Highest-ever quarterly revenue achieved in Q4 23
BROOKLYN, N.Y., Feb. 21,
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 financial results for its fourth quarter and full year
ended December 31, 2023.
"Etsy delivered over $13 billion in consolidated GMS and
our highest-ever annual revenue," said Josh
Silverman, Etsy's Chief Executive Officer. "We've built an
ambitious plan to invest in a portfolio of growth initiatives in
2024, starting with efforts to make Etsy an indispensable partner
for Gifting. We recently launched Gift ModeTM, an
interactive hub for gifting that combines AI and human curation to
help shoppers find the perfect present — just the beginning of our
bold plans to drive buyer consideration and frequency. We start the
year energized - with the right team, a highly relevant and
differentiated Right to Win strategy, a disciplined investment
approach, and a resilient business model."
Fourth quarter 2023 performance highlights include:
- Consolidated GMS was $4.0
billion, down 0.7% year-over-year and down 1.6% on a
currency neutral basis. Headwinds to consolidated GMS included a
dynamic macroeconomic environment that impacted consumer
discretionary product spending, Etsy marketplace category mix, and
a highly promotional and competitive retail environment, as well as
a small headwind from the divestiture of Elo7.
- Etsy marketplace GMS was $3.6
billion, down 1.4% year-over-year and up 142% on a four-year
basis.
- The Etsy marketplace's GMS accelerated during the
holiday season, with GMS during Cyber 5 (Thanksgiving through Cyber
Monday) up 4% on a year-over-year basis. We delivered record levels
of GMS on Cyber Monday and Giving Tuesday.
- Active buyers reached a new all-time high of 92 million,
increasing 3% year-over-year. United
States active buyer trends continued to improve, with
modestly positive year-over-year growth again this quarter, and
international buyer growth remained strong.
- We reactivated a record nearly 10 million lapsed buyers, up
13% from the prior year, and we acquired over 8 million new buyers.
On a trailing twelve month basis, our retention of active buyers
improved from the prior year and remained above pre-pandemic
levels.
- While GMS per active buyer on a trailing twelve month
basis was down 4% year-over-year to $126 in the fourth quarter, this metric declined
only 1% from the prior quarter as trends continued to show signs of
stabilization. Our number of habitual buyers remained stable on a
sequential basis at just over 7 million.
- GMS ex-U.S. domestic for the Etsy marketplace was 47% of
overall GMS, with GMS ex-U.S. domestic up 4%
year-over-year.
- Consolidated revenue reached a record $842.3 million, up 4.3% versus the fourth quarter
of 2022, with take rate (i.e., consolidated revenue divided by
consolidated GMS) of 21%. Solid revenue growth was primarily driven
by growth in Etsy Ads and payments revenue.
- Consolidated net income was $83.3
million, down 24.0% year-over-year, largely due to
restructuring and other exit costs of $27
million recognized in the fourth quarter. Consolidated net
income margin (i.e., net income divided by revenue) was
approximately 10%, down approximately 400 basis points
year-over-year, and diluted earnings per share was $0.62, reflecting the impact of restructuring and
exit costs.
- Consolidated non-GAAP Adjusted EBITDA was a record
$235.5 million, with consolidated
non-GAAP Adjusted EBITDA margin (i.e., consolidated non-GAAP
Adjusted EBITDA divided by consolidated revenue) of approximately
28%, relatively flat year-over-year.
- We ended the year with $1.2
billion in cash and cash equivalents, short- and long-term
investments. Under Etsy's stock repurchase program, during the
fourth quarter of 2023, Etsy repurchased an aggregate of
approximately $93 million, or
1,347,993 shares, of its common stock.
"We delivered our highest-ever quarterly consolidated revenue of
$842 million in the fourth quarter due to healthy GMS flow
through, strong growth in Etsy Ads and good contribution from
payments," said Rachel Glaser,
Etsy's Chief Financial Officer. "We made significant product and
marketing investments to support the important holiday period, and
our fourth quarter consolidated Adjusted EBITDA grew to an all-time
high of $236 million. For the full
year, our operational rigor and capital light business model have
allowed us to deliver about $754
million in consolidated Adjusted EBITDA, at 27.4% margin,
converting nearly 90% of that Adjusted EBITDA to free cash flow. In
2023, capital return accounted for nearly 90% of our Free Cash
Flow, demonstrating a shift in our capital return strategy to more
intentionally return a higher percentage of free cash flow,
especially during times of volatility in our stock, and when
valuations are meaningfully below our view of fair value."
