Etsy, Inc. · NYSE:ETSY
Etsy — Q3 2021 Earnings Presentation
37 slides from Etsy's earnings presentation, Nov 3, 2021
Slide 1: Q3 2021 Financial Results
1 Q3 2021 Financial Results November 3, 2021
Slide 2: Forward-looking Statements
2 This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include statements relating to our financial guidance for the fourth quarter of 2021 and key drivers thereof, the uncertain impact that the ongoing Forward-looking COV
Slide 3: Excellent Q3 21 financial performance
3 Excellent Q3 21 financial performance... primarily driven by outperformance of Q3 21 GMS Q3 21 Revenue Q3 21 Adjusted EBITDA1 the Etsy marketplace $3.1B $532M $174M Non-Mask GMS Growth Y/Y +17% Y/Y +18% Y/Y ~33% Adj. EBITDA Margin +24% Currency-Neutral For the Etsy Marketplace... +138% ...on a two-
Slide 4: Larger scale amplifies our Right to Win strategy
4 Larger scale amplifies our Right to Win strategy, further transforming customer experiences GMS per Active Buyer* Best-in-Class Human A Trusted Q3 21 Search and Discovery × Connections × Brand +20% Y/Y $132 $129 $124 $117 $110 Our Sellers’ Collection of Unique Items 3Q20 4Q20 1Q21 2Q21 3Q21 *Etsy m
Slide 5: Investing in experiences to create inspiration
5 Investing in experiences to create inspiration Buyer Onboarding Updates Strategic Discounting Engaging buyers early, and bringing them back to Etsy
Slide 6: Delivering real-time personalization
6 Delivering A user’s previous search for leather accessories... real-time personalization, making the on-site Leads to results in their next reformulated in-session query for “wallets” highlighting leather wallet listings rather than many other possible types of wallets experience faster and more e
Slide 7: Ready for holiday with better fulfillment transparency
7 Ready for holiday with better ...making Etsy an even more reliable fulfillment transparency... place to shop Expected Delivery Date Coverage Late Deliveries % of US listings with estimated arrival dates based on shipping and % of US orders that arrive after their expected delivery date processing t
Slide 8: Star Seller program and Sell on Etsy app
8 Our Star Seller program is also focused on improving the reliability of shopping on Etsy We’re investing in our sellers’ success: the New ‘Sell on Etsy’ App1 Repeat Purchase Rate* Star Sellers vs. Non-Star Sellers +25% Non-Star Sellers Star Sellers *Repeat Purchase Rate measured M/M in September 2
Slide 9: By driving buyers to the app, we significantly increased downloads
9 By driving buyers to the app, we We’re transitioning Buyers from Mobile Web to the Mobile App significantly increased downloads, engagement and +36% increase frequency in App Downloads YTD Incremental GMS; $ % share of App GMS surpassed mobile web Etsy is now the #5 shopping for the 1st time! app i
Slide 10: Sustainable packaging enables sellers to join our environmental commitment
10 Sustainable packaging enables sellers to join our environmental commitment while building buyer loyalty Etsy’s planet-friendly packaging initiative is an important step towards achieving our commitment of Net Zero by 2030 Etsy branded Planet-Friendly Packaging that became available for sale to se
Slide 11: Investing in creative new approaches to broaden the reach of our brand
11 Investing in creative new approaches to broaden the reach of our brand The Etsy House Our first-ever interactive, augmented-reality experience that allows shoppers to “walk through” and shop a digital home filled with high quality, curated items Other examples of brand building marketing initiative
Slide 12: Reinforcing Etsy as a global holiday shopping destination
12 Reinforcing Etsy as a NEW Gift Finder Tool global holiday shopping Designed to help buyers find inspiration among the ~100M items in our marketplace destination Extending the Holiday 1 Shopping Period Expanding the 2 Gifting Opportunity Creating Localized 3 Experiences
Slide 13: Placeholder slide for video of holiday TV campaign
13 13 Placeholder slide for video of holiday TV campaign (with groceries?)
