Core Viewpoint - The investment thesis for Etsy, Inc. (NASDAQ:ETSY) hinges on its current undervaluation and potential for growth, despite recent challenges and a poor acquisition of Depop. The stock's cheap valuation and stock buybacks provide downside protection, making the risk-reward profile favorable for investors [2]. Market Position and Strategy - Etsy operates in a large addressable market of $2 trillion with only a 2% penetration rate, indicating significant growth potential. The company aims to differentiate itself by focusing on unique, handmade products and enhancing community trust and safety [4][5]. - The management is taking steps to improve the quality of listings by enforcing rules against dropshipping and low-quality sellers, which is crucial for maintaining the platform's integrity [5][6]. Product and Service Enhancements - Etsy has re-engineered its search engine to prioritize quality over quantity, aiming to improve customer satisfaction and lifetime value. This new algorithm has already shown a reduction in duplicate listings and increased visibility for small- and medium-sized shops [7][8]. - The introduction of creativity standards and new product categories aims to better showcase how products are made, countering misinterpretations of Etsy's policies and enhancing differentiation from competitors like Amazon and Temu [6][12]. Marketing and Customer Engagement - Etsy is shifting its marketing strategy to focus more on performance marketing, particularly on social media, to increase brand awareness in key shopping categories like gifting. This is part of a broader effort to make Etsy the first choice for consumers during their shopping journey [16]. - The company is also testing a loyalty program to encourage repeat purchases and increase customer retention, which could enhance its valuation if successful [13]. Financial Performance and Valuation - Etsy's stock trades at 10.9x 2025 non-GAAP EPS estimates, with expected double-digit EPS growth from 2025-2027. The company has been aggressively buying back shares, reducing outstanding shares by approximately 9.8% over the past 2.25 years [21][22]. - Despite challenges, Etsy's adjusted EBITDA conversion to free cash flow has been strong, with 90% conversion in the past year, indicating financial health and potential for continued buybacks [21]. Competitive Landscape - Etsy faces competition from various online marketplaces, but it maintains a strong position in the handmade and vintage product categories. The company has a unique moat due to its brand recognition and the difficulty for small businesses to find alternative platforms for handmade goods [19]. - The impact of high interest rates and a weak housing market has affected Etsy's home & living category, which represents 33% of its GMS. However, recent declines in interest rates may positively influence this segment [20].

Core Insights - Etsy is pursuing significant growth opportunities through initiatives like free shipping and a new subscription service called Etsy Insider [1][3] - The company aims to differentiate itself from competitors such as Amazon by enhancing customer experience and loyalty [1][2] Group 1: New Initiatives - Etsy Insider is a paid subscription service that offers free shipping to its members [1] - The introduction of Etsy Gift Mode allows shoppers to send messages to gift recipients before delivery [2][4] - The company plans to increase mobile app usage from 40% to 75% among shoppers [2] Group 2: Customer Engagement and Loyalty - A new loyalty program is designed to encourage higher spending and more frequent purchases among consumers [2] - The beta program will include benefits such as free U.S. domestic shipping on millions of items and discounts [3] - Etsy is enhancing its search and discovery tools to improve the visibility of high-quality listings, thereby building trust with shoppers [3][4]

Etsy, Inc (NASDAQ:ETSY) Citi's 2024 Global TMT Conference Call September 4, 2024 3:50 PM ET Company Participants Josh Silverman - Chief Executive Officer Conference Call Participants Ygal Arounian - Citi Ygal Arounian All right. Good afternoon, everyone. Thanks for joining, Ygal Arounian on the Citi Internet team close to wrapping up day one here at the TMT Conference. And so thanks for joining us. Really excited now to have Etsy's CEO, Josh Silverman, with us. Appreciate you being here and thanks for takin ...

