Core Insights - Etsy is a leading two-sided marketplace with approximately 95 million active buyers and over 100 million listings from more than 8 million active sellers, focusing on unique creative and handmade goods [1] - The company is projected to generate $12 billion in Gross Merchandise Sales (GMS) for the year, with adjusted EBITDA margins of 26% and free cash flow of $600 million [2] Company Overview - Josh Silverman has been the CEO of Etsy since May 2017, with a background that includes roles at American Express, Skype, shopping.com, and co-founding Evite [2] - Lanny Baker, the CFO, joined Etsy earlier this year and has held previous positions at Eventbrite, Yelp, ZipRealty, and Monster Worldwide [2] Market Outlook - The company is addressing macroeconomic volatility and uncertainty, with a focus on consumer confidence and expectations for stable to slightly improved GMS trends in Q2 compared to a negative 6% in Q1 [6]

Summary of Etsy (ETSY) FY Conference Call - May 13, 2025 Company Overview - Etsy is a leading two-sided marketplace with approximately 95 million active buyers and over 100 million listings from more than 8 million active sellers, primarily focused on unique, creative, and handmade goods [2][2] - Estimated to generate $12 billion in Gross Merchandise Sales (GMS) for the year, with 26% adjusted EBITDA margins and $600 million in free cash flow [2][2] Macro Environment and Consumer Trends - The macro environment remains volatile, but Etsy has not observed significant changes in consumer spending despite market fluctuations [6][6] - Etsy experienced substantial growth during the pandemic, with GMS increasing from $4.9 billion pre-pandemic to nearly $11 billion in 2024 [5][5] - The company has shown resilience against supply shocks and inflation, with sellers not passing on price increases as seen in other markets [7][8] Competitive Landscape - The e-commerce market is highly competitive, with major players like Amazon and Walmart actively participating [11][11] - Etsy is focusing on local sellers to mitigate tariff impacts, with over 90% of supplies sourced domestically [16][16][20][20] - The advertising market remains strong, and Etsy is enhancing its marketing technology to improve performance [12][12] Growth Strategies - Etsy is recalibrating its strategy to balance near-term conversions with long-term initiatives, particularly focusing on app development and personalized experiences [24][24][41][41] - The company has shifted resources to improve the app experience, with 44.5% of GMS now coming from app purchases [38][38] - Emphasis on quality and personalization through a new search engine architecture that prioritizes customer experience [30][30] Advertising and Revenue Growth - Etsy has seen growth in revenue despite GMS declines, primarily through Etsy Payments and Etsy Ads, which enhance seller profitability [57][57][58][58] - The company is exploring off-site ads as a cooperative advertising program to further drive sales for sellers [62][62] Financial Performance and Profitability - Etsy has maintained a strong take rate and gross margins, with expectations for continued profitability in 2025 [65][65][76][76] - The divestiture of Reverb is expected to improve overall profit margins for Etsy [71][71][73][73] Future Outlook - Etsy's unique marketplace model positions it as a valuable alternative in a consolidating e-commerce landscape [78][78] - The company is optimistic about its growth potential, leveraging its distinct offerings to attract consumers seeking alternatives to traditional e-commerce [78][78]

