He added that the company is now starting to fight for time, "an inspiration that when you're waiting for the subway or there's a commercial on TV, you pull out your app, and we want you to go to Etsy and spend that time just being immersed in all of the different things that you can find on Etsy." By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Condi ...

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]

Summary of Etsy (ETSY) FY Conference Call - May 13, 2025 Company Overview - Etsy is a leading two-sided marketplace with approximately 95 million active buyers and over 100 million listings from more than 8 million active sellers, primarily focused on unique, creative, and handmade goods [2][2] - Estimated to generate $12 billion in Gross Merchandise Sales (GMS) for the year, with 26% adjusted EBITDA margins and $600 million in free cash flow [2][2] Macro Environment and Consumer Trends - The macro environment remains volatile, but Etsy has not observed significant changes in consumer spending despite market fluctuations [6][6] - Etsy experienced substantial growth during the pandemic, with GMS increasing from $4.9 billion pre-pandemic to nearly $11 billion in 2024 [5][5] - The company has shown resilience against supply shocks and inflation, with sellers not passing on price increases as seen in other markets [7][8] Competitive Landscape - The e-commerce market is highly competitive, with major players like Amazon and Walmart actively participating [11][11] - Etsy is focusing on local sellers to mitigate tariff impacts, with over 90% of supplies sourced domestically [16][16][20][20] - The advertising market remains strong, and Etsy is enhancing its marketing technology to improve performance [12][12] Growth Strategies - Etsy is recalibrating its strategy to balance near-term conversions with long-term initiatives, particularly focusing on app development and personalized experiences [24][24][41][41] - The company has shifted resources to improve the app experience, with 44.5% of GMS now coming from app purchases [38][38] - Emphasis on quality and personalization through a new search engine architecture that prioritizes customer experience [30][30] Advertising and Revenue Growth - Etsy has seen growth in revenue despite GMS declines, primarily through Etsy Payments and Etsy Ads, which enhance seller profitability [57][57][58][58] - The company is exploring off-site ads as a cooperative advertising program to further drive sales for sellers [62][62] Financial Performance and Profitability - Etsy has maintained a strong take rate and gross margins, with expectations for continued profitability in 2025 [65][65][76][76] - The divestiture of Reverb is expected to improve overall profit margins for Etsy [71][71][73][73] Future Outlook - Etsy's unique marketplace model positions it as a valuable alternative in a consolidating e-commerce landscape [78][78] - The company is optimistic about its growth potential, leveraging its distinct offerings to attract consumers seeking alternatives to traditional e-commerce [78][78]

Core Insights - Etsy's first quarter 2025 financial results met expectations, showing solid adjusted EBITDA performance despite revenue pressure [2][3] - The company is leveraging AI and machine learning to enhance the app experience and drive user engagement [2] - Etsy's resilient two-sided marketplace model is positioned to navigate macroeconomic challenges [2] Financial Performance - Gross Merchandise Sales (GMS) for Q1 2025 was $2.8 billion, a decline of 6.5% year-over-year [4][5] - Revenue reached $651.2 million, up 0.8% compared to Q1 2024, with a take rate of 23.3%, an increase of 170 basis points [4][5] - Adjusted EBITDA was $171.1 million, with an adjusted EBITDA margin of 26.3%, slightly up from 26.0% in the previous year [4][5] Operational Highlights - Active sellers decreased by 11.3% year-over-year to 8,095, while active buyers fell by 3.4% to 88.5 million [4][5] - The number of habitual buyers dropped by 11.0% year-over-year to 6.2 million [5] - Depop experienced strong growth, achieving its highest GMS since acquisition in 2021 [5][12] Strategic Initiatives - Etsy is focusing on enhancing customer engagement through improved product experiences and strategic marketing initiatives [7][8] - The company has established a task force to address tariff changes and improve buyer and seller experiences [9] - Significant investments are planned to support GMS improvement and enhance the marketplace experience [3] Future Guidance - For Q2 2025, Etsy anticipates GMS to decline at a rate similar to Q1 2025, with an adjusted EBITDA margin around 25% [14]