Company and Industry Overview * **Company**: Etsy, Inc. (NASDAQ: ETSY) * **Industry**: E-commerce, Handmade and Vintage Goods Key Points 1. Shift in Focus to Engagement and Browsing * **Change**: Etsy is shifting its focus from driving Gross Merchandise Sales (GMS) conversion to improving overall platform health and engagement. * **Approach**: * Redesigning the search and discovery algorithm to prioritize quality over relevance. * Launching a loyalty program to increase frequency and loyalty. * Investing in the Etsy app to drive more traffic and improve the shopping experience. 2. Search and Discovery Algorithm Redesign * **Objective**: Improve the quality of search results and enhance the buyer experience. * **Changes**: * Incorporating quality metrics, such as seller and item quality scores, into the search algorithm. * Providing sellers with a dashboard to track their quality scores and make improvements. * Creating a virtuous cycle where sellers compete based on quality to earn higher search rankings. 3. Loyalty Program * **Purpose**: Increase frequency and loyalty among occasional buyers. * **Details**: * Invite-only beta program focusing on occasional buyers. * Members will receive exclusive deals, drops, and other benefits. * Aim to understand buyer behavior and test the economic sustainability of the program. 4. Etsy App * **Importance**: Drive more traffic and improve the shopping experience. * **Strategy**: * Introducing friction in the mobile web to encourage app downloads. * Prioritizing app experience in product development. * Leveraging mobile web to drive organic traffic and improve sales. 5. Marketing Strategy * **Focus**: Maximize the return on marketing spend. * **Approach**: * Investing in Google PLAs for measurable results. * Investing in brand advertising to increase awareness. * Targeting mid-funnel customers with generalized needs using Gen AI and social media platforms. 6. Market Opportunity * **TAM**: Etsy believes there is significant growth potential in various markets, including home furnishings, gifting, and other categories. * **Competitive Landscape**: Etsy views itself as a unique alternative to commoditized e-commerce and aims to capture a larger share of the market. 7. Macroeconomic Challenges * **Consumer Discretionary Spend**: Etsy acknowledges the challenges posed by the current economic environment but remains optimistic about its growth potential. * **Competitive Response**: Etsy focuses on differentiating itself through quality, unique products, and the value it offers to customers. 8. Regulatory Environment * **De Minimis Tax Regulations**: Etsy supports the de minimis exemption for cross-border shipping and advocates for targeted regulations to prevent abuse. 9. Gifting * **Growth**: Gifting GMV increased by 4% in the second quarter, driven by product improvements and marketing efforts. * **Opportunity**: Etsy sees significant growth potential in the gifting market, particularly in the US. 10. Leadership Transition * **CFO Retirement**: Etsy's CFO, Rachel Glaser, is retiring, and the company is actively searching for a replacement. 11. Seller Demographics * **Seller Composition**: Approximately 85% of Etsy sellers are women. * **Buyer Composition**: Approximately 80% of Etsy buyers are women. * **Strategy**: Etsy aims to attract more male buyers and sellers by leveraging male-centric media channels and showcasing products that appeal to men.

It has been about a month since the last earnings report for Etsy (ETSY) . Shares have lost about 7.8% in that time frame, underperforming the S&P 500. Will the recent negative trend continue leading up to its next earnings release, or is Etsy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. ETSY's Q2 Earnings Miss Estimates, Revenues Increase Y/Y ...

Betting on a turnaround is tough, but in this instance, it might make sense to do just that. Having exposure to the S&P 500 in recent times has been a fruitful endeavor. The broad index of 500 large and profitable U.S. businesses has generated a total return of 96% in the past five years, virtually doubling one's capital. That's a fantastic outcome. Not all companies have performed even remotely as well for their shareholders. Etsy (ETSY 1.36%), for example, is actually down 4% since August 2019. The online ...

