The documents indicate that Etsy’s cash and cash equivalents increased from **$741,958 thousand in Q3 2023** to **$914,323 thousand in Q4 2023** ( **[0001370637-23-000080_etsy-20230930.htm:5]** **[0001370637-24-000013_etsy-20231231.htm:169]** ). However, the only detailed explanation provided relates to the change from Q4 2023 to Q1 2024, where factors such as **stock repurchases, operating cash flow, investing activities, financing expenses, and exchange rate impacts** led to a decrease in cash ( **[20240501NY03162:6]** ). There is no specific discussion in the documents about what drove the significant jump in cash in Q4 2023.

What factors drove the significant jump in cash in Q4 2023?

The steep increase in total assets in Q4 2023 was primarily driven by several factors. **Long-term investments** rose significantly from **$29,137 thousand to $86,676 thousand**.  **[0001370637-24-000011_exhibit99112312023.htm:9]**  **Deferred tax assets** also increased from **$121,506 thousand to $137,776 thousand**  **[0001370637-24-000011_exhibit99112312023.htm:9]** , and there was a notable increase in **prepaid and other current assets** from **$80,203 thousand to $129,884 thousand**.  **[0001370637-24-000011_exhibit99112312023.htm:9]**  These increases more than offset reductions in intangible assets, net, and in restricted cash, collectively contributing to a net asset rise of **$50,439 thousand** in Q4 2023.  **[0001370637-24-000011_exhibit99112312023.htm:9]** 

What contributed to the steep increase in total assets in Q4 2023?

Total assets dropped notably in Q1 2024 primarily due to a decrease in current assets. **Cash and cash equivalents** fell from **$914,323 thousand** to **$788,837 thousand**, largely driven by significant **stock repurchases (~$158 million)**, along with net cash used in financing (**$163,014 thousand**) and investing (**$25,106 thousand**) activities. In addition, there were substantial reductions in **accounts receivable** (from **$24,734 thousand** to **$16,542 thousand**), **prepaid and other current assets** (from **$129,884 thousand** to **$104,633 thousand**), and **funds receivable and seller accounts** (from **$265,387 thousand** to **$239,532 thousand**), cumulatively leading to an overall decline of **$187,729 thousand** in total assets.  **[20240501NY03162:6]** **[0001370637-24-000028_exhibit991q12024.htm:7]** **[20240501NY03162:0]** 

Why did total assets drop notably in Q1 2024?

64941bda9f6bd8aa1a2e6c667ac46174bbefd672e9cf230b268fa659c9ca2eb4

The documents explain that Q1 2024’s operating cash flow of **$69,033 thousand** was driven by several factors. In Q1 2024, **net income declined** from **$74,537 thousand** (in Q1 2023) to **$63,004 thousand**, which negatively affected operating cash flows. At the same time, the cash impact from changes in operating assets and liabilities improved (using **$85,282 thousand** in Q1 2024 compared to **$110,274 thousand** in Q1 2023), and there were increases in both stock‐based compensation (from **$68,683 thousand** to **$70,683 thousand**) and depreciation and amortization (from **$23,172 thousand** to **$26,846 thousand**), which provided some support.  **[0001370637-24-000030_etsy-20240331.htm:29]** **[0001370637-24-000030_etsy-20240331.htm:7]**  However, while these factors explain changes relative to Q1 2023, the documents do not offer a definitive explanation as to why Q1 2024’s operating cash flow is relatively low compared to Q4 2023’s **$295,105 thousand**. Consequently, the provided information only partially addresses the underlying reasons for the low operating cash flow in Q1 2024.  **[0001370637-24-000030_etsy-20240331.htm:29]** **[0001370637-24-000030_etsy-20240331.htm:7]** 

Why was Operating Cash Flow so low in Q1 2024?

What explains the sharp decline in Free Cash Flow in Q1 2024?

