Keep commerce human. Investor Presentation November 2019
Forward-looking This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include statements relating to our financial guidance and key drivers thereof, the timing and impact of our new and planned initiatives, including our free shipping program, anticipated launch of our unified ad platform, and our planned acquisition of Reverb, the anticipated impact of our product launches on Statements conversion rates and our future financial results, and the timing of our full migration to Google Cloud. 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 difger materially from those that we expect. These risks and uncertainties include: (1) the fluctuation of our quarterly operating results; (2) our ability to implement our business strategy; (3) our ability to attract and retain an active and engaged community of Etsy sellers and Etsy buyers; (4) our history of operating losses;(5) macroeconomic events that are outside of our control; (6) our ability to recruit and retain employees; (7) the importance to our success of the trustworthiness of our marketplace and the connections within our community; (8) our ability to enhance our current ofgerings and develop new ofgerings to respond to the changing needs of Etsy sellers and Etsy buyers; (9) the efgectiveness of our marketing efgorts; (10) the efgectiveness of our mobile solutions for Etsy sellers and Etsy buyers; (11) our ability to expand our business in our core geographic markets; (12) regulation in the area of privacy and protection of user data; (13) our dependence on third-party payment providers; (14) acquisitions which may prove unsuccessful or divert management attention, including our potential acquisition of Reverb; and (15) 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 September 30, 2019, 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 difger 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 presentation. We disclaim any obligation to update forward-looking statements. This presentation is a high-level summary of our Q3 2019 financial results. For more information please refer to our press release dated October 30, 2019 and filings with the SEC.
Etsy’s Value Proposition 1 2 3 Significant early stage opportunity to One of a kind platform ofgering Successfully executing a own “special” and capture a greater unique handcrafted goods from long-term growth strategy share of a $250B+ TAM creative entrepreneurs around the focused on our Right to Win world 4 5 Leveraging our strong brand Delivering strong top and bottom line awareness with marketing initiatives operating and financial performance to drive frequency and growth
1 One of a kind platform ofgering unique handcrafted goods from creative entrepreneurs around the world
Our marketplace has two-sided vibrancy... Buyers Sellers 45 Million* 2.6 Million* Active Buyers Active Sellers +63 million items *Active sellers and active buyers include Reverb’s active sellers and active buyers of 155 thousand and 594 thousand, respectively, as of September 30, 2019.
Etsy connects those who love unique, handcrafted and Personalization difgerentiated goods Made to customer specification Product Range Large assortment of unique, original and vintage products from all over the world Categories Unique goods listed across dozens of retail categories Buyer Intent People come to Etsy to browse and be inspired
In a survey of Etsy buyers, 78% agreed that Etsy has items you can’t find anywhere else *2018 survey of Etsy buyers
In a sea of sameness, we ofger something unique... fun self-expression everyday ≠ special commodities human personal
2 Significant early stage opportunity to own “special” and capture a greater share of a $250B+ TAM
Significant opportunity to grow market share in a very large TAM 2018 TOTAL RETAIL AND ONLINE TAM 2018 $ 1.7T 6 core geographies Across all relevant retail categories $ 249B Expanded to include online spend $3.9B in ALL relevant retail categories Top Geographies: and core geographies United States United Kingdom 2018 Global GMS Canada ~ $ 100B Australia Etsy Estimated Germany Market Share: → France ~4% Market for “Special” Sources: Euromonitor (2018), Assoc. for Creative Ind. (Jan 2018), Art Basel (2018), Hiscox (2018), IBIS, Etsy Consumer Survey
Based upon shopping styles...we know there’s a large population who would love Etsy - 40% of consumers fit our profile US Consumers Expressives We use this information to help size the marketplace for “Special” ~40% Seekers Data from a June 2018 Etsy study of US consumers Expressives 28.8% Seekers Target consumers for “special” 14.8%
3 Successfully executing a long-term growth strategy focused on our Right-to-Win
Disciplined and focused long-term growth strategy 1. 2. Focus on the core Etsy marketplace Build a sustainable competitive advantage in our 6 core geographies around four key elements Best-in-Class Human A Trusted Search and × × Connections Brand Discovery Our Collection of Unique Items United States Canada United Kingdom Australia France Germany
14 New product development aligned with our Right to Win Best-in-Class Search Human A Trusted and Discovery Connections Brand ✕ ✕ Ex: New non-linear models Ex: Improved messaging Ex: Improved shipping between buyers & sellers experience Our Collection of Unique Items Ex: Improved variation photos 14
We are driving to best-in class search 2017 2018 2019 2020+ - Increasing model Multiple search complexity Context Specific Ranking experiments with Advanced CSR (CSR) more data to inform - Optimizing for algorithms contextual cues - Machine learning algorithm that - Advanced re-rank over more and - Ability to optimize across multiple re-ranks in real time more listings objectives, given business - Uses buyer’s context to serve up - Improved signals into machine priorities relevant search items learning models - Advanced model engines & - Index based on data provided by - Expansion of context models to continuous feature expansion sellers (titles, tags, categories) app search ranking - Filter out distracting content (wrong stuff at the wrong time) Etsy Marketplace + Apps Big Data & Search Support Services ● ● ● Fueled by Google Cloud Platform Machine Learning ●
17 2019 built the foundation for the next evolution of our emerald ring Search journey Emerald Jewelry ring Type: Material Type: Category Emerald Shower curtain ring Type: City Type: Category Emerald Type: Color Non-linear models Context-specific search ranking Linear models Compute Utilization
18 Large product initiative focused on improving Etsy’s shipping experience … starting 80% with price 60% 40% 20% 62% 74% 0% Listing views of items Listings eligible to 3Q18 4Q18 1Q19 2Q19 3Q19 ship for free to US eligible to ship for free *as of 9/30 *as of 9/30 % of listings with free shipping 1 same shop purchases >$35
4 Leveraging our strong brand awareness with marketing investments to drive buyer frequency and growth
Our buyers love Etsy, but many only shop once a year... 44 Million* 70 + NPS score 60% among recent purchasers 2 1x/year 1 *Active buyers for Etsy marketplace exclude Reverb and were approximately 44.2 million, as of September 30, 2019. 1 Percent of buyers who have made purchases on only one day in the previous 12 months, as of December 31, 2018. The 40/60% split has been a stable metric. 2 Net Promoter Score for recent purchasers in Feb 2019 Etsy buyer survey; recent purchasers defined as having made purchase within past 30 days of answering survey.
And while millions love us, they don’t know when to think of us... Prompted Awareness 79% 39% Unprompted Awareness 22% Visit Intent (Consideration) 16% Purchase Intent 18% Loyalty 18% Advocacy Etsy Brand Funnel: U.S., Q4 2018
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