Group 1 - The US and China have agreed to suspend the implementation of a 24% tariff on each other's goods for 90 days, while retaining a 10% tariff [3][4] - Chery Automobile's marketing executive criticized Geely's new car, leading to disciplinary action against the involved personnel [3][4] - Contemporary Amperex Technology Co., Ltd. (CATL) announced a donation of 4.05 million shares, valued at over 1 billion yuan, to Fudan University [6] Group 2 - Apple has not confirmed any price reductions for the iPhone 16 series despite media reports suggesting significant price cuts [8][9] - A consumer reported finding a foreign object in a rice dumpling from Laiyifen, prompting the company to initiate a full investigation and product recall [9] - Toyota denied rumors of acquiring Neta Auto, stating that they have no knowledge of such discussions [11] Group 3 - Nissans plans to lay off an additional 10,000 employees, bringing the total layoffs to approximately 20,000, which is about 15% of its workforce [22] - Tesla has applied for the "TESLA OPTIMUS" trademark as it prepares for the production of its humanoid robot [22] - SoftBank's $100 billion investment plan in AI infrastructure has been delayed due to tariff concerns and economic risks [23] Group 4 - Kimi announced a collaboration with Xiaohongshu to enhance AI capabilities, allowing users to generate notes directly from conversations [23] - Over 250 CEOs in the US have called for AI and computer science to be included in K-12 education as a core curriculum [23] - Meituan led a multi-million A round investment in Variable Robotics, which aims to accelerate the development of intelligent robotics [24][25]

Core Viewpoint - Shopify and Etsy are positioned as strong players in the e-commerce industry, with both companies expected to benefit from significant market growth projected to reach $21.22 trillion by 2030, growing at a compound annual growth rate of 15.8% from 2025 to 2030 [2] Group 1: Shopify (SHOP) - Shopify's Merchant Solutions generated $1.74 billion in revenue in Q1 2025, accounting for 73.7% of total revenues, driven by user-friendly tools like Shop Pay and Shopify Pay Instalments [3][5] - Shop Pay processed $22 billion in Gross Merchandise Value in Q1 2025, reflecting a 57% year-over-year increase, with adoption by major brands enhancing Shopify's portfolio [4] - Shopify is investing in AI-driven tools to improve customer engagement and streamline operations, with partnerships including TikTok, Amazon, and PayPal expected to expand its merchant base [5] Group 2: Etsy (ETSY) - Etsy is leveraging AI for enhanced personalization and has seen strong mobile app performance, with the app accounting for 44.5% of total Gross Merchandise Sales in Q1 2025 [6][7] - The introduction of an AI-powered discovery feature in April 2025 allows shoppers to browse curated collections, enhancing the shopping experience [8] - Etsy's subsidiary, Depop, is contributing significantly to growth, particularly in the U.S. market, with strong performance in gifting categories during seasonal events [10] Group 3: Price Performance and Valuation - Year-to-date, Shopify and Etsy shares have declined by 13.7% and 11.3%, respectively, due to a challenging macroeconomic environment [12] - Shopify shares are currently overvalued with a Value Score of F, while Etsy shares are considered cheap with a Value Score of B, trading at 10.34X and 1.75X forward Price/Sales, respectively [15] - The Zacks Consensus Estimate for Shopify's 2025 earnings is $1.44 per share, indicating a 10.77% year-over-year increase, while Etsy's estimate is $1.77 per share, reflecting a 24.68% year-over-year decline [17]

The logo of Shopify is seen outside its headquarters in Ottawa, Ontario, Canada, September 28, 2018.Shares of Shopify dipped more than 5% in early trading on Thursday after the company posted mixed first-quarter results and issued soft guidance for the current period.Here's how the company did:Revenue: $2.36 billion vs. $2.33 billion expected by LSEGEarnings per share: 39 cents adjusted vs. 26 cents expected by LSEGFor the second quarter, Shopify said it expects gross profit to grow at a high-teens percenta ...

