Summary of Etsy, Inc. Conference Call Company Overview - **Company**: Etsy, Inc. (NASDAQ:ETSY) - **Date**: November 25, 2024 - **Participants**: - Josh Silverman - CEO - Rachel Glaser - CFO - Bernie McTernan - Needham Key Points Industry Insights - **E-commerce Trends**: E-commerce is growing, but the growth is primarily in everyday essentials at discounted prices, leading to pressure on discretionary products [4][9] - **Consumer Sentiment**: Consumers feel financially pressured despite positive GDP growth, impacting discretionary spending [9][10] Company Performance and Strategy - **Gross Merchandise Sales (GMS)**: There has been volatility in GMS, with opportunities identified in both active buyer growth and GMS per buyer [4][6] - **Active Buyers**: Only about one in three women and one in ten men in the U.S. have purchased on Etsy in the last year, indicating significant potential for new buyer acquisition and re-engagement of 100 million lapsed buyers [6] - **Customer Experience**: Etsy is focusing on enhancing customer experience by improving search results and showcasing diverse product offerings [5][12] Gifting and Seasonal Opportunities - **Gifting Market**: The average American spends approximately $1,600 annually on gifts, with Etsy capturing only 2% of that market. There is a significant opportunity to increase market share in gifting [20] - **Gift Mode Features**: New features have been introduced to enhance the gifting experience, including gift teasers and improved shipping options [23][25] Product and Technology Enhancements - **Search and Discovery**: Improvements in search technology using neural networks to enhance relevance and reduce the "tyranny of choice" in search results [45][49] - **Seller Visibility**: A new Q-score system has been implemented to rank sellers based on quality metrics, improving the buyer experience [34][36] Financial Performance - **Take Rate Expansion**: Etsy's take rate increased by 130 basis points without negatively impacting seller margins, indicating a balanced approach to revenue growth [70][72] - **Etsy Ads**: The advertising platform is a key driver of revenue, with ongoing improvements to enhance return on ad spend (ROAS) for sellers [62][66] Capital Allocation and Future Outlook - **Free Cash Flow Utilization**: Etsy is focused on organic investments, share repurchases, and potential M&A opportunities, with a strong balance sheet to support these strategies [78][81] - **M&A Success**: The acquisition of Depop has been successful, enhancing Etsy's presence in the apparel category and reaching younger demographics [81] Challenges and Risks - **Market Competition**: Etsy is avoiding a price war in the marketplace, focusing instead on value and quality differentiation [12][10] - **Tariff Exposure**: The impact of potential tariffs on imports from China is minimal, as Etsy's inventory from China is de minimis [60][61] Conclusion Etsy is navigating a challenging macroeconomic environment by focusing on enhancing customer experience, expanding its gifting market, and leveraging technology to improve search and discovery. The company is well-positioned for future growth with a strong balance sheet and strategic focus on organic investments and potential acquisitions.

I recently joined The REIT Forum and if you are looking for more investment ideas like this one, get them exclusively at The REIT Forum with access to our subscriber only portfolios.I last wrote about Etsy, Inc. (NASDAQ: ETSY ) in August, where I upgraded my rating from “hold” to “buy” as I believed that an improving macroeconomic environment and a robust product roadmap should setAmrita runs a boutique family office fund in beautiful Vancouver, where she leads the investment strategy for the family fund. T ...

Core Insights - Stocks removed from major indexes like the S&P 500 often lose appeal, particularly among professional investors, leading to significant price declines [1] - Historical data indicates that these stocks can outperform their indexes by five percentage points annually over the next five years after removal [2] Group 1: Etsy - Etsy generates 82% of its revenue from sellers identifying as a "business of one," offering a unique product range compared to larger retailers [5] - The company experienced a sales surge of over 100% during the pandemic, but growth has since slowed to single digits, resulting in an 81% decline from all-time highs [6][3] - Currently, Etsy trades at 11 times free cash flow (FCF), near historical lows, and only 15 times FCF when accounting for stock-based compensation [7] - A reverse discounted cash flow (DCF) analysis suggests Etsy needs only 4% annual FCF growth over the next decade to be an attractive investment [8] - In Q3, Etsy added 3 million app downloads, indicating potential for growth, as buyers through the app have a 40% higher lifetime value [9][10] - With a 22% FCF margin, Etsy has the capacity to buy back shares, having reduced its share count by 4% annually over the last four years [11] Group 2: WK Kellogg - WK Kellogg, known for brands like Frosted Flakes and Special K, was cast aside after its spinoff from Kellanova in 2023, trading 25% below its highs [12][13] - The company trades at a low EV-to-EBITDA ratio of 7, significantly cheaper than peers like General Mills and Post Holdings [14] - Kellogg is guiding for mid-teens EBITDA margins by 2026, following a $500 million investment to modernize its supply chain, which could lead to substantial undervaluation if successful [14] - The company raised its adjusted EBITDA growth guidance for 2024 to 5%-6% and increased its adjusted EBITDA margin to 10.5% for the first three quarters of 2024, indicating early progress [15] - Despite modest industry growth projections of 2% annually through 2029, Kellogg's current valuation suggests it is priced for minimal growth, presenting potential for market-beating returns [16][17]