Fourth Quarter and Full Year 2023 Financial Summary
(in thousands, except percentages; unaudited)
The financial results of Elo7 have been included in our
consolidated financial results until August
10, 2023 (the date of sale). The GAAP and non-GAAP
financial measures and key operating metrics we use are:
|
Three Months
Ended December
31,
|
|
%
(Decline)
Growth
Y/Y
|
|
Year
Ended December
31,
|
|
% (Decline)
Growth
Y/Y
|
|
2023
|
|
2022
|
|
|
2023
|
|
2022
|
|
GMS (1)
|
$ 4,007,404
|
|
$ 4,033,782
|
|
(0.7) %
|
|
$
13,161,196
|
|
$
13,318,396
|
|
(1.2) %
|
Revenue
|
$
842,322
|
|
$
807,241
|
|
4.3 %
|
|
$ 2,748,377
|
|
$ 2,566,111
|
|
7.1 %
|
Marketplace
revenue
|
$
615,795
|
|
$
600,158
|
|
2.6 %
|
|
$ 1,997,190
|
|
$ 1,910,887
|
|
4.5 %
|
Services
revenue
|
$
226,527
|
|
$
207,083
|
|
9.4 %
|
|
$
751,187
|
|
$
655,224
|
|
14.6 %
|
Gross profit
|
$
586,565
|
|
$
581,466
|
|
0.9 %
|
|
$ 1,919,702
|
|
$ 1,821,519
|
|
5.4 %
|
Operating
expenses
|
$
471,107
|
|
$
442,122
|
|
6.6 %
|
|
$ 1,639,861
|
|
$ 2,480,079
|
|
(33.9) %
|
Net income (loss)
(2)
|
$ 83,266
|
|
$
109,548
|
|
(24.0) %
|
|
$
307,568
|
|
$
(694,288)
|
|
144.3 %
|
Net income (loss)
margin
|
9.9 %
|
|
13.6 %
|
|
(370)
bps
|
|
11.2 %
|
|
(27.1) %
|
|
3,830 bps
|
Adjusted EBITDA
(Non-GAAP)
|
$
235,514
|
|
$
227,219
|
|
3.7 %
|
|
$
754,311
|
|
$
716,882
|
|
5.2 %
|
Adjusted EBITDA margin
(Non-GAAP)
|
28.0 %
|
|
28.1 %
|
|
(10)
bps
|
|
27.4 %
|
|
27.9 %
|
|
(50)
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
Active sellers
(3)
|
9,035
|
|
7,470
|
|
21.0 %
|
|
9,035
|
|
7,470
|
|
21.0 %
|
Active buyers
(3)
|
96,483
|
|
95,076
|
|
1.5 %
|
|
96,483
|
|
95,076
|
|
1.5 %
|
Percent mobile
GMS
|
68 %
|
|
67 %
|
|
100
bps
|
|
68 %
|
|
67 %
|
|
100
bps
|
Percent GMS ex-U.S.
Domestic (1)
|
45 %
|
|
44 %
|
|
100 bps
|
|
45 %
|
|
44 %
|
|
100
bps
|
|
|
(1)
|
Consolidated GMS for
the year ended December 31, 2023 includes Etsy.com GMS of $11.6
billion, Reverb GMS of $942.1 million, Depop GMS of
$599.6 million, and Elo7 GMS of $42.1 million (from
January 1, 2023 until the date of sale on August 10, 2023). Percent
GMS ex-U.S. Domestic for Etsy.com for both the three months and the
year ended December 31, 2023 was 47%.
|
(2)
|
Net loss for the year
ended December 31, 2022 is driven by the Depop and Elo7 asset
impairment charge of $1.0 billion.
|
(3)
|
Consolidated active
sellers and active buyers includes Etsy.com active sellers and
active buyers of 7.0 million and 92.0 million, respectively, as of
December 31, 2023 and excludes Elo7 active sellers and active
buyers for the year ended December 31, 2023.
|
To provide consistency with our calculation of GMS,
beginning in the first quarter of 2023, we have reported our mobile
GMS, GMS ex-U.S. domestic, and Non-U.S. domestic GMS as a
percentage of GMS net of refunds. We did not apply this change to
prior periods as the impact was immaterial to such periods. For
information about how we define our metrics, see our
Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.
