10-Q 1 etsy-20240930.htm 10-Q etsy-20240930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 10-Q
__________________________________
☒
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period endedSeptember 30, 2024
OR
☐
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from              to                                    
Commission File Number 001-36911
__________________________________
etsy_logo_lg_rgb copy.jpg
ETSY, INC.
(Exact name of registrant as specified in its charter)
__________________________________
Delaware20-4898921
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
117 Adams StreetBrooklyn,NY11201
(Address of principal executive offices)(Zip code)
(718) 880-3660
(Registrant’s telephone number, including area code) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareETSYThe Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☒Accelerated Filer ☐
Non-accelerated Filer ☐Smaller Reporting Company ☐
Emerging Growth Company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ☐    No  ☒
The number of shares of common stock outstanding as of October 25, 2024 was 112,492,489.



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Table of Contents
Part I - Financial Information
Item 1.Condensed Consolidated Financial Statements (Unaudited)
Notes to Condensed Consolidated Financial Statements
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
Part II - Other Information
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Item 5.Other Information
Item 6.Exhibits
Signatures


Unless the context otherwise requires, we use the terms “Etsy,” the “Company,” “we,” “us,” and “our” in this Quarterly Report on Form 10-Q (“Quarterly Report”) to refer to Etsy, Inc. and, where appropriate, our consolidated subsidiaries.
See Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating and Financial Metrics” for the definitions of the following terms used in this Quarterly Report: “active buyer,” “active seller,” “Adjusted EBITDA,” “Adjusted EBITDA margin,” “currency-neutral GMS growth,” “GMS,” “GMS ex-U.S. domestic,” “new buyer GMS,” and “U.S. domestic GMS.”
Etsy has used, and intends to continue using, its investor relations website and the Etsy News Blog (etsy.com/news) to disclose material non-public information and to comply with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website and the Etsy News Blog in addition to following our press releases, SEC filings, and public conference calls and webcasts.



Note Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include statements relating to our opportunity; the impact of our “Right to Win” and other growth strategies, including marketing and product initiatives, investments, and other levers for growth, on our business and operating results, including future gross merchandise sales (“GMS”) and revenue growth; our ability to attract, engage, and retain buyers and sellers; our ability to recruit and retain a diverse group of employees; our ability to maintain profitability; strategic investments or acquisitions, product and marketing investments, and the potential benefits thereof; our ability to maintain trustworthy marketplaces; our Impact Goals, strategy, and intended progress; the impact that global macroeconomic, domestic and geopolitical uncertainty and volatility may have on our business, strategy, operating results, key metrics, financial condition, profitability, and cash flows; the effects on consumer behavior from cultural, weather and political events; our ability to expand into additional countries; and uncertainty regarding and continued pressure on levels of consumer discretionary product spending and e-commerce generally. Forward-looking statements include all statements that are not historical facts. In some cases, forward-looking statements can be identified by terms such as “aim,” “anticipate,” “believe,” “could,” “enable,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “potential,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and derivative forms and/or negatives of those terms.
Forward-looking statements are not guarantees of performance and involve known and unknown risks and uncertainties. Other factors may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Those risks include those described in Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report. Given these uncertainties, you should read this Quarterly Report in its entirety and not place undue reliance on any forward-looking statements in this Quarterly Report.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report and, although we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
Moreover, we operate in a competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements made in this Quarterly Report. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. In addition, the global economic climate and general market, political, economic, and business conditions may amplify many of these risks.
Forward-looking statements represent our beliefs and assumptions only as of the date of this Quarterly Report. We disclaim any obligation to update forward-looking statements.

3

Summary Risk Factors
Our business is subject to numerous risks. The following summary highlights some of the risks we are exposed to in the normal course of our business activities. This summary is not complete and the risks summarized below are not the only risks we face. You should review and consider carefully the risks and uncertainties described in more detail in Part II, Item 1A, “Risk Factors,” which includes a more complete discussion of the risks summarized below as well as a discussion of other risks related to our business and an investment in our common stock.
Financial Performance and Operational Risks Related to Our Business
•While we have experienced rapid growth in our business in the past, our revenue growth rate and financial performance have fluctuated, which makes it difficult to predict the extent of demand for our services or the products sold in our marketplaces.
•The trustworthiness of our marketplaces and the connections within our communities are important to our success. Our business, financial performance, and growth depend on our ability to attract and retain active and engaged communities of buyers and sellers. If we are unable to retain our existing buyers and sellers and activate new ones, our financial performance could decline.
•Our quarterly operating results have and may continue to fluctuate, which could cause significant stock price fluctuations.
•We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause our stock price to decline.
•We track certain operational metrics with internal systems and tools or manual processes, and do not independently verify such metrics. Certain of these metrics are subject to inherent challenges in measurement, and any real or perceived inaccuracies may adversely affect our business and reputation.
•If we experience a technology disruption that results in a loss of information, if personal data or sensitive information about members of our communities or employees is misused or disclosed, or if we or our third-party providers are unable to protect against software and hardware vulnerabilities, service interruptions, cyber-related events, ransomware, security incidents, or other security breaches, then members of our communities may curtail use of our platforms, we may be exposed to liability or incur additional expenses, and our reputation might suffer.
•Our business depends on continued and unimpeded access to third-party services, platforms, and infrastructure that we rely upon to maintain and scale our platform. If the widely adopted mobile, social, search, and/or advertising solutions that we, our sellers, and our buyers rely on as part of our key offering are no longer available or effective, or if access to these major platforms is limited, the use of our marketplaces could decline.
•Our payments systems have both operational and compliance risks, including in-house execution risk, dependency on third-party providers, and a complex landscape of evolving laws, regulations, rules, and standards.
•Our business could be adversely affected by economic downturns, inflation, natural disasters, public health crises, political crises, geopolitical events or other Macroeconomic Conditions, which have in the past and may in the future negatively impact our business and financial performance.
•Our ability to recruit and retain a diverse group of employees and retain key employees is important to our success. Significant attrition or turnover could impact our ability to grow our business.
Strategic Risks Related to Our Business and Industry
•We face intense competition and may not be able to compete effectively.
•Enforcement of our marketplace policies may negatively impact our brands, reputation, and/or our financial performance.
•If we are not able to keep pace with technological changes, and enhance our current offerings and develop new offerings to respond to the changing needs of sellers and buyers, our business, financial performance, and growth may be harmed.
•Continuing to expand our operations outside of the United States is part of our strategy, and the growth of our business could be harmed if our expansion efforts do not succeed.