If you're looking to invest in a niche e-commerce stock, Etsy is hard to ignore.Even with the advent of smartphones, digital payments, and the internet, brick-and-mortar shopping still represents 84% of overall retail spending in the U.S. There's still a lot of room for online shopping to continue rising, especially in less developed parts of the world.Etsy (ETSY -2.76%) is one such option when looking to put money to work to benefit from this trend. Before you decide to buy this e-commerce stock, here are ...

This article has been reviewed according to Science X's editorial process and policies . Editors have highlighted the following attributes while ensuring the content's credibility: Credit: Unsplash/CC0 Public Domain The web platform Etsy is famous for selling cutesy handmade arts and crafts, but even a company that relies on a cottage industry of artisans is increasingly undergirded by artificial intelligence, its CEO told AFP on Tuesday. "You couldn't run Etsy without AI," Josh Silverman said on the sid ...

Etsy's (NASDAQ: ETSY ) shares have suffered a significant blow in the last year, falling by more than 22% - a notable decrease that is difficult to ignore. Some years ago, Etsy was thriving, taking full advantage of the e-commerce surge with certainty. However, inFollower of the markets. My investment style is mostly looking for asymmetrical risk/reward opportunities on the long and short side. I utilize a mixture of stock and derivatives positions in my investment approach. The time horizon of my investmen ...

When investors think of how they will eventually get their returns from a stock investment, they typically relate to the classic “Buy low, sell high” strategy. Another common way of looking at this is through dividend payouts, as the quarterly (sometimes monthly) income gives shareholders a sense of comfort and achievement. Etsy TodayETSYEtsy$53.41 +0.33 (+0.62%) 52-Week Range$47.10▼$89.58P/E Ratio27.25Price Target$64.87Add to WatchlistHowever, dividends are paid with company profits, which are taxed at th ...

Etsy (ETSY) shares jumped 7.19% to close at $51.44 on Thursday following the announcement of third-quarter 2024 results.Revenues advanced 4.1% year over year to $662.4 million. The figure beat the Zacks Consensus Estimate by 1.31%. Top-line growth was driven by accelerating Marketplace revenues.However, third-quarter 2024 earnings of 45 cents per share missed the Zacks Consensus Estimate by 16.67%. The bottom-line figure reflects a year-over-year decrease of 29.7%.Find the latest EPS estimates and surprises ...

