Etsy(US:ETSY)2025-10-29 13:30Financial Data and Key Metrics Changes - Consolidated GMS for Q3 2025 was $2.72 billion, exceeding guidance, with a year-over-year growth of 0.9% when excluding Reverb [26] - Consolidated revenue grew 6.1% year over year to $678 million, with adjusted EBITDA at $172 million, representing a margin of 25.4% [27][36] - Etsy Marketplace GMS declined 2.4% year over year, but improved by 300 basis points sequentially from Q2 to Q3 [27][28] Business Line Data and Key Metrics Changes - Etsy Marketplace GMS was $2.43 billion, down 2.4% year over year, while Depop's GMS grew 39.4% year over year to $292 million [14][27] - Services revenue increased by 12.7% year over year, driven by growth in on-site ad revenue at both Etsy and Depop [32] - Etsy Ads experienced meaningful growth, supported by model enhancements that optimized seller budget pacing and improved ad quality [33] 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 [29] - GMS per active buyer was stable at $1.21, with encouraging month-by-month improvements in purchase frequency and average item values [30] - The app's contribution to total GMS increased to 46%, with app users visiting five times more often than non-app users [31] 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 [17][22] - A partnership with OpenAI aims to integrate Etsy listings into ChatGPT, enhancing the shopping experience and driving incremental growth [19][45] - The company is reallocating marketing spend towards upper funnel channels to spark engagement and inspiration, particularly during the holiday season [20][62] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consumer spending, anticipating a stable macro environment for Q4 [36][60] - The company expects Q4 consolidated GMS to be between $3.5 and $3.65 billion, indicating further sequential improvement [37] - Management highlighted the importance of maintaining profitability while also being willing to invest in growth opportunities, particularly for Depop [65][90] Other Important Information - The company completed the sale of Reverb on June 2, impacting year-over-year comparisons [26] - The transition in leadership from Josh Silverman to Kruti Patel Goyal is set to take place on January 1, 2026, with a focus on continuing growth and innovation [9][10] Q&A Session Summary Question: About the OpenAI partnership and its integration - Management highlighted the excitement around the OpenAI partnership, emphasizing that Etsy listings will be integrated into ChatGPT, allowing seamless transactions through Etsy's payment system [41][45] Question: Engagement improvements on the app - Management discussed meaningful investments in reshaping the app's home screen to enhance discovery, resulting in increased engagement metrics [50][52] Question: Fourth quarter guidance and holiday opportunities - Management noted that while consumer outlook remains uncertain, they expect continued progress in initiatives and a strong holiday campaign focused on the unique value of Etsy [60][62] Question: Balancing traffic from AI platforms versus direct mobile - Management indicated that both channels can coexist and benefit Etsy, with agentic commerce providing additional exposure to potential buyers [87][89] Question: Investments planned for Depop and margin compression - Management confirmed that the brand campaign for Depop is a long-term investment aimed at expanding awareness, which may compress margins in the near term but is expected to yield significant long-term benefits [90][91]