4

•We have incurred impairment charges for our goodwill and other long-lived tangible and intangible assets, and may incur further impairment charges in the future, which would negatively impact our operating results.
•We may expand our business through additional acquisitions of other businesses or assets or strategic partnerships and investments, which may divert management’s attention and/or prove to be unsuccessful.
•We are subject to risks related to our environmental, social, and governance activities and disclosures.
•We have a significant amount of convertible debt and may incur additional debt in the future.
Regulatory, Compliance, and Legal Risks
•Failure to deal effectively with fraud or other illegal activity could harm our business.
•Compliance with evolving global legal and regulatory requirements and/or available safe harbors, including privacy and data protection laws, tax laws, product liability laws, laws regulating speech and platform monitoring or moderation, antitrust laws, intellectual property and counterfeiting regulations, may materially impact our time, resources, and ability to grow our business.
•We are regularly involved in litigation, arbitration, and regulatory matters that are expensive and time consuming and that may require changes to our strategy, the features of our marketplaces and/or how our business operates.
•We may be subject to intellectual property or other claims, which, even if meritless, could be extremely costly to defend, damage our brands, require us to pay significant damages, and limit our ability to use certain technologies or business strategies in the future.
Other Risks
•Future sales and issuances of our common stock or rights to purchase common stock, including upon conversion of our convertible notes, could result in additional dilution to our stockholders and could cause the price of our common stock to decline.

5
Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited).
Etsy, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands, except per share amounts)
As of September 30,
2024		As of December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents$818,939 $914,323 
Short-term investments226,022 236,118 
Accounts receivable, net of expected credit losses of $7,543 and $10,149 as of September 30, 2024 and December 31, 2023, respectively
8,644 24,734 
Prepaid and other current assets94,514 129,884 
Funds receivable and seller accounts172,562 265,387 
Total current assets1,320,681 1,570,446 
Property and equipment, net of accumulated depreciation and amortization of $292,136 and $244,052 as of September 30, 2024 and December 31, 2023, respectively
242,889 249,794 
Goodwill138,622 138,377 
Intangible assets, net of accumulated amortization of $158,367 and $125,932 as of September 30, 2024 and December 31, 2023, respectively
443,943 457,140 
Deferred tax assets144,408 137,776 
Long-term investments107,046 86,676 
Other assets44,617 45,191 
Total assets$2,442,206 $2,685,400 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable$19,589 $29,920 
Accrued expenses298,995 353,553 
Finance lease obligations—current6,081 6,079 
Funds payable and amounts due to sellers172,562 265,387 
Deferred revenue17,097 14,635 
Other current liabilities38,636 41,207 
Total current liabilities552,960 710,781 
Finance lease obligations—net of current portion95,044 99,620 
Deferred tax liabilities7,101 13,192 
Long-term debt, net2,287,016 2,283,817 
Other liabilities124,385 121,705 
Total liabilities3,066,506 3,229,115 
Commitments and contingencies (Note 10)
Stockholders’ deficit:
Common stock ($0.001 par value, 1,400,000 shares authorized as of September 30, 2024 and December 31, 2023; 112,848 and 119,069 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively)
113 119 
Preferred stock ($0.001 par value, 25,000 shares authorized as of September 30, 2024 and December 31, 2023)
— — 
Additional paid-in capital1,270,347 1,081,026 
Accumulated deficit(1,652,267)(1,357,390)
Accumulated other comprehensive loss(242,493)(267,470)
Total stockholders’ deficit(624,300)(543,715)
Total liabilities and stockholders’ deficit$2,442,206 $2,685,400 
The accompanying notes are an integral part of these condensed consolidated financial statements.


6
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
 Three Months Ended 
 September 30,		Nine Months Ended 
 September 30,
 2024202320242023
Revenue$662,410 $636,302 $1,956,170 $1,906,055 
Cost of revenue185,640 188,827 556,863 572,918 
Gross profit476,770 447,475 1,399,307 1,333,137 
Operating expenses:
Marketing196,526 160,936 571,400 498,120 
Product development107,251 113,932 331,590 351,844 
General and administrative86,176 84,051 271,241 250,699 
Asset impairment charges— — — 68,091 
Total operating expenses389,953 358,919 1,174,231 1,168,754 
Income from operations86,817 88,556 225,076 164,383 
Other (expense) income, net(13,007)8,411 7,366 19,269 
Income before income taxes73,810 96,967 232,442 183,652 
(Provision) benefit for income taxes(16,444)(9,117)(59,067)40,650 
Net income$57,366 $87,850 $173,375 $224,302 
Net income per share attributable to common stockholders:
Basic$0.50 $0.72 $1.49 $1.82 
Diluted$0.45 $0.64 $1.34 $1.62 
Weighted-average common shares outstanding:
Basic114,181 121,808 116,372 123,341 
Diluted130,748 138,891 133,116 141,046 
The accompanying notes are an integral part of these condensed consolidated financial statements.

7
Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands)
 Three Months Ended 
 September 30,		Nine Months Ended 
 September 30,
 2024202320242023
Net income$57,366 $87,850 $173,375 $224,302 
Other comprehensive income (loss):
Cumulative translation adjustment42,179 (17,516)24,154 9,663 
Unrealized gains on investments, net of tax expense of $353, $130, $266, and $260, respectively
1,091 387 823 801 
Total other comprehensive income (loss)43,270 (17,129)24,977 10,464 
Comprehensive income$100,636 $70,721 $198,352 $234,766 
The accompanying notes are an integral part of these condensed consolidated financial statements.

8
Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited)
(In thousands)
Three Months Ended September 30, 2024
 Common StockAdditional
Paid-in Capital		Accumulated DeficitAccumulated Other Comprehensive LossTotal
 
 SharesAmount
Balance as of June 30, 2024115,315 $115 $1,203,294 $(1,552,642)$(285,763)$(634,996)
Stock-based compensation (1)12 — 74,836 — — 74,836 
Exercise of vested options35 — 1,095 — — 1,095 
Vesting of restricted stock units, net of shares withheld230 — (8,878)— — (8,878)
Stock repurchase(2,744)(2)— (156,991)— (156,993)
Other comprehensive income— — — — 43,270 43,270 
Net income— — — 57,366 — 57,366 
Balance as of September 30, 2024112,848 $113 $1,270,347 $(1,652,267)$(242,493)$(624,300)


Nine Months Ended September 30, 2024
 Common StockAdditional
Paid-in Capital		Accumulated DeficitAccumulated Other Comprehensive LossTotal
 
 SharesAmount
Balance as of December 31, 2023119,069 $119 $1,081,026 $(1,357,390)$(267,470)$(543,715)
Stock-based compensation (1)21 — 227,387 — — 227,387 
Exercise of vested options154 — 3,830 — — 3,830 
Vesting of restricted stock units, net of shares withheld925 1 (41,896)— — (41,895)
Stock repurchase(7,321)(7)— (468,252)— (468,259)
Other comprehensive income— — — — 24,977 24,977 
Net income— — — 173,375 — 173,375 
Balance as of September 30, 2024112,848 $113 $1,270,347 $(1,652,267)$(242,493)$(624,300)
(1) Includes the partial payments of Depop deferred consideration.

