Online marketplace Etsy named insider Kruti Goyal as its new chief executive officer, effective January 1, replacing Josh Silverman after eight years in the role. ...

(Reuters) -Online marketplace Etsy named insider Kruti Patel Goyal as its new chief executive officer on Wednesday, succeeding Josh Silverman, who has spent over eight years in the role. Etsy's shares, which have gained about 40% so far this year, were down nearly 7% in early trading, after the company also forecast muted gross merchandise sales (GMS) - a key metric - for the fourth quarter. A long-time Etsy executive, Patel Goyal, will take the helm on January 1, at a time when online retailers and mark ...

Financial Performance - Consolidated GMS for Q3 2025 was $2.7 billion, up 0.9% year-over-year excluding Reverb, while including Reverb, it was down 6.5% year-over-year[6]. - Revenue for Q3 2025 reached $678 million, a 6.1% increase year-over-year excluding Reverb, and a 2.4% increase including Reverb[7]. - Adjusted EBITDA for Q3 2025 was $172 million, with a consolidated margin of 25.4%[6]. - Revenue for Q3 2025 was $678,026 thousand, a 2.5% increase from $662,410 thousand in Q3 2024[19]. - Gross profit for Q3 2025 was $483,381 thousand, compared to $476,770 thousand in Q3 2024, reflecting a slight increase[19]. - Net income for Q3 2025 was $75,503 thousand, up from $57,366 thousand in Q3 2024, representing a 31.6% increase[19]. - Operating expenses for Q3 2025 totaled $400,670 thousand, an increase from $389,953 thousand in Q3 2024[19]. - Basic net income per share for Q3 2025 was $0.76, compared to $0.50 in Q3 2024, indicating a significant improvement[19]. - Net income for the nine months ended September 30, 2025, was $52,247,000, a decrease from $173,375,000 in the same period of 2024[20]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $512,050,000, compared to $530,897,000 in 2024, reflecting a margin of 25.6%[22]. - The company reported a net cash provided by operating activities of $376,290,000 for the nine months ended September 30, 2025, compared to $437,510,000 in 2024[20]. User Metrics - Active sellers totaled 5.5 million, a 10.9% year-over-year decrease, while active buyers were 86.6 million, down 5.0% year-over-year[7]. - GMS per active buyer on a trailing twelve-month basis was $121, down 1.6% year-over-year[7]. - Depop's GMS was $292.1 million, up 39.4% year-over-year, driven by new user growth and improved buyer conversion[7]. Stock and Cash Management - The company repurchased approximately $120 million worth of its common stock during Q3 2025[7]. - The company repurchased stock totaling $643,670,000 during the nine months ended September 30, 2025, compared to $464,314,000 in 2024[20]. - Cash and cash equivalents as of September 30, 2025, were $1,248,940 thousand, compared to $811,178 thousand as of December 31, 2024[18]. - Cash and cash equivalents at the end of the period increased to $1,250,902,000 from $818,939,000 year-over-year[20]. Liabilities and Deficits - Total liabilities as of September 30, 2025, were $3,765,395 thousand, up from $3,176,648 thousand as of December 31, 2024[18]. - Total stockholders' deficit increased to $(1,112,584) thousand as of September 30, 2025, from $(758,866) thousand as of December 31, 2024[18]. - Total current liabilities decreased to $565,072 thousand as of September 30, 2025, from $665,113 thousand as of December 31, 2024[18]. Deferred Revenue and Expenses - The company reported a deferred revenue of $25,612 thousand for Q3 2025, up from $19,213 thousand in Q3 2024[19]. - Stock-based compensation expense for the nine months ended September 30, 2025, was $181,390,000, down from $214,692,000 in 2024[22]. - The company experienced a provision for expected credit losses of $7,100,000 for the nine months ended September 30, 2025, down from $10,141,000 in 2024[20]. - The company reported a loss on the sale of business amounting to $5,097,000 during the nine months ended September 30, 2025[22]. Future Guidance and Partnerships - Fourth quarter 2025 GMS guidance is set between $3.5 billion and $3.65 billion, with an expected take rate of approximately 24.5%[10]. - Etsy signed a partnership with OpenAI to allow U.S. ChatGPT users to discover and purchase items directly from sellers[7]. - Depop launched its largest-ever brand campaign in September, aimed at increasing awareness in the U.S.[7]. Currency Impact - Currency-neutral Gross Merchandise Sales (GMS) declined by 7.2% for the quarter ended September 30, 2025, compared to a decline of 4.4% in the same quarter of 2024[21]. - The effect of exchange rate changes on cash resulted in an increase of $36,487,000 for the nine months ended September 30, 2025[20].