Full Year 2023 Etsy Marketplace Operating
Highlights
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 2023, we 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. We worked to build
Etsy's brand association in key categories and purchase occasions,
such as Gifting, Home & Living, and Style.
In 2023, returns on our product development investments were
solid, with the number of product development launches up about 30%
over the prior year. We also delivered strong results from
marketing investments. Below is a recap of some of our key
initiatives.
- We worked to elevate the best of Etsy in our Search
results, including our 'Curation at Scale' efforts to combine
human curation with machine learning models to show quality
listings. We ended the year with a library of over one million
curated listings, which convert over two times better, on average,
than other listings and attract more loyal buyers. We also made
improvements to the item ranking we use for recommendations in
order to consider longer-term buyer interests and deliver more
diverse results. We tested new Generative AI enabled features in
order to develop new ways to move search functionality from
keywords to conversations. Elements of this work are being
incorporated into new Etsy products for 2024, including our
recently launched Gift Mode.
- We highlighted the great value Etsy has to offer by: 1)
expanding seller funded promotional events and elevating their
prominence on and off the marketplace, which contributed meaningful
GMS for the year; 2) introducing new types of signals and nudges to
highlight promotional events; 3) selectively utilizing Etsy-funded
site wide promotions to test return on investment ("ROI")
thresholds for this type of investment; and 4) launching a new
Deals tab in our app to provide more prominence for deals and
personalization for buyers.
- We created category experiences for Gifting, Home &
Living, and Style purchase occasions. We now offer three
Registries (Gift, Wedding, and Baby) and launched a new and
improved 'Gift Finder.' Our 'Etsy Has It' brand campaign was
also an important component of this effort to build buyer
consideration for these purchase occasions given its direct
messaging and call-to-action.
- We worked to continue to build trust in our marketplace
by expanding proactive listing review and enforcement of our
Handmade Policy. In 2023, we removed approximately 140% more
listings for violations of our Handmade Policy than in 2022. We
estimate that we have reduced how often buyers see merchandise that
appears to violate our listings guidelines by more than half since
the first half of 2023. We also leaned into our 'On Time or Your
Money Back' messaging in the United
States this holiday season, and we incorporated shipping
label purchasing reminders in seller communications to increase
shipping label adoption, which improves transparency for
buyers.
- We supported our sellers with multiple product launches
to help grow their business. For example, our Etsy Share & Save
program, a way for sellers to save on Etsy fees for sales they
drive to their Etsy shop, was adopted by a large percentage of our
top sellers. This program also positively impacted incremental
visits and average order value. We published a new 'Pricing Guide,'
providing useful considerations for setting sustainable pricing
strategies, and we launched 'Make an Offer' ("MAO"), a feature that
provides U.S. sellers, as well as sellers who list items in U.S.
dollars, the option to receive offers from buyers, allowing direct
price negotiation.
Fourth Quarter 2023 Operating Highlights
Select highlights of fourth quarter business initiatives for the
Etsy marketplace are outlined below:
Product: Focused on increasing Consideration for
Etsy: Quality + Great Value + Reliability.
- Multiple product initiatives successfully drove GMS during the
all-important holiday season. For example, our Cyber Sales Hub, a
highly curated landing page of seller funded promotions,
highlighted seller funded discounted items throughout Cyber Week,
positively impacting visits and conversion rate. We increased
urgency signals by adding promotional banners and nudges to our
website and app homepages, which drove meaningful increases in
conversion rate. In addition, our new 'Deals' tab also increased
conversion rate and app engagement.