9
Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited)
(In thousands)
Three Months Ended September 30, 2023
Common StockAdditional
Paid-in Capital
Accumulated Deficit
Accumulated Other
Comprehensive Loss		Total
SharesAmount
Balance as of June 30, 2023123,249 $123 $957,738 $(1,135,412)$(286,624)$(464,175)
Stock-based compensation (1)27 — 76,370 — — 76,370 
Exercise of vested options150 — 2,693 — — 2,693 
Vesting of restricted stock units, net of shares withheld152 — (8,466)— — (8,466)
Stock repurchase(3,915)(3)— (299,668)— (299,671)
Other comprehensive loss— — — — (17,129)(17,129)
Net income— — — 87,850 — 87,850 
Balance as of September 30, 2023119,663 $120 $1,028,335 $(1,347,230)$(303,753)$(622,528)


Nine Months Ended September 30, 2023
Common StockAdditional
Paid-in Capital		Accumulated
Deficit		Accumulated Other Comprehensive LossTotal
SharesAmount
Balance as of December 31, 2022125,054 $125 $815,085 $(1,048,267)$(314,217)$(547,274)
Stock-based compensation (1)46 — 228,148 — — 228,148 
Exercise of vested options483 — 8,448 — — 8,448 
Settlement of capped call(1,194)(1)34,224 (34,223)— — 
Settlement of convertible senior notes, net of taxes— — (1)— — (1)
Vesting of restricted stock units, net of shares withheld806 1 (57,569)— — (57,568)
Stock repurchase(5,532)(5)— (489,042)— (489,047)
Other comprehensive income— — — — 10,464 10,464 
Net income— — — 224,302 — 224,302 
Balance as of September 30, 2023119,663 $120 $1,028,335 $(1,347,230)$(303,753)$(622,528)
(1) Includes the partial payments of Depop deferred consideration.
The accompanying notes are an integral part of these condensed consolidated financial statements.

10
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 Nine Months Ended 
 September 30,
 20242023
Cash flows from operating activities
Net income$173,375 $224,302 
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense214,692 216,082 
Depreciation and amortization expense81,672 68,290 
Provision for expected credit losses10,141 14,390 
Deferred benefit for income taxes(13,727)(45,255)
Loss on sale of business— 2,630 
Asset impairment charges— 68,091 
Other non-cash income, net(2,066)(3,786)
Changes in operating assets and liabilities (net of impact of sale of business):
Current assets135,804 (39,578)
Non-current assets(11)(3,964)
Current liabilities(165,024)(87,852)
Non-current liabilities2,654 (2,942)
Net cash provided by operating activities437,510 410,408 
Cash flows from investing activities
Purchases of property and equipment(10,174)(7,752)
Development of internal-use software(22,860)(19,594)
Purchases of investments(266,935)(288,226)
Sales and maturities of investments263,210 261,589 
Net cash used in investing activities(36,759)(53,983)
Cash flows from financing activities
Payment of tax obligations on vested equity awards(42,136)(58,008)
Repurchase of stock(464,314)(483,987)
Proceeds from exercise of stock options3,830 8,448 
Payment of debt issuance costs — (2,215)
Settlement of convertible senior notes— (90)
Payments on finance lease obligations(4,591)(4,723)
Other financing, net2,418 (259)
Net cash used in financing activities(504,793)(540,834)
Effect of exchange rate changes on cash8,658 (252)
Net decrease in cash, cash equivalents, and restricted cash(95,384)(184,661)
Cash, cash equivalents, and restricted cash at beginning of period914,323 926,619 
Cash and cash equivalents at end of period$818,939 $741,958 

11
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended 
 September 30,
20242023
Supplemental cash flow disclosures:
Cash paid for income taxes, net of refunds$58,838 $29,598 
Supplemental non-cash disclosures:
Stock-based compensation capitalized in development of capitalized software and asset additions in exchange for liabilities$15,861 $16,479 
Lease assets obtained in exchange for new lease liabilities$3,089 $7,751 
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown above:
Nine Months Ended 
 September 30,
20242023
Beginning balance:
Cash and cash equivalents$914,323 $921,278 
Restricted cash— 5,341 
Total cash, cash equivalents, and restricted cash$914,323 $926,619 
The accompanying notes are an integral part of these condensed consolidated financial statements.

12
Etsy, Inc.
Notes to Condensed Consolidated Financial Statements



Note 1—Basis of Presentation and Summary of Significant Accounting Policies
Description of Business
Etsy operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world. These marketplaces - which collectively create a “House of Brands” - share the Company’s mission, common levers for growth, similar business models, and a strong commitment to use business and technology to strengthen communities and empower people. The Company’s primary marketplace, Etsy.com, is the global destination for unique and creative goods made by independent sellers. The Company generates revenue primarily from marketplace activities, including transaction (inclusive of offsite advertising), payments processing, and listing fees, as well as from optional seller services, which include on-site advertising and shipping labels.
Basis of Consolidation
The condensed consolidated financial statements include the accounts of Etsy and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. On August 10, 2023, Etsy closed the sale of the parent holding company of Elo7 Serviços de Informática (“Elo7”), the Company’s Brazil-based marketplace for handmade and unique items, to Enjoei S.A., a corporation in Brazil. The financial results of Elo7 have been included in Etsy’s condensed consolidated financial statements from the date of acquisition until August 10, 2023.
Reclassifications
Certain items in the prior years’ condensed consolidated financial statements have been reclassified to conform to the current year presentation reflected in the condensed consolidated financial statements.
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). The Company has condensed or omitted certain information and notes normally included in complete annual financial statements prepared in accordance with GAAP. These unaudited interim condensed consolidated financial statements should therefore be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the SEC on February 21, 2024 (the “Annual Report”). In the opinion of management, all material adjustments, which are of a normal and recurring nature, necessary for a fair statement of the results for the periods presented have been reflected in the condensed consolidated financial statements. The results of operations of any interim period are not necessarily indicative of the results of operations for the full annual period or any future period due to seasonal and other factors.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates and judgments. The accounting estimates that require management’s most subjective judgments include: income taxes, including the estimate of the annual effective tax rate at interim periods and evaluation of uncertain tax positions; valuation of goodwill; and leases. As of September 30, 2024, there continues to be significant global macroeconomic and geopolitical uncertainty which may impact the Company’s business, results of operations, and financial condition. As a result, many of the Company’s estimates and judgments require increased judgment and carry a higher degree of variability and volatility. As additional information becomes available, the Company’s estimates may change materially in future periods.


