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What changed in ETSY INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ETSY INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+750 added−942 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-22)

Top changes in ETSY INC's 2024 10-K

750 paragraphs added · 942 removed · 534 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

236 edited+150 added−236 removed56 unchanged
Biggest changeONLY Board Overall Leadership Tech Engineering Other Business Roles 2021 2022 2023 2021† 2022† 2023† 2021† 2022† 2023† 2021† 2022† 2023† 2021† 2022† 2023† 2021† 2022† 2023† American Indian or Alaska Native —% —% —% 0.1 % 0.2 % 0.1 % — % — % — % 0.2 % 0.2 % 0.1 % 0.3 % 0.2 % 0.1 % — % 0.1 % 0.2 % Asian —% —% —% 18.9 % 18.7 % 20.5 % 15.6 % 14.1 % 15.8 % 24.7 % 24.0 % 25.6 % 24.2 % 24.5 % 25.4 % 9.8 % 10.2 % 11.3 % Black/ African American 22.2% 22.2% 22.2% 6.1 % 7.1 % 7.3 % 6.1 % 6.2 % 5.5 % 5.4 % 5.6 % 5.9 % 5.6 % 4.8 % 5.1 % 7.2 % 9.5 % 10.2 % Hispanic —% —% —% 6.3 % 7.3 % 7.2 % 3.3 % 4.0 % 3.6 % 5.0 % 5.7 % 5.9 % 5.6 % 5.9 % 5.6 % 8.5 % 9.9 % 9.8 % Two or More Races —% —% —% 3.7 % 3.5 % 3.6 % 2.2 % 2.2 % 1.6 % 3.9 % 3.6 % 3.8 % 4.4 % 3.9 % 4.3 % 3.1 % 3.2 % 3.0 % White 77.8% 77.8% 77.8% 61.2 % 60.2 % 58.5 % 70.0 % 71.8 % 71.5 % 57.0 % 58.1 % 55.8 % 55.6 % 57.3 % 56.2 % 67.8 % 63.8 % 62.7 % Not Declared —% —% —% 3.7 % 3.0 % 2.9 % 2.8 % 1.8 % 2.0 % 3.8 % 2.8 % 2.8 % 4.4 % 3.4 % 3.2 % 3.6 % 3.3 % 2.9 % † Etsy commissioned an external third-party to perform attest procedures with respect to our diversity metrics for the reporting period.
Biggest changeONLY Board of Directors Overall Leadership Tech Engineering Other Business Roles n American Indian or Alaska Native* n Asian n Black/ African American n Hispanic n Not Declared n Two or More Races n White * American Indian or Alaska Native for Board of Directors was 0% in 2024, 2023, and 2022; for Overall was 0.1% in 2024, 0.1% in 2023, and 0.2% in 2022; for Leadership was 0% in 2024, 2023, and 2022; for Tech was 0.1% in 2024, 0.1% in 2023, and 0.2% in 2022; for Engineering was 0.1% in 2024, 0.1% in 2023, and 0.2% in 2022; for Other Business Roles was 0% in 2024, 0.2% in 2023, and 0.1% in 2022. † Etsy commissioned an external third party to perform attest procedures with respect to our workforce metrics for the reporting period.
In 2023, we made the following updates to our methodology for quantifying our GHG inventory: 1 We moved to a new carbon data management vendor allowing us to derive a portion of our quantified Scope 2 location-based emissions with different and more commonly used emissions factors, resulting in an increase of emissions compared to the emissions factors used in 2022. 2 Our new carbon data management vendor derived our emissions for Scope 3 - Category 1 and included calculations to account for inflation or deflation which resulted in a decrease in emissions due to spend amounts shrinking when adjusting the dollar value from 2012 to 2022.
In 2023, we made the following updates to our methodology for quantifying our GHG inventory: 1 We moved to a new carbon data management vendor allowing us to derive a portion of our quantified Scope 2 location-based emissions with different and more commonly used emissions factors, resulting in an increase of emissions compared to 2022. 2 Our new carbon data management vendor derived our emissions for Scope 3 - Category 1 and included calculations to account for inflation or deflation which resulted in a decrease in emissions due to spend amounts shrinking when adjusting the dollar value from 2022 to 2012.
We believe our marketplaces all share key elements central to success, including: • analytical frameworks, product experiment and measurement approaches, and operating rhythms that prioritize resource allocation towards the most impactful outcomes; • sophisticated search and discovery technology; • compelling on-site customer experiences; • efficient payment platforms; • value-added seller services, such as advertising platforms and effective shipping options; • strong brand and performance marketing capabilities; and • a commitment to investments that protect the marketplace.
We believe our marketplaces share key elements central to success, including: • analytical frameworks, product experiment and measurement approaches, and operating rhythms that prioritize resource allocation towards the most impactful outcomes; • sophisticated search and discovery technology; • compelling on-site customer experiences; • efficient payment platforms; • value-added seller services, such as advertising platforms and effective shipping options; • strong brand and performance marketing capabilities; and • a commitment to investments that protect the marketplace.
Processes for integrating climate-related risks into the overall risk management At Etsy marketplace, climate-related risks are managed as part of ESG risk and are seen as both underlying drivers of other types of risks as well as standalone risks. These risks, as well as their drivers, are monitored by the Sustainability Team. The I&S Sr.
Processes for integrating climate-related risks into the overall risk management At Etsy, climate-related risks are managed as part of ESG risk and are seen as both underlying drivers of other types of risks as well as standalone risks. These risks, as well as their drivers, are monitored by the Sustainability Team. The I&S Sr.
Director and the Sustainability Manager, engage relevant internal risk owners to evaluate the risk, assess existing controls, and, when necessary, escalate for oversight by senior management through Etsy’s Risk Steering Committee (see Governance in this section above for more detail).
Sustainability Manager, engage relevant internal risk owners to evaluate the risk, assess existing controls, and, when necessary, escalate for oversight by senior management through Etsy’s Risk Steering Committee (see Governance in this section above for more detail).
We used a range of representative concentration pathway (“RCP”) scenarios, with the lowest emissions scenario being RCP2.6 and the highest emission scenario being RCP8.5, as well as models and reports from the Intergovernmental Panel on Climate Change (“IPCC”).
We used a range of representative concentration pathway (“RCP”) scenarios, with the lowest emissions scenario being RCP2.6 and the highest emission scenario being RCP8.5, as well as models and reports from the Intergovernmental Panel on Climate Change.
In 2021, we conducted a qualitative scenario analysis in key markets across Etsy marketplace’s operations and marketplace activities while in 2022 and 2023 we conducted more quantitative scenario analysis focused on physical risks to our U.S. business and key partners.
In 2021, we conducted a qualitative scenario analysis in key markets across Etsy marketplace’s operations and marketplace activities while in 2022 and 2023 we conducted more quantitative scenario analysis focused on physical risks to our U.S. and U.K. business and key partners.
We use a mix of consultant support, third-party physical risk modeling, and public data to ground our research and risk analysis. Once a risk is identified, our Sustainability Team, including the I&S Sr.
We use a mix of consultant support, third-party physical risk modeling, and public data to ground our research and risk analysis. Once a risk is identified, our Sustainability Team, including the I&S Sr. Director and the Sr.
To date, while we have identified relevant climate risks, we have not identified any climate-related risks which are reasonably expected to have a material short-term impact on financial or strategic business operations.
CSRD. To date, while we have identified relevant climate risks, we have not identified any climate-related risks which are reasonably expected to have a material short-term impact on financial or strategic business operations.
You can read more about Etsy’s Impact and environmental, social, and governance (“ESG”) strategies beginning on page 19 , where we report on metrics aligned with both our self-identified Impact priorities and widely accepted third-party frameworks. About our Company Etsy operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world.
You can read more about Etsy’s Impact and environmental, social, and governance (“ESG”) strategies beginning on page 20 , where we report on metrics aligned with both our self-identified Impact priorities and widely accepted third-party frameworks. About our Company Etsy operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world.
We believe that since our 2023 Etsy marketplace GMS represented approximately 2% of that online only portion, we have significant opportunity to gain further e-commerce market share. Since our estimated opportunity is focused on our core geographies and retail categories, additional upside to this opportunity could come from further geographic and/or category expansion for the Etsy marketplace.
We believe that since our 2024 Etsy marketplace GMS represented approximately 2% of that online only portion, we have significant opportunity to gain further e-commerce market share. Since our estimated opportunity is focused on our core geographies and retail categories, additional upside to this opportunity could come from further geographic and/or category expansion for the Etsy marketplace.
As a result, we do not yet have a full “Year 2” data set for the 2022 new buyer cohort, as buyers who bought later in 2022 have not had two years to age. Additionally, note that across our cohorts, GMS retention levels in years that include 2020 and 2021 were impacted by the pandemic.
As a result, we do not yet have a full “Year 2” data set for the 2023 new buyer cohort, as buyers who bought later in 2023 have not had two years to age. Additionally, note that across our cohorts, GMS retention levels in years that include 2020 and 2021 were impacted by the pandemic.
Each new seller cohort includes the aggregate GMS from all sellers that created and were billed for their first listing on Etsy.com in the designated year - the table on the left shows retention as a percentage of “Year 1” GMS and the one on the right shows retention in dollars.
Each new seller cohort includes the aggregate GMS from all sellers that created and were billed for their first listing on the Etsy marketplace in the designated year - the table on the left shows retention as a percentage of “Year 1” GMS and the one on the right shows retention in dollars.
In accordance with SBTi materiality guidelines, we are not required to submit the adjusted target for revalidation by the SBTi at this time. 21 Table of Contents Shipping Emissions from the shipping of items sold in our marketplaces are by far the largest source of our quantified Scope 3 emissions.
In accordance with SBTi materiality guidelines, we are not required to submit the adjusted target for revalidation by the SBTi at this time. 22 Table of Contents Shipping Emissions from the shipping of items sold in our marketplaces are by far the largest source of our quantified Scope 3 emissions.
For more information, please see Part 1, Item 1, “Business—Primary Business Drivers—Trust & Safety” of this Annual Report.
For more information, please see Part I, Item 1, “Business—Primary Business Drivers—Trust & Safety” of this Annual Report.
Additional details regarding the scope and data methodologies used to calculate our GHG emissions data can be found on our Investor Relations website. 37 Table of Contents The Task Force on Climate-Related Financial Disclosures Etsy treats climate change and its related impacts seriously.
Additional details regarding the scope and data methodologies used to calculate our GHG emissions data can be found on our Investor Relations website. 35 Table of Contents The Task Force on Climate-Related Financial Disclosures Etsy treats climate change and its related impacts seriously.
Medium- and Long- Term Seller Operations As natural disasters increase in intensity and frequency, we are finding that our sellers and buyers are correspondingly more frequently impacted. See our “Helping Our Sellers Build Climate Resilience” section on pag e 24 f or more details.
Medium- and Long- Term Seller Operations As natural disasters increase in intensity and frequency, we are finding that our sellers and buyers are correspondingly more frequently impacted. See our “Helping Our Sellers Build Climate Resilience” section on pag e 26 f or more details.
We estimate that approximately 30% of adults who identify as women in the United States and the United Kingdom shopped Etsy at least once in 2023, so there are many more millions of women who did not shop on Etsy during that time frame.
We estimate that approximately 30% of adults who identify as women in the United States and the United Kingdom shopped Etsy at least once in 2024, so there are many more millions of women who did not shop on Etsy during that time frame.
As a result, we do not yet have a full “Year 2” data set for the 2022 new seller cohort, as sellers who incurred their first listing fee later in 2022 have not yet had two years to age.
As a result, we do not yet have a full “Year 2” data set for the 2023 new seller cohort, as sellers who incurred their first listing fee later in 2023 have not yet had two years to age.
Details of these targets including actions taken as part of our efforts to achieve them and performance against each can be found on pages 21 - 23 of this Annual Report. 41 Table of Contents Available Information We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), and file or furnish reports, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports, proxy statements, and other information with the SEC.
Details of these targets including actions taken as part of our efforts to achieve them and performance against each can be found on pages 22 - 23 of this Annual Report. 39 Table of Contents Available Information We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), and file or furnish reports, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports, proxy statements, and other information with the SEC.
Our SEC reports are also available on the SEC’s website at www.sec.gov free of charge as soon as reasonably practicable after we have filed or furnished them to the SEC. 42 Table of Contents
Our SEC reports are also available on the SEC’s website at www.sec.gov free of charge as soon as reasonably practicable after we have filed or furnished them to the SEC. 40 Table of Contents
We believe that when executed effectively, these elements can create a multiplier effect that will drive future growth. Our sellers’ unique items : The foundation of Etsy.com’s competitive advantage is our sellers’ millions of unique items.
We believe that when executed effectively, these elements can create a multiplier effect that will drive future growth. Our sellers’ unique items : The foundation of the Etsy marketplace’s competitive advantage is our sellers’ millions of unique items.
We believe our Offsite Ads program is a win-win for Etsy and our sellers since: 1) the seller only pays a transaction fee when a sale is made; and 2) the additional fee expands Etsy’s LTV, as outlined above, enabling us to spend deeper for performance marketing to drive more visits to our marketplace.
We believe our Offsite Ads program is a win-win for Etsy and our sellers since: 1) the seller only pays a transaction fee when a sale is made; and 2) the additional fee expands Etsy’s LTV, as outlined above, enabling us to spend deeper for performance marketing to drive more visits to our marketp lace.
We aim to continue improving our data collection and analysis on these topics to improve our understanding of long-term climate-related risks, quantify opportunities and, if necessary, update our strategic planning. 40 Table of Contents Risk Management Processes for identifying and assessing climate-related risks Our climate risk identification and assessment process is integrated into our company-wide risk management.
We aim to continue improving our data collection and analysis on these topics to improve our understanding of long-term climate-related risks, quantify opportunities and, if necessary, update our strategic planning. Risk Management Processes for identifying and assessing climate-related risks Our climate risk identification and assessment process is integrated into our company-wide risk management.
Driving purchase frequency As outlined above, about half of our active buyer base shops on Etsy one purchase day per year, with the other half purchasing an average of approximately five purchase days per year.
Driving purchase frequency As outlined above, about half of our active buyer base shops on Etsy one purchase day per year, with the other half purchasing approximately five purchase days per year.
For information on how we manage our cybersecurity risks, please refer to Item 1C, beginning on page 71 of this Annual Report. 32 Table of Contents SASB Disclosure The Sustainability Accounting Standards Board’s (“SASB”) mission is to develop sustainability metrics for public corporations to disclose material, decision-useful information to investors. Etsy’s disclosures are designed to provide comparable and consistent data.
For information on how we manage our cybersecurity risks, please refer to Item 1C, beginning on page 67 of this Annual Report. 31 Table of Contents SASB Disclosure The Sustainability Accounting Standards Board’s (“SASB”) mission is to develop sustainability metrics for public corporations to disclose material, decision-useful information to investors. Etsy’s disclosures are designed to provide comparable and consistent data.
In 2023, Etsy, Inc.’s Advocacy team worked with sellers and policymakers around the world to ensure a voice for small business owners in public policy.
In 2024, Etsy, Inc.’s Advocacy team worked with sellers and policymakers around the world to ensure a voice for small business owners in public policy.
Etsy also periodically makes market-based adjustments to compensation that we apply consistently within and across teams, to ensure pay for internal employees is aligned with that of new hires. As part of our commitment to fair pay practices, we completed our most recent biennial Pay Equity analysis, conducted by a third-party consulting firm, in 2022.
Etsy also periodically makes market-based adjustments to compensation that we apply consistently within and across functions and/or teams, to ensure pay for internal employees is aligned with that of new hires. As part of our commitment to fair pay practices, we completed our most recent biennial pay equity analysis, conducted by a third-party consulting firm, in 2024.
You should not rely on such information in deciding whether to invest in our common stock. Copies of our SEC reports and other documents are also available, without charge, by sending a letter to Investor Relations, Etsy, Inc., 117 Adams Street, Brooklyn, NY 11201, by sending an email to ir@etsy.com, or by calling (347) 382-7582.
You should not rely on such information in deciding whether to invest in our common stock. Copies of our SEC reports and other documents are also available, without charge, by sending a letter to Investor Relations, Etsy, Inc., 117 Adams Street, Brooklyn, NY 11201, or by sending an email to ir@etsy.com.
One member of our Board of Directors is experienced in sustainability accounting practices and is a Sustainability Accounting Standards Board (“SASB”) FSA Credential Holder. Information about Etsy’s Board of Directors and its Committees, including their charters and membership, is available in the Governance section of our investor relations website.
One member of our Board of Directors is experienced in sustainability accounting practices and is a SASB FSA Credential Holder. Information about Etsy’s Board of Directors and its Committees, including their charters and membership, is available in the Governance section of our Investor Relations website.
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.
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 Etsy marketplace is the global destination for unique, creative goods from independent sellers.
Our investment philosophy for performance marketing is to invest until the marginal return on investment (“ROI”) on the next dollar spent is below our target minimum ROI. Increases in buyer lifetime value (“LTV”), driven by visits, conversion rate, incremental revenue, and frequency, shift the return curve higher, enabling us to spend more in marketing.
Our investment philosophy for performance marketing is to invest until the marginal return on investment (“ROI”) on the next dollar spent is below our target minimum ROI. Increases in buyer LTV, driven by visits, conversion rate, incremental revenue, and frequency, shift the return curve higher, enabling us to spend more in marketing.
The “relevant retail categories” included in our estimate of total market size are apparel and footwear, beauty and personal care, home and living, craft supplies, paper and party, art and collectibles, personal accessories and eyewear, pet care, and toys and games.
The “relevant retail categories” included in our estimate of total market size are apparel and footwear, personal accessories, beauty and personal care, home and garden, toys and games, pet care, craft supplies, paper and party, and art and collectibles.
We estimate our penetration with consumers who identify as men is much lower, with only about 10% of adult men in the United States and United Kingdom having shopped Etsy at least once in 2023.
We estimate our penetration with consumers who identify as men is much lower, with only about 10% of adult men in the United States and United Kingdom having shopped on Etsy at least once in 2024.
For the subsection of Scope 3 - Category 1, Cloud Computing - Google Cloud (Etsy marketplace only), we calculated the emissions partly with data provided by Google and partly by our own calculation of their market-based emissions.
For the subsection of Scope 3 - Category 1, Cloud Computing - Google Cloud (Etsy marketplace only), in 2022 we calculated the emissions partly with data provided by Google and partly using our own calculation of their market-based emissions.
Etsy’s Transparency Report also includes details of our Privacy Principles. • Among other things, our Privacy Policy and Cookies & Similar Technologies Policy cover the user information that Etsy collects or receives, the choices and control that a user has in relation to their data including based on type and sensitivity by region and worldwide, the purpose for which Etsy uses such information (including first and third-party advertising purposes), our policies relating to our usage and sharing within Etsy, its affiliates and third-party partners, disclosures about third-party partner privacy policy and options, and user controls for sharing and controlling such information with third-parties. • Depop and Reverb each have separate policies in place that address similar privacy matters.