Core Insights - The secondhand industry is facing challenges due to President Trump's tariffs, but companies like eBay and Etsy show resilience [1][2] Company Performance - eBay and Etsy reported Q1 2025 earnings, addressing tariff impacts; eBay's CEO noted that only about 5% of their gross merchandise value (GMV) comes from China, while Etsy's CFO stated that just over 1% of gross merchandise sales (GMS) are from U.S. imports from China [2][3] - Etsy experienced a 3.4% year-over-year decline in active buyers, totaling 88.5 million, and an 8.9% decline in GMS to $2.3 billion [7][8] - eBay reported a GMV growth to $18.8 billion and a revenue increase of over 1% to $2.58 billion, benefiting from price-conscious shoppers opting for used and refurbished goods [10][11] Market Dynamics - Sellers on eBay and Etsy primarily source products locally, which provides a competitive advantage over import-reliant rivals like Temu and Shein [2][6] - Etsy's focus on handcrafted and vintage goods may make it more vulnerable to economic uncertainty, as consumer spending is hesitant [7] - eBay has seen increased spending from customers looking to avoid tariffs, indicating a positive trend in consumer behavior [10][11] Strategic Positioning - Etsy's ownership of Depop, a secondhand fashion platform, continues to perform well despite economic challenges, achieving record-high GMS since its acquisition in 2021 [8] - eBay's strategy of focusing on used and refurbished goods has positioned it favorably in the current market environment [10]

Group 1: Impact of Tariff Changes - The cancellation of the de minimis tax exemption for low-value packages from China has resulted in tariffs as high as 145%, leading many retailers to halt shipments to the U.S. market [1][3][5] - Retailers are increasing prices to cope with the new tariffs, which may exacerbate inflationary pressures on U.S. consumers already facing high living costs [1][4][5] - The effective tariff rate in the U.S. is now close to 23%, the highest in over a century, significantly impacting consumer and business confidence [4][5] Group 2: Retailer Responses - Major retailers, including Amazon, have reported that the new tariffs will have a significant negative impact on their earnings, with Amazon's profit guidance falling short of analyst expectations by as much as 27% [2][9][10] - Smaller retailers are withdrawing from the U.S. market due to the prohibitive costs associated with the new tariffs, which are expected to lead to price increases for essential goods [3][7] - Companies like Space NK and Understance have already suspended U.S. shipments to avoid unexpected costs due to the new tariff regime [3][7] Group 3: Economic Outlook - Analysts warn that the combination of high tariffs and ongoing inflation could lead to a significant downturn in consumer demand, potentially pushing the U.S. economy into recession [5][6] - The impact of tariffs is expected to ripple through various sectors, including e-commerce and advertising, as companies like Snap Inc. have indicated that they are facing macroeconomic headwinds due to these changes [6][9] - The overall economic environment is becoming increasingly challenging for retailers reliant on Chinese imports, with many predicting a slowdown in global economic growth [5][6]

Core Viewpoint - Etsy reported quarterly earnings of $0.46 per share, missing the Zacks Consensus Estimate of $0.50 per share, representing an earnings surprise of -8% [1]. Financial Performance - The company posted revenues of $651.18 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.33% and showing a year-over-year increase from $645.95 million [2]. - Over the last four quarters, Etsy has surpassed consensus revenue estimates three times [2]. Stock Performance - Etsy shares have declined approximately 12.8% since the beginning of the year, compared to a decline of -5.5% for the S&P 500 [3]. - The current consensus EPS estimate for the upcoming quarter is $0.52 on revenues of $638.28 million, and for the current fiscal year, it is $2.60 on revenues of $2.77 billion [7]. Industry Outlook - The Internet - Commerce industry, to which Etsy belongs, is currently ranked in the top 25% of over 250 Zacks industries, indicating a favorable outlook [8]. - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Etsy's stock performance [5]. Future Expectations - The estimate revisions trend for Etsy is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6]. - The upcoming earnings call will be crucial for assessing the sustainability of the stock's price movement based on management's commentary [3].

