31/07/2024 | Press release | Distributed by Public on 31/07/2024 20:15
Consolidated results came in at the high end or ahead of guidance for key performance metrics
BROOKLYN, N.Y., July 31, 2024/PRNewswire/ -- Etsy, Inc. (NASDAQ: ETSY), which operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world, today announced results for its second quarter ended June 30, 2024.
"We are pleased that second quarter consolidated results included sequential acceleration of Etsy marketplace year-over-year GMS, higher consolidated revenue both year-over-year and sequentially, and strong adjusted EBITDA profitability," said Josh Silverman, Etsy, Inc. Chief Executive Officer. "Gifting is proving to be a winning theme - driving growth as a key source of differentiation for Etsy. We are making excellent progress with other bold moves and investments meant to raise consideration among buyers - to help us stand apart more than ever. While this is a challenging environment for our type of goods, we are focused on reigniting Etsy marketplace growth and gaining market share."
Second quarter 2024 performance highlights include:
"We are investing in strategic growth areas including Gifting, highlighting the best of Etsy through Quality initiatives, launching a new Loyalty Program, expanding our App, and more, while also carefully managing expenses to deliver very healthy profit," said Rachel Glaser, Chief Financial Officer. "In fact, second quarter adjusted EBITDA was about 28%, ahead of our guidance and up 130 bps from last year, as we gained leverage year-over-year on employee costs and cost of revenue, which was partially offset by higher level of performance marketing investments to help fuel buyer growth and frequency. The Etsy marketplace's record level of active buyers has held up quite well, and we added approximately 12 million new and reactivated buyers during the quarter."
______________________________________ |
1Etsy Gifting GMS: Estimate based upon word 'gift' in the listing title, shipped with a gift message, or other signal the item was purchased as a gift. |
2 Source: Consumer Edge spend data from sampling of credit card transactions from online 'gifting' peers Zola, Zazzle, Minted, Uncommon Goods, Hallmark, and Mark and Graham. |
Second Quarter 2024 Financial Summary
(in thousands, except percentages; unaudited)
The financial results of Elo7 have been included in our consolidated financial results for the prior year periods, as Elo7 was sold on August 10, 2023. The unaudited GAAP and non-GAAP financial measures and key operating metrics we use are:
|
Three Months Ended June 30, |
|
% (Decline) Growth Y/Y |
|
Six Months Ended June 30, |
|
% (Decline) Growth Y/Y |
||||
|
2024 |
|
2023 |
|
|
2024 |
|
2023 |
|
||
GMS (1) |
$ 2,949,254 |
|
$ 3,012,504 |
|
(2.1) % |
|
$ 5,935,754 |
|
$ 6,113,862 |
|
(2.9) % |
Revenue |
$ 647,806 |
|
$ 628,876 |
|
3.0 % |
|
$ 1,293,760 |
|
$ 1,269,753 |
|
1.9 % |
Marketplace revenue |
$ 470,377 |
|
$ 452,957 |
|
3.8 % |
|
$ 937,359 |
|
$ 920,473 |
|
1.8 % |
Services revenue |
$ 177,429 |
|
$ 175,919 |
|
0.9 % |
|
$ 356,401 |
|
$ 349,280 |
|
2.0 % |
Gross profit |
$ 463,716 |
|
$ 440,238 |
|
5.3 % |
|
$ 922,537 |
|
$ 885,662 |
|
4.2 % |
Operating expenses |
$ 393,547 |
|
$ 442,610 |
|
(11.1) % |
|
$ 784,278 |
|
$ 809,835 |
|
(3.2) % |
Net income |
$ 53,005 |
|
$ 61,915 |
|
(14.4) % |
|
$ 116,009 |
|
$ 136,452 |
|
(15.0) % |
Net income margin |
8.2 % |
|
9.8 % |
|
(160) bps |
|
9.0 % |
|
10.7 % |
|
(170) bps |
Adjusted EBITDA (Non-GAAP) |
$ 179,375 |
|
$ 166,235 |
|
7.9 % |
|
$ 347,310 |
|
$ 336,578 |
|
3.2 % |
Adjusted EBITDA margin (Non-GAAP) |
27.7 % |
|
26.4 % |
|
130 bps |
|
26.8 % |
|
26.5 % |
|
30 bps |
|
|
|
|
|
|
|
|
|
|
|
|
Active sellers (2) |
8,801 |
|
8,312 |
|
5.9 % |
|
8,801 |
|
8,312 |
|
5.9 % |
Active buyers (2) |
96,610 |