8c85380a6e633285d29578e55eee58698a10fa2b928fc81afdcf91ad4ce51dd1

In Q4 2023, **Etsy’s significant revenue jump** stemmed from a confluence of factors. **Marketplace revenue increased by 2.6% year-over-year**, driven by higher payments revenue—thanks to a favorable mix of more international transactions with higher fee yields—along with growth in subsidiary payments fees and offsite ads revenue. Additionally, **services revenue surged by 9.4% year-over-year**, largely because of robust performance from Etsy Ads and improved ad relevance. This was further bolstered by a strong holiday performance in November and December, where improved GMS trends helped exceed revised guidance, contributing to the record quarterly revenue.  **[ETSY_3374494_6]** **[0001370637-24-000011_exhibit99112312023.htm:0]** 

What drove the significant jump in revenue in Q4 2023?

Marketing expenses spiked in Q4 2023 because Etsy increased its investments in brand awareness and holiday initiatives. The company raised its consolidated brand spending by **24% year-over-year**, launched targeted holiday campaigns that emphasized its role as a gifting partner, shifted funds to new channels and mid-funnel investments with social media partners, and executed a site-wide **Cyber Monday promotion** that further drove up marketing spending.  **[0001370637-24-000011_exhibit99112312023.htm:9]** **[ETSY_3374494_7]** **[0001370637-24-000013_etsy-20231231.htm:170]** 

Why did marketing expenses spike in Q4 2023?

Etsy’s turnaround in FY 2023 was driven by several key factors. **First**, the company recorded **significantly lower asset impairment charges** in FY 2023—down from over **$1.045 billion** in FY 2022 to **$68.1 million**—reducing a major one-time expense.  **[0001370637-24-000011_exhibit99112312023.htm:12]** **[0001370637-24-000013_etsy-20231231.htm:151]** **[0001370637-24-000013_etsy-20231231.htm:138]**  **Second**, there was **revenue growth** with total revenue increasing by **7.1%** year-over-year, highlighting stronger core performance.  **[0001370637-24-000011_exhibit99112312023.htm:2]** **[0001370637-24-000013_etsy-20231231.htm:149]**  **Third**, despite incurring **$26.6 million** in restructuring and exit costs as part of a workforce reduction plan, the overall impact was mitigated compared to the previous year’s large expenses.  **[0001370637-24-000011_exhibit99112312023.htm:12]** **[0001370637-24-000013_etsy-20231231.htm:138]**  **Fourth**, a **favorable shift in taxes** occurred, as a **$14.7 million income tax benefit** in FY 2023 replaced a **$32.3 million tax provision** in FY 2022.  **[0001370637-24-000013_etsy-20231231.htm:152]**  **Finally**, the company benefited from **lower operating expenses**—primarily due to the absence of the massive goodwill impairment charges that were present in FY 2022.  **[0001370637-24-000011_exhibit99112312023.htm:2]** **[0001370637-24-000011_exhibit99112312023.htm:9]** 

What factors contributed to the turnaround in net income in FY 2023?

The **Other (expense) income, net** turned negative in Q3 2024 primarily due to the **remeasurement of non-functional currency balances**, which shifted from a **noncash gain** in Q3 2023 to a **noncash loss** in Q3 2024. Additionally, there was a **decrease in interest and dividend income** caused by lower balances, further contributing to the negative outcome.  **[0001370637-24-000051_etsy-20240930.htm:32]** **[0001370637-24-000051_etsy-20240930.htm:35]** 

Why did the other expense/income turn negative in Q3 2024?

acdf480ba910ec9583d61409af2787ce58643bbdb6c4a8a2ac37a763624b9a2e

Net Income (USD, thousands)

Stock-based Compensation Expense (USD, thousands)

Depreciation and Amortization Expense (USD, thousands)

Provision for Expected Credit Losses (USD, thousands)

Deferred Benefit for Income Taxes (USD, thousands)

Asset Impairment Charges (USD, thousands)

Other Non-Cash (Income) Expense, Net (USD, thousands)

Net Cash Provided by Operating Activities (USD, thousands)

Purchases of Property and Equipment (USD, thousands)

Development of Internal-Use Software (USD, thousands)

Purchases of Investments (USD, thousands)

Sales and Maturities of Investments (USD, thousands)

Net Cash Used in Investing Activities (USD, thousands)

Payment of Tax Obligations on Vested Equity Awards (USD, thousands)

Repurchase of Stock (USD, thousands)

Proceeds from Exercise of Stock Options (USD, thousands)

Payments on Finance Lease Obligations (USD, thousands)