13
Etsy, Inc.
Notes to Consolidated Financial Statements
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. Additionally, it requires that a public entity (1) disclose an amount for “other segment items” by reportable segment, (2) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods, and (3) requires that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this proposed ASU and all existing segment disclosures in Topic 280. The new guidance is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The amendments in this proposed ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the impact that this new guidance will have on its disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The ASU requires that public business entities on an annual basis (1) disclose specific categories in the effective tax rate reconciliation and (2) provide additional information for reconciling items that meet or exceed a quantitative threshold. Additionally, it requires all entities disclose the following information about income taxes paid on an annual basis: (1) the year-to-date amounts of income taxes paid disaggregated by federal (national), state, and foreign taxes and (2) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid. The amendments are effective for annual periods beginning after December 15, 2024. The amendments in this proposed ASU should be applied on a prospective basis, although retrospective application to all periods presented is permitted. Early adoption is permitted. The Company is currently evaluating the impact that this new guidance will have on its disclosures.
Note 2—Revenue
The following table summarizes revenue disaggregated by Marketplace revenue and optional Services revenue for the periods presented (in thousands):
Three Months Ended 
 September 30,		Nine Months Ended 
 September 30,
2024202320242023
Marketplace revenue$476,075 $460,922 $1,413,434 $1,381,395 
Services revenue186,335 175,380 542,736 524,660 
Revenue$662,410 $636,302 $1,956,170 $1,906,055 
Contract balances
Deferred revenues
The amount of revenue recognized in the nine months ended September 30, 2024 that was included in the deferred balance at January 1, 2024 was $13.9 million.


14
Etsy, Inc.
Notes to Consolidated Financial Statements
Note 3—Income Taxes
The Company’s provision or benefit from income taxes in interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates its estimate of the annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment. The estimate of the annual effective income tax rate for the full year is applied to the respective interim period, taking into account year-to-date amounts and projected results for the full year.
The Company’s quarterly tax provision, and its quarterly estimate of the annual effective tax rate, is subject to significant variation due to several factors, including variability in accurately predicting its income or loss before tax and the mix of jurisdictions to which they relate, taxable income or loss in each jurisdiction, changes in its stock price, audit-related developments, acquisitions, divestitures, changes in its deferred tax assets and liabilities and their valuation, foreign currency gains (losses), changes in statutes, regulations, case law, and administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions, and relative changes of expenses or losses for which tax benefits are not recognized. Additionally, the effective tax rate can be more or less volatile based on the amount of income or loss before tax. For example, the impact of discrete items and non-deductible expenses on the effective tax rate is greater when income before income taxes is lower.
For the nine months ended September 30, 2024, the Company’s effective income tax rate was 25.4% representing an income tax provision recorded on net income before tax. The effective tax rate for the nine months ended September 30, 2024 was higher than the U.S. statutory rate of 21% primarily due to tax deficiencies from stock-based compensation resulting from a lower stock price at vesting of restricted stock units compared to the stock price upon grant and state income taxes, partially offset by foreign operations taxed at a lower rate and a benefit related to a research and development tax credit.
Although management believes its tax positions and related provisions reflected in the condensed consolidated financial statements are fully supportable, it recognizes that these tax positions and related provisions may be challenged by various tax authorities. These tax positions and related provisions are reviewed on an ongoing basis and are adjusted as additional facts and information become available, including progress on tax audits, changes in interpretation of tax laws, developments in case law and closing of statute of limitations. To the extent that the ultimate results differ from the original or adjusted estimates of the Company, the effect will be recorded in the provision for income taxes.
The provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant facts and laws in the jurisdictions in which the Company operates. Future changes in applicable laws, projected levels of taxable income and tax planning could change the effective tax rate and tax balances recorded by the Company. In addition, tax authorities periodically review income tax returns filed by the Company and can raise issues regarding its filing positions, timing and amount of income and deductions, and the allocation of income among the jurisdictions in which the Company operates. A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an issue raised by a revenue authority with respect to that return. Any adjustments as a result of any examination may result in additional taxes or penalties against the Company. If the ultimate result of these audits differ from original or adjusted estimates, they could have a material impact on the Company’s tax provision.
The amount of unrecognized tax benefits included in the Consolidated Balance Sheets increased $3.6 million in the nine months ended September 30, 2024, from $51.7 million as of December 31, 2023 to $55.3 million as of September 30, 2024. The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate is $52.7 million as of September 30, 2024. Although the timing of the resolution and/or closure of audits is highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. The Company’s reasonable estimate of its gross unrecognized tax benefits, excluding interest and penalties, that could potentially be reduced during the next 12 months is $15.8 million.
The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense.
Over the last several years, the Organization for Economic Cooperation and Development (“OECD”) has been developing its “two pillar” project to address the tax challenges arising from digitalization. The OECD project, if broadly implemented by participating countries, will result in significant changes to the international taxation system under which the Company’s current tax obligations are determined. Pillar Two of the project calls for a minimum tax rate on corporations of 15% and is enacted by a significant number of countries starting in 2024. The OECD and implementing countries are expected to continue to make further revisions to the rules. The FASB indicated that they believe the minimum tax imposed under Pillar Two is an alternative minimum tax, and, accordingly, deferred tax assets and liabilities associated with the minimum tax would not be recognized or adjusted for the estimated future effects of the minimum tax but would be recognized in the period incurred. The Company’s quarterly tax provision includes the impact of Pillar Two, however, the impact is not material. Management will continue to monitor developments to determine any potential impact of Pillar Two in the countries in which the Company operates.

15
Etsy, Inc.
Notes to Consolidated Financial Statements
Note 4—Net Income Per Share
The following table presents the calculation of basic and diluted net income per share for the periods presented (in thousands, except per share amounts):
 Three Months Ended 
 September 30,		Nine Months Ended 
 September 30,
 2024202320242023
Numerator:
Net income$57,366 $87,850 $173,375 $224,302 
Add back interest expense, net of tax attributable to assumed conversion of convertible senior notes1,585 1,583 4,755 4,750 
Net income attributable to common stockholders—diluted$58,951 $89,433 $178,130 $229,052 
Denominator:
Weighted-average common shares outstanding—basic114,181 121,808 116,372 123,341 
Dilutive effect of outstanding stock-based compensation awards1,853 2,369 2,030 2,991 
Dilutive effect of assumed conversion of convertible senior notes (1)14,714 14,714 14,714 14,714 
Weighted-average common shares outstanding—diluted130,748 138,891 133,116 141,046 
Net income per share attributable to common stockholders—basic$0.50 $0.72 $1.49 $1.82 
Net income per share attributable to common stockholders—diluted$0.45 $0.64 $1.34 $1.62 
Outstanding stock-based compensation awards excluded from net income per diluted share because their effect would have been anti-dilutive7,655 6,864 7,446 6,199 
(1)The $1.0 billion aggregate principal amount of 0.25% Convertible Senior Notes due 2028 (the “2021 Notes”), the $650.0 million aggregate principal amount of 0.125% Convertible Senior Notes due 2027 (the “2020 Notes”), and the $649.9 million aggregate principal amount of 0.125% Convertible Senior Notes due 2026 (the “2019 Notes” and together with the 2021 Notes and 2020 Notes, the “Notes”) were dilutive for the three and nine months ended September 30, 2024 and September 30, 2023.

