Disclaimer

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 third second quarter of 2021 and key drivers thereof, the uncertain impact that the COVID-19 pandemic or its abatement may have on our business, strategy, operating results, key metrics, financial condition, profitability and cash flows, on our product delivery goals, on changes in the overall levels of consumer spending, on e-commerce generally and on volatility in the global economy; the impact of our strategy, marketing and product initiatives on our business and operating results; our future investments, our intended environmental, social and ecological impacts; and the size and our ability to capitalize on our large market opportunity; the anticipated impact of sharing expertise across Etsy’s House of Brands; and the potential impact of our acquisition of Depop and Elo7 on our market opportunity and on Etsy’s future consolidated financial results. Forward-looking statements include all statements that are not historical facts. In some cases, forward-looking statements can be identified by terms such as “aim,” “anticipate,” “believe,” “could,” “enable,” “estimate,” “expect,” “goal”, “intend,” “may,” “plan,” “potential,” “target,” “will,” or similar expressions and the negatives of those words. 

Forward-looking statements involve substantial risks and uncertainties that may cause actual results to differ materially from those that we expect. These risks and uncertainties include: (1) our ability to continue our rapid growth; (2) risks related to the ongoing COVID-19 pandemic, which continues to impact our business and results of operations in numerous ways that remain volatile and unpredictable, and risks related to the pandemic’s abatement and return to pre-COVID consumer shopping behavior; (3) the fluctuation of our quarterly operating results; (4) our failure to meet our publicly announced guidance or market expectations; (5) our ability to successfully execute on our business strategy or if our strategy proves to be ineffective; (6) our ability to attract and retain an active and engaged community of sellers and buyers; (7) macroeconomic events that are outside of our control; (8) our ability to recruit and retain employees; (9) the importance to our success of the trustworthiness of our marketplaces and the connections within our community; (10) our ability to enhance our current offerings and develop new offerings to respond to the changing needs of sellers and buyers; (11) the effectiveness of our marketing efforts; (12) the effectiveness of our mobile solutions for sellers and buyers; (13) our ability to expand our business in our core geographic markets; (14) regulation in the area of privacy and protection of user data; (15) our dependence on third-party payment providers; (16) our ability to successfully integrate the Depop and Elo7 acquisitions and execute on our ‘House of Brands’ operating model; (17) acquisitions that may prove unsuccessful or divert management attention; and (18) the potential misuse or disclosure of sensitive information about members of our community and the potential for cyber-attacks. These risks and uncertainties are more fully described in our filings with the Securities and Exchange Commission, including in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, and in our Quarterly Report on Form 10-Q for the quarter ending March 31, 2021 and subsequent reports that we file with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. 

Forward-looking statements represent our beliefs and assumptions only as of the date of this press release. We disclaim any obligation to update forward-looking statements.

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Etsy, Inc. Reports First Quarter 2021 Results

May 05, 2021
Reports 132% increase in Consolidated Year-Over-Year GMS Growth and 141% Year-Over-Year Revenue Growth

BROOKLYN, N.Y., May 5, 2021 /PRNewswire/ -- Etsy, Inc. (NASDAQ: ETSY), which operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world, today announced results for its first quarter ended March 31, 2021, including the following highlights:

  • Consolidated GMS was $3.1 billion, up 132.3% year-over-year; while Etsy marketplace GMS was $2.9 billion, up 144.1% year-over-year.
    • GMS per active buyer for the Etsy marketplace on a trailing twelve month basis grew 20% year-over-year.
    • The Etsy marketplace acquired approximately 16.3 million new and reactivated buyers who haven't purchased in a year or more. Habitual buyers, those with 6 or more purchase days and $200 or more in spend in the trailing twelve months, grew 205% year-over-year, our highest ever growth for this buyer segment.
    • GMS from paid channels was 21% of overall GMS, expanding 500 basis points compared to the first quarter of 2020.
  • Consolidated revenue was $550.6 million, up 141.5% versus the same period of 2020, with a take rate (i.e., Consolidated revenue divided by Consolidated GMS) of 17.5%.
  • Net income was $143.8 million, up 1,048.1% year-over-year, with diluted earnings per share of $1.00.
  • Non-GAAP Adjusted EBITDA was $184.1 million, with Non-GAAP Adjusted EBITDA margin (i.e., Non-GAAP Adjusted EBITDA divided by Consolidated revenue) of 33%, up 900 basis points compared to the first quarter of 2020.
  • We ended the first quarter with $1.7 billion in cash, cash equivalents, and short-term investments.

