Q1 2024 Etsy Inc Earnings Call

Joshua G. Silverman: positively impacting GMS, just not enough to offset the headwinds to our baseline business. I'm particularly pleased that our leaner and more nimble Etsy Marketplace product development organization was off to the races. We had double-digit growth in the number of experiments per product engineer that led to machine learning, as well as in our annualized gross GMS from experiments. And the total number of experiments run per engineer increased 20%.

If the parents positively impacting gms.

Not enough to offset the headwinds to our based upon business performance.

I'm, particularly pleased that our leaders.

Our nimble marketing product development and organizational after.

He had doubled.

But from the number of.

Right.

Speaker Change: Good morning.

Well in our annualized growth came from experiment.

Speaker Change: Number of expiring.

Speaker Change: <unk>.

Joshua G. Silverman: Some of this progress can be directly tied to work we told you about last year to democratize machine learning. These metrics give me confidence that the bold moves to improve the customer experience can build over time and play a key role in getting Etsy growing again. Our marketing team also kicked into high gear, outsourcing Etsy pay search efforts and scaling mid-funnel, expanding our product feed testing across PLA and paid social to improve the quality of inventory we're showing users, and developing engaging and creative full funnel activations across channels.

20%.

Speaker Change: So what is the progress can be directly tied to the portal.

Speaker Change: To democratize M L E.

Speaker Change: Metrics gives me confidence the bold moves to improve customer experience 10 build overtime and keep growing.

Speaker Change: Growing again.

Our marketing team also.

Speaker Change: In sourcing.

Speaker Change: Charles.

Speaker Change: Scaling that.

Speaker Change: Extending our product feed testing cost P L a and paid social to improve the quality of inventory showing users.

Speaker Change: And the valent engaging and creative fulfilled divisions across channels.

Joshua G. Silverman: Our key focus for 2024 is to continue to build consideration for Etsy to help buyers think of us more often by making it easier to find the best stuff, driving association that there are great deals on Etsy, and making shopping on Etsy more convenient. We believe that changing buyer perceptions is eminently achievable, making us more of a go-to shopping destination. And we've made excellent progress kicking off bold initiatives to do just that.

Speaker Change: Our focus for 2024 is to continue build consideration for etsy to help buyers think of us more often by making it easier to find that's.

Speaker Change: Driving association.

Speaker Change: Right deal on Etsy, and making shopping on etsy more convenient we believe the changing by our perceptions is eminently achievable, making us more of a go to shopping destination and we've made excellent progress kicking off bold initiatives to do just that.

Joshua G. Silverman: Thanks to the great work our product team did on the initial launch of gift mode, creative and engaging marketing campaigns to raise awareness of Etsy as a key gifting destination. We're off to a good start evolving Etsy from being one of the places you can go to find, toward being the indispensable partner for all of your gifting missions, gift mode is by far the most unique and varied subset of inventory we've ever curated and shown on Etsy, organized around a set of good idea, just items in order to help you feel like you're shopping for a person and not a, We're pleased to report that Etsy's total sitewide gifting GMS in the first quarter grew in the low single digits year over year, significantly outpacing our sitewide performance and data we're tracking for select US online gifting focused peers who all saw year over year decline.

Speaker Change: Thanks to the great work our product team did on the initial launch of.

Speaker Change: Mode.

Speaker Change: With creative and engaging marketing and raise awareness of Etsy is key gifting destination, we're off to a good start evolving etsy from being one of the places you can go find a gift towards being lead spendable.

Speaker Change: All of your existing men's.

Speaker Change: Gift mode is by far the most unique and varied subs have inventory.

Speaker Change: Yeah.

Speaker Change: Ever created and shown on that.

Speaker Change: We're organized around a set of peers.

Speaker Change: In order to help you feel like you're shopping for a person and not a thing.

Speaker Change: We're pleased to report that Etsy is total supply gifting Josh first.

Speaker Change: The first quarter grew in low single digits year over year significantly outpacing our site wide performance and data we're tracking for select U S online gifting peers, who also up year over year declines, we're seeing quarter over quarter increases in U S consumer Christian that Etsy is making it easy to find great.

Joshua G. Silverman: We're seeing quarter over quarter increases in US consumer perceptions that Etsy is making it easy to find great gifts, a key gift mode value. And importantly, our research tells you that gift mode expands by our understanding of the breadth of our offer. They're helpful, as, of course, we're about more than just gifts.

Speaker Change: Yeah.

Speaker Change: A key gift modality.

Speaker Change: And importantly.

Speaker Change: Tells you that gift <unk> by our understanding of the breadth of our offering there Paul of course, we're up.

Joshua G. Silverman: We utilized full final marketing strategies to tell the world there was something new at Etsy, such as securing the most visible advertising and Football's Big Game, making an estimated 100 million plus impressions. Giftmode's launch generated over four times as many news articles as any of our prior consumer PR campaigns, and we had an over 200% increase in conversation volume around Etsy and gifting on our social channels compared to this time last year.

Speaker Change: Just gifts.

Speaker Change: We utilized full funnel marketing strategy couple of warfare was something new at Etsy, such as securing the most visible advertising business.

Speaker Change: Mission and football's Big game, making an estimated 100 million plus impressions gift modes launch generated over four times as many news articles as any of our prior consumer PR campaigns, and we had an over 200% in recent conversation volume around etsy, and gifting and our social channels.

Joshua G. Silverman: As we've said before, this was a kickoff, not the mic drop, and we're in the early days of driving brand awareness to make Etsy more top of mind for gifts. We've got a robust roadmap for gift mode to improve the experience and get more buyers into the funnel, from recently optimized gift teasers to additional gifty profiles, reminders, video and audio message capabilities, and new occasion pages, and much more.

Speaker Change: Paired to this time last year as we've said before this was a kickoff not my problem and we're in the early days of driving brand awareness to make etsy more top of mind for gifts. We've got a robust roadmap for gift mode to improve the experience and get more buyers into the funnel from recently optimized gift.

Speaker Change: Teasers to additional Giftee profiles reminders video and audio message capabilities, and a new occasion pages and much more turning to our quality focused initiative. When we will present, a tremendous unlock to drive by our consideration we stand for keeping commerce human.

Joshua G. Silverman: Turning to our quality focus, which we believe represents a tremendous unlock to drive our consideration, we stand for keeping commerce and believe that doing this in a way that no one else can is our most important competitive advantage. We're focused on creating cleaner shopping aisles for buyers. All too often, when you visit Etsy, your search is cluttered, showing you too many items that feel very similar, increasing cognitive load while failing to highlight the incredible diversity that is a towering strength for Etsy.

Speaker Change: And believed that doing this in a way that no one else can is our most.

Speaker Change: Important competitive advantage, we're focused on creating cleaner shopping Isles for buyers.

Speaker Change: Too often when you visit Etsy your shirt searches cluttered, showing you too many items that you'll be similar <unk>.

Joshua G. Silverman: In addition, you might not be clear as to why each of these items belong on it, for example, which are handmade by the seller themselves, which are designed by the seller but produced in close collaboration with the production partner, and or which are personalized and customized by the buyer. While there's demand on Etsy for each of these categories of items, it depends a great deal on the buyer's shopping experience.

Speaker Change: Creasing cognitive load, while failing to highlight the incredible diversity that has a towering strength for Etsy. In addition, you might not be clear as to why each of these items belong on Etsy for example, which are handmade by the seller themselves, which are designed by the seller, but it's in close collaboration with a production partner.

Speaker Change: <unk>, which are personalized and customized by the seller.

Joshua G. Silverman: With the tremendous growth in sellers and inventory we've experienced over the last few years, this challenge has gotten all the more real and compelling. The great news about this challenge is that large language models and Gen AI techniques provide so much opportunity for Etsy to better understand both the shopping mission you're on as well as our inventory and show you the best stuff in ways we couldn't have imagined just a few years ago. This year, we're going on the offense in an even bigger way to make sure Etsy lives up to our promise, from an inventory and quality perspective, in these four key focuses.

Speaker Change: While there is demand on etsy for each of these categories of items it depends a great deal on the buyer's shopping mission.

Speaker Change: With the tremendous growth in sellers and inventory we've experienced over the last few years. This challenge has gotten all the more real and complex.

Speaker Change: The great news about this challenge.

Speaker Change: Large language models and Jenny I techniques provide so much opportunity for etsy to better understand both the shopping mission you're on as well as our inventory and show you the best stuff in ways. We couldn't have imagined just a few years ago.

Speaker Change: This year, we're going on the offense and an even bigger way to make sure etsy lives up to our promise from inventory and quality perspective, along these four key focus areas first we're doing more than ever to suppress and remove listings that violate our policies and advances in ml.

Joshua G. Silverman: First, we're doing more than ever to suppress and remove listings that violate our policies, and advances in ML have been particularly powerful as enablers. In the first quarter, we removed about 115% more listings for violating our handmade policy than in the prior year.

Speaker Change: Powerful as enablers here and.

Speaker Change: In the first quarter, we removed about 115% more listings for violating our handmade policy than in the prior year.

Joshua G. Silverman: And you've heard us talk about the violative view rate by our views of listings that violate our handmade policy are now just a few percentage points of total sales. Our improved enforcement capabilities have resulted in the cumulative removal of millions of listings and tens of thousands of active sellers. While there's a strong replacement factor to fill in for any removal of seller listings on our marketplace, we estimate that the heightened level of takedowns we've initiated over the last six to nine months has represented about a 50 basis point headwind on our annualized GMS.

Speaker Change: And you've heard us talk about the violative view.

Speaker Change: By our views of listings that violate our handmade policy are now just a few percentage points of total listing views our improved enforcement capabilities.

Speaker Change: Resulted in accumulative removal of millions of listings and tens of thousands of active sellers, while theres a phone replacement factor to fill in for any removal of seller listings on our marketplace. We estimate that the heightened level of takedowns, we've initiated over the last six to nine months has represented about a 50 basis point headwind to our annualized <unk>.

