Investor Presentation - Etsy Investor Relations
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Investor Presentation
Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of the federal securities laws.
Forward-looking statements include statements related to our outlook, business strategy, market size,
financial guidance and key drivers thereof, our ability to execute on our strategy to own special purchase
occasions, the impact of our key initiatives, our product roadmap and potential future growth. Forward-
looking statements include all statements that are not historical facts. In some cases, forward-looking
statements can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “may,”
“plans,” “will,” “intends,” 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 history of operating
losses; (2) the fluctuation of our quarterly operating results; (3) our ability to implement our business
strategy; (4) our ability to attract and retain an active and engaged community of Etsy sellers and Etsy
buyers; (5) our ability to recruit and retain employees (6) the importance to our success of the
trustworthiness of our markets and the connections within our community; (7) our ability to enhance our
current offerings and develop new offerings to respond to the changing needs of Etsy sellers and Etsy
buyers; (8) the effectiveness of our marketing efforts; (9) our ability to effectively transition and integrate our
new executive officers and implement our business strategy; (10) the effectiveness of our mobile solutions
for Etsy sellers and Etsy buyers; (11) our ability to expand our business in our core geographic markets; (12)
our dependence on third-party payment providers; and (13) the potential misuse or disclosure of sensitive
information about our members and the potential for cyber-attacks. These risks and uncertainties are more
fully described in our filings with the SEC, including in the section entitled “Risk Factors” in our Quarterly
Report on Form 10-Q for the quarter ended September 30, 2017, and subsequent reports that we file.
Forward-looking statements represent our beliefs and assumptions only as of the date of this webcast/
presentation. We disclaim any obligation to update these forward-looking statements.
This presentation is a high-level summary of our business. For more information please refer to our form
10-K for the year ended December 31, 2017 and other filings with the SEC
2
Business Overview
3
Our Mission
Keep commerce human.
4
Etsy’s Value Proposition
1 2 3
Attractive platform Two-Sided $155 Billion
for creative Marketplace: 1.9 million estimated online
entrepreneurs active sellers, 33.4 spend in top Etsy
million active buyers, categories and
over 50 million items; geographies
creates a strong
competitive position
4 5 6
Sophisticated Strong brand Attractive financials
technology platform and awareness, with significant
widely respected high NPS scores margin potential
engineering team
and organic traffic
5
How Etsy’s Unique Marketplace Works
33.4 Million*
More Buyers More GMS
Active Buyers
Etsy is a go-to shopping destination
for unique and special goods
Invest in the
More Sellers
Buyer Experience
1.9 Million*
Active Sellers
Etsy helps sellers start, manage and
More scale their businesses
Revenue
Etsy facilitates the transaction, invests in the platform and delivers a global base of buyers
*Active buyers and active sellers were approximately 33.4 million and approximately
1.9 million, respectively, as of December 31, 2017 6
Etsy creates a marketplace for creative
entrepreneurs: Sellers focus on their craft and we
do everything else
Services and Tools
Etsy Payments
Shipping Labels
Business
Quickbooks
Shop Manager
Management
Seller Handbook
Platform Services and Tools
Etsy sponsored PLAs to drive
traffic to sellers’ shops
Promoted Listings
Pattern
Marketing Google Shopping
Services Etsy’s email marketing strategy
to drive visits
Sales and promotions tools for
sellers
Social Medial Tool
Global Buyer
Base Millions of visitors per month
7
… And we provide access to millions of buyers around the world
Personalization Connection
Made to customer specification Buyer-to-Seller relationships
Product Range Trust & Reliability
Secure transaction
Large assortment of unique,
Purchase guarantee
original and vintage products
from all over the world Frictionless shopping experience
Buyers can search and browse over 50 million items
8
Diversified revenue stream with value-added seller
services that drive revenue growth
Etsy Payments
• Transaction processing fee
• 3-4% of the transaction total