|
96,250 |
|
0.4 % |
|
96,610 |
|
96,250 |
|
0.4 % |
Percent GMS ex-U.S. domestic (1) |
45 % |
|
45 % |
|
- bps |
|
45 % |
|
45 % |
|
- bps |
|
|
(1) |
Consolidated GMS for the three and six months ended June 30, 2024 includes Etsy marketplace GMS of $2.5 billion and $5.1 billion, respectively. Percent GMS ex-U.S. domestic for the Etsy marketplace for both the three and six months ended June 30, 2024 was 48%. |
(2) |
Consolidated active sellers and active buyers includes Etsy marketplace active sellers and active buyers of 6.6 million and 91.5 million, respectively, as of June 30, 2024. |
Second Quarter 2024 Operating Highlights
Etsy
Our "Right to Win" is centered on key elements that we believe make the Etsy marketplace a better place to shop and sell and, which, in turn, will bring more buyers, lead to increased frequency and size of purchases, and build trust in the Etsy marketplace. In 2024, we are focused on building buyer consideration by making it easier to 'find the best stuff' on Etsy, driving association that Etsy sellers offer great value, and making shopping on Etsy more reliable and dependable. The below highlights some of our key initiatives:
Product Highlights:
In order to drive buyer Consideration, we are making progress in our efforts to position Etsy as an indispensable partner for Gifting, with broad based investments positively impacting our performance:
We launched a "Made for You" microsite to increase consideration and help buyers get the most out of shopping on Etsy. It features our latest product improvements, including Gift Mode, the Deals Tab, the Etsy's Picks badge, and Etsy Purchase Protection. The microsite was launched globally in June, is available in 11 languages, and has already attracted hundreds of thousands of users.
To help buyers 'find the best stuff on Etsy,' we invested in the following Quality initiatives:
Aligned with our efforts to make shopping on Etsy more reliable and dependable, and also to drive international growth, we recently secured a new preferred shipping partnership with a third party to simplify cross-border logistics for Turkish sellers. We continued to expand Etsy Payments globally, with about 98% of our GMS now processed through our platform.
We worked to continue to build trust in our marketplace with a roll out of our new seller set-up fee in additional regions. This fee, meant to strengthen our new shop onboarding process, and in combination with added trust and safety enforcement - resulted in a significant decline in fraudulent onboarding, while continuing to provide ample access for creative entrepreneurs to start businesses on Etsy.
Marketing Highlights:
We further developed plans to launch our new Etsy Insider Loyalty program, currently scheduled to be introduced in invitation-only beta form to targeted occasional Etsy U.S. buyers in mid-September. Etsy Insider will be buyer-fee based, offering free U.S. domestic shipping on millions of items, item discounts, first access merchandise and other benefits, with a goal to drive frequency and loyalty over time.
We now manage all of Etsy's paid search campaigns in-house, enabling us to reallocate the significant external costs of managing these campaigns directly into the campaigns themselves.
To support our U.S. sellers, we launched a targeted marketing campaign to promote the availability of a seller financing program offered via a third party partner. We've observed strong initial engagement from the campaign signaling interest and need for additional capital among our seller community.
Etsy's Creator Collective program, which incentivizes creators and influencers to drive purchases, social conversation, and unique content for Etsy by providing affiliate links to any page on Etsy.com and boosting top posts, has reached over 260,000 participants.