- Our Search & Discovery teams launched a new graph neural
network retrieval system, which, when combined with existing neural
networks, should enhance our search retrieval capabilities by
enabling improved interactions between listings, resulting in
better search relevance. We also enhanced our neural ranking model
in non-U.S. markets to include all features available in
the United States.
- We continued to work to make Etsy a trusted brand. For example,
99% of purchases in the United
States were delivered on or before the estimated delivery
date this holiday season. In order to better enable last minute
gifting missions and improve fulfillment experiences, we launched
an estimated delivery date filter in search results and highlighted
local delivery options to buyers. Work on buyer reviews,
particularly the addition of subcategories related to quality,
shipping, and customer service, for example, drove meaningful
growth in buyer review submissions. We expanded Etsy Payments to
seven additional countries, bringing a more seamless shopping
experience to more of our buyers and sellers.
- We are investing in our sellers by providing them the tools and
insights to set sustainable pricing strategies. We began initial
testing of our 'Seller Growth Tips' within Shop Manager, providing
sellers personalized checklists such as tips for how to stand out
in search results, build buyer trust, and other helpful
resources.
- Etsy Ads was once again a key driver of revenue growth. During
the quarter, we utilized novel approaches for machine learning
generated graph representations to increase ad relevance, which
positively impacted average order value of items sold across the
marketplace. We also added localization capabilities to our
existing ads ranking system to improve ad relevancy in
international markets, driving higher conversion rates.
Marketing: We continued to optimize marketing
channel investments, focusing on driving top-of-mind awareness and
new buyer acquisition, increasing purchase frequency of existing
buyers, and reactivating lapsed buyers.
- Building brand awareness for specific purchase occasions was an
important focus, particularly within Gifting. We increased our Etsy
marketplace brand spending by over 20% year-over-year, while
significantly increasing ROI as our media efficiencies continued to
improve. Our holiday gifting missions campaigns ran in the United States and United Kingdom, delivering the message that
Etsy can be an indispensable partner for all gifting missions.
Early indications suggest that these campaigns may be contributing
to increased brand association for Etsy in the gifting
category.
- An important buyer message for Etsy during the holiday season
was 'On Time or Your Money Back.' This message, featured in our ad
campaigns, on our marketplace, and in our marketing emails,
resonated with buyers. We also launched a multi-channel campaign to
inform buyers of our new 'Deals' tab, with an emphasis on Early
Holiday and Cyber Week Sales.
- We adjusted our performance marketing investment strategy to
lean into new channels and geographies (such as non-core Western
European countries), which resulted in GMS growth and improved
efficiencies on a year-over-year basis. We ramped 'mid-funnel'
spending with select social media partners by leaning into our
category focus and enhancing influencer based creative, which drove
a significant increase in our ROI and a meaningful increase in
visits.
- As part of our increased focus on value, we continued to test
Etsy-funded site wide promotions as a way to drive buyer engagement
and GMS. Our 24-hour Cyber Monday event drove meaningful
incremental GMS and a positive ROI, contributing to Etsy's highest
single-day GMS performance to-date. We are also seeing evidence
that the repeat purchase rate for buyers who use these coupons
improves over time.
Below are a few fourth quarter 2023 operational highlights
for our subsidiary marketplaces:
Reverb
- Reverb enhanced the buyer experience by improving the search
results page with better filter views and listing displays, and
made it easier for buyers to see similar 'boosted' listings.
- As part of its focus on deals and affordability, Reverb
highlighted outlet gear from sellers throughout the holiday season,
including through its 'Dream gear for every budget' marketing
campaign. These discounts and campaigns drove a meaningful increase
in Reverb's GMS.
- Reverb also continued to optimize its performance marketing
spend, delivering solid results and a positive ROI.
Depop
- Depop's product development velocity significantly increased on
a year-over-year basis, while maintaining its healthy win rate.
Select product wins included improved personalization and ranking
that enhanced search relevance.
- To help sellers set sustainable pricing strategies, Depop
added a 'Sold Item Index' to its listing process that provides
sellers real-time information on market prices for similar items.
