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.

Press Release Details

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Etsy, Inc. Reports Second Quarter 2021 Results

August 04, 2021
Reports 13% increase in Consolidated Year-Over-Year GMS Growth and 23% Year-Over-Year Revenue Growth

BROOKLYN, N.Y., Aug. 4, 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 second quarter ended June 30, 2021, including the following highlights:

  • Consolidated GMS was $3.0 billion, up 13.1% year-over-year; while Etsy marketplace GMS was $2.8 billion, up 14.2% year-over-year.
    • GMS per active buyer for the Etsy marketplace on a trailing twelve month basis grew 22% year-over-year.
    • The Etsy marketplace acquired approximately 11.9 million new and reactivated buyers who haven't purchased in a year or more. While the growth in new buyers decelerated year-over-year as anticipated, we added approximately 8 million new buyers in the quarter - nearly double the number of new buyers acquired in the second quarter of 2019. Habitual buyers, those with 6 or more purchase days and $200 or more in spend in the trailing twelve months, grew 115% year-over-year, continuing to be our fastest growing buyer segment.
    • GMS from paid channels was 19% of overall GMS, decreasing 200 basis points compared to the second quarter of 2020.
  • Consolidated revenue was $528.9 million, up 23.4% versus the second quarter of 2020, with a take rate (i.e., Consolidated revenue divided by Consolidated GMS) of 17.4%.
  • Net income was $98.3 million, up 1.9% year-over-year, with diluted earnings per share of $0.68.
  • Non-GAAP Adjusted EBITDA was $139.5 million, with Non-GAAP Adjusted EBITDA margin (i.e., Non-GAAP Adjusted EBITDA divided by Consolidated revenue) of 26%, down 900 basis points compared to the second quarter of 2020, as the Company invested in the business.
  • We ended the second quarter with $2.5 billion in cash, cash equivalents, and short-term investments. In early July Etsy completed the acquisitions of Depop and Elo7 for $1.625 billion and $217 million, respectively, both consisting primarily of cash.

"Etsy's second quarter 2021 performance is quite remarkable when viewed in context of how dramatically the world changed during the year-ago period," said Josh Silverman, Etsy, Inc. CEO. "It is deeply gratifying to me and our entire team that we are able to report strong year-over-year growth, with GMS and revenue up approximately 13% and 23% respectively. In fact, excluding facemasks, which were an important driver of the prior year period, second quarter GMS for the Etsy marketplace increased 31%. We're demonstrating just how many purchase occasions Etsy sellers can meet in truly delightful ways, attracting millions of new buyers and engaging our customers more than ever before. We're seeing measurable results from deepened investments in our 'Right to Win' strategy, which provides a clear roadmap for product and marketing investments to make it easier to shop on Etsy, build top of mind awareness, and solidify buyer trust."

"In the second quarter we also announced two strategic acquisitions, both completed in July," continued Mr. Silverman. "Depop and Elo7 further extend our total available market opportunities in resale, a large and fast growing apparel segment, and in Brazil, Latin America's largest e-commerce market. In addition to driving growth in our core Etsy.com marketplace, we are now focusing on integrating these exciting businesses into our 'House of Brands.'"

Second 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 

 June 30,


% Growth

(Decline)

Y/Y


Six Months Ended 

 June 30,


% Growth

(Decline)

Y/Y


2021


2020



2021


2020


GMS

$

3,041,490



$

2,688,783



13.1

%


$

6,184,662



$

4,042,074



53.0

%

Revenue

$

528,900



$

428,737



23.4

%


$

1,079,546



$

656,792



64.4

%

Marketplace revenue

$

395,463



$

332,031



19.1

%


$

809,105



$

487,952



65.8

%

Services revenue

$

133,437



$

96,706



38.0

%


$

270,441



$

168,840



60.2

%

Gross profit

$

379,931



$

317,356



19.7

%


$

787,660



$

462,995



70.1

%

Operating expenses

$

290,826



$

198,216



46.7

%


$

547,918



$

318,490



72.0

%

Net income

$

98,254



$

96,425



1.9

%


$

242,020



$

108,947



122.1

%

Adjusted EBITDA (Non-GAAP)