Slide 14: Etsy, Inc.'s four marketplaces now form a House of Brands
14 Etsy, Inc.’s four marketplaces now form a ‘House of Brands’ which stands Handmade, Vintage, Craft for creativity, community and ‘special’ Musical Instruments Fashion Recommerce Brazilian Handmade, Craft
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15 15
Slide 16: We had another strong third quarter
16 We had another strong third quarter… Consolidated Results GMS Revenue Adjusted EBITDA1 $3.1B $532M $174M +18% Y/Y +18% Y/Y ~33% Adj. EBITDA Margin 1 Reconciliation of non-GAAP financial measures is contained in the Appendix Consolidated financial results. Y/Y reflects Q2 2021 vs. Q2 2020, $ in milli
Slide 17: Etsy marketplace contributing the majority of the outperformance
17 With the Etsy marketplace contributing the majority of the outperformance GMS Take-Rate Etsy Marketplace Results Non-Mask GMS Growth Y/Y $2.7B 18% +24% +12% Y/Y +25 bps
Slide 18: Etsy marketplace - top category growth
18 Etsy marketplace - top category growth Home & Living TTM Category GMS ($B) and Y/Y Growth Top 6 Categories represent 87% of overall GMS; increased 51% Y/Y Jewelry Ceramic Ghost Tea Lights Apparel Embroidered Necklace +76% +62% +45% +62% +69% +20% TTM Category Y/Y Category GMS $ excludes face mask
Slide 19: Outperforming ecommerce on a 2-year basis
19 Outperforming ecommerce on a ...and monthly GMS trends showed 2-year basis... relative stability during the quarter Etsy marketplace GMS growth (including masks) vs. Q3 21 Monthly GMS & 2-Year Growth e-commerce benchmark growth Etsy marketplace; ex masks (2021 vs 2019) 157% 143% 52% Q2’21 Etsy Q2
Slide 20: Non-mask GMS growth remains stable on a 2-year basis
20 Non-mask GMS Etsy Marketplace GMS growth remains stable on a 2-year basis *Etsy marketplace GMS 4Q20 and 1Q21 includes the benefit to our marketplace from the distribution of stimulus checks in the US
Slide 21: Q3 revenue growth driven by Etsy Ads, GMS volume, and acquisitions
21 Q3 revenue growth Incremental Revenue Bridge driven by Etsy Ads, 3Q20 vs 3Q21 GMS volume, and the incremental impact of our recent acquisitions Q3 2021 Consolidated Revenue $532M, up 18% Y/Y Consolidated take-rate was 17.1%, flat Y/Y despite the inclusion of our recent acquisitions which, on avera
Slide 22: Disciplined investments in product and marketing
22 Disciplined investments in product and marketing serve as a foundation for future growth Product Development Marketing Spend All results are consolidated
Slide 23: We continue to generate incremental GMS
23 We continue to generate Product & Engineering Headcount Growth* incremental GMS 2019 - 2021 from recent product development and engineering +30% headcount growth +30% 2019 2020 2021E *Etsy marketplace Product & Engineering headcount growth reflected based on average end of period headcount
Slide 24: Encouraging performance of buyer segments
24 Encouraging performance of buyer segments, particularly on a 2 Yr basis, as we compare to prior year pandemic-driven peaks Active Buyers Repeat Buyers1 Habitual Buyers Relative stability in total active buyers Stable repeat buyers as existing customers Habitual buyers expand slightly sequentially
Slide 25: New buyer purchase trends remain quite healthy
25 New buyer purchase trends remain quite healthy New Buyers New Buyer Repeat Purchase Rate 2021 vs 2019 +25% 2019 2021* New Buyers reflects results from the Etsy marketplace *30 day New Buyer Repeat Purchase Rate as of 9/30/2021
Slide 26: Retaining many of the millions of buyers who shopped on Etsy in 2020