Joshua G. Silverman: We see this as a very important investment in our future with significant progress made, but still more to do to keep making Etsy different and special and even more Etsy. Second, we need to elevate listings that represent the best of Etsy. Over the past several years, we've dramatically improved our search relevance, ensuring that buyers can more easily find what they're looking for. We believe there's a huge opportunity to build on this work by factoring attributes such as the quality of the listing and photography, shipping price and reliability, and customer reviews into our organic search algorithm.

Speaker Change: We see this as a very important investment in our future with significant progress made but still more to do to keep making etsy different and special and even more FC.

Speaker Change: Second we need to elevate listings that represent the best of Etsy over the past several years, we've dramatically improved our search relevance ensuring that buyers to more easily find what they're looking for we believe that a huge opportunity to build on this work by factoring attributes such as the quality of the listing and.

Speaker Change: Photography, Xing place in reliability and customer reviews into our organic search all of them.

Joshua G. Silverman: All of this will help buyers find something that's not only relevant, but will also lead to a purchase experience they're likely to love. We also want to empower sellers through transparency and education so they know exactly what actions they can take to improve their visibility, creating opportunity for more sales on it. And the third and fourth items on this slide, curation and organization, work together to do an even better job showing the newest and best merchandise available from sellers on Etsy, whether through home and landing page experiences, category shopping, initiatives like gift mode, our deals tab, and more.

Speaker Change: All of this will help buyers find something that is not only well event, but will also lead to a purchase experience theyre likely to love.

Speaker Change: We also want to empower sellers through transparency and education. So they know exactly what actions they can take to improve their visibility creating opportunity for more sales on etsy.

Speaker Change: And the third and fourth items on this slide duration and organization worked together to do an even better job showing the newest and best merchandise available from sellers on Etsy.

Speaker Change: Other who home and landing page experiences category shopping initiatives like gift mode, our deals tab and more while we've made incredible strides directed search on Etsy, we have a very significant opportunity to focus more on window shopping.

Joshua G. Silverman: While we've made incredible strides in directed search on Etsy, we have a very significant opportunity to focus more on window shopping, creating engaging buyer experiences to spark your imagination, capture impulse buys, get to know your tastes and preferences better, and expand your understanding of the breadth of products available on Etsy. This is an area where we intend to fight much harder, making Etsy more fun, engaging, inspiring, and surprising. We want you to come to Etsy when you have five minutes to spare just to be entertained. She'll come back to us again and again.

Speaker Change: Quitting gauging by our experience with spark your imagination capture impulse clients get to know your tastes and preferences better.

Speaker Change: And expand your understanding of the breadth of products available on it. This is an area, where we intend to fight much harder, making etsy more fun engaging inspiring surprising.

Speaker Change: We want you to come to Etsy, when you have five minutes to spare just to be entertained she'll come back to us again and again and.

Joshua G. Silverman: And I'm confident that with our sellers' incredible merchandise, our large buyer base, brand strength, and our team's creativity, we can make this happen. But it's imperative that we continue to widen the gap between Etsy's offering and that of the competition so that our site always feels inherently different, fresh, special, and even more human. Better organizing our diverse listings into cleaner aisles will declutter our site, enable buyers to find something they love with less friction, and keep them coming back.

Speaker Change: And I am confident that with our sellers incredible merchandise, our large buyer base brand strength and our teams creativity, we can make this happen.

Speaker Change: It's imperative that we continue to widen the gap between Etsy is offering and that of the competition. So that our site always feels inherently different fresh special and even more human.

Speaker Change: Better organizing our diverse listings in the cleaner aisles will declutter our site enable buyers to find something they love with less friction and keep them coming back we believe that supporting small businesses.

Joshua G. Silverman: We believe that supporting small business and Shopping Unique Goods are our strongest levers to get buyers to think of Etsy more often. We're planning to be quite loud about it, reestablishing our point of differentiation in a clear and compelling way. We're also making great progress in our other key focus areas to drive buyer consideration, highlighting great value and reliability. In keeping with the times, during the first quarter, we promoted special and hot deals from our sellers, with discount-related signals continuing to drive significant GMS impact.

Speaker Change: And shopping unique goods are our strongest letters to get buyers to think of etsy more often we're planning to be quite loud message reestablishing our points of differentiation and clear and compelling ways.

Speaker Change: We're also making great progress in our other key focus areas to drive buyer consideration highlighting great value and reliability in keeping with the times during the first quarter, we promoted special and hot deals from our sellers with discount related signals continuing to drive significant Gms we all.

Joshua G. Silverman: We also introduced new functionality for sellers, such as a growth page with customer insights they can use to inform actions to grow their business, such as a new earnings calculator to assist sellers in understanding the various inputs that go into their profitability. In terms of shipping timeliness, I'm pleased to report that our initiative to tighten estimated delivery dates, which we believe is an important effort to improve buyer perceptions of our reliability, as well as to grow GMS, is already paying off.

Speaker Change: <unk> introduced new functionality for sellers, such a growth page with customer insights that they can use to inform actions to grow their business such as a new earnings calculator to assist sellers and understanding the various inputs that go into their profitability.

Speaker Change: In terms of shipping timeliness I'm pleased to report that our initiative to tightened estimated delivery date, which we believe are an important effort to improve buyer perceptions of our reliability as well as grow gms are already paying off.

Joshua G. Silverman: Our fulfillment team recently launched a new machine learning model which reduced our estimate of USPS transit times by greater than one day, resulting in a nearly tripling of the percentage of eligible orders for which Etsy is now able to show an estimated delivery date of seven days or less. Consideration is all about inflecting the curve to capture more new buyers and to help browsers convert to sales to engage our existing active buyers, half of whom still only shop on Ets Within this framework, it's a very compelling opportunity to further expand the usage of our Buy on Etsy app.

Speaker Change: Our fulfillment team recently launched a new machine learning model, which reduced our estimate of USPS transit times by greater than one day, resulting in a nearly tripling of the percentage of eligible orders for which Etsy is now able to show an estimated delivery date of seven days or less.

Speaker Change: Having consideration is all about inflicting a curve to capture more new buyers and to help browsers convert to sales to engage our existing active buyers have a home still only shop on etsy, one time per year and to retain reactivate more buyers every year.

Speaker Change: Working to get another bite at the Apple with our more than 100 million lap expires within this framework, it's a very compelling opportunity to further expand usage of our buy on etsy app since purchasing days per app user.

Joshua G. Silverman: Since purchasing days per app user are 75% higher than our non-app, and only 45% of active buyers use our app. We've set some ambitious goals for 2024 to increase user penetration of our app and drive incremental downloads, including strategies to improve how and where we show the app download prompts, increasing the reach and effectiveness of our push messages, and improving the experience for first time app users. We have massive pools of buyers to fuel these strategies and are excited about the road ahead.

Speaker Change: 75% higher than our.

Speaker Change: Non app users and 145% of active buyers use our app. We've set some ambitious goals for 2024 to increase user penetration of our app and drive incremental downloads, including strategies to improve how and where we show the app download prompts increasing the reach and effectiveness of our push messages and improve.

Joshua G. Silverman: Owning our own destiny, particularly as some top search engines have lost a bit of their potency to drive traffic for e-commerce players, is an important priority. In closing, while so far 2024 is still proving to be a cyclically challenging period for us, rest assured that we are clear-eyed about what we need to accomplish to set Etsy back on a growth path. We're confident we're working on areas that will positively impact Etsy in the months and years ahead.

Speaker Change: The experience for first time App users.

Speaker Change: We have massive pools buyers fueled these strategies and are excited about the road ahead owning our own destiny, particularly as some top search engines lost a bit of a potency to drive traffic E. Commerce players is an important priority for us.

Speaker Change: In closing, while so far 2024 is still proving to be a cyclically challenging period for us rest assured that we are clear eyed about what we need to accomplish to set etsy back on a growth path. We're confident we're working on areas that will positively impact etsy in the months and years ahead.

Joshua G. Silverman: We're leaning in more than ever to what makes Etsy Etsy. We are not deterred. And, as I've said to some of you, proving doubters wrong is frankly quite energizing. Even as I celebrate my seventh anniversary this month, I remain encouraged that we still have so many opportunities. I'll now turn the call over to Josh.

Speaker Change: We're leaning in more than ever to what makes etsy Etsy, we are not deterred and as I've said to some of you proving doubters wrong is probably quite energizing for us even as I celebrate my seventh that diversity of this month I remain encouraged that we still have so many opportunities to grow.

Rachel C. Glaser: Thanks, Josh, and thank you, everyone, for joining our first quarter call. My commentary today will cover consolidated results, key drivers of performance, and Etsy marketplace standalone results where appropriate. As a reminder, we divested ELO 7 on August 10th, 2023. So please take that into consideration when you compare year over year for consolidated results. Etsy's first quarter 2024 consolidated GMS was $3 billion, down approximately 3.7% year-over-year with a 40 basis points FX benefit.

Speaker Change: I'll now turn the call over to Rachel.

Rachel: Thanks, Josh and thank you everyone for joining our first quarter call I.

Rachel: My commentary today will cover consolidated results key drivers of performance and Etsy marketplaces, Standalone results, where appropriate as a reminder, we divested seven on August 10, 2023. So please take that into consideration when you compare year over year for consolidated results.

Rachel: It's just first quarter 2024, consolidated Gms, a $3 billion down approximately three 7% year over year with 40 basis points FX benefits revs.

Rachel C. Glaser: Revenue increased a bit year over year to $646 million, and our adjusted EBITDA of $168 million was in line with expectations and roughly similar to last year. Note that ELO 7's divestiture resulted in small headwinds to GMS and revenue growth in the quarter, but was modestly accretive to our consolidated adjusted EBITDA margin.

Rachel: Revenue in a year over year to $646 million.

Rachel: And our adjusted EBITDA of $168 million was in line with expectations and roughly similar to last year.

Speaker Change: Note that even though Stephens divestiture resulted in a small headwind to gms and revenue growth in the quarter, but was modestly accretive to our consolidated adjusted EBITDA margin.

Rachel C. Glaser: While strong external headwinds pressured Etsy Marketplace's GMS trends throughout the first quarter, solid year-over-year GMS growth at our subsidiaries provided a tailwind to consolidated results. Our $2.6 billion in Etsy marketplace GMS represented a 5.3% decline on a year-over-year basis. I'll cover this in more detail later.

