Financial Data and Key Metrics Changes - Consolidated GMS for Q4 was $3.6 billion, up 2.4% year-over-year, excluding Reverb, and up 1.3% year-over-year on a currency-neutral basis [20] - Consolidated revenue reached $882 million, up 6.6% year-over-year, marking a new quarterly record [20] - Adjusted EBITDA was $222 million, with a consolidated adjusted EBITDA margin of 25.2% [20] - Etsy Marketplace adjusted EBITDA margin was slightly above 30% in Q4, though slightly lower year-over-year due to higher costs [21] - Consolidated fourth quarter take rate was 24.5%, expanding by 170 basis points year-over-year [30] Business Line Data and Key Metrics Changes - Etsy Marketplace GMS was up 0.1% year-over-year in Q4, marking the first positive comparison since Q3 2023 [22] - U.S. buyer GMS grew 0.3% year-over-year, marking the first quarter of positive growth in four years [23] - Home and living category returned to positive year-over-year GMS growth, driven by high average order value subcategories [24] - Active sellers increased to 5.6 million, up 1.5% sequentially, reflecting growth in both U.S. and international sellers [26] Market Data and Key Metrics Changes - Trailing 12-month active buyer count in the U.S. increased slightly from Q3 to Q4, with a total of 86.5 million active buyers [25] - Mobile app downloads grew 4% year-over-year, with app GMS growth accelerating in Q4 [24] - Agentic traffic to Etsy in Q4 was about 15 times what it was last year, indicating rapid growth in this channel [16] Company Strategy and Development Direction - The company signed a definitive agreement to sell Depop to eBay for $1.2 billion, allowing a focus on growing the Etsy marketplace [4] - Strategic priorities include improving the shopping journey, enhancing machine learning for item matching, deepening customer loyalty, and emphasizing human connection [10] - The company reorganized around customer outcomes, consolidating product and engineering teams for better execution [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the changes made, noting that the trajectory is improving with a return to growth in the core marketplace [12] - The company aims for sustained, durable growth by leveraging AI technology to enhance the shopping experience [15] - Management anticipates Q1 2026 GMS growth in the range of 2%-4% year-over-year, with expectations for positive growth throughout the year [34] Other Important Information - The company plans to use proceeds from the Depop sale for general corporate purposes, share repurchases, and investment in the Etsy marketplace [27] - For the full year 2025, Depop generated $1.1 billion in GMS and $187 million in revenue, impacting consolidated margins [28] Q&A Session Summary Question: Improvement in gross buyer adds and reactivated buyers - Management noted that cumulative investments in product experience, app usage, and personalized marketing contributed to the improvement in buyer metrics, indicating sustainability in these trends [40] Question: Key drivers of sustaining GMS growth - Management emphasized that the four strategic priorities work as a system to drive durable growth, focusing on discovery, matching, loyalty, and differentiation [45] Question: Traffic from AI platforms and its impact - Management observed that early signs indicate agentic platforms can serve as valuable discovery channels, with higher intent and average order value among users engaging through these platforms [58]

Financial Data and Key Metrics Changes - Consolidated GMS for Q4 was $3.6 billion, up 2.4% year-over-year, excluding Reverb, and up 1.3% year-over-year on a currency-neutral basis [20] - Consolidated revenue reached $882 million, up 6.6% year-over-year, marking a new quarterly record [20] - Adjusted EBITDA was $222 million, representing a consolidated adjusted EBITDA margin of 25.2% [20] - Etsy Marketplace adjusted EBITDA margin was slightly above 30% in Q4, though slightly lower year-over-year due to higher costs [21] Business Line Data and Key Metrics Changes - Etsy Marketplace GMS was up 0.1% year-over-year in Q4, marking the first positive comparison since Q3 2023 [21] - U.S. buyer GMS grew 0.3% year-over-year, marking the first quarter of positive growth in four years [23] - Depop's Q4 GMS was up nearly 38% year-over-year to a new record of $300 million, with U.S. GMS growing 60% year-over-year [27] Market Data and Key Metrics Changes - Mobile app downloads grew 4% year-over-year, with app GMS growth accelerating in Q4 [24] - The app's contribution to total GMS reached 46% in Q4, five percentage points higher than at the end of 2023 [24] - The year-over-year rate of decline in active buyers improved for the first time in over a year, with active buyers largely flat sequentially at 86.5 million [25] Company Strategy and Development Direction - The company signed a definitive agreement to sell Depop to eBay for $1.2 billion, allowing a focus on growing the Etsy marketplace [4] - Strategic priorities include improving discovery, matching buyers with items, deepening loyalty, and enhancing human connection [10] - The company reorganized around customer outcomes rather than functional silos to drive clearer focus and better execution [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the changes made, noting that the trajectory is improving with a return to growth in the core marketplace [12] - The company anticipates first quarter 2026 GMS to be in the range of $2.38 billion to $2.43 billion, representing year-over-year growth of approximately 2%-4% [34] - Management highlighted the importance of AI technology in enhancing the shopping experience and driving growth [15] Other Important Information - The company plans to use proceeds from the Depop sale for general corporate purposes, continued share repurchases, and investment in the Etsy marketplace [27] - Etsy held $1.8 billion in cash and equivalents as of December 31, 2025, with $735 million in adjusted EBITDA generated in 2025 [32] Q&A Session Summary Question: What changed in Q4 regarding buyer acquisition and reactivation? - Management noted that cumulative investments in product experience, app usage, and personalized marketing contributed to improved buyer metrics [40] Question: What are the key drivers of sustaining GMS growth through 2026? - The company emphasized a system of strategic priorities focused on discovery, matching, loyalty, and differentiation to drive durable growth [45] Question: How is the company leveraging AI and agentic platforms for consumer behavior? - Management indicated that early signs show agentic platforms can be valuable for discovery, with higher intent and average order value from consumers engaging through these channels [58]