Reverb
Depop
Consolidated Q3 24 Financial Guidance
|
Q3 24 Guidance |
GMS |
We currently estimate that Consolidated GMS will |
Take Rate |
Similar to Q2 24 |
Adjusted EBITDA Margin |
~27% |
Regarding our full-year 2024 outlook, we reiterate that consolidated adjusted EBITDA margin should come in at least the same as the 2023 result.
Please note that our guidance assumes currency exchange rates remain unchanged at current levels.
With respect to our expectations under "Consolidated Q3 24 Financial Guidance " and outlook for the remainder of 2024 above, reconciliation of Adjusted EBITDA margin guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity, and low visibility with respect to the charges excluded from Adjusted EBITDA; in particular, stock-based compensation expense, foreign exchange (gain) loss, interest and other non-operating income, net, provision (benefit) for income taxes, acquisition, divestiture, and corporate structure-related expenses, and other non-recurring expenses.
Webcast and Conference Call Information
Etsy will host a video webcast conference call to discuss these results at 5:00 p.m. Eastern Time today, which will be live-streamed via our Investor Relations website (investors.etsy.com) under the Events section. A copy of the earnings call presentation will also be posted to our website.
A replay of the video webcast will be available through the same link following the conference call starting at 8:00 p.m. Eastern Time this evening, for at least three months thereafter.
About Etsy
Etsy, Inc. operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world. These marketplaces share a mission to "Keep Commerce Human," and we're committed to using the power of business and technology to strengthen communities and empower people. Our primary marketplace, Etsy.com, is the global destination for unique and creative goods. Buyers come to Etsy to be inspired and delighted by items that are crafted and curated by creative entrepreneurs. For sellers, we offer a range of tools and services that address key business needs.
Etsy, Inc.'s "House of Brands" portfolio also includes fashion resale marketplace Depop, and Reverb, the largest online marketplace dedicated to music gear. Each Etsy, Inc. marketplace operates independently, while benefiting from shared expertise in product, marketing, technology, and customer support.
Etsy was founded in 2005 and is headquartered in Brooklyn, New York.
Etsy has used, and intends to continue using, its Investor Relations website and the Etsy News Blog (blog.etsy.com/news) to disclose material non-public information and to comply with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website and the Etsy News Blog in addition to following our press releases, SEC filings, and public conference calls and webcasts.
Investor Relations Contact:
Deb Wasser, Vice President, Investor Relations and ESG Engagement
[email protected]
Media Relations Contact:
Sarah Marx, Director, Corporate Communications
[email protected]
Cautionary Statement Regarding Forward-Looking Statements
This press release contains or references forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include statements relating to our financial guidance for the third quarter of 2024 and outlook for the full year of 2024 and underlying assumptions; our ability to reignite Etsy marketplace growth and gain market share; our ability to invest in strategic growth while delivering on profitability; our ability to drive buyer engagement through our new Quality initiatives; and the impact of our "Right to Win" strategy and our product development and marketing efforts, including the timing and impact of the launch of Etsy Insider. Forward-looking statements include all statements that are not historical facts. In some cases, forward-looking statements can be identified by terms such as "aim," "anticipate," "believe," "could," "enable," "estimate," "expect," "goal," "intend," "may," "outlook," "plan," "potential," "target," "will," or similar expressions and derivative forms and/or the negatives of those words.
