Etsy(US:ETSY)2025-07-30 13:32Financial 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]