Etsy(ETSY) - 2024 Q4 - Annual Results

Fourth Quarter and Full Year 2024 Results Performance Highlights In Q4 2024, Etsy achieved its highest-ever quarterly revenue of $852.2 million, a 1.2% YoY increase, despite a 6.8% decline in consolidated GMS to $3.7 billion, while net income saw a significant 56.0% YoY rise to $129.9 million, demonstrating strong profitability and cash flow that enabled the repurchase of 4.9 million shares for $260 million Q4 2024 Key Performance Metrics (in millions) | Metric | Value | YoY Change | | :--- | :--- | :--- | | Consolidated GMS | $3.7 billion | -6.8% | | Etsy Marketplace GMS | $3.3 billion | -8.6% | | Consolidated Revenue | $852.2 million | +1.2% | | Consolidated Net Income | $129.9 million | +56.0% | | Diluted Net Income per Share | $1.03 | - | | Consolidated non-GAAP Adj. EBITDA | $250.6 million | - | | Active Buyers | 89.6 million | -2.6% | | Habitual Buyers | 6.4 million | -9.5% | - Revenue growth was primarily driven by Services revenue, with Etsy Ads being the main contributor due to improved bidding algorithms[4] - The company ended the year with $1.2 billion in cash and investments and repurchased $260 million of its common stock in Q4[4] - Depop's GMS reached its highest level since its acquisition in 2021, with full-year GMS growth of 31.6%, benefiting from US share gains and re-commerce trends[4] Financial Summary For the full year 2024, Etsy's consolidated GMS was $12.6 billion, a 4.4% decrease YoY, while revenue grew 2.2% to $2.8 billion, and net income slightly decreased by 1.4% to $303.3 million, though Adjusted EBITDA increased by 3.6% to $781.5 million, with the margin expanding by 40 basis points to 27.8% Full Year 2024 vs 2023 Financial Results (in thousands) | Metric | FY 2024 | FY 2023 | YoY Change | | :--- | :--- | :--- | :--- | | GMS | $12,586,952 | $13,161,196 | -4.4% | | Revenue | $2,808,332 | $2,748,377 | +2.2% | | Gross Profit | $2,033,778 | $1,919,702 | +5.9% | | Net Income | $303,281 | $307,568 | -1.4% | | Adjusted EBITDA | $781,538 | $754,311 | +3.6% | Q4 2024 vs Q4 2023 Financial Results (in thousands) | Metric | Q4 2024 | Q4 2023 | YoY Change | | :--- | :--- | :--- | :--- | | GMS | $3,735,942 | $4,007,404 | -6.8% | | Revenue | $852,162 | $842,322 | +1.2% | | Gross Profit | $634,471 | $586,565 | +8.2% | | Net Income | $129,906 | $83,266 | +56.0% | | Adjusted EBITDA | $250,641 | $235,514 | +6.4% | Business & Operating Highlights Throughout 2024, Etsy focused on enhancing the user experience by improving search algorithms, revamping the homepage, and launching a beta loyalty program, with Q4 initiatives including using machine learning to shorten estimated delivery dates, expanding marketing campaigns, and improving subsidiary platforms like Depop and Reverb Etsy Marketplace - Full Year 2024 Initiatives - Expanded merchandise diversity in search results by incorporating high-quality listing indicators into algorithms[7] - Revamped the homepage to focus on inspiration and deepened investment in the Etsy app, which now accounts for 42% of 2024 GMS[7] - Introduced 'Etsy Insider,' a new beta loyalty program to drive purchase frequency, and implemented a shop set-up fee to reduce fraudulent onboarding[7] Fourth Quarter 2024 Initiatives - Product: Implemented machine learning for estimated delivery dates, making the average EDD over two days sooner for US domestic orders during the peak holiday season[11] - Marketing: Ran full-funnel marketing campaigns, curated 'on sale' shopping experiences with Etsy-funded promotions, and expanded gift card offerings[11] - Support: Expanded the use of conversational AI in support channels to significantly scale availability for the community[11] Subsidiary Marketplace Highlights (Depop & Reverb) - Depop: New listing growth accelerated in Q4 following the removal of seller fees and introduction of buyer fees in the US and UK[8] - Reverb: Outlet & Exclusive categories showed strong performance with double-digit percentage YoY GMS growth during the holiday season[11] Business Outlook First Quarter 2025 Financial Guidance For the first quarter of 2025, Etsy anticipates a consolidated GMS decline similar to the rate seen in Q4 2024, projecting a take rate of approximately 23% and an Adjusted EBITDA margin between 25% and 26% Q1 2025 Guidance | Metric | Guidance | | :--- | :--- | | GMS | Decline rate