Etsy Q4 2018 Earnings Call: We Take A Look At The Newsworthy Highlights

Etsy released earnings for Q4 2018 and full 2018 on Monday. The company had a phenomenal year and continues to grow the marketplace at a faster pace than most other eCommerce companies.

Here are the high-level takeaways from Etsy’s Q4 2018 and full 2018 earnings report:

• In the fourth quarter, GMS was up 22.3% year-over-year, revenue was up 46.8%, and adjusted EBITDA grew 47.5% (with a margin of 25.7%)

• For the full year, GMS grew 20.8%, revenue was up of 36.8%, and adjusted EBITDA rose 74.4%

• At the end of the year, Etsy’s community included 39.4 million active buyers and 2.1 million active sellers in nearly every country in the world

• GMS growth was primarily driven by our investment in product launches, marketing, and improved landing page experiences

During the earnings call, it became clear that increasing the number of sellers offering free shipping will be a focus for 2019.

Etsy also talked about expansion in India, but unlike other eCommerce news on India lately (ie Walmart, Amazon, eBay, etc.), this is to bring Indian made products to buyers outside of India.

Joshua Silverman – Chief Executive Officer

“…we believe Etsy’s growth was higher than the overall e-commerce market indicating that we’re gaining share in a very large and expanding addressable market. Our continued focus on improving the Etsy platform for sellers and buyers is paying off.”

“We worked with sellers to create a sense of urgency for buyers, made promotions more prominent and helped them offer more competitive shipping prices. Improvements such as estimated delivery dates, drive buyer confidence that their special items would arrive in time.”

“on Cyber Monday, we transacted nearly $19,000 in GMS per minute, our highest ever single-day performance.”

“Also, approximately one-third of items on Etsy were available to ship for free domestically during the holidays,…”

“TV is something that I know is of interest to many people. We did spend and invest in TV in the second half of 2018. And our learnings there are, in general, we’re pleased with what we saw.”

“…we’re proud of the fact that substantial majority of our traffic today does come to us for free, either people come into their web browser and typing in Etsy, launching the app, finding us on SEO, but quite a lot of it comes direct to Etsy.”

“…on free shipping, we haven’t published a goal for 2019… we think that we know that buyers prefer free shipping and that sellers win when they offer it in most cases. And so we’re going to be working hard to educate them about that and provide the right incentives to make that happen.”

“…international GMS grew at a rate faster than the core business. …even with all of the Brexit mania that’s happening, we had a robust Q4 in the UK. And in both the UK and Germany, those businesses are now more than 50% domestic businesses, meaning the buyer and the seller is in the UK or Germany respectively.”

“And now turning to India, we’re making some relatively small investments in India with a hugely talented team of folks on the ground to really drive some export activity there. And the insight is that India has a long history of wonderful craftsmanship and artisanal products and there’s big demand for them in other markets that we serve.”

“And for example, we find that when a buyer in – for example, the U.S. or the UK buys from someone in India, the lifetime value of that buyer goes up and we thought that was very encouraging and due to the nature of the Indian market, hiring people who can go village to village and actually help artisans to get online, and so, on Etsy, is actually cost effective in a way that it wouldn’t be in many other markets.”

“For example, mobile web is disproportionately newer users. And once people become really habitual buyers, so for example, habitual buyers disproportionately use the mobile app.”

“…16% of sellers have adopted Promoted Listings.”

Rachel Glaser – Chief Financial Officer

“As of December 31, 2018, Etsy had 2 million habitual buyers*, up nearly 22% compared to 2017…”

*Etsy defined habitual buyers as a group of people that have bought on six or more purchase days and spent $200 or more.

“We believe that shipping continues to be one of the areas of friction that we have in our shopping experience that we need to solve for.”

On an analyst’s question on employee count at Etsy, Rachel Glaser said “headcount 874”

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