Core Insights - Etsy's third quarter consolidated results exceeded expectations across key financial metrics, with Gross Merchandise Sales (GMS) for Etsy and Depop showing year-over-year growth [2][5] - The Etsy marketplace's GMS improved sequentially, driven by customer-centric strategies and enhanced AI-powered features [2][5] - Depop continued to gain traction in the U.S. resale clothing market, contributing to overall GMS growth [2][5] Financial Performance - Third quarter consolidated GMS was $2.7 billion, up 0.9% year-over-year excluding Reverb, with Etsy marketplace GMS improving approximately 300 basis points sequentially [5][7] - Revenue for the third quarter was $678 million, reflecting a 2.4% increase year-over-year, while the revenue take rate increased to 24.9% [6][7] - Adjusted EBITDA was $172 million, representing a consolidated margin of 25.4%, with Etsy marketplace margin just shy of 30% [5][7] User Metrics - Active sellers totaled 5.5 million, a 10.9% year-over-year decrease, while active buyers were 86.6 million, down 5.0% year-over-year [7][8] - GMS per active buyer on a trailing twelve-month basis was $121, down 1.6% year-over-year, but improved sequentially [7][8] - Depop saw significant growth with active sellers increasing by 40.8% year-over-year to 3.0 million and active buyers up 38.8% to 6.6 million [7][8] Strategic Initiatives - Etsy signed a partnership with OpenAI to allow U.S. ChatGPT users to discover and purchase items directly from Etsy sellers [7] - Key initiatives included improving search ranking models, launching new seller tools, and enhancing the Etsy App for a more personalized shopping experience [7][8] - Depop launched its largest brand campaign in September and introduced a new in-app styling feature [7][8] Fourth Quarter Guidance - For the fourth quarter of 2025, Etsy expects GMS to be between $3.5 billion and $3.65 billion, with an adjusted EBITDA margin around 24% [10][11] - The guidance reflects stable profitability for the Etsy marketplace and increased brand marketing investment at Depop [10][11]

Leadership Transition - Etsy, Inc. announced a leadership transition plan where Kruti Patel Goyal will become the new CEO effective January 1, 2026, succeeding Josh Silverman who will step down on December 31, 2025 [1][2] - Josh Silverman will serve as Executive Chair until December 31, 2026, to ensure continuity during the transition [1] - Fred Wilson, the current Chair of Etsy's Board since 2017, will step down as Chairman but will remain on the Board [1] Performance and Growth - Under Josh Silverman's leadership, Etsy has seen significant growth: the number of shoppers has more than tripled, Gross Merchandise Sales (GMS) has grown fourfold, revenue has increased nearly eightfold, and the share price has appreciated by more than seven times [2] - Kruti Patel Goyal has been instrumental in leading Etsy's strategic growth initiatives over the past year, which have improved top-line performance [2] Kruti Patel Goyal's Background - Kruti Patel Goyal has extensive experience, having served as Etsy's President and Chief Growth Officer, overseeing various departments including Product, Engineering, and Marketing [3] - Prior to her role at Etsy, she was the CEO of Depop, where she nearly doubled gross merchandise sales and buyer base, making it the fastest-growing online apparel resale marketplace in the U.S. [4] - Kruti has over 10 years of experience at Etsy in various leadership roles, including Chief Product Officer and head of Marketplace Integrity and Trust & Safety [5]

Core Insights - The retail sector is experiencing a challenging period due to economic concerns and tariff uncertainties, reflected in the S&P Retail ETF's underperformance compared to the S&P 500 [1] Company Overview: Etsy - Etsy has shown strong performance recently, with a 17% increase over the past month and over 40% year-to-date gain, despite being down approximately 75% from its peak in November 2021 [2][3] - The company operates as a $7.3 billion e-commerce platform focused on handmade and vintage goods, indicating significant potential for growth [3] Financial Performance - Etsy boasts stable profits, wide profit margins, and over $700 million in annual free cash flow, making it attractive to investors [5] - In the first half of the year, Etsy repurchased over $525 million of its own shares while maintaining $1.5 billion in cash and equivalents, contrasting with competitors like Amazon that focus on reinvestment [6] Market Position and Consumer Trends - Etsy benefits from a loyal customer base that values personalized products and small businesses, which mass retailers cannot replicate [4] - The company is addressing seller concerns regarding costs and fees while enhancing its platform with AI-powered personalization to improve conversion rates and repeat purchases [7] Market Dynamics - Retail stocks, including Etsy, have seen a short-term bounce in Q4 but have lagged throughout the year, with Etsy's stock rallying 70% since the April sell-off, not driven by sales or earnings growth [8]