Other Financing, Net (USD, thousands)

Net Cash Used in Financing Activities (USD, thousands)

Effect of Exchange Rate Changes on Cash (USD, thousands)

Net Decrease in Cash, Cash Equivalents, and Restricted Cash (USD, thousands)

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period (USD, thousands)

Cash and Cash Equivalents at End of Period (USD, thousands)

10444c230268a4faee0368097984f5848cad10efdc96b68a7b8e4651539ff2dc

Cash and cash equivalents (USD, thousands)

Short-term investments (USD, thousands)

Accounts receivable, net of expected credit losses (USD, thousands)

Prepaid and other current assets (USD, thousands)

Funds receivable and seller accounts (USD, thousands)

Total current assets (USD, thousands)

Property and equipment, net of accumulated depreciation and amortization (USD, thousands)

Goodwill (USD, thousands)

Intangible assets, net of accumulated amortization (USD, thousands)

Deferred tax assets (USD, thousands)

Long-term investments (USD, thousands)

Other assets (USD, thousands)

Total assets (USD, thousands)

Accounts payable (USD, thousands)

Accrued expenses (USD, thousands)

Finance lease obligations—current (USD, thousands)

Funds payable and amounts due to sellers (USD, thousands)

Deferred revenue (USD, thousands)

Other current liabilities (USD, thousands)

Total current liabilities (USD, thousands)

Finance lease obligations—net of current portion (USD, thousands)

Deferred tax liabilities (USD, thousands)

Long-term debt, net (USD, thousands)

Other liabilities (USD, thousands)

Total liabilities (USD, thousands)

Total stockholders’ deficit (USD, thousands)

Total liabilities and stockholders’ deficit (USD, thousands)

fc4c48b82169570e97b44b46f6b51686c6bfd750c04347b52875e6098f888c43

Revenue (USD, thousands)

Cost of revenue (USD, thousands)

Gross profit (USD, thousands)

Marketing (USD, thousands)

Product development (USD, thousands)

General and administrative (USD, thousands)

Asset impairment charges (USD, thousands)

Total operating expenses (USD, thousands)

Income from operations (USD, thousands)

Other (expense) income, net (USD, thousands)

Income before income taxes (USD, thousands)

(Provision) benefit for income taxes (USD, thousands)

Net income (USD, thousands)

06864890ba3d2af504811428e1e9942d066b3f6536d55c4418e3be9d77f02e17

Gross merchandise sales - total (USD, in thousands)

Share of Etsy marketplace GMS processed through Etsy Payments platform (percentage)

Paid GMS as percentage of overall GMS (percentage)

Percent GMS ex-U.S. domestic (percentage)

Year-over-year change in New Buyer GMS (percentage)

New Buyer GMS as a percent of total GMS (percentage)

Year-over-year change in Existing Buyer GMS (percentage)

Existing Buyer GMS as a percent of total GMS (percentage)

Number of active sellers - Consolidated (thousands)

Number of active sellers - Etsy marketplace (thousands)

Number of active buyers - Consolidated (thousands)

Number of active buyers - Etsy marketplace (thousands)

Etsy marketplace GMS per active buyer on a trailing twelve month basis (USD)

7c5a5abff76249ef2a700b683b3cf3a25e4c942903b49cfee7cf6e06b7390a91

b68a22aa266f32867c1f7fdb0dca409fe5ab1573775bc4e2fecf3696cbf98484

United States

United Kingdom

All Other Countries

- International

Total Revenue

b5d61c8b457c73e5e73e533ad6834ee5bec279c36c2f0cc890392f51a616ab33

8663b1d02e3174fbff52969b9e32421f512f7a4f4817884691cbdc33aafa9fce

Marketplace

Services

Other

f173fb762d93aa29e256fd25b049671561b24251f417d0ae4250a13ac481e861

Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (CapEx) (USD, thousands)

Proceeds from / Repayments of Debt (USD, thousands)

Share Repurchases (USD, thousands)

Dividend Payments (USD, thousands)

Net Change in Cash (USD, thousands)

6d3a4ac1ab575e5bb369517e563cff5c20e19bc5a519c07b76b93b51640181e9

ETSY (ETSY)

Financials