ETSY INC

Previous wording

Etsy operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world. These marketplaces share our mission, common levers for growth, similar business models, and a strong commitment to use business and technology to strengthen communities and empower people.

Current wording

Etsy 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 and technology to strengthen communities and empower people.

Previous wording

Our primary Etsy marketplace is the global destination for unique, creative goods from independent sellers. It connects artisans and entrepreneurs with thoughtful consumers seeking items that reflect their tastes and values. We aim to create a virtuous cycle that benefits all of our stakeholders. Ultimately, our success is tied to our sellers; we make money when they do. In addition to providing them with access to tens of millions of buyers, we offer tools and services to help sellers grow. For buyers, we surface quality listings that offer great value and provide a reliable shopping experience. When buyers are satisfied, it fuels this cycle.

Current wording

Our primary marketplace, Etsy, is the global destination for unique and creative goods. It connects artisans and entrepreneurs with thoughtful consumers seeking items that reflect their tastes and values. We aim to create a virtuous cycle that benefits all of our stakeholders. Ultimately, our success is tied to our sellers; we make money when they do. In addition to providing them with access to tens of millions of buyers, we offer a range of tools and services that address key business needs. Buyers come to Etsy to be inspired and delighted by items that are crafted and curated by creative entrepreneurs.

Previous wording

In addition to our core Etsy marketplace, our marketplaces include Reverb Holdings, Inc. (“Reverb”), our musical instrument marketplace acquired in 2019, and Depop Limited (“Depop”), our fashion resale marketplace acquired in 2021. See “Purchase Agreement” section below for discussion related to Reverb. Each Etsy, Inc. marketplace primarily operates independently, while benefiting from shared expertise in product development, marketing, technology, and customer support.

Current wording

In addition to our core Etsy marketplace, we also own Depop Limited (“Depop”), a fashion resale marketplace acquired in 2021. On June 2, 2025, we completed the previously announced sale of Reverb Holdings, Inc. (“Reverb”), our musical instrument marketplace acquired in 2019. Our condensed consolidated financial results and related disclosures for the three and six months ended June 30, 2025 include the results of Reverb until June 2, 2025. Our marketplaces operate independently, while benefiting from shared expertise in product development, marketing, technology, and customer support.

Previous wording

First Quarter 2025 Key Metrics and Financial Highlights

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Second Quarter 2025 Key Metrics and Financial Highlights

Previous wording

As of March 31, 2025, our marketplaces connected 8.1 million active sellers and 94.8 million active buyers in nearly every country in the world. In the three months ended March 31, 2025, sellers generated GMS of $2.8 billion.

Current wording

As of June 30, 2025, our marketplaces connected 8.1 million active sellers and 93.3 million active buyers in nearly every country in the world. In the three and six months ended June 30, 2025, sellers generated GMS of $2.8 billion and $5.6 billion, respectively.

Previous wording

Total revenue was $651.2 million in the three months ended March 31, 2025. In the three months ended March 31, 2025, we recorded net loss of $52.1 million, and non-GAAP Adjusted EBITDA of $171.1 million. See “Non-GAAP Financial Measures” for more information and for a reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable financial measure calculated in accordance with GAAP. As of March 31, 2025, it was determined that a sale of the Reverb reporting unit was more likely than not. As such, a quantitative assessment was performed, resulting in a non-cash goodwill impairment charge of $101.7 million in the three months ended March 31, 2025. See Part I, Item 1, “Note 5—Goodwill” for further information.

Current wording

Total revenue was $672.7 million and $1.3 billion in the three and six months ended June 30, 2025, respectively. In the three and six months ended June 30, 2025, we recorded net income (loss) of $28.8 million and $(23.3) million, respectively, and non-GAAP Adjusted EBITDA of $169.0 million and $340.1 million, respectively. See “Non-GAAP Financial Measures” for more information and for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated in accordance with GAAP.

Previous wording

Cash and cash equivalents and short-term investments were $867.7 million as of March 31, 2025. As of March 31, 2025, we had three outstanding series of convertible notes, which collectively had a net carrying value of $2.3 billion. Additionally, we have the ability to draw down on our $400.0 million senior secured revolving credit facility. In the three months ended March 31, 2025, we had positive operating cash flows of $49.2 million.

