Amazon has told Perplexity to get its agentic browser out of its online store, the companies both confirmed publicly on Tuesday. After warning Perplexity multiple times that Comet, its AI-powered shopping assistant, was violating Amazon’s terms of service by not identifying itself as an agent, the ecommerce giant sent the AI search engine startup a sternly worded cease-and-desist letter, Perplexity wrote in a blog post entitled “Bullying is not innovation.”“This week, Perplexity received an aggressive legal ...

Group 1: Amazon's Advertising Business - Amazon has built the third-largest advertising business globally, trailing only Meta and Google, with ad revenues growing more than 20% annually since 2019, which is double the pace of Amazon's overall sales growth [2][3] - The advertising business is crucial for Amazon's story, as it targets high-intent shoppers at the moment of purchase, despite accounting for less than 10% of total sales [2][3] Group 2: Amazon Web Services (AWS) and Competition - AWS is the primary profit driver for Amazon and is expected to be a key growth driver over the next three to five years, but the advertising business is more critical for return on invested capital in the one to three-year timeframe [3] - AWS is responsible for over 80% of Amazon's estimated $100 billion capital expenditures in 2025, but it has 50% lower margins than advertising revenues and faces strong competition from Microsoft, Google, and Oracle [3] Group 3: Stock Performance and Analyst Ratings - Amazon stock is currently rated a buy with a price target of $265, trading around $220.62 [4] - The stock has seen a decline of 2% in August and 4% in September, with concerns over tariff impacts and disappointing Q2 results compared to competitors [5][6]

BREAKING: ADP Reports Surprise Drop In Private Jobs Take a Trial Today Get instant access to exclusive stock lists, expert market analysis and powerful tools with 2 months of IBD Digital for only $20! Nike shares swung higher early Wednesday, following a solid fiscal Q1 beat reported after Tuesday's close. The Dow Jones sports retailer is navigating turnaround efforts as well as President Donald Trump's tariffs. Nike (NKE) reported earnings of 49 cents per share, down from 70 cents last year. Revenue rose 1 ...

Core Insights - The article discusses the impact of artificial intelligence on e-commerce, particularly focusing on the "buy now, pay later" (BNPL) sector, with Affirm Holdings positioned to benefit from these changes [1][5][6]. Group 1: AI and E-commerce - OpenAI has introduced a feature allowing ChatGPT users to purchase items directly within the chatbot, with merchants paying a fee to OpenAI [2]. - Autonomous AI agents are expected to enhance e-commerce by providing personalized recommendations based on pricing, shipping, and payment options [3]. - Affirm's CEO, Max Levchin, anticipates that AI will facilitate a more integrated shopping experience, guiding consumers through the entire purchasing process [4]. Group 2: Affirm's Market Position - Affirm is shifting its product mix towards more interest-free BNPL plans, generating revenue from merchant fees instead [6]. - Levchin emphasizes Affirm's unique selling points, such as no late fees and no compounding interest, which could give it a competitive edge in the market [7]. - Affirm competes with other BNPL providers like Klarna, Sezzle, and PayPal, and has partnerships with major companies like Amazon and Shopify [8]. Group 3: Stock Performance - Affirm's stock has seen a 15% increase in 2025 but has recently faced pressure, dropping 4.55% to $73.08 after reaching a record close of $92.56 on September 19 [9]. - The stock holds an IBD Composite Rating of 94, indicating strong growth potential, and an Accumulation/Distribution Rating of A-minus, suggesting more buying than selling activity [11].