"Last year the world took notice of Etsy's highly differentiated value proposition, and that incredible momentum has continued into the first quarter of 2021," said Josh Silverman, Etsy, Inc. Chief Executive Officer. "We moved the needle by growing our team to deliver an exciting product roadmap aligned with our Right to Win strategy, and are executing a dynamic marketing strategy focused on driving frequency and keeping our buyers engaged. In a time when human connection is so vital, Etsy provides a one-of-a-kind community where sellers are empowered to grow their businesses,  reaching buyers who value finding items that express their unique identity, while putting their money where their heart is."

First Quarter 2021 Financial Summary

(in thousands, except percentages; unaudited)


The unaudited GAAP and non-GAAP financial measures and key operating metrics we use are:






Three Months Ended 

 March 31,


% Growth



2021




2020



Y/Y

GMS

$

3,143,172



$

1,353,291



132.3

%

Revenue

$

550,646



$

228,055



141.5

%

Marketplace revenue

$

413,642



$

155,921



165.3

%

Services revenue

$

137,004



$

72,134



89.9

%

Gross profit

$

407,729



$

145,639



180.0

%

Operating expenses

$

257,092



$

120,274



113.8

%

Net income

$

143,766



$

12,522



1,048.1

%

Adjusted EBITDA (Non-GAAP)

$

184,068



$

55,056



234.3

%

Adjusted EBITDA margin (Non-GAAP)

33

%


24

%


900

 bps







Active sellers

4,702



2,814



67.1

%

Active buyers

90,654



47,748



89.9

%

Percent mobile GMS

63

%


58

%


500

 bps

Percent international GMS

42

%


36

%


600

 bps


 

An active seller is a seller who has incurred at least one charge from us in the last 12 months. As part of our commitment to integrity and transparency, we continuously monitor the criteria for disqualifying a seller as an active seller. Commencing in the first quarter of 2021, we expanded our disqualifying criteria, but did not apply such criteria to prior periods as the impact of such criteria was immaterial to such periods. For information about how we define our other metrics, see our Annual Report on Form 10-K for the year ended December 31, 2020.

"Our disciplined investments in both product and marketing have enabled us to make significant strides in frequency," said Rachel Glaser, Etsy, Inc. Chief Financial Officer. "GMS per active buyer on a trailing twelve month basis was up 20% year-over-year, driven by engagement among our most valuable cohorts, specifically habitual buyers, which represent on average about 40% of Etsy marketplace GMS and our fastest growing buyer segment. With heightened consumer awareness of Etsy's brand and the breadth of unique products that increase keyword inventory, our marketing dollars continue to yield positive returns, as evidenced by very healthy adjusted EBITDA and margins in the first quarter."

First Quarter 2021 Operating Highlights

Select highlights of our first quarter operating performance and business initiatives are outlined below:

Product: Aligned with our Right to Win strategy, we improved customer experiences across the Etsy marketplace, including the following activities:

  • We continue to focus on developing a Search and Discovery experience that unlocks the value of our unique items. In the first quarter of 2021, we enhanced personalized search and incorporated more user features into our ranking models to better understand our users interests and needs, which led to increased engagement, conversion, and repeat purchase rates across all devices.

  • We believe that fostering and elevating the quality of human connections will enable us to drive buyer engagement, loyalty, and purchase frequency. During the quarter we launched a new version of our "Sell on Etsy" App with updated features such as a redesigned dashboard and "Convos" to enhance interactions between buyers and sellers.

  • We have commenced robust efforts to improve buyer fulfillment, focused on speed expectations, delivery predictability, issue resolution, and seller reputation. For example, we made our buyer protection policy more visible to buyers to bolster trust, offered sellers additional discounted shipping labels, and expanded seller tools to reduce lateness by clearly displaying a schedule of their upcoming and/or past-due orders.

