Etsy(US:ETSY)2025-04-30 12:30Financial 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]