Financial Performance - Consolidated GMS was $2.8 billion, a decrease of 6.5% year-over-year, or 5.7% on a currency neutral basis[7] - Etsy marketplace GMS was $2.3 billion, down 8.9% year-over-year, or 8.1% on a currency neutral basis[7] - Consolidated revenue reached $651 million, up 0.8% year-over-year[7] - Consolidated Adjusted EBITDA was $171 million, with a 26.3% Adjusted EBITDA margin[7] - Take rate expanded by 170 bps year-over-year, driven by Etsy & Depop Ads and payments expansion[42] - Free cash flow was $35.3 million in Q1 2025[54] User Metrics - Active buyers on the Etsy marketplace totaled 88.5 million, a decrease of 3.4% year-over-year[50] - New buyers numbered 4.8 million, down 15.4% year-over-year[50] - Reactivated buyers increased by 2.1% year-over-year, reaching 6.5 million[50] Strategic Initiatives - App GMS achieved its highest-ever percentage share of total GMS at 44.5%, accelerating at the fastest pace in a year[18] - The company is pulling in over ⅓ more data than from Search alone, leading to a 16.4% increase in buyers recognized[22] - Paid social spend grew by 46% year-over-year, now representing 23% of Performance Marketing Spend, up from 19% last year[48]

Financial Data and Key Metrics Changes - In Q1 2025, consolidated GMS was $2.8 billion, down approximately 6.5% year over year, with Etsy Marketplace GMS down 8.9% [26][25] - Consolidated revenue increased by approximately 1% year over year to $651 million, despite the GMS decline [26][27] - Adjusted EBITDA was $171 million for Q1, representing a 26.3% margin, up 30 basis points year over year [27][28] - Consolidated take rate improved to 23.3%, an increase of 170 basis points over the 21.6% take rate reported in the same period last year [28] Business Line Data and Key Metrics Changes - Etsy Marketplace GMS decreased by 8.9%, while Depop continued to deliver strong growth, benefiting consolidated results [26][27] - Services revenue grew 7.7% year over year, driven by strong growth in on-site ads revenue at both Etsy and Depop [27] - The number of reactivated buyers increased by over 6 million in Q1, indicating progress in buyer engagement strategies [45] Market Data and Key Metrics Changes - US buyer GMS represented about 75% of first quarter Etsy Marketplace GMS, with both US and non-US buyer GMS performing similarly to Q4 of the previous year [30] - Gifting GMS outperformed non-gifting GMS during the quarter, supported by product and marketing efforts [31] Company Strategy and Development Direction - The company is focused on reigniting core Etsy marketplace growth through a balanced portfolio of product investments aimed at improving GMS and customer experience [7][20] - There is an emphasis on enhancing personalization and leveraging AI to improve buyer engagement and frequency [10][12] - The company is adapting to macroeconomic challenges while maintaining a strong financial foundation and focusing on unique seller offerings [5][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic backdrop but expressed confidence in the company's ability to improve growth through product and marketing strategies [44][46] - The outlook for Q2 anticipates a decline in consolidated GMS similar to Q1, with expectations for improved performance as product and marketing strategies take effect [37][38] Other Important Information - The company announced the sale of Reverb for $105 million, which will allow for a greater focus on driving growth for Etsy and Depop [25][19] - The company has established a task force to address the impacts of global tariff regulations on its operations [17][34] Q&A Session Summary Question: Can you provide an update on the full year outlook and the second quarter EBITDA margin guide? - Management indicated that the macroeconomic backdrop remains challenging, but they are encouraged by product and marketing improvements that could drive growth throughout the year [44][46] Question: What is next on the app product roadmap? - The company is focused on increasing the app's share of GMS, which reached 44.5% in Q1, and is working on enhancing personalized browsing experiences [53][55] Question: Is there concern that the decline in active sellers is driving the decline in active buyers? - Management clarified that the decline in active sellers is intentional due to the introduction of a new shop setup fee, which has led to a healthier seller base [62][63] Question: Can you discuss the take rate guidance for Q2? - Management explained that the take rate is expected to remain flat due to lapping previous price-related increments that had benefited the take rate [74] Question: What are the gross margin headwinds from free shipping and machine learning costs? - Management acknowledged that higher processing costs and investments in machine learning and search development could create some gross margin headwinds, but these are necessary for product experience [79][80]