Core Viewpoint - Shopify and Etsy are positioned as strong players in the e-commerce industry, with both companies expected to benefit from significant market growth projected to reach $21.22 trillion by 2030, growing at a compound annual growth rate of 15.8% from 2025 to 2030 [2] Group 1: Shopify (SHOP) - Shopify's Merchant Solutions generated $1.74 billion in revenue in Q1 2025, accounting for 73.7% of total revenues, driven by user-friendly tools like Shop Pay and Shopify Pay Instalments [3][5] - Shop Pay processed $22 billion in Gross Merchandise Value in Q1 2025, reflecting a 57% year-over-year increase, with adoption by major brands enhancing Shopify's portfolio [4] - Shopify is investing in AI-driven tools to improve customer engagement and streamline operations, with partnerships including TikTok, Amazon, and PayPal expected to expand its merchant base [5] Group 2: Etsy (ETSY) - Etsy is leveraging AI for enhanced personalization and has seen strong mobile app performance, with the app accounting for 44.5% of total Gross Merchandise Sales in Q1 2025 [6][7] - The introduction of an AI-powered discovery feature in April 2025 allows shoppers to browse curated collections, enhancing the shopping experience [8] - Etsy's subsidiary, Depop, is contributing significantly to growth, particularly in the U.S. market, with strong performance in gifting categories during seasonal events [10] Group 3: Price Performance and Valuation - Year-to-date, Shopify and Etsy shares have declined by 13.7% and 11.3%, respectively, due to a challenging macroeconomic environment [12] - Shopify shares are currently overvalued with a Value Score of F, while Etsy shares are considered cheap with a Value Score of B, trading at 10.34X and 1.75X forward Price/Sales, respectively [15] - The Zacks Consensus Estimate for Shopify's 2025 earnings is $1.44 per share, indicating a 10.77% year-over-year increase, while Etsy's estimate is $1.77 per share, reflecting a 24.68% year-over-year decline [17]

Core Viewpoint - Etsy is facing significant challenges in the e-commerce marketplace, with declining sales and a loss of investor confidence following disappointing earnings reports [1][2][4]. Group 1: Financial Performance - Etsy's gross merchandise sales (GMS) fell by 6.5% to $2.8 billion, continuing a trend of declining business [5]. - Active sellers decreased by 11.3% to 8.1 million, with a notable drop of 23% in active sellers on the Etsy marketplace [5]. - The company's take rate increased to 23.3% in Q1 2025 from 21.6% in Q1 2024 and 17.8% in 2022, marking a 31% rise over three years [12][13]. Group 2: Acquisition Strategy - Etsy's acquisition of Reverb in 2019 initiated a "House of Brands" strategy, but the company has since sold Reverb and taken significant impairment charges [6][9]. - The company incurred a $1 billion impairment on the value of Depop and Elo7 in 2022, indicating poor performance of acquired brands [9]. - Despite Depop's GMS growth of 32% in 2024, the overall acquisition strategy has been deemed a failure, distracting from the core business [10]. Group 3: Seller Dynamics - A significant exodus of sellers is evident, with a 23% decline over the past year, which poses a risk to the marketplace's viability [11]. - The increase in seller fees has contributed to the decline in sellers, as there has been no corresponding increase in sales [12][13]. - Concerns have been raised about brand dilution due to the introduction of non-handmade goods, which may compromise Etsy's core identity [14]. Group 4: Future Prospects - For Etsy to recover, it must return to GMS growth and increase active sellers, addressing structural problems in the business [15]. - The company is seen as a potential target for activist investors, with Elliott Management owning 13% of the company but struggling to effect change [16]. - A change in management or a strategic partnership may be necessary for a turnaround, as the brand's relevance continues to decline [18].

Core Insights - The secondhand industry is facing challenges due to President Trump's tariffs, but companies like eBay and Etsy show resilience [1][2] Company Performance - eBay and Etsy reported Q1 2025 earnings, addressing tariff impacts; eBay's CEO noted that only about 5% of their gross merchandise value (GMV) comes from China, while Etsy's CFO stated that just over 1% of gross merchandise sales (GMS) are from U.S. imports from China [2][3] - Etsy experienced a 3.4% year-over-year decline in active buyers, totaling 88.5 million, and an 8.9% decline in GMS to $2.3 billion [7][8] - eBay reported a GMV growth to $18.8 billion and a revenue increase of over 1% to $2.58 billion, benefiting from price-conscious shoppers opting for used and refurbished goods [10][11] Market Dynamics - Sellers on eBay and Etsy primarily source products locally, which provides a competitive advantage over import-reliant rivals like Temu and Shein [2][6] - Etsy's focus on handcrafted and vintage goods may make it more vulnerable to economic uncertainty, as consumer spending is hesitant [7] - eBay has seen increased spending from customers looking to avoid tariffs, indicating a positive trend in consumer behavior [10][11] Strategic Positioning - Etsy's ownership of Depop, a secondhand fashion platform, continues to perform well despite economic challenges, achieving record-high GMS since its acquisition in 2021 [8] - eBay's strategy of focusing on used and refurbished goods has positioned it favorably in the current market environment [10]