Speaker Change: Our strong external headwinds crush etsy marketplace, the CNS trends throughout the first quarter solid year over year Gms growth at our subsidiaries from a tailwind to consolidated results.

Speaker Change: Our $2 $6 billion in etsy marketplace en masse, representing a five 3% decline on a year over year basis.

Rachel C. Glaser: Within our consolidated year-over-year revenue growth of 0.8%, consolidated marketplace revenue was flat, with growth in payments and off-site ads revenue offset by declines in transaction fees given lower GMS this quarter. We had a nominal benefit related to our new seller, Setup the Experiment, launched in late February. Part of our efforts.

Speaker Change: I'll cover this in more detail later.

Speaker Change: Within our consolidated year over year revenue growth of 8% consolidated marketplace revenue was flat with growth in payments and Offsite ads revenue offset by declines in transaction fees, given lower Gms this quarter.

Rachel C. Glaser: This fee is meant to introduce healthy friction into our process, facilitating enhanced security checks and continued support for new shops. Tests indicate it resulted in an expected decrease in new shop openings and a significant decline in fraud attempts. Based on this successful outcome, we rolled it out in all eligible countries in early April.

Speaker Change: Nominal benefit related to our newest stellar set up the experiment launched in late February part of our efforts.

Speaker Change: Etsy safe and secure.

Speaker Change: This is meant to introduce healthy friction into our process facilitating enhanced security checks and continued support for new shops.

Speaker Change: <unk> indicated it resulted in an expected decrease in new shop openings and a significant decline in Friday attempts based.

Rachel C. Glaser: Consolidated services revenue increased 3%, with our ad platforms being the primary contributor. During the quarter, we continued to enhance Etsy ads, including refinements to our data retrieval engines that improved conversion predictions and the pace of spend for sellers' ad budgets throughout the day. First quarter 2024 consolidated take rate was 21.6%, slightly ahead of guidance and above the 20.7% reported in the first quarter of last year.

Speaker Change: Based on this successful outcome, we rolled it out in all eligible countries in early April.

Speaker Change: Consolidated services revenue increased 3% with our AD platforms being the primary contributor.

Speaker Change: During the quarter, we continued to enhance etsy ads, including refinements to our data retrieval engines that improves conversion predictions and the pace of spend for sellers AD budgets throughout the day.

Speaker Change: First quarter 2024 consolidated take rate was 21, 6% slightly ahead of guidance and above the 27% reported in the first quarter of last year.

Rachel C. Glaser: Our first quarter consolidated adjusted EBITDA margin was 26% in line with our guidance, down 60 basis points from last. The Games leveraged year-over-year on employee costs and a variable cost of revenue, offset by higher marketing expense, primarily from our big-game advertising. Our subsidiaries represented an approximately 300 basis point headwind to our consolidated adjusted EBITDA margin. We're encouraged that our efforts to effectively manage our cost structure and look for efficiencies are helping us to make important investments while also delivering very healthy profitability through this challenging environment for our discretionary. During the first quarter, consolidated product development spend decreased 5% year over year to $110 million, primarily as a result of our December Etsy marketplace restructuring.

Speaker Change: Our first quarter consolidated adjusted EBITDA margin was 26% in line there.

Speaker Change: Guidance down 60 basis points from last year, the Gainesville that range year over year unemployed cost and variable cost of revenue offset by higher marketing expense, primarily from our big game advertising.

Speaker Change: Our subsidiaries represented an approximately 300 basis point headwind to our consolidated adjusted EBITDA margin.

Speaker Change: We're encouraged that our efforts to effectively manage our cost structure and look for efficiencies are helping us to make important investments while also delivering very healthy profitability even in this challenging environment for our discretionary goods.

Speaker Change: During the first quarter consolidated product development spend decreased 5% year over year to $110 million, primarily as a result of our December etsy marketplace restructuring. So we are in fact gain leverage on this P&L line as you can see from this slide.

Rachel C. Glaser: So we are, in fact, gaining leverage on this P&L line, as you can see from this slide. Our first quarter consolidated headcount was approximately 2400, down 15% on a year-over-year basis. For the Etsy marketplace, headcount was down approximately 9% year over year to a bit under 1800, with revenue per headcount increasing about 2% year over year. We continue to make deliberate and judicious decisions related to our hiring, focused on selective skills and the very best talent for our significant opportunity ahead.

Speaker Change: Our first quarter consolidated head count with approximately 2400 down 15% on a year over year basis for.

Speaker Change: For the Etsy market play, it's head count was down approximately 9% year over year to a bit under 1800 with revenue per head count increasing 2% year over year.

Speaker Change: We continue to make deliberate and judicious decisions related to our hiring focus on selective skill and the very best talent for a significant opportunity ahead.

Rachel C. Glaser: First quarter consolidated marketing spend increased 12% year over year to $192 million, largely driven by a 59% year over year increase in our consolidated brand spend, primarily related to our above the line big game campaign in support of the Etsy marketplaces launch of gift. Our consolidated performance marketing spend increased 2% year over year. Performance Marketing was a headwind for January as we conducted core channel optimization. And it then became a tailwind in both February and March as we expanded Etsy marketplace product feeds testing across PLA and paid social and scaled up push, notifications, and mid funnel investments to diversify our marketing portfolio. Etsy Marketplace paid GMS was about 20% of our total, similar to our normal trend line. Moving to the Etsy Marketplace GMS environment.

Speaker Change: First quarter consolidated marketing spend increased 12% year over year to $192 million, largely driven by a 59% year over year increase in brand.

Speaker Change: Brands spend primarily related to our above the line Big game campaign in support of the Etsy marketplaces launch of gift smoke.

Speaker Change: Our consolidated performance marketing spend increased 2% year over year.

Speaker Change: Its marketing was a headwind for January as they conducted core channel optimization, and then became a tailwind in both February and March as they expanded etsy marketplace product scenes testing across P. L. A in paid social and scaled up quick.

Speaker Change: The vacations and mid funnel investments.

Speaker Change: Diversify our marketing portfolio mix.

Speaker Change: The marketplace paid Gms was about 20% of our total similar to our normal trend line moving to etsy marketplace Gms and biometrics.

Rachel C. Glaser: Etsy Marketplace GMS declined 5.3% in the first quarter, with the negative trends we experienced in January and February continuing through March. While we saw positive GMS impact from our product and marketing initiatives in the quarter, and we were really pleased with the performance here, our baseline GMS levels continued to be pressured by macro factors, specifically related to consumer discretionary product spending, that made it harder than we expected to bend the curve, which was disappointing. More on that in a moment.

Speaker Change: C marketplace came out find five 3% in the first quarter with the negative trends, we experienced in January and February continuing through March.

Speaker Change: While we saw positive G M S impact from our product and marketing initiatives in the quarter and we were really pleased with the performance here our baseline TNF levels continued to be pressured by macro factors, specifically related to consumer discretionary products spending that made it harder than we expected to bend the curve, which was disappointing.

Rachel C. Glaser: Further, we saw greater than expected volatility around the timing shift of Easter from April to March. Consequently, this was a headwind for March. It has also provided a helpful tailwind for April, which I'll cover in our Qt guide. Diving in a bit further on the consumer discretionary headwinds we are seeing, particularly in our categories, these two charts are probably the most informative to help us explain the overall GMS pressure we've been experiencing.

Speaker Change: More on that in a moment.

Speaker Change: Further we saw greater than expected volatility around the timing shift of Easter from April to March well. This was a headwind to March is also provided a helpful tailwind for April.

Rachel C. Glaser: On the left, you can see the steady decline in U.S. consumer discretionary spending as a percentage of total personal consumption expenditures, including through the first quarter of 2024, which supports our belief that much of our deceleration in the quarter was in line with the larger trend for discretionary goods. And on the right, you can see that Consumer Edge is pure play, pure sales data for our top six categories in Q1, with low to mid single-digit declines in every category except for craft supplies, which had a slightly positive. These headwinds were stiffer than we had been anticipating when we set guidance for the quarter.

Speaker Change: Which I'll cover in our Q2 guidance diving in a bit further against consumer discretionary had been so you're seeing particularly in our categories. These two charts are probably the most informative to help us explain the overall gms pressure we've been experiencing.

Speaker Change: On the left you can see the steady decline in U S consumer discretionary spending as a percentage of total personal consumption expenditures, including during the first quarter of 2020 for.

Speaker Change: Which supports our belief that much of our deceleration in the quarter was in line with the larger trend for skip discretionary goods.

Speaker Change: And on the right you can see that consumer just pure play peer sales leader for our top six categories in Q1 with low to mid single digit declines in every category, except for craft supplies, which had a slightly positive results.

Rachel C. Glaser: Here you can see that Etsy Marketplace GMS was down across the board in our top 10. When we map our performance to the Consumer Edge data on the prior slide, we believe that we perform similarly, if not better, than peers in four of our six categories, Home and Living, Apparel, Paper and Party Supplies, and Toys and Games, and we underperformed a bit in Jewelry and Craft Supplies. But overall, we see this as a tale of broad weakness in the types of merchandise we sell. We'd encourage you to remember that this comparison is a bit of apples to oranges and that Etsy sellers generally have not raised prices in keeping with inflation, as pure retailers do.

Speaker Change: Wins were differ than we had been anticipating when we set guidance for the quarter.

Speaker Change: Here, you see that Etsy marketplace Gms was down across the board in our top cap.

Speaker Change: Okay great.

Speaker Change: Our performance to the edge data on the prior slide we believe that we perform slowly if not better than peers in four of our six categories home and living apparel paper and party supplies and toys and games, we underperformed a bit in jewelry and craft supplies that.

Speaker Change: But overall, we see this as a tale of broad weakness in the types of merchandise T cell.

Speaker Change: We'd encourage you to remember that this comparison is a bit of apples to oranges in that etsy sellers generally have not taken up prices are keeping pushing as peer retailers do.