Financial Data and Key Metrics Changes - In Q1 2025, consolidated GMS was $2.8 billion, down approximately 6.5% year over year, with FX representing an 80 basis point headwind [26] - Consolidated revenue increased by approximately 1% year over year to $651 million, despite a decline in GMS [26] - Adjusted EBITDA was $171 million for Q1, representing a 26.3% margin, up 30 basis points year over year [27] - Consolidated take rate improved to 23.3%, an increase of 170 basis points over the 21.6% take rate reported in the same period last year [28] Business Line Data and Key Metrics Changes - Etsy Marketplace GMS was down 8.9% year over year, while Depop continued to deliver strong growth in buyers, sellers, and GMS [26][30] - Marketplace revenue decreased 1.8% year over year, reflecting the decline in GMS, partially offset by increases in payments revenue [27] - Services revenue grew 7.7% year over year, with strong growth in on-site ads revenue at both Etsy and Depop [27] Market Data and Key Metrics Changes - US buyer GMS represented about 75% of first quarter Etsy Marketplace GMS, with both US and non-US buyer GMS performing similarly to Q4 of last year [30] - Gifting GMS outperformed non-gifting GMS during the quarter, benefiting from product and marketing efforts [30] Company Strategy and Development Direction - The company is focused on reigniting core Etsy marketplace growth through a balanced portfolio of product investments aimed at improving GMS and customer experience [6][19] - There is an emphasis on enhancing the mobile app experience, with the app reaching an all-time high of 44.5% of total Etsy Marketplace GMS [9] - The company is leveraging AI and machine learning to create personalized shopping experiences and improve customer engagement [10][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic backdrop but expressed confidence in the company's ability to adapt and improve growth through product and marketing strategies [44][45] - The outlook for Q2 anticipates a decline in consolidated GMS similar to Q1, but management remains optimistic about future growth driven by ongoing product and marketing initiatives [36][45] Other Important Information - The company announced the sale of Reverb for $105 million, which is expected to close in the coming months [24] - A new shop setup fee of $29 for new sellers was introduced, which management believes will lead to a healthier seller environment [61] Q&A Session Summary Question: Update on full year outlook and second quarter EBITDA margin guidance - Management indicated that the macroeconomic backdrop remains challenging, but they are encouraged by product and marketing improvements that could drive growth throughout the year [44][45] Question: Next steps for the app product roadmap - The app is expected to continue growing as a percentage of GMS, with ongoing efforts to enhance the browsing experience and personalization [52][54] Question: Concerns about the decline in active sellers impacting active buyers - Management clarified that the decline in active sellers is intentional and aimed at improving the quality of sellers on the platform, and they do not see a direct correlation with active buyer decline [61][62] Question: Take rate guidance for Q2 - Management explained that the take rate is expected to remain flat due to lapping previous price-related increments and improvements in Etsy Ads [70][71] Question: Gross margin headwinds from free shipping and ML costs - Management acknowledged that higher processing costs and machine learning expenses could create some gross margin headwinds, but they are necessary for enhancing the product experience [75][76] Question: Opportunities to leverage domestic sourcing amid rising prices - Management is focusing on promoting domestic sellers and enhancing the value proposition of Etsy in light of potential price increases from competitors [90]

[Part I - Financial Information](index=6&type=section&id=Part%20I%20-%20Financial%20Information) This section details the company's unaudited condensed consolidated financial statements, accompanying notes, and management's discussion and analysis of financial performance and condition [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, highlighting a slight revenue increase to **$651.2 million** but a net loss of **$52.1 million** due to a **$101.7 million** goodwill impairment charge Consolidated Statement of Operations Highlights (Q1 2025 vs Q1 2024) | Metric | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :--- | :--- | :--- | | **Revenue** | **$651.2** | **$646.0** | | **Gross Profit** | **$459.1** | **$458.8** | | **Asset Impairment