ETSY Q2 2020 Earnings

Call Details

• Call Title: Etsy Q2 2020 Earnings Call
• Date: August 5, 2020 at 9:00 PM UTC
• Management Team:
  • Deb Wasser (VP of Investor Relations)
  • Josh Silverman (Chief Executive Officer)
  • Jessica Schmidt (Senior Director of Investor Relations)
  • Gabe Ratcliffe (Director of Investor Relations)

Call Summary

Financial Performance

• Consolidated GMS was $2.7B in Q2, up 147% year over year.
• Revenue was $429M in Q2, up 137% year over year.
• Adjusted EBITDA was nearly $151M, representing a 35% adjusted EBITDA margin for Q2 on a non-GAAP basis.
• Gross margin was 74% in Q2, which improved 640 basis points year over year.
• Etsy Ads grew 94% year over year in Q2 and grew 60% sequentially versus Q1.
• Off-site ads billing started in early May and less than 2% of sellers had opted out by quarter end.
• Etsy Payments processed 92% of GMS in Q2.
• Take rate declined 100 basis points sequentially in Q2, reflecting a lower effective take on on-site ads and seller investments.

Guidance

• Q3 GMS guidance is $2.2B to $2.5B, which implies growth of 80% to 110% year over year.
• Q3 revenue guidance is $366M to $426M, which implies growth of 85% to 115% year over year.
• Q3 adjusted EBITDA guidance is $111M to $127M, implying a margin range of 28% to 32%.
• At the midpoint of Q3 guidance, consolidated take rate for the second half of 2020 is expected to be approximately 16.9%.
• The Q3 guidance range is wide and management explicitly cited macro volatility and lapping Reverb as drivers of uncertainty.
• Reverb was said to have contributed ~20 percentage points to GMS growth in Q2 and lapping that acquisition is expected to contribute to Q3 deceleration.