Core Viewpoint - Etsy's shares have declined 19.7% year to date, underperforming both the Zacks Retail and Wholesale sector and the Zacks Internet-Commerce industry, which saw declines of 3.6% and 7.1% respectively [1] Financial Performance - First-quarter 2025 earnings were reported at 46 cents per share, missing the Zacks Consensus Estimate by 8% and decreasing 4.2% year over year [1] - Revenues for the first quarter of 2025 increased by 0.8% year over year to $651.2 million, exceeding the Zacks Consensus Estimate by 1.33% [2] - Marketplace revenues were $458.5 million, accounting for 70.4% of total revenues, down 1.8% from the previous year [3] - Services revenues reached $192.7 million, representing 29.6% of total revenues, and increased by 7.7% year over year [4] User Metrics - The total number of active buyers decreased by 3.4% year over year to 88.5 million, while the active buyer base decreased by 1.7% to 94.8 million, surpassing the consensus mark of 94.4 million [5] - The active seller base was 8.1 million, down 11.3% year over year, missing the consensus mark of 8.9 million [5] Gross Merchandise Sales (GMS) - Consolidated GMS was $2.8 billion, down 6.5% on a reported basis and 5.7% on a currency-neutral basis from the prior year [6] - The Etsy marketplace's GMS was $2.3 billion, reflecting an 8.9% year-over-year decline on a reported basis [6] Operating Results - Total operating expenses for the first quarter were $481.4 million, up 23.2% year over year, with operating loss reported at $22.3 million compared to an operating income of $68.1 million in the prior year [7][9] - Adjusted EBITDA increased by 1.9% year over year to $171.1 million, with an adjusted EBITDA margin of 26.3% [9] Balance Sheet - As of March 31, 2025, cash and cash equivalents totaled $649.2 million, down from $811.2 million at the end of the previous quarter [10] - Long-term debt remained unchanged at $2.3 billion [10] Guidance - For the second quarter of 2025, Etsy anticipates a take rate of 23.3% and expects consolidated GMS to decline at a rate similar to or slightly better than the first quarter's year-over-year decline [11]

Core Insights - Etsy is facing a challenging macroeconomic environment, with a reported consolidated gross merchandise sales (GMS) of $2.8 billion, down 6.5% year-over-year and down 5.7% on a currency-neutral basis [1] - The number of active buyers on the platform decreased by 3.4% to 88.5 million [1][2] Sales Performance - GMS for the Etsy marketplace specifically fell by 8.9%, or 8.1% on a currency-neutral basis, totaling $2.3 billion [1] - The company anticipates no major changes in the macroeconomic backdrop, maintaining a consistent outlook [2] Strategic Focus - Etsy is prioritizing personalization efforts to enhance traffic, incorporating ad and recommendation data into search models [3] - The aim is to create a more personalized shopping experience, likening it to a personal boutique for users [3] Engagement Metrics - Personalized homepages are showing nearly double the engagement compared to non-personalized ones [4] - Machine learning has increased the share of personalized email and push notifications by over 10 percentage points, leading to higher engagement [4] Tariff Exposure - Etsy's exposure to tariffs appears low, with just over 1% of GMS coming from U.S. imports of products from Chinese sellers [4] - The current trade situation is fluid, making it difficult to predict the impact of tariffs on demand [5] Seller Impact - Tariffs on China could negatively affect Etsy's individual sellers, as broad policies may inadvertently harm them [6] - While most sellers source 90% of their supplies locally, rising raw material prices could lead to increased costs for sellers, potentially impacting consumer prices [6]