Etsy’s Transparency Report also includes details of our Privacy Principles. • Among other things, our Privacy Policy and Cookies & Similar Technologies Policy cover the user information that Etsy collects or receives, the choices and control that a user has in relation to their data including based on type and sensitivity by region and worldwide, the purpose for which Etsy uses such information (including first and third-party advertising purposes), our policies relating to our usage and sharing within Etsy, its affiliates and third-party partners, disclosures about third-party partner privacy policy and options, and user controls for sharing and controlling such information with third parties.
In addition, we compete with retailers of all shapes and sizes for the attention of our buyers. A buyer has the choice of shopping with any online or offline retailer, whether large e-commerce marketplaces, national retail chains, local consignment and vintage stores, the brands represented on social commerce channels, resale marketplaces, or other venues or marketplaces.
In addition, we compete with retailers and marketplaces of all shapes and sizes for the attention of our buyers. A buyer has the choice of shopping with any online or offline venue, whether large e-commerce marketplaces, national retail chains, local consignment and vintage stores, social commerce channels, resale marketplaces, or other venues or marketplaces.
Thoughtful Corporate Governance Our corporate governance practices include an independent Board Chair, a fully independent Board of Directors (except for our CEO), independent Committee members, sophisticated and fully engaged directors with different areas of relative expertise and additional dimensions of diversity, and a balanced distribution of director tenure.
Thoughtful Corporate Governance Our corporate governance practices include an independent Board Chair, a fully independent Board of Directors (except for our Chief Executive Officer), independent Committee members, sophisticated and fully engaged directors with different areas of relative expertise and additional dimensions of diversity, and a balanced distribution of director tenure.
Without reason to share or enough trust between a company and its employees, individuals are unlikely to self-disclose. In 2023, 10.7% of U.S. and U.K. Etsy marketplace employees disclosed that they have or have had a disability.
Without reason to share or enough trust between a company and its employees, individuals are unlikely to self-disclose. In 2024, 9.7% of U.S. and U.K. Etsy marketplace employees disclosed that they have or have had a disability.
We define short-term impacts as those expected to occur within 0-2 years, medium-term impacts as those expected to occur within 2-5 years, and long-term impacts as those expected to occur after 5 or more years. Etsy, Inc.’s Impact goal-setting process considers these climate-related impacts.
We define short-term impacts as those expected to occur within 0-2 years, medium-term impacts as those expected to occur within 2-5 years, and long-term impacts as those expected to occur after 5 or more years. Etsy’s Impact goal-setting process considers these climate-related impacts.
For 2023, we estimate that our energy consumption in Google Cloud was 6,253 MWh, based on a methodology developed by Etsy and reviewed by industry experts (our “Cloud Jewels methodology”). Quantification of our cloud energy consumption is allowing us to meaningfully explore and activate levers of change to drive further cost and energy efficiencies in our computing footprint.
For 2024, we estimate that our energy consumption in Google Cloud was 5,742 MWh, based on a methodology developed by Etsy and reviewed by industry experts (our “Cloud Jewels methodology”). Quantification of our cloud energy consumption is allowing us to meaningfully explore and activate levers of change to drive further cost and energy efficiencies in our computing footprint.
AGE METRICS - GLOBAL* 2021† 2022† 2023† n 24 years and younger n 30-34 years n 40-49 years n 25-29 years n 35-39 years n 50+ years *Age Not Declared was .2% in 2021, .1% in 2022, and .04% in 2023. † Etsy commissioned an external third-party to perform attest procedures with respect to our diversity metrics for the reporting period.
AGE METRICS - GLOBAL* 2024† 2023† 2022† n 24 years and younger n 30-34 years n 40-49 years n 25-29 years n 35-39 years n 50+ years * Age Not Declared was 0.1% in 2024, 0.04% in 2023, and 0.1% in 2022. † Etsy commissioned an external third party to perform attest procedures with respect to our workforce metrics for the reporting period.
In 2023, we began to invest in initiatives to democratize ML across the Etsy platform, with the goal to streamline and automate ML modeling in order to allow more Etsy engineers to deploy these models in significantly less time.
In 2024, we continued to invest in initiatives to democratize ML across the Etsy platform, with the goal to streamline and automate ML modeling in order to allow more Etsy engineers to deploy these models in significantly less time.
Oversight of climate risk at Etsy is supported by the Risk Steering Committee, a cross-functional management team which includes our CEO and CFO. This Committee meets at least quarterly to review and discuss the significant risks facing Etsy and its deliberations inform the risk management-related topics elevated to the Board of Directors and the Board Committees.
Oversight of climate risk at Etsy is supported by the Risk Steering Committee, a cross-functional management team which includes our Chief Executive Officer and Chief Financial Officer. This Committee meets at least quarterly to review and discuss the significant risks facing Etsy and its deliberations inform the risk management-related topics elevated to the Board of Directors and the Board Committees.
We also share certain workforce metrics, such as our most recent consolidated EEO-1 report, information derived from our most recent seller census, our annual Transparency Report, and our external facing policies, including our governance policies and guidelines, privacy policy and marketplace rules on our investor relations website.
We also share certain workforce metrics, such as our most recent consolidated EEO-1 report, our annual Transparency Report, and our external facing policies, including our governance policies and guidelines, privacy policy and marketplace rules on our investor relations website.
Offsite Ads is an innovative advertising program for Etsy marketplace sellers, where Etsy pays the upfront costs to promote Etsy sellers’ listings on multiple internet platforms and takes a ‘success fee’ when a sale is made.
Offsite Ads is an innovative advertising program for Etsy marketplace sellers, where Etsy’s marketing spend funds the upfront costs to promote Etsy sellers’ listings on multiple internet platforms and takes a ‘success fee’ when a sale is made.
SASB Metrics SASB Code Metric 2021 2022 2023 CG-EC-000.A Entity-defined measure of user activity Active buyers (thousands) 96,336 95,076 96,483 Active sellers (thousands) 7,522 7,470 9,035 • 2021 and 2022 Active buyers and Active sellers includes Etsy marketplace, Reverb, Depop and Elo7, while 2023 excludes Elo7 (divested).
SASB Metrics SASB Code Metric 2024 2023 2022 CG-EC-000.A Entity-defined measure of user activity Active buyers (thousands) 95,459 96,483 95,076 Active sellers (thousands) 8,134 9,035 7,470 • 2022 Active buyers and Active sellers includes Etsy marketplace, Reverb, Depop and Elo7, while 2023 and 2024 excludes Elo7 (divested).
Performance marketing Our investments in performance marketing, which we define as paid media spend related to the digital acquisition and re-engagement of buyers, adjusts according to demand and scale based on incremental return. We do not set fixed budgets for our marketing team.
Our investments in performance marketing, which we define as paid media spend related to the digital acquisition and re-engagement of buyers (for example, Google Product Listing Ads, or “PLAs”), adjusts according to demand and scale based on incremental return. We do not set fixed budgets for our marketing team.
Continuing to retain and reactivate lapsed buyers We continue to have a very large pool of over 100 million lapsed buyers to reactivate, and we expect that for the foreseeable future there will continue to be millions of buyers for us to reactivate each year.
Continuing to retain and reactivate lapsed buyers We continue to have a very large pool of over 100 million lapsed buyers to reactivate, and we expect that for the foreseeable future there will continue to be millions of buyers for us to reactivate each year. In fact, we reactivated nearly 29 million lapsed buyers in 2024.
Among other things, we invest in our technology infrastructure, product development, marketing, trust and safety, member support and helping sellers grow as we strive to continuously improve our marketplaces for our buyers and sellers. While the discussion below focuses on the primary drivers of the Etsy marketplace, there are similar business drivers at each of our marketplaces.
Among other things, we invest in our technology infrastructure, product development, marketing, trust and safety, member support, helping sellers grow, and fostering engaged and impactful teams as we strive to continuously improve our marketplaces. While the discussion below focuses on each of these primary drivers of the Etsy marketplace, there are similar business drivers present for our subsidiary marketplaces.
Our teams are organized around a collection of initiatives that support a common strategy aligned with our “Right to Win,” with cross-functional teams focused on delivering a key customer outcome that we measure by a set of objectives and key results, all meant to solve key customer friction points.
Our teams are organized around a collection of initiatives that support a common strategy aligned with our “Right to Win,” with cross-functional teams focused on delivering engaging customer experiences that we measure by a set of objectives and key results, all meant to solve key customer friction points and elevate overall Etsy shopping missions.
Sellers choose to list their unique items on our marketplace because they believe that we are the best place for them to start and grow a creative business and that we have created a community that attracts, supports, and retains some of the world’s most talented makers.
We have created a community that attracts, supports, and retains some of the world’s most talented makers, and sellers choose to list on our marketplace because they believe that we are a great place to start and grow a creative business.
Management’s role in assessing and managing climate-related risks and opportunities Our Executive Team, including our CEO and CFO, review our environmental goals annually. Our CFO approves material capital expenditures, including those related to climate-related issues, such as renewable energy projects, and investments in verified emissions reductions.
Management’s role in assessing and managing climate-related risks and opportunities Our Executive Team, including our Chief Executive Officer, reviews our environmental goals annually. Our Chief Financial Officer approves material capital expenditures, including those related to climate-related issues, such as renewable energy projects, and investments in verified emissions reductions.
For a more complete description of our corporate governance practices, please refer to our Proxy Statement for the 2024 Annual Meeting of Stockholders. More information on our governance policies and guidelines is available at the Investor Relations section of our website.
For a more complete description of our corporate governance practices, please refer to our most recent proxy statement. More information on our governance policies and guidelines is available at the Investor Relations section of our website.
During 2023, we developed initiatives to drive buyer consideration by highlighting our sellers’ quality listings, at great value, that we believe our sellers can deliver in a way that is both reliable and dependable. You can read more about these specific initiatives on page 8 in the Product Development section.
To that end, in 2024, we continued to focus on driving buyer consideration by highlighting our sellers’ quality listings, at great value, that we believe our sellers can deliver in a way that is both reliable and dependable. You can read more about these specific initiatives on page 8 in the Product Development section.
Full details and data methodology are available at investors.etsy.com. 36 Table of Contents Notes on Our GHG Inventory We note that the above emissions do not include any net calculation for the application of carbon offsets.
Full details and data methodology are available at investors.etsy.com. 34 Table of Contents Notes on Our GHG Inventory We note that the above emissions are not net of the application of carbon offsets.
We also have a long history of healthy buyer retention and believe this trend can continue. See “The Etsy Marketplace: Our Passionate and Engaged Community” on page 12 for additional details. Lastly, there are many millions of visitors to the Etsy marketplace each month who do not make a purchase when they visit.
We also have a long history of healthy buyer retention and believe this trend can continue. See “The Etsy Marketplace: Our Passionate and Engaged Community” on page 12 for additional details. Lastly, there are many millions of visits to the Etsy marketplace each month that do not result in a purchase.
We believe our efforts to engage new, lapsed, and existing buyers, as well as drive frequency, have helped support the health of our buyer cohorts overall despite stiff reopening headwinds and challenging macroeconomic conditions.
Etsy Buyers We believe our efforts to engage new, lapsed, and existing buyers, as well as drive frequency, have helped support the health of our buyer cohorts overall despite challenging macroeconomic conditions for discretionary goods.
Etsy expects to provide additional disclosures on Board of Directors diversity in our Proxy Statement for our 2024 Annual Meeting of Stockholders (“Proxy Statement”) to be filed with the SEC within 120 days of the fiscal year ended December 31, 2023. Our 2022 consolidated equal employment opportunity (EEO-1) report can be found on our Investor Relations website.
Etsy expects to provide additional disclosures on its Board of Directors in our Proxy Statement for our 2025 Annual Meeting of Stockholders (“Proxy Statement”) to be filed with the SEC within 120 days of the fiscal year ended December 31, 2024. Our most recent consolidated equal employment opportunity (“EEO-1”) report can be found on our Investor Relations website.
Etsy’s Sustainability team, led by the Senior Director of Impact and Sustainability (the “I&S Sr. Director”), oversees Etsy’s sustainability strategy and implementation, which includes climate impacts. The I&S Sr. Director reports to the GM, International and VP, Marketplace Initiatives, who reports to the Chief Operating and Marketing Officer, who is the Executive Sponsor for Etsy’s Impact strategy. The I&S Sr.
Etsy’s Sustainability team, led by the Senior Director of Impact and Sustainability (the “I&S Sr. Director”), oversees Etsy’s sustainability strategy and implementation, which includes climate impacts. The I&S Sr. Director reports to the Chief Legal Officer, who is the Executive Sponsor for Etsy’s Impact strategy. The I&S Sr.
To this end, we track the annual carbon offset costs, offset cost savings from specific emissions reduction activities, and carbon offset price projections for the voluntary carbon market. Related to natural disasters, we track GMS impacts from FEMA designated natural disasters as well as the percentage of our sellers and buyers in regions exposed to extreme weather events.
Additionally, we track the voluntary carbon market costs and carbon credit cost savings from specific emissions reduction activities. Related to natural disasters, we track GMS impacts from FEMA designated natural disasters as well as the percentage of our sellers and buyers in regions exposed to extreme weather events.
Section Page How We Drive Impact The levers we use to drive Impact work 20 Environmental Goals & Highlights 21 Social Goals & Highlights 24 Workforce Metrics Employee Diversity data 30 Governance Highlights 32 SASB Consumer Goods Sector – E-Commerce industry standard reporting 33 TCFD Climate - Governance, Strategy, Risk Management, Metrics, and Targets 38 19 Table of Contents How We Drive Impact: Underpinning our Impact strategy is a set of levers we employ to drive toward our Impact goals while advancing and complementing our business strategy.
Section Page How We Drive Impact The levers we use to drive Impact work 21 Environmental Goals & Highlights 22 Social Highlights 26 Workforce Metrics Highlights 28 Governance Highlights 31 SASB Consumer Goods Sector – E-Commerce industry standard reporting 32 TCFD Climate - Governance, Strategy, Risk Management, Metrics, and Targets 36 20 Table of Contents How We Drive Impact: Underpinning our Impact strategy is a set of levers we employ to drive toward our Impact goals while advancing and complementing our business strategy.
Short-Term Investors We continue to provide robust ESG disclosures for investors, which we believe well positions us to respond to expanded and standardized ESG reporting expectati ons. 39 Table of Contents Identified Climate Risks & Management Response Category Class Risk Description Horizon Management Response Physical Acute Extreme weather events have the potential to: • impact sellers' ability to make and/or ship items to and displace buyers, which could temporarily decrease supply and/or demand for items on our marketplaces and disrupt transit times; • place our offices at risk, or negatively impact the operations of our third-party service providers.
Short-Term External Constituencies We continue to provide robust ESG disclosures for investors and other constituencies . 37 Table of Contents Identified Climate Risks & Management Response Category Class Risk Description Horizon Management Response Physical Acute Extreme weather events have the potential to: • impact sellers' ability to make and/or ship items to and displace buyers, which could temporarily decrease supply and/or demand and disrupt transit times; • place our offices at risk, or negatively impact the operations of our third-party service providers.
Continuing to expand beyond our top geographies While Etsy more than doubled the number of active buyers on our marketplace from 2019 to a record 92 million in 2023, we continue to believe that there are millions of additional consumers globally interested in unique and creative goods made by independent sellers.
Continuing to expand beyond our top geographies While Etsy nearly doubled the number of active buyers on our marketplace from 2019, we continue to believe that there are millions of additional consumers globally who would be interested in unique and creative goods made by independent sellers.
For example, our goal to source 100% renewable electricity for office operations and computing load, which was achieved for 2020 through 2023, reduces our exposure to carbon pricing and volatile energy prices.
For example, our goal to source 100% renewable electricity for office operations and computing load reduces our exposure to carbon pricing and volatile energy prices.
Capturing more of our total available market Using the above mentioned Euromonitor report and other data, we estimate that the online market size across all relevant retail categories for the Etsy marketplace within our six core geographic markets represents an approximately $500 billion market opportunity, and an approximately $2 trillion market opportunity when offline sales are included.
Capturing more of our total available market We estimate that the online market size across all relevant retail categories for the Etsy marketplace within our historical core geographic markets represents an approximately $550 billion market opportunity, and an approximately $2 trillion market opportunity when offline sales are included 2 .
For a historical view of our metrics, please view pages 33 - 37 of this Annual Report. Internally, we track a number of additional climate-related metrics. For example, in 2023 we offset carbon emissions across our quantified Scope 1, 2, and 3 categories, which effectively acts as an internal price on our emissions.
For a historical view of our metrics, please view pages 32 - 35 of this Annual Report. Internally, we track a number of additional climate-related metrics. For example, in 2024 we invested in carbon credits to offset our quantified Scope 1, 2, and 3 emissions, which effectively acts as an internal price on our emissions.
The Reverb and Depop marketplaces are included in all financial and other metrics discussed in this report, unless otherwise noted, from their respective dates of acquisition. On August 10, 2023, Etsy completed the sale of Elo7 Serviços de Informática S.A. (“Elo7”), a Brazil-based marketplace for handmade and unique items.
On August 10, 2023, Etsy completed the sale of Elo7 Serviços de Informática S.A. (“Elo7”), a Brazil-based marketplace for handmade and unique items. The results of Elo7 are included in all financial and other metrics discussed in this report, unless otherwise noted, from the date of acquisition on July 2, 2021 until August 10, 2023.
Brand marketing Since 2018, Etsy has leaned more heavily into “upper funnel” brand marketing strategies through TV and digital video to create a flywheel designed to elevate the effectiveness of our other marketing channels.
Brand marketing Since 2018, Etsy has leaned more heavily into “upper funnel” brand marketing strategies through TV, digital video, and out-of-home advertisements, such as billboards and public transportation signage, to create a flywheel designed to elevate the effectiveness of our other marketing channels.
In 2023, the percentage of GMS attributed to performance marketing (“paid GMS”) was 20%, meaning that the vast majority of our GMS comes to us organically through awareness of our brand.
Performance marketing In 2024, the percentage of GMS attributed to performance marketing (“paid GMS”) for the Etsy marketplace was 21%, meaning that the vast majority of our GMS comes to us organically through awareness of our brand.
We apply a combination of proprietary and non-proprietary machine learning (“ML”) algorithms, large language models (“LLM”), and neural networks, as well as human curation to personalize the search and discovery experiences and enable buyers to more easily browse, filter, and buy that perfect item, even when they may not have something specific in mind.
We apply a combination of proprietary and non-proprietary AI, Gen AI, and ML algorithms, as well as human curation, to personalize the search and discovery experiences and enable buyers to more easily browse, filter, and buy that perfect item, even when they may not have something specific in mind.