26 Retaining many of Early data on retention of the 2020 cohorts shows they are outperforming historical cohorts the millions of buyers who shopped 100% on Etsy in 2020 56% 56% ~43% of Active Buyers as of 3Q20 made at least one purchase in their 2nd year on the platform Year 1 Historical Retention Y
Slide 27: GMS per Active Buyer was driven by frequency and higher AOV
27 GMS per Active Buyer was driven by TTM Average Purchase Days frequency and higher AOV Repeat Buyers 5.2 GMS per Active Buyer1 +20% 4.6 Y/Y FY19 2021* All Buyers 3.1 Historical Average 2.5 FY19 2021* 1 TTM GMS per Active Buyer reflects results from the Etsy marketplace *Average purchase days on a T
Slide 28: Capital light business model delivers strong Adj. EBITDA
28 Capital light business model delivers strong Adj. EBITDA Adj. EBITDA ($M) Cash Balance 9/30/211 $907M Note: Cash balance reflects the use of ~$1.7B of cash to fund the recent acquisitions of Depop and Elo7 Etsy also repurchased $54M in shares under its share buyback plan in Q3. 1 Cash and Cash Eq
Slide 29: Q4 Guidance for GMS, Revenue and Adj. EBITDA
29 Q4 Guidance for GMS, Revenue Q4’21 Guidance and Adj. EBITDA November 3, 2021 Margin % Consolidated: $3.9B to $4.1B; with ~12% y/y growth at the midpoint GMS Etsy marketplace: high-single digit growth Revenue Consolidated: $660M to $690M; with ~10% y/y growth at the midpoint Adj. EBITDA Margin Con
Slide 30: Our guidance implies stable GMS trends in Q4 vs 2019
30 Our guidance implies stable GMS trends in Q4 vs 2019 2-Year GMS Growth Etsy Standalone GMS Growth Implied based on Q4 Etsy Standalone Guidance
Slide 31: Appendix
31 Appendix
Slide 32: Key factors impacting our Q4 Guidance
32 Key factors impacting our Q4 Guidance We anticipate that the key factors impacting Q4 GMS and revenue growth will be: ● Headwinds and tailwinds, including but not limited to the following: macro factors including the shift in spend from offline to online, economic environment, competitive dynamics,
Slide 33: Condensed Consolidated Statement of Operations
33 Q3 2021 Financial Results Condensed Three months ended 9/30/21 Three months ended 9/30/20 Consolidated (in thousands) Statement of Revenue $532,429 $451,478 Cost of revenue 153,660 120,168 Operations Gross profit 378,769 331,310 Marketing 131,928 126,779 Product development 73,521 45,908 General a
Slide 34: Condensed Consolidated Statement of Cash Flows
34 Q3 2021 Financial Results Condensed Nine months ended Nine months ended 9/30/21 9/30/20 Consolidated (in thousands) Statement of Net Income $331,950 $200,708 Cash Flows Net cash provided by operating activities 361,092 435,289 Net cash (used in) provided by investing activities (1,534,861) 41,643
Slide 35: Condensed Consolidated Balance Sheets
35 Q3 2021 Financial Results As of September 30, 2021 As of December 31, 2020 Condensed (in thousands) Cash and cash equivalents Consolidated $619,402 $1,244,099 Short-term investments 197,430 425,119 Balance Sheets Accounts receivable, net 23,884 22,605 Funds receivable and seller accounts 167,682
Slide 36: Reconciliation of Quarterly Net Income to Adj. EBITDA
Q3 2021 Financial Results Reconciliation of Quarterly Net Income to Adj. EBITDA 3Q20 4Q20 1Q21 2Q21 3Q21 (in thousands, except percentages) Net income $91,761 $148,538 $143,766 $98,254 $89,930 Excluding: Interest and other non-operating expense, net 9,457 10,818 706 1,079 2,640 (Benefit) provision fo
Slide 37: Reconciliation of Operating Cash Flow to Free Cash Flow
Q3 2021 Financial Results Reconciliation of Operating Cash Flow to Free Cash Flow Free cash flow is considered to be a non-GAAP financial measure. We believe that free cash flow, which measures our ability to generate cash from our business operations, is an important financial measure for use in evalua