Etsy(US:ETSY)2024-10-30 22:06Cash and Cash Equivalents - Cash and cash equivalents decreased from $914.3 million to $818.9 million as of September 30, 2024, compared to December 31, 2023[40] - Cash and cash equivalents at the end of the period were $818.939 million, compared to $741.958 million in 2023[57] - Cash and cash equivalents and short-term investments were $1.0 billion as of September 30, 2024[145] - Cash and cash equivalents and short-term investments totaled $1.0 billion as of September 30, 2024, with $107.0 million in long-term investments and access to a $400.0 million credit facility[182] Total Current Assets - Total current assets decreased from $1,570.4 million to $1,320.7 million as of September 30, 2024, compared to December 31, 2023[40] Accounts Receivable - Accounts receivable decreased from $24.7 million to $8.6 million as of September 30, 2024, compared to December 31, 2023[40] Funds Receivable and Seller Accounts - Funds receivable and seller accounts decreased from $265.4 million to $172.6 million as of September 30, 2024, compared to December 31, 2023[40] Total Liabilities - Total liabilities decreased from $3,229.1 million to $3,066.5 million as of September 30, 2024, compared to December 31, 2023[43] Long-Term Debt - Long-term debt remained relatively stable at $2,287.0 million as of September 30, 2024, compared to $2,283.8 million as of December 31, 2023[43] - The total carrying value of all Notes as of September 30, 2024, is $2,287,016 thousand with a fair value of $2,020,888 thousand[97] - The total principal amount of the Notes as of September 30, 2024, is $2,299,887 thousand with a net carrying value of $2,287,016 thousand[100] - The interest expense related to the Notes was $2.1 million for both the three months ended September 30, 2024, and September 30, 2023[106] Accumulated Deficit - Accumulated deficit increased from $(1,357.4) million to $(1,652.3) million as of September 30, 2024, compared to December 31, 2023[40] - Accumulated deficit as of September 30, 2024, increased to $1.65 billion from $1.55 billion as of June 30, 2024[50] Total Stockholders' Deficit - Total stockholders' deficit increased from $(543.7) million to $(624.3) million as of September 30, 2024, compared to December 31, 2023[40] Intangible Assets - Intangible assets decreased from $457.1 million to $443.9 million as of September 30, 2024, compared to December 31, 2023[40] - Asset impairment charges were $68.1 million in the nine months ended September 30, 2023, related to Elo7's intangible assets and property, with no charges in 2024[177] Deferred Tax Assets - Deferred tax assets increased from $137.8 million to $144.4 million as of September 30, 2024, compared to December 31, 2023[40] Revenue - Revenue for Q3 2024 increased to $662.41 million, up 4.1% from $636.30 million in Q3 2023[46] - Total revenue for the three and nine months ended September 30, 2024 was $662.4 million and $2.0 billion, respectively[144] - Total revenue for the nine months ended September 30, 2024 was $1.956 billion, compared to $1.906 billion in 2023[70] - Total revenue for Q3 2024 increased by 4.1% to $662.41 million, driven by a 3.3% increase in Marketplace revenue and a 6.2% increase in Services revenue[161] - Total revenue for the nine months ended September 30, 2024, increased by 2.6% to $1.956 billion, with Marketplace revenue up 2.3% and Services revenue up 3.4%[170] Net Income - Net income for Q3 2024 decreased to $57.37 million, down 34.7% from $87.85 million in Q3 2023[46] - Net income for the three and nine months ended September 30, 2024 was $57.4 million and $173.4 million, respectively[144] - Net income for the nine months ended September 30, 2024 was $173.375 million, compared to $224.302 million in the same period in 2023[57] Gross Profit - Gross profit for Q3 2024 rose to $476.77 million, up 6.6% from $447.48 million in Q3 2023[46] Marketing Expenses - Marketing expenses for Q3 2024 increased to $196.53 million, up 22.1% from $160.94 million in Q3 2023[46] - Marketing expenses increased by 22.1% in Q3 2024, with paid GMS accounting for 21% of overall GMS, up from 19% in Q3 2023[164] - Marketing expenses for the nine months ended September 30, 2024, increased by 14.7%, with paid GMS accounting for 21% of overall GMS, up from 20% in the same period in 2023[173] Comprehensive