$

139,474



$

150,628



(7.4)

%


$

323,542



$

205,684



57.3

%

Adjusted EBITDA margin (Non-GAAP)

26

%


35

%


(900)

 bps


30

%


31

%


(100)

 bps













Active sellers

5,233



3,140



66.7

%


5,233



3,140



66.7

%

Active buyers

90,490



60,274



50.1

%


90,490



60,274



50.1

%

Percent mobile GMS

63

%


61

%


200

 bps


63

%


60

%


300

 bps

Percent international GMS

41

%


32

%


900

 bps


41

%


33

%


800

 bps

For information about how we define our metrics, see our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.

"Underlying growth and buyer cohort trends in our core Etsy marketplace remain encouraging as the world reopens and consumer spending patterns shift," said Rachel Glaser, Etsy, Inc. Chief Financial Officer. "For example, despite a decline in new buyer growth, which we anticipated as we emerge from the pandemic, in the second quarter we still added 8 million new buyers to the Etsy marketplace - nearly double the number of new buyers acquired in the second quarter of 2019. Furthermore, GMS per active buyer on a trailing twelve month basis was up 22% as compared to the second quarter of 2020, another record high for this important metric. We're also leveraging our strong financial position to invest in people, product, marketing, and infrastructure to support future growth. We believe our capital light business model will enable us to make these investments while continuing to deliver healthy levels of adjusted EBITDA."

Second Quarter 2021 Operating Highlights

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

Product: Our primary focus in 2021 is to improve customer experiences across the Etsy marketplace to engage and retain the millions of buyers that we acquired over the past year. These are just a few of our initiatives during the second quarter, aligned with our Right to Win strategy, that are focused on driving frequency and engagement.

  • We continued to improve our search capabilities by leveraging the engagement of buyers and sellers and the vast amount of data on our platform to create "XWalk," a large-scale, real-time graph retrieval engine that provides more relevant search results and narrows the semantic gap- boosting conversion and repeat purchase rate for buyers.
     
  • We made additional progress in the discovery experience, further unlocking the value of our sellers' unique collection of items by redesigning our home and landing pages using machine learning, personalization, and recommendations in a way that made content more engaging and compelling to buyers.
     
  • We improved our ranking capabilities for Etsy Ads with refined algorithms and new machine learning based models designed to expand seller returns, provide more relevant inventory for buyers, and increase click through rates and revenue for Etsy.
     
  • We created a new seller program that defines what success looks like, by celebrating and rewarding our top-rated sellers, defining standards, and giving them motivation, support, and agency to improve their Etsy businesses. This "Star Seller" program was officially introduced to our seller community on July 28, 2021.
     
  • Internationally, we introduced "local pricing," which is a way for sellers to set a specific price for the origin country of their listing, allowing a seller to more efficiently incorporate the cost of shipping into the item price, and enabling pricing strategies that can help a seller grow both domestic and export sales.

Marketing: We significantly increased our investments in marketing and continued to optimize spend across all channels. Upper funnel marketing spend, including television and digital video, was 23% of our overall marketing spend, or approximately $35 million in the second quarter.

  • In television and digital video, we rolled out new TV campaigns in the United States, United Kingdom, and Germany. Campaigns feature localized creative designed for the growth opportunity identified in each market. "Why Buy Boring?" aims to make Etsy top-of-mind among consumers in the United States and the United Kingdom, and "Etsy Has It" is designed to drive brand awareness in Germany.
     
    • These campaigns continued to drive meaningful improvement in Etsy brand metrics such as prompted and unprompted awareness, an acceleration in Etsy App downloads, and we believe contributed to an uptick in new shop openings in all three geographies.
       