Scope 3 emissions include all other indirect emissions that occur in our value chain such as business travel, employee commuting, and the processing of waste from our operations.
Scope 2 emissions include indirect emissions from the generation of electricity that we may purchase for our offices. Scope 3 emissions include all other indirect emissions that occur in our value chain such as business travel, employee commuting, and the processing of waste from our operations.
Our vendor also derived more supplier specific emissions factors based on publicly available data from some suppliers, resulting in a decrease in emissions as the emissions data from suppliers were lower than the average EPA EEIO factors previously used.
Our vendor also derived more supplier specific emissions factors based on publicly available data from some suppliers, resulting in a decrease in emissions as the emissions data from suppliers were lower than the average Environmental Protection Agency Environmentally Extended Input-Output factors previously used.
For example, we see significant opportunity to expand in the Gifting market, which we estimate represents a $200 billion relevant opportunity, online and offline, in the United States alone, and where we believe the Etsy marketplace has approximately 1% of that market.
Given the special and unique nature of items on Etsy, we see significant opportunity to expand in the Gifting market, which we estimate represents a $200 billion 3 relevant opportunity, online and offline, in the United States alone, and where we believe the Etsy marketplace has approximately 1% 1,4 of that market.
Resource Efficiency Reducing resource use across our facilities offers opportunities to reduce operating costs while strengthening employee engagement and thus improving retention. Short-Term Energy Efficiency We continue to be on track to meet our goal of a 25% reduction in the intensity of our energy use in Etsy marketplace offices and for computing by 2025.
Resource Efficiency Reducing resource use across our offices offers opportunities to reduce operating costs while strengthening employee engagement and thus improving retention. Short-Term Energy Efficiency Our efforts to meet our goal of a 25% reduction in the intensity of our energy use in Etsy marketplace offices and for computing by 2025 has reduced the impact of fuel price increases.
ESG Reporting: Our Impact Goals, Strategy & Progress We have developed an Impact strategy and goals that reflect the positive impact we want to have on the world while advancing and complementing our business strategy, and we are pleased to provide this update on our progress.
We expect this seasonality to continue in future years. 19 Table of Contents ESG Reporting: Our Impact Goals, Strategy, & Progress We have developed an Impact strategy and goals that reflect the positive impact we want to have on the world while advancing and complementing our business strategy, and we are pleased to provide this update on our progress.
Resilience of strategy across different climate-related scenarios Over the past few years, we have worked with two external vendors to assess current climate-related impacts and understand how they might change under different temperature pathways over time.
Through our aforementioned efforts, we aim to ensure the gap between expectations and reality remains narrow. Resilience of strategy across different climate-related scenarios Over the past few years, we have worked with two external vendors to assess current climate-related impacts and understand how they might change under different temperature pathways over time.
We have a Supplier Code of Conduct designed to ensure that our suppliers are committed to our standards. 20 Table of Contents Environmental Building resilience for the long term Net Zero Goal : A chieve Net Zero through targets aligned with the science of climate change while continuing to offset our carbon emissions.
We have a Supplier Code of Conduct designed to ensure that our suppliers are committed to our standards. 21 Table of Contents Environmental Building resilience for the long term Net Zero Sustainable Operations Marketplace Sustainability Net Zero Goal : Achieve Net Zero through targets aligned with the science of climate change.
Furthermore, when looking at the next 15 largest markets beyond the United States and United Kingdom, our penetration rate of consumers shopping on Etsy is approximately 80% lower.
Furthermore, when looking at the next 15 largest markets beyond the United States and United Kingdom, our penetration rate of consumers shopping on Etsy is approximately only one fifth as high as it is within the United States and United Kingdom.
We recognize that decarbonization of the transportation sector presents an opportunity for us to achieve ambitious emissions reduction goals and strengthen our reputation. Our Advocacy Team advocates for national and regional policies that have the potential to accelerate the decarbonization of the transportation sector.
Medium-Term Low-Emissions Transport A significant portion of our Scope 3 emissions come from shipping. We recognize that decarbonization of the transportation sector presents an opportunity for us to achieve ambitious emissions reduction goals and strengthen our reputation. Our Advocacy Team advocates for national and regional policies that have the potential to accelerate the decarbonization of the transportation sector.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur quarterly operating results, as well as our key metrics, may fluctuate for a variety of reasons, many of which are beyond our control, including: • fluctuations in GMS or revenue, including as a result of uncertainty or changing spending patterns resulting from Macroeconomic Conditions, the seasonality of market transactions, and our sellers’ use of services; • uncertainty regarding overall levels of consumer spending and e-commerce generally; • our success in attracting and retaining sellers and buyers; • our ability to convert marketplace visits into sales for our sellers; • the amount and timing of our operating expenses and the success of any cost-reduction activities; • our success in executing on our strategy and the impact of any changes in our strategy; • the timing and success of product launches, including new services and features we may introduce; • the success of our marketing efforts; • the success of our “House of Brands” strategy; • disruptions or defects in our marketplaces, such as privacy or data security breaches, errors in our software, or other incidents that impact the availability, reliability, or performance of our platforms; • the impact of competitive developments and our response to those developments; • the impact of the Restructuring Plan approved in December 2023; • our ability to manage our business and future growth; and 45 Table of Contents • our ability to recruit and retain employees.
Biggest changeOur quarterly operating results, as well as our key metrics, have and may continue to fluctuate for a variety of reasons, many of which are beyond our control, including: • inflation, interest rates, recessionary factors, foreign exchange rate volatility, tariffs and other trade barriers, disruptions to the banking industry, changing consumer shopping preferences, continued pressure on consumer discretionary product spending, weather, domestic and global geopolitical uncertainties, various types of cultural events, public health crises, supply-chain disruptions, an increasingly competitive retail environment, and employment levels, among other factors (collectively, “Macro Conditions”). • fluctuations in our GMS or revenue , including as a result of Macro Conditions, the seasonality of market transactions, and our sellers’ use of services; • uncertainty regarding overall levels of consumer spending and e-commerce generally; • our success in attracting and retaining sellers and buyers; • our ability to convert marketplace visits into sales for our sellers; • our ability to manage our operating expenses and our Adjusted EBITDA margin as we continue to invest in our marketplaces; • our success in executing on our strategy and the impact of any changes in our strategy; • the timing and success of product launches, including new services and features we may introduce; • the success of our marketing efforts; • the success of our “House of Brands” strategy; • disruptions or defects in our marketplaces, such as privacy or data security breaches, errors in our software, or other incidents that impact the availability, reliability, or performance of our platforms; • the impact of competitive developments and our response to those developments; and • our ability to recruit and retain employees.
Even if we are able to attract new buyers and sellers to replace the ones that we lose, we may not be able to do so at comparable levels, they may not maintain the same level of activity, and the GMS and revenue generated from new buyers and sellers may not be as high as the GMS and revenue generated from the ones who leave, or reduce their activity level on, our marketplaces.
Even if we are able to attract new buyers and sellers to replace the ones that we may lose, we may not be able to do so at comparable levels, they may not maintain the same level of activity, and the GMS and revenue generated from new buyers and sellers may not be as high as the GMS and revenue generated from the ones who leave, or reduce their activity level on our marketplaces.
In addition, if our third-party providers increase the fees they charge us, our operating expenses, or those of our sellers, could increase, and it could negatively impact our sellers’ businesses or our business. Further, our ability to expand our payments services into additional countries is dependent upon the third-party providers we use to support these services.
In addition, if our third-party providers increase the fees they charge us, our operating expenses, or those of our sellers, could increase, and it could negatively impact our sellers’ businesses and/or our business. Further, our ability to expand our payments services into additional countries is dependent upon the third-party providers we use to support these services.
We are regularly involved in litigation, arbitration, disputes, and regulatory matters, including those related to intellectual property, consumer protection, product liability, product safety, regulatory compliance, security and privacy, or commercial matters, either individually or, where available, on a class-action basis.
We are regularly involved in litigation, arbitration, disputes, and regulatory matters, including those related to intellectual property, consumer protection, product liability, product safety, regulatory compliance, security and privacy, and/or commercial matters, either individually or, where available, on a class-action basis.
If requirements like these become applicable in additional jurisdictions, our business, collectively with our sellers’ businesses, could be harmed. For example, taxing authorities in many U.S. states and in other countries have targeted e-commerce platforms as a means to calculate, collect, and remit indirect taxes for transactions taking place over the internet, and others are considering similar legislation.
If requirements like these become applicable in additional jurisdictions, then our business, collectively with our sellers’ businesses, could be harmed. For example, taxing authorities in many U.S. states and in other countries have targeted e-commerce platforms as a means to calculate, collect, and remit indirect taxes for transactions taking place over the internet, and others are considering similar legislation.
Like all online services, we are vulnerable to power outages, telecommunications failures, and catastrophic events, as well as computer viruses, break-ins, intentional or accidental actions or inaction by employees or others with authorized access to our networks, phishing attacks, denial-of-service attacks, malicious or destructive code, malware, ransomware attacks, and other cyber attacks, breaches and security incidents.
Like all online services, we are vulnerable to power outages, telecommunications failures, and catastrophic events, as well as computer viruses, break-ins, intentional or accidental actions or inaction by employees or others with authorized access to our networks, phishing attacks, denial-of-service attacks, malicious or destructive code, malware, ransomware or other extortion attacks, and other cyber attacks, breaches and security incidents.
Although we establish accruals for our litigation and regulatory matters in accordance with applicable accounting guidance when they present loss contingencies that are both probable and reasonably estimable, there may be a material exposure to loss in excess of any amounts accrued, or in excess of any loss contingencies disclosed as reasonably probable, particularly in more uncertain legal or regulatory environments.
Although we establish accruals for our litigation and regulatory matters in accordance with applicable accounting guidance when they present loss contingencies that are both probable and reasonably estimable, there may be a material exposure to loss in excess of any amounts accrued, or in excess of any loss contingencies disclosed as reasonably possible, particularly in more uncertain legal or regulatory environments.
Any of these events could materially and adversely affect our business, financial performance, and growth. Our payments systems have both operational and compliance risks, including in-house execution risk and dependency on third-party providers. The payment offerings provided on each of our marketplaces differ and, as such, are subject to varying degrees and types of risk.
Any of these events could materially and adversely affect our business, financial performance, and growth prospects. Our payments systems have both operational and compliance risks, including in-house execution risk and dependency on third-party providers. The payment offerings provided on each of our marketplaces differ and, as such, are subject to varying degrees and types of risk.
Any harm to our reputation resulting from setting public goals or our failure or perceived failure to meet such goals could impact employee engagement and retention, the willingness of our buyers and sellers and our partners and vendors to do business with us, or investors’ willingness to purchase or hold shares of our common stock, any of which could adversely affect our business, financial performance, and growth.
Any harm to our reputation resulting from setting public goals or our failure or perceived failure to meet such goals could impact employee engagement and retention, the willingness of our buyers and sellers and our partners and vendors to do business with us, or investors’ willingness to purchase or hold shares of our common stock, any of which could adversely affect our business and financial performance.
In addition, factors other than those discussed below or in other of our reports filed with or furnished to the SEC also could adversely affect our business, financial condition, or results of operations. We cannot assure you that the risk factors described below or elsewhere in our reports address all potential risks that we may face.
In addition, factors other than those discussed below or in other of our reports filed with or furnished to the SEC also could adversely affect our business, financial condition, results of operations, or prospects. We cannot assure you that the risk factors described below or elsewhere in our reports address all potential risks that we may face.
Our digital marketing efforts currently include, among others, search engine optimization, search engine marketing, affiliate marketing, and display advertising, as well as social media, mobile push notifications, and email marketing. If we fail to scale and deliver an effective return on investment in any of these marketing efforts, it may harm our business.
Our digital marketing efforts currently include, among others, search engine optimization, search engine marketing, affiliate marketing, and display advertising, as well as social media, mobile push notifications, and email marketing. If we fail to scale and deliver an effective return on investment in any of our marketing efforts, it may harm our business.
Guidance is necessarily speculative in nature and guidance offered in periods of significant extreme uncertainty is inherently more speculative in nature than guidance offered in periods of relative stability. It can be expected that some or all of the assumptions underlying the guidance furnished by us will not materialize or will vary significantly fr om actual results.
Guidance is necessarily speculative in nature, and guidance offered in periods of significant uncertainty is inherently more speculative in nature than guidance offered in periods of relative stability. It can be expected that some or all of the assumptions underlying the guidance furnished by us will not materialize or will vary significantly fr om actual results.
Similarly, our vendors, particularly those providing advertising and analytics products and services have, and may continue to, modify their products and services based on legal and technical changes relating to privacy in ways that could reduce the efficiency of our marketing efforts and our access to data about use of our platforms.
Similarly, our vendors, particularly those providing advertising and analytics products and services have modified and may continue to modify their products and services based on legal and technical changes relating to privacy in ways that could reduce the efficiency of our marketing efforts and our access to data about use of our platforms.
If we are unable to generate the cash flow necessary to pay our debts when due, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional equity capital on terms that may be onerous or highly dilutive.
If we are unable to generate the cash flow necessary to pay our debts when due, we may be required to adopt one or more alternatives, such as selling assets, refinancing or restructuring debt, or obtaining additional equity capital on terms that may be onerous or highly dilutive.
For example, in addition to listing her goods for sale on the Etsy or other “House of Brands” marketplaces, a seller can list her goods with online retailers or sell her goods through local consignment and vintage stores, as well as other venues or marketplaces, or through commerce channels on social networks.
For example, in addition to listing goods for sale on the Etsy or other “House of Brands” marketplaces, a seller can list goods with online retailers or sell goods through local consignment and vintage stores, as well as other venues or marketplaces, or through commerce channels on social networks.
In addition, the success of our marketplaces has at times and could in the future also be harmed by factors outside our control, such as actions taken by providers of mobile and desktop operating systems, social networks, or search and advertising platforms, including: • policy changes that interfere with, add tolls or costs to, or otherwise limit our ability to provide users with a full experience of our platforms, such as for our mobile apps or social network presence, including policy changes that effectively require us to use the provider’s payment processing or other services for transactions on the provider’s operating system, network, or platform; • unfavorable treatment received by our platforms, especially as compared to competing platforms, such as the placement of our mobile apps in a mobile app download store; • increased costs to distribute or use our platforms via mobile apps, social networks, or established search and advertising systems; • changes in mobile operating systems, such as iOS and Android, that degrade the functionality of our mobile website or mobile apps, our understanding of the data and usage related to our services, or that give preferential treatment to competitive products; • changes to social networks that degrade the e-commerce functionality, features, or marketing of our services or our sellers’ shops and products; or 49 Table of Contents • implementation and interpretation of regulatory or industry standards by these widely adopted platforms that, as a side effect, degrade the e-commerce functionality, features, or marketing of our services or our sellers’ shops and products.
In addition, the success of our marketplaces has at times and could in the future also be harmed by factors outside our control, such as actions taken by providers of mobile and desktop operating systems, social networks, or search and advertising platforms, including: • policy changes that interfere with, add tolls or costs to, or otherwise limit our ability to provide users with a full experience of our platforms, such as for our mobile apps or social network presence, including policy changes that effectively require us to use the provider’s payment processing or other services for transactions on the provider’s operating system, network, or platform; • unfavorable treatment received by our platforms, especially as compared to competing platforms, such as the placement of our mobile apps in a mobile app download store; • increased costs to distribute or use our platforms via mobile apps, social networks, or established search and advertising systems; • changes in mobile operating systems, such as iOS and Android, that degrade the functionality of our mobile website or mobile apps, our understanding of the data and usage related to our services, or that give preferential treatment to competitive products; • changes to social networks that degrade the e-commerce functionality, features, or marketing of our services or our sellers’ shops and products; or • implementation and interpretation of regulatory or industry standards by these widely adopted platforms that, as a side effect, degrade the e-commerce functionality, features, or marketing of our services or our sellers’ shops and products.
We have and plan to continue to invest in our payments tools and infrastructure, and have, or may in the future, add or change payment tools and third-party service providers to maintain existing availability, expand into additional markets, and offer new payment methods, offerings, and tools to our buyers and sellers.
We have invested, and plan to continue to invest, in our payments tools and infrastructure, and have, or may in the future, add or change payment tools and third-party service providers to maintain existing availability, expand into additional markets, and offer new payment methods, offerings, and tools to our buyers and sellers.
Our internal systems, tools, and processes have a number of limitations, and our surveys or data collection methodologies may have errors or could change over time, which could result in unexpected changes to our metrics, including the metrics we publicly disclose.
Our internal systems, tools, and processes and our surveys or data collection methodologies have a number of limitations, may have errors or could change over time, any of which could result in unexpected changes to our metrics, including the metrics we publicly disclose.
We also may issue additional equity securities in connection with an acquisition or partnership, which could cause dilution to our stockholders. Finally, acquisitions or partnerships could be viewed negatively by analysts, investors, or the members of our communities.
We also may issue additional equity securities in connection with an acquisition or partnership, which could cause dilution to our stockholders. Finally, acquisitions, dispositions, or partnerships could be viewed negatively by analysts, investors, or the members of our communities.
We continue to evolve our marketplaces and invest to improve our customer experience. If our efforts are unsuccessful, or if our customer service platforms or our trust and safety program fail to meet legal requirements or buyers’ and sellers’ expectations, we may need to invest significant additional resources.
We continue to evolve our marketplaces and invest to improve our customer experience. If our efforts are unsuccessful, or if our customer service platforms or our trust and safety program fail to meet legal requirements or buyers’ and sellers’ expectations, we may need to invest in significant additional resources.
Among other things, these provisions: • provide for a classified board of directors so that not all members of our Board of Directors are elected at one time; • permit our Board of Directors to establish the number of directors and fill any vacancies and newly created directorships; • provide that directors may only be removed for cause; • require super-majority voting to amend some provisions in our certificate of incorporation and bylaws; • authorize the issuance of “blank check” preferred stock that our Board of Directors could use to implement a stockholder rights plan; • eliminate the ability of our stockholders to call special meetings of stockholders; • prohibit stockholder action by written consent, which means all stockholder actions must be taken at a meeting of our stockholders; • provide that our Board of Directors is expressly authorized to amend or repeal any provision of our bylaws; and • require advance notice for nominations for election to our Board of Directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
Among other things, these provisions: • provide for a classified board of directors so that not all members of our Board of Directors are elected at one time; 65 Table of Contents • permit our Board of Directors to establish the number of directors and fill any vacancies and newly created directorships; • provide that directors may only be removed for cause; • require super-majority voting to amend some provisions in our certificate of incorporation and bylaws; • authorize the issuance of “blank check” preferred stock that our Board of Directors could use to implement a stockholder rights plan; • eliminate the ability of our stockholders to call special meetings of stockholders; • prohibit stockholder action by written consent, which means all stockholder actions must be taken at a meeting of our stockholders; • provide that our Board of Directors is expressly authorized to amend or repeal any provision of our bylaws; and • require advance notice for nominations for election to our Board of Directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
As a result, there could be errors or disagreement with our policy determinations, policy enforcement could be subject to different, inconsistent, or conflicting regional consensus or regulatory standards in different jurisdictions, and our policy decisions could be perceived to be arbitrary, unfair, unclear, or inconsistent.