Current wording

Cash and cash equivalents and short-term investments were $1.4 billion as of June 30, 2025. As of June 30, 2025, we had four outstanding series of convertible notes, which collectively had a net carrying value of $3.0 billion. Additionally, we have the ability to draw down on our $400.0 million senior secured revolving credit facility. In the six months ended June 30, 2025, we had positive operating cash flows of $157.3 million.

Previous wording

We collect and analyze operating and financial data to evaluate the health and performance of our business and allocate our resources (such as capital, people, and technology investments). We are providing Etsy marketplace standalone information in certain instances where particularly relevant. The financial measures and key operating metrics we use are:

Current wording

We collect and analyze operating and financial data to evaluate the health and performance of our business and allocate our resources (such as capital, people, and technology investments). We are providing Etsy marketplace information in certain instances where particularly relevant. The financial results of Reverb have been included in our consolidated financial results until June 2, 2025 (the date of sale) and for all periods presented in this table, except as noted below. The financial measures and key operating metrics we use are:

Previous wording

(1)Consolidated GMS for the three months ended March 31, 2025 includes Etsy marketplace GMS of $2.3 billion.

Current wording

(1)Consolidated GMS for the three and six months ended June 30, 2025 includes Etsy marketplace GMS of $2.4 billion and $4.7 billion, Depop GMS of $249.6 million and $483.1 million, and Reverb GMS of $153.0 million and $381.3 million, respectively.

Previous wording

(3)Consolidated active sellers and active buyers includes Etsy marketplace active sellers and active buyers of 5.4 million and 88.5 million, respectively, as of March 31, 2025.

Current wording

(3)Consolidated active sellers and active buyers includes Etsy marketplace active sellers and active buyers of 5.4 million and 87.3 million, respectively, and excludes Reverb active sellers and active buyers as of June 30, 2025.

Previous wording

GMS decreased $193.2 million to $2.8 billion in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease in GMS between the three months ended March 31, 2025 and 2024 was primarily driven by a decrease in Etsy marketplace GMS, partially offset by an increase in GMS for the Depop marketplace. Etsy marketplace GMS reflected the continued impact of pressure on consumer discretionary product spending, a highly promotional and competitive retail environment, and category mix. In addition, GMS at the start of 2025 is being impacted by changes to Etsy’s product development strategy last year which prioritized foundational investments over near-term GMS driving initiatives. The Etsy marketplace GMS per active buyer on a trailing twelve-month basis declined 3.5% year-over-year to $120, along with a year-over-year decline of 3.4% of active buyers on the Etsy marketplace to 88.5 million.

Current wording

GMS decreased $143.0 million to $2.8 billion in the three months ended June 30, 2025 compared to the three months ended June 30, 2024, and GMS decreased $336.2 million to $5.6 billion in the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The decrease in GMS between the three and six months ended June 30, 2025 and 2024 was primarily driven by a decrease in Etsy marketplace GMS and the sale of Reverb on June 2, 2025, partially offset by an increase in GMS for the Depop marketplace. At the start of 2025, Etsy marketplace GMS was impacted by pressure on consumer discretionary product spending, a highly promotional and competitive retail environment, category mix, and changes to Etsy’s product development strategy last year which prioritized foundational investments over near-term GMS driving initiatives. While some of these factors persist, we saw momentum in the second quarter attributable in part to improved app performance and effective marketing initiatives. The Etsy marketplace GMS per active buyer on a trailing twelve-month basis declined 2.9% year-over-year to $120, along with a year-over-year decline of 4.6% of active buyers on the Etsy marketplace to 87.3 million.

Previous wording

U.S. buyer GMS is GMS from transactions in which the shipping address entered by the buyer at the time of sale is in the U.S., net of refunds. GMS from transactions in which the shipping address entered by the buyer at the time of sale is not in the U.S is non-U.S. buyer GMS. Consolidated and Etsy marketplace percent U.S. Buyer GMS for the three months ended March 31, 2025 were 75%. Consolidated and Etsy marketplace percent U.S. Buyer GMS for the three months ended March 31, 2024 were 74% and 73%, respectively.