  • We further adopted organic social strategies which are showing strong traction and increased buyer engagement including: user generated content and seller videos, as well as creator collaborations focused on supporting independent makers from under-represented communities. To date, we've seen our influencer collections deliver above average order value and strong awareness, engagement, and frequency.
     
  • We redesigned our marketing emails to feature more accessible and responsive designs, and created new campaigns that utilized our improved CRM capabilities and App Push notifications to promote flash sales, remind buyers of favorite shops, and send updates to lapsed Etsy app users.
     
  • We launched Etsy coupons, a highly targeted approach to driving engagement among select buyers. These are Etsy-funded promotions that buyers can redeem when purchasing any item from a shop using Etsy Payments.

Impact Pillars: We continued to make progress on our Impact strategy that 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:

  • In connection with our goal to be Net Zero by 2030, we introduced a "Shop Local" signal, a conversion-boosting initiative that provides buyers with faster delivery times while reducing shipping emissions.
     
  • We continue to highlight underrepresented communities on our marketplace. For example, during the quarter we launched our first-ever marketing campaign highlighting our Etsy.com community of Asian American Pacific Islander sellers. In addition, we supported our Etsy.com LGBTQIA+ community in a campaign that saw high buyer engagement and drove an average of $1,800 in GMS per featured seller.
     
  • Etsy was ranked number 20 on the 2021 Purpose Power Index of Most Purposeful Brands. Survey respondents considered companies to have an honest intention to improve the lives of people and their communities while staying committed to changing the world for the better for all of its stakeholders.
     
  • To support India's most vulnerable communities during the COVID-19 wave that has had a devastating impact, Etsy provided direct support to organizations delivering much needed aid.
     
  • In February 2021 we launched a program that allows buyers in the U.S. to round up their order total to the nearest dollar and donate the difference to nonprofits that work to dismantle barriers to creative entrepreneurship. To date this program has collected over 3 million donations, well on our way to achieving our 2021 goal to raise $2 million.

Reverb is focused on these four areas in 2021- increased personalization, selling more new gear, international growth, and improving the customer experience, with the following second quarter highlights:

  • We launched a premium advertising product to drive awareness and purchase intent by integrating relevant promoted content in the core buyer experiences. This product makes it easier for gear manufacturers to promote their inventory directly to a large, targeted set of buyers on Reverb.
     
  • We launched personalized recommendations and expanded the rollout of "Gear Collections," which now includes over 175,000 items from players across Reverb. This capability not only helps us learn more about buyers and personalize their experience, it also helps players understand how much their gear is worth and consider selling it.
     
  • We formed a new international product team and delivered our first global-specific feature enhancements.

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 margin for the third quarter of 2021, and some additional guidance for how Etsy's recent acquisitions of Depop and Elo7 have impacted its third quarter outlook.

GMS:

$2.9B to $3.0B; with ~12.5% year-over- year growth at the midpoint


Etsy.com standalone business: mid-single digit growth; mid-teens growth excluding facemasks



Revenue:

$500M to $525M; with ~13.5% year-over-year growth at the midpoint


Consolidated: take rate ~17.4% consolidated (includes Depop + Elo7)


Take rate excluding recent acquisitions ~17.7%



Adjusted EBITDA
margin:

Consolidated: ~25% (includes Depop + Elo7)


Excluding recent acquisitions ~28%

Mr. Silverman commented, "Through all of the changes the world has experienced during the last year, Etsy has demonstrated the relevance of our marketplaces, the dynamism of our business model and the ambition and determination of our team. Our guidance for the third quarter for the core Etsy marketplace anticipates mid-single digit GMS growth and mid-teens growth in GMS excluding facemasks. These growth levels continue to represent strength in the business and our ability to attract and engage buyers as we compare to the above e-commerce sector growth Etsy reported last year. And, we couldn't be more excited to now operate four highly differentiated, non-commoditized, and loved e-commerce brands, which we believe all share similar levers of growth to unlock value. While Reverb, Depop, and Elo7 all represent small pieces of our overall company today, we anticipate they will expand our TAM, provide new avenues for growth, and further deepen Etsy Inc.'s differentiation compared to the many commoditized places there are to shop. We're keeping our eye on the prize - investing for the long term in our tremendous market opportunity while delivering top line growth and driving strong levels of profitability."