As a result, there could be errors or inconsistencies in, or disagreement with, our policy determinations; policy enforcement could be subject to different, inconsistent, or conflicting regional consensus or regulatory standards in different jurisdictions; and our policy decisions could be perceived to be arbitrary, unfair, unclear, or inconsistent.
We rely on both registered and unregistered trademarks, which may not always be comprehensive in scope. In addition, our copyrights and trademarks, whether or not registered, and patents may be held invalid or unenforceable if challenged, and may be of limited territorial reach.
We rely on both registered and unregistered trademarks, which may not always be comprehensive in scope. In addition, our copyrights, trademarks, and patents may be held invalid or unenforceable if challenged, and may be of limited territorial reach.
Many things could undermine these cornerstones, such as: • a failure to operate our business in a way that is consistent with our guiding principles and mission; • an inability to gain the trust of prospective buyers; • disruptions or defects in our marketplaces, privacy or data security incidents, website outages, payment disruptions, or other incidents that impact the reliability of our platforms; • lack of awareness of, or adherence to, our policies by our communities or confusion about how they are applied; • a failure to enforce our policies effectively, consistently, and transparently, including, for example, by allowing the repeated widespread listing of prohibited items in our marketplaces; 43 Table of Contents • changes to our policies or fees that members of our communities perceive as inconsistent with their best interests or our mission, or that are not clearly articulated; • complaints or negative publicity about us, our platforms, or our policies and guidelines, even if factually incorrect or based on isolated incidents; • inadequacies in our House Rules, policies, and other terms of use; • frequent product launches, updates, and experiments that could deteriorate member trust and/or engagement; or • inadequate or unsatisfactory customer service experiences, failure to adequately respond to feedback from our communities, or inability of our sellers to fulfill their orders in accordance with our policies, their own shop-specific policies, or buyer expectations.
Many things could undermine these cornerstones, such as: • a failure to operate our business in a way that is consistent with our guiding principles and mission; • an inability to gain the trust of prospective buyers; • disruptions or defects in our marketplaces, privacy or data security incidents, website outages, payment disruptions, or other incidents that impact the reliability of our platforms; • lack of awareness of, or adherence to, our policies by our communities or confusion about how they are applied; • a failure to enforce our policies effectively, consistently, and transparently, including, for example, by allowing the repeated widespread listing of prohibited items in our marketplaces; • changes to our policies or fees that members of our communities perceive as inconsistent with their best interests or our mission, or that are not clearly articulated; • complaints or negative publicity about us, our platforms, or our policies and guidelines, even if factually incorrect or based on isolated incidents; • inadequacies in our House Rules, policies, and other terms of use; • frequent product launches, updates, and experiments that could deteriorate member trust and/or engagement; or • inadequate or unsatisfactory customer service experiences, failure to adequately respond to feedback from our communities, or failure of our sellers to fulfill their orders in accordance with our policies, including as a result of fraud, their own shop-specific policies, or buyer expectations.
If we are unable to attract and retain buyers and sellers, or our buyers or sellers do not maintain their level of activity, our business, financial performance, and growth could be harmed.
If we are unable to attract and retain buyers and sellers, or our buyers or sellers do not maintain their level of activity, our business and financial performance could be harmed.
Failure by these service providers to perform adequately, or changes to or termination of our relationships with these service providers, has and could again negatively affect our sellers’ ability to receive payments.
Failure of these service providers to perform adequately, or changes to or termination of our relationships with these service providers, has and could again negatively affect our sellers’ ability to receive payments.
We have been, are, and may in the future be subject to heightened regulatory scrutiny, inquiries, or investigations, including with respect to our sellers, vendors or third-parties, relating to both specific inquiries as well as broad, industry-wide concerns, such as antitrust, product liability, and privacy, that could lead to legal liability, increased expenses, or reputational damage.
We have been, are, and may in the future be subject to heightened regulatory scrutiny, inquiries, or investigations, including with respect to our sellers, vendors or third parties, relating to both specific inquiries as well as broad, industry-wide concerns, such as antitrust, product liability, and privacy, that could lead to legal liability, increased expenses, injunctive relief, or reputational damage.
Under certain circumstances, we have contractual and other legal obligations to indemnify and to incur legal expenses on behalf of current and former directors, officers, underwriters and other third parties.
Under certain circumstances, we have contractual and other legal obligations to indemnify and to incur legal expenses on behalf of current and former directors, officers, employees, underwriters and other third parties.
As a result, they may be able to reduce our ability to service our users, reduce our ability to obtain analytics or information to optimize advertising or intentionally seek to disintermediate Etsy.
As a result, they may be able to reduce our ability to service our users and/or to obtain analytics or information to optimize advertising or intentionally seek to disintermediate Etsy.
Impairments have resulted from, among other things, deterioration in performance, adverse market conditions, adverse changes in applicable laws or regulations, challenges applying our technological, marketing, and operational expertise to help scale the acquired brands’ marketplaces in a profitable, efficient, and effective manner, and a variety of other factors.
Impairments have resulted and may result from, among other things, deterioration in performance, adverse market conditions, adverse changes in applicable laws or regulations, challenges applying our technological, marketing, and operational expertise to help scale the acquired brands’ marketplaces in a profitable, efficient, and effective manner, and a variety of other factors.
We track certain operational metrics, including active buyers and active sellers, GMS, GMS from specific categories of goods or classes of buyers or sellers or specific platforms, and other information about our communities, with internal systems and tools or manual processes and these metrics are not independently verified by a third-party.
We track certain operational metrics, including active buyers and active sellers, GMS, GMS from specific categories of goods, classes of buyers or sellers, or specific platforms, and other information about our communities and the performance of our platforms, with internal systems and tools or manual processes. These metrics are not independently verified by a third party.
Our sellers face similar risks in conducting their businesses across borders. Even if we are successful in managing the risks of conducting our business across borders, if our sellers are not, our business could be adversely affected. Our ability to recruit and retain a diverse group of employees and retain key employees is important to our success.
Our sellers face similar risks in conducting their businesses across borders. Even if we are successful in managing the risks of conducting our business across borders, if our sellers are not, our business could be adversely affected. Our ability to recruit and retain a talented and broadly diverse group of employees and retain key employees is important to our success.
In addition, new offerings may not drive the GMS or revenue that we anticipate, may have lower margins than we anticipate or than existing offerings, and our revenue from the new offerings may not be enough to offset the cost of developing and maintaining them, which could adversely affect our business, financial performance, and growth.
In addition, new offerings may not drive the GMS or revenue that we anticipate, may have lower margins than we anticipate or than existing offerings, and our revenue from the new offerings may not be enough to offset the cost of developing and maintaining them, which could adversely affect our business, financial performance, and prospects.
As a result, our current protections from liability for third-party content in the United States could significantly decrease or change. We could incur significant costs implementing any required changes, investigating and defending claims and, if we are found liable, significant damages.
As a result, our current protections from liability for third-party content and content moderation decisions in the United States could significantly decrease or change. We could incur significant costs implementing any required changes, investigating and defending claims and, if we are found liable, significant damages.
The increase in remote working for employees, vendors, or contractors may also result in increased consumer privacy, IT security, and fraud concerns or increased administrative costs. A successful cyber attack could occur and persist for an extended period of time before being detected.
The prevalence of remote working for employees, vendors, or contractors may also result in increased consumer privacy, IT security, and fraud concerns or increased administrative costs. A successful cyber attack could occur and persist for an extended period of time before being detected.
Our business depends on third-party services and technology which we utilize to maintain and scale the technology underlying our platforms and our business operations. Our business operations depend upon a number of third-party service providers, such as cloud service providers, marketing platforms and providers, payments and shipping providers, contingent labor teams, and network and mobile infrastructure providers.
Our business depends on third-party services and technology that we utilize to maintain and scale the technology underlying our platforms and our business operations. Our business operations depend upon a number of third-party service providers, such as cloud service providers, marketing platforms and providers, payments and shipping providers, contingent labor teams, and network and mobile infrastructure providers.
Doing business outside of the United States subjects us to increased risks and burdens such as: • complying with different (and sometimes conflicting) laws and regulatory standards (particularly including those related to the use and disclosure of personal information, online payments and money transmission, intellectual property, product liability, consumer protection, online platform liability, e-commerce marketplace regulation, labor and employment laws, business practices, including those related to corporate social responsibility, and taxation of income, goods, and services) sometimes with attempts to apply these laws and regulatory standards extra-territorially; • defending our marketplaces against international litigation, including in jurisdictions that may not offer judicial norms or protections similar to those found in the United States; • conforming to local business or cultural norms; • barriers to international trade, such as tariffs, customs, or other taxes, or, when applicable, cross-border limits placed on U.S. technology companies; • uncertainties around the continuing impact on operations of supply chain disruptions and geopolitical events such as natural disasters, pandemics, terrorism, and acts of war; • varying levels of internet, e-commerce, and mobile technology adoption and infrastructure; 51 Table of Contents • potentially heightened risk of fraudulent or other illegal transactions; • limitations on the repatriation of funds; • exposure to liabilities under anti-corruption, anti-money laundering and export control laws, including the U.S.
Doing business outside of the United States subjects us to increased risks and burdens such as: • complying with different (and sometimes conflicting) laws and regulatory standards (particularly including those related to the use and disclosure of personal information, online payments and money transmission, intellectual property, product safety and liability, consumer protection, online platform liability, minors’ online safety, e-commerce marketplace regulation, artificial intelligence, labor and employment laws, business practices, including those related to corporate social responsibility and sustainability, and taxation of income, goods, and services), including attempts to apply these laws and regulatory standards extra-territorially; • defending our marketplaces against international litigation and regulatory matters, including in jurisdictions that may not offer judicial norms or protections similar to those found in the United States; • conforming to local business or cultural norms; 48 Table of Contents • barriers to international trade, such as tariffs, customs, or other taxes, or, when applicable, cross-border limits placed on U.S. technology companies; • uncertainties around the continuing impact on operations of supply chain disruptions and geopolitical events such as natural disasters, pandemics, terrorism, and acts of war; • varying levels of internet, e-commerce, and mobile technology adoption and infrastructure; • potentially heightened risk of fraudulent or other illegal transactions; • limitations on the repatriation of funds; • exposure to liabilities under anti-corruption, anti-money laundering and export control laws, including the U.S.
Filling key strategic roles, including engineering and product management, can be challenging at times, particularly for more specialized positions. Qualified individuals may be limited and in high demand, and we may incur significant costs to attract, develop, retain and motivate them.
Filling key strategic roles, including engineering and product management, can be challenging at times, particularly for more specialized positions. Qualified individuals may be limited and in high demand, and we may incur significant costs to attract, develop, retain and engage them.
Some of those key assumptions include the timing and impact of broad Macroeconomic Conditions, particularly in our core markets, and the resulting impact of these factors on future consumer spending patterns and our business. These assumptions are inherently difficult to predict, particularly in the long-term.
Some of those key assumptions include the timing and impact of broad Macro Conditions, particularly in our core markets, and the resulting impact of these factors on future consumer spending patterns and our business. These assumptions are inherently difficult to predict, particularly in the long term.
Further, a shift in trends away from unique or vintage goods, socially-conscious consumerism, second-hand fashion, or specialty items such as musical instruments, could also make it more difficult to attract new buyers and sellers. Under any of these circumstances, we may have difficulty attracting new buyers and sellers without incurring additional expense.
Further, a shift in trends away from unique or vintage goods, socially-conscious consumerism, second-hand fashion, or specialty items such as musical 43 Table of Contents instruments, could also make it more difficult to attract new buyers and sellers. Under any of these circumstances, we may have difficulty attracting new buyers and sellers without incurring additional expense.
We are subject to a variety of laws and regulations in the United States and around the world, including those relating to traditional businesses, such as employment laws, accessibility requirements, taxation, trade, product liability, marketing, and consumer protection laws, and laws and regulations focused on e-commerce and online marketplaces, such as those governing online payments, privacy, anti-spam, data security and protection, online platform liability, content moderation, marketplace seller regulation, intellectual property, artificial intelligence, automated decision-making, and machine learning.
We are subject to a variety of laws and regulations in the United States and around the world, including those relating to traditional businesses, such as employment laws, accessibility requirements, taxation, trade, product liability, marketing, intellectual property, and consumer protection laws, and laws and regulations focused on e-commerce and online marketplaces, such as those governing online payments, privacy, anti-spam, data security and protection, online platform liability, content moderation, online child safety, social media regulation, marketplace seller regulation, artificial intelligence, automated decision-making, and machine learning.
In addition, if we are restricted from operating in one or more countries, our ability to attract and retain sellers and buyers may be adversely affected and we may not be able to grow our business as we anticipate.
In addition, if we are restricted from operating in one or more countries, our ability to attract and retain sellers and buyers may be adversely affected and we may not be able to operate our business as we anticipate.
For more information on our strategy, see Part I, Item 1, "Business—Overview—Our Strategy." 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.
For more information on our strategy, see Part I, Item 1, "Business—Overview—Our Strategy." 54 Table of Contents 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.
We compete to attract, engage, and retain sellers based on many factors, including: • the value, awareness, and perception of our brands; • our investments in product and marketing for the benefit or our sellers; • the effectiveness of our scaled member support and trust and safety practices and policies; • the global scale of our marketplaces and the breadth of our online presence; • our tools, education, and services, which support a seller in running her business; • the number and engagement of buyers; • our policies and fees; • the ability of a seller to scale her business; • the effectiveness of our mobile apps; • the strength of our communities; and • our mission.
We compete to attract, engage, and retain sellers based on many factors, including: • the value, awareness, and perception of our brands; • our investments in product and marketing for the benefit of our sellers; • the effectiveness of our member support and trust and safety practices and policies; • the global scale of our marketplaces and the breadth of our online presence; • our tools, education, and services; • the number and engagement of buyers; • our policies and fees; • the ability of a seller to scale her business; • the effectiveness of our mobile apps; • the strength of our communities; and • our mission.
We have not always been able to realize the anticipated benefits of our acquisitions, and may not be able to realize the anticipated benefits of possible future acquisitions or partnerships, and such relationships may disrupt our business and divert management’s time and attention.
We have not always been able to realize the anticipated benefits of our acquisitions, and may not be able to realize the anticipated benefits of possible future acquisitions or partnerships, and such transactions may disrupt our business and divert management’s time and attention.
Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance. Our actual business results may vary significantly from such guidance or consensus due to Macroeconomic Conditions or other factors, many of which are outside of our control, which could adversely affect our business and future operating results.
Furthermore, analysts and investors develop and publish their own projections for our business, which may form a consensus about our future performance. Our actual business results may vary significantly from such guidance or consensus due to Macro Conditions or other factors, many of which are outside of our control, which could adversely affect our business and future operating results.
The costs and effort to respond to a security breach and/or to mitigate any security vulnerabilities that may be identified could be significant, our efforts to address these problems may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service, negative publicity, and other harm to our business and our competitive position.
The costs and effort to respond to a security breach and/or to mitigate any security vulnerabilities that may be identified could be significant, our efforts to address these problems may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service, negative publicity, negative seller or buyer sentiment, and other harm to our business and our competitive position.
An inability to develop our communities globally or to otherwise grow our business outside of the United States in a cost-effective manner could adversely affect our GMS, revenue, and operating results. Our ability to grow our international operations may be adversely affected by any circumstances that reduce or hinder cross-border trade.
An inability to develop our communities globally or to otherwise grow our business outside of the United States in a cost-effective manner could adversely affect our GMS, revenue, and operating results. Our business may be adversely affected by any circumstances that reduce or hinder cross-border trade.
Furthermore, if our employees or employees of our third-party service providers fail to comply with our internal security policies and practices, member or employee data may be improperly accessed, used, or disclosed.
Furthermore, if our employees, contractors, or third-party service providers fail to comply with our internal security policies and practices, member or employee data may be improperly accessed, used, or disclosed.
Any acquisitions or partnerships may result in unforeseen operational difficulties and expenditures associated with: • integrating new businesses and technologies into our infrastructure; • clearing any required regulatory review that may be complex, costly, time-consuming, or place additional requirements on the business; • implementing growth initiatives; • integrating administrative functions; • hiring, retaining, and integrating key employees; • supporting and enhancing morale and culture; • retaining key customers, merchants, vendors, and other key business partners; • maintaining or developing controls, procedures, and policies (including effective internal controls over financial reporting and disclosure controls and procedures, as well as information privacy controls); and 59 Table of Contents • assuming liabilities related to the activities of the acquired business before and after the acquisition, including liabilities for violations of laws and regulations, intellectual property infringement, commercial disputes, cyber attacks, taxes, and other matters.
Any acquisitions, dispositions, or partnerships may result in unforeseen operational difficulties and expenditures associated with: • integrating new businesses and technologies into, or separating existing businesses from, our infrastructure; • clearing any required regulatory review that may be complex, costly, time-consuming, or place additional requirements on the business; • implementing growth initiatives; • integrating or separating administrative functions; • hiring, retaining, and integrating key employees; • supporting and enhancing morale and culture; • retaining key customers, merchants, vendors, and other key business partners; • maintaining or developing controls, procedures, and policies (including effective internal controls over financial reporting and disclosure controls and procedures, as well as information privacy controls); and • assuming liabilities related to the activities of the acquired business before and after the acquisition, including liabilities for violations of laws and regulations, intellectual property infringement, commercial disputes, cyber attacks, taxes, and other matters.
In addition, there have been various U.S. Congressional efforts to require platforms to vet and police sellers or proactively screen content, or to restrict the scope of the intermediary liability protections available to online platforms for third-party user content, such as the proposed SHOP SAFE Act.
In addition, there have been various U.S. Congressional and U.S. state efforts to require platforms to vet and police sellers or proactively screen content, to regulate content moderation, or to restrict the scope of the intermediary liability protections available to online platforms for third-party user content, such as the proposed SHOP SAFE Act.
Based on the daily closing prices of our stock during the quarter ended December 31, 2023, holders of the Notes are not eligible to convert their Notes during the first quarter of 2024.
Based on the daily closing prices of our stock during the quarter ended December 31, 2024, holders of the Notes are not eligible to convert their Notes during the first quarter of 2025.
While both our manual and automated systems have tools and procedures designed to account for our and our partners’ policies, despite our best efforts, we may inadvertently include in our marketing efforts sellers or their products inconsistent with our policies, brands, and 56 Table of Contents values, which could result in failure to deliver a return on our investment, media or regulatory scrutiny, and damage to our brands and/or business.