Depop also shifted to a 'Buyer Pays for Shipping' model for the
vast majority of listings, defaulting to a standardized Depop
shipping option that a buyer pays at checkout.
- Depop's marketing highlights include: scaling of paid marketing
with solid ROI and an impactful 'I got it on Depop' brand campaign
that delivered strong improvement in brand awareness in the
United Kingdom.
2023 Impact Goals, Strategy, and Progress: Etsy will
provide detailed progress on our ESG pillars, outlined below, in
our soon to be filed 2023 Annual Report on Form 10-K.
- Environmental pillar: includes progress towards
achieving our Net Zero by 2030 goal, running sustainable
operations, and marketplace sustainability initiatives.
- Social pillar: with goals to ensure equitable access to
opportunities, including prioritizing people and our diversity,
equity and inclusion initiatives focused on employees, suppliers,
and the creative community.
- Governance pillar: focused on fostering a culture of
ethics and accountability, including responsible marketplace
practices, thoughtful corporate governance, integrated ESG
reporting, and risk oversight and management.
Consolidated Financial Guidance and Outlook
First quarter 2024 Guidance
- GMS for the first quarter of 2024 is currently estimated to
decline in the low-single-digit range on a year-over-year basis.
This guidance reflects our slow start to the quarter, and our
current expectation that GMS for the core Etsy marketplace improves
as we move through the rest of the quarter as a result of our
planned product and marketing investments. However, if our trends
fail to improve as we currently expect, this could become a
mid-single-digit decline.
- We estimate Q1 2024 take rate to be between 21-21.5%. This can
be used to estimate revenue range for the quarter.
- Adjusted EBITDA margin is currently estimated to be ~26%.
FY 2024 Outlook
- We currently expect the first quarter to be our low point in
year-over-year growth in GMS and revenue as we begin to see the
expected benefits of our Etsy marketplace product and marketing
investments kicking in starting in the second quarter.
- We expect revenue growth to outpace GMS growth; full year
take-rate in line or ahead of the first quarter.
- We expect to maintain very healthy margins, with consolidated
Adjusted EBITDA margins for 2024 at least similar to 2023.
Please note that our guidance assumes currency exchange rates
remain unchanged at current levels.
With respect to our expectations under "Financial Guidance and
Outlook" 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 loss, acquisition,
divestiture, and other corporate structure-related expenses, and
other non-recurring expenses can have unpredictable fluctuations
based on unforeseen activity that is out of our control and/or
cannot reasonably be predicted.
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 the Company's Investor
Relations website (investors.etsy.com) under the Events section.
Published research analysts will be provided an opportunity to ask
company management live questions on the call. 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 musical instrument marketplace Reverb.
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
ir@etsy.com
Jessica Schmidt, Sr. Director,
Investor Relations
ir@etsy.com
Media Relations Contact:
Sarah Marx, Director, Corporate
Communications
press@etsy.com
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 first quarter of 2024 and underlying
assumptions and our first quarter and full year 2024 commentary.