Rachel C. Glaser: Consistent with the macro pressure we experienced in the US, Etsy marketplace GMS, excluding US domestic, declined 1.5% from the prior year, with particular weakness on a year over year basis in our top markets of the UK and Germany. We did see growth in Switzerland, Austria, and the Netherlands, while our U.S. domestic GMS continues to decline. China On a year over year basis, we are seeing healthier performance in our US import trade route, with a high percentage share of imports from sellers in the UK, Canada, and Turkey.

Speaker Change: Consistent with the macro pressure experienced in the U S Etsy marketplace Gms, excluding U S. Domestic declined one 5% from the prior year with particular weakness on a year over year basis in our top markets of the UK and Germany we.

Speaker Change: We did see growth in Switzerland, Austria, and the Netherlands.

Speaker Change: While our U S domestic gms continues to do fine.

Speaker Change: On a year over year basis, we are seeing health care performance in our U S import trade group with high percentage share of imports from sellers in the UK, Canada and Turkey.

Rachel C. Glaser: It's quite encouraging that Etsy marketplace active buyers grew 2% on a year over year basis, roughly flat to the fourth quarter at about 92 million active buyers. U.S. active buyers have grown a bit now on a year-over-year basis for three consecutive quarters, and we continue to see healthy additions outside the U.S. We reactivated over 6 million lapse buyers, up 6% year over year, and we added nearly 6 million new buyers in the first quarter, down year over year, but still a very healthy proof point in this type of macro climate, well above pre-pandemic Habitual buyers decreased by 3% year over year.

Speaker Change: It's quite encouraging that etsy marketplace active buyers grew 2% on a year over year basis, roughly flat to the fourth quarter at about 92 million active buyers.

Speaker Change: U S active buyers have grown a bit now on a year over year basis for three consecutive quarters, and we continue to see healthy additions outside the U S.

Speaker Change: We reactivated over 6 million of lapsed buyers up 6% year over year.

Speaker Change: And we added nearly 6 million new buyers in the first quarter down year over year, but it's still a very healthy proof point in this type of macroclimate well without pre pandemic levels.

Rachel C. Glaser: We continue to observe a trend where some habitual buyers purchase slightly fewer items or spend slightly less, no longer meeting our definition of a habitual buyer and moving to the repeat buyer category. We also retained slightly more habitual buyers in the first quarter versus our retention of habituals in the fourth quarter and the prior year period. Lastly, GMS per actifier was down 3.5% in the quarter. Additional Etsy marketplace metrics and trend charts can be found in the appendix to this presentation, which is posted on our IR website.

Speaker Change: The bitch wires decreased by 3% year over year, we continue to observe a trend where some habitual buyers just slightly fewer items and slightly less no longer meeting our habitual buyer definition.

Speaker Change: And moving to the repeat buyer category.

Speaker Change: We also retained slightly more habitual buyers in the first quarter versus versus our tender for vehicles in the fourth quarter and the prior year period.

Speaker Change: Lastly, gms per active buyer was down three 5% in the quarter additional etsy marketplace metrics and trend chart can be found in the.

Rachel C. Glaser: Our subsidiaries both had encouraging momentum to start the year. Both businesses delivered year-over-year GMS growth, with Reverb continuing to outpace the musical instruments industry, and Depop growing faster in the U.S. than its comparable resale players. They are providing good lift to consolidate the results, affording exposure to different categories and buyer-purchase behaviors in our core markets. Both Reverb and Depop appeal to value-oriented shoppers with great deals, with Reverb highlighting used and outlet merchandise, establishing itself as a destination for affordable and discounted music, and Depop continuing to be a home for discovering affordable fashion, with success helping users to set fair prices and more easily negotiate.

Speaker Change: A presentation, which is posted on our IR website.

Speaker Change: Our subsidiaries both had encouraging momentum to start the year, both businesses delivered year over year Gms growth with reverb continuing to outpace the musical instruments industry and deep hop growing faster in the U S than comparable we sell players.

Speaker Change: They are providing good lifts to consolidate the Bristol affording exposure to different categories and buyer behavior than our core marketplace.

Speaker Change: Reverb and deep appeal to value oriented shoppers with great deals with reverb, highlighting us in outlet merchandise establishing itself as a definite.

Speaker Change: For affordable and discounted heating here.

Speaker Change: And deep hop continuing to be a home for discovering affordable fashion with success, helping users to set their prices and more easily negotiate.

Rachel C. Glaser: As of March 31, we had $1.1 billion in cash, cash equivalents, and short and long-term investments. During the first quarter, we repurchased a total of $158 million in stock under our $1 billion June 2023 Board Authorized Repurchase Program, of which $566 million remains available as of March 31. Our capital light business model allowed us to deliver strong free cash flow this quarter of approximately $59 million.

Speaker Change: As of March 31, and $1 $1 billion in cash cash equivalents and short and long term investments during.

Speaker Change: During the first quarter, we repurchased a total of $158 million in stock under our $1 billion June 2023 Board authorized repurchase program of which $566 million remains available as of March 31st or.

Speaker Change: Our capital light business model allowed us Dover strong free cash flow this quarter of approximately $59 million. We also continue to convert approximately 90% of our adjusted EBITDA to free free cash flow on a trailing 12 month basis.

Rachel C. Glaser: We also continue to convert approximately 90% of our adjusted EBITDA to free cash flow on a trailing 12-month basis. Now turning to our outlook, as mentioned earlier, the larger than anticipated headwinds the Etsy marketplace experienced in March due to the shift in Easter and spring break timing had the inverse effect on our consolidated GMS for April, which was down about two percent year over year, pacing ahead of our consolidated G1 results.

Speaker Change: Now turning to our outlook as mentioned earlier, the larger than anticipated head on the etsy marketplace experience.

Speaker Change: Due to the shift in Easter and spring break timing had the inverse effect on our consolidated Gms for April which was down about 2% year over here getting ahead of our consolidated Q1 results.

Rachel C. Glaser: While we are certainly encouraged by this performance and we have a lot of conviction about our product and marketing investments, which stack each quarter, we remain cautious given how challenging it has been to predict the outlook for our business. We currently expect the year-over-year decline in consolidated GMS for the second quarter to be similar to our actual first quarter performance, with the downside being a mid-single-digit decline and the upside being the top end of a low single-digit decline.

Speaker Change: While we are certainly encouraged by this performance and we have a lot of conviction about our product and marketing investments, which stack each quarter.

Speaker Change: We're made cautious given how challenging has been to predict the outlook for our business.

Speaker Change: We currently expect the year over year decline in consolidated Gms for the second quarter to be similar to our actual first quarter performance with the downside being a mid single digit decline and the upside being the top end of a low single digit decline.

Rachel C. Glaser: Reverb and Depop are again expected to provide a modest tailwind within the consolidated GMS for. We anticipate consolidated take rate and adjusted EBITDA margin for the second quarter to be similar to our actual performance for the first quarter. Our subsidiaries are expected to pose about a 300 basis point headwind to adjusted EBITDA margins as their revenue continues to flow through at lower margins. With a range of potential outcomes for the full year, our current view suggests a modest acceleration in year over year consolidated GMS in the second half. You know, we'd like to call it that way if we see it. And it's just really tough for us to call them that.

Speaker Change: Riverbend deep hop are again expected to provide a modest tailwind within the consolidated Gms performance.

Speaker Change: We anticipate consolidated take rate and adjusted EBITDA margin for the second quarter to be similar to our actual performance for the first quarter.

Speaker Change: Our subsidiaries are expected to pose about a 300.

Speaker Change: The basis point headwind to adjusted EBITDA margins as the revenue continues to flow through at lower margins.

Speaker Change: With a range of potential outcomes for the full year. Our current view suggests a modest acceleration in year over year consolidated Gms in the second half.

Unknown Executive: As you can see on the slide, we are reiterating our prior commentary about full-year take rate, revenue, and adjusted EBITDA margin. Built into the take rate expectation for 2024 are Etsy payments expansion plans, including the recent addition of China and the seller setup fee described earlier. As we continue to build exciting initiatives, we will look for opportunities to deliver a fair exchange of value, which will enable us to invest in growth. Our team is highly engaged and energized, and we will continue to keep our eye on the prize. Thank you all for your time today. I'll now turn the call over to the operator to take your questions.

Speaker Change: You know, we'd like to call. It like we see it and it's just really tough to call. It right now.

Speaker Change: As you can see on this slide we are reiterating our prior commentary about full year take rate revenue and adjusted EBITDA margin built into the take rate expectation for 'twenty or 'twenty, four or etsy payments expansion plans, including the recent addition of China and the setup data timed earlier as we continue to build exciting initiatives.

Speaker Change: We will look for opportunities to deliver a fair exchange of value, which enable us to invest in growth.

Speaker Change: Our team is highly engaged energized and continues to rise.

Speaker Change: Right.

Speaker Change: Thank you all for your time today I'll now turn the call over to the operator to take your questions.

Unknown Executive: Thank you, Rachel. At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you will hear your name called and receive a prompt to be promoted. Please accept, wait a moment, and once you have been promoted, you may unmute your video and audio and ask your question.

Speaker Change: Yeah.

Speaker Change: Thank you Rachel at this time, if you would like to ask a question. Please click on the Raytheon button, which can be found on the black bar at the bottom of your screen.

Speaker Change: They remove yourself Amit.

Speaker Change: Yeah.

Amit: It is your turn you all hearing AIDS are called and receiver.

Unknown Executive: As a reminder, we are allowing analysts one question and one related follow-up today. We will wait one moment to allow the queue to form. Thank you. Our first question will come from Maria Ripps with Canaccord. You may now unmute your audio and video and ask your question.

Amit: He promoted except wait a moment and once you have them come on it you man.

Rachel: An audio and that's two questions. As a reminder, we are allowing analysts one question and one related follow up.

Speaker Change: One moment to allow the uniform.

Speaker Change: Thank you. Our first question will come from Maria <unk> with Canaccord, you May know Amit your audio video and ask your question.

Maria Ripps: Thank you so much for taking my questions. So, yeah, first, kind of understanding that we're sort of in a tough environment right now for consumer spending, I just need to ask about the competitive environment. It seems like the Chinese competitors started becoming a little bit more aggressive around Q2 of last year. So as we start overlapping that, do you anticipate maybe a more favorable, maybe a little bit more stable competitive backdrop, kind of, is that becoming less of a headwind as we move through the second half of the year?