+ $0.20 - $0.51 charged in local
currency
• Mandated for all eligible sellers
Shipping Seller
• Shipping Labels Services
• Wholesale USPS/Canada Post/
59%*
FedEx shipping labels
Marketplace • $0.20 listing fee per item
• 3.5% transaction fee on goods
41%*
sold
Promoted Listings
• On-site ad product
• Cost-per-click pricing model
Pattern
• Custom website offering
• $15/month + transaction fees Other
on goods sold
0%*
*Percentage of total revenue for the year ended December 31, 2017 9
Our two-sided marketplace creates a virtuous cycle
$3.3B
Active Buyers 33.4M GMS $2.8B
28.6M
24.0M $2.4B
19.8M $1.9B
14.0M $1.4B
More Buyers More GMS
2013 2014 2015 2016 2017
2013 2014 2015 2016 2017
Invest in the
More Sellers
Annual Revenue Buyer Experience Active Sellers
1.9M
1.9M
Pattern
Shipping Labels $441.2 1.7M
1.7M
Promoted Listings 1.6M
1.6M
Etsy Payments 1.4M
1.4M
Marketplace $365.0
1.1M
$273.5
$195.6
More
$125.0
Revenue
2013 2014 2015 2016 2017
2013 2014 2015 2016 2017
10Our Growth Strategy
11Our Strategy
122017 GMS in top Etsy categories
in $ millions
800
600
400
200
Clothing & Home & Jewelry Craft Supplies Art & Paper &
Accessories Living Collectibles Party Supplies
Category
Rank (Etsy GMS) #1 #2 #3 #4 #5 #6
132017 Estimated annual spend in top Etsy categories and
geographies ~$1.3 Trillion
in $ billions
600
450
300
150
Clothing & Home & Jewelry Craft Supplies Art & Paper &
Accessories Living Collectibles Party Supplies
Category
Rank (Etsy GMS) #1 #2 #3 #4 #5 #6
** Source: Euromonitor (March 2017), Assoc. for Creative Ind. (Jan 2017), TEFAF (2017), Hiscox (2017), IBIS
14Etsy is well positioned to grow market share
estimated spend in top
$1.3T categories and top
geographies
United States estimated online spend
Canada
United Kingdom
Australia
$155B in top categories and
top geographies
France
Germany
$3B
Estimated Etsy Market
Share
2%
(based on GMS)
** Source: Euromonitor (March 2017), Assoc. for Creative Ind. (Jan 2017), TEFAF (2017), Hiscox
(2017), IBIS
15Etsy is well positioned to own “special”
Special shopping occasions happen frequently in our core
categories and core geographies
“Special” “Special”
purchases span shopping
a wide variety of occasions occur
occasions and retail quite frequently
categories. in everyday life.
special
“Special” …91%*
allows buyers of Etsy buyers agree
to express their Etsy offers items
individual style. they can’t find
elsewhere.
*In a 2016 survey of Etsy.com buyers
16When does special matter?
Style Gifting Celebrations
(me) (you) (us)
17In 2018 we aim to win by owning “special”
2 Million
Creative Entrepreneurs
Human, Personal Commerce
Unique Inventory
18
*Active sellers were approximately 1.93 million as of December 31, 2017In 2018 we aim to win by delivering “special”
33 Million
Thoughtful Consumers
Seeking something “Special”
In search for Inspiration
19
*Active buyers were approximately 33.4 million as of December 31, 20172018 Focus: Executing key initiatives to address opportunities
Marketing Capabilities Search & Discovery
Trust & Reliability Seller Tools & Services
20Our strategy to win: Our key initiatives
Secure shopping experience Traffic acquisition across all
Build trust and confidence for: channels
Unbranded items Empower sellers to compete
Marketing with larger retailers
Unbranded seller Trust and Reliability
Capabilities Emails
Digital Acquisition
SEO
Site-wide sales & promotions
Conversion Rate
Visit Growth
ACVV
Search and Discovery Frequency Expand services & tools
Curated shopping experience platform for sellers
Connected experience across all Increase promoted listing
devices inventory
Best-In-Class Enhance shipping tools
Large assortment of unique Search, Discovery
inventory connected to Seller Services and Continued expansion of business
inspiration and Inspiration management platform
Tools
Continued Pattern
enhancements
Etsy Payments: a more
frictionless payment process
21Enhancing buyer trust and removing friction from the buying
experience has increased conversion rate
New Structured Return Policy
Best Seller Badge
22Enhancing the buying experience and improving search has
increased conversion rate
Context Specific Search Ranking
Scarcity Badges
23Acquiring, engaging and retaining buyers are
critical to growing GMS
Buyer Journey
Search and Lasting
Consideration Purchase Impressions
Discovery
Brand Unique Buyer Checkout Sharing the Browsing,
Inspiration Transparency
Perception Items Experience Process experience Buying again
I’m looking for something special…… Can I find what I’m looking for? Is my purchase secure? How do I feel about Etsy?
