Etsy(ETSY) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated GMS for Q4 was $3.6 billion, up 2.4% year-over-year, excluding Reverb, and up 1.3% year-over-year on a currency-neutral basis [20] - Consolidated revenue reached $882 million, up 6.6% year-over-year, marking a new quarterly record [20] - Adjusted EBITDA was $222 million, representing a consolidated adjusted EBITDA margin of 25.2% [20] - Etsy Marketplace adjusted EBITDA margin was slightly above 30% in Q4, though slightly lower year-over-year due to higher costs [21] Business Line Data and Key Metrics Changes - Etsy Marketplace GMS was up 0.1% year-over-year in Q4, marking the first positive comparison since Q3 2023 [21] - U.S. buyer GMS grew 0.3% year-over-year, marking the first quarter of positive growth in four years [23] - Depop's Q4 GMS was up nearly 38% year-over-year to a new record of $300 million, with U.S. GMS growing 60% year-over-year [27] Market Data and Key Metrics Changes - Mobile app downloads grew 4% year-over-year, with app GMS growth accelerating in Q4 [24] - The app's contribution to total GMS reached 46% in Q4, five percentage points higher than at the end of 2023 [24] - The year-over-year rate of decline in active buyers improved for the first time in over a year, with active buyers largely flat sequentially at 86.5 million [25] Company Strategy and Development Direction - The company signed a definitive agreement to sell Depop to eBay for $1.2 billion, allowing a focus on growing the Etsy marketplace [4] - Strategic priorities include improving discovery, matching buyers with items, deepening loyalty, and enhancing human connection [10] - The company reorganized around customer outcomes rather than functional silos to drive clearer focus and better execution [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the changes made, noting that the trajectory is improving with a return to growth in the core marketplace [12] - The company anticipates first quarter 2026 GMS to be in the range of $2.38 billion to $2.43 billion, representing year-over-year growth of approximately 2%-4% [34] - Management highlighted the importance of AI technology in enhancing the shopping experience and driving growth [15] Other Important Information - The company plans to use proceeds from the Depop sale for general corporate purposes, continued share repurchases, and investment in the Etsy marketplace [27] - Etsy held $1.8 billion in cash and equivalents as of December 31, 2025, with $735 million in adjusted EBITDA generated in 2025 [32] Q&A Session Summary Question: What changed in Q4 regarding buyer acquisition and reactivation? - Management noted that cumulative investments in product experience, app usage, and personalized marketing contributed to improved buyer metrics [40] Question: What are the key drivers of sustaining GMS growth through 2026? - The company emphasized a system of strategic priorities focused on discovery, matching, loyalty, and differentiation to drive durable growth [45] Question: How is the company leveraging AI and agentic platforms for consumer behavior? - Management indicated that early signs show agentic platforms can be valuable for discovery, with higher intent and average order value from consumers engaging through these channels [58]