Speaker Change: No.

Joshua G. Silverman: It's possible. I think what we've been saying all along is that we think that the Chinese competitors are more a symptom than a root cause. I think what we're observing again and again, both at Etsy and what we read in the commentary from so many others in our space, is that consumers feel really pressured in spite of what we're seeing about a generally healthy economy. And so they are seeking value and deep discounts and deep promotion.

Speaker Change: Thank.

Maria: So much for taking my question seems like Mike.

Speaker Change: I'm sorry.

Speaker Change: Charles.

Speaker Change: So yeah.

Charles: Yes, first kind of.

Speaker Change: Sending them, we sort of in this tough environment right now consumer spending.

Charles: Did you ask about the competitive environment. It seems like the teams that are competitors started becoming more a little bit more risk from Q2 of last year. So as we start lapping that you anticipate maybe a more favorable or maybe a little bit more stable competitive backdrop.

Speaker Change: Is that becoming less of a headwind.

Speaker Change: As we move through the second half of the year.

Speaker Change: It's possible I think what we've been saying all along is that we think that the.

Speaker Change: Chinese competitors are more symptom that cause I think we're observing again and again, both at Etsy and what we read in the commentary. So many others in our space is that consumers feel really pressured in spite of what we're seeing about a generally healthy economy consumers feel really pressured and so they are seeking value and deep.

Joshua G. Silverman: And so yes, the Chinese competitors are offering that, but you know, Amazon and Walmart are too. And it looks like the people that are driving most of the growth in e-commerce are people that are able to offer everyday essentials at very low prices. And there's probably some trip consolidation that's happening there too.

Speaker Change: Discounts from deep promotions.

Speaker Change: And so yes, the Chinese competitors are offering that but Amazon Walmart are due.

Speaker Change: And it looks like people that are driving most of the growth.

Joshua G. Silverman: While you go into Walmart to buy your groceries at a cheaper price, you may pick up some other items as well while you're there. So I think that the Chinese competitors are a competitive headwind, no doubt. They've been a headwind to us and to everyone else in e-commerce. It would be great to see them not investing so aggressively in marketing. But I think the root cause of consumers feeling a ton of pressure and therefore seeking deep discounts will remain regardless of what the Chinese players do.

Speaker Change: E Commerce our people.

Speaker Change: To offer everyday essentials at very low prices and there's probably some trip consolidation thats happening to world market by your groceries at a cheaper price you may pick up some other items.

Speaker Change: As well, while you're there so.

Speaker Change: I think the Chinese competitors are uncompetitive had been no doubt there have been a headwind to us and to everyone else in E Commerce.

Speaker Change: It would be great to see them not investing so aggressively in marketing.

Speaker Change: Hi.

Speaker Change: I think the root cause consumers feeling a ton pressure and therefore seek seeking deep discounts.

Speaker Change: We remain regardless of what the.

Joshua G. Silverman: Our focus in that is not to chase them to the bottom, is not to try to be the very cheapest place to buy things. It's to make Etsy more Etsy. It's to lean into what makes Etsy different and special, and we talked a lot about that on the call. I'm incredibly excited about all the initiatives we have going to really elevate the very best of Etsy, suppress the things that are not the best of Etsy, and make the aisles easier to shop in.

Speaker Change: Players do our focus and that is not to chase them to the bottom is not to try to be very cheapest.

Speaker Change: Places to buy things just to make it seem more etsy is totally into what makes etsy different and special.

Speaker Change: Asked a lot about that on the call I'm incredibly excited about.

Speaker Change: The initiatives, we have going to really elevate the very best of Etsy suppressed. So things that are not best of etsy and make the aisles easier to shop.

Joshua G. Silverman: So people can see the wonderful products that we have on offer. And the more that they find really, really cheap and really disposable things, I think the more they will crave an alternative to that. And we're bound and determined to use this moment to get even stronger as that alternative.

Speaker Change: So people can see the wonderful products that we have on offer and the more that they are really.

Speaker Change: Really really cheap really disposable things I think are more they will create an alternative to that and we're bound and determined to use this moment to get even stronger at that alternative.

Joshua G. Silverman: Great, thank you. And then, for my follow-up, I just wanted to ask you about your kind of product roadmap. Is there any sort of additional color you can share with regards to the expected sort of structure and timing of your loyalty program? And then, sort of what, which cohort of customers do you think this loyalty program will have the most sort of tangible impact on driving sort of increased frequency? Is it one-time buyers kind of turning into repeat buyers or, sort of, maybe repeat buyers? Yeah, great question.

Speaker Change: Yeah.

Speaker Change: Great. Thank you and then my follow up I just wanted to ask you about your kind of product roadmap is there any sort of.

Speaker Change: Additional color you can share with you guys should they expect a sort of structure in China.

Speaker Change: The problem, and then sort of what which cohort of customers do you think sort of this loyalty program will have the most sort of tangible impact driving increased frequency.

Joshua G. Silverman: Yeah, great questions. The team is making really good progress. I don't have any specifics to announce, but we are on track to launch in beta form in the second half of the year, and the focus is going to be on occasional shoppers. And how do we take people that shop on Etsy occasionally and turn those people into more loyal buyers?

Speaker Change: Uh huh.

Speaker Change: I will turn it into repeat buyers.

Speaker Change: Okay.

Speaker Change: Yes, great question, because he was making really good progress I don't have any specifics to announce but we are on track to launch in beta form in the second half of the year and the focus is going to be an occasional shoppers and how do we think people that shop on etsy.

Unknown Executive: Thanks so much for the call. Thanks for asking questions. Our next question comes

Speaker Change: Finally in turn those people into more loyal buyers.

Unknown Executive: Our next question comes from Nick Jones with JMP Securities. (Inaudible) My apologies, I'm waiting for him. I think he was having some issues before.

Speaker Change: Thank you.

Speaker Change: Thanks, so much for the call.

Speaker Change: Questions.

Speaker Change: Our next question comes from Nick Jones with JMP Securities.

Speaker Change: Okay.

Nick Jones: My apologies and waiting for them.

Nick Jones: Yes.

Nick Jones: If he was having some issues before so if you can go to the next.

Unknown Executive: So if you can't get them, you can go to the next slide. Our next question comes from Laura Champagne with Loop. Please unmute your audio and video and ask your question. Hi, I got it. And I think we're working on it now. So the question is about the implications that GMS improves as you move through the year. And I know that's not what you're saying for Q2, but upon what kind of macro changes is that predicated, if any?

Nick Jones: Right.

Nick Jones: Our next question comes from Laura Champine with loop.

Laura Allyson Champine: Please limit your audio and video and ask your question.

Laura Allyson Champine: Oh, Hi, Hello that was Oh got it and I think we're working now so the question is about the implication that G. M. S improves as you move through the year and I know that's not what you are saying for Q2, but upon what kind of macro changes that.

Joshua G. Silverman: I am very excited about the initiatives the team is working on this year. I think the things we've talked about with gifting, getting even more known as the place for gifting, the things we've talked about with quality, really leaning into the differentiation of Etsy. There's a lot of really good work going on, and that work stacks.

Nick Jones: Predicated if any.

Nick Jones: So.

Nick Jones: I am very excited about the initiatives. The team is working on this year I think the things we've talked about with gifting getting even more known as the place for gifting things, we've talked about with quality really leaning into the differentiation.

Joshua G. Silverman: So it is our current expectation that it's more likely we would grow in the second half of the year as a result of that. Headwinds to that would be if the consumer discretionary environment gets even more challenged. And it's just hard; things have been pretty volatile even week to week right now. So it's pretty hard to know how that's going to shape up.

Nick Jones: Etsy Theres a lot of really good work going and that work stacks. So it is our current expectation that's more likely not we would grow in the second half of the year as a result of that headwinds to that would be if the consumer.

Nick Jones: Consumer discretionary environment gets even more challenged.

Nick Jones: And then so far.

Joshua G. Silverman: So just to make sure I understand that correctly, sort of a similar macro to what we're experiencing right now, but starting to see the impact of your own initiatives. Is that fair?

Nick Jones: Things have been pretty volatile even week to week right now so it's pretty hard to have that kind of thing so that's going to shape up.

Speaker Change: So just make sure I'm understanding that correct sort of a similar macro to what we're experiencing right now, but starting to see the impact of your own initiatives is that fair that's fair.

Joshua G. Silverman: That's fair. And you know, I am very excited about what we're doing this year. I think it's really very relevant. I think it's going to be very impactful. And the team did great work last year. The product and engineering teams alone generated an incremental $1.5 billion in GMS from the work they did last year.

Nick Jones: I am very excited about what we're doing this year I think it's really.

Nick Jones: Very relevant I think it's going to be very impactful and the team did great work last year product and engineering teams alone generated an incremental $1 $5 billion of Gms from the work. They did last year. So we're lapping that and I think the work. We're doing this year is going to be even more impactful I believe that I think we are on track for that and.

Joshua G. Silverman: So we're beating that, and I think the work we're doing this year is going to be even more impactful. I believe that. I think we're on track for that. And so we believe that can lead to accelerated growth in the second half. That's our hope, and we think it'll happen.

Joshua G. Silverman: Got it. Quick follow-up on something that Rachel called out was positive friction with sellers with this incremental fee. And it's been, I think, 12 quarters in a row that your sellers have been outgrowing your buyers. Is that making it tougher for search to improve? And would you rather see a narrowing of that gap?

Nick Jones: So we believe that can lead to accelerated growth in the second half that's our open.

Nick Jones: We're thinking about.

Speaker Change: Got it quick follow on something that Rachel called out was.

Speaker Change: Positive friction with sellers with this inc.

Speaker Change: Mental fee and and it's been I think 12 quarters in a row that your sellers have been outgrowing your buyers is that making it tougher for search to improve and would you rather see a narrowing of that gap.

