Core Viewpoint - Etsy has faced significant challenges post-pandemic, with its stock down 77% from its peak, indicating struggles in returning to growth after a surge in interest during the stay-at-home period [1][2]. Leadership Change - CEO Josh Silverman will step down at the end of the year after eight years, with current President Kruti Patel Goyal set to take over as CEO on January 1, 2026 [4][5]. - Silverman played a crucial role in turning around Etsy since 2017, implementing layoffs and focusing on core business areas [2][3]. Performance Metrics - Despite recent challenges, Etsy's stock is up 24% for the year, showing signs of improving performance, including the adoption of ChatGPT's Instant Checkout [7]. - In Q3, gross merchandise sales (GMS) rose 0.9% to $2.72 billion, although GMS on the Etsy marketplace declined by 2.4% [8]. - Revenue increased by 6.1% to $678 million, surpassing consensus estimates, while adjusted EBITDA was $171.9 million, down from $183.6 million [9]. Market Position - Etsy's take rate is improving due to on-site ads and fee increases, with the company trading at approximately 10 times adjusted EBITDA, although a significant portion is attributed to share-based compensation [10]. - The company is perceived to have reached market saturation and may require a new direction under Goyal's leadership to reinvigorate growth [11].

Financial Data and Key Metrics Changes - Consolidated GMS for the third quarter was $2.72 billion, exceeding the top end of guidance, with a year-over-year decline of 0.9% when excluding Reverb [22][23] - Consolidated revenue grew 6.1% year over year to $678 million, with adjusted EBITDA at $172 million, representing a margin of 25.4% [23][30] - Etsy Marketplace GMS was down 2.4% year over year, but improved by 300 basis points sequentially from Q2 to Q3 [23][24] Business Line Data and Key Metrics Changes - Etsy Marketplace GMS declined 2.4% year over year, while Depop's GMS grew 39.4% year over year to $292 million, driven by new user growth and improved buyer conversion [10][23] - Services revenue increased by 12.7% year over year, primarily due to growth in on-site ad revenue at both Etsy and Depop [29] Market Data and Key Metrics Changes - Active buyer count was 86.6 million, down 5% year over year, but new and reactivated buyers totaled 11.4 million for the quarter, showing slight improvement [25] - GMS per active buyer remained stable at $1.21, with encouraging month-by-month improvements in purchase frequency and average item values [26] Company Strategy and Development Direction - The company is focusing on four strategic priorities: enhancing customer discovery, deepening loyalty, amplifying seller creativity, and leveraging AI for personalization [12][16] - A partnership with OpenAI aims to integrate Etsy listings into ChatGPT, enhancing the shopping experience and increasing brand consideration [13][40] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the consumer environment heading into the holiday season, with expectations for Q4 consolidated GMS between $3.5 billion and $3.65 billion [33][55] - The company is committed to investing in Depop's brand marketing to expand its market presence, which may compress margins in the near term but is seen as a long-term growth opportunity [34][84] Other Important Information - The company has made significant improvements in its app, with app GMS outperforming non-app GMS by 13 percentage points, indicating a positive impact from recent enhancements [16][27] - Seller satisfaction scores have increased by over 10% year over year, reflecting the effectiveness of new AI-powered tools and improved support [19] Q&A Session Summary Question: About the OpenAI partnership and its integration - Management highlighted the excitement around the OpenAI partnership, stating that Etsy listings will be included in the organic experience, with transactions processed through Etsy's payment system [38][40] Question: Engagement improvements on the app - Management discussed meaningful investments in reshaping the app's home screen to enhance discovery, leading to increased engagement metrics [44][46] Question: Fourth quarter guidance and holiday opportunities - Management provided insights on the uncertain consumer outlook for the holiday season, emphasizing the importance of their initiatives in driving sequential improvement [53][55] Question: Balancing traffic from AI platforms versus direct mobile - Management indicated that both channels can coexist and benefit Etsy, with agentic commerce expected to enhance brand consideration [78][82] Question: Investments planned for Depop - Management confirmed that the brand campaign for Depop is a long-term investment aimed at expanding awareness, which may compress margins in the short term but is expected to yield significant growth [79][84]