Charge** | **$101.7** | **$0** | | **(Loss) Income from Operations** | **$(22.3)** | **$68.1** | | **Net (Loss) Income** | **$(52.1)** | **$63.0** | | **Diluted EPS** | **$(0.49)** | **$0.48** | Consolidated Balance Sheet Highlights (As of March 31, 2025 vs Dec 31, 2024) | Metric | As of March 31, 2025 (in millions) | As of December 31, 2024 (in millions) | | :--- | :--- | :--- | | **Total Current Assets** | **$1,110.0** | **$1,327.7** | | **Goodwill** | **$36.2** | **$137.1** | | **Total Assets** | **$2,120.8** | **$2,417.8** | | **Total Liabilities** | **$3,031.1** | **$3,176.6** | | **Total Stockholders' Deficit** | **$(910.3)** | **$(758.9)** | Consolidated Cash Flow Highlights (Q1 2025 vs Q1 2024) | Metric | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | **$49.2** | **$69.0** | | **Net Cash used in Investing Activities** | **$(20.7)** | **$(25.1)** | | **Net Cash used in Financing Activities** | **$(204.8)** | **$(163.0)** | | **Net Decrease in Cash** | **$(162.0)** | **$(125.5)** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies and specific financial items, including a **$101.7 million** goodwill impairment for Reverb and the formal agreement to sell Reverb for **$105.0 million** - On April 21, 2025, the company entered into an agreement to sell Reverb, its musical instrument marketplace, for a purchase price of **$105.0 million** in cash. The transaction is expected to close in the coming months[95](index=95&type=chunk) - A non-cash goodwill impairment charge of **$101.7 million** was recorded in Q1 2025 to write off goodwill in full for the Reverb reporting unit. This was triggered by the determination that a sale of the business was more likely than not[51](index=51&type=chunk)[53](index=53&type=chunk)[96](index=96&type=chunk) Revenue Disaggregation | Revenue Type | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Marketplace revenue | **$458.5** | **$467.0** | | Services revenue | **$192.7** | **$179.0** | | **Total Revenue** | **$651.2** | **$646.0** | - In Q1 2025, the company repurchased **3.717 million** shares of its common stock at an average price of **$50.90** per share. As of March 31, 2025, **$811.0 million** remained available for repurchase under the October 2024 program[84](index=84&type=chunk)[88](index=88&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and cash flows, including key trends and factors impacting performance [Overview](index=24&type=section&id=MD%26A%20Overview) Etsy operates two-sided online marketplaces, with its primary focus on the Etsy marketplace for unique goods, alongside Depop for fashion resale, and has agreed to sell Reverb for **$105.0 million** - Etsy's strategy is focused on building a sustainable competitive advantage ('Right to Win'), growing the Etsy marketplace in core geographies, and leveraging its marketplace playbook at Etsy and Depop[103](index=103&type=chunk) - The company entered into an agreement on April 21, 2025, to sell its musical instrument marketplace, Reverb, for **$105.0 million** in cash[107](index=107&type=chunk) [Key Operating and Financial Metrics](index=25&type=section&id=MD%26A%20Key%20Operating%20and%20Financial%20Metrics) Consolidated Gross Merchandise Sales (GMS) decreased by **6.5%** year-over-year to **$2.8 billion**, primarily due to a decline in the Etsy marketplace GMS amid pressure on consumer discretionary spending, while total revenue grew **0.8%** to **$651.2 million** Key Metrics (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | GMS | **$2,793.3** | **$2,986.5** | **(6.5)%** | | Revenue | **$651.2** | **$646.0** | **0.8%** | | Revenue Take Rate | **23.3%** | **21.6%** | **+170 bps** | | Adjusted EBITDA | **$171.1** | **$167.9** | **1.9%** | | Active Sellers | **8.1** | **9.1** | **(11.3)%** | | Active Buyers | **94.8** | **96.4** | **(1.7)%** | - The decrease in GMS was primarily driven by the Etsy marketplace, reflecting continued pressure on consumer discretionary spending, a competitive retail environment, and changes in product development strategy that prioritized foundational investments[111](index=111&type=chunk) - Currency-neutral GMS declined by **5.7%** in Q1 2025, indicating that foreign exchange rates had a negative impact of **0.8%** on reported GMS[117](index=117&type=chunk) [Results of Operations](index=27&type=section&id=MD%26A%20Results%20of%20Operations) Total revenue increased by **0.8%** to **$651.2 million**, driven by Services revenue growth offsetting a Marketplace revenue decline, while operating expenses rose **23.2%** primarily due to a **$101.7 million** goodwill impairment charge for Reverb - Marketplace revenue decreased **1.8%** due to lower transaction fee revenue from a decline in Etsy marketplace GMS, partially offset by a new seller set-up fee and increased Depop payments