Financial Data and Key Metrics Changes - Consolidated GMS for Q4 2025 was $3.6 billion, up 2.4% year-over-year, excluding Reverb, and up 1.3% year-over-year on a currency-neutral basis [19] - Consolidated revenue reached $882 million, up 6.6% year-over-year, marking a new quarterly record [19] - Adjusted EBITDA was $222 million, with a consolidated adjusted EBITDA margin of 25.2% [19] - Etsy Marketplace adjusted EBITDA margin was slightly above 30% in Q4, though lower year-over-year due to higher costs [20] Business Line Data and Key Metrics Changes - Etsy Marketplace GMS was up 0.1% year-over-year in Q4, marking the first positive comparison since Q3 2023 [20] - U.S. buyer GMS grew 0.3% year-over-year, the first quarter of positive growth in four years [21] - Home and living category returned to positive year-over-year GMS growth, driven by high average order value subcategories [22] - Mobile app contributed 46% to total GMS in Q4, with app GMS growth accelerating [22] Market Data and Key Metrics Changes - Trailing twelve-month active buyer count in the U.S. increased slightly from Q3 to Q4, with active buyers largely flat sequentially at 86.5 million [24] - 6.8 million new buyers and 10.4 million reactivated buyers were added, totaling 17.2 million gross additions, up 2.7% year-over-year [24] - Active sellers increased to 5.6 million, up 1.5% sequentially, reflecting growth in both U.S. and international sellers [25] Company Strategy and Development Direction - The company signed a definitive agreement to sell Depop to eBay for $1.2 billion, allowing a focus on growing the Etsy marketplace [3] - Strategic priorities include improving buyer-seller matching, enhancing customer loyalty, and leveraging human connection to differentiate Etsy [9] - The company aims to optimize for inspiration and ongoing engagement rather than just conversion [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the changes made, noting that the trajectory is improving with a return to growth in the core marketplace [11] - The company anticipates Q1 2026 GMS to be in the range of $2.38 billion to $2.43 billion, representing year-over-year growth of approximately 2%-4% [33] - Management highlighted the importance of AI technology in enhancing the shopping experience and driving growth [13] Other Important Information - The company plans to use proceeds from the Depop sale for general corporate purposes, share repurchases, and investment in the Etsy marketplace [26] - Etsy's cash position as of December 31 was $1.8 billion, with $735 million in adjusted EBITDA generated in 2025 [31] Q&A Session Summary Question: What changed in Q4 regarding buyer acquisition and reactivation? - Management noted that cumulative investments in product experience, app usage, and personalized marketing contributed to improved buyer metrics, indicating sustainable trends [38][39] Question: What are the key drivers of sustaining GMS growth through 2026? - The company emphasized a system of strategic priorities focused on discovery, matching, loyalty, and differentiation to drive durable growth [44] Question: How is the company addressing the competition from agentic platforms? - Management acknowledged the early days of agentic platforms but expressed optimism about their potential as a valuable discovery channel, highlighting the importance of understanding buyer intent [56][58]

Core Viewpoint - Etsy reported quarterly earnings of $0.92 per share, exceeding the Zacks Consensus Estimate of $0.88 per share, but down from $1.03 per share a year ago, indicating a +4.31% earnings surprise [1] Financial Performance - The company posted revenues of $881.64 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 0.02% and up from $852.16 million year-over-year [2] - Over the last four quarters, Etsy has surpassed consensus EPS estimates two times and topped consensus revenue estimates four times [2] Stock Performance - Etsy shares have declined approximately 20.6% since the beginning of the year, while the S&P 500 has gained 0.5% [3] Future Outlook - The company's earnings outlook will be crucial for stock performance, with current consensus EPS estimates at $0.46 for the coming quarter and $2.58 for the current fiscal year [7] - The Zacks Rank for Etsy is currently 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Internet - Commerce industry, to which Etsy belongs, is currently ranked in the bottom 23% of over 250 Zacks industries, suggesting potential challenges ahead [8]

2 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 2026 and underlying assumptions; expected timing of the closing of the Depop transaction; the impact of AI, ML, and LLMs, including expanded AI-driven tools and insights; the impact of agentic shopping and our partnerships with OpenAI, Google Gemini, Microsoft Copilot, and Stripe; our product de ...