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
but are not limited to: (1) the level of demand for our services or
products sold in our marketplaces and our ability to support our
recent growth; (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)
if we or our third-party providers are unable to protect against
technology vulnerabilities, service interruptions, security
breaches, or other cyber incidents; (6) our dependence on continued
and unimpeded access to third-party services, platforms, and
infrastructure; (7) macroeconomic events that are outside of our
control; (8) operational and compliance risks related to our
payments systems; (9) our ability to recruit and retain employees;
(10) our ability to compete effectively; (11) our ability to
enhance our current offerings and develop new offerings to respond
to the changing needs of sellers and buyers; (12) our ability to
demonstrate progress against our environmental, social, and
governance Impact strategy; (13) our efforts to expand
internationally; (14) acquisitions that may prove unsuccessful or
divert management attention; (15) regulation in the area of privacy
and protection of user data; and (16) 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 September 30,
2023, 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. Condensed Consolidated Balance Sheets (in
thousands; unaudited)
|
|
|
As of December
31,
|
|
2023
|
|
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
914,323
|
|
$
921,278
|
Short-term
investments
|
236,118
|
|
250,413
|
Accounts receivable,
net
|
24,734
|
|
27,888
|
Prepaid and other
current assets
|
129,884
|
|
80,203
|
Funds receivable and
seller accounts
|
265,387
|
|
233,961
|
Total current
assets
|
1,570,446
|
|
1,513,743
|
Restricted
cash
|
—
|
|
5,341
|
Property and equipment,
net
|
249,794
|
|
249,744
|
Goodwill
|
138,377
|
|
137,724
|
Intangible assets,
net
|
457,140
|
|
535,406
|
Deferred tax
assets
|
137,776
|
|
121,506
|
Long-term
investments
|
86,676
|
|
29,137
|
Other assets
|
45,191
|
|
42,360
|
Total
assets
|
$
2,685,400
|
|
$
2,634,961
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
29,920
|
|
$
28,757
|
Accrued
expenses
|
353,553
|
|
331,234
|
Finance lease
obligations—current
|
6,079
|
|
4,731
|
Funds payable and
amounts due to sellers
|
265,387
|
|
233,961
|
Deferred
revenue
|
14,635
|
|
14,008
|
Other current
liabilities
|
41,207
|
|
19,064
|
Total current
liabilities
|
710,781
|
|
631,755
|
Finance lease
obligations—net of current portion
|
99,620
|
|
105,699
|
Deferred tax
liabilities
|
13,192
|
|
44,735
|
Long-term debt,
net
|
2,283,817
|
|
2,279,640
|
Other
liabilities
|
121,705
|
|
120,406
|
Total
liabilities
|
3,229,115
|
|
3,182,235
|
Total stockholders'
deficit
|
(543,715)
|
|
(547,274)
|
Total liabilities and
stockholders' deficit
|
$
2,685,400
|
|
$
2,634,961
|
Etsy,
Inc. Condensed Consolidated Statements of
Operations (in thousands, except share and per share
amounts; unaudited)
|
|
|
Three Months
Ended December
31,
|
|
Year
Ended December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
$
842,322
|
|
$
807,241
|
|
$
2,748,377
|
|
$
2,566,111
|
Cost of
revenue
|
255,757
|
|
225,775
|
|
828,675
|
|
744,592
|
Gross profit
|
586,565
|
|
581,466
|
|
1,919,702
|
|
1,821,519
|
Operating
expenses:
|
|
|
|
|
|
|
|
Marketing
|
261,076
|
|
244,809
|
|
759,196
|
|
710,399
|
Product
development
|
117,488
|
|
112,787
|
|
469,332
|
|
412,398
|
General and
administrative
|
92,543
|
|
84,526
|
|
343,242
|
|
312,260
|
Asset impairment
charges
|
—
|
|
—
|
|
68,091
|
|
1,045,022
|
Total operating
expenses
|
471,107
|
|
442,122
|
|
1,639,861
|
|
2,480,079
|
Income (loss) from
operations
|
115,458
|
|
139,344
|
|
279,841
|
|
(658,560)
|
Other (expense) income,
net
|
(6,290)
|
|
(11,454)
|
|
12,979
|
|
(3,418)
|
Income (loss) before
income taxes
|
109,168
|
|
127,890
|
|
292,820
|
|
(661,978)
|
(Provision) benefit for
income taxes
|
(25,902)
|
|
(18,342)
|
|
14,748
|
|
(32,310)
|
Net income
(loss)
|
$
83,266
|
|
$
109,548
|
|
$
307,568
|
|
$
(694,288)
|
Net income (loss) per
share attributable to common stockholders:
|
|
|
|
|
|
|
|
Basic
|
$
0.70
|
|
$
0.87
|
|
$
2.51
|
|
$
(5.48)
|
Diluted
|
$
0.62
|
|
$
0.77
|
|
$
2.24
|
|
$
(5.48)
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