revenue[118](index=118&type=chunk) - Services revenue grew **7.7%**, primarily driven by a **6.2%** increase in on-site advertising revenue due to a higher average price per click on Etsy Ads[119](index=119&type=chunk) - Marketing expenses decreased **1.5%** as the company reduced brand marketing spend (e.g., no prime time big game TV ad) and increased investment in performance marketing. Paid GMS grew to **23%** of overall GMS from **20%** YoY[121](index=121&type=chunk) - A **$101.7 million** asset impairment charge was recorded related to the goodwill of Reverb, significantly impacting operating income[124](index=124&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=MD%26A%20Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with **$867.7 million** in cash, cash equivalents, and short-term investments, plus an undrawn **$400.0 million** revolving credit facility, despite increased cash used in financing activities due to higher stock repurchases - As of March 31, 2025, the company had **$867.7 million** in cash, cash equivalents, and short-term investments, and access to a **$400.0 million** senior secured revolving credit facility[130](index=130&type=chunk) Historical Cash Flows | Activity | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Operating Activities | **$49.2** | **$69.0** | | Investing Activities | **$(20.7)** | **$(25.1)** | | Financing Activities | **$(204.8)** | **$(163.0)** | - The increase in cash used for financing activities was primarily due to an increase in stock repurchases during the quarter[139](index=139&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Management states that there have been no material changes to the company's quantitative and qualitative disclosures about market risks during the first quarter of 2025 compared to those disclosed in the 2024 Annual Report on Form 10-K - There were no material changes to market risk disclosures during the three months ended March 31, 2025[143](index=143&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's management, including the CEO and CFO, evaluated and concluded that the disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[144](index=144&type=chunk) - No material changes to internal controls over financial reporting were identified during the first quarter of 2025[146](index=146&type=chunk) [Part II - Other Information](index=33&type=section&id=Part%20II%20-%20Other%20Information) This section covers legal proceedings, risk factors, equity security sales, and other disclosures relevant to the company's operations and financial health [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various claims and litigation in the ordinary course of business, with management believing the outcomes will not have a material adverse effect on its financial condition or operations - The company is regularly involved in various claims and litigation but does not currently expect the outcomes to have a material adverse effect on its business[83](index=83&type=chunk)[148](index=148&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) This section details the significant risks that could materially affect the company's business, financial condition, and operating results, encompassing operational, strategic, regulatory, and other investment-related factors [Operational Risks](index=33&type=section&id=Risk%20Factors%20-%20Operational%20Risks) Operational risks include fluctuating quarterly results due to macroeconomic conditions, the critical need to attract and retain buyers and sellers, reliance on third-party technology, and vulnerability to cyber-attacks and data breaches - Quarterly operating results may fluctuate due to factors beyond control, such as economic downturns, inflation, and geopolitical events, which can cause significant stock price fluctuations[149](index=149&type=chunk)[150](index=150&type=chunk) - The business depends on attracting and retaining active buyers and sellers; failure to do so could harm financial performance, especially as GMS is concentrated in the most active users[160](index=160&type=chunk)[164](index=164&type=chunk) - The company is vulnerable to technology disruptions, cyber-attacks, and security breaches, which could lead to service interruptions, data loss, and reputational damage. The Etsy marketplace relies substantially on Google Cloud[169](index=169&type=chunk)[180](index=180&type=chunk) [Strategic Risks](index=44&type=section&id=Risk%20Factors%20-%20Strategic%20Risks) Strategic risks encompass intense competition from diverse retailers, challenges in marketing effectiveness due to evolving digital landscapes, and potential failures in executing business strategy, including the announced sale of Reverb and future goodwill impairments - The company faces intense competition from large e-commerce marketplaces, national