Core Insights - Etsy has experienced a decline in gross merchandise sales (GMS) for three consecutive quarters, with a 3.2% decrease in Q2 compared to the previous year, and management anticipates further pressure in Q3 [2] - The company operates in non-essential discretionary categories, which are sensitive to inflation and economic uncertainty, leading to cautious consumer spending [3] - Despite current challenges, the decline in the Consumer Price Index and potential interest rate cuts by the Federal Reserve could positively impact Etsy's GMS growth [4] Competitive Advantage - Etsy possesses a sustainable competitive advantage, referred to as an economic moat, which protects it from industry rivals and new entrants [5] - The platform benefits from strong network effects, with 96.6 million active buyers and 8.8 million active sellers, enhancing its value for both parties as participation increases [6] - The difficulty of establishing a competing marketplace from scratch reinforces Etsy's position in the market [7] Valuation and Investment Opportunity - Etsy's stock has fallen 81% from its all-time high, contrasting with a 59% increase in the Nasdaq Composite index since the start of 2023, resulting in a significant decline of 54% in Etsy shares as of August 7 [8] - The stock is currently trading at a forward price-to-earnings ratio of 12.3, indicating a low valuation and reflecting market pessimism [9] - For investors who believe in Etsy's potential for revenue and earnings growth, this may represent a favorable buying opportunity [9]

Earnings Performance - Etsy reported Q2 2024 earnings of 41 cents per share, missing the Zacks Consensus Estimate by 10.9% and reflecting an 8.9% year-over-year decrease [1] - Revenues increased 3% year-over-year to $647.81 million, beating the Zacks Consensus Estimate by 2.3% [1] Revenue Breakdown - Marketplace revenues were $470.38 million (72.6% of total revenues), up 3.8% year-over-year, driven by payments and transaction fee revenue from Offsite Ads [2] - Services revenues were $177.43 million (27.4% of total revenues), up 0.9% year-over-year [3] User Metrics - Etsy acquired 5.6 million new buyers, with total active buyers reaching 91.5 million, a 1% year-over-year increase [2] - Active buyer base grew 0.4% year-over-year to 96.6 million, missing the consensus mark of 97.2 million [4] - Active seller base stood at 8.8 million, up 5.9% year-over-year, but missed the consensus mark of 9.6 million [4] - Reactivated buyers reached 6.4 million, up 8.5% year-over-year [5] Gross Merchandise Sales (GMS) - GMS was $2.95 billion, down 2.1% on a reported basis and 1.9% on a currency-neutral basis year-over-year, beating the Zacks Consensus Estimate of $2.92 billion [5] - Etsy marketplace's GMS was $2.5 billion, down 3.2% on a reported basis year-over-year [5] Operating Performance - Gross margin expanded 160 basis points year-over-year to 71.6% [6] - Total operating expenses decreased 11.1% year-over-year to $393.55 million, representing 60.8% of revenues compared to 70.4% in the prior-year quarter [6] - Operating income was $70.2 million, compared to an operating loss of $2.4 million in the prior-year quarter [6] Balance Sheet - Cash and cash equivalents totaled $759.21 million as of Jun 30, 2024, down from $788.84 million as of Mar 31, 2024 [7] - Short-term investments were $240.68 million, down from $254.88 million in the previous quarter [7] - Long-term debt stood at $2.29 billion at the end of Q2 2024, up from $2.28 billion at the end of the prior quarter [8] Guidance - For Q3 2024, Etsy expects the take rate to be similar to Q2 2024's 22% [9] - GMS is anticipated to decline in the low single-digit range year-over-year [9] - Adjusted EBITDA margin is expected to be 27% [9]

Etsy (ETSY) reported $647.81 million in revenue for the quarter ended June 2024, representing a year-overyear increase of 3%. EPS of $0.41 for the same period compares to $0.83 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $633.51 million, representing a surprise of +2.26%. The company delivered an EPS surprise of -10.87%, with the consensus EPS estimate being $0.46. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street ex ...

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, announced today that Rachel Glaser, Etsy's Chief Financial Officer, has decided to retire after a nearly 40-year career in strategic finance roles, including over seven years in her current role. Etsy has retained an executive recruiting firm to assist in the search for her successor. Ms. Glaser is expected ...