1 Q3 2019 Financial Results October 30, 2019
2 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, anticipated impact of our strategy, marketing and product initiatives and product development velocity on conversion rates and our future financial results, including GMS and revenue growth, planned improvements to our Statements recent initiatives, and the anticipated benefits of our recent acquisition of Reverb. 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 sellers and 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 marketplaces 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 sellers and buyers; (9) the efgectiveness of our marketing efgorts; (10) the efgectiveness of our mobile solutions for sellers and 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 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 June 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.
3 Josh Silverman CEO
4 Another quarter of solid execution across the board for the Etsy marketplace Etsy GMS ($) Revenue GMS $192M $1.1B Etsy Revenue ($) +27.6% Y/Y +21.8% Y/Y +22.8% Y/Y (FX adj.) Etsy Revenue Take-Rate Results exclude consolidated financials and operating metrics related to the acquisition of Reverb
5 Our Right to Win Best-in-Class Human A Trusted Search and ✕ Connections ✕ Brand Discovery Our Collection of Unique Items 5
BEFORE: Listing variations shown across multiple listings 6 Before : Listing variations shown across multiple Variation photos listings now better highlight our sellers’ unique ability to customize and After: Buyers visualize color personalize and design variations in the listing purchase flow Pine Wood Walnut White Add to cart Add to cart Add to cart
7 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
8 Before : Email-like user experience Human Connections enable us to drive buyer engagement with an improvement to After: Streamlined Convos...now chat-like interface called Messages
9 Making significant progress improving our App: • onboarding • home screen feed • search drop down menus • recommendations • new cart features 9
10 Giving Reviews more prominence inspires trust in the buyer journey 10
11 We are making good progress driving Etsy seller adoption of the “free shipping 1 ” 80% guarantee 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
12 Amping up buyer marketing and providing additional shipping solutions to support sellers
13 Etsy Ads involves a three phased approach to ensure sellers’ success 3Q19 4Q19 2020 2021+ Migrated Promoted Listing and Google Shopping sellers to the platform 1 Maintain seller budgets, Provided redesigned shop analytics minimize churn and tools to help sellers measure begin budget expansion success Demonstrate the value of Etsy Ads 2 through increased visits and return Optimize seller spend and budget utilization; expand seller budgets Improve aggregate return; enabling sellers to increase investments Provide a path for growth for other 3 sellers Begin to acquire new sellers
14 We have improved seller analytics... centered around visits This Month (Oct 1-28, 2019)
15 Gearing up for Holiday!
16 Rachel Glaser CFO
TO BE UPDATED 17 Strong execution has led to solid financial results... Revenue & Adj. EBITDA Margin 1 GMS $200 $192 22.8% 23.1% $181 22.8% $169 20.8% 20.6% $1,123 $150 $1,246 $1,095 $923 $1,024 25.7% 29.4% 21.9% 21.9% 22.6% $51.4 $49.9 $39.7 $42.0 $34.0 Anniversaried the increase in our marketplace take-rate 1 Reconciliation of non-GAAP financial measures is contained in the appendix Results exclude consolidated financials and operating metrics related to the acquisition of Reverb
18 Initial impact of free shipping initiative Good progress to date Areas for improvement Purchases per In-cart conversion Buyer sentiment Shipping price Search relevance visit rate transfer rate
19 So far, sellers absorbing more of shipping costs than pre-launch testing indicated...or is warranted BEFORE: Expected Actual Shipping price broken out separately Shipping cost absorbed by ~16% absorbed by sellers Shipping price sellers ~40% Shipping price charged to buyers Shipping price transfer rate ~84% transfer rate ~60% Item price Item price + Shipping price Item price + Shipping price
20 Etsy Ads: we plan to optimize seller budgets and drive an increase in total advertising for the marketplace Today’s Marketing Spend Future Marketing Spend Etsy Ads (Seller Incremental Funded) Advertising Promoted Listings Google Shopping Etsy Ads (Seller *Other marketing Funded) channels Promoted Listings Google Shopping Performance Marketing (Etsy Funded) Performance Marketing (Etsy Funded) Brand Marketing (Etsy Funded) Brand Marketing (Etsy Funded)
21 Our marketing spend reflects increased investment in brand, social and CRM initiatives Social Email Brand
22 Improvement in key operating GMS per Active Buyer metrics signal effjcacy of $101.5 marketing spend and progress $100.3 $99.8 $99.7 $99.8 improving frequency Active Buyers Habitual Buyers 44.2M 2.4M Year-over-year 2.0% 2.2% 2.0% 1.3% 1.8% growth 2-year growth 3.7% -0.3% 0.2% 1.0% 1.9% +19% Y/Y +24% Y/Y rate Results exclude consolidated financials and operating metrics related to the acquisition of Reverb
23 We are seeing Buyer Cohort GMS Retention Rate continued improvement to our buyer cohort retention Quarters since first purchase Results exclude consolidated financials and operating metrics related to the acquisition of Reverb
24 US Buyer growth remains strong, 21% continuing to 21% 20% 19% 19% accelerate in Q3 18% 17% 2019 US Buyer GMS Growth Results exclude consolidated financials and operating metrics related to the acquisition of Reverb US Buyer GMS is purchases from all US Buyers who bought from a US or international seller
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