Joshua G. Silverman: Yeah, that's such a good question, Laura. So, yes, we have been saying for quite some time that we have quite a lot of sellers and quite a lot of inventory, and we want to make sure that we have enough demand to match supply. And so particularly seeing low effort sellers come on the platform, sellers that may not have the skill or the will, is more data we have to process, more, you know, the handholding we've got to give to folks.

Speaker Change: Yes, that's a good question Laura.

Speaker Change: So yes, we have been saying for quite some time that we have quite a lot of sellers with quite a lot of inventory and we want to make sure that we have enough demand to match supply and so, particularly seeing low FERC sellers come on the platform sellers that may not have the scale or the well.

Joshua G. Silverman: And so having a group of sellers that have higher skill and higher willpower, these are the sellers that I think are most likely to succeed on the platform anyway. We think that's very helpful. So the early results from having just a small fee of $15 to set up a shop on Etsy. If you're not prepared to invest $15 to get your shop going on Etsy, you may not have the skill or the will to really succeed.

Speaker Change: As more data we have to process more.

Speaker Change: Sure.

Speaker Change: Handholding, we've got again to folks and so having a group of sellers that have by our scale and higher well. These.

Speaker Change: These are the sellers that I think are most likely to succeed on the platform anyway.

Speaker Change: We think Thats, we think thats very helpful. So the early results from having just a small fee of $15 to set up shop.

Speaker Change: They are prepared to invest $15 to get yourself going on Etsy, you may not have the scale or the well.

Joshua G. Silverman: So we're seeing that little bit of a speed bump be helpful. Josh talked about it.

Joshua G. Silverman: Josh talked about a few things about our quality and duration and really getting better at finding the good stuff, elevating that to the things you see first, and then suppressing or not upvoting the stuff that's lower quality. So there's a lot of initiatives going on at the same time that's all about keeping them not only keeping the marketplace safe and secure but really focusing on quality and being able to find good stuff.

To really succeed so we're seeing that little bit of a speed bump be helpful and can I just talked about a few things about them.

Speaker Change: Alright.

Speaker Change: Quality installation and really getting better.

Speaker Change: Finally in the bid stuff elevating that to the things you see first and then passing or not.

Speaker Change: Our floating the stuff that's lower quality said, there's a lot of initiatives going on at the same time that all about.

Speaker Change:

Joshua G. Silverman: <unk> been in not only keeping the marketplace safety care, but really focus on quality and being able to find.

Joshua G. Silverman: So we also talk about actively removing things that don't comply with our handmade policy. So some of these things that we do on the upfront help us with the downstream efforts that we want to invest in to really focus on quality and organization of that stuff.

Speaker Change: So we often talk about actively removing things that comply with or.

Speaker Change: Policies in some of these things that we do on the upfront to help us with the downstream.

Speaker Change: The second one.

Joshua G. Silverman: And I can't help but pile on because I'm just really passionate about this. You know, we've talked about the abundance of supply on Etsy a lot. But what does that look like in real life?

Joshua G. Silverman: Okay.

Speaker Change: Really focused on quality and our organization.

Joshua G. Silverman: Uh huh.

Joshua G. Silverman: When you search for something, we usually have thousands, and, in fact, often tens of thousands of relevant results. And on the first page of search results, there might be 30 things that look very, very similar. And to a buyer, that's just a lot of cognitive load. If these 30 things are virtually identical, can't you just tell me which one's the best? Or what are the three, and what are the tradeoffs between

Speaker Change: Yeah.

Speaker Change: I kind of hope to pile on but I'm, just really passionate about this we talked about the abundance of supply on I'd say a lot, but what does that look like in real life. When you search for something we usually have thousands and in fact, often tens of thousands of relevant results in the first page of FERC results might be 30 things that work.

Joshua G. Silverman: A very similar and to a buyer that is just a lot of cognitive load. If these 30 things are virtually identical cancers is tell me, which one was the best or what are the three what are the trade offs between them and.

Joshua G. Silverman: And that's harder for us where we don't map to a catalog, but I think with the latest machine learning and Gen AI techniques, it's easier and easier for us to start to understand what the stuff is, what's very substantially similar, and really try to give you fewer choices of just the best. And in doing that, offer a lot more diversity as well. Instead of 30 really similar versions, we can offer much more different things.

Speaker Change: And that's harder for us where we don't have to catalog, but I think with the latest machine learning and Jen AI techniques, it's easier and easier for us to start to understand what the stuff is whats very substantially similar and really try to give you fewer choices of just the best and in doing that offer a lot more versatile.

Joshua G. Silverman: And that can also help buyers to understand the breadth of offerings that we have on Etsy. So not only might they have a more satisfying purchase experience this time, but they'll come back more often because they realize the breadth of offerings we have.

Joshua G. Silverman: Well instead of 30 really similar version we can offer much more different things and that can also help buyers to understand the breadth of it Paul.

Joshua G. Silverman: <unk> offerings that we have on etsy, so not only might they have a more satisfying purchase experience. This time, but they'll come back more often because they realize that the breadth of offering we have.

Unknown Executive: Our next question comes from Michael Morton with Moffitt Nathanson. Please unmute your audio and video and ask your question.

Michael Paul Morton: Thank you next question in queue. Thanks, Laura.

Unknown Executive: Perfect, thank you. Two questions, if I could.

Joshua G. Silverman: Josh, you spoke to seller removal being a bit of a gross margin headwind. It was our interpretation looking at some of the comments last year that some of the fraud that was created in poor behavior from like non-compliant merchants could actually be a gross margin headwind last year. So just curious as you work through this process, if this could be a tailwind to gross margins as you get some of the non-compliant sellers off who have maybe elevated levels of returns that are outside of Etsy's protection program?

Michael Paul Morton: Our next question comes from Omar Maher.

Speaker Change: Nathan Please on your audio and video and that's your question.

Speaker Change: Perfect. Thank you.

Speaker Change: Two questions if I could.

Joshua G. Silverman: Yes.

Joshua G. Silverman: You spoke to seller removal I think being a bit of a gross margin headwind. It was our interpretation looking at some of the comments last year that some of the fraud that was created employer behavior from a noncompliant merchants could be actually like a gross margin headwind masters. So just curious as you work through this process is this could be a <unk>.

Joshua G. Silverman: Tailwind to gross margins as you get sort of the Noncompliant sellers also like maybe elevated levels of returns right outside of Etsy protection program.

Joshua G. Silverman: So in terms of gross margins, possibly, yes. And in particular, it may not be non-compliant, meaning sellers that are not in compliance but just sellers that have higher levels of refunds or consistently ship late. So within the quality initiative, when we say we don't want to just get you to a product you're going to buy, but to a purchase experience you're going to love, how do we have the search engine explicitly favor sellers that consistently ship on time, that consistently get five-star reviews, and that very rarely get returns? Our search engine has been very focused on relevance.

Joshua G. Silverman: Yeah.

Joshua G. Silverman: So in terms of gross margins, possibly yes, and in particular it may not be noncompliant. Many sellers that are not have made but just higher level.

Joshua G. Silverman: Of refunds are consistently shipped late.

Joshua G. Silverman: So within the quality initiative, when we say we don't want to just get you to a product is going to buy but to purchase experience are going to love. How do we have the shenzhen explicitly favor sellers that consistently ship on time that consistently gets five star reviews, but very rarely get.

Joshua G. Silverman: Is this item very closely related to what we think the person is likely to buy? In addition to relevance, we really want the quality of the purchase experience to be very important. And that I think is going to lead to more satisfied buyers who come back more often and should result in a lower cost of revenue through lower refunds. Separately, what I was specifically referring to in my comments was doing an even better job taking non-handmade items off the site. And I know you've been talking about that with us. And we couldn't agree more that it's really important that Etsy be Etsy. And there are new technologies out there that make it easier and easier to find.

Joshua G. Silverman: Returns.

Joshua G. Silverman: Our search engine has been very focused on relevance is this item very close related to what we think the purchase prices likely to buy it.

Joshua G. Silverman: In addition development and if we really want the quality of the purchase experience to be very important in that I think is going to lead to more satisfied buyers who come back more often.

Joshua G. Silverman: For example, does this same item exist also on AliExpress? And we assume right now if that item exists on AliExpress, we assume it's mass produced, and we take it down. You as a seller can appeal that. You can tell us how you made it yourself and it still ended up on AliExpress. And by the way, that's true sometimes. You can appeal that.

Joshua G. Silverman: Should it be lower cost of revenues through lower refunds.

Joshua G. Silverman: Separately.

Joshua G. Silverman: What I was specifically referring to in my comments was doing an even better job, taking not handmade items off the site and I know you've been talking about that with us and we couldnt agree more that it's really important that FCB etsy.

Joshua G. Silverman: And there's new technologies out there that make it easier and easier to spot. For example, does the same item exist also on aliexpress and we assume right now with that item exists.

Joshua G. Silverman: But our default now is we take that down. And that's just one example. Gen AI is actually going to be, I think, more and more helpful at understanding how much value this particular seller truly adds to the product. And we're looking to prioritize items that are really original, where the seller really adds value, and then be able to explain to the buyer exactly where the seller did add value. Did the seller make it themselves?

Joshua G. Silverman: We assume it's mass produced and we take it that you as a seller can appeal that you could tell us how you made it yourself, but it still ended up on aliexpress and by the way that's true sometimes.

Joshua G. Silverman: You can appeal that but our default that was we take that down and.

Joshua G. Silverman: One example is actually.

Joshua G. Silverman: Moving to be more and more helpful in understanding how much.

Joshua G. Silverman: Did they design and produce it with a production partner? Did they personalize it? I think that buyers are interested in knowing that, and I think we can make that a lot more explicit. And that also, I think, is going to make the Etsy buying experience a lot more satisfying.

Joshua G. Silverman: Particularly.

Joshua G. Silverman: Yeah.

Joshua G. Silverman: To the product that we're looking to prioritize items that are really regional.

Joshua G. Silverman: Really added value.

Joshua G. Silverman: Yes.

Joshua G. Silverman: Explain to buyer exactly with others.

Joshua G. Silverman: Did the solar market themselves did they design it and produce it with a production partner debate.

Speaker Change: Got it.