Current wording

U.S. buyer GMS is GMS from transactions in which the shipping address entered by the buyer at the time of sale is in the U.S., net of refunds. GMS from transactions in which the shipping address entered by the buyer at the time of sale is not in the U.S is non-U.S. buyer GMS. Percent U.S. buyer GMS for the periods presented below are as follows:

Previous wording

There is considerable uncertainty as to when specific tariffs may go into effect, how potential changes to de minimus exemptions may play out, and the impact higher tariffs may have on consumer demand and discretionary wallet share. Any circumstances that reduce consumer demand or hinder our sellers' cross-border trade may adversely affect our business. See Part II, Item 1A, “Risk Factors” for further detail.

Current wording

There is considerable uncertainty as to when specific tariffs may go into effect, how recent and potential future changes to de minimis exemptions may play out, and the impact higher tariffs may have on consumer demand and discretionary wallet share. Any circumstances that reduce consumer demand or hinder our sellers' cross-border trade may adversely affect our business. See Part II, Item 1A, “Risk Factors” for further detail.

Previous wording

Adjusted EBITDA represents our net (loss) income adjusted to exclude: stock-based compensation expense and related payroll taxes; depreciation and amortization; provision for income taxes; interest and other non-operating income, net; foreign exchange loss (gain); asset impairment charge; acquisition, divestiture, and corporate structure-related expenses; and restructuring and other exit (income) costs. Adjusted EBITDA margin is Adjusted EBITDA divided by revenue. See “Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable GAAP financial measure.

Current wording

Adjusted EBITDA represents our net income (loss) adjusted to exclude: stock-based compensation expense and related payroll taxes; depreciation and amortization; provision for income taxes; interest and other non-operating income, net; foreign exchange loss (gain); asset impairment charge; acquisition, divestiture, and corporate structure-related expenses; loss on sale of business; retroactive non-income tax expense; and restructuring and other exit (income) costs. Adjusted EBITDA margin is Adjusted EBITDA divided by revenue. See “Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure.

Previous wording

Marketplace revenue decreased primarily due to a decrease in transaction fee revenue, including offsite advertising, of 6.3%, due to a mix of volume and pricing, primarily driven by a decline in GMS for the Etsy marketplace, and partially offset by an increase in GMS for the Depop marketplace, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This decrease was partially offset by an increase in marketplace revenue due to pricing, driven by the launch of a seller set-up fee for the Etsy marketplace in April 2024, under which a seller pays a set-up fee when they open a shop. Additionally, marketplace revenue increased due to a mix of volume and pricing, related to a 2.1% increase in payment revenue, primarily driven by Depop payments expansion as well as higher payments revenue in locations in which we charge a higher payments fee for the Depop marketplace.

Current wording

Marketplace revenue decreased primarily due to an overall volume decrease in transaction fee revenue of 5.2%, primarily driven by a decline in GMS for the Etsy marketplace, and to a lesser extent, the Reverb marketplace given the sale on June 2, 2025, and partially offset by an increase in GMS for the Depop marketplace. This decrease was partially offset by an increase in the seller set-up fee as well as expansion of the fee to additional locations. Additionally, marketplace revenue increased as a result of a 2.4% increase in payment revenue, primarily driven by an increase in transactions on the Etsy and Depop marketplaces in locations in which we charge a higher payments fee, as well as volume related to Depop payments expansion, and partially offset by a decrease related to the sale of the Reverb marketplace.

Previous wording

The growth in Services revenue was primarily driven by an increase of 6.2% in on-site advertising revenue, primarily due to an increase in average price per click on Etsy Ads, and, to a lesser extent, an increase from the Depop marketplace.

Current wording

The growth in Services revenue was primarily driven by an increase of 12.7% in on-site advertising revenue, primarily due to an increase in average price per click on Etsy Ads, and, to a lesser extent, an increase in on-site advertising revenue from the Depop marketplace.

Previous wording

Product development expenses increased, primarily due to increased employee compensation-related expenses, including stock-based compensation. These increases were partially offset by an increase in the amount of employee-related costs capitalized as a result of several larger projects in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Current wording

Product development expenses decreased, primarily due to an increase in the amount of employee-related costs capitalized as a result of several larger projects, and a decrease in stock-based compensation, primarily due to forfeitures related to the sale of Reverb on June 2, 2025. These decreases were largely offset by increased employee compensation-related expenses.

Previous wording

Other expense, net decreased from other income, net, primarily driven by the remeasurement of non-functional currency cash and intercompany balances as changes in exchange rates resulted in a noncash loss for the three months ended March 31, 2025 as compared to a noncash gain for the three months ended March 31, 2024.

