Q4 2023 Earnings Summary
Reported on Feb 18, 2025 (After Market Close)
Pre-Earnings Price$77.13Last close (Feb 21, 2024)
Post-Earnings Price$73.47Open (Feb 22, 2024)
Price Change
$-3.66(-4.75%)
- Etsy continues to demonstrate resilience and growth in a challenging macro environment, adding 8 million new buyers in the fourth quarter, with active buyers reaching a record 92 million. Despite pressures from discount retailers, the average buyer on Etsy is spending over 20% more than pre-pandemic, indicating strong customer loyalty and potential for growth as economic conditions improve.
- Etsy's Gross Merchandise Sales (GMS) per active buyer has stabilized, maintaining at $126 over the last four quarters, and remains 22% higher than in Q4 2019, showcasing the platform's ability to retain and engage buyers. This stability, even amidst macroeconomic headwinds, suggests that Etsy can capitalize on consumer spending when conditions improve.
- Strategic initiatives like enhancing search algorithms to elevate quality and uniqueness are expected to improve the buyer experience and drive growth. By developing an explainable AI model to rank sellers based on quality metrics, Etsy aims to create a "race to the top" among sellers, potentially unlocking significant value and differentiating itself from competitors.
- Etsy is experiencing slowing growth due to increased competition from large retailers and discount platforms, as consumers are favoring cheaper products and essentials sold by competitors like Amazon, Walmart, Temu, and Shein. Joshua Silverman stated that "people feel their wallet is under a lot of pressure... many people are looking for the cheapest way to buy something when they need to buy something that is discretionary," and noted that "almost everyone else is losing share to Amazon, Walmart, Temu and Shein."
- Average Order Values (AOVs) are declining, indicating increased price sensitivity among buyers, which could impact revenue growth. Joshua Silverman mentioned that "AOVs are down slightly... buyers are still coming and buying on Etsy. They're just even more price sensitive in this moment." This suggests that while transaction volumes may hold up, lower AOVs could negatively affect overall revenue.
- Etsy faces challenges in post-holiday consumer spending due to lacking offerings like gift cards and deep discounting strategies, limiting its ability to compete with big-box retailers during key periods. Rachel Glaser pointed out that "at Christmas time, people get a lot of gift cards. And today, Etsy doesn't have a gift card program... big-box stores are doing all their clearance right now... Etsy really wasn't in the game on those three areas and I think affected our January's GMS to some extent."