sellers we the cause their worse. that economics are And get don't to concerned mostly

our shipping both what seller as when that have we'd lower said, -- it mean and our they research, to free as So buyer have love we research sellers did margins. long doesn't

the free for "I thinking the loyalty and to want said, pay cool. thing on about And So you other marketplaces. different it. Etsy said of I else. wonderful that or they I for do the a want are think shipping don't buyers, sellers want shipping? I things to have we want. interestingly, and -- one is That's so program But don't out buyers, the I want what on or that this think is anywhere to than People free that's do When eBay Amazon of or you

the buyer I between think connection real to the the seller. and speaks it

salary to And of we succeeded. And I from I the has takes programs that something start the a the That's get really what as bit expect It it's look days. out, to evolved have typically positive. through that action, figure think at been think, I seller, they -- early when and they loyalty and generally us the care This so while is scale. point quite a buyer well. it would and the work for

Operator

Evercore. come will [indiscernible] question next with Our from Robert

Unknown Analyst

scale I wanted you GMS from any a the neutral it bit confirmed and in on you score just QX? to that perhaps And additional on app web. has and do in then mobile you the expect up. you similar Q conversion that check conversion longer-term versus in the Would headwind of consistent be Or changes into downloads to refocus consideration QX? a think remained in as I color if a scale the Josh, GMS earlier, but vein, headwind

Joshua Silverman

Yes.

were neutral conversion able we launched Q we it to So roughly in rate. to score search be to when get the

think for ROI on $X conversion cost to to positive in it's like and an obviously example, the We it's an to said not that, think, app. more that. putting have experience signed We the in do high. driving, web I incremental drive the is mobile we million but some appropriate portion rate, listing friction annualized page out to that There's downloads. prerecorded people been very interstitial

headwinds changes the opportunity to from bigger cost years that think keep candidly, cost. prior grind I way The in running So GMS the the Had is have modest. are wins. and out decided the quite we we made we've business actually just

that, in differentiate don't We have the But grow. what in end, have towards the and way decline that business possible strongest would points itself set had to this less think up probably GMS year. could several I percentage

already really to estate I spark makes think quality, special the uniqueness create the knowing, of better what to to we're different, new more in the leading are Etsy more makes it great I us up spark we're lean a the missions quarters. mission, into think of making for investments to investment screen instead just to to things arrived into growth in you that what to set the doing real Etsy highlight show future diversity,

think I this felt is bigger that cost piece it year. the So the of we opportunity is that cost

Operator

Our from come Laura Champine will question from Loop. next

We'll take our BTIG. next question from Marvin Fong from

Marvin Fong

I Awesome. it. appreciate really

me. for ones quick X Just

gave gave Or some small always you the that. And maybe -- seeing am you second I So just calculated, business? in I on anything of numbers marginal category of terms home different category. question, know full buyback. maybe in categories the here, on broader as like the a maybe there different but that? your us the mean into I appreciate as question, some was the you I pressure But improvement numbers, which then just are is just among sort overreading

million north free $XXX are million, guys You $XXX cash of in generating flow.

to the and you think the the cash you balance What's here. So stock free the up lever buyback. out sort undervalued called sheet have is here appetite of kind here. Obviously, generation flow the that of similar guys to outrun maybe

Just would about deploying the any structure buyback be capital and you thoughts think on how paid.

Rachel Glaser

our which Going and the And can the doing flow about of even then does shareholders. call the to be that. approved billion, so that buying XX% say the been we one we've do into return cash and free $X to we to Board first last flexibility that did the in above more take that give additional current levels, back us

do being that invest We investments. able the luxury have to our of way we and in want the to continue to organic

we is balance The feel about up. sheet that. pleased levered So

We outstanding have first of due converts fall XXXX. one and coming the X the in

be lever currently. leaning the to ample been we be into repurchasing doing we that, We're go to want repurchase. to what pretty up able don't thinking to even more to about doing and right we have now flexibility be have and So we've share beyond

Joshua Silverman

about It's a great thing requirements are this business pretty that capital our so low.

EBITDA companies, many not does For into translate cash still free flow.

us, it For does. largely

free flow, cash we is this has generates than a sheet, is balance which lot more business so need. we on a the billion And think of $X.X that

I So one and have it a value. where not a interesting. lot continue on category last think might that is this candidly talked us to the if lot the there is being interesting, I'm gives pockets very not in even the real The flexibility. about And we insight, direct, I of see are call,

fine we call jewelry. demi what in growing are we jewelry, in example, for So

So find had think price that cost might a what can you're to on all. relative ring you compelling that engagement you at an to between just partner handmade that's gold Goldsmith giving them you really Etsy, like $XX real $XX and by your may for

jewelry in that under so And pressure. winning is $XX more we're under

without shipping $XX pay You've needing the where able got to be under to for buy on to something pay a might go you mall to that. something Etsy $XX, and

category are seeing within in we pockets now and this every important. market value So very is right

Debra Wasser

Cool.

in, take I more operator. one think we'll

Operator

Research. from comes Wolfe question Khajuria Shweta from next Our

Unknown Analyst

This is Shweta. [indiscernible] for on

QX. in take to Really in guide both Sorry about the that. nice rate, for upside see the the QX and

in how Just payments side, to called or seller drivers beyond was well. incremental out quality the on you about the and think consider any this. should letter, initiatives curious the other there's if either that score anything we with as advertising

Joshua Silverman

is we What I'm this gains about rate really significant made year. excited in take

rate. through take If did like look our of impacting sellers' We year, basis at that margins. without XXX it you the it's points

year. instead think of That We instead go must and experience. provider, somehow saw up. at it take I third-party sellers. not coverage expense having this payments they're often a there's of payments other if some That's rate paying come not a up, Etsy's true. better that Certainly the means Etsy view paying goes

likely both when runs Payments, are better. better right and got safer we're the not better Etsy ad that to Etsy buyer picking just Ads more sellers paying and that. is at buyers for and it Our a buy. getting through they're

more sellers our roughly so Etsy rate. take earned ROAs stayed And but consistent

a without small it average that in because a stopping impacted. business the and onboarding good That's it's a component everyone well. as succeed. go bad seller to not stopping allows on we're Etsy win-win fee actors and back The negatively is is it's What margins that sellers to seeing for invest job sellers' more doing were being that likely of

sales amount as any that. new the not in of has from of So sellers a declined way meaningful result

friction component like it OSA So feels and it. amount is been that's very to of of the the a to add the marketplace other healthy

gains rate that. at good feel a healthy. value to without Etsy exchange expense this about them So for to help services offering we fair their grow better that margins. sellers, opportunity to be continue our we they're get of and add there and at feel their like year value We made to coming think sustainable think And the are take continues we to we've business for

Rachel Glaser

real made in quickly And schemes that we I'll XXXX. in just add we'll annualize XXXX that payment the

So day is we then And OSA just all definition, because the year. first didn't that as offsite a on ads. of the do them

are our marketing, more OSA more spend performance to and we we collect revenue. on when So able

Debra Wasser

Great.

Operator, evening. time. call we're the at it are I We think going to

Joshua Silverman

Thank you.

Debra Wasser

you, Thank everybody.

Etsy (ETSY) 30 Oct 242024 Q3 Earnings call transcript