16
Etsy, Inc.
Notes to Consolidated Financial Statements
Note 5—Asset Impairment Charges
During the nine months ended September 30, 2023, the Company concluded that the book value of the property and equipment and finite-lived intangible assets for the Elo7 reporting unit were fully impaired, and recorded an impairment charge of $7.9 million and $60.2 million, respectively, in Asset impairment charges in the Consolidated Statement of Operations. The asset impairment charges related to property and equipment primarily related to developed technology and to intangible assets primarily related to trademark and customer relationships.
The impairment charge was the result of macroeconomic conditions at the time, challenges applying the Company’s technological, marketing, and operational expertise to help scale Elo7’s business, and the resultant headwinds to the business, which caused the Company to revise its business forecasts for Elo7 downwards. The Company prepared an updated fair value for the Elo7 reporting unit based on a quantitative assessment, which included estimates of future revenue, and the net available cash flows; as well as a determination that the Company would more likely than not use the Elo7 asset group for a period of less than twelve months. The Company completed the sale of Elo7 in the third quarter of 2023.
In the event there are adverse changes in the Company’s projected cash flows, changes in key assumptions, including but not limited to an increase in the discount rate, lower revenue growth, lower margin, and a lower terminal growth rate, the Company may be required to record additional non-cash impairment charges to its goodwill and other long-lived assets. Such non-cash charges could have a material adverse effect on the Company’s consolidated statement of operations and balance sheet in the reporting period of the charge. The impairment assessments are most sensitive to broader market conditions, including the discount rate and market multiples, and to the Company’s estimated future cash flows.
Note 6—Sale of Business
Due to challenges Etsy faced to effectively scale Elo7 in Brazil, particularly given headwinds created by a volatile macroeconomic environment and an increasingly competitive e-commerce market in Brazil, on August 10, 2023, Etsy closed the sale of the parent holding company of Elo7 to Enjoei S.A., a corporation in Brazil.
The Company recognized a net loss on the sale of Elo7 of $2.6 million, which includes a $7.5 million loss from the reclassification out of accumulated other comprehensive loss related to a cumulative translation adjustment. The net loss on the sale of Elo7 was recorded in other (expense) income, net in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023.
Note 7—Fair Value Measurements
As of September 30, 2024 and December 31, 2023 the Company’s cash equivalents, short-term investments, and long-term investments primarily consisted of available-for-sale debt securities. These debt securities are measured at fair value and classified within Level 1 or Level 2 in the fair value hierarchy as the Company uses unadjusted quoted prices for identical assets in an active market that the Company has the ability to access (Level 1) or quoted market prices in markets that are not active or model derived valuations in which all significant inputs are observable in active markets (Level 2).
As of September 30, 2024 and December 31, 2023 the Company’s long-term investments also consisted of investments in loan receivables and in third-party managed funds. The investments in loan receivables are measured on an amortized cost basis and classified in Level 3 of the fair value hierarchy as the fair value is derived from techniques in which one or more significant inputs are unobservable. The investments in third-party managed funds are measured on the net assets value (“NAV”) basis as a practical expedient. NAV is primarily determined based on the information provided by external fund administrators for which the most recent financial information is typically received on a lag within the quarter following the Company’s balance sheet date. These investments further the Company’s impact strategy as part of the Company’s Impact Investment Fund.

17
Etsy, Inc.
Notes to Consolidated Financial Statements
The following table sets forth the cost, gross unrealized losses, gross unrealized gains, and fair value of the Company’s investments as of the dates indicated (in thousands):
 CostGross
Unrealized
Holding
Loss		Gross
Unrealized
Holding
Gain		Fair ValueCash and Cash EquivalentsShort-term InvestmentsLong-term Investments
September 30, 2024
Level 1
Money market funds$85,634 $— $— $85,634 $85,634 $— $— 
U.S. Government securities75,146 (16)210 75,340 10,650 42,494 22,196 
160,780 (16)210 160,974 96,284 42,494 22,196 
Level 2
Certificate of deposit32,862 — 58 32,920 — 32,920 — 
Commercial paper56,351 (1)87 56,437 2,991 53,446 — 
Corporate bonds159,800 (9)703 160,494 — 97,162 63,332 
249,013 (10)848 249,851 2,991 183,528 63,332 
Level 3
Loans receivable - held for investment7,000 — — 7,000 — — 7,000 
7,000 — — 7,000 — — 7,000 
$416,793 $(26)$1,058 $417,825 $99,275 $226,022 $92,528 
Measured at NAV (1)
Third-party managed funds14,518 
$107,046 
December 31, 2023
Level 1
Money market funds$377,021 $— $— $377,021 $376,941 $80 $— 
U.S. Government securities95,298 (164)39 95,173 — 60,153 35,020 
472,319 (164)39 472,194 376,941 60,233 35,020 
Level 2
U.S. agency securities15,635 (14)3 15,624 — 15,624 — 
Certificate of deposit35,365 (1)55 35,419 — 35,419 — 
Commercial paper62,463 (12)54 62,505 4,449 58,056 — 
Corporate bonds100,386 (145)128 100,369 1,566 66,786 32,017 
213,849 (172)240 213,917 6,015 175,885 32,017 
Level 3
Loans receivable - held for investment6,000 — — 6,000 — — 6,000 
6,000 — — 6,000 — — 6,000 
$692,168 $(336)$279 $692,111 $382,956 $236,118 $73,037 
Measured at NAV (1)
Third-party managed funds13,639 
$86,676 
(1)Third-party managed funds measured on the NAV basis have not been categorized in the fair value hierarchy. The amount presented in the table is intended to permit reconciliation of the long-term investments in the fair value hierarchy to the amount presented in the Consolidated Balance Sheets.