Forward-looking statements involve substantial risks and uncertainties that may cause actual results to differ materially from those that we expect. These risks and uncertainties include: (1) the level of demand for our services or products sold in our marketplaces; (2) the importance to our success of the trustworthiness of our marketplaces and our ability to attract and retain active and engaged communities of buyers and sellers; (3) the fluctuation of our quarterly operating results; (4) our failure to meet our publicly announced guidance or other expectations; (5) any real or perceived inaccuracies in our operational metrics; (6) if we or our third-party providers are unable to protect against technology vulnerabilities, service interruptions, security breaches, or other cyber-related events; (7) our dependence on continued and unimpeded access to third-party services, platforms, and infrastructure; (8) macroeconomic events that are outside of our control; (9) operational and compliance risks related to our payments systems; (10) our ability to recruit and retain employees; (11) our ability to compete effectively; (12) enforcement of our marketplace policies; (13) our ability to enhance our current offerings and develop new offerings to respond to the changing needs of sellers and buyers; (14) risks related to our environmental, social, and governance activities and disclosures; (15) our efforts to expand our operations outside of the United States; (16) acquisitions that may prove unsuccessful or divert management attention; (17) failure to deal effectively with fraud; (18) compliance with evolving regulations, including in the area of privacy and data protection; and (19) litigation and regulatory matters, including intellectual property claims. These and other risks and uncertainties are more fully described in our filings with the Securities and Exchange Commission, including in the section entitled "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, and subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur.
Forward-looking statements represent our beliefs and assumptions only as of the date of this press release. We disclaim any obligation to update forward-looking statements.
Etsy, Inc. |
|||
|
|||
|
As of |
|
As of |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 759,211 |
|
$ 914,323 |
Short-term investments |
240,679 |
|
236,118 |
Accounts receivable, net |
10,324 |
|
24,734 |
Prepaid and other current assets |
109,311 |
|
129,884 |
Funds receivable and seller accounts |
239,481 |
|
265,387 |
Total current assets |
1,359,006 |
|
1,570,446 |
Property and equipment, net |
238,798 |
|
249,794 |
Goodwill |
137,742 |
|
138,377 |
Intangible assets, net |
435,687 |
|
457,140 |
Deferred tax assets |
137,756 |
|
137,776 |
Long-term investments |
93,528 |
|
86,676 |
Other assets |
45,571 |
|
45,191 |
Total assets |
$ 2,448,088 |
|
$ 2,685,400 |
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 13,070 |
|
$ 29,920 |
Accrued expenses |
256,819 |
|
353,553 |
Finance lease obligations-current |
6,037 |
|
6,079 |
Funds payable and amounts due to sellers |
239,481 |
|
265,387 |
Deferred revenue |
15,788 |
|
14,635 |
Other current liabilities |
33,290 |
|
41,207 |
Total current liabilities |
564,485 |
|
710,781 |
Finance lease obligations-net of current portion |
96,587 |
|
99,620 |
Deferred tax liabilities |
8,788 |
|
13,192 |
Long-term debt, net |
2,285,950 |
|
2,283,817 |
Other liabilities |
127,274 |
|
121,705 |
Total liabilities |
3,083,084 |
|
3,229,115 |
Total stockholders' deficit |
(634,996) |
|
(543,715) |
Total liabilities and stockholders' deficit |
$ 2,448,088 |
|
$ 2,685,400 |
Etsy, Inc. |
|||||||
|
|||||||
|
Three Months Ended |
|
Six Months Ended |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Revenue |
$ 647,806 |
|
$ 628,876 |
|
$ 1,293,760 |
|
$ 1,269,753 |
Cost of revenue |
184,090 |
|
188,638 |
|
371,223 |
|
384,091 |
Gross profit |
463,716 |
|
440,238 |
|
922,537 |
|
885,662 |
Operating expenses: |
|
|
|
|
|
|
|
Marketing |
183,063 |
|
165,870 |
|
374,874 |
|
337,184 |
Product development |
114,493 |
|
121,988 |
|
224,339 |