Income - Comprehensive income for Q3 2024 was $100.64 million, compared to $70.72 million in Q3 2023[48] - Other comprehensive income for Q3 2024 was $43.27 million, reversing a loss of $17.13 million in Q3 2023[50] Stock Repurchases - Stock repurchases in Q3 2024 totaled $156.99 million, reducing common shares by 2,744[50] - The company repurchased $464.314 million of stock during the nine months ended September 30, 2024, compared to $483.987 million in 2023[57] - The company approved a stock repurchase program authorizing up to $1 billion of its common stock, with $259.9 million remaining available for repurchase as of September 30, 2024[117] - The company approved a new stock repurchase program authorizing up to an additional $1 billion of its common stock on October 30, 2024[118] - The company repurchased 7,321 shares of common stock for a total value of $464.4 million at an average price of $63.42 per share during the nine months ended September 30, 2024[122] Stock-Based Compensation - Stock-based compensation for Q3 2024 was $74.84 million, contributing to additional paid-in capital[50] - The company granted 4,270 restricted stock units (RSUs) during the nine months ended September 30, 2024, with a total unrecognized compensation expense of $588.3 million related to unvested RSUs[126] Weighted-Average Diluted Shares Outstanding - Weighted-average diluted shares outstanding for Q3 2024 decreased to 130.75 million from 138.89 million in Q3 2023[46] Net Cash Provided by Operating Activities - Net cash provided by operating activities for the nine months ended September 30, 2024 was $437.510 million, compared to $410.408 million in 2023[57] - Net cash provided by operating activities was $437.5 million in the nine months ended September 30, 2024, driven by cash net income of $464.1 million[189] Marketplace Revenue - Marketplace revenue for the nine months ended September 30, 2024 was $1.413 billion, compared to $1.381 billion in 2023[70] Services Revenue - Services revenue for the nine months ended September 30, 2024 was $542.736 million, compared to $524.660 million in 2023[70] - Services revenue growth in Q3 2024 was driven by a 5.4% increase in on-site advertising revenue and a 20.5% increase in shipping label revenue[162] - Services revenue growth for the nine months ended September 30, 2024, was driven by a 2.7% increase in on-site advertising revenue and a 15.2% increase in shipping label revenue[171] Effective Income Tax Rate - The company's effective income tax rate for the nine months ended September 30, 2024 was 25.4%, higher than the U.S. statutory rate of 21% due to tax deficiencies from stock-based compensation and state income taxes[75] - Income tax provision increased to $59.1 million in 2024, compared to a $40.7 million benefit in 2023, driven by tax deficiencies from stock-based compensation and state/local taxes[179] Unrecognized Tax Benefits - The unrecognized tax benefits increased by $3.6 million, from $51.7 million as of December 31, 2023, to $55.3 million as of September 30, 2024[78] - The total unrecognized tax benefits that could favorably affect the effective tax rate is $52.7 million as of September 30, 2024[78] - The company estimates that $15.8 million of gross unrecognized tax benefits could potentially be reduced in the next 12 months[78] Impairment Charges - The company recorded an impairment charge of $7.9 million for property and equipment and $60.2 million for finite-lived intangible assets related to the Elo7 reporting unit[83] - The company recognized a net loss of $2.6 million on the sale of Elo7, including a $7.5 million loss from the reclassification of accumulated other comprehensive loss[87] Investments - The company's cash equivalents, short-term investments, and long-term investments primarily consist of available-for-sale debt securities, with fair value classified within Level 1 or Level 2[88] - The company's long-term investments include loan receivables measured on an amortized cost basis and third-party managed funds measured on the NAV basis[89] - The fair value of the company's investments as of September 30, 2024, was $417.8 million, with $99.3 million in cash and cash equivalents, $226.0 million in short-term investments, and $92.5 million in long-term investments[91] - The fair value of U.S. Government