Financial Performance - Total consolidated Gross Merchandise Sales (GMS) in 2025 was $11,916.9 million, with Etsy marketplace GMS at $10,460.7 million (87.8% of total) and Depop generating $1,074.9 million (9.0% of total) GMS[31] - In 2025, the company generated $693.4 million in cash from operating activities and $638.8 million in consolidated free cash flow, indicating strong financial health[40] - Etsy repurchased 14.4 million shares at a total cost of $777.1 million in 2025, with a new $750 million stock repurchase program approved by the Board of Directors[41] - The company plans to utilize proceeds from the sale of Depop, expected to close in Q2 2026 for $1.2 billion, for general corporate purposes and continued share repurchases[32] - As of December 31, 2025, Etsy had 86.5 million active buyers and 5.6 million active sellers, with GMS declining 4% to $10.5 billion[44] Strategic Initiatives - Etsy's leadership transition includes Kruti Patel Goyal as the new CEO effective January 1, 2026, following Josh Silverman's departure[42] - The company emphasizes investment in technology to enhance search, discovery, and overall platform performance, which is critical for marketplace growth[34] - Marketing strategies focus on engaging customers through performance and brand marketing, with an emphasis on personalized communication[35] - Etsy's strategic initiatives focus on increasing buyer engagement, with 21.2 million new buyers added in 2025, despite a 10% year-over-year decline[59] - The company aims to deepen retention and engagement among existing buyers while attracting new ones through its four strategic initiatives[62] Market and Competition - The company faces risks related to competition, technology disruptions, and regulatory compliance that could impact future performance[25][28] - The estimated online market size for Etsy's relevant retail categories is approximately $600 billion, with Etsy's GMS representing about 2% of this opportunity[64] - Depop's active sellers grew 60% year-over-year in the U.S., highlighting strong market momentum in the resale apparel sector[66] User Engagement - Etsy Ads improvements led to year-over-year revenue growth, enhancing ad relevancy and efficiency, contributing to overall performance despite GMS pressure[46] - In 2025, Etsy reactivated 30.0 million lapsed buyers, a 4% increase year-over-year, indicating effective personalized marketing strategies[59] - Approximately 59% of Depop sellers who made a sale in 2025 also made at least one purchase in the same year, indicating strong user engagement[68] - 93% of Depop's Gross Merchandise Sales (GMS) was in the apparel category, with 74% coming from U.S. buyers and 26% from non-U.S. buyers[68] - 92% of GMS was transacted on the app, and 87% of buyers over the past year were under the age of 34[68] Environmental Sustainability - In 2025, Etsy's Scope 1 and 2 emissions were 1,248 metric tonnes, with Scope 3 emissions totaling 416,665 metric tonnes, reflecting a decrease in emissions intensity to 202 tCO2e per million dollars of gross profit[99] - The company aims for a 50% reduction in absolute Scope 1 and 2 greenhouse gas emissions by 2030 from a 2020 baseline, achieving a 21% reduction so far[85] - In 2025, Etsy established terms with suppliers representing over $39 million in annual spend to support emissions reduction initiatives[91] - The company provided a $3 million loan to the nonprofit New York Energy Efficiency Corporation to finance energy-efficiency improvements in 2025[96] - Etsy's Net Zero goal was approved by the Science Based Targets Initiative (SBTi) in 2022, aligning with its commitment to reduce emissions[89] Operational Efficiency - The total operational energy footprint in 2025 was 7,797 MWh, with 54% derived from electricity, meeting a 25% reduction target from a 2016 baseline[106] - Etsy achieved 100% renewable energy sourcing for its quantified electricity usage, including offices and employees working from home[105] - Etsy's Brooklyn office received "Zero Waste" certification for the seventh consecutive year, while the Dublin office diverted over 90% of waste from landfills[109] - The company aims for 100% of its offices to achieve "Zero Waste" certification by the end of 2025, currently at 88%[105] - Etsy's sustainable compute energy target was met with a 25% reduction (kWh/visit) from a 2016 baseline[107] Social Responsibility - Etsy's Impact Investment Fund made approximately $3.4 million in philanthropic donations to community-based organizations in 2025[79] - The Uplift Fund supported nearly 7,690 entrepreneurs in 2025, with U.S. buyers donating $1.9 million to the creative community through checkout contributions[137] - In 2025, the company spent $39 million with diverse-owned suppliers, including women, disability, and LGBTQ-owned globally, as well as various minority-owned businesses in the U.S.[134] - The company is committed to ensuring contractors receive a living wage and access to quality medical care[141] - The company implemented a process for key suppliers to complete third-party assessments to strengthen understanding of human rights and ethical practices[136] Risk Management - The company has a significant amount of convertible debt and may incur additional debt in the future, which poses financial risks[27] - A 10% adverse change in foreign currency exchange rates could decrease revenue by $117.1 million, approximately 4.1% of total revenue for 2025[396] - The company has not entered into any derivatives or hedging transactions to manage foreign currency exchange risk but may consider it in the future[395] - A 10% adverse change in foreign currency exchange rates would result in a currency exchange loss of $9.1 million based on balance sheet balances as of December 31, 2025[396] - The company updated its Modern Slavery Statement and published AI principles to guide innovation while maintaining human connection[136]