Channels Retention and Repeat Visits
• Site Navigation • Trust Signals • Emails
• Direct Traffic • Personalized Search • Guest Checkout
• GPLA • SEO
• Recommendations • Multi-shop Checkout • SEM
• Social • Recently Viewed • Etsy Payments • More targeted marketing
24Best-In-Class tools and services that our sellers need to compete
Free Tools Paid Services
Google Shopping enables sellers to
invest in their success with product ProList inventory Etsy Payments: a more friction-
listing ads helps sellers to drive traffic to less checkout experience
their shops
Sales and Promotions tool helps sellers
to create sales and run promotions in Pattern helps sellers build custom Continued improvements to our
their shops websites and manage inventory shipping labels service 252017 Seller Services adoption rate expanded
54% of active sellers used at least one seller service
Relative sizing of Seller Services
Pattern
Shipping Labels
Promoted Listings
Etsy Payments
2013 2014 2015 2016 2017
Etsy Payments Promoted Listings Shipping Labels Pattern1
~usage rate ~usage rate ~usage rate ~usage rate
50% 15% 28% 2.5%
85% of GMS +4%* Y/Y +18%* Y/Y +11%* Y/Y
processed through
Etsy payments
*Reflects growth on an absolute basis
1Pattern was launched in April 2016, 2.5% usage represents approximately 50,000
26
active sellers as of December 31, 2017.Multi-platform social media tool to help sellers drive
traffic to their Etsy shops
Sellers can leverage their Instagram, Facebook, Twitter and Pinterest social networks to build
their businesses
27Our Strategy: Etsy wants to own “special” and win everyday
purchase occasions
Focus on Etsy.com in our six
Win “special” shopping occasions Empower the Etsy Community
core geographic markets
Celebrations
(us)
Gifting
(you)
1.9 Million*
Creative Entrepreneurs
Style
(me)
28
*Active sellers were approximately 1.93 million as of December 31, 2017Financials
29Healthy two-sided marketplace
25% GMS CAGR from 2013 to 2017
GMS
Active Sellers
Active Buyers
36M $3.4B
33.4M
28.6M
24M $2.3B
24.0M
19.8M
14.0M
12M $1.1B
1.4M 1.6M 1.7M 1.9M
1.1M
2013 2014 2015 2016 2017
30Diversified revenue mix with accelerating Seller Services
revenue growth
$500M
Marketplace
3.5% Transaction Fee
$0.20 Listing Fee
Seller Services
$375M Etsy Payments
Promoted Listings
Shipping Labels
Pattern
REVENUE
Other
$250M
$125M
$0M
2013 2014 2015 2016 2017
31Steady revenue growth over time
37% Revenue CAGR from 2013 to 2017
$441.2M
AGR
rC
-Yea $365.0M
% 5
37
$273.5M
$195.6M
$136.3M
$125.0M
$110.2M
2013 2014 2015 2016 2017 4Q16 4Q17
32Healthy Gross Profit and Gross Margins
Gross Profit
Gross Margin
$290M 68.5%
$242M
66.8%
$177M 65.1%
$122M
63.4%
$92M
$77M $73M
61.7%
60%
2013 2014 2015 2016 2017 4Q16 4Q17
33Leveraging our OPEX base to support profitable growth
25.6% 4Q Adjusted EBITDA margin
Adjusted EBITDA
Adjusted EBITDA Margin
$60M 35%
28%
$45M
$34.8M 21%
$30M
$22.8M 14%
$14.8M $15.3M
$15M $14M $13.1M $12.7M
$9.7M 7%
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17Fourth Quarter 2017: Financial Results
GMS Revenue Net Income Adjusted EBITDA2
$1.02B $136M $45M $35M
+17.8% Y/Y +23.6% Y/Y $0.36 EPS1 25.6% margin
GMS Revenue Adjusted EBITDA*
$136.3M
$1,019.5M
$34.8M
$865.2M $110.2M
$106.4M
$101.7M
$766.4M $96.9M
$719.0M $748.8M
$669.7M $677.2M $85.3M $87.6M
$629.9M $81.8M $22.8M
$14.8M $15.3M
$14.0M $13.1M $12.7M
$9.7M
1Q16 2Q16 3Q16 4Q16 1Q17 *2Q17 3Q17 4Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
1EPS reflects diluted earnings per share, basic EPS is $0.37
2Reconciliation of non-GAAP financial measures is contained in
the Appendix 35
*Revised to reflect the correction of an immaterial errorFull Year 2018 Guidance
GMS Growth Revenue Growth Adj. EBITDA Margin*
14% - 16% 21% - 23% 20% - 22%
~$3.7B - $3.8B ~$534M - $543M ~$108M - $118M**
* Reconciliation of non-GAAP financial measures is contained in the Appendix.