Rachel C. Glaser: And I just wanted to comment real quickly on how we've been doing takedowns. I don't know exactly how many quarters now, but I was really leaning into it for at least the last two or three.

Joshua G. Silverman: The buyers are interested in knowing that and I think we can make it more explicit Natalie.

Rachel C. Glaser: It's going to be buying experience a lot more satisfying and I just wanted to comment.

Rachel C. Glaser: So we've gotten successively better at it. We've often talked about the substitution effect. So we take things down. It does not necessarily mean a one to one loss of GMS when we do that because we have so many listings on the site that there are often similar items that trust can substitute, but that doesn't, hopefully, mean we're taking down low-quality GMS. So GMS, it's a need that doesn't come with a high amount of respect back or fraud or unpaid charges, as we call it here.

Rachel C. Glaser: Do you mean is down.

Rachel C. Glaser: I don't know exactly how many quarters now.

Rachel C. Glaser: At least that.

Rachel C. Glaser: Two or three.

Rachel C. Glaser: So we bought it.

Rachel C. Glaser: Better at it.

Rachel C. Glaser:

Rachel C. Glaser: We've often talked about 17 effects. Thanks.

Speaker Change: It does.

Rachel C. Glaser: At this point.

Speaker Change: Let me do that.

Rachel C. Glaser: We have some things on it.

Rachel C. Glaser: They're similar.

Rachel C. Glaser: Okay.

Rachel C. Glaser: Hello, Paula P M S.

Rachel C. Glaser: And the second thing I was going to say is that the GM, the growth margin impact may therefore be offset by improvements in the cost of revenue hits we're getting from some of the lower quality sellers that are on the site.

Rachel C. Glaser: Yeah.

Speaker Change: Hi, Doug.

Rachel C. Glaser: Perfect.

Rachel C. Glaser: Okay.

Rachel C. Glaser: Our main charges.

Rachel C. Glaser: Okay.

Rachel C. Glaser: Maintenance.

Rachel C. Glaser: Let's say that the team.

Rachel C. Glaser: The D.

Rachel C. Glaser: So I think.

Joshua G. Silverman: I think it is safe to assume that the removal of these merchants is not having any type of impact on on-site revenue just due to the auction dynamic that there's a merchant sitting right underneath that bid. Yes. Most of the time when we remove an item...

Rachel C. Glaser: The impact therefore be offset by improvements in.

Joshua G. Silverman: Okay.

Joshua G. Silverman: Revenue.

Joshua G. Silverman: Okay.

Joshua G. Silverman: Uh huh.

Joshua G. Silverman: Right.

Joshua G. Silverman: Most of the time when we remove an item, there's another seller ready, willing, and able to take that sale instead. And so when we talked about that 50 basis point hit, we've been really leaning in to, and we've always taken down items for not complying with the "not handmade" label. That's always been a focus, but we've been getting better technology and investing a lot in that. And as we've taken down, as we said in the call, millions of listings and tens of thousands of sellers.

Joshua G. Silverman: Great.

Joshua G. Silverman: Okay.

Joshua G. Silverman: Merchants.

Joshua G. Silverman: Having any type of impact onsite revenue just due to like the auction dynamic that this or considering right underneath that.

Joshua G. Silverman: Most of the time when we remove an item there is another seller ready willing and able to take that sale. Instead. So when we talked about the 50 basis point hit we've been really leaning in to.

Joshua G. Silverman: It has had about a 50 BIP impact on our site, meaning sometimes it is not replaced, but most of the time it is. And frankly, that 50 basic points of headwind are happy to bear. We think it's a great investment in making sure that Etsy is different than it is at Etsy. Thank you so much.

Joshua G. Silverman: And we've always taken down items for not complying with not handmade thats always been a focus but we've been getting better technology and investing a lot in that.

Joshua G. Silverman: And as we've taken down as we said on the ball mill.

Joshua G. Silverman: So flipping some tens of thousands of sellers.

Joshua G. Silverman: Had about a 50 bps impact to we think our site, meaning sometimes it is not replaced but most of the time. It is and frankly that 50 basis points of headwind. We are happy to bear we think it's a great investment and making sure that she is different than an etsy is up.

Joshua G. Silverman: and I are out for that. Mike, I'm sure you'll be all over it. All right, next question.

Unknown Executive: All right, next question. Our next question comes from Naveed Khan with B Riley Securities. Please unmute your audio and your video and ask your question.

Naved Ahmad Khan: Thanks, so much.

Naved Ahmad Khan: Listen the transparency report next week, so keep an eye out for that I am sorry, they are all over it.

Unknown Executive: Thanks.

Naved Ahmad Khan: So two questions, maybe just to kind of tease out some of the noise. So Q1, we also have some impact potentially from tax refunds. I heard that tax refunds are up 6% this year. And then we also had an extra day. So if you're talking about, GMS being similar, in terms of year-on-year growth, does that mean it actually is improving trend-wise?

Unknown Executive: So.

Naved Ahmad Khan: Our next question comes from Nevada, Kang with B Riley Securities. Please mute your order on your video and ask your question.

Unknown Executive: How should we?

Speaker Change: Hi can you hear me.

Unknown Executive: Yep.

Speaker Change: Okay. So two questions.

Unknown Executive: Maybe just to kind of.

Unknown Executive: These are some of the noise. So Q1, we also have some impact potentially from tax refunds.

Speaker Change: Yes, Stephen were up 6% this year.

Unknown Executive: And then you also have an extra day.

Unknown Executive: There are things that went both ways that were beneficial to Q1 that won't repeat in Q2 and things that are beneficial to Q2 like Mother's Day that didn't happen in Q1. Leap Day was, we say, one 90 91st of an additional amount.

Unknown Executive: So if you're talking about as a baseline gms being similar.

Unknown Executive: Comes up year on year growth.

Unknown Executive: Does it mean and actually is improving trend lines, how should we interpret that.

Unknown Executive: There's things that went both both ways.

Unknown Executive: Were beneficial to Q1 that won't repeat in Q2 and things that are beneficial to Q2 as mother's day that didn't happen in Q1 Leap day was.

Unknown Executive: So it's a pretty small denominator, pay less than a point of benefit to Q1, tax refunds were up a bit they came later in the quarter so it could actually potentially be a bank goes in the bank account and can actually replenish people's balance sheets that could be a long-term benefit so we I don't think we've thought about it the way you're thinking about it that granularly of what's in g1 that doesn't repeat in g2 and vice versa but you I think that's similar to the guidance that we gave in Q1, that's our current expectation. You point out some fair things.

Speaker Change: Which one.

Unknown Executive: 90.

Unknown Executive: Ah 91st of an.

Unknown Executive: An additional amount or is it pretty small de minimis.

Unknown Executive: Less than a point benefit to Q1.

Unknown Executive: <unk> three <unk>.

Unknown Executive: We're a bit that came later in the quarter so it could actually.

Bofa Goldman: Bofa Goldman Thank you Kevin.

Unknown Executive: <unk> balance sheet that can be unlocked.

Unknown Executive: Benefit so.

Unknown Executive: I don't think we thought about it when youre thinking about it that granularly, what <unk> one <unk>.

Unknown Executive: It is also true, as I think many of you know, that the comps get a little harder each month this quarter. So May's a little... Last year, May was a little stronger than April, and June was a little stronger than May.

Speaker Change: Thank you.

Unknown Executive: Similar to the guidance we gave in Q1.

Unknown Executive: So we also consider that. And we're doing a lot of good things to make the business better, make the customer experience better, and we think that's important as well. So net-net, what we said is we think it'll be roughly similar. It could be as high as the top end of the low single digits or could be mid single digits, particularly if discretionary gets even more pressure.

Unknown Executive: Thank you point out some fair. Thanks. It is also true as I think many of you know the comps get a little harder each month this quarter, so maybe a little <unk>.

Unknown Executive: Last year May was a little stronger than April and tubular a little stronger.

Unknown Executive: No.

Unknown Executive: We also consider that.

Unknown Executive: And we're doing a lot of things to make businesses better make the customer experience better and we think thats important as well. So net net what we said is we think it'll be roughly roughly similar could be as high as the top end of low single digits.

Unknown Executive: And then maybe a quick follow-up. So I think Josh talked about app downloads as a priority. What are the things you're going to look at in terms of driving those downloads? Yeah, great question.

Unknown Executive: Or could the mid segment, particularly discretionary gifts even more pressure.

Unknown Executive: Yeah, a great question. Thank you so much for that.

Unknown Executive: Thank you so much.

Speaker Change: And then maybe a quick follow up so I think Josh talked about.

Unknown Executive: Downloads as a priority.

Unknown Executive: So, first, we find that someone who is an app user produces about seven... 25% more GMS than somebody who's not an app user. So we think having someone on the app is a really valuable thing. And we frankly, we leaned into this a fair amount in 2021. And in 2022 and 2023, it wasn't a big focus with competing priorities.

Speaker Change: Are the things.

Speaker Change: When I look at it in terms of driving those downloads. Yes. Great question. Thank you so much for that so first we find that someone who in app user.

Unknown Executive: Goodbye.

Unknown Executive: Sure.

Unknown Executive: 75% more domestic and somebody is not in the future. So we think having someone on the App is a really valuable thing.

Joshua G. Silverman: It's a big focus right now for us again, and the kinds of things we can do are first use more screen real estate to promote why you should be downloading the app. When someone's on the mobile web or on the desktop, using more screen real estate to talk about the benefits of being in the app. There's some trade-off to that, of course, because we could be using that space to try to sell you something and drive a sale. And we're going to be using it in the right moments in the right ways to try to drive app downloads. We think from a lifetime value perspective, that's a good trade-off.

Unknown Executive: And.

Joshua G. Silverman: We frankly, we leaned into this a fair amount in 2021 and in 2022 and 2023 it wasn't it wasn't the big focus.

Joshua G. Silverman: With competing priorities is the big focus right now for US again and the kinds of things. We can do is first we used more screen real estate to be promoting why you should be downloading the app when someone's on mobile web or desktop using more screen real estate to talk about the benefits being yeah. There's a tradeoff to that of course, because we can.