similar to Q4 2024's YoY performance (-6.8%) | | Take Rate | ~23% | | Adjusted EBITDA Margin | ~25-26% | 2025 Strategic Focus In 2025, Etsy is moving with urgency to return to GMS growth by increasing buyer engagement and sales, with a core strategy to infuse 'Discovery' more deeply into the marketplace to create more personalized and joyful shopping experiences, while management remains committed to maintaining a strong bottom line and healthy free cash flow - The company is focused on increasing buyer engagement and driving more sales to return to GMS growth[9] - A key strategy is to infuse 'Discovery' more deeply into the marketplace to create more personalized and resonant user experiences[9] - Management believes several factors should position the Etsy marketplace for improved GMS performance beyond Q1 2025[9] Financial Statements and Non-GAAP Reconciliations Condensed Consolidated Balance Sheets As of December 31, 2024, Etsy reported total assets of $2.42 billion, down from $2.69 billion in the prior year, with total liabilities standing at $3.18 billion, resulting in a total stockholders' deficit of $758.9 million, and cash and cash equivalents at $811.2 million Key Balance Sheet Items (in thousands) | As of December 31, | 2024 | 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $811,178 | $914,323 | | Total current assets | $1,327,691 | $1,570,446 | | Total assets | $2,417,782 | $2,685,400 | | Total current liabilities | $665,113 | $710,781 | | Long-term debt, net | $2,288,083 | $2,283,817 | | Total liabilities | $3,176,648 | $3,229,115 | | Total stockholders' deficit | ($758,866) | ($543,715) | Condensed Consolidated Statements of Operations For the full year 2024, Etsy generated $2.81 billion in revenue and $2.03 billion in gross profit, with income from operations at $380.2 million and net income at $303.3 million, resulting in diluted net income per share of $2.35, up from $2.24 in 2023 Key Statement of Operations Items - Full Year (in thousands) | Year Ended December 31, | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | $2,808,332 | $2,748,377 | | Gross profit | $2,033,778 | $1,919,702 | | Income from operations | $380,208 | $279,841 | | Net income | $303,281 | $307,568 | | Diluted EPS | $2.35 | $2.24 | Condensed Consolidated Statements of Cash Flows For the full year 2024, net cash provided by operating activities was $752.5 million, while the company used $53.1 million in investing activities and $787.2 million in financing activities, primarily driven by $723.9 million in stock repurchases, resulting in a net decrease in cash of $103.1 million Key Cash Flow Items - Full Year (in thousands) | Year Ended December 31, | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $752,469 | $705,513 | | Net cash used in investing activities | ($53,101) | ($73,307) | | Net cash used in financing activities | ($787,168) | ($656,533) | | Net decrease in cash | ($103,145) | ($12,296) | Non-GAAP Reconciliations For the full year 2024, Etsy reconciled a net income of $303.3 million to a non-GAAP Adjusted EBITDA of $781.5 million, resulting in an Adjusted EBITDA margin of 27.8%, with the currency-neutral GMS decline for FY 2024 being 4.5%, slightly worse than the reported 4.4% decline, indicating a minor positive impact from foreign exchange rates Reconciliation of Net Income to Adjusted EBITDA - Full Year (in thousands) | Year Ended December 31, | 2024 | 2023 | | :--- | :--- | :--- | | Net Income | $303,281 | $307,568 | | Stock-based compensation | $282,847 | $284,558 | | Depreciation & amortization | $108,074 | $91,323 | | Adjusted EBITDA | $781,538 | $754,311 | | Adjusted EBITDA margin | 27.8% | 27.4% | Currency-Neutral GMS Growth | Period Ended Dec 31, 2024 | As Reported | Currency Neutral | FX Impact | | :--- | :--- | :--- | :--- | | Q4 2024 | (6.8)% | (6.9)% | 0.1% | | FY 2024 | (4.4)% | (4.5)% | 0.1% | Cautionary Statement Regarding Forward-Looking Statements - This section warns that statements in the press release, particularly financial guidance and strategic outlooks, are not guarantees of future performance and involve substantial risks and uncertainties[18][19] - Key risks cited include fluctuations in operating results, failure to meet guidance, ability to retain buyers and sellers, cybersecurity incidents, competition, and evolving legal and regulatory requirements[19]