Etsy, Inc. CEO and CFO Discuss Growth Strategies and Market Position at JPMorgan Global Technology, Media and Communications Conference

Key Takeaways

TL;DR: Etsy's CEO & CFO emphasize resilience amid macro volatility, focusing on a differentiated marketplace (handmade/unique goods) with limited tariff exposure (1% China GMS). Strategic shifts to app-centric growth (44.5% app GMS), GenAI-driven personalization, and LT investments in quality/gifting are expected to drive GMS recovery. Take rate (~30%) stability, adj. EBITDA margins (~26%), and divestiture of non-core assets (Reverb) support profitability.

1. Macro Resilience & Tariff Exposure

• Limited Direct China Exposure: 1% of GMS from China-U.S. imports; 90% of sellers source supplies locally.
• Local Sellers Promoted: Tariff messaging highlights domestic sellers (U.S./EU) to ease buyer concerns.
• Consumer Behavior Stability: No material slowdown observed in discretionary spending (-6% Q1 GMS in line with guide).

2. Growth Strategy Pivot

• App-Centric Focus:
  • App GMS: 44.5% of total in Q1 (+↑ Y/Y; goal to migrate mobile web users).
  • Features: GenAI-powered “trends” (~200 curated), algotorial search, and gifting integration.
  • Personalization: Shift from conversion-centric UX to discovery-driven engagement (e.g., wedding/home categories).
• Quality Over Conversions:
  • Q-Score Algorithm: Rearchitected search to prioritize seller quality (customer reviews/shipping speed).
  • Growth Hacking Resumes: 1/3 eng. teams now focused on near-term conversion (~H2 benefit).

3. Competitive Differentiation

• Agentic AI Partnerships: Alpha partner with OpenAI/Copilot to leverage unstructured product data for LLM training.
• Avoiding "Race to Bottom": Emphasizes unique/customizable items (vs. commoditized SKUs on AMZN/Temu).
• Ads & Marketing:
  • Etsy Ads: Core driver of take rate (ML improvements); off-site ads expanding to social.
  • Full-Funnel Marketing: LLMs to target mid-funnel buyers (e.g., wedding planners) via Meta/YouTube.

4. Financial Outlook

• Take Rate Stability: ~30% (170bps growth past 2 yrs), driven by ads/payments; 2025 goal = flat.
• Margins: 2024 adj. EBITDA ~26%; 2025 GM ~low-70s (reinvesting in product vs. marketing).
• Asset Rationalization: Sold Reverb (niche, shrinking market); Depop (app-centric resale) retained as growth lever.