Core Insights - The article discusses five publicly traded companies that exhibit characteristics signaling potential take-private transactions in 2026 due to their depressed valuations and strong cash flows [1] Group 1: Company Profiles - **Wayfair**: Trading at $81.35, down 72% from its five-year high of $292.73, with a market cap of $11.9 billion. Q4 2025 revenue was $3.3 billion, with adjusted EBITDA of $224 million, a 133% year-over-year increase. However, the company reported a $116 million GAAP net loss and has negative shareholders' equity of $2.8 billion. Executives have been selling shares, which raises concerns about a potential LBO [1] - **LKQ**: Trading at $33.22, down 13% over the past year, with a market cap of $8.5 billion. The company generated $387 million in free cash flow in Q3 2025 and has an EV/EBITDA of 9x. Despite a 1.2% decline in overall organic revenue, the Specialty business saw over 9% organic growth. Executive selling at $33.41 in January 2026 is a cautionary signal [1] - **YETI**: Trading at $49.43, 34% below its five-year high of $75, with a market cap of $4.0 billion. Q4 2025 revenue was $538.7 million, but gross margin fell to 58.4% due to tariff pressures. The company has accelerated its buyback program, but tariff-related margin compression poses a near-term risk [1] - **Etsy**: Trading at $44.05, down 81% from its five-year high of $227.27, with a market cap of $4.4 billion and $1.40 billion in cash. Q4 2025 revenue was $881.6 million, missing estimates, while EPS of $0.92 exceeded expectations. The core marketplace saw slight recovery, but active sellers continued to decline [1] - **EPAM Systems**: Trading at $141, down 63% from its five-year high of $376. Q4 2025 revenue was $1.41 billion, growing 12.8% year-over-year, with acquisitions contributing to growth. The company holds $1.30 billion in cash and has no significant debt, making it an attractive LBO candidate [1] Group 2: Market Conditions - Private equity firms currently have a record amount of dry powder, and leveraged buyout financing has improved as interest rates stabilize. Mid-cap public companies with strong brands and cash flows are trading at multi-year lows, creating favorable conditions for take-private activity [1] - The article emphasizes that none of the companies have confirmed any go-private transactions or private equity interest, and the potential for such deals depends on various factors beyond financial metrics, including management willingness and regulatory conditions [2]

Group 1: eBay Inc - eBay Inc has shown a significant increase in its revenue, reporting a year-over-year growth of 5% to reach $2.5 billion [1] - The company has successfully expanded its active buyer base, which now stands at 182 million, reflecting a 3% increase compared to the previous year [1] - eBay's gross merchandise volume (GMV) has also seen a positive trend, increasing by 4% to $22 billion [1] Group 2: Etsy Inc - Etsy Inc reported a robust revenue growth of 12% year-over-year, amounting to $600 million [1] - The platform has experienced a surge in active sellers, reaching 5.5 million, which is a 10% increase from the prior year [1] - Etsy's gross merchandise sales (GMS) have risen by 15%, totaling $3.5 billion [1]

Core Insights - Etsy reported a decrease in profit for the fourth quarter, despite an increase in revenue [1] Financial Performance - The company experienced a rise in revenue, indicating growth in sales [1] - However, the profit margins were lower compared to previous quarters, suggesting potential challenges in cost management or pricing strategies [1]

Group 1 - The core viewpoint of the article indicates that Etsy missed Wall Street expectations for fourth-quarter revenue, suggesting a decline in demand for personalized gifts and handcrafted goods amid economic uncertainty [1] Group 2 - Etsy's revenue performance reflects a broader trend of cooling demand in the online marketplace sector, particularly for niche products like personalized gifts [1] - The ongoing economic uncertainty is impacting consumer spending habits, which may lead to further challenges for companies in the e-commerce industry [1]