securities as of September 30, 2024, is $11,578 thousand with an unrealized holding loss of $16 thousand[94] - The total fair value of available-for-sale debt securities as of September 30, 2024, is $41,879 thousand with a gross unrealized loss of $7 thousand[94] - The total fair value of available-for-sale debt securities as of December 31, 2023, is $153,750 thousand with a gross unrealized loss of $264 thousand[94] - The Company's investments, excluding the Impact Investment Fund, have maturities no longer than 37 months, with an average maturity of 12 months or less[95] Credit Facility - The company entered into a $400.0 million senior secured revolving credit facility with a maturity date of March 2028, including a $60.0 million letter of credit sublimit and a $20.0 million swingline loan sublimit[110] - Borrowings under the 2023 Credit Agreement bear interest at a base rate plus a margin ranging from 0.50% to 1.25%, or an adjusted Term SOFR rate plus a margin ranging from 1.50% to 2.25%[112] - The company had no outstanding borrowings under the 2023 Credit Agreement and was in compliance with all financial covenants as of September 30, 2024[114] Workforce Reductions - The company incurred approximately $26.6 million in charges related to workforce reductions, primarily consisting of severance and employee-related benefits[130] - The company reduced its workforce by an additional 18% during the third quarter of 2024 to align with key strategic initiatives[131] - The company's liability for severance and employee-related benefits associated with restructuring and other exit costs was $3.6 million as of September 30, 2024[132] Etsy Marketplace Metrics - Etsy marketplace connected 8.5 million active sellers and 96.7 million active buyers globally as of September 30, 2024[143] - GMS for the three and nine months ended September 30, 2024 was $2.9 billion and $8.9 billion, respectively, with 46% and 45% coming from ex-U.S. transactions[143] - Etsy marketplace GMS decreased by 4.1% year-over-year to $2.5 billion in the three months ended September 30, 2024[147] - Active buyers on the Etsy marketplace declined by 0.4% year-over-year to 91.2 million as of September 30, 2024[150] - New buyer GMS declined by 12% year-over-year in the three months ended September 30, 2024[152] - GMS ex-U.S. domestic as a percentage of total GMS was 46% and 45% for the three and nine months ended September 30, 2024, respectively[159] - Currency-neutral GMS decline for Q3 2024 was 4.4% quarter-to-date and 3.5% year-to-date, with FX impacts of 0.3% and 0.2% respectively[160] Etsy Payments Platform - Etsy Payments platform processed 99% of Etsy marketplace GMS in Q3 2024, up from 93% in Q3 2023, contributing to an 8.3% increase in payments revenue[161] Cost of Revenue - Cost of revenue decreased by 1.7% in Q3 2024, primarily due to reduced refund costs and workforce reductions in 2023[163] Product Development Expenses - Product development expenses decreased by 5.9% in Q3 2024, primarily due to reduced employee compensation-related expenses[165] General and Administrative Expenses - General and administrative expenses increased to $271.2 million, up 8.2% YoY, primarily due to retroactive non-income tax expenses related to digital services tax legislation in Canada[176] Other Income - Other income, net decreased by 61.8% to $7.4 million, driven by noncash losses from exchange rate changes and lower interest and dividend income[178] Adjusted EBITDA - Adjusted EBITDA for the three and nine months ended September 30, 2024 was $183.6 million and $530.9 million, respectively[144] - Adjusted EBITDA for the nine months ended September 30, 2024, was $530.9 million, with an Adjusted EBITDA margin of 27.1%[181] Net Cash Used in Investing Activities - Net cash used in investing activities was $36.8 million in the nine months ended September 30, 2024, primarily due to $33.0 million in capital expenditures[192] Net Cash Used in Financing Activities - Net cash used in financing activities was $504.8 million in the nine months ended September 30, 2024, mainly due to $464.3 million in stock repurchases[194] Liquidity and Capital Resources - The company believes its existing cash, investments, and cash flows from operations will be sufficient to meet operating cash needs for at least the next 12 months[186]