|
237,912 |
General and administrative |
95,991 |
|
86,661 |
|
185,065 |
|
166,648 |
Asset impairment charges |
- |
|
68,091 |
|
- |
|
68,091 |
Total operating expenses |
393,547 |
|
442,610 |
|
784,278 |
|
809,835 |
Income (loss) from operations |
70,169 |
|
(2,372) |
|
138,259 |
|
75,827 |
Other income, net |
8,808 |
|
7,786 |
|
20,373 |
|
10,858 |
Income before income taxes |
78,977 |
|
5,414 |
|
158,632 |
|
86,685 |
(Provision) benefit for income taxes |
(25,972) |
|
56,501 |
|
(42,623) |
|
49,767 |
Net income |
$ 53,005 |
|
$ 61,915 |
|
$ 116,009 |
|
$ 136,452 |
Net income per share attributable to common stockholders: |
|
|
|
|
|
|
|
Basic |
$ 0.46 |
|
$ 0.50 |
|
$ 0.99 |
|
$ 1.10 |
Diluted |
$ 0.41 |
|
$ 0.45 |
|
$ 0.89 |
|
$ 0.98 |
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
116,432 |
|
123,463 |
|
117,445 |
|
123,971 |
Diluted |
133,118 |
|
141,011 |
|
134,263 |
|
142,011 |
Etsy, Inc. |
|||
|
|||
|
Six Months Ended |
||
|
2024 |
|
2023 |
Cash flows from operating activities |
|
|
|
Net income |
$ 116,009 |
|
$ 136,452 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
Stock-based compensation expense |
145,400 |
|
145,964 |
Depreciation and amortization expense |
53,933 |
|
46,118 |
Provision for expected credit losses |
7,321 |
|
10,258 |
Deferred benefit for income taxes |
(4,291) |
|
(67,568) |
Asset impairment charges |
- |
|
68,091 |
Other non-cash (income) expense, net |
(11,556) |
|
894 |
Changes in operating assets and liabilities |
(86,722) |
|
(148,307) |
Net cash provided by operating activities |
220,094 |
|
191,902 |
Cash flows from investing activities |
|
|
|
Purchases of property and equipment |
(5,908) |
|
(3,852) |
Development of internal-use software |
(14,093) |
|
(12,603) |
Purchases of investments |
(192,863) |
|
(197,565) |
Sales and maturities of investments |
185,120 |
|
171,307 |
Net cash used in investing activities |
(27,744) |
|
(42,713) |
Cash flows from financing activities |
|
|
|
Payment of tax obligations on vested equity awards |
(33,007) |
|
(49,256) |
Repurchase of stock |
(308,726) |
|
(187,037) |
Proceeds from exercise of stock options |
2,735 |
|
5,755 |
Payment of debt issuance costs |
- |
|
(2,186) |
Settlement of convertible senior notes |
- |
|
(90) |
Payments on finance lease obligations |
(3,086) |
|
(3,150) |
Other financing, net |
3,821 |
|
(278) |
Net cash used in financing activities |
(338,263) |
|
(236,242) |
Effect of exchange rate changes on cash |
(9,199) |
|
7,287 |
Net decrease in cash, cash equivalents, and restricted cash |
(155,112) |
|
(79,766) |
Cash, cash equivalents, and restricted cash at beginning of period |
914,323 |
|
926,619 |
Cash, cash equivalents, and restricted cash at end of period |
$ 759,211 |
|
$ 846,853 |
Currency-Neutral GMS Growth
We calculate currency-neutral GMS growth by translating current period GMS for goods sold that were listed in non-U.S. dollar currencies into U.S. dollars using prior year foreign currency exchange rates.
As reported and currency-neutral GMS decline for the periods presented below are as follows:
|
Quarter-to-Date Period Ended |
|
Year-to-Date Period Ended |
||||||||
|
As Reported |
|
Currency- |
|
FX Impact |
|
As Reported |
|
Currency- |
|
FX Impact |
June 30, 2024 |
(2.1) % |
|
(1.9) % |
|
(0.2) % |
|
(2.9) % |
|
(3.0) % |
|
0.1 % |
June 30, 2023 |
(0.6) % |
|
(0.4) % |
|
(0.2) % |
|
(2.7) % |
|
(1.5) % |
|
(1.2) % |
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin
In this press release, we provide Adjusted EBITDA, a non-GAAP financial measure that represents our net income adjusted to exclude: interest and other non-operating income, net; provision (benefit) for income taxes; depreciation and amortization; stock-based compensation expense; foreign exchange (gain) loss; acquisition, divestiture, and corporate structure-related expenses; asset impairment charges; restructuring and other exit (income) costs; and retroactive non-income tax expense. We also provide Adjusted EBITDA margin, a non-GAAP financial measure that presents Adjusted EBITDA divided by revenue. Below is a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure.