Core Insights - Etsy's fiscal Q1 2025 financial report shows a mixed performance with revenue and earnings exceeding expectations, but a notable decline in gross merchandise sales (GMS) and active buyers [2][3][4]. Financial Performance - Revenue for Q1 2025 was $651.2 million, a 0.8% increase from $646 million in Q1 2024, beating expectations [2]. - Adjusted earnings per share rose significantly by 115% from $0.48 to $1.03, also surpassing forecasts [2]. - Gross merchandise sales decreased by 6.5% year over year, dropping from $3 billion to $2.8 billion [2][4]. - The revenue take rate improved from 21.6% to 23.3%, an increase of 170 basis points [2]. Business Efficiency - Despite lower sales, Etsy's revenue growth was attributed to higher take rates, increased on-site advertising revenue, and the expansion of Etsy's Payments business [5]. - The number of active buyers fell by 3.4%, and spending per average active buyer declined by 3.5%, indicating consumer hesitance [4]. - The number of habitual buyers decreased by 11%, and active sellers dropped from 9.1 million to less than 8.1 million [4]. Future Outlook - Etsy's guidance for Q2 suggests GMS will decline at a rate similar to or slightly better than Q1, which is viewed positively given current economic uncertainties [6]. - The company remains active in stock buybacks, spending $189 million, approximately 2% of its total market cap, and ended the quarter with nearly $1 billion in cash and investments [7]. Market Reaction - Following the earnings release, Etsy's stock initially rose by about 1%, but concerns over tariff issues and declining sales metrics tempered further gains [8]. External Factors - The evolving tariff and trade war situation is a key area to monitor, as Etsy operates in an international marketplace with significant buyer and seller activity outside the U.S. [9].

Core Insights - Etsy reported revenue of $651.18 million for Q1 2025, a year-over-year increase of 0.8% [1] - The EPS for the same period was $0.46, down from $0.48 a year ago, indicating a decline [1] - The revenue exceeded the Zacks Consensus Estimate of $642.63 million by 1.33%, while the EPS fell short of the consensus estimate of $0.50 by 8% [1] Financial Performance Metrics - Total Gross Merchandise Sales (GMS) were $2.79 million, matching the average estimate from 10 analysts [4] - Active buyers reached 94,779, surpassing the average estimate of 94,400 from seven analysts [4] - Active sellers numbered 8,095, which was below the average estimate of 8,946 from four analysts [4] - Revenue from services was $192.68 million, exceeding the average estimate of $184.12 million by 7.7% year-over-year [4] - Marketplace revenue was $458.50 million, slightly above the estimated $458.22 million, but represented a year-over-year decline of 1.8% [4] Stock Performance - Etsy's shares have returned -5% over the past month, compared to a -0.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Etsy reported quarterly earnings of $0.46 per share, missing the Zacks Consensus Estimate of $0.50 per share, representing an earnings surprise of -8% [1]. Financial Performance - The company posted revenues of $651.18 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.33% and showing a year-over-year increase from $645.95 million [2]. - Over the last four quarters, Etsy has surpassed consensus revenue estimates three times [2]. Stock Performance - Etsy shares have declined approximately 12.8% since the beginning of the year, compared to a decline of -5.5% for the S&P 500 [3]. - The current consensus EPS estimate for the upcoming quarter is $0.52 on revenues of $638.28 million, and for the current fiscal year, it is $2.60 on revenues of $2.77 billion [7]. Industry Outlook - The Internet - Commerce industry, to which Etsy belongs, is currently ranked in the top 25% of over 250 Zacks industries, indicating a favorable outlook [8]. - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Etsy's stock performance [5]. Future Expectations - The estimate revisions trend for Etsy is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6]. - The upcoming earnings call will be crucial for assessing the sustainability of the stock's price movement based on management's commentary [3].