While both our manual and automated systems have tools and procedures designed to account for our and our partners’ policies, despite our best efforts, we may inadvertently include in our marketing efforts sellers or their products inconsistent with our policies, brands, and values, which could result in failure to deliver a return on our investment, media or regulatory scrutiny, and damage to our brands and/or business.
As our marketplaces grow, our controls over fraud and policy violations are important to maintaining user trust, but they may not be adequate and may not be sufficient to keep up with quickly-shifting techniques used by those attempting to undertake fraudulent activity on our platforms.
Our controls over fraud and policy violations are important to maintaining user trust, but they may not be adequate and may not be sufficient to keep up with quickly-shifting techniques used by those attempting to undertake fraudulent activity on our platforms.
An increasing number of jurisdictions are considering or have adopted laws or 53 Table of Contents administrative practices that impose new tax measures, including revenue-based taxes, such as digital services taxes or online sales taxes, targeting online commerce and the remote selling of goods and services.
An increasing number of jurisdictions are considering or have adopted laws or administrative practices that impose new tax measures, including revenue-based taxes, such as digital services taxes or online sales taxes, targeting online commerce and the remote selling of goods and services.
We cannot be sure that our existing insurance coverage, including coverage for cyber events and errors and omissions, will continue to be 54 Table of Contents available on acceptable terms or that our insurers will not deny coverage as to all or part of any future claim or loss.
We cannot be sure that our existing insurance coverage, including coverage for cyber events and errors and omissions, will continue to be available on acceptable terms or that our insurers will not deny coverage as to all or part of any future claim or loss.
Additionally, Reverb offers integrations with these and other companies to help sellers integrate their inventory across channels and otherwise power their businesses. Changes in the terms of those companies could make it more difficult or expensive for sellers to sell on Reverb.
Additionally, Reverb offers integrations with some of these companies to help sellers integrate their inventory across channels and otherwise power their businesses. Changes in the terms and conditions of those companies could make it more difficult or expensive for sellers to sell on Reverb.
If we experience, or are perceived to experience, security breaches that result in marketplace performance or availability problems or the loss, compromise or unauthorized disclosure of personal data or other sensitive information, or if we fail to respond appropriately to any security breaches that we may experience, or are perceived to do so, people may become unwilling to provide us the information necessary to set up an account with us.
If we experience, or are perceived to experience, security breaches that result in marketplace performance or availability problems or the loss, compromise or unauthorized disclosure of personal data or other sensitive information, or if we fail to respond appropriately to any security breaches that we may experience, or are perceived to do so, people may become unwilling to provide us the information necessary to set up an account with us to become a new seller or buyer.
Applicable rules regarding how to respond, required notices to users, and reporting to regulators and investors vary by jurisdiction, and may subject Etsy to additional liability and reputational harm.
Applicable rules regarding how to respond, required notices to users, and reporting to regulators and investors vary by jurisdiction, and may subject us to additional liability and reputational harm.
Existing sellers and buyers may also stop listing new items 47 Table of Contents for sale, decrease their purchases, or close their accounts altogether.
Existing sellers and buyers 45 Table of Contents may also stop listing new items for sale, decrease their purchases, or close their accounts altogether.
They may also sell wholesale directly to traditional retailers, including large national retailers, who discover her goods in our marketplaces or otherwise.
They may also sell wholesale directly to traditional retailers, including large national retailers, who discover their goods in our marketplaces or otherwise.
If an increasing number of such laws are passed, the resulting compliance costs and potential liability risk could negatively impact our business. Increased regulation of technology companies, even if focused on large, widely adopted platforms, may nevertheless impact smaller platforms and small businesses, including us and our sellers.
With an increasing number of such laws being proposed and passed, the resulting compliance costs and potential liability risk could negatively impact our business. Increased regulation of technology companies, even if focused on large, widely adopted platforms, may nevertheless impact smaller platforms and small businesses, including us and our sellers.
Even if we are successful in defending against these types of claims, we may be required to spend significant resources in those efforts which may distract our management and otherwise negatively impact our results of operations.
Even if we are successful in defending against these tactics, we may be required to spend significant resources in those efforts which may distract our management and otherwise negatively impact our results of operations.
Similarly, our third-party data sources have in the past and may in the 46 Table of Contents future revise the historical data provided as a result of adjustments to their prior estimates or for other reasons.
Similarly, our third-party data sources have in the past and may in the future revise the historical data provided as a result of adjustments to their prior estimates or for other reasons.
If we cannot license or develop technology for any allegedly infringing aspect of our business, we could be forced to limit our services and may be unable to compete effectively. Any of these results could harm our business.
If we cannot license or develop technology for any 62 Table of Contents allegedly infringing aspect of our business, we could be forced to limit our services and may be unable to compete effectively. Any of these results could harm our business.
If existing buyers do not find our platforms appealing, for example, because of a negative experience, lack of competitive shipping costs, delayed shipping times, inadequate customer service, lack of buyer-friendly features, declining interest in the goods offered by our sellers, or other factors, they may make fewer purchases and they may not refer others to us.
If existing buyers do not find our platforms appealing, for example, because of a negative experience, lack of competitive shipping charges, delayed shipping times, inadequate customer service, buyer fees or lack of buyer-friendly features, declining interest in the goods offered by our sellers, lack of desirable inventory, or other factors, they may make fewer purchases and they may not refer others to us.
Any debt financing that we may secure in the future could result in additional operating and financial covenants that would limit or restrict our ability to take certain actions, such as incurring additional debt, making capital expenditures, repurchasing our stock, 60 Table of Contents or declaring dividends.
Any debt financing that we may secure in the future could result in additional operating and financial covenants that would limit or restrict our ability to take certain actions, such as incurring additional debt, making capital expenditures, repurchasing our stock, or declaring dividends.
If we and our sellers are unable to cost-effectively comply with new regulatory regimes, such as if the regulations place requirements on our sellers that they find difficult or impossible to comply with, or require us to take actions at a scale inconsistent with the size, resources, and operation of our marketplaces, our sellers may elect not to ship into, or we may be required to restrict shipping into, the impacted jurisdictions, and our business could be harmed.
If we and our sellers are unable to cost-effectively comply with new regulatory regimes, such as if the regulations place requirements on our sellers that they find difficult or impossible to comply with, or require us to take actions at a scale inconsistent with the size, resources, and operation of our marketplaces, our sellers may elect not to ship into, or we may be required to restrict shipping into, or change our product offerings, functionality or operations in, the impacted jurisdictions, and our business could be harmed.
We maintain and enforce these policies in order to uphold the safety and integrity of our marketplaces, engender trust in the use of our services, and encourage positive connections among members of our communities. We strive to enforce these policies in a consistent and principled manner that is transparent and explicable to stakeholders.
We maintain and enforce these policies in order to uphold the safety and integrity of our marketplaces, comply with laws and regulations, engender trust in the use of our services, and encourage positive connections among members of our communities. We strive to enforce these policies in a consistent and principled manner that is transparent and explicable to stakeholders.
Failure to comply with these rules or requirements could impact our ability to meet our contractual obligations with our third-party payment processors and could result in potential fines or negatively impact our relationship with our third-party payments processors. 50 Table of Contents We are also subject to rules governing electronic funds transfers.
Failure to comply with these rules or requirements could impact our ability to meet our contractual obligations with our third-party payment processors and could result in potential fines or negatively impact our relationship with our third-party payments processors. We are also subject to rules governing electronic funds transfers.
In addition, we could be subject to penalties, fines, other sanctions, and/or significant expenses. 61 Table of Contents Our brands may be harmed if third-parties or members of our communities use or attempt to use our marketplaces as part of their illegal or unethical business practices.
In addition, we could be subject to penalties, fines, other sanctions, and/or incur significant expenses. Our brands may be harmed if third parties or members of our communities use or attempt to use our marketplaces as part of their illegal or unethical business practices.
We compete with both online and offline retailers for the attention of buyers who have the choice of shopping with any online or offline retailer, including large e-commerce marketplaces, national retail chains, local consignment and vintage stores, social commerce channels, event-driven platforms and vertical experiences, resale commerce and streaming video commerce sites and apps, and other venues or marketplaces.
We compete for the attention of buyers who have the choice of shopping with any online or offline venue, including large e-commerce marketplaces, national retail chains, local consignment and vintage stores, social commerce channels, event-driven platforms and vertical experiences, resale marketplaces, streaming video commerce apps, and other venues or marketplaces.
Digital Services Act (“DSA”), and rules related to security, privacy, or national security, which may regulate us, our users, or our vendors. In light of our international operations, we need to comply with various laws associated with doing business outside of the United States, including anti-money laundering, sanctions, anti-corruption, and export control laws.
INFORM Consumers Act, and rules related to security, privacy, or national security, which may regulate us, our users, or our vendors. In light of our international operations, we need to comply with various laws associated with doing business outside of the United States, including anti-money laundering, sanctions, anti-corruption, and export control laws.
While we cover the reimbursement for qualifying orders under Etsy Purchase Protection, we also take steps to cover certain reimbursements that do not relate to qualified orders, such as requiring reserves from some sellers based on indications they may not be able to fulfill orders and other factors.
While we cover the reimbursement for qualifying orders under Etsy Purchase Protection, we also take steps to cover certain reimbursements that do not relate to qualified orders, such as requiring reserves from some sellers based on indications they may not be able to fulfill orders and other factors. Depop and Reverb have similar programs.
If jurisdictions become increasingly fragmented, with additional regulation of small sellers and platforms, tariffs, certifications, representative requirements, and customs requirements that increase the cost or complexity of cross-border trade, whether on the seller’s sourcing of materials or between the seller and buyer, our business could be adversely impacted.
If jurisdictions become increasingly fragmented, with additional regulation of small sellers and platforms, tariffs, changes to de minimis thresholds, certifications, representative requirements, and customs requirements that increase the cost or complexity of cross-border trade, whether on the seller’s sourcing of materials or between the seller and buyer, our business could be adversely impacted.
Additionally, it is expensive to maintain these rights, both in terms of application and maintenance costs, and the time and cost required to defend such rights, if necessary, could be substantial.
Additionally, it is expensive to maintain these rights, both in terms of application and maintenance costs, and the time and cost required to defend such rights, if necessary.
This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims.
This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, Section 22 of the Securities Act of 1933, as amended (the “Securities Act”) creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims.
Although our management has determined, and our independent registered public accounting firm has attested, that our internal controls over financial reporting were effective as of 67 Table of Contents December 31, 2023, we cannot assure you that we or our independent registered public accounting firm will not identify a material weakness in our internal controls in the future.
Although our management has determined, and our independent registered public accounting firm has attested, that our internal controls over financial reporting were effective as of December 31, 2024, we cannot assure you that we or our independent registered public accounting firm will not identify a material weakness in our internal controls in the future.
In addition, ongoing legal and regulatory changes in the data privacy, social media and technology spheres in U.S. states and countries throughout the world – and the interpretation of these laws by major search, social, and operating system providers – may impact the scope and effectiveness of marketing and advertising services generally, including those used on our platforms.
In addition, ongoing legal and regulatory changes in the data privacy, social media and technology spheres in U.S. states and countries throughout the world – and the interpretation of these laws by major search, 53 Table of Contents social, and operating system providers – have and may continue to impact the scope and effectiveness of marketing and advertising services generally, including those used on our platforms.
The price of our common stock may fluctuate significantly for numerous reasons, many of which are beyond our control, such as: • variations in our operating results and other financial and operational metrics, including the key financial and operating metrics disclosed in this Annual Report, as well as how those results and metrics compare to analyst and investor expectations; • forward-looking statements related to our financial guidance or projections, our failure to meet or exceed our financial guidance or projections, or changes in our financial guidance or projections; • failure of analysts to initiate or maintain coverage of our company, changes in their estimates of our operating results or changes in recommendations by analysts that follow our common stock or a negative view of our financial guidance or projections and our failure to meet or exceed the estimates of such analysts; • the strength of the global economy or the economy in the jurisdictions in which we operate, particularly during times of macroeconomic uncertainty affecting members of our communities; • entry into or exit from stock market indices; • announcements of new services or enhancements, strategic alliances or significant agreements or other developments by us or our competitors; • announcements by us or our competitors of mergers, acquisitions, or divestitures, or rumors of such transactions involving us or our competitors; • the amount and timing of our operating expenses and the success of any cost-savings actions we take, including the reduction in force as part of the Restructuring Plan approved in December 2023; • changes in our Board of Directors or senior management team; • disruptions in our marketplaces due to hardware, software or network problems, security breaches, or other issues; • the trading activity of our largest stockholders; • the number of shares of our common stock that are available for public trading; 68 Table of Contents • litigation or other claims against us; • stakeholder activism; • the operating performance of other similar companies; • changes in legal requirements relating to our business; and • any other factors discussed in this Annual Report.
Any securities litigation could result in substantial costs and divert our management’s attention and resources, which could adversely affect our business. 63 Table of Contents The price of our common stock may fluctuate significantly for numerous reasons, many of which are beyond our control, such as: • variations in our operating results and other financial and operational metrics, including the key financial and operating metrics disclosed in this Annual Report, as well as how those results and metrics compare to analyst and investor expectations; • forward-looking statements related to our financial guidance or projections, our failure to meet or exceed our financial guidance or projections, or changes in our financial guidance or projections; • failure of analysts to initiate or maintain coverage of our company, changes in their estimates of our operating results or changes in recommendations by analysts that follow our common stock or a negative view of our financial guidance or projections and our failure to meet or exceed the estimates of such analysts; • the strength of the global economy or the economy in the jurisdictions in which we operate, particularly during times of macroeconomic uncertainty affecting members of our communities; • entry into or exit from stock market indices; • announcements of new services or enhancements, strategic alliances or significant agreements or other developments by us or our competitors; • announcements by us or our competitors of mergers, acquisitions, or divestitures, or rumors of such transactions involving us or our competitors; • the amount and timing of our operating expenses and the success of any cost-savings actions we take; • changes in our Board of Directors or senior management team; • disruptions in our marketplaces due to hardware, software or network problems, security breaches, or other issues; • the trading activity of our largest stockholders; • the number of shares of our common stock that are available for public trading; • litigation or other claims against us; • stakeholder activism; • the operating performance of other similar companies; • changes in legal requirements relating to our business; and • any other factors discussed in this Annual Report.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn December 2023, our Board approved the formation of a Risk Oversight Committee to assist the Board with its oversight of Etsy’s management of risk exposures, including oversight of technology and information security related risks (which responsibility will move from the Audit Committee to the Risk Oversight Committee), as well as oversight of management’s processes for effectively monitoring and mitigating risk. 71 Table of Contents Our management has general responsibility for day-to-day implementation of our information technology, cybersecurity, and privacy strategies and policies, including deployment and use of security tools, applications, and annual employee training.
Biggest changeOur Risk Oversight Committee assists our Board of Directors with its oversight of Etsy’s management of risk exposures, including oversight of technology and information security related risks, as well as oversight of management’s processes for effectively monitoring and mitigating risk. 67 Table of Contents Our management has general responsibility for day-to-day implementation of our information technology, cybersecurity, and privacy strategies and policies, including deployment and use of security tools, applications, and annual employee training.
Our CISO has nearly twenty years of experience in various roles involving managing information security, developing cybersecurity strategy, implementing effective information and cybersecurity programs, and secure architecture and design, as well as several relevant degrees and certifications, including a Bachelors of Science in Computer Engineering from the University of Denver, and IAPP Certified Information Privacy Technologist (“CIPT”).
Our CISO has nearly twenty years of experience in various roles involving managing information security, developing cybersecurity strategy, implementing effective information and cybersecurity programs, and secure architecture and design, as well as several relevant degrees and certifications, including a Bachelors of Science in Computer Engineering from the University of Denver, and IAPP Certified Information Privacy Technologist.
Role or project specific employee training, as well as other training, may occur more frequently than annually, as needed. Our cybersecurity risk management and strategy processes, which are discussed in greater detail above, are led by our Chief Technology Officer (“CTO”), who is assisted by our Chief Information Security Officer (“CISO”).
Role or project specific employee training, as well as other training, may occur more frequently than annually, as needed. Our cybersecurity risk management and strategy processes, which are discussed in greater detail above, are typically led by our Chief Technology Officer (“CTO”), who is assisted by our Chief Information Security Officer (“CISO”).
Our Board also periodically participates in tabletop exercises conducted by senior management, with the assistance of outside counsel as needed, as part of risk management and disaster-related planning to validate, test, and assess the effectiveness and adequacy of certain roles and decision-making processes in the event of a cyber-incident.
Our Board of Directors also periodically participates in tabletop exercises conducted by senior management, with the assistance of outside counsel as needed, as part of risk management and disaster-related planning to validate, test, and assess the effectiveness and adequacy of certain roles and decision-making processes in the event of a cyber-incident.
Given the importance of information security to our stakeholders, our Board or the committee of our Board of Directors responsible for assisting the Board of Directors with its oversight of cybersecurity risk receives regular reports from our CISO on cybersecurity-related matters, including the status of projects to strengthen our security systems and to improve our cyber threat readiness, as well as on the existing and emerging cyber threat landscape and our program for managing these security risks.
Given the importance of information security to our stakeholders, our Risk Oversight Committee receives regular reports from our CISO on cybersecurity-related matters, including the status of projects to strengthen our security systems and to improve our cyber threat readiness, as well as on the existing and emerging cyber threat landscape and our program for managing these security risks.
We maintain an incident response plan that outlines the activities we take to prepare for, detect, respond to, and recover from cybersecurity incidents, which include processes designed to triage, assess the severity of, escalate, contain, investigate, and remediate the incident, as well as to comply with relevant legal obligations.
We maintain an incident response plan that outlines the activities we take to respond to, remediate, and resolve any cybersecurity incidents, which include processes designed to triage, assess the severity of, escalate, contain, investigate, and remediate the incident, as well as to comply with relevant legal obligations.
Additionally, we generally require third-parties that we have identified as parties that could introduce significant cybersecurity risk to agree by contract to manage their cybersecurity risks according to standards set by us and/or to agree to be subject to cybersecurity audits conducted by our agents, which we conduct as we deem appropriate.
Additionally, we generally require third-parties that we have identified as parties that could introduce significant cybersecurity risk to agree by contract to manage their cybersecurity risks based on accepted industry standards and/or to agree to be subject to cybersecurity audits conducted by our agents, which we conduct as we deem appropriate.
Our CISO held previous certifications include ISC2 Certified Information Systems Security Professional (“CISSP”), EC-Council Certified Chief Information Security Officer (“C|CISO”), and ISACA Certified Data Privacy Solutions Engineer (“CDPSE”).
Our CISO previously held certifications include ISC2 Certified Information Systems Security Professional, EC-Council Certified Chief Information Security Officer, and ISACA Certified Data Privacy Solutions Engineer.