Current wording

Other expense, net decreased from other income, net, primarily driven by changes in exchange rates that impact our non-functional currency cash and intercompany balances, which resulted in a loss for the three months ended June 30, 2025 as compared to a gain for the three months ended June 30, 2024. Other expense, net decreased to a lesser extent due to a net loss on the sale of Reverb.

Previous wording

The increase in cost of revenue was primarily driven by an increase in cloud-related hosting and bandwidth costs and Etsy Insider loyalty program costs, which launched in beta form in the third quarter of 2024. These increases were partially offset by a net decrease in payments processing fees driven by a net GMS decrease and cost optimization efforts, partially offset by an increase due to payments expansion.

Current wording

The increase in cost of revenue was driven by an increase in cloud-related hosting and bandwidth costs, Etsy Insider loyalty program costs, which launched in beta form in the third quarter of 2024, and, to a lesser extent, cost of refunds. These increases were partially offset by a net decrease in payments processing fees driven by a net GMS decrease and cost optimization efforts.

Previous wording

Marketing expenses decreased, primarily driven by a decrease in stock-based compensation primarily due to forfeitures related to an executive departure. Direct marketing costs increased slightly in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This was driven by an increased focus on performance marketing, as we continued to increase investments in efficient channels and regions with positive return on investment. The increase in performance marketing was largely offset by a decrease in spend on brand marketing as a result of a decrease in broadcasting costs across different media channels primarily in North America, including no prime time big game television advertisement as compared to the first quarter of 2024. Paid GMS was 23% of overall GMS for the three months ended March 31, 2025 compared to 20% for the three months ended March 31, 2024. We gained leverage as marketing did not increase as fast as revenue.

Current wording

Marketing expenses increased, primarily driven by increased direct marketing costs. This was driven by an increased focus on performance marketing, as we continued to increase investments in efficient channels with positive return on investment, including search engine marketing, product listing ads, and paid social. The increase in performance marketing was partially offset by a decrease in spend on brand marketing as a result of a decrease in broadcasting investments across different media channels primarily in North America, including no prime time big game television advertisement as compared to 2024. Paid GMS was 23% of overall GMS for the six months ended June 30, 2025 compared to 21% for the six months ended June 30, 2024.

Previous wording

Asset impairment charge was $101.7 million in the three months ended March 31, 2025, related to the impairment of the goodwill of Reverb. See Part I, Item 1, “Note 5—Goodwill” for more information. There was no asset impairment charge in the three months ended March 31, 2024.

Current wording

Asset impairment charges were $101.7 million in the six months ended June 30, 2025, related to the impairment of the goodwill of Reverb. See Part I, Item 1, “Note 6—Goodwill” for more information.

Previous wording

The primary drivers of our income tax provision for the three months ended March 31, 2025 were tax expense on income before income taxes excluding the impairment charge and tax deficiencies from stock-based compensation due to a lower stock price at vesting of restricted stock units compared to the stock price upon grant.

Current wording

The primary drivers of our income tax provision for the six months ended June 30, 2025 were tax expense on income before income taxes excluding the impairment charge and tax deficiencies from stock-based compensation due to a lower stock price at vesting of restricted stock units compared to the stock price upon grant.

Previous wording

The following table reflects the reconciliation of net (loss) income to Adjusted EBITDA and the calculation of Adjusted EBITDA margin for each of the periods indicated:

Current wording

The following table reflects the reconciliation of net income (loss) to Adjusted EBITDA and the calculation of Adjusted EBITDA margin for each of the periods indicated:

Previous wording

(1)Beginning in the first quarter of 2025, we are excluding payroll tax expense related to stock-based compensation from Adjusted EBITDA because these taxes are directly related to stock-based compensation expense which is excluded from Adjusted EBITDA. Additionally, these taxes fluctuate with settlements and exercises of stock-based compensation awards, our stock price, and other factors that are beyond our control, and therefore we believe they are not reflective of our ongoing business operations or the underlying trends in our business. Management does not consider these taxes when evaluating the performance of our business or making operating plans. We believe excluding this expense from Adjusted EBITDA provides investors with a better understanding of the performance of our core business and serves as a tool for investors to use in comparing our core business operating results over multiple periods with other companies in our industry. We did not retrospectively apply this change to prior periods as the impact was immaterial to such periods. In the three months ended March 31, 2024 payroll tax expense related to stock-based compensation was $1.0 million.