  • Our sellers' collection of unique items represents a large assortment of over 92 million handmade, customized, personalized, vintage, and craft supply products from all over the world. During the quarter we launched several initiatives aimed at elevating the visibility of personalized and bespoke inventory to highlight those purchase occasions that are uniquely Etsy.

Marketing: We continued to drive frequency among existing buyers and acquired new buyers as a result of expanded investments across all marketing channels:

  • In television and digital video, we rolled out our new TV campaign, "Meant for You," in the United States designed with our buyers in mind, and showcasing our sellers' broad collection of unique items. The campaign, which was released in late January, helped improve our brand metrics throughout the quarter.

  • We leaned into saved searches and favorites, and engaged with hundreds of influencers to promote strategic holiday campaigns for Valentine's Day and U.K. Mother's Day, which resulted in strong reach and buyer engagement. We also elevated Black sellers through a Black History Month Editor's Pick page — in addition to our existing Black Owned Shops page. One particularly impactful campaign was our work with the women of Gee's Bend Quilters, who were featured on the Etsy marketplace; many shops sold out within the campaign's first 24 hours.

  • We expanded Offsite Ads to include more affiliate channels. Our sellers can now reach prospective buyers on major publishing sites such as Buzzfeed, Martha Stewart, Real Simple, and Better Homes & Gardens, as well as the Google Display Network, which helps buyers find our sellers' items while they're browsing their favorite websites or using mobile devices and apps.

Impact Pillars: We continued to make progress on our Impact strategy which reflects the positive economic, social, and ecological impact we want to have on the world while advancing and complementing our business strategy. Here are some highlights:

  • We introduced a new way for buyers to invest in creators and creativity both on and off Etsy. Buyers in the United States who are purchasing from sellers with Etsy Payments can now round up their order total to the nearest dollar and donate the change to the Uplift Fund, which contributes to nonprofits that work to dismantle barriers to creative entrepreneurship, such as lack of digital education and training and access to capital. Since the program launched in February 2021, over 1 million users have participated, marking a great start toward our 2021 goal to raise over $2 million.

  • Etsy stands united with the Asian American and Pacific Islander ("AAPI") community against the marked increase in violence, hate speech, and harassment directed toward the AAPI community in the United States since the start of the COVID-19 pandemic. In addition to support and training for our employees, Etsy pledged donations totaling $500,000 to the Asian Pacific Policy and Planning Council and Asian Americans Advancing Justice in support of the broader AAPI community.

  • In February 2021, we set a target to continue to run a carbon neutral business and to achieve Net Zero by 2030, addressing not only our Scope 1 and 2 emissions, including our office operations and purchased energy, but also our Scope 3 emissions, which include seller activities like shipping and packaging. We are also focusing in 2021 on further work to establish our Etsy and Reverb marketplaces as destinations for sustainably-minded shoppers and conscious living.

  • Etsy recently completed its 2020 Global Seller Census which will be released soon on the Etsy News Blog. This document  provides a snapshot of aspects of our global seller community and the economic opportunities enabled by the Etsy marketplace.

Reverb:

  • Reverb benefited from macroeconomic e-commerce tailwinds such as stimulus checks and pandemic-related musical instrument inventory constraints. During the first quarter of 2021, Reverb continued to grow faster than the overall music industry in the United States, and also saw strong growth in its core international markets.

  • During the quarter, Reverb made investments to expand inventory and improve the user experience for buyers and sellers, including enhancements in search, personalization, and the Reverb app, which now has better jumping off points for product discovery and easy access to curated musical equipment. Reverb also launched "Gear Collections" a new tool that allows Reverb's members to keep track of all their gear and understand its potential value. Close to 2,000 listings have already been added to Gear Collections as of March 31, 2021.

Financial Guidance and Outlook

Given the continued uncertainty of future macroeconomic conditions as a result of the ongoing COVID-19 pandemic, Etsy is not issuing guidance for the full year 2021 and will continue providing guidance on a quarterly basis until otherwise stated. Below is Etsy's guidance for consolidated GMS, revenue, and Adjusted EBITDA for the second quarter of 2021.

 



Q2 2021 Guidance



May 5, 2021

GMS Year-Over-Year Growth


5% - 15%

GMS


~$2.8B - $3.1B

Revenue Year-Over-Year Growth


15% - 25%

Revenue


~$493M - $536M

Adjusted EBITDA Margin*


25% - 28%

Adjusted EBITDA


~$129M - $144M




*Assumes the midpoint of our revenue guidance.