For more information about these risks, please see the “Risk Factors” in this Annual Report on Form 10-K. Cybersecurity Governance Our Board and our Board Committees are actively engaged in the oversight of our information security program.
For more information about these risks, please see the “Risk Factors” in this Annual Report. Cybersecurity Governance Our Board of Directors and our Risk Oversight Committee are actively engaged in the oversight of our information security program.
We perform diligence on critical third-party suppliers that have access to our systems, and data or facilities that house such systems or data, and we monitor cybersecurity threat risks identified through such diligence.
In addition, cybersecurity considerations affect the selection and oversight of our third-party suppliers. We perform diligence on critical third-party suppliers that have access to our systems and data and to facilities that house critical third-party systems or data, and we monitor cybersecurity threat risks identified through such diligence.
In addition, our CISO has direct access to the chair of the committee of our Board of Directors overseeing cyber-related risks and is expected to keep that committee apprised of any significant developments that may emerge between scheduled meetings that may require the attention of the Board or relevant committee.
In addition, our CISO has direct access to the chair of our Risk Oversight Committee and is expected to keep that committee apprised of any significant developments that may emerge between scheduled meetings that may require the attention of our Risk Oversight Committee.
Additionally, we conduct cybersecurity awareness and sensitive information protection training for our employees, and we periodically test the effectiveness of our training and policies through simulations, which may include simulated phishing emails and tabletop exercises.
Additionally, we conduct cybersecurity awareness and sensitive information protection training for our employees, and we periodically test the effectiveness of our training and policies through simulations, which may include simulated phishing emails and tabletop exercises. We apply similar processes, technologies, and controls to manage cybersecurity risks associated with third-party suppliers.
Certain risks identified by our enterprise risk management function, including cybersecurity risks, are monitored by our Risk Steering Committee, a senior management level committee that includes our Executive Team.
Certain risks identified by our enterprise risk management function, including cybersecurity risks, are monitored by our Risk Steering Committee, a senior management level committee that includes our Executive Team. The Risk Steering Committee’s review of these risks in turn informs the risk management updates provided to the Risk Oversight Committee of our Board of Directors.
Additionally, Internal Audit will from time to time review certain aspects of our cybersecurity program and the related Internal Controls, and our external auditor will test relevant controls around our cybersecurity program and incident reporting.
Additionally, Internal Audit will annually review certain aspects of our cybersecurity program and the related Internal Controls, and our external auditor will test relevant controls around our cybersecurity program and incident reporting. We also do external testing, and in 2024 completed a NIST Cybersecurity Framework audit with Mandiant.
Removed
We also would use similar processes, technologies, and controls to manage cybersecurity risks associated with third-party suppliers, including those who have access to our systems or our employee and other confidential data. In addition, cybersecurity considerations affect the selection and oversight of our third-party suppliers.
Added
On December 5, 2024, we announced that our CTO would cease serving as CTO effective December 31, 2024, and that we had initiated a search for her successor. In the interim, two current vice presidents of engineering, one of whom is our CISO, are providing interim leadership of our engineering organization.
Removed
The Risk Steering Committee’s review of these risks in turn informs the risk management updates provided to the committee of our Board of Directors responsible for assisting the Board of Directors with its oversight of cybersecurity risks.
Added
Our CISO is also primarily responsible for cybersecurity and risk-related matters in his capacity as interim Co-CTO, with assistance from our Senior Director of Information Security.
Removed
Before the establishment of our Risk Oversight Committee, our Audit Committee assisted our Board of Directors with its oversight of risks associated with Etsy’s technology and information security policies and practices, the internal controls relating to information security, and the steps taken by management to identify, monitor, and control any risk exposures.
Added
Our Risk Oversight Committee provides a quarterly report to the Board of Directors on enterprise risk management matters overseen by that Committee, including cybersecurity-related matters.
Removed
Our CTO holds a Bachelor's degree from RV College of Engineering in Bengaluru, India and a Master of Public Administration from Columbia University.
Removed
Our CTO has been recognized as one of the Top 50 Women in Tech by the National Diversity Council and has received the Digital Diversity Network's Innovation and Inclusion CodeBreakers Award, Innovators & Disrupters Award from New York on Tech and Future CIO Award at Women in IT Awards.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The table below provides information with respect to repurchases of shares of our common stock during the three months ended December 31, 2023: Period Total Number of Shares Purchased(1) Average Price Paid per Share(2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(3)(4) Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs (in thousands)(3) October 1 - 31 554,296 $ 64.34 554,296 $ 781,689 November 1 - 30 504,253 66.68 504,253 748,057 December 1 - 31 289,444 81.85 289,444 724,360 Total 1,347,993 1,347,993 (1) The total number of shares purchased does not include shares withheld to satisfy tax withholding obligations in connection with the vesting of employee restricted stock units (“RSUs”).
Biggest changeIssuer Purchases of Equity Securities The table below provides information with respect to repurchases of shares of our common stock during the three months ended December 31, 2024 (in thousands, except per share amounts): Period Total Number of Shares Purchased Average Price Paid per Share(1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)(3) Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs(2) October 1 - 31 1,102 $ 50.74 1,102 $ 1,204,007 November 1 - 30 2,884 52.92 2,884 1,051,344 December 1 - 31 894 57.17 894 1,000,278 Total 4,880 53.20 4,880 1,000,278 (1) Average price paid per share excludes broker commissions and excise tax.
(4) All of these shares were purchased pursuant to a 10b5-1 trading plan. Share repurchases may be executed through open market repurchases, privately negotiated transactions or by other means, including repurchase plans designed to comply with Rule 10b5-1 and other derivative, accelerated share repurchase and other structured transactions.
These stock repurchase programs have no expiration date. (3) These shares were purchased pursuant to a 10b5-1 trading plan or in open market purchases. Share repurchases may be executed through open market repurchases, privately negotiated transactions or by other means, including repurchase plans designed to comply with Rule 10b5-1 and other derivative, accelerated share repurchase and other structured transactions.
Holders of Record As of the close of business on February 16, 2024, there were approximately 750 stockholders of record of our common stock.
Holders of Record As of the close of business on February 14, 2025, there were approximately 726 stockholders of record of our common stock.
The timing and exact amount of any common stock repurchases will depend on various factors, including market conditions, common stock trading price, our liquidity and financial performance and legal considerations. 73 Table of Contents Performance Graph The following graph shows a comparison from December 31, 2018 through December 31, 2023, of the cumulative total returns for our common stock, the Russell 1000 Index, and the S&P 500 Index.
The timing and exact amount of any common stock repurchases will depend on various factors, including market conditions, common stock trading price, our liquidity and financial performance and legal considerations. 69 Table of Contents Performance Graph Our 2023 Annual Report on Form 10-K included a comparison of the cumulative total return of our common stock with the S&P 500 Index since December 31, 2018.
The graph assumes $100 was invested at the market close on December 31, 2018 in the common stock of Etsy, Inc. Such returns are based on historical results and are not intended to suggest future performance. The Russell 1000 Index and the S&P 500 Index assume reinvestment of any dividends.
Such returns are based on historical results and are not intended to suggest future performance. The Russell 1000 Index, S&P 500 Index, and S&P SmallCap 600 Index assume reinvestment of any dividends.
Any excise tax incurred on share repurchases is recognized as part of the cost basis of the shares acquired in the Consolidated Statements of Stockholders’ Equity (Deficit). (3) In June 2023, our Board of Directors approved a stock repurchase program that authorizes repurchases of up to $1 billion of our common stock. The stock repurchase program has no expiration date.
(2) In June 2023, our Board of Directors approved a stock repurchase program that authorizes repurchases of up to $1 billion of our common stock. The table also reflects the authorization, in October 2024, of a new stock repurchase program that authorizes repurchases of up to an additional $1 billion of our common stock.
Removed
(2) Average price paid per share excludes broker commissions and excise tax. As of January 1, 2023, our share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act.
Added
In 2024, there were changes to the indices that Etsy is included in, and, as a result, we believe that the S&P SmallCap 600 Index is a more appropriate index than the S&P 500 for comparison of our stock performance.
Added
If a company discloses a different index from that used in the immediately preceding fiscal year, the company’s stock performance must be compared with both the newly disclosed index and the index used in the immediately preceding year.
Added
Accordingly, the following graph shows a comparison from December 31, 2019 through December 31, 2024, of the cumulative total returns for our common stock, the Russell 1000 Index, the S&P 500 Index, and the S&P SmallCap 600 Index. The graph assumes $100 was invested at the market close on December 31, 2019 in the common stock of Etsy, Inc.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOther Income (Expense), net Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2023 2022 $ % 2021 $ % (in thousands, except percentages) Other income (expense), net: Loss on sale of business $ (2,630) $ — $ (2,630) NM $ — $ — NM Percentage of total revenue (0.1) % — % — % Interest expense $ (14,042) $ (14,168) $ 126 (0.9) % $ (9,885) $ (4,283) 43.3 % Percentage of total revenue (0.5) % (0.6) % (0.4) % Interest and other income $ 35,999 $ 10,956 $ 25,043 228.6 % $ 2,137 $ 8,819 412.7 % Percentage of total revenue 1.3 % 0.4 % 0.1 % Foreign exchange (loss) gain $ (6,348) $ (206) $ (6,142) 2,981.6 % $ 13,670 $ (13,876) (101.5) % Percentage of total revenue (0.2) % — % 0.6 % Other income (expense), net $ 12,979 $ (3,418) $ 16,397 (479.7) % $ 5,922 $ (9,340) (157.7) % Percentage of total revenue 0.5 % (0.1) % 0.3 % Other income, net was $13.0 million in the year ended December 31, 2023, which increased $16.4 million from other expense, net of $3.4 million in the year ended December 31, 2022.
Biggest changeThere were no asset impairment charges in 2024. 77 Table of Contents Other Income (Expense) Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2024 2023 $ % 2022 $ % (in thousands, except percentages) Other income (expense): Interest expense $ (13,806) $ (14,042) $ 236 (1.7) % $ (14,168) $ 126 (0.9) % Interest and other income 30,982 35,999 (5,017) (13.9) % 10,956 25,043 228.6 % Foreign exchange gain (loss) 13,391 (6,348) 19,739 (310.9) % (206) (6,142) 2,981.6 % Loss on sale of business — (2,630) 2,630 NM — (2,630) NM Other income (expense) $ 30,567 $ 12,979 $ 17,588 135.5 % $ (3,418) $ 16,397 (479.7) % Percentage of total revenue 1.1 % 0.5 % (0.1) % Other income increased, primarily driven by the remeasurement of non-functional currency cash and intercompany balances as changes in exchange rates resulted in a noncash gain for 2024 as compared to a noncash loss for 2023.
General and administrative expenses also include costs associated with the use of facilities and equipment, including depreciation and amortization and office overhead, professional services expenses, digital services tax, bad debt expense, and non-income tax items. Asset impairment charges: Asset impairment charges consists of non-cash charges related to the impairment of goodwill, finite-lived intangible assets, and other long-lived assets.
General and administrative expenses also include costs associated with the use of facilities and equipment, including depreciation and amortization and office related expenses, professional services expenses, digital services tax, bad debt expense, and non-income tax items. Asset impairment charges: Asset impairment charges consists of non-cash charges related to the impairment of goodwill, finite-lived intangible assets, and other long-lived assets.
However, because our revenue and cost of revenue depend significantly on the dollar value of items sold in our marketplace, we believe that GMS is an indicator of the success of our sellers, the satisfaction of our buyers, and the health, scale, and growth of our business.
However, because our revenue and cost of revenue depend significantly on the dollar value of items sold in our marketplace, we believe that GMS is an indicator of the success of our sellers, the satisfaction of our buyers, and the health and scale of our business.
Interest expense consists primarily of amortization of debt issuance costs and coupon interest expense related to our Notes. Interest expense also includes interest associated with the portion of our Brooklyn headquarters lease which is accounted for as a finance lease.
Interest expense consists primarily of amortization of debt issuance costs and coupon interest expense related to our convertible notes. Interest expense also includes interest associated with the portion of our Brooklyn headquarters lease which is accounted for as a finance lease.
Other (Expense) Income, net Other (expense) income, net consists of interest and other income, interest expense, foreign exchange (loss) gain, and, in 2023, also loss on sale of business which relates to the sale of Elo7 in 2023. Interest and other income is primarily comprised of interest income from our investment accounts.
Other Income (Expense) Other income (expense) consists of interest and other income, interest expense, foreign exchange gain (loss), and, in 2023, also loss on sale of business which relates to the sale of Elo7. Interest and other income is primarily comprised of interest income from our investment accounts.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in Part I, Item 1A, “Risk Factors.” We have omitted discussion of 2021 results where it would be redundant to the discussion previously included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in Part I, Item 1A, “Risk Factors.” We have omitted discussion of 2022 results where it would be redundant to the discussion previously included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.
Marketplace Revenue : Etsy.com marketplace revenue is comprised of the fees an Etsy marketplace seller pays for marketplace activities, including: • The transaction fee that an Etsy marketplace seller pays for each completed transaction, inclusive of shipping fees charged, which increased from 5% to 6.5% effective April 11, 2022, and where applicable, an additional transaction fee of 12% or 15% related to offsite advertising (“Offsite Ads”); • A fee for Etsy Payments, our payment processing product, which typically varies between 3.0% and 4.5% of an item’s total sale price, including shipping, plus a flat fee per order, that depends on the country in which a seller’s bank account is located.
Marketplace Revenue : Etsy marketplace revenue is primarily comprised of the fees an Etsy marketplace seller pays for marketplace activities, including: • The transaction fee that an Etsy marketplace seller pays for each completed transaction, inclusive of shipping fees charged, which increased from 5% to 6.5% effective April 11, 2022, and where applicable, an additional transaction fee of 12% or 15% related to offsite advertising (“Offsite Ads”); • A fee for Etsy Payments, our payment processing product, which typically varies between 3.0% and 6.5% of an item’s total sale price, including shipping, plus a flat fee per order, that depends on the country in which a seller’s bank account is located.
As reported and currency-neutral GMS (decline) / growth for the periods presented below are as follows: Year-to-Date Period Ended As Reported Currency-Neutral FX Impact December 31, 2023 (1.2) % (1.2) % — % December 31, 2022 (1.3) % 1.6 % (2.9) % December 31, 2021 31.2 % 29.6 % 1.6 % 79 Table of Contents Key Factors Affecting Our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us, including those discussed in Part I, Item 1, “Business,” but also pose risks and challenges, including those discussed in Part I, Item 1A, “Risk Factors.” Components of Our Results of Operations Revenue Our revenue is diversified and generated from a mix of marketplace activities and other optional services we provide to sellers to help them generate more sales and scale their businesses.
As reported and currency-neutral GMS (decline) / growth for the periods presented below are as follows: Year-to-Date Period Ended As Reported Currency-Neutral FX Impact December 31, 2024 (4.4) % (4.5) % 0.1 % December 31, 2023 (1.2) % (1.2) % — % December 31, 2022 (1.3) % 1.6 % (2.9) % 73 Table of Contents Key Factors Affecting Our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us, including those discussed in Part I, Item 1, “Business,” but also pose risks and challenges, including those discussed in Part I, Item 1A, “Risk Factors.” Components of Our Results of Operations Revenue Our revenue is diversified and generated from a mix of marketplace activities and other optional services we provide primarily to sellers to help them generate more sales and scale their businesses.
The primary drivers of our income tax benefit for the year ended December 31, 2023 were a $55.9 million tax benefit related to Elo7 and a benefit related to research and development tax credits, partially offset by tax expense on income before income taxes and tax deficiencies from stock-based compensation.
The primary drivers of our income tax benefit for 2023 were a $55.9 million tax benefit related to Elo7 and a benefit related to research and development tax credits, partially offset by tax expense on income before income taxes and tax deficiencies from stock-based compensation.
See Part II, Item 8, “Financial Statements and Supplementary Data—Note 13—Debt” for more information on the Notes and the 2023 Credit Agreement.
See Part II, Item 8, “Financial Statements and Supplementary Data—Note 12—Debt” for more information on the 2023 Credit Agreement.
Recent Accounting Pronouncements See Part II, Item 8, “Financial Statements and Supplementary Data—Note 1—Basis of Presentation and Summary of Significant Accounting Policies” for information regarding recently issued accounting pronouncements.
Recent Accounting Pronouncements See Part II, Item 8, “Financial Statements and Supplementary Data—Note 1—Basis of Presentation and Summary of Significant Accounting Policies” for information regarding recently adopted and recently issued accounting pronouncements. 82 Table of Contents
The Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value.
We have the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value.
Marketing expenses also include employee compensation-related expenses to support our marketing initiatives and amortization expense related to acquired customer relationships and trademark intangible assets. Product development: Product development expenses consist primarily of employee compensation-related expenses for our engineering, product management, product design, and product research activities.
Marketing expenses also include employee compensation-related expenses to support our marketing initiatives and amortization expense related to acquired customer relationships and trademark intangible assets. Product development: Product development expenses consist primarily of employee compensation-related expenses for our engineering, product management, product design, and product research activities, net of costs capitalized to website and app development.
Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA represents our net income (loss) adjusted to exclude: interest and other non-operating (income) expense, net; (benefit) provision for income taxes; depreciation and amortization; stock-based compensation expense; foreign exchange loss (gain); acquisition, divestiture, and corporate structure-related expenses; asset impairment charges; loss on sale of business; and restructuring and other exit costs.
Buyer GMS - Etsy marketplace 74 % 74 % 75 % Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA represents our net income (loss) adjusted to exclude: stock-based compensation expense; depreciation and amortization; provision (benefit) for income taxes; interest and other non-operating (income) expense, net; foreign exchange (gain) loss; retroactive non-income tax expense; restructuring and other exit costs; acquisition, divestiture, and corporate structure-related expenses; asset impairment charges; and loss on sale of business.
Cost of Revenue Cost of revenue primarily consists of the cost of interchange and other fees for payments processing services, and expenses associated with the usage of cloud infrastructure, including hosting and bandwidth costs.
Cost of Revenue: Cost of revenue primarily consists of the cost of interchange and other fees for payments processing services and expenses associated with cloud-related hosting and bandwidth costs.
GMS and international GMS) is GMS from transactions in which (1) the billing address for the seller and / or (2) the shipping address for the buyer at the time of sale is outside of the United States.
GMS ex-U.S. domestic is GMS from transactions in which (1) the billing address for the seller and / or (2) the shipping address for the buyer at the time of sale is outside of the United States.
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 globally; and • Leveraging our marketplace playbook across our “House of Brands.” 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 Part 1, Item 1, “Business—Primary Business Drivers.” 75 Table of Contents Annual Key Metrics and Financial Highlights As of December 31, 2023, our marketplaces connected 9.0 million active sellers and 96.5 million active buyers in nearly every country in the world.