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. These marketplaces share a mission to "Keep Commerce Human," and we're committed to using the power of business to strengthen communities and empower people. 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.

Etsy, Inc.'s "House of Brands" portfolio also includes fashion resale marketplace Depop, musical instrument marketplace Reverb, and Brazil-based handmade goods marketplace Elo7. Each Etsy, Inc. marketplace operates independently, while benefiting from shared expertise in product, marketing, technology, and customer support.

Etsy 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 third 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 ability to attract, engage, and retain buyers and sellers; our future investments; our intended environmental, social, and ecological impacts; the size of and our ability to capitalize on our large market opportunity; our ability to successfully integrate Depop and Elo7 and 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 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) 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, and subsequent reports that we file with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended June 30, 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
June 30,
2021


As of
December 31,
2020

ASSETS




Current assets:




Cash and cash equivalents

$

2,053,882



$

1,244,099


Short-term investments

430,727



425,119


Accounts receivable, net

20,283



22,605


Prepaid and other current assets

49,693



56,152


Funds receivable and seller accounts

136,395



146,806


Total current assets

2,690,980



1,894,781


Restricted cash

5,341



5,341


Property and equipment, net

105,814



112,495


Goodwill

140,045



140,810


Intangible assets, net

178,854



187,449


Deferred tax assets

46,106



115


Long-term investments

102,801



39,094


Other assets

20,475



24,404


Total assets

$

3,290,416



$

2,404,489


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

26,752



$

40,883


Accrued expenses

209,823



232,352


Finance lease obligations—current

8,691



8,537


Funds payable and amounts due to sellers

136,395



146,806


Deferred revenue

12,312



11,264


Other current liabilities

13,027



14,822


Total current liabilities

407,000



454,664


Finance lease obligations—net of current portion

40,969



44,979


Deferred tax liabilities

33



58,481


Long-term debt, net

2,273,331



1,062,299


Other liabilities

38,330



41,642


Total liabilities

2,759,663



1,662,065


Total stockholders' equity

530,753



742,424


Total liabilities and stockholders' equity

$

3,290,416



$

2,404,489


 

Etsy, Inc.

Condensed Consolidated Statements of Operations

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



Three Months Ended 

 June 30,


Six Months Ended 

 June 30,


2021


2020


2021


2020

Revenue

$

528,900



$

428,737



$

1,079,546



$

656,792


Cost of revenue

148,969



111,381



291,886



193,797


Gross profit

379,931



317,356



787,660



462,995


Operating expenses:








Marketing

167,474



114,707



318,678



163,212


Product development

61,753



45,233



115,459



83,015


General and administrative

61,599



38,276



113,781



72,263


Total operating expenses

290,826



198,216



547,918



318,490


Income from operations

89,105



119,140



239,742



144,505


Other (expense) income, net

(3,351)



(6,824)



3,740



(22,496)


Income before income taxes

85,754



112,316



243,482



122,009


Benefit (provision) for income taxes

12,500



(15,891)



(1,462)



(13,062)


Net income

$

98,254



$

96,425



$

242,020



$

108,947


Net income per share attributable to common stockholders:








Basic

$

0.77



$

0.81



$

1.91



$

0.92


Diluted

$

0.68



$

0.75



$

1.68



$

0.88


Weighted-average common shares outstanding:








Basic

126,977,990



118,865,885



126,659,372



118,483,712


Diluted

144,867,491



134,408,041



144,857,500



133,238,316


 