 

Mr. Silverman commented, "We currently expect Q2 2021 GMS to decelerate along with the rest of e-commerce as we lap the tremendous 2020 growth rates. That said, we'll keep the pedal to the metal in 2021 to continue to improve our customer experiences, make Etsy top-of-mind for the millions of buyers who have found Etsy for the first time or are relying on us now more than ever, and further invest in our very large market opportunity."


Webcast and Conference Call Information

Etsy will host a video webcast conference call to discuss these results at 5:00 p.m. Eastern Time today, which will be live-streamed via our Investor Relations website (investors.etsy.com) under the Events section. Those interested in submitting questions during the earnings call can do so by using the Q&A chat window, which will be available during the webcast. A copy of the earnings call presentation will also be posted to our website.

A replay of the video webcast will be available through the same link following the conference call starting at 8:00 p.m. Eastern Time this evening, for at least three months thereafter.

About Etsy

Etsy, Inc. operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world. Our primary marketplace, Etsy.com, is the global destination for unique and creative goods. Buyers come to Etsy to be inspired and delighted by items that are crafted and curated by creative entrepreneurs. For sellers, we offer a range of tools and services that address key business needs. In addition, Etsy, Inc. owns Reverb, a leading global online marketplace dedicated to buying and selling new, used, and vintage musical instruments.

Etsy's mission is to "Keep Commerce Human," and we're committed to using the power of business to strengthen communities and empower people. Our company was founded in 2005 and is headquartered in Brooklyn, New York.

Etsy has used, and intends to continue using, its Investor Relations website and the Etsy News Blog (blog.etsy.com/news) to disclose material non-public information and to comply with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website and the Etsy News Blog in addition to following our press releases, SEC filings, and public conference calls and webcasts.

Investor Relations Contact:

Deb Wasser, Vice President, Investor Relations and ESG Engagement
ir@etsy.com

Gabriel Ratcliff, Director, Investor Relations
ir@etsy.com 

Media Relations Contact:

Sarah Marx, Senior Manager, Corporate Communications
press@etsy.com

Cautionary Statement Regarding Forward-Looking Statements

This press release contains or references forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include statements relating to our financial guidance for the second quarter of 2021 and key drivers thereof; the uncertain impact that the COVID-19 pandemic or its abatement may have on our business, strategy, operating results, key metrics, financial condition, profitability, and cash flows, on changes in overall levels of consumer spending, on e-commerce generally and on volatility in the global economy; the impact of our strategy, marketing and product initiatives on our business and operating results; our future investments; our intended environmental, social, and ecological impacts; and the size of and our ability to capitalize on our large market opportunity. Forward-looking statements include all statements that are not historical facts. In some cases, forward-looking statements can be identified by terms such as "aim," "anticipate," "believe," "could," "enable," "estimate," "expect," "goal," "intend," "may," "plan," "potential," "target," "will," or similar expressions and the negatives of those words.

Forward-looking statements involve substantial risks and uncertainties that may cause actual results to differ materially from those that we expect. These risks and uncertainties include: (1) our ability to continue our rapid growth; (2) risks related to the ongoing COVID-19 pandemic, which continues to impact our business and results of operations in numerous ways that remain volatile and unpredictable and risks related to the return to pre-COVID consumer shopping behavior; (3) the fluctuation of our quarterly operating results; (4) our failure to meet our publicly announced guidance or other expectations; (5) our ability to successfully execute on our business strategy or if our strategy proves to be ineffective; (6) our ability to attract and retain an active and engaged community of sellers and buyers; (7) macroeconomic events that are outside of our control; (8) our ability to recruit and retain employees; (9) the importance to our success of the trustworthiness of our marketplaces and the connections within our community; (10) our ability to enhance our current offerings and develop new offerings to respond to the changing needs of sellers and buyers; (11) the effectiveness of our marketing efforts; (12) the effectiveness of our mobile solutions for sellers and buyers; (13) our ability to expand our business in our core geographic markets; (14) regulation in the area of privacy and protection of user data; (15) our dependence on third-party payment providers; (16) acquisitions that may prove unsuccessful or divert management attention; and (17) the potential misuse or disclosure of sensitive information about members of our community and the potential for cyber-attacks. These risks and uncertainties are more fully described in our filings with the Securities and Exchange Commission, including in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2020, and subsequent reports that we file with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur.