Our strategy is focused around: • Building a sustainable competitive advantage for the Etsy marketplace — our “Right to Win;” • Growing the Etsy marketplace in our core geographies and globally; and • Leveraging our marketplace playbook across our “House of Brands.” Our investments in technology infrastructure, product development, marketing, trust and safety, member support, helping sellers grow, and fostering engaged and impactful teams support our strategy, which you can read more about in Part I, Item 1, “Business—Primary Business Drivers.” Annual Key Metrics and Financial Highlights As of December 31, 2024, our marketplaces connected 8.1 million active sellers and 95.5 million active buyers in nearly every country in the world.
GMS ex-U.S. domestic represents all GMS other than GMS from transactions in which the billing address for the seller and the shipping address for the buyer at the time of sale are both in the United States, which we refer to as U.S. Domestic GMS.
GMS ex-U.S. domestic represents all GMS other than GMS from transactions in which the billing address for the seller and the shipping address for the buyer at the time of sale are both in the United States, which we refer to as U.S. domestic GMS. Beginning in the first quarter of 2023, GMS ex-U.S. domestic is calculated net of refunds.
If actual results are materially lower than originally estimated, it could result in a material impact on our consolidated financial statements in future periods. Valuation of Goodwill Goodwill is tested for impairment at the reporting unit level annually, or more frequently if triggering events occur.
If actual results were to be materially different than estimated, it could result in a material impact on our consolidated financial statements in future periods. 81 Table of Contents Valuation of Goodwill Goodwill is tested for impairment at the reporting unit level annually, or more frequently if triggering events occur.
Operating lease obligations consist of obligations under non-cancelable operating leases, including a portion of our headquarter office located in Brooklyn, New York and for a majority of our other office locations, and include imputed interest and tenant improvement allowances.
Operating lease obligations consist of obligations under non-cancelable operating leases, including a portion of our headquarter office located in Brooklyn, New York and for a majority of our other office locations, and include imputed interest and tenant improvement allowances. $3.5 million of operating lease obligations are due within 12 months.
Cost of revenue also includes chargebacks to support payments revenue and costs of refunds made to buyers that we either are not able to collect from sellers or are otherwise covered by us, which we collectively refer to as cost of refunds, and seller verification fees.
Cost of revenue also includes certain employee compensation-related expenses as well as chargebacks to support payments revenue and costs of refunds made to buyers that we either are not able to collect from sellers or are otherwise covered by us, which we collectively refer to as cost of refunds.
We earn additional fees on transactions in which currency conversions are performed; and • The $0.20 listing fee for each item listed (for up to four months or until the item is sold or relisted, whichever comes sooner).
We earn additional fees on transactions in which currency conversions are performed; and • The $0.20 listing fee for each item listed (for up to four months or until the item is sold or relisted, whichever comes sooner). Reverb sellers pay a 5% transaction fee for each completed transaction, inclusive of shipping fees charged.
While these beliefs are based on our current expectations and assumptions, in light of current macroeconomic conditions, our future capital requirements and the adequacy of available funds will depend on many factors, including those described in Part I, Item 1A, “Risk Factors” in this Annual Report. 88 Table of Contents Historical Cash Flows Year Ended December 31, 2023 2022 2021 (in thousands) Cash provided by (used in): Operating activities $ 705,513 $ 683,612 $ 651,551 Investing activities (73,307) (30,024) (1,557,969) Financing activities (656,533) (506,484) 452,749 Net Cash Provided by Operating Activities Our cash flows from operations are largely dependent on the amount of revenue generated on our platforms, as well as associated cost of revenue and other operating expenses.
While these beliefs are based on our current expectations and assumptions, in light of current macroeconomic conditions, our future capital requirements and the adequacy of available funds will depend on many factors, including those described in Part I, Item 1A, “Risk Factors” in this Annual Report. 80 Table of Contents Historical Cash Flows Year Ended December 31, 2024 2023 2022 (in thousands) Cash provided by (used in): Operating activities $ 752,469 $ 705,513 $ 683,612 Investing activities (53,101) (73,307) (30,024) Financing activities (787,168) (656,533) (506,484) Net Cash Provided by Operating Activities Our cash flows from operations are largely dependent on the amount of revenue generated on our platforms, as well as cash payments for direct marketing expenses, employee compensation-related expenses, and payments processing fees.
Based on the terms of the Notes, we have the option to pay or deliver cash, shares of our common stock, or a combination thereof, when a conversion notice is received.
Based on the terms of each series of Notes, when a conversion notice is received, we have the option to pay or deliver cash, shares of our common stock, or a combination thereof. No debt obligations are due within 12 months.
These investments are intended to allow us to preserve our principal, maintain the ability to meet our liquidity needs, deliver positive yields across a balanced portfolio, and continue to provide us with direct fiduciary control.
We typically invest in short- and long-term instruments, which are intended to allow us to preserve our principal, maintain the ability to meet our liquidity needs, deliver positive yields across a balanced portfolio, and continue to provide us with direct fiduciary control.
These increases were partially offset by net favorable impacts of non-income tax items. 84 Table of Contents Asset impairment charges Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2023 2022 $ % 2021 $ % (in thousands, except percentages) Asset impairment charges $ 68,091 $ 1,045,022 $ (976,931) (93.5) % $ — $ 1,045,022 NM Percentage of total revenue 2.5 % 40.7 % — % Asset impairment charges were $68.1 million in the year ended December 31, 2023, related to the impairment of intangible assets and property and equipment of Elo7.
Asset impairment charges Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2024 2023 $ % 2022 $ % (in thousands, except percentages) Asset impairment charges $ — $ 68,091 $ (68,091) NM $ 1,045,022 $ (976,931) (93.5) % Percentage of total revenue — % 2.5 % 40.7 % Asset impairment charges were $68.1 million in 2023 related to the impairment of intangible assets and property and equipment of Elo7.
We believe that certain assumptions and estimates associated with stock-based compensation; income taxes; business combinations; valuation of goodwill; and leases are material in nature due to the subjectivity associated with them and have the greatest potential impact on our consolidated financial statements.
We believe that certain assumptions and estimates associated with income taxes; valuation of goodwill; and leases are material in nature due to the subjectivity associated with them and have the greatest potential impact on our consolidated financial statements. Therefore, we consider the assumptions and estimates associated with these (as further detailed below) to be our critical accounting estimates.
Effective June 14, 2023, the Board of Directors approved a stock repurchase program that authorizes us to repurchase up to an additional $1 billion of our common stock. As of December 31, 2023, the remaining amount available to be repurchased under the approved plan was $724.4 million.
In October 2024, the Board of Directors approved a new stock repurchase program that authorizes us to repurchase up to an additional $1 billion of our common stock. As of December 31, 2024, the remaining amount available to be repurchased under the approved plans was $1.0 billion.
The primary drivers of our income tax provision for the year ended December 31, 2022 were tax expense on income before income taxes, excluding the non-deductible goodwill impairment expense, and state and local income taxes, partially offset by tax benefits from stock-based compensation and a benefit related to research and development tax credits. 85 Table of Contents Non-GAAP Financial Measures Adjusted EBITDA and Adjusted EBITDA Margin In this Annual Report, we provide Adjusted EBITDA, a non-GAAP financial measure that represents our net income (loss) adjusted to exclude: interest and other non-operating (income) expense, net; (benefit) provision for income taxes; depreciation and amortization; stock-based compensation expense; foreign exchange loss (gain); acquisition, divestiture, and corporate structure-related expenses; asset impairment charges; loss on sale of business; and restructuring and other exit costs.
Non-GAAP Financial Measures Adjusted EBITDA and Adjusted EBITDA Margin In this Annual Report, we provide Adjusted EBITDA, a non-GAAP financial measure that represents our net income (loss) adjusted to exclude: stock-based compensation expense; depreciation and amortization; provision (benefit) for income taxes; interest and other non-operating (income) expense, net; foreign exchange (gain) loss; retroactive non-income tax expense; restructuring and other exit costs; acquisition, divestiture, and corporate structure-related expenses; asset impairment charges; and loss on sale of business.
Additionally, we have $86.7 million in long-term investments, a majority of which we can liquidate at short notice and with minimal penalties if needed. We also have the ability to draw down on our $400.0 million senior secured revolving credit facility. In the year ended December 31, 2023, we had positive operating cash flows of $705.5 million.
Liquidity and Capital Resources Cash and cash equivalents and short-term investments were $1.0 billion as of December 31, 2024. Additionally, we have $111.7 million in long-term investments, a majority of which we can liquidate at short notice and with minimal penalties if needed. We also have the ability to draw down on our $400.0 million senior secured revolving credit facility.
The unaudited GAAP and non-GAAP financial measures and key operating metrics we use are: Year Ended December 31, % (Decline) / Growth Y/Y Year Ended December 31, % (Decline) / Growth Y/Y 2023 2022 2021 (in thousands, except percentages) GMS (1)(2) $ 13,161,196 $ 13,318,396 (1.2) % $ 13,491,828 (1.3) % Revenue $ 2,748,377 $ 2,566,111 7.1 % $ 2,329,114 10.2 % Marketplace revenue $ 1,997,190 $ 1,910,887 4.5 % $ 1,745,824 9.5 % Services revenue $ 751,187 $ 655,224 14.6 % $ 583,290 12.3 % Gross profit $ 1,919,702 $ 1,821,519 5.4 % $ 1,674,602 8.8 % Operating expenses $ 1,639,861 $ 2,480,079 (33.9) % $ 1,208,870 105.2 % Net income (loss) $ 307,568 $ (694,288) 144.3 % $ 493,507 (240.7) % Net income (loss) margin (3) 11.2 % (27.1) % 3,830 bps 21.2 % (4,830) bps Adjusted EBITDA (Non-GAAP) (1) $ 754,311 $ 716,882 5.2 % $ 716,613 — % Adjusted EBITDA margin (Non-GAAP) (1) 27.4 % 27.9 % (50) bps 30.8 % (290) bps Active sellers (1)(4) 9,035 7,470 21.0 % 7,522 (0.7) % Active buyers (1)(4) 96,483 95,076 1.5 % 96,336 (1.3) % Percent mobile GMS (1)(5) 68 % 67 % 100 bps 64 % 300 bps Percent GMS ex-U.S.
The financial measures and key operating metrics we use are: Year Ended December 31, % (Decline) / Growth Y/Y Year Ended December 31, % (Decline) / Growth Y/Y 2024 2023 2022 (in thousands, except percentages) GMS (1)(2) $ 12,586,952 $ 13,161,196 (4.4) % $ 13,318,396 (1.2) % Revenue $ 2,808,332 $ 2,748,377 2.2 % $ 2,566,111 7.1 % Marketplace revenue $ 2,020,744 $ 1,997,190 1.2 % $ 1,910,887 4.5 % Services revenue $ 787,588 $ 751,187 4.8 % $ 655,224 14.6 % Gross profit $ 2,033,778 $ 1,919,702 5.9 % $ 1,821,519 5.4 % Operating expenses $ 1,653,570 $ 1,639,861 0.8 % $ 2,480,079 (33.9) % Net income (loss) $ 303,281 $ 307,568 (1.4) % $ (694,288) (144.3) % Net income (loss) margin (3) 10.8 % 11.2 % (40) bps (27.1) % 3,830 bps Adjusted EBITDA (Non-GAAP) $ 781,538 $ 754,311 3.6 % $ 716,882 5.2 % Adjusted EBITDA margin (Non-GAAP) 27.8 % 27.4 % 40 bps 27.9 % (50) bps Active sellers (1)(4) 8,134 9,035 (10.0) % 7,470 21.0 % Active buyers (1)(4) 95,459 96,483 (1.1) % 95,076 1.5 % (1) Unaudited.
A buyer is separately identified in each of our marketplaces by a unique e-mail address; a single person can have multiple buyer accounts and can count as a distinct active buyer in each of our marketplaces.
Active Buyers An active buyer is a buyer who has made at least one purchase in the last 12 months. A buyer is separately identified in each of our marketplaces by a unique e-mail address; a single person can have multiple buyer accounts and can count as a distinct active buyer in each of our marketplaces.
We include stock-based compensation expense in the applicable operating expense category based on the respective equity award recipient’s function.
Costs and Operating Expenses We include stock-based compensation expense in the applicable operating expense category based on the respective equity award recipient’s function. We also include restructuring and other exit costs in the applicable operating expense category of the impacted function.
Therefore, we consider the assumptions and estimates associated with these (as further detailed below) to be our critical accounting estimates. See Part II, Item 8, “Financial Statements and Supplementary Data—Note 1—Basis of Presentation and Summary of Significant Accounting Policies” for further information on our critical accounting policies related to revenue recognition, stock-based compensation, income taxes, business combinations, goodwill, and leases.
See Part II, Item 8, “Financial Statements and Supplementary Data—Note 1—Basis of Presentation and Summary of Significant Accounting Policies” for further information on our critical accounting policies related to revenue recognition, income taxes, goodwill, and leases.
We succeed when sellers succeed, so we view the number of active sellers as a key indicator of consumer awareness of our brands, the reach of our platforms, the potential for growth in GMS and revenue, and the health of our business. 78 Table of Contents Active Buyers An active buyer is a buyer who has made at least one purchase in the last 12 months.
We succeed when sellers succeed, so we view the number of active sellers as a key indicator of consumer awareness of our brands, the reach of our platforms, the potential for growth in GMS and revenue, and the health of our business.
We track “Paid GMS” for the Etsy marketplace and define it as Etsy marketplace GMS that is attributable to our performance marketing efforts, which excludes most of our marketing investments focused on brand awareness like TV and digital video. 77 Table of Contents As outlined starting on page 5 in Part I, Item 1, “Business” above, Etsy’s 2023 performance reflects the impact of macroeconomic headwinds.
We track “Paid GMS” for the Etsy marketplace and define it as Etsy marketplace GMS that is attributable to our performance marketing efforts, which excludes most of our marketing investments focused on brand awareness like TV and digital video.
GMS decreased $157.2 million to $13.2 billion in the year ended December 31, 2023 compared to the year ended December 31, 2022. The approximately 1% decline in GMS compared to December 31, 2022 was primarily driven by a decrease in Etsy marketplace GMS, partially offset by an increase in GMS for the Depop marketplace.
The approximately 4% decline in GMS compared to 2023 was primarily driven by a decrease in Etsy marketplace GMS, partially offset by an increase in GMS for the Depop marketplace.
Some of these limitations are: • Adjusted EBITDA does not reflect interest and other non-operating (income) expense, net; • Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; • Adjusted EBITDA does not consider the impact of stock-based compensation expense; • Adjusted EBITDA does not consider the impact of foreign exchange loss (gain); • Adjusted EBITDA does not reflect acquisition, divestiture, and corporate structure-related expenses; • Adjusted EBITDA does not consider the impact of asset impairment charges; • Adjusted EBITDA does not consider the impact of the loss on sale of business; • Adjusted EBITDA does not reflect restructuring and other exit costs; and • other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Some of these limitations are: • Adjusted EBITDA does not consider the non-cash expense of stock-based compensation expense, which has been, and for the foreseeable future is expected to continue to be, a significant recurring expense and an important part of how we attract, reward, and retain employees; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; • Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and • other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
These shares were retired upon receipt. 76 Table of Contents 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).
In 2024, we had positive operating cash flows of $752.5 million. 71 Table of Contents 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).
For benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by the taxing authorities. The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate audit settlement.
The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate audit settlement.
Because of these limitations, you should consider Adjusted EBITDA and Adjusted EBITDA margin alongside other financial performance measures, including net income (loss), revenue, and our other GAAP results. 86 Table of Contents The following table reflects the reconciliation of net income (loss) to Adjusted EBITDA and the calculation of Adjusted EBITDA margin for each of the periods indicated: Year Ended December 31, 2023 2022 2021 (in thousands) Net income (loss) $ 307,568 $ (694,288) $ 493,507 Excluding: Interest and other non-operating (income) expense, net (21,957) 3,212 7,748 (Benefit) provision for income taxes (14,748) 32,310 (21,853) Depreciation and amortization 91,323 96,702 74,267 Stock-based compensation expense 284,558 230,888 139,910 Foreign exchange loss (gain) 6,348 206 (13,670) Acquisition, divestiture, and corporate structure-related expenses 3,921 2,830 36,704 Asset impairment charges 68,091 1,045,022 — Loss on sale of business 2,630 — — Restructuring and other exit costs 26,577 — — Adjusted EBITDA $ 754,311 $ 716,882 $ 716,613 Divided by: Revenue $ 2,748,377 $ 2,566,111 $ 2,329,114 Adjusted EBITDA margin 27.4 % 27.9 % 30.8 % Liquidity and Capital Resources Cash and cash equivalents and short-term investments were $1.2 billion as of December 31, 2023.
The following table reflects the reconciliation of net income (loss) to Adjusted EBITDA and the calculation of Adjusted EBITDA margin for each of the periods indicated: Year Ended December 31, 2024 2024 2023 2022 (in thousands) Net income (loss) $ 303,281 $ 307,568 $ (694,288) Excluding: Stock-based compensation expense 282,847 284,558 230,888 Depreciation and amortization 108,074 91,323 96,702 Provision (benefit) for income taxes 107,494 (14,748) 32,310 Interest and other non-operating (income) expense, net (17,176) (21,957) 3,212 Foreign exchange (gain) loss (13,391) 6,348 206 Retroactive non-income tax expense (1) 6,124 — — Restructuring and other exit costs 2,807 26,577 — Acquisition, divestiture, and corporate structure-related expenses 1,478 3,921 2,830 Asset impairment charges — 68,091 1,045,022 Loss on sale of business — 2,630 — Adjusted EBITDA $ 781,538 $ 754,311 $ 716,882 Divided by Revenue $ 2,808,332 $ 2,748,377 $ 2,566,111 Adjusted EBITDA margin 27.8 % 27.4 % 27.9 % (1) Retroactive non-income tax expense related to the digital services tax legislation in Canada, which was enacted on June 28, 2024 retroactive to January 1, 2022.
Net Cash Used in Investing Activities Our primary investing activities consist of cash paid for the acquisitions of Depop and Elo7, purchases and sales and maturities of short- and long-term investments, and capital expenditures, including investments in capitalized website development and internal-use software and purchases of property and equipment to support our overall business growth.
Net Cash Used in Investing Activities Net cash used in investing activities corresponds with purchases and sales and maturities of investments and cash capital expenditures, including investments in website and app development and purchases of property and equipment to support our overall business growth.
Reverb and Depop sellers pay a 5% and 10% transaction fee, respectively for each completed transaction, inclusive of shipping fees charged, and a fee for payment processing. These marketplaces do not charge listing fees.
Prior to 2024, all Depop sellers paid a 10% transaction fee for each completed transaction. These marketplaces both charge a fee for payments processing and do not charge listing fees.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP.
We believe that Adjusted EBITDA and Adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business as they remove the impact of certain non-cash items and certain variable charges. 78 Table of Contents Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP.