retailers, and social commerce channels, many of which have greater resources and offer features like free and fast shipping[217](index=217&type=chunk)[220](index=220&type=chunk)[222](index=222&type=chunk) - Marketing effectiveness is at risk from changes in search engine algorithms (e.g., Google), social media platform policies, and the rise of ad-blocking technologies[229](index=229&type=chunk)[230](index=230&type=chunk)[232](index=232&type=chunk) - The proposed sale of Reverb is subject to closing conditions and may not be completed as planned, which could result in expended management resources, transaction costs, and negative publicity[246](index=246&type=chunk)[247](index=247&type=chunk) - The company has incurred significant goodwill impairment charges for Reverb, Depop, and Elo7 in the past and may incur further charges, which would negatively impact operating results[248](index=248&type=chunk)[249](index=249&type=chunk) [Regulatory, Compliance, and Legal Risks](index=51&type=section&id=Risk%20Factors%20-%20Regulatory%2C%20Compliance%2C%20and%20Legal%20Risks) This section details risks from a complex and evolving global regulatory landscape, including potential liability for illegal items, high litigation costs, compliance with privacy and data protection laws, and challenges from evolving tax regimes and increased tech platform regulation - The company faces risk of liability for counterfeit, infringing, or unlawful items listed by sellers, as legal safe harbors like the DMCA are limited and subject to change[265](index=265&type=chunk)[266](index=266&type=chunk) - Compliance with complex and evolving global privacy and data protection regulations (e.g., GDPR, U.S. state laws) is costly and failure to comply could result in significant fines and reputational damage[273](index=273&type=chunk)[276](index=276&type=chunk) - Evolving tax laws, such as those imposing indirect tax collection on marketplaces and digital services taxes, create complexity and could adversely affect the business and its sellers[278](index=278&type=chunk)[279](index=279&type=chunk) - Increased regulation of technology companies, such as the E.U. Digital Services Act (DSA) and the U.K. Online Safety Act, may impose significant compliance costs and operational burdens on Etsy and its sellers[285](index=285&type=chunk)[287](index=287&type=chunk) [Other Risks](index=56&type=section&id=Risk%20Factors%20-%20Other%20Risks) This section covers other investment-related risks, including stock price volatility, potential dilution from future stock sales or convertible note conversions, discretionary stock repurchase programs, and anti-takeover provisions that could affect stock price - The price of the company's common stock has been and will likely continue to be volatile, which could subject the company to securities litigation[296](index=296&type=chunk) - Future sales of common stock or conversion of the outstanding convertible notes could result in additional dilution to stockholders and cause the stock price to decline[298](index=298&type=chunk)[299](index=299&type=chunk) - Anti-takeover provisions, such as a classified board and super-majority voting requirements, could delay or prevent a change in control and depress the stock price[307](index=307&type=chunk)[309](index=309&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's stock repurchase activity for the first quarter of 2025, including the repurchase of **3.717 million** shares for approximately **$189.2 million** and the remaining availability under the October 2024 program Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased (in thousands) | Average Price Paid per Share ($) | | :--- | :--- | :--- | | January 1 - 31 | **1,140** | **$53.57** | | February 1 - 28 | **1,090** | **$53.81** | | March 1 - 31 | **1,487** | **$46.71** | | **Total** | **3,717** | **$50.90** | - The June 2023 stock repurchase program was completed in Q1 2025. A new program authorized in October 2024 has no expiration date[315](index=315&type=chunk) [Item 3. Defaults Upon Senior Securities](index=60&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[311](index=311&type=chunk) [Item 4. Mine Safety Disclosures](index=60&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[312](index=312&type=chunk) [Item 5. Other Information](index=60&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[314](index=314&type=chunk) [Item 6. Exhibits](index=61&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including management compensation plans, CEO and CFO certifications required under the Sarbanes-Oxley Act, and the Inline XBRL documents - Exhibits filed include amended executive severance and non-employee director compensation plans, forms of RSU agreements, and required CEO/CFO certifications[316](index=316&type=chunk)