Forward-looking statements represent our beliefs and assumptions only as of the date of this press release. We disclaim any obligation to update forward-looking statements.

 

Etsy, Inc.

Condensed Consolidated Balance Sheets

(in thousands; unaudited)






As of
March 31,

2021


As of
December 31,

2020

ASSETS




Current assets:




Cash and cash equivalents

$

1,163,678



$

1,244,099


Short-term investments

502,569



425,119


Accounts receivable, net

22,991



22,605


Prepaid and other current assets

46,277



56,152


Funds receivable and seller accounts

158,104



146,806


Total current assets

1,893,619



1,894,781


Restricted cash

5,341



5,341


Property and equipment, net

107,960



112,495


Goodwill

139,745



140,810


Intangible assets, net

182,312



187,449


Deferred tax assets

7,723



115


Long-term investments

137,655



39,094


Other assets

23,056



24,404


Total assets

$

2,497,411



$

2,404,489


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

16,386



$

40,883


Accrued expenses

218,157



232,352


Finance lease obligations—current

8,639



8,537


Funds payable and amounts due to sellers

158,104



146,806


Deferred revenue

12,260



11,264


Other current liabilities

13,499



14,822


Total current liabilities

427,045



454,664


Finance lease obligations—net of current portion

43,042



44,979


Deferred tax liabilities

33



58,481


Long-term debt, net

1,302,345



1,062,299


Other liabilities

41,172



41,642


Total liabilities

1,813,637



1,662,065


Total stockholders' equity

683,774



742,424


Total liabilities and stockholders' equity

$

2,497,411



$

2,404,489


 


Etsy, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts; unaudited)




Three Months Ended 

 March 31,


2021


2020

Revenue

$

550,646



$

228,055


Cost of revenue

142,917



82,416


Gross profit

407,729



145,639


Operating expenses:




Marketing

151,204



48,505


Product development

53,706



37,782


General and administrative

52,182



33,987


Total operating expenses

257,092



120,274


Income from operations

150,637



25,365


Other income (expense), net

7,091



(15,672)


Income before income taxes

157,728



9,693


(Provision) benefit for income taxes

(13,962)



2,829


Net income

$

143,766



$

12,522


Net income per share attributable to common stockholders:




Basic

$

1.14



$

0.11


Diluted

$

1.00



$

0.10


Weighted-average common shares outstanding:




Basic

126,214,735



118,138,186


Diluted

144,714,686



123,119,053


 

Etsy, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands; unaudited)




Three Months Ended 

 March 31,


2021


2020

Cash flows from operating activities




Net income

$

143,766



$

12,522


Adjustments to reconcile net income to net cash provided by operating activities:




Stock-based compensation expense

20,351



13,811


Depreciation and amortization expense

13,080



15,163


Provision for expected credit losses

4,601



3,684


Foreign exchange (gain) loss

(4,395)



8,157


Non-cash interest expense

271



8,570


Deferred benefit for income taxes

(3,068)



(2,829)


Other non-cash expense, net

1,184



530


Changes in operating assets and liabilities

(27,325)



(29,944)


Net cash provided by operating activities

148,465



29,664


Cash flows from investing activities




Purchases of property and equipment

(526)



(567)


Development of internal-use software

(3,226)



(1,261)


Purchases of marketable securities

(268,972)



(101,501)


Sales and maturities of marketable securities

91,714



109,422


Net cash (used in) provided by investing activities

(181,010)



6,093


Cash flows from financing activities




Payment of tax obligations on vested equity awards

(14,802)



(4,198)


Repurchase of stock



(24,992)


Proceeds from exercise of stock options

3,930



4,896


Payment of debt issuance costs

(25)



(14)


Settlement of convertible senior notes

(27,319)




Payments on finance lease obligations

(2,421)



(2,566)


Other financing, net

1,259



(5,804)


Net cash used in financing activities

(39,378)



(32,678)


Effect of exchange rate changes on cash

(8,498)



(4,018)


Net decrease in cash, cash equivalents, and restricted cash

(80,421)



(939)


Cash, cash equivalents, and restricted cash at beginning of period

1,249,440



448,634


Cash, cash equivalents, and restricted cash at end of period

$

1,169,019



$

447,695


 

Currency-Neutral GMS Growth

We calculate currency-neutral GMS growth by translating current period GMS for goods sold that were listed in non-U.S. dollar currencies into U.S. dollars using prior year foreign currency exchange rates.