For the year ended December 31, 2023, GMS ex-U.S. domestic as a percentage of total GMS was approximately 45%, compared to approximately 44% for the year ended December 31, 2022. Additionally, GMS ex-U.S. domestic increased 2% from December 31, 2022 to December 31, 2023.
For 2024, GMS ex-U.S. domestic as a percentage of total GMS was approximately 46%, compared to approximately 45% for 2023. Additionally, GMS ex-U.S. domestic decreased 3% from 2023 to 2024. Effective December 31, 2024, we have changed our presentation of U.S. versus non-U.S.
The results of Elo7, acquired on July 2, 2021 and sold on August 10, 2023, are included in all financial and other metrics discussed in this report, unless otherwise noted, from the date of acquisition until August 10, 2023.
The results of Elo7 Serviços de Informática S.A. (“Elo7”), through its sale on August 10, 2023, are included in all financial and other metrics discussed in this report, unless otherwise noted.
Lease obligations and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term.
Leases Leases with a term greater than one year are recognized on the consolidated balance sheets as right-of-use (“ROU”) assets, lease obligations, and, if applicable, long-term lease obligations. Lease obligations and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term.
Cost of Revenue Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2023 2022 $ % 2021 $ % (in thousands, except percentages) Cost of revenue $ 828,675 $ 744,592 $ 84,083 11.3 % $ 654,512 $ 90,080 13.8 % Percentage of total revenue 30.2 % 29.0 % 28.1 % Cost of revenue increased $84.1 million to $828.7 million in the year ended December 31, 2023 compared to the year ended December 31, 2022.
Cost of Revenue Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2024 2023 $ % 2022 $ % (in thousands, except percentages) Cost of revenue $ 774,554 $ 828,675 $ (54,121) (6.5) % $ 744,592 $ 84,083 11.3 % Percentage of total revenue 27.6 % 30.2 % 29.0 % The decrease in cost of revenue was primarily driven by a decrease in cost of refunds.
Additionally, there was a $55.9 million tax benefit related to Elo7. In the year ended December 31, 2023, we recorded non-GAAP Adjusted EBITDA of $754.3 million. See “Non-GAAP Financial Measures” for more information and for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated in accordance with GAAP.
See “Non-GAAP Financial Measures” for more information and for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated in accordance with GAAP. Cash and cash equivalents and short-term investments were $1.0 billion as of December 31, 2024.
This was primarily attributable to stock repurchases of $425.7 million and payment of tax obligations on vested equity awards of $79.2 million, partially offset by proceeds from the exercise of stock options of $15.0 million. 89 Table of Contents Critical Accounting Estimates and Policies Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
The increase in 2024 of $130.6 million, compared to the same period in 2023, was primarily due to an increase in stock repurchases. Critical Accounting Estimates and Policies Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
Marketing Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2023 2022 $ % 2021 $ % (in thousands, except percentages) Marketing $ 759,196 $ 710,399 $ 48,797 6.9 % $ 654,804 $ 55,595 8.5 % Percentage of total revenue 27.6 % 27.7 % 28.1 % Marketing expenses increased $48.8 million to $759.2 million in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to increased Etsy marketplace digital marketing costs, as we continued to invest in efficient channels and regions with positive return on investment, and to a lesser extent, in non-digital marketing costs, due to an increase in marketing expenses related to increased broadcasting costs across different media channels primarily in North America and the United Kingdom.
We gained leverage as cost of revenue did not increase as fast as revenue. 76 Table of Contents Marketing Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2024 2023 $ % 2022 $ % (in thousands, except percentages) Marketing $ 856,565 $ 759,196 $ 97,369 12.8 % $ 710,399 $ 48,797 6.9 % Percentage of total revenue 30.5 % 27.6 % 27.7 % The increase in marketing expenses was driven by increased performance marketing costs, as we continued to invest in efficient channels and regions with positive return on investment.
The financial results of Depop have been included in our consolidated financial results (“Consolidated”) from July 12, 2021 (the date of acquisition). The financial results of Elo7 have been included in our consolidated financial results from July 2, 2021 (the date of acquisition) until August 10, 2023 (the date of sale).
The financial results of Elo7 have been included in our consolidated financial results (“Consolidated”) until August 10, 2023 (the date of sale). We are providing Etsy marketplace standalone information in certain instances where particularly relevant.
Additionally, cost of revenue increased due to an increase in cloud-related hosting and bandwidth costs. 83 Table of Contents Operating Expenses After giving effect to employee departures in connection with our Restructuring Plan, we had approximately 2,420 total employees worldwide on December 31, 2023, including approximately 240 Reverb employees and approximately 400 Depop employees.
Costs and Operating Expenses There were approximately 2,400 total employees worldwide on December 31, 2024, including approximately 180 Reverb employees and approximately 400 Depop employees. This is compared with approximately 2,420 total employees worldwide on December 31, 2023, after giving effect to employee departures in connection with our workforce reductions in the fourth quarter of 2023.
Benefit (Provision) for Income Taxes Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2023 2022 $ % 2021 $ % (in thousands, except percentages) Benefit (provision) for income taxes $ 14,748 $ (32,310) $ 47,058 (145.6) % $ 21,853 $ (54,163) 247.9 % Percentage of total revenue 0.5 % (1.3) % 0.9 % Our income tax benefit and provision for the years ended December 31, 2023 and 2022 was $14.7 million and $32.3 million, respectively.
(Provision) Benefit for Income Taxes Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2024 2023 $ % 2022 $ % (in thousands, except percentages) (Provision) benefit for income taxes $ (107,494) $ 14,748 $ (122,242) (828.9) % $ (32,310) $ 47,058 (145.6) % Percentage of total revenue (3.8) % 0.5 % (1.3) % The primary drivers of our income tax provision for 2024 were tax expense on income before income taxes and tax deficiencies from stock-based compensation due to a lower stock price at vesting of restricted stock units compared to the stock price upon grant.
General and administrative Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2023 2022 $ % 2021 $ % (in thousands, except percentages) General and administrative $ 343,242 $ 312,260 $ 30,982 9.9 % $ 282,531 $ 29,729 10.5 % Percentage of total revenue 12.5 % 12.2 % 12.1 % General and administrative expenses increased $31.0 million to $343.2 million in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to increased employee compensation-related expenses, including stock-based compensation.
General and administrative Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2024 2023 $ % 2022 $ % (in thousands, except percentages) General and administrative $ 353,949 $ 343,242 $ 10,707 3.1 % $ 312,260 $ 30,982 9.9 % Percentage of total revenue 12.6 % 12.5 % 12.2 % General and administrative expenses increased, primarily due to net unfavorable non-income tax items, including net favorable items in 2023 which did not occur in 2024, as well as retroactive non-income tax expense related to the digital services tax legislation in Canada, which was enacted on June 28, 2024 retroactive to January 1, 2022.
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.
Our primary Etsy marketplace is the global destination for unique, creative goods from independent sellers. It connects artisans and entrepreneurs with thoughtful consumers seeking items that reflect their tastes and values. We aim to create a virtuous cycle that benefits all of our stakeholders. Ultimately, our success is tied to our sellers; we make money when they do.
The growth in Services revenue was primarily driven by an increase of 16.9% in on-site advertising revenue, which represented a significant majority of the overall Services revenue growth. The increase in advertising revenue was primarily due to higher click volume on Etsy Ads.
The growth in Services revenue was primarily driven by an increase of 4.2% in on-site advertising revenue, primarily due to an increase in average price per click on Etsy Ads. Service revenue also increased, to a lesser extent, due to an increase of 14.8% in shipping label revenue, primarily due to the Depop marketplace.
Net cash used in financing activities was $656.5 million in the year ended December 31, 2023. This was primarily attributable to stock repurchases of $577.0 million and, to a lesser extent, payment of tax obligations on vested equity awards of $83.4 million. Net cash used in financing activities was $506.5 million in the year ended December 31, 2022.
The decrease in 2024 of $20.2 million, compared to the same period in 2023, was primarily due to a decrease in net purchases of investments. Net Cash Used in Financing Activities Net cash used in financing activities primarily consists of cash outflows from stock repurchases and payment of tax obligations on vested equity awards.
Beginning January 1, 2024, mobile GMS will no longer be reported as a key operating metric as it has largely stabilized and is not considered a key indicator of our performance. GMS ex-U.S. Domestic GMS ex-U.S. domestic (formerly referred to as Non-U.S.
As such, GMS ex-U.S. domestic is no longer reported as a key operating metric and beginning January 1, 2025 will not be disclosed. See Part I, Item 1, “Business—Overview” for more information.
(3) Net income (loss) margin is net income (loss) divided by revenue. (4) Consolidated active sellers and active buyers includes Etsy.com active sellers and active buyers of 7.0 million and 92.0 million, respectively, as of December 31, 2023 and excludes Elo7 active sellers and buyers for the year ended December 31, 2023.
(4) Consolidated active sellers and active buyers includes Etsy marketplace active sellers and active buyers of 5.6 million and 89.6 million, respectively, as of December 31, 2024. Consolidated active sellers and active buyers excludes Elo7 active sellers and buyers as of December 31, 2024 and 2023.
Asset impairment charges were $1.0 billion in the year ended December 31, 2022 related to the impairment of goodwill for Depop and Elo7. See Part II, Item 8, “Financial Statements and Supplementary Data—Note 7—Goodwill and Intangible Assets” and “Note 10—Property and Equipment” for more information. There were no asset impairment charges in the year ended December 31, 2021.
See Part II, Item 8, “Financial Statements and Supplementary Data—Note 6—Goodwill and Intangible Assets” and “Note 9—Property and Equipment” for more information.
For those agreements with variable terms, we do not estimate what the total obligation may be beyond any minimum quantities and/or pricing. In addition, we have uncertain tax positions of $51.7 million and non-income tax related contingency reserves of $26.2 million. These amounts are not reflected in the table as the ultimate resolution and timing are uncertain.
Purchase obligations primarily consist of the minimum, non-cancelable commitments as well as cancellation fees related to technology spending. For agreements with variable terms, we do not estimate what the total obligation may be beyond any minimum quantities and/or pricing.
Product development Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2023 2022 $ % 2021 $ % (in thousands, except percentages) Product development $ 469,332 $ 412,398 $ 56,934 13.8 % $ 271,535 $ 140,863 51.9 % Percentage of total revenue 17.1 % 16.1 % 11.7 % Product development expenses increased $56.9 million to $469.3 million in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to increased employee compensation-related expenses, including stock-based compensation, mainly driven by an increase in average headcount for the Etsy marketplace throughout the year and the issuance of equity awards as part of our compensation strategy, and partially due to restructuring and other exit costs associated with our workforce reductions in the fourth quarter of 2023.
Product development Year Ended December 31, Change Y/Y Year Ended December 31, Change Y/Y 2024 2023 $ % 2022 $ % (in thousands, except percentages) Product development $ 443,056 $ 469,332 $ (26,276) (5.6) % $ 412,398 $ 56,934 13.8 % Percentage of total revenue 15.8 % 17.1 % 16.1 % Product development expenses decreased, primarily due to decreased employee compensation-related expenses, including stock-based compensation.
We fund our non-U.S. operations from our funds held in the United States on an as-needed basis. We typically invest in short- and long-term instruments, including fixed-income funds and U.S. Government securities aligned with our investment strategy.
As of December 31, 2024, a majority of our cash and cash equivalents, short-term, and long-term investments balance was held in the United States. Our cash and cash equivalents are held for future investments, working capital funding, and general corporate purposes. We fund our non-U.S. operations from our funds held in the United States on an as-needed basis.
We also have the ability to draw down on a $400.0 million senior secured revolving credit facility (the “2023 Credit Agreement”).
As of December 31, 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.
GMS Gross merchandise sales (“GMS”) is the dollar value of items sold in our marketplaces, excluding shipping fees and net of refunds, within the applicable period. To provide consistency with our calculation of GMS, beginning in the first quarter of 2023, we are also reporting our mobile GMS and GMS ex-U.S. domestic as a percentage of GMS net of refunds.
GMS Gross merchandise sales (“GMS”) is the dollar value of items sold in our marketplaces, excluding shipping fees and net of refunds, within the applicable period. GMS does not represent revenue earned by us. GMS is largely driven by transactions in our marketplaces and is not directly impacted by Services activity.
The share of Etsy marketplace GMS processed through our Etsy Payments platform was 94% and 93% for the years ended December 31, 2023 and 2022, respectively. Services revenue increased $96.0 million to $751.2 million in the year ended December 31, 2023 compared to the year ended December 31, 2022.
As part of the payments expansion, the share of Etsy marketplace GMS processed through our Etsy Payments platform increased to 98% for 2024 compared to 94% for 2023. The net increase in payments revenue includes a decrease related to the decline in Etsy marketplace GMS in 2024 compared to 2023.
Net cash provided by operating activities was $705.5 million in the year ended December 31, 2023, primarily driven by cash net income of $729.2 million as a result of revenue generated on our platforms, and changes in our operating assets and liabilities that used $23.7 million in cash, primarily driven by timing of the payment of prepaid expenses and other current assets, partially offset by the timing of payment of accrued expenses in the period.
The increase in 2024 of $47.0 million, compared to the same period in 2023, was primarily due to timing of the payment of prepaid expenses and other current assets, partially offset by a decrease in cash net income.
No further impairment charges were recorded within our Etsy or Reverb reporting units as of our annual impairment test in the fourth quarter of 2022. During the years ended December 31, 2023 and 2021, we did not recognize any goodwill impairment. During the year ended December 31, 2022, we recognized total non-cash impairment charges of $1.0 billion.
No further impairment charges were recorded within our Etsy or Reverb reporting units as of our annual impairment test in the fourth quarter of 2022. See Part II, Item 8, “Financial Statements and Supplementary Data—Note 6—Goodwill and Intangible Assets” for further discussion and presentation of these amounts.
For more information on our Impact Investment Fund, see Part I, Item I, “Business—ESG Reporting: Our Impact Goals, Strategy & Progress.” 87 Table of Contents Sources of Liquidity We expect to continue to generate net positive operating cash flow, and the cash we generate from our core operations enables us to fund ongoing operations including those outlined in Part 1, Item 1, “Business—Primary Business Drivers.” As of December 31, 2023, we had three outstanding series of convertible senior notes, which collectively had a net carrying value of $2.3 billion.
In accordance with our investment policy, all investments, other than investments made through our Impact Investment Fund, have maturities no longer than 37 months, with the average maturity of these investments maintained at 12 months or less. 79 Table of Contents Sources of Liquidity We expect to continue to generate net positive operating cash flow, and the cash we generate from our core operations enables us to fund ongoing operations including investing in the areas outlined in Part I, Item 1, “Business—Primary Business Drivers.” We also have the ability to draw down on a $400.0 million senior secured revolving credit facility (the “2023 Credit Agreement”).
We also include restructuring and other exit costs in the applicable operating expense category of the impacted function. 80 Table of Contents Marketing: Marketing expenses primarily consist of direct marketing expenses, which largely includes digital marketing and television ad and digital video expenses.
Additionally, cost of revenue includes depreciation and amortization and third-party customer support services. 74 Table of Contents Marketing: Marketing expenses primarily consist of direct marketing expenses, which largely includes digital marketing and television ad and digital video expenses.
This increase was partially offset by a $157.2 million decrease in the volume of GMS on our marketplaces for the year ended December 31, 2023 compared to the year ended December 31, 2022, which was primarily driven by a decline in GMS for the Etsy marketplace, partially offset by an increase in GMS for the Depop marketplace.
These increases were partially offset by a decrease in transaction fee revenue due to a mix of volume and pricing, and primarily driven by a decline in GMS for the Etsy marketplace.
Debt obligations consist of the 2021 Notes, 2020 Notes, and 2019 Notes, which will mature on June 15, 2028, September 1, 2027, and October 1, 2026, respectively, unless earlier converted or repurchased.
Material Cash Requirements Our cash commitments as of December 31, 2024 were as follows (in thousands): Debt obligations $ 2,299,887 Interest payments 12,812 Finance lease obligations 145,859 Operating lease obligations 64,898 Purchase obligations 137,003 Total cash commitments $ 2,660,459 Debt obligations consist of the 0.25% Convertible Senior Notes due 2028 (the “2021 Notes”), the 0.125% Convertible Senior Notes due 2027 (the “2020 Notes”), and the 0.125% Convertible Senior Notes due 2026 (the “2019 Notes” and together with the 2021 Notes and the 2020 Notes, the “Notes”), which will mature on June 15, 2028, September 1, 2027, and October 1, 2026, respectively, unless earlier converted or repurchased.
As our Adjusted EBITDA increases, we are able to invest more in our platforms. We believe that Adjusted EBITDA and Adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business as they remove the impact of certain non-cash items and certain variable charges.
As our Adjusted EBITDA increases, we are able to invest more in our platforms.
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 providing them with access to tens of millions of buyers, we offer tools and services to help sellers grow. For buyers, we surface quality listings that offer great value and provide a reliable shopping experience. When buyers are satisfied, it fuels this cycle.
Removed
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.
Added
In addition to our core Etsy marketplace, our “House of Brands” consists of Reverb Holdings, Inc. (“Reverb”), our musical instrument marketplace acquired in 2019, and Depop Limited (“Depop”), our fashion resale marketplace acquired in 2021. Each Etsy, Inc. marketplace primarily operates independently, while benefiting from shared expertise in product development, marketing, technology, and customer support.
Removed
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.
Added
In 2024, sellers generated GMS of $12.6 billion. Total revenue was $2.8 billion in 2024, driven by growth in both Services and Marketplace revenue. In 2024, we recorded net income of $303.3 million and non-GAAP Adjusted EBITDA of $781.5 million.
Removed
(“Reverb”), our musical instrument marketplace, 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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAn adverse 10% change in foreign currency exchange rates would have resulted in a decrease to revenue of $111.1 million or approximately 4.0% of total revenue for the year ended December 31, 2023.
Biggest changeAn adverse 10% change in foreign currency exchange rates would have resulted in a decrease to revenue of $113.7 million or approximately 4.0% of total revenue for 2024. Additionally, a 10% adverse change in foreign currency exchange rates would result in a currency exchange loss of $30.7 million based on balance sheet balances as of December 31, 2024.
This compares to a revenue decrease of $97.2 million or approximately 3.8% of total revenue for the year ended December 31, 2022 and currency exchange loss of $9.5 million based on the same analysis performed on balance sheet balances as of December 31, 2022. 92 Table of Contents
This compares to a revenue decrease of $111.1 million or approximately 4.0% of total revenue for 2023 and currency exchange loss of $11.5 million based on the same analysis performed on balance sheet balances as of December 31, 2023. 83 Table of Contents
Removed
Additionally, a 10% adverse change in foreign currency exchange rates would result in a currency exchange loss of $11.5 million based on balance sheet balances as of December 31, 2023.

Other ETSY 10-K year-over-year comparisons