18
Etsy, Inc.
Notes to Consolidated Financial Statements
The tables below show the fair value and gross unrealized loss related to available-for-sale debt securities, aggregated by investment category and the length of time that the securities have been in a continuous unrealized loss position as of the dates indicated (in thousands):
As of September 30, 2024
Less than 12 Months
12 Months or Greater
 
Fair Value
Gross Unrealized Holding Loss
Fair Value
Gross Unrealized Holding Loss
U.S. Government securities$11,578 $— $15,472 $(16)
Commercial paper
11,434 (1)— — 
Corporate bonds18,867 (6)2,922 (3)
Total
$41,879 $(7)$18,394 $(19)
As of December 31, 2023
Less than 12 Months
12 Months or Greater
 Fair Value
Gross Unrealized Holding Loss
Fair Value
Gross Unrealized Holding Loss
U.S. Government securities$71,536 $(164)$— $— 
U.S. agency securities
12,569 (14)— — 
Certificate of deposit
7,178 (1)— — 
Commercial paper
34,066 (12)— — 
Corporate bonds28,401 (73)20,808 (72)
Total
$153,750 $(264)$20,808 $(72)
The Company evaluates fair value for each individual security in the investment portfolio. When assessing the risk of credit loss, the Company considers factors such as the extent to which the fair value is less than the amortized cost basis, the credit rating, including whether there has been any changes to the rating of the security by a rating agency, available information relevant to the collectability of the security, and management’s intended holding period and time horizon for selling the security.
Outside of the Company’s Impact Investment Fund, the Company typically invests in short- and long-term instruments, including fixed-income funds and U.S. Government securities aligned with the Company’s investment strategy. In accordance with the Company’s investment policy, all investments, other than investments made through its Impact Investment Fund, have maturities no longer than 37 months, with the average maturity of these investments maintained at 12 months or less.
Disclosure of Fair Values
The Company’s financial instruments that are not remeasured at fair value in the Consolidated Balance Sheets include the Notes. See “Note 9—Debt” for additional information. The Company estimates the fair value of the Notes through inputs that are observable in the market, classified as Level 2 as described above. The following table presents the carrying value and estimated fair value of the Notes as of the dates indicated (in thousands):
As of September 30, 2024As of December 31, 2023
Carrying ValueFair ValueCarrying ValueFair Value
2021 Notes$992,954 $818,500 $991,529 $799,000 
2020 Notes646,519 558,740 645,624 556,790 
2019 Notes647,543 643,648 646,664 747,630 
$2,287,016 $2,020,888 $2,283,817 $2,103,420 
The carrying value of other financial instruments, including accounts receivable, funds receivable and seller accounts, accounts payable, and funds payable and amounts due to sellers approximate fair value due to the immediate or short-term maturity associated with these instruments.

19
Etsy, Inc.
Notes to Consolidated Financial Statements
Note 8—Accrued Expenses
Accrued expenses consisted of the following as of the dates indicated (in thousands):
As of September 30,
2024		As of December 31,
2023
Vendor accruals$104,067 $120,804 
Pass-through marketplace tax collection obligation 93,973 126,284 
Employee compensation-related liabilities (1)65,522 95,842 
Taxes payable35,433 10,623 
Total accrued expenses$298,995 $353,553 
(1)Includes severance and employee-related benefits associated with restructuring and other exit costs. See “Note 13—Restructuring and Other Exit Costs” for more information.
Note 9—Debt
The following table presents the outstanding principal amount and carrying value of the Notes as of the dates indicated (in thousands):
As of September 30, 2024
2021 Notes2020 Notes2019 NotesTotal
Principal$1,000,000 $650,000 $649,887 $2,299,887 
Unamortized debt issuance costs7,046 3,481 2,344 12,871 
Net carrying value$992,954 $646,519 $647,543 $2,287,016 
As of December 31, 2023
2021 Notes2020 Notes2019 NotesTotal
Principal$1,000,000 $650,000 $649,887 $2,299,887 
Unamortized debt issuance costs8,471 4,376 3,223 16,070 
Net carrying value$991,529 $645,624 $646,664 $2,283,817 
Terms of the Notes
The Notes will mature at their maturity date unless earlier converted or repurchased. The terms of the Notes are summarized below:
Convertible NotesMaturity DateContractual Convertibility Date (1)Initial Conversion Rate per $1,000 PrincipalInitial Conversion PriceAnnual Effective Interest Rate
2021 Notes
June 15, 2028February 15, 20284.0518 $246.80 0.4 %
2020 Notes
September 1, 2027May 1, 20275.0007 199.97 0.3 %
2019 Notes
October 1, 2026June 1, 202611.4040 87.69 0.3 %
(1)During any calendar quarter preceding the respective convertibility date of each series of Notes, in which the closing price of the Company’s common stock exceeds 130% of the applicable conversion price of the Notes on at least 20 of the last 30 consecutive trading days of the quarter, holders may, in the immediate quarter following, convert all or a portion of their Notes. Based on the daily closing prices of the Company’s stock during the quarter ended September 30, 2024, holders of the 2021 Notes, 2020 Notes, and 2019 Notes are not eligible to convert their 2021 Notes, 2020 Notes, and remaining 2019 Notes, respectively, during the fourth quarter of 2024.
Based on the terms of each series of Notes, when a conversion notice is received, the Company has the option to pay or deliver cash, shares of the Company’s common stock, or a combination thereof. Accordingly, the Company cannot be required to settle the Notes in cash and, therefore, the Notes are classified as long-term debt as of September 30, 2024.

20
Etsy, Inc.
Notes to Consolidated Financial Statements
The Company may redeem all or any portion of the 2021 Notes, at the Company’s option, subject to partial redemption limitations, on or after June 20, 2025, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2021 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The Notes are general unsecured obligations of the Company. The Notes rank senior in right of payment to all of the Company’s future indebtedness that is expressly subordinated in right of payment to the Notes; rank equal in right of payment with all of the Company’s liabilities that are not so subordinated; are effectively junior to any of the Company’s secured indebtedness; and are structurally junior to all indebtedness and liabilities (including trade payables) of the Company’s subsidiaries.
Interest Expense
Interest expense, which consists of coupon interest and amortization of debt issuance costs, related to the Notes was $2.1 million in both the three months ended September 30, 2024 and September 30, 2023 and $6.3 million in both the nine months ended September 30, 2024 and September 30, 2023.
Fair Value of Notes
The estimated fair value of each of the Notes was determined through inputs that are observable in the market, and are classified as Level 2. See “Note 7—Fair Value Measurements” for more information regarding the fair value of the Notes.
Capped Call Transactions
The Company used a portion of the net proceeds from each of the Note offerings to enter into separate privately negotiated capped call instruments (the 2019, 2020, and 2021 capped call instruments collectively referred to as the “Capped Call Transactions”) with certain financial institutions, initial purchasers, and/or their respective affiliates. The Capped Call Transactions are expected generally to reduce the potential dilution and/or offset the cash payments the Company is required to make in excess of the principal amount of the Notes upon conversion of the Notes in the event that the market price per share of the Company’s common stock is greater than the strike price of the Capped Call Transactions with such reduction and/or offset subject to a cap. Collectively, the Capped Call Transactions cover, initially, the number of shares of the Company’s common stock underlying the respective Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Notes.
The initial terms of the Company’s outstanding Capped Call Transactions are presented below:
Capped Call TransactionsMaturity DateInitial Cap Price per ShareCap Price Premium
2021 Capped Call TransactionsJune 15, 2028$340.42 100 %
2020 Capped Call TransactionsSeptember 1, 2027327.83150 %
2019 Capped Call TransactionsOctober 1, 2026148.63150 %
2023 Credit Agreement
On March 24, 2023, the Company entered into a $400.0 million senior secured revolving credit facility pursuant to an Amended and Restated Credit Agreement (the “2023 Credit Agreement”) among the Company, as borrower, certain subsidiaries of the Company as guarantors, the lenders, and JPMorgan Chase Bank N.A., as administrative Agent. The 2023 Credit Agreement will mature in March 2028 and includes a letter of credit sublimit of $60.0 million and a swingline loan sublimit of $20.0 million.
The 2023 Credit Agreement amends and restates in its entirety the Credit Agreement dated as of February 25, 2019 between the Company, as borrower, the lenders party thereto from time to time, and Citibank N.A., as administrative Agent.
Borrowings under the 2023 Credit Agreement (other than swingline loans) bear interest, at the Company’s option, at (i) a base rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 0.50%, and (c) an adjusted Term SOFR rate for a one-month interest period plus 1.00%, in each case plus a margin ranging from 0.50% to 1.25% or (ii) an adjusted Term SOFR rate plus a margin ranging from 1.50% to 2.25%. Swingline loans under the 2023 Credit Agreement bear interest at the same base rate (plus the margin applicable to borrowings bearing interest at the base rate). These margins are determined based on the senior secured net leverage ratio (defined as secured funded debt, net of unrestricted cash up to $100.0 million, to EBITDA (as defined in the 2023 Credit Agreement)) for the preceding four fiscal quarter periods. The Company is also obligated to pay other customary fees for a credit facility of this size and type, including an unused commitment fee, ranging from 0.20% to 0.35%