Financial Data and Key Metrics Changes - Consolidated GMS for Q2 2025 was $2.8 billion, down 4.8% year over year, with a 2.6% decline when excluding Reverb [25][26] - Consolidated revenue increased by approximately 4% to $673 million, with adjusted EBITDA at $169 million, representing a 25.1% margin [26][27] - Etsy Marketplace GMS was down 5.4% year over year, showing a notable improvement from the previous quarter's 6.2% decline [27][28] Business Line Data and Key Metrics Changes - Etsy Marketplace revenue decreased by 0.5% year over year, while Services revenue grew by 15.3% year over year, driven by strong growth in on-site ads revenue [31][32] - The take rate expanded by 200 basis points to 24%, aided by the divestiture of Reverb, which had a lower take rate [32][33] - The app GMS grew year over year, accounting for 44.8% of total GMS, up three percentage points from the previous year [29][30] Market Data and Key Metrics Changes - Trailing twelve-month active buyers in the Etsy marketplace stood at 87.3 million, down 4.6% year over year [27] - The number of reactivated buyers increased by 2.8% year over year, with 4.8 million new buyers added in the quarter [28] - GMS per buyer showed signs of stabilization, holding steady sequentially at $120, while monthly GMS per buyer trends improved in May and June [28] Company Strategy and Development Direction - The company is focusing on enhancing the customer experience through improved app features and personalized marketing [5][10] - A strategic shift was made to prioritize customer engagement and retention, with a focus on machine learning for better inventory matching [13][17] - The company aims to position itself as a leader in agentic shopping, leveraging unique inventory and personalized experiences [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recent performance and the potential for sustained growth, citing favorable competitive dynamics and stable consumer spending [6][24] - The outlook for Q3 includes expected consolidated GMS between $2.6 billion and $2.7 billion, indicating continued improvement [38] - Management emphasized a disciplined approach to investments, focusing on ROI and long-term growth potential [50][53] Other Important Information - The company completed the sale of Reverb on June 2, impacting year-over-year comparisons [24] - The app's user experience has significantly improved, leading to higher satisfaction and engagement metrics [9][10] - The company generated $90 million in free cash flow during the quarter, ending with $1.5 billion in cash [36][37] Q&A Session Summary Question: What drove the sequential improvement in Etsy's GMS trajectory? - Management highlighted four key drivers: increased app usage, personalized marketing efforts, enhanced paid social strategies, and improved performance in Google PLA auctions [42][46] Question: What is the outlook for Etsy's EBITDA margins? - Management indicated that they are managing to high twenties EBITDA margins, with expectations for a step-up in margins in Q3 due to ongoing investments [43][50] Question: How is the app contributing to growth? - The app is seen as a critical component for increasing customer engagement and lifetime value, with efforts to drive more users to adopt the app [59][61] Question: How is consumer demand across different income cohorts? - Management noted a slight improvement in consumer spending across all income cohorts, with higher income households showing a bit more resilience [70][71] Question: Can you elaborate on personalized communication efforts? - Management discussed the importance of personalized content in push and email notifications, aiming to enhance user engagement and conversion rates [76][80] Question: How is marketing spend allocated between Etsy and Depop? - The marketing spend in Q2 was more normalized between Etsy and Depop, with expectations for increased investment in Depop moving forward [89][91]

Financial Data and Key Metrics Changes - Consolidated GMS for Q2 2025 was $2.8 billion, down 4.8% year over year, while excluding Reverb, it was approximately $2.7 billion, down 2.6% year over year [25][26] - Consolidated revenue increased by approximately 4% to $673 million, with adjusted EBITDA at $169 million, representing a 25.1% margin [26][32] - Trailing twelve month active buyers in the Etsy marketplace stood at 87.3 million, down 4.6% year over year [27] Business Line Data and Key Metrics Changes - Etsy Marketplace GMS was down 5.4% year over year, but this was an improvement from a 6.2% decline in Q1 2025 [25][27] - Depop reported GMS growth accelerating to 35% year over year, reaching an annualized run rate of $1 billion [5][26] - Services revenue grew 15.3% year over year, driven by strong growth in on-site ads revenue at both Etsy and Depop [31] Market Data and Key Metrics Changes - In the U.S., GMS for Depop grew 54% year over year, positioning it as the fastest growing player in the online fashion resale market [5] - Monthly GMS per buyer trends strengthened over the quarter, inflecting into positive year over year comparisons in May and June [28] - The proportion of Etsy GMS generated on the app increased to 44.8%, three percentage points higher than a year ago [29] Company Strategy and Development Direction - The company is focused on enhancing the customer experience through a strategic shift to make Etsy a more delightful place to shop, emphasizing a recommendation-driven approach [4][10] - Key priorities include improving customer discovery, enhancing machine learning for better inventory matching, and retaining valuable customers through loyalty programs [12][13][19] - The company plans to shift marketing investments from traditional media to digital platforms, increasing focus on OTT, audio, and social media [14][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recent performance and the potential for sustained growth, citing improvements in consumer spending and favorable competitive dynamics [5][27] - The company anticipates continued improvement in growth comparisons in the second half of the year, with Q3 consolidated GMS expected to be between $2.6 billion and $2.7 billion [38] - Management emphasized a disciplined approach to investments, focusing on ROI and long-term growth potential [51][49] Other Important Information - The company completed the sale of Reverb on June 2, which impacted the reported results for Q2 2025 [23][24] - The app's user experience has improved significantly, with increased satisfaction reported among users [7][9] - The company generated $90 million in free cash flow in the quarter, ending with $1.5 billion in cash and approximately $3 billion in convertible debt [36][37] Q&A Session Summary Question: What helped drive improved spending despite habitual buyers continuing to moderate? - Management noted that improved app experience, personalized marketing, and increased visibility in paid social contributed to the sequential improvement in GMS [44][46] Question: What is driving the margin compression in the core business? - Management clarified that they are managing to high twenties EBITDA margins while investing in app experience and marketing to drive long-term growth [48][49] Question: How should we think about the app's growth and its impact on GMS? - Management indicated that app adoption leads to higher lifetime value for buyers, and they are focusing on making the app a central part of the customer experience [57][62] Question: What is the demand profile across different household income cohorts? - Management observed slightly healthier consumer spending across all cohorts, with higher income households showing stronger resilience [67] Question: Can you elaborate on the personalized communication and its impact on conversion? - Management highlighted that personalized push and email notifications have shown positive results, with plans to enhance personalization further using LLMs [76][78]