Core Insights - The focus is shifting towards companies with depressed share prices, aiming for potential turnaround gains rather than investing in high-performing stocks [2] - Etsy's stock has plummeted 76% from its peak, raising questions about its future growth potential [3] Company Performance - Etsy experienced significant revenue growth during the pandemic, with a 111% increase in 2020 and a 35% increase in 2021, driven by an expanding user base and gross merchandise sales (GMS) [3] - In the second quarter of the current year, Etsy's GMS was $2.8 billion, which is 8% lower than the same period in 2021, indicating a failure to maintain growth despite a generally healthy economic backdrop [4] - The company's performance is closely tied to consumer spending trends, with discretionary goods sales being affected during economic downturns, highlighting its cyclical nature [5] Market Position - Despite challenges, Etsy has carved out a niche in the e-commerce market, focusing on differentiated merchandise that sets it apart from larger competitors like Amazon and Walmart [6] - Etsy boasts 93.3 million active buyers and 8.1 million active sellers, both significantly higher than pre-pandemic levels in 2019, indicating a strong user base [6] - The company benefits from a network effect that supports its competitive position, suggesting that valuation expansion and higher revenue could drive share price recovery [7]

Core Insights - Jefferies analyst John Colantuoni has set a price target of $70 for Etsy, with the current stock price slightly above at $71.16 [1][4] - Etsy is scheduled to release its third-quarter 2025 financial results on October 29, 2025, followed by a video webcast conference call [2][3] - The company's market capitalization stands at approximately $7.05 billion, with a trading volume of 2,164,573 shares, indicating significant investor interest and market liquidity [2][5] Stock Performance - Currently, Etsy's stock is trading at $71.16, marking a slight decrease of 0.41% or $0.30, with a trading session low of $69.63 and a high of $71.70 [4] - Over the past year, Etsy's stock has experienced volatility, with a peak of $76.52 and a trough of $40.05 [4] Upcoming Events - The forthcoming financial results and the accompanying conference call are poised to provide analysts and investors with a deeper understanding of Etsy's financial health and strategic direction [5] - The live-streamed event will facilitate direct interaction between research analysts and the company's management, fostering greater transparency and communication within the investment community [5]

Core Insights - Etsy, Inc. plans to release its third quarter 2025 financial results on October 29, 2025, before market opening [1] - A video webcast conference call will be held at 8:30 a.m. Eastern Time on the same day to discuss the results, allowing publishing research analysts to ask questions [2] - A replay of the webcast will be available starting at 12:00 p.m. Eastern Time on the same day for at least three months [3] Company Overview - Etsy operates two-sided online marketplaces connecting millions of buyers and sellers globally, with a mission to "Keep Commerce Human" [4] - The primary marketplace, Etsy.com, is known for unique and creative goods, providing tools and services to sellers [4] - Etsy also owns the fashion resale marketplace Depop, with both marketplaces operating independently while sharing expertise [5] Investor Relations - Etsy utilizes its Investor Relations website and the Etsy News Blog for disclosing material non-public information and compliance with Regulation FD [6] - Key contacts for investor and media relations are provided for further inquiries [6]

Core Insights - Etsy's valuation may have reached a low point, potentially setting the stage for future outperformance if a new partnership drives growth [1][10] - The company was removed from the S&P 500 due to its stock no longer representing large U.S. companies, reflecting a shift to a small-cap status [2] - Despite a significant stock decline of approximately 80% since its peak in late 2021, Etsy's business has remained resilient, generating substantial free cash flow [3][4] Valuation and Buybacks - Etsy's shares are currently trading at a price-to-free-cash-flow valuation of less than 14, one of the lowest since its IPO [4] - Over the past three years, Etsy has reduced its outstanding shares by 21% through substantial stock buybacks [5] Historical Performance and Future Potential - Historical data suggests that stocks removed from the S&P 500 tend to underperform initially but may outperform the market over a five-year horizon [8][9] - The decline in stock price often leads to a lower starting point for future returns, indicating that Etsy's current low valuation may present an opportunity [10] Adoption Trends and Growth Catalysts - Etsy's active buyers decreased by nearly 5% in Q2 2025, highlighting a challenge in user adoption [11] - The integration of ChatGPT with Etsy's platform could provide a new shopping experience, potentially boosting user engagement and growth [13] Comparative Analysis - eBay serves as a relevant example, having faced similar growth challenges but managed to reduce its share count significantly, leading to a 141% stock increase over three years despite low revenue growth [14][16] - If Etsy can leverage the ChatGPT integration to improve its growth rate, it may follow a similar trajectory to eBay and outperform the market [16]