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].

Q1 2025 Financial Results April 30, 2025 Forward-looking Statements This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include but are not limited to statements relating to: our financial guidance for the second quarter of 2025 and underlying assumptions; our customer relationship flywheel; the impact of AI, ML, and LLMs; our product development investments and marketing portfolio; strength of our financial foundation; our resi ...

Financial Data and Key Metrics Changes - In Q1 2025, consolidated GMS was $2.8 billion, down approximately 6.5% year over year, with Etsy Marketplace GMS down 8.9% [26][25] - Consolidated revenue increased by approximately 1% year over year to $651 million, despite the GMS decline [26][27] - Adjusted EBITDA was $171 million for Q1, representing a 26.3% margin, up 30 basis points year over year [27][28] - Consolidated take rate improved to 23.3%, an increase of 170 basis points over the 21.6% take rate reported in the same period last year [28] Business Line Data and Key Metrics Changes - Etsy Marketplace GMS decreased by 8.9%, while Depop continued to deliver strong growth, benefiting consolidated results [26][27] - Services revenue grew 7.7% year over year, driven by strong growth in on-site ads revenue at both Etsy and Depop [27] - The number of reactivated buyers increased by over 6 million in Q1, indicating progress in buyer engagement strategies [45] Market Data and Key Metrics Changes - US buyer GMS represented about 75% of first quarter Etsy Marketplace GMS, with both US and non-US buyer GMS performing similarly to Q4 of the previous year [30] - Gifting GMS outperformed non-gifting GMS during the quarter, supported by product and marketing efforts [31] Company Strategy and Development Direction - The company is focused on reigniting core Etsy marketplace growth through a balanced portfolio of product investments aimed at improving GMS and customer experience [7][20] - There is an emphasis on enhancing personalization and leveraging AI to improve buyer engagement and frequency [10][12] - The company is adapting to macroeconomic challenges while maintaining a strong financial foundation and focusing on unique seller offerings [5][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic backdrop but expressed confidence in the company's ability to improve growth through product and marketing strategies [44][46] - The outlook for Q2 anticipates a decline in consolidated GMS similar to Q1, with expectations for improved performance as product and marketing strategies take effect [37][38] Other Important Information - The company announced the sale of Reverb for $105 million, which will allow for a greater focus on driving growth for Etsy and Depop [25][19] - The company has established a task force to address the impacts of global tariff regulations on its operations [17][34] Q&A Session Summary Question: Can you provide an update on the full year outlook and the second quarter EBITDA margin guide? - Management indicated that the macroeconomic backdrop remains challenging, but they are encouraged by product and marketing improvements that could drive growth throughout the year [44][46] Question: What is next on the app product roadmap? - The company is focused on increasing the app's share of GMS, which reached 44.5% in Q1, and is working on enhancing personalized browsing experiences [53][55] Question: Is there concern that the decline in active sellers is driving the decline in active buyers? - Management clarified that the decline in active sellers is intentional due to the introduction of a new shop setup fee, which has led to a healthier seller base [62][63] Question: Can you discuss the take rate guidance for Q2? - Management explained that the take rate is expected to remain flat due to lapping previous price-related increments that had benefited the take rate [74] Question: What are the gross margin headwinds from free shipping and machine learning costs? - Management acknowledged that higher processing costs and investments in machine learning and search development could create some gross margin headwinds, but these are necessary for product experience [79][80]

Financial Data and Key Metrics Changes - In Q1 2025, consolidated GMS was $2.8 billion, down approximately 6.5% year over year, with FX representing an 80 basis point headwind [26] - Consolidated revenue increased by approximately 1% year over year to $651 million, despite a decline in GMS [26] - Adjusted EBITDA was $171 million for Q1, representing a 26.3% margin, up 30 basis points year over year [27] - Consolidated take rate improved to 23.3%, an increase of 170 basis points over the 21.6% take rate reported in the same period last year [28] Business Line Data and Key Metrics Changes - Etsy Marketplace GMS was down 8.9% year over year, while Depop continued to deliver strong growth in buyers, sellers, and GMS [26][30] - Marketplace revenue decreased 1.8% year over year, reflecting the decline in GMS, partially offset by increases in payments revenue [27] - Services revenue grew 7.7% year over year, with strong growth in on-site ads revenue at both Etsy and Depop [27] Market Data and Key Metrics Changes - US buyer GMS represented about 75% of first quarter Etsy Marketplace GMS, with both US and non-US buyer GMS performing similarly to Q4 of last year [30] - Gifting GMS outperformed non-gifting GMS during the quarter, benefiting from product and marketing efforts [30] Company Strategy and Development Direction - The company is focused on reigniting core Etsy marketplace growth through a balanced portfolio of product investments aimed at improving GMS and customer experience [6][19] - There is an emphasis on enhancing the mobile app experience, with the app reaching an all-time high of 44.5% of total Etsy Marketplace GMS [9] - The company is leveraging AI and machine learning to create personalized shopping experiences and improve customer engagement [10][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic backdrop but expressed confidence in the company's ability to adapt and improve growth through product and marketing strategies [44][45] - The outlook for Q2 anticipates a decline in consolidated GMS similar to Q1, but management remains optimistic about future growth driven by ongoing product and marketing initiatives [36][45] Other Important Information - The company announced the sale of Reverb for $105 million, which is expected to close in the coming months [24] - A new shop setup fee of $29 for new sellers was introduced, which management believes will lead to a healthier seller environment [61] Q&A Session Summary Question: Update on full year outlook and second quarter EBITDA margin guidance - Management indicated that the macroeconomic backdrop remains challenging, but they are encouraged by product and marketing improvements that could drive growth throughout the year [44][45] Question: Next steps for the app product roadmap - The app is expected to continue growing as a percentage of GMS, with ongoing efforts to enhance the browsing experience and personalization [52][54] Question: Concerns about the decline in active sellers impacting active buyers - Management clarified that the decline in active sellers is intentional and aimed at improving the quality of sellers on the platform, and they do not see a direct correlation with active buyer decline [61][62] Question: Take rate guidance for Q2 - Management explained that the take rate is expected to remain flat due to lapping previous price-related increments and improvements in Etsy Ads [70][71] Question: Gross margin headwinds from free shipping and ML costs - Management acknowledged that higher processing costs and machine learning expenses could create some gross margin headwinds, but they are necessary for enhancing the product experience [75][76] Question: Opportunities to leverage domestic sourcing amid rising prices - Management is focusing on promoting domestic sellers and enhancing the value proposition of Etsy in light of potential price increases from competitors [90]