119,599,093
|
|
125,656,123
|
|
122,503,366
|
|
126,778,626
|
Diluted
|
136,552,671
|
|
143,981,481
|
|
140,145,406
|
|
126,778,626
|
Etsy,
Inc. Condensed Consolidated Statements of Cash
Flows (in thousands; unaudited)
|
|
|
Year
Ended December
31,
|
|
2023
|
|
2022
|
Cash flows from
operating activities
|
|
|
|
Net income
(loss)
|
$
307,568
|
|
$
(694,288)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Stock-based
compensation expense
|
284,558
|
|
230,888
|
Depreciation and
amortization expense
|
91,323
|
|
96,702
|
Provision for expected
credit losses
|
19,634
|
|
12,464
|
Foreign exchange
loss
|
7,400
|
|
1,238
|
Asset impairment
charges
|
68,091
|
|
1,045,022
|
Deferred benefit for
income taxes
|
(50,086)
|
|
(55,303)
|
Loss on sale of
business
|
2,630
|
|
—
|
Other non-cash
(income) expense, net
|
(1,901)
|
|
6,423
|
Changes in operating
assets and liabilities, net of sale of business
|
(23,704)
|
|
40,466
|
Net cash provided by
operating activities
|
705,513
|
|
683,612
|
Cash flows from
investing activities
|
|
|
|
Cash paid for
intangible assets
|
(12)
|
|
(6,456)
|
Purchases of property
and equipment
|
(12,938)
|
|
(10,237)
|
Development of
internal-use software
|
(26,958)
|
|
(20,506)
|
Purchases of
investments
|
(342,850)
|
|
(270,345)
|
Sales and maturities
of investments
|
309,451
|
|
277,520
|
Net cash used in
investing activities
|
(73,307)
|
|
(30,024)
|
Cash flows from
financing activities
|
|
|
|
Payment of tax
obligations on vested equity awards
|
(83,441)
|
|
(79,163)
|
Repurchase of
stock
|
(576,968)
|
|
(425,727)
|
Proceeds from exercise
of stock options
|
14,228
|
|
15,024
|
Payment of debt
issuance costs
|
(2,215)
|
|
(25)
|
Settlement of
convertible senior notes
|
(90)
|
|
(44)
|
Payments on finance
lease obligations
|
(6,278)
|
|
(6,307)
|
Other financing,
net
|
(1,769)
|
|
(10,242)
|
Net cash used in
financing activities
|
(656,533)
|
|
(506,484)
|
Effect of exchange rate
changes on cash
|
12,031
|
|
(6,022)
|
Net (decrease) increase
in cash, cash equivalents, and restricted cash
|
(12,296)
|
|
141,082
|
Cash, cash equivalents,
and restricted cash at beginning of period
|
926,619
|
|
785,537
|
Cash, cash equivalents,
and restricted cash at end of period
|
$
914,323
|
|
$
926,619
|
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) / growth for the
periods presented below is as follows:
|
Quarter-to-Date
Period Ended
|
|
Year-to-Date Period
Ended
|
|
As
Reported
|
|
Currency-
Neutral
|
|
FX
Impact
|
|
As
Reported
|
|
Currency-
Neutral
|
|
FX
Impact
|
December 31,
2023
|
(0.7) %
|
|
(1.6) %
|
|
0.9 %
|
|
(1.2) %
|
|
(1.2) %
|
|
— %
|
December 31,
2022
|
(4.0) %
|
|
(0.7) %
|
|
(3.3) %
|
|
(1.3) %
|
|
1.6 %
|
|
(2.9) %
|
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 (loss) adjusted to
exclude: interest and other non-operating (income) expense, net;
provision (benefit) for income taxes; depreciation and
amortization; stock-based compensation expense; foreign exchange
loss; acquisition, divestiture, and corporate structure-related
expenses; asset impairment charges; loss on sale of business; and
restructuring and other exit costs. 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 (loss), 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:
- Adjusted EBITDA does not reflect interest and other
non-operating (income) expense, net;
- Adjusted EBITDA does not reflect tax payments that may
represent a reduction in cash available to us;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future, and Adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements or for new capital
expenditure requirements;
- Adjusted EBITDA does not consider the impact of stock-based
compensation expense;
- Adjusted EBITDA does not consider the impact of foreign
exchange loss;
- Adjusted EBITDA does not reflect acquisition, divestiture, and
corporate structure-related expenses;
- Adjusted EBITDA does not consider the impact of asset
impairment charges;
- Adjusted EBITDA does not consider the impact of the loss on
sale of business;
- Adjusted EBITDA does not reflect restructuring and other exit
costs; and
- other companies, including companies in our industry, may
calculate Adjusted EBITDA differently, which reduces its usefulness
as a comparative measure.