21
Etsy, Inc.
Notes to Consolidated Financial Statements
depending on the Company’s senior secured net leverage ratio, and fees associated with letters of credit. The 2023 Credit Agreement also permits the Company, in certain circumstances, to request an increase in the facility by an amount of up to $200.0 million at the same maturity, pricing and other terms and to request an extension of the maturity date for the facility. In connection with the 2023 Credit Agreement, the Company also paid the lenders certain upfront fees.
The Company had no outstanding borrowings under the 2023 Credit Agreement and was in compliance with all financial covenants as of September 30, 2024.
Note 10—Commitments and Contingencies
Purchase Obligations
The Company’s purchase obligations are primarily related to cloud computing. During the nine months ended September 30, 2024, there were no material changes outside the ordinary course of business to the Company’s non-cancelable purchase obligations disclosed in the Company’s Annual Report.
Legal Proceedings
From time to time in the normal course of business, various claims and litigation have been asserted or commenced against the Company. Due to uncertainties inherent in litigation and other claims, the Company can give no assurance that it will prevail in any such matters, which could subject the Company to significant liability for damages. Any claims or litigation could have an adverse effect on the Company’s results of operations, cash flows, or business and financial condition in the period the claims or litigation are resolved. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these matters will not have a material adverse effect on its business.
Note 11—Stockholders’ Deficit
On June 14, 2023, the Board of Directors approved a stock repurchase program that authorizes the Company to repurchase up to $1 billion of its common stock (the “June 2023 Stock Repurchase Program”). As of September 30, 2024, the remaining amount available to be repurchased under this program was $259.9 million.
On October 30, 2024, the Board of Directors approved a new stock repurchase program that authorizes the Company to repurchase up to an additional $1 billion of its common stock (the “October 2024 Stock Repurchase Program”). See “Note 14—Subsequent Event” for additional information.
The stock repurchase programs have no expiration date and may be modified, suspended, or terminated at any time by the Board of Directors. The number of shares repurchased and the timing of repurchases will depend on a number of factors, including, but not limited to, stock price, trading volume, and general market conditions, along with the Company’s working capital requirements, general business conditions, and other factors.
Under the stock repurchase programs, the Company may purchase shares of its common stock through various means, including open market transactions, privately negotiated transactions, tender offers, or any combination thereof. In addition, open market repurchases of common stock have and could be made pursuant to trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit common stock to be repurchased at a time that the Company might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions.


22
Etsy, Inc.
Notes to Consolidated Financial Statements
The following table summarizes the Company’s cumulative share repurchase activity under the program noted above (in thousands, except per share amounts):
Shares RepurchasedAverage Price Paid per Share (1)Value of Shares Repurchased (1)Remaining Amount Authorized
Balance as of January 1, 2024$724,360 
Repurchases of common stock for the three months ended:
March 31, 20242,222 $71.28 $158,377 (158,377)
June 30, 20242,355 63.87 150,418 (150,418)
September 30, 20242,744 56.67 155,629 (155,629)
Balance as of September 30, 20247,321 $63.42 $464,424 $259,936 
(1) Average price paid per share excludes broker commissions and excise tax. Value of shares repurchased includes broker commissions.
All repurchases were made using cash on hand, and all repurchased shares of common stock have been retired.
Note 12—Stock-Based Compensation
During the three and nine months ended September 30, 2024, the Company granted restricted stock units (“RSUs”), including financial performance-based restricted stock units (“Financial PBRSUs”) and total shareholder return performance-based restricted stock units (“TSR PBRSUs”), under its equity incentive plan. In April 2024, the Board of Directors approved an amendment and restatement of the Etsy, Inc. 2015 Equity Incentive Plan (“2015 Plan”) as the Etsy, Inc. 2024 Equity Incentive Plan (“2024 Plan”), which became effective upon stockholder approval during the 2024 Annual Meeting of Stockholders in June 2024. At September 30, 2024, 19,280,062 shares were authorized under the 2024 Plan and 8,273,437 shares were available for future grant.
Effective in the first quarter of 2024, the Company updated its vesting terms for new RSU issuances from semi-annually to quarterly. In general, awards vest ratably each three-month period over a four-year period following the vesting commencement date, except for RSU awards to newly-hired employees, which vest 25% after the first year of service and ratably each subsequent three-month period.
The following table summarizes the activity for the Company’s unvested RSUs, which includes Financial PBRSUs and TSR PBRSUs, during the nine months ended September 30, 2024 (in thousands, except per share amounts):
SharesWeighted-Average
Grant Date Fair Value
Unvested at December 31, 20236,197 $117.14 
Granted4,270 66.61 
Vested(1,572)114.40 
Forfeited/Canceled(767)111.99 
Unvested at September 30, 20248,128 91.61 
The total unrecognized compensation expense at September 30, 2024 related to the Company’s unvested RSUs, including the Financial PBRSUs and TSR PBRSUs, was $588.3 million, which will be recognized over an estimated weighted-average amortization period of 2.51 years.


