ETSY Q2 2022 Earnings

Call Details

• Call Title: Etsy Q2 2022 Earnings Call
• Date: July 27, 2022 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 billion, basically flat year over year and up 2.6% on a currency neutral basis.
• Consolidated revenue was $585 million, up 10.6% year over year for the quarter.
• Consolidated adjusted EBITDA was $163 million with a 28% adjusted EBITDA margin for the quarter.
• Consolidated take rate was 19.3%, which was ahead of the take rate implied by prior guidance.
• Etsy Marketplace standalone GMS was $2.6 billion in the quarter compared to $1.1 billion in Q2 2019, representing a material year-over-three-year expansion.
• Consolidated product development spend was $102 million, up 65% year over year, driven by headcount growth and acquisitions.
• Consolidated marketing spend was $164 million, down 2% year over year, with performance marketing declining and brand marketing up 4% year over year.
• Consolidated operating cash flow for the quarter was $125.8 million and cash plus short and long-term investments totaled $1.1 billion as of June 30th.

Guidance

• Third quarter 2022 consolidated GMS is estimated at approximately $2.8 billion to $3 billion, implying a decline of about 7% to 8% at the midpoint versus Q3 2021.
• Third quarter revenue guidance is $540 million to $575 million, which is up about 5% at the midpoint versus last year.
• The company expects adjusted EBITDA margin of approximately 26% in Q3, reflecting a full quarter of recent hires, compensation increases, and the new Etsy purchase protection expense.
• Guidance assumes currency exchange rates remain unchanged at current levels and notes FX was a ~300 basis point headwind to GMS in Q2.
• The company expects consolidated take rate for the second half of the year to be largely in line with the 19.3% reported in Q2.
• The company flagged uncertainty in year-over-year growth rates and noted that the deceleration has shown signs of flattening but not yet returned to year-over-year growth.