Because of these limitations, you should consider Adjusted
EBITDA and Adjusted EBITDA margin alongside other financial
performance measures, including net income (loss), revenue, and our
other GAAP results.
Reconciliation of
Net Income (Loss) to Adjusted EBITDA and the Calculation of
Adjusted EBITDA Margin (in thousands, except percentages;
unaudited)
|
|
|
Three Months
Ended December
31,
|
|
Year
Ended December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income
(loss)
|
$
83,266
|
|
$
109,548
|
|
$
307,568
|
|
$ (694,288)
|
Excluding:
|
|
|
|
|
|
|
|
Interest and other
non-operating (income) expense, net
|
(4,904)
|
|
(2,865)
|
|
(21,957)
|
|
3,212
|
Provision (benefit)
for income taxes
|
25,902
|
|
18,342
|
|
(14,748)
|
|
32,310
|
Depreciation and
amortization
|
23,033
|
|
22,794
|
|
91,323
|
|
96,702
|
Stock-based
compensation expense (1)
|
68,476
|
|
64,355
|
|
284,558
|
|
230,888
|
Foreign exchange
loss
|
11,194
|
|
14,319
|
|
6,348
|
|
206
|
Acquisition,
divestiture, and corporate structure-related expenses
|
1,970
|
|
726
|
|
3,921
|
|
2,830
|
Asset impairment
charges
|
—
|
|
—
|
|
68,091
|
|
1,045,022
|
Loss on sale of
business
|
—
|
|
—
|
|
2,630
|
|
—
|
Restructuring and
other exit costs (2)
|
26,577
|
|
—
|
|
26,577
|
|
—
|
Adjusted
EBITDA
|
$
235,514
|
|
$
227,219
|
|
$
754,311
|
|
$
716,882
|
Divided by:
|
|
|
|
|
|
|
|
Revenue
|
$
842,322
|
|
$
807,241
|
|
$
2,748,377
|
|
$
2,566,111
|
Adjusted EBITDA
margin
|
28.0 %
|
|
28.1 %
|
|
27.4 %
|
|
27.9 %
|
|
|
(1)
Stock-based compensation expense included in the Condensed
Consolidated Statements of Operations for the periods presented
below is
as follows:
|
|
|
Three Months
Ended December
31,
|
|
Year
Ended December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cost of
revenue
|
$
7,724
|
|
$
6,738
|
|
$
31,246
|
|
$
23,283
|
Marketing
|
5,652
|
|
5,019
|
|
22,784
|
|
19,571
|
Product
development
|
33,246
|
|
35,903
|
|
146,017
|
|
124,559
|
General and
administrative
|
21,854
|
|
16,695
|
|
84,511
|
|
63,475
|
Stock-based
compensation expense
|
$
68,476
|
|
$
64,355
|
|
$
284,558
|
|
$
230,888
|
|
|
(2)
Restructuring and other exit costs included in the Condensed
Consolidated Statements of Operations for the periods presented
below is as
follows:
|
|
|
Three Months
Ended December
31,
|
|
Year
Ended December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cost of
revenue
|
$
5,650
|
|
$
—
|
|
$
5,650
|
|
$
—
|
Marketing
|
3,233
|
|
—
|
|
3,233
|
|
—
|
Product
development
|
13,527
|
|
—
|
|
13,527
|
|
—
|
General and
administrative
|
4,167
|
|
—
|
|
4,167
|
|
—
|
Restructuring and other
exit costs
|
$
26,577
|
|
$
—
|
|
$
26,577
|
|
$
—
|
View original
content:https://www.prnewswire.com/news-releases/etsy-inc-reports-fourth-quarter-and-full-year-2023-results-302067970.html
SOURCE Etsy