As reported and currency-neutral GMS growth for the periods presented below is as follows:


Quarter-to-Date Period Ended


Year-to-Date Period Ended


As Reported


Currency-
Neutral


FX Impact


As Reported


Currency-
Neutral


FX Impact

March 31, 2021

132.3

%


127.5

%


4.8

%


132.3

%


127.5

%


4.8

%

December 31, 2020

117.7

%


115.2

%


2.5

%


106.7

%


105.7

%


1.0

%

September 30, 2020

119.4

%


117.4

%


2.0

%


101.1

%


100.9

%


0.2

%

June 30, 2020

145.6

%


146.7

%


(1.1)

%


90.8

%


91.6

%


(0.8)

%

March 31, 2020

32.2

%


32.6

%


(0.4)

%


32.2

%


32.6

%


(0.4)

%

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin

In this press release, we provide Adjusted EBITDA, a non-GAAP financial measure that represents our net income adjusted to exclude: interest and other non-operating expense, net; provision (benefit) for income taxes; depreciation and amortization; stock-based compensation expense; foreign exchange (gain) loss; and acquisition-related expenses. We also provide Adjusted EBITDA margin, a non-GAAP financial measure that presents Adjusted EBITDA divided by revenue. Below is a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure.

We have included Adjusted EBITDA and Adjusted EBITDA margin because they are key measures used by our management and Board of Directors to evaluate our operating performance and trends, allocate internal resources, prepare and approve our annual budget, develop short- and long-term operating plans, determine incentive compensation, and assess the health of our business. As our Adjusted EBITDA increases, we are able to invest more in our platform.

We believe that Adjusted EBITDA and Adjusted EBITDA margin can provide a useful measure for period-to-period comparisons of our business as it removes the impact of certain non-cash items and certain variable charges.

Adjusted EBITDA and Adjusted EBITDA margin have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

  • Adjusted EBITDA does not reflect other non-operating expenses, net of other non-operating income, including net interest expense;

  • Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;

  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

  • Adjusted EBITDA does not consider the impact of stock-based compensation expense;

  • Adjusted EBITDA does not consider the impact of foreign exchange (gain) loss;

  • Adjusted EBITDA does not reflect acquisition-related expenses; and

  • other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA and Adjusted EBITDA margin alongside other financial performance measures, including net income, revenue, and our other GAAP results.

 

Reconciliation of Net Income to Adjusted EBITDA

(Unaudited)




Three Months Ended 

 March 31,


2021


2020






(in thousands)

Net income

$

143,766



$

12,522


Excluding:




Interest and other non-operating expense, net (1)

706



6,354


Provision (benefit) for income taxes

13,962



(2,829)


Depreciation and amortization

13,080



15,163


Stock-based compensation expense

20,351



13,811


Foreign exchange (gain) loss (2)

(7,797)



9,318


Acquisition-related expenses



717


Adjusted EBITDA

$

184,068



$

55,056


Divided by:




Revenue

$

550,646



$

228,055


Adjusted EBITDA margin

33

%


24

%



(1)

Included in interest and other non-operating expense, net is primarily non-cash interest expense, including amortization of debt issuance costs, related to our convertible debt offerings, which were entered into in March 2018, September 2019, and August 2020. The adoption of Accounting Standards Update 2020-06 in the first quarter of 2021 resulted in a decrease in non-cash interest expense related to our convertible debt offerings as there was no amortization of the debt discount due to its derecognition.



(2)

Foreign exchange (gain) loss is primarily driven by the change in U.S. dollar, Euro, Pound Sterling, and Canadian dollar exchange rates on our intercompany and other non-functional currency cash balances.

 

Cision View original content:http://www.prnewswire.com/news-releases/etsy-inc-reports-first-quarter-2021-results-301284792.html

SOURCE Etsy, Inc.

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