Etsy, the operator of popular online marketplaces connecting creative buyers and sellers worldwide, has reported its second-quarter results for the period ending June 30, 2023.
During the second quarter, Etsy’s active buyers reached a record high, demonstrating the strong appeal of the brand and its ability to provide opportunities for sellers.
This growth in buyers contributed to a return to year-over-year Gross Merchandise Sales (GMS) growth in May and June, with the positive trend continuing into the beginning of the third quarter, according to Josh Silverman, the CEO of Etsy, Inc.
“We believe we can unlock significant growth opportunities by making Etsy a more organized, curated, and reliable place to shop, and we are aligning our investments and efforts with initiatives that move us toward this vision. Our teams are working with speed and agility to execute on our ambitious roadmap and continue serving our global community,” added Silverman.
Key Financial Highlights
- Consolidated GMS amounted to $3.0 billion, experiencing a slight decline of 0.6% year-over-year and on a currency-neutral basis.
- GMS for the Etsy marketplace totaled $2.6 billion, showing a decrease of 0.7% year-over-year and on a currency-neutral basis.
- The number of active buyers increased by 3% year-over-year, reaching an all-time high of 91 million. Etsy gained 6 million new buyers, reactivated 21% more buyers compared to the prior year, and retained active buyers at rates higher than pre-pandemic levels on a trailing twelve-month basis.
- While GMS per active buyer on a trailing twelve-month basis for the Etsy marketplace declined by 6% year-over-year to $128 in the second quarter, the metric showed signs of stabilization on a sequential basis.
- International GMS for the Etsy marketplace accounted for 47% of overall GMS, experiencing a 5% year-over-year increase as positive growth resumed during the second quarter.
- Consolidated revenue reached $628.9 million, showing a growth of 7.5% compared to the second quarter of 2022. The take rate, calculated as consolidated revenue divided by consolidated GMS, stood at 20.9%.
- Consolidated net income was $61.9 million, a decrease of $11.2 million year-over-year. This decline was due to an impairment charge of $68.1 million related to the property and equipment and intangible assets of Elo7, offset partially by a related tax benefit of $15.0 million.
- There was also a $54.0 million tax benefit related to Elo7. The consolidated net income margin, calculated as net income divided by revenue, was approximately 9.8%, and diluted net income per share amounted to $0.45.
- Etsy achieved a consolidated non-GAAP Adjusted EBITDA of $166.2 million, with a non-GAAP Adjusted EBITDA margin of around 26.4%, calculated as consolidated non-GAAP Adjusted EBITDA divided by consolidated revenue.
- As of the end of the second quarter, Etsy had $1.2 billion in cash and cash equivalents and short- and long-term investments.
- The company also repurchased approximately $39 million, or 411,421 shares, of its common stock during the quarter, as part of its stock repurchase program. On June 14, 2023, Etsy’s Board of Directors authorized a new $1 billion repurchase program.
Business Highlights Include:
During the quarter, Etsy focused on enhancing its Search & Discovery to provide a more curated and organized platform. This effort positively impacted the average order value by incorporating Etsy’s Pick listings into search results for weddings, vintage items, and certain occasions.
This also improved the buyer experience by prioritizing useful item details and higher-rated reviews in the ‘Suggested’ filter and adding organized shopping pathways on the homepage based on the perceived mission, which increased conversion rates.
Etsy made strides in creating category experiences and brand associations for Home & Living, Style, and Gifting purchase occasions.
The company introduced a curated ‘Shop the Look’ in Home & Living and launched the Etsy Registry (to be expanded in August), which saw steady growth since its launch in May. The ‘Etsy has it’ campaigns also contributed to driving brand association for these purchase occasions.
To ensure reliability and sustainability, Etsy added local delivery signals to listings in the United States and continued fulfillment improvement initiatives to achieve Net Zero emissions by 2030.
Etsy Ads played a crucial role in revenue growth, with data retrieval systems and prioritization of potential conversion in the ranking system. The company also provided tools and insights to sellers, such as the ‘Make an Offer’ feature, which saw significant engagement among vintage sellers.
The company’s marketing efforts included CRM initiatives that brought buyers back to the platform for more shopping missions. Performance marketing investments were expanded to non-core countries, resulting in a meaningful increase in new buyer acquisitions.
Etsy created notable brand moments through collaborations with artist John Legend and the Etsy Design Awards. The impact highlights included the success of Etsy’s Uplift Makers program and recognition by Disability:IN as a ‘Best Place to Work for Disability Inclusion.’
Additionally, the company published a Human Rights Commitment as part of its broader Impact strategy.
Please refer to the official Etsy announcement on its Q2 financials, which includes additional information for investors. We will review the earnings call tonight for information that is relevant to Etsy Sellers.
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