Financial Data and Key Metrics - Consolidated GMS was $2.9 billion, down 4.1% YoY, with Etsy marketplace GMS down 6% YoY [6] - Revenue grew 4.1% YoY to $662 million, driven by take rate expansion [6] - Adjusted EBITDA margin was 27.7%, down 90 basis points YoY but ahead of guidance [26] - Active buyers remained solid at approximately 91 million, with a slight YoY decline [7][40] - GMS per active buyer decreased by 3.4% YoY to $123, primarily due to reduced visit frequency and lower spending per purchase day [41] Business Line Performance - Etsy marketplace GMS declined 6% YoY, but active buyer levels remained stable at 91 million [7] - Depop delivered strong GMS growth, accelerating sequentially, with U.S. listing growth up 26 percentage points since fee changes [22] - Reverb saw double-digit YoY growth in used music gear sales, particularly in the U.S., and partnered with Fender for certified pre-owned gear [23] - Etsy's focus on gifting resulted in site-wide GMS growth, with personalized and customized items outperforming overall site performance by 4% YoY [39] Market Performance - U.S. domestic-only trade routes and non-U.S. trade routes saw GMS declines, while international non-domestic trade routes and U.S. imports showed modest growth [34] - Back-to-school merchandise GMS in the U.S. grew 5% YoY [40] - Depop's U.S. marketing campaign reached over 70 million people, strengthening its position in the U.S. resale market [22] Strategy and Industry Competition - Etsy is focusing on improving customer experience through app and search enhancements, including a 33% reduction in "rearview mirror impressions" on the app [11][12] - The company is leveraging GenAI to diversify search results, reducing repetitive listings by 40% [13][14] - Etsy is prioritizing quality in search results, leading to an increase in four and five-star buyer reviews and a decrease in refund requests [15] - The company introduced physical Etsy gift cards in over 20,000 U.S. stores, aiming to capture a larger share of the gifting market [21] Management Commentary on Operating Environment and Future Outlook - Management acknowledged macro headwinds, including declining discretionary spending and mind-share events like elections and natural disasters [35][36] - Etsy is focusing on long-term customer experience improvements rather than short-term metrics like conversion rate and GMS [19] - The company expects Q4 consolidated GMS to decline in the low to mid-single digits YoY, with a take rate of 22.3% and adjusted EBITDA margin between 28% and 29% [49][50] Other Key Information - Etsy repurchased $156 million in stock during Q3, with $260 million remaining under its $1 billion repurchase program [45] - The company approved an additional $1 billion stock repurchase program, reflecting confidence in its growth plans [47] - Etsy generated $204 million in free cash flow during Q3, with a 90% conversion rate of adjusted EBITDA to free cash flow over the trailing 12 months [46] Q&A Session Summary Question: Leverage in product development and potential investment cycle [54] - Etsy prioritizes customer experience improvements that drive lifetime value and GMS growth, with a focus on foundational investments like the Q-score in search [55][56] - The company is hiring more app engineers and machine learning specialists to enhance the app experience and drive future growth [58] Question: Business performance quarter-to-date and physical gift card launch [61] - The holiday season is expected to be shorter and later than usual, with significant shopping activity in mid-to-late November and December [62] - Physical gift cards are expected to drive incremental GMS over time, with initial marketing efforts focused on building awareness [63] Question: Key initiatives to enhance consumer experience [68] - Etsy is most excited about improving consideration through on-site experiences, leveraging GenAI to inspire new shopping missions [69][70] Question: Right margin level and investment intensity [73] - Etsy is focused on growing market cap through a balance of profitability and growth, with potential for increased hiring if foundational investments show results [74][75] - Depop's strong performance, with GMS growth exceeding 30% YoY, validates Etsy's portfolio strategy [77] Question: Holiday season expectations for gift mode [80] - Gifting GMS grew faster than overall marketplace GMS in Q3, with significant product improvements and marketing efforts to drive awareness [80][81] Question: Etsy Insider and seller reaction [83] - Etsy Insider is in early beta, with limited uptake to test the economics and value propositions of the loyalty program [84] - Buyers and sellers both expressed a preference for free shipping without negatively impacting seller margins [85] Question: Q-score impact and mobile app changes [87] - The Q-score in search has remained conversion and GMS neutral, with modest headwinds from mobile app changes driving incremental downloads [88] - The opportunity cost of focusing on foundational improvements rather than short-term GMS gains is seen as a necessary trade-off for long-term growth [89] Question: Category performance and buyback strategy [91] - Etsy is seeing pockets of growth in value-driven categories like demi-fine jewelry, while lower-priced items face more pressure [94] - The company has the flexibility to increase share repurchases beyond current levels, supported by strong free cash flow and a $1.2 billion cash balance [92][93] Question: Incremental drivers of take rate [95] - Take rate gains in 2024 were driven by payments coverage, Etsy ads improvements, and seller onboarding fees, with sustainable opportunities for further growth [96][97]

Etsy (ETSY) reported $662.41 million in revenue for the quarter ended September 2024, representing a yearover-year increase of 4.1%. EPS of $0.45 for the same period compares to $0.64 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $653.83 million, representing a surprise of +1.31%. The company delivered an EPS surprise of -16.67%, with the consensus EPS estimate being $0.54. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and ...