23
Etsy, Inc.
Notes to Consolidated Financial Statements
Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for the periods presented below is as follows (in thousands):
 Three Months Ended 
 September 30,		Nine Months Ended 
 September 30,
 2024202320242023
Cost of revenue$8,013 $8,105 $24,504 $23,522 
Marketing5,690 5,763 18,009 17,132 
Product development36,048 37,842 108,553 112,771 
General and administrative19,541 18,408 63,626 62,657 
Stock-based compensation expense$69,292 $70,118 $214,692 $216,082 
Note 13—Restructuring and Other Exit Costs
On December 12, 2023, the Company’s Board of Directors approved a restructuring plan designed to increase Etsy’s operational efficiencies, reduce operating costs, and better align Etsy’s workforce and cost structure with current business needs, top strategic priorities, and key growth opportunities (collectively, the “Restructuring Plan”). The Restructuring Plan included an approximately 11% reduction of the Etsy marketplace workforce, which is approximately 225 employees. Additionally, in the fourth quarter of 2023, Reverb reduced its workforce by approximately 13% to gain operational efficiencies and enable critical growth investments into 2024 and beyond.
In connection with these workforce reductions, Etsy incurred approximately $26.6 million in charges in the fourth quarter of 2023, primarily consisting of severance and employee-related benefits, a majority of which related to the Etsy marketplace. As of the end of the first quarter of 2024, the execution of the Restructuring Plan was substantially complete.
During the third quarter of 2024, Reverb reduced its workforce by an additional 18%, and restructured to better align with its key strategic initiatives: to help buyers find great value, increasing focus on used, outlet, and exclusive gear, providing a great customer experience and delivering value added services to its community.
The following table is a summary of the changes in the Company’s liability for severance and employee-related benefits associated with restructuring and other exit costs, included in accrued expenses in the Consolidated Balance Sheets (in thousands):
Restructuring and Other Exit Costs
Balance as of December 31, 2023$24,340 
Severance and employee-related benefits1,869 
Cash payments(22,616)
Balance as of September 30, 2024$3,593 
Note 14—Subsequent Event
On October 30, 2024, the Board of Directors approved a new stock repurchase program authorizing the Company to repurchase up to $1 billion of its common stock. The program does not have an expiration date and may be modified, suspended, or terminated at any time by the Board of Directors. The number of shares repurchased and the timing of repurchases will depend on a number of factors, including, but not limited to, stock price, trading volume, and general market conditions, along with Etsy’s working capital requirements, general business conditions, and other factors.

24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) and with the audited consolidated financial statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 21, 2024 (the “Annual Report”). This discussion, particularly information with respect to our outlook, key trends and uncertainties, our plans and strategy for our business, and our performance and future success, includes forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report, particularly in Part II, Item 1A, “Risk Factors.” We also believe that our performance and future success depend on a number of factors that present significant opportunities for us, as discussed in Part I, Item 1, “Business,” in our Annual Report, which we incorporate by reference.
Overview
Business
Etsy operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world. These marketplaces - which collectively create a “House of Brands” - 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.
Our primary marketplace, Etsy.com, is the global destination for unique and creative goods made by independent sellers. The Etsy marketplace connects creative artisans and entrepreneurs with thoughtful consumers looking for items that are a joyful expression of their taste and values. By surfacing quality listings at a great value and providing a reliable shopping experience to buyers, we aim to create a virtuous cycle that not only benefits Etsy, but creates economic opportunities for the millions of sellers in our marketplace. Our success is aligned with our sellers; we make money when they do. In addition to bringing them an audience of tens of millions of buyers, we offer a range of features and services designed to help them generate more sales and run their businesses. Similarly, we also make money when we meet our buyers’ expectations. When they find quality listings, at great value, and have a reliable and dependable experience from discovery to delivery, it fuels a virtuous cycle, benefiting our global community of sellers and buyers, as well as Etsy and our broader stakeholders.
In addition to our core Etsy marketplace, our “House of Brands” includes Reverb Holdings, Inc. (“Reverb”), the largest online marketplace dedicated to music gear, and Depop Limited (“Depop”), our fashion resale marketplace. Each of our marketplaces primarily operate independently, although some of our key operational functions such as finance, legal, and human resources, for example, support all of our marketplaces to some extent. Our goal is that our marketplaces benefit from shared expertise in product, marketing, technology, and customer support, and that the sum of the whole, over time, will equal more than its individual parts.
The results of Elo7, sold on August 10, 2023, are included in all financial and other metrics discussed in this report, unless otherwise noted, until August 10, 2023.
We generate revenue primarily from marketplace activities, including transaction (inclusive of offsite advertising), payments processing, and listing fees, as well as from optional seller services, which include on-site advertising and shipping labels.

25
Our strategy is focused around:
•Building a sustainable competitive advantage for the Etsy Marketplace - our “Right to Win;”
•Growing the Etsy marketplace in our six core geographies; and
•Leveraging our marketplace expertise and playbook across our “House of Brands.”
10K_2023_Graphics_RTW (1).jpg
Our investments in technology infrastructure, product development, marketing, trust and safety, member support, and helping sellers grow support our strategy, which you can read more about in our Annual Report.
Third Quarter 2024 Key Metrics and Financial Highlights
As of September 30, 2024, our marketplaces connected 8.5 million active sellers and 96.7 million active buyers in nearly every country in the world. In the three and nine months ended September 30, 2024, sellers generated GMS of $2.9 billion and $8.9 billion, respectively. We are a global company and approximately 46% and 45%, respectively, of our GMS in the three and nine months ended September 30, 2024 came from transactions where either a seller or a buyer, or both, were located outside of the United States.
Total revenue was $662.4 million and $2.0 billion in the three and nine months ended September 30, 2024, respectively. In the three and nine months ended September 30, 2024, we recorded net income of $57.4 million and $173.4 million, respectively, and non-GAAP Adjusted EBITDA of $183.6 million and $530.9 million, respectively. See “Non-GAAP Financial Measures” for more information and for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated in accordance with GAAP.
Cash and cash equivalents and short-term investments were $1.0 billion as of September 30, 2024. As of September 30, 2024, 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 nine months ended September 30, 2024, we had positive operating cash flows of $437.5 million.

26
Key Operating and Financial Metrics
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 results of Elo7 have been included in our condensed consolidated financial results (“Consolidated”) until August 10, 2023 (date of sale). The unaudited GAAP and non-GAAP financial measures and key operating metrics we use are:
 Three Months Ended 
 September 30,
% (Decline)
Growth
Y/Y
Nine Months Ended 
 September 30,		% (Decline)
Growth
Y/Y
 2024202320242023
 (in thousands, except percentages)
GMS (1)$2,915,256 $3,039,930 (4.1)%$8,851,010 $9,153,792 (3.3)%
Revenue$662,410 $636,302 4.1 %$1,956,170 $1,906,055 2.6 %
Marketplace revenue$476,075 $460,922 3.3 %$1,413,434 $1,381,395