** Based on the mid-point of 2018 revenue guidance
Photo by Knobbly 36Management Team: Extensive marketplace, tech and financial experience
Josh Silverman Rachel Glaser Linda Findley Kozlowski Mike Fisher
Chief Executive Officer Chief Financial Officer Chief Operating Officer Chief Technology Officer
• Member of Etsy’s Board of Directors • Brings more than 30 years of senior financial • Brings more than 20 years of experience in • Manages our technology strategy helping to
• Two decades of leadership experience include experience to Etsy operations, international marketing, business further scale our global platform
growing consumer technology companies and • Previously at Leaf Group, where she served as development, public relations, and customer • Prior to joining Etsy, Mike was the co-founder
scaling global marketplaces CFO since 2015 service and managing partner of the consulting firm
• Previously served as President of Consumer • As the CFO at Move, Inc. she helped lead a
• Prior to joining Etsy in 2016, Linda was COO of AKF Partners
Products and Services at American Express, CEO successful sale of the company to News Evernote, where she oversaw worldwide • Mike’s career in technology has also included
of Skype, and CEO of shopping.com, and held Corporation operations in offices across 7 countries the roles of Chief Technology Officer of Quigo,
various executive roles at eBay Vice President of Engineering & Architecture
for PayPal, and various roles at General Electric
Jill Simeone Kruti Patel Goyal David Zhang Carissa Menendez
General Manager, Etsy Markets
General Counsel and Secretary General Manager, Seller Services Vice President, People and Workplace
• Brings more than 15 years of experience in • Manages our seller services platform globally • Manages our global marketplace through • Leads Etsy’s global People team, including talent
international strategic advising, compliance, overseeing development of the tools and services developing our business, product, and acquisition and management, learning
and public company reporting that enable our sellers to effectively start, scale and growth strategy & engagement, Workplace, HR systems, along with the
• Before joining Etsy, Jill served as Vice manage their creative businesses • Brings extensive experience launching and scaling compensation & benefits teams
President, Senior Counsel and Assistant • Held many integral roles at Etsy over the past six e-commerce platforms to Etsy • Since joining Etsy in 2013, Carrissa has held roles of
Secretary at American Express Global years from Business & Corporate Development, • Previously at Amazon where he served in a variety increasing responsibility and scaled our global HR
Business Travel International, Marketplace Integrity and Trust & Safety of roles, including leading the consumables operations processes
portfolio for Amazon subsidiary Quidsi
37Etsy’s Value Proposition
1 2 3
Attractive platform Two-Sided $155 Billion
for creative Marketplace: 1.9 estimated online
entrepreneurs million active sellers, spend in top Etsy
33.4 million active categories and
buyers, over 50 million geographies
items; creates a strong
competitive position
4 5 6
Sophisticated Strong brand Attractive financials
technology platform and awareness, with significant
widely respected high NPS scores margin potential
engineering team
and organic traffic
38Appendix
Etsy is not able, at this time, to provide GAAP targets for net income margin for 2018 because of the
unreasonable effort of estimating certain non-cash items that are excluded from non-GAAP
Adjusted EBITDA margin, including, for example, provision or benefit for income taxes and foreign
exchange gain or loss, the effect of which may be significant.
39Reconciliation of Annual Net (Loss) Income to
Adjusted EBITDA
2013 2014 2015 2016 2017
(in thousands)
Net (loss) income ($796) ($15,243) ($54,063) ($29,901) $81,800
Excluding:
Interest and other non-operating expense, net 256 549 1,202 5,502 8,736
Provision (benefit) for income taxes 854 4,983 26,069 27,025 (49,535)
Depreciation and amortization 12,380 17,223 18,550 22,525 27,197
Stock-based compensation expense 3,834 5,920 8,981 13,168 19,953
Stock-based compensation expense-acquisitions — 4,130 1,860 2,733 3,904
Asset impairment charges — — — 551 3,162
Net unrealized loss on warrant and other liabilities 419 411 3,133 — —
Foreign exchange loss (gain) — 3,049 21,775 14,951 (29,105)
Acquisition-related expenses — 2,059 — 570 —
Restructuring and other exit costs — — — — 13,897
Contribution to Etsy.org — — 3,500 — —
Adjusted EBITDA $16,947 $23,081 $31,007 $57,124 $80,009
40Reconciliation of Quarterly Net Income (Loss) to Adjusted EBITDA
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
(in thousands)
Net income (loss) $1,192 ($7,311) ($2,399) ($21,383) ($421) $11,669 $25,802 $44,750
Excluding:
Interest and other non-operating expense,
97 1,333 2,046 2,026 2,152 2,153 2,254 2,177
net
Provision (benefit) for income taxes 13,614 4,261 4,363 4,787 (1,052) (9,437) (12,562) (26,484)
Depreciation and amortization 4,731 5,103 5,786 6,905 6,938 6,660 7,022 6,577
Stock-based compensation expense 2,581 3,452 2,975 4,160 4,043 4,881 5,832 5,197
Stock-based compensation expense-
656 816 1,110 151 842 1,613 724 725
acquisitions
Asset impairment charges — — — 551 — — — 3,162
Foreign exchange (gain) loss (8,120) 6,386 (1,337) 18,022 (2,780) (16,103) (8,069) (2,153)
Acquisition-related expenses — — 512 58 — — — —
Restructuring and other exit costs — — — — — 11,260 1,766 871
Adjusted EBITDA $14,751 $14,040 $13,056 $15,277 $9,722 $12,696 $22,769 $34,822
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