Etsy, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands; unaudited)



Six Months Ended 

 June 30,


2021


2020

Cash flows from operating activities




Net income

$

242,020



$

108,947


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




Stock-based compensation expense

47,791



30,536


Depreciation and amortization expense

26,065



29,334


Provision for expected credit losses

9,890



5,904


Foreign exchange (gain) loss

(3,306)



10,394


Non-cash interest expense

613



17,026


Deferred (benefit) provision for income taxes

(21,128)



7,389


Other non-cash expense, net

2,280



1,845


Changes in operating assets and liabilities

(34,063)



38,720


Net cash provided by operating activities

270,162



250,095


Cash flows from investing activities




Purchases of property and equipment

(1,917)



(209)


Development of internal-use software

(7,084)



(2,043)


Purchases of marketable securities

(268,972)



(181,198)


Sales and maturities of marketable securities

197,770



206,182


Net cash (used in) provided by investing activities

(80,203)



22,732


Cash flows from financing activities




Payment of tax obligations on vested equity awards

(56,493)



(10,551)


Repurchase of stock

(180,000)



(24,992)


Proceeds from exercise of stock options

8,037



12,177


Proceeds from issuance of convertible senior notes

1,000,000




Payment of debt issuance costs

(12,566)



(14)


Purchase of capped calls

(85,000)




Settlement of convertible senior notes

(43,853)




Payments on finance lease obligations

(4,887)



(4,927)


Other financing, net

72



(10,196)


Net cash provided by (used in) financing activities

625,310



(38,503)


Effect of exchange rate changes on cash

(5,486)



(93)


Net increase in cash, cash equivalents, and restricted cash

809,783



234,231


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

$

2,059,223



$

682,865


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

June 30, 2021

13.1

%


10.2

%


2.9

%


53.0

%


49.5

%


3.5

%

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)

%

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; (benefit) provision for income taxes; depreciation and amortization; stock-based compensation expense; foreign exchange loss (gain); 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. With respect to our expectations under "Financial Guidance and Outlook" above, reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity, and low visibility with respect to the charges excluded from these non-GAAP measures, in particular, stock-based compensation expense, foreign exchange loss (gain) and acquisition-related and other non-recurring expenses which can have unpredictable fluctuations based on unforeseen activity that is out of our control and/or cannot reasonably be predicted.

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 platforms.

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

Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, 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 loss (gain);
     
  • 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 and the Calculation of Adjusted EBITDA Margin


(in thousands, except percentages; unaudited)



Three Months Ended 

 June 30,


Six Months Ended 

 June 30,


2021


2020


2021


2020

Net income

$

98,254



$

96,425



$

242,020



$

108,947


Excluding:








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

1,079



8,294



1,785



14,648


(Benefit) provision for income taxes

(12,500)



15,891



1,462



13,062


Depreciation and amortization

12,985



14,171



26,065



29,334


Stock-based compensation expense

27,440



16,725



47,791



30,536


Foreign exchange loss (gain) (2)

2,272



(1,470)



(5,525)



7,848


Acquisition-related expenses (3)

9,944



592



9,944



1,309


Adjusted EBITDA

$

139,474



$

150,628



$

323,542



$

205,684


Divided by:








Revenue

$

528,900



$

428,737



$

1,079,546



$

656,792


Adjusted EBITDA margin

26

%


35

%


30

%


31

%



(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, August 2020, and June 2021. 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 loss (gain) 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.



(3)

Acquisition-related expenses for the three and six months ended June 30, 2021 related to our acquisitions of Depop and Elo7, while acquisition-related expenses for the three and six months ended June 30, 2020 related to our acquisition of Reverb.

 

Cision View original content:https://www.prnewswire.com/news-releases/etsy-inc-reports-second-quarter-2021-results-301348612.html

SOURCE Etsy, Inc.

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