ETSY Q3 2023 Earnings

Call Details

• Call Title: Etsy, Inc. Q3 2023 Earnings Call
• Date: November 1, 2023 at 9:00 PM UTC
• Management Team:
  • Deb Wasser (VP of Investor Relations)
  • Josh Silverman (Chief Executive Officer)
  • Rachel Glaser (Chief Financial Officer)
  • Jessica Schmidt (Senior Director of Investor Relations)

Call Summary

Financial Performance

• Consolidated GMS was $3.0B in Q3 2023, up 1.2% year-over-year.
• Consolidated revenue was $636M in Q3 2023, up 7% year-over-year.
• Consolidated adjusted EBITDA was $182M in Q3 2023, which was up nearly 9% year-over-year and represented a 28.6% adjusted EBITDA margin on a non-GAAP basis.
• Etsy Marketplace standalone GMS was $2.7B in Q3 2023, up 1% year-over-year.
• Consolidated take rate was 20.9% in Q3 2023, in line with the prior quarter and modestly above the midpoint implied by quarterly guidance.
• Free cash flow for the quarter was $208M and cash, cash equivalents, and investments totaled $1.1B as of September 30, 2023.

Guidance

• Etsy expects consolidated Q4 2023 GMS to decline in the low single-digit range year-over-year, with outcomes ranging to mid-single-digit decline if trends worsen or flat/slightly up if trends improve.
• Etsy expects Q4 2023 consolidated take rate to be approximately 20.8%, which is slightly lower sequentially due to seasonality.
• Etsy is guiding consolidated adjusted EBITDA margin of 26% to 27% for Q4 2023, driven primarily by seasonally higher marketing spend.
• The Q4 guidance excludes Elo 7 following its divestiture and implies the subsidiaries will represent roughly a 300 basis point headwind to consolidated adjusted EBITDA margin.
• If trends materially worsen in November/December, management stated the low single-digit GMS decline guidance could move to a mid-single-digit decline.
• The guidance reiterates a disciplined ROI approach to marketing spend, with dynamic pullbacks if marginal returns fall below thresholds.