Etsy(US:ETSY)2025-10-29 12:16Financial Performance - Revenue for Q3 2025 reached $678,026,000, a 2.5% increase from $662,410,000 in Q3 2024[24]. - Gross profit for Q3 2025 was $483,381,000, compared to $476,770,000 in Q3 2024, reflecting a slight increase[24]. - Net income for Q3 2025 was $75,503,000, up 31.6% from $57,366,000 in Q3 2024[26]. - Basic net income per share increased to $0.76 in Q3 2025 from $0.50 in Q3 2024, representing a 52% rise[24]. - Total operating expenses for Q3 2025 were $400,670,000, a 2.2% increase from $389,953,000 in Q3 2024[24]. - Marketing expenses rose to $207,841,000 in Q3 2025, up from $196,526,000 in Q3 2024, indicating a 5.7% increase[24]. - Comprehensive income for Q3 2025 was $69,333,000, down from $100,636,000 in Q3 2024[26]. - For the nine months ended September 30, 2025, the company reported a net income of $52.247 million, a decrease from $173.375 million in the same period of 2024[32]. - Revenue for the three months ended September 30, 2025, was $678.0 million, compared to $662.4 million for the same period in 2024, indicating a growth of 2.6%[64]. - Marketplace revenue for the nine months ended September 30, 2025, was $1.394722 billion, slightly down from $1.413434 billion in 2024, representing a decrease of 1.4%[46]. - Services revenue increased to $607.143 million for the nine months ended September 30, 2025, up from $542.736 million in 2024, marking a growth of 11.9%[46]. Assets and Liabilities - As of September 30, 2025, total assets increased to $2,652,811,000 from $2,417,782,000 as of December 31, 2024, representing a growth of approximately 9.7%[23]. - Cash and cash equivalents rose to $1,248,940,000, up from $811,178,000, indicating a significant increase of about 54%[23]. - Total current liabilities decreased to $565,072,000 from $665,113,000, reflecting a reduction of approximately 15%[23]. - Long-term debt increased to $2,980,605,000 from $2,288,083,000, marking an increase of about 30.3%[23]. - The accumulated deficit grew to $(2,380,707,000) from $(1,784,037,000), indicating a worsening of approximately 33.4%[23]. - The company reported a decrease in accounts payable from $25,979,000 to $9,215,000, a reduction of about 64.6%[23]. - Goodwill decreased significantly from $137,089,000 to $38,060,000, a decline of approximately 72.2%[23]. - As of September 30, 2025, the total tangible long-lived assets amounted to $158,408,000, a decrease from $168,698,000 as of December 31, 2024[65]. - The total accrued expenses as of September 30, 2025, were $309,348,000, down from $374,947,000 as of December 31, 2024[73]. Cash Flow and Investments - Net cash provided by operating activities for the nine months ended September 30, 2025, was $376.290 million, down from $437.510 million in 2024, a decrease of 13.9%[32]. - The company repurchased stock totaling $643.670 million during the nine months ended September 30, 2025, compared to $464.314 million in 2024, an increase of 38.7%[32]. - Cash paid for income taxes, net of refunds, was $47.496 million for the nine months ended September 30, 2025, down from $58.838 million in 2024[33]. - The company's cash equivalents and investments primarily consist of available-for-sale debt securities, with a fair value of $1,015,899,000 as of September 30, 2025[68]. - The company's total investments in short-term and long-term instruments included $663,105,000 in money market funds as of September 30, 2025[68]. Stock and Compensation - The Company repurchased approximately 2.5 million shares of its common stock for $150.0 million in June 2025 under the October 2024 Stock Repurchase Program[100]. - The remaining amount available for repurchase under the October 2024 Stock Repurchase Program as of September 30, 2025, is $356.5 million[96]. - The average price paid per share for repurchases in the three months ended September 30, 2025, was $58.28, with a cumulative total of 12,132 thousand shares repurchased[99]. - The total unrecognized compensation expense related to unvested RSUs is $461.4 million, to be recognized over an estimated weighted-average amortization period of 2.35 years[104]. - Stock-based compensation expense for the three months ended September 30, 2025, totaled $60.772 million, compared to $69.292 million for the same period in 2024, reflecting a decrease of approximately 7.3%[105]. - For the nine months ended September 30, 2025, stock-based compensation expense was $181.390 million, down from $214.692 million in 2024, indicating a decrease of about 15.5%[105]. - The Company granted 5,090 thousand RSUs during the nine months ended September 30, 2025, with a weighted-average grant date fair value of $50.09[104]. Leadership and Strategy - The company has plans to invest in artificial intelligence as part of its growth strategies, aiming to enhance product offerings and market reach[8]. - The company emphasizes the importance of maintaining trustworthy marketplaces to attract and retain active buyers and sellers, which is critical for financial performance[18]. - Future growth strategies include expanding beyond top geographies and addressing barriers to international trade, which may impact overall business growth[18]. - The leadership transition announced on October 29, 2025, will see Josh Silverman step down as CEO effective January 1, 2026, with Kruti Patel Goyal appointed as the new CEO[106]. - The Company adjusted the mix of long-term compensation for certain employees, granting LTC awards to better align employee interests with stockholder goals[102]. Tax and Regulatory - The effective income tax rate for the nine months ended September 30, 2025, was 52.5%, impacted by non-deductible goodwill impairment and other factors[49]. - The company expects certain provisions of the One Big Beautiful Bill Act to favorably change the timing of cash tax payments but does not anticipate a material impact on the provision for income taxes[54]. - The amount of unrecognized tax benefits increased by $2.6 million from $56.8 million as of December 31, 2024, to $59.4 million as of September 30, 2025[52]. - For the nine months ended September 30, 2025, the company recorded interest and penalties of $4.9 million, increasing the cumulative balance from $6.2 million as of December 31, 2024, to $11.1 million as of September 30, 2025[53]. Debt and Financing - The carrying value of the 2025 Notes was $689,323,000, with an estimated fair value of $765,240,000 as of September 30, 2025[72]. - The Company issued $700.0 million of 2025 Notes in June 2025, with net proceeds of $689.5 million after deducting expenses[75]. - Interest expense related to the Notes was $4.4 million for the three months ended September 30, 2025, compared to $2.1 million for the same period in 2024[85]. - The 2023 Credit Agreement provides a $400.0 million senior secured revolving credit facility, maturing in March 2028, with a letter of credit sublimit of $60.0 million[89]. - As of September 30, 2025, the Company had no outstanding borrowings under the 2023 Credit Agreement and was in compliance with all financial covenants[91].