Current wording

(1)Beginning in the first quarter of 2025, we are excluding payroll tax expense related to stock-based compensation from Adjusted EBITDA because these taxes are directly related to stock-based compensation expense which is excluded from Adjusted EBITDA. Additionally, these taxes fluctuate with settlements and exercises of stock-based compensation awards, our stock price, and other factors that are beyond our control, and therefore we believe they are not reflective of our ongoing business operations or the underlying trends in our business. Management does not consider these taxes when evaluating the performance of our business or making operating plans. We believe excluding this expense from Adjusted EBITDA provides investors with a better understanding of the performance of our core business and serves as a tool for investors to use in comparing our core business operating results over multiple periods with other companies in our industry. We did not retrospectively apply this change to prior periods as the impact was immaterial to such periods. In the three and six months ended June 30, 2024 payroll tax expense related to stock-based compensation was $3.1 million and $4.1 million, respectively.

Previous wording

Cash and cash equivalents and short-term investments were $867.7 million as of March 31, 2025. Additionally, we have $129.5 million in long-term investments, a majority of which we can liquidate at short notice and with minimal penalties if needed. We also have the ability to draw down on our $400.0 million senior secured revolving credit facility. As of March 31, 2025, we had net working capital of $590.8 million and in the three months ended March 31, 2025, we had positive operating cash flows of $49.2 million. We believe that this capital structure, as well as the nature and framework of our business, will allow us to meet all debt covenants, sustain our business operations, and be able to react to changing macroeconomic conditions.

Current wording

Cash and cash equivalents and short-term investments were $1.4 billion as of June 30, 2025. Additionally, we have $126.6 million in long-term investments, a majority of which we can liquidate at short notice and with minimal penalties if needed. We also have the ability to draw down on our $400.0 million senior secured revolving credit facility. As of June 30, 2025, we had net working capital of $1.2 billion and in the six months ended June 30, 2025, we had positive operating cash flows of $157.3 million. We believe that this capital structure, as well as the nature and framework of our business, will allow us to meet all debt covenants, sustain our business operations, and be able to react to changing macroeconomic conditions.

Previous wording

Our cash flows from operations are largely dependent on the amount of revenue generated on our platforms, as well as cash payments for direct marketing expenses, employee compensation-related expenses, and payments processing fees. The decrease in the three months ended March 31, 2025 of $19.9 million, compared to the same period in 2024, was primarily due to timing of the payment of accrued and other current liabilities.

Current wording

Our cash flows from operations are largely dependent on the amount of revenue generated on our platforms, as well as cash payments for direct marketing expenses, employee compensation-related expenses, and payments processing fees. The decrease in the six months ended June 30, 2025 of $62.8 million, compared to the same period in 2024, was primarily due to timing of the payment of accrued and other current liabilities and prepaid expenses and other current assets.

Previous wording

Net Cash Used in Investing Activities

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Net Cash Provided by (Used in) Investing Activities

Previous wording

Net cash used in investing activities results from purchases and maturities of investments and cash capital expenditures, including investments in website and app development and purchases of property and equipment to support our business initiatives. The decrease in the three months ended March 31, 2025 of $4.4 million, compared to the same period in 2024, was primarily due to a decrease in net purchases of investments.

Current wording

Net cash provided by (used in) investing activities results from purchases and maturities of investments and cash capital expenditures, including investments in website and app development and purchases of property and equipment to support our business initiatives, and any proceeds from sale of business. The increase in the six months ended June 30, 2025 of $83.3 million, compared to the same period in 2024, was primarily due to the proceeds from sale of Reverb, net of cash.

Previous wording

Net Cash Used in Financing Activities

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Net Cash Provided by (Used in) Financing Activities

Previous wording

Net cash used in financing activities primarily consists of cash outflows from stock repurchases. The increase in the three months ended March 31, 2025 of $41.8 million, compared to the same period in 2024, was primarily due to an increase in stock repurchases.

Current wording

Net cash provided by (used in) financing activities primarily consists of cash inflows from the issuance of convertible notes offset in part by cash outflows from stock repurchases and payments of debt issuance costs. The increase in the six months ended June 30, 2025 of $460.3 million, compared to the same period in 2024, was primarily due to the issuance of the 2025 Notes offset in part by an increase in stock repurchases and payment of debt issuance costs related to the 2025 Notes.