ETSY Q1 2023 Earnings

Call Details

• Call Title: Etsy, Inc. Q1 2023 Earnings Call
• Date: May 3, 2023 at 9:00 PM UTC
• Management Team:
  • Deb Wasser (VP of Investor Relations and ESG Engagement)
  • Josh Silverman (Chief Executive Officer)
  • Rachel Glaser (Chief Financial Officer)
  • Jessica Schmidt (Senior Director of Investor Relations)

Call Summary

Financial Performance

• Consolidated GMS was $3.1B in Q1 2023 and consolidated revenue was $641M, representing nearly 11% year-over-year revenue growth.
• Consolidated adjusted EBITDA was $170M, with adjusted EBITDA margin reported at approximately 26.6% (non-GAAP).
• Consolidated GMS declined 4.6% year-over-year in Q1 and Etsy Marketplace GMS was $2.7B, down about 3% on a currency-neutral basis.
• Consolidated take rate expanded to 20.7%, which was ahead of the midpoint-implied take rate in the company's guidance range.
• GAAP versus non-GAAP disclosure was explicit, with adjusted EBITDA and adjusted margins presented as non-GAAP measures reconciled in the slide appendix.
• FX translation acted as a headwind of approximately 200 basis points in Q1, improving from 330 basis points in Q4 2022.

Guidance

• Q2 2023 consolidated GMS guidance is $2.85B to $3.1B with a $3.0B midpoint, implying about a 1.8% year-over-year decline at the midpoint.
• Q2 2023 revenue guidance is $590M to $640M with a midpoint up about 5% year-over-year, which management said implies a relatively stable sequential take rate.
• Q2 2023 adjusted EBITDA margin guidance is approximately 26%, which is a modest contraction versus reported Q1 margin.
• Approximately half of the guided sequential margin decline into Q2 was attributed to incremental Depop marketing investments, according to commentary.
• The discrete tax benefit that aided Q1 adjusted EBITDA is not expected to repeat in Q2, which was cited as a driver of the margin difference.
• Company stated that volatility in demand and macro events make multi-quarter forecasting uncertain and they declined to provide second-half guidance.