We have included Adjusted EBITDA and Adjusted EBITDA margin because they are key measures used by our management and Board of Directors to evaluate our operating performance and trends, allocate internal resources, prepare and approve our annual budget, develop short- and long-term operating plans, determine incentive compensation, and assess the health of our business. As our Adjusted EBITDA increases, we are able to invest more in our platforms.
We believe that Adjusted EBITDA and Adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business as they remove the impact of certain non-cash items and certain variable charges.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
Because of these limitations, you should consider Adjusted EBITDA and Adjusted EBITDA margin alongside other financial performance measures, including net income, revenue, and our other GAAP results.
Reconciliation of Net Income to Adjusted EBITDA and the Calculation of Adjusted EBITDA Margin |
|||||||
|
|||||||
|
Three Months Ended |
|
Six Months Ended |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Net income |
$ 53,005 |
|
$ 61,915 |
|
$ 116,009 |
|
$ 136,452 |
Excluding: |
|
|
|
|
|
|
|
Interest and other non-operating income, net |
(3,947) |
|
(5,934) |
|
(9,257) |
|
(11,623) |
Provision (benefit) for income taxes |
25,972 |
|
(56,501) |
|
42,623 |
|
(49,767) |
Depreciation and amortization |
27,087 |
|
22,946 |
|
53,933 |
|
46,118 |
Stock-based compensation expense (1) |
74,717 |
|
77,281 |
|
145,400 |
|
145,964 |
Foreign exchange (gain) loss |
(4,861) |
|
(1,852) |
|
(11,116) |
|
765 |
Acquisition, divestiture, and corporate structure-related expenses |
234 |
|
289 |
|
2,132 |
|
578 |
Asset impairment charges |
- |
|
68,091 |
|
- |
|
68,091 |
Restructuring and other exit (income) costs |
(76) |
|
- |
|
342 |
|
- |
Retroactive non-income tax expense (2) |
7,244 |
|
- |
|
7,244 |
|
- |
Adjusted EBITDA |
$ 179,375 |
|
$ 166,235 |
|
$ 347,310 |
|
$ 336,578 |
Divided by: |
|
|
|
|
|
|
|
Revenue |
$ 647,806 |
|
$ 628,876 |
|
$ 1,293,760 |
|
$ 1,269,753 |
Adjusted EBITDA margin |
27.7 % |
|
26.4 % |
|
26.8 % |
|
26.5 % |
|
|
(1) |
Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for the periods presented below is as follows: |
|
|||||||
|
Three Months Ended |
|
Six Months Ended |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Cost of revenue |
$ 8,787 |
|
$ 8,171 |
|
$ 16,491 |
|
$ 15,417 |
Marketing |
5,882 |
|
6,107 |
|
12,319 |
|
11,369 |
Product development |
38,441 |
|
38,220 |
|
72,505 |
|
74,929 |
General and administrative |
21,607 |
|
24,783 |
|
44,085 |
|
44,249 |
Stock-based compensation expense |
$ 74,717 |
|
$ 77,281 |
|
$ 145,400 |
|
$ 145,964 |
|
|
(2) |
Retroactive non-income tax expense related to the digital services tax legislation in Canada, which was enacted on June 28, 2024 retroactive to January 1, 2022. |
View original content:https://www.prnewswire.com/news-releases/etsy-inc-reports-second-quarter-2024-results-302211378.html
SOURCE Etsy, Inc.