Joshua G. Silverman: We're always looking at how we can add more benefits in the app to make the app more valuable, to make it richer, you know, certain deals and drops that are specific to the app. Track Your Package has been a very powerful call to action. Why do you need to download the app so you can track the package and the purchase that you just made? So we've got some squads that are really focused right now on just developing the value propositions and promoting the value propositions to make sure that people are downloading the app and using the app more. And when we compare Etsy to our peers, we find that app penetration on Etsy is lower than on many peers.

Joshua G. Silverman: But using that space to try to sell you something and drive sales.

Joshua G. Silverman: And we're going to be using it in the right right.

Joshua G. Silverman: Two two outbound, but we think from a lifetime value perspective, that's a good trade off we're always looking at how can we add more benefits in the app to make the app more valuable to make it richer so you've seen us do things like hub app only specials in sales or to have.

Joshua G. Silverman: First on App like.

Joshua G. Silverman: Certain deals and drops that are that are specific to the app.

Joshua G. Silverman: Okay.

Joshua G. Silverman: A powerful call to action why do you need to download the app.

Joshua G. Silverman: The package and the purchase that you just made.

Joshua G. Silverman: So we've got some slides are really focused right now on just.

Unknown Executive: So we think that's a gap that we can close, and we think doing that will drive more LTV, and more frequency, and we think that's very helpful. Thank you. Thanks for that. Our next question comes from Trevor Young with Barclays. Please unmute your audio.

Joshua G. Silverman: Developing the value proposition and promoting the value proposition to make sure that people are downloading the app and using the app more and when we compare etsy to our peers, we find that our penetration on etsy is lower than many peers. So we think that's a gap that we can close we think in doing that will drive more LTV more frequency.

Unknown Executive: Our next question comes from Trevor Young with Barclays. Please unmute your audio and your video and ask your question.

Trevor Vincent Young: And we think Thats very helpful.

Trevor Vincent Young: Thank you Thanks and then.

Unknown Executive: Our next question comes from Trevor Young with Barclays. Please that meet your audio and you're bidding on and ask your question.

Trevor Vincent Young: Great. Thanks, just to clarify on the full year guide commentary and accelerating in two age.

Unknown Executive: So the guide we gave said that the range of the guide was that we could be slightly positive, slightly better than Q2, not positive, slightly better than Q2, or slightly worse than Q2, which I know is not very helpful. Our current forecast shows that our current view is that we see some acceleration as we go through the year, but the cushion, the margin of error, has gotten a lot narrower, which is why I am very cautiously giving you some, you know, giving you some perspective on what we are seeing.

Speaker Change: Is that to be interpreted that will still be slightly negative in the back half or do you.

Unknown Executive: We will get to flattish gms by yearend.

Speaker Change: What does the guide we said that.

Unknown Executive: We think the range of the guide with that we could be.

Unknown Executive: Slightly.

Unknown Executive: And positive slightly better than Q2.

Unknown Executive: Slightly better than Q2 or slightly worse in Q2, which I know is not very helpful.

Unknown Executive: Our current forecast is that our current view is that we see.

Unknown Executive: Some acceleration as we go through the year.

Unknown Executive: So it's a kind of a cautious narrow range without specifically saying, do you get all the way to flat or positive at that upper end? And how much further could you go from the Q2 range that we've given you on the downside? We're modestly optimistic because we have really great product and marketing initiatives planned, and they stack as they go through the year, and so we feel confident enough in our own internal forecasting to be able to give that guidance. I think we will see modest acceleration in the second half of the year. And we didn't say whether it would get to positive or not. OK.

Unknown Executive: Pushing the margin of error has gotten a lot narrower which is why we're very cautiously moving some.

Unknown Executive:

Unknown Executive: Giving him.

Speaker Change: Second on what we're seeing.

Unknown Executive: So it's a kind of a.

Unknown Executive: Our cautious narrow range without specifically, saying that all the way to flat or positive at that upper end and how how much further can you go.

Unknown Executive: The Q2 range that we've given you on the downside.

Unknown Executive:

Unknown Executive: Yes.

Joshua G. Silverman: I think it was a modest acceleration in the second half of the year, and we didn't say whether it would get to positive or not. Okay, and then just to clarify on the 50 BIP headwind from removing listings that violate the policies, is that expected, that 50 basis points expected to continue throughout this year? Is that what's baked in?

Unknown Executive: I think I'm optimistic because we have a great product and marketing initiatives planned.

Joshua G. Silverman: And the fact I think all through the year and so we feel we felt confident enough in our own internal forecasting to be able to give that guidance.

Joshua G. Silverman: I think what we said is modest acceleration in the second half of the year and we didn't say, whether it would be to get to positive and bill.

Joshua G. Silverman: So that has been happening for about six to nine months now, and the reason we put that data point in there is just to give some sense that we're leaning in a lot, but there's still quite a high replacement rate. So even as we take things down, you know, we generally see another seller ready, willing, and able to make that sale, but it has a slight headwind. I wouldn't be surprised to see it continue.

Joshua G. Silverman: Okay, and then just to clarify on the 50 bps headwind from removing those things that violate the policies is that expected to that 50 basis points expected to continue throughout this year is that right.

Joshua G. Silverman: Alright.

Joshua G. Silverman: So that has been happening for about six to nine months and the reason we put that data point and there is just to give some sense that we are leaning in a lot, but theres still quite a high replacement rate so even as we take things down.

Joshua G. Silverman: It could even grow a little bit more as we keep leaning in, you know, more and more. We've always said that there we try as hard as we can to enforce and there are some things that get through our enforcement controls; it is a small but nonzero number. And so I think 50 vets is pretty consistent with that prior commentary.

Joshua G. Silverman: We generally see another seller ready willing and able to make that sale, but it has a slight headwind.

Joshua G. Silverman: I wouldn't be surprised to see it continue it could even grow a little bit more.

Joshua G. Silverman: Okay.

Joshua G. Silverman: Keep leaning in more and more.

Joshua G. Silverman: We've always said that we try as hard as we can to enforce and there are some things that get through our.

Unknown Executive: Our next question comes from Ken Goralski with Wells Fargo.

Joshua G. Silverman: Through our enforcement controls it is a small but non zero number.

Kenneth James Gawrelski: Hi, good afternoon. Thanks for doing this. I appreciate it. Um, can I can I ask you something? It's clear to me that you always see yourselves as a growth company, right? And, and, and unfortunately, you haven't been growing. So the question I have is, do you feel like you have enough certainty around the different macro and maybe even micro factors to be more aggressive, right? To be a bit bolder in your initiatives.

Kenneth James Gawrelski: So I think 50 bps is pretty consistent with that prior commentary.

Speaker Change: Okay, great. Thank you very much.

Kenneth James Gawrelski: Our next question comes from Ken Borawski with Wells Fargo.

Kenneth James Gawrelski: Alright.

Speaker Change: Good afternoon. Thanks for doing this I appreciate it.

Kenneth James Gawrelski: Can I ask.

Kenneth James Gawrelski: It is clear to me that you all would you see yourselves as a growth company right and.

Kenneth James Gawrelski: And unfortunately I haven't been growing so the question I have is do you do you feel like you have enough certainty around.

Kenneth James Gawrelski: And I'm not suggesting that you're not making real attempts to get back to growth. But what I'm getting at is are you willing to make the bet now to say either we're going to spend much more on marketing because we have a better feel for the landscape and you know that we've we've stomached the Timu you know excessive spending for for multiple quarters and now we know what it looks like right um you know and we have a feel for where the macro where the the consumer opportunities is or or is not i guess what i'm just trying to get at is it it feels like there's loyalty you know an alpha coming you know or in a beta coming in the back half but it doesn't i i don't hear yet that kind of the real aggressive move from you so talk to me about how you how you think about that how you feel like the organization is prepared to be more aggressive to get back to [inaudible]

Kenneth James Gawrelski: The different macro factors macro and maybe even micro factors to be more aggressive right.

Kenneth James Gawrelski: To be a bit bolder and your initiatives and I'm, not suggesting that you're not making.

Kenneth James Gawrelski: Bill attempts to get back to growth, but I'm, what I'm getting at is.

Kenneth James Gawrelski: Are you willing to make the bet now to say either we're going to spend much more on marketing because we have a better feel for the landscape and.

Kenneth James Gawrelski: We've we've stomach the team who are you know.

Kenneth James Gawrelski: Excessive spending for for multiple quarters and now we know what it looks like right.

Kenneth James Gawrelski: Yeah.

Kenneth James Gawrelski: And we have a feel for where the macro where the the consumer opportunities is or is not I guess I'm just trying to get at is it it feels like theres loyalty and alpha coming or in a beta coming in the back half, but it doesn't I don't hear yet that kind of the real aggressive move from.

Joshua G. Silverman: Yeah, I think that the internal mantra we have been on for the past year is bold and fast, that we want to move to bigger, bolder, more eye-catching, more attention-grabbing releases, and fewer of the more incremental steps that have been driving a ton of progress in a very ROI positive and very predictable way for the last seven years are not what's going to catch consumer attention and drive that kind of step function change that we are looking for. And so those are very much the kinds of things that we have been leading into. GIF mode being one example where we're launching a whole new experience on Etsy. We launched it very quickly in MVP form.

Speaker Change: So talk to me about how you how you think about that.

Joshua G. Silverman: Do you feel like the organization is prepared to be more aggressive to get back to growth. Yes, I think that we are the internal mantra, we have been on for the past year as bold and fast.

Joshua G. Silverman: That we want to move to bigger bolder more eye catching more attention grabbing releases.

Joshua G. Silverman: And fewer of the more incremental steps that have been driving a ton of progress and a very ROI positive and very predictable way for the last seven years is now within the catch consumer attention.

Joshua G. Silverman: And drive that kind of step function change that we're looking for and so that's very much the kinds of things that we have been leading into gift being one example, where we're launching a whole new experience on Etsy, we launched it very quickly and MVP form and for proud what the team was able to do in a short amount of time and now youre going to see a steadily make that.

Joshua G. Silverman: I'm very proud of what the team was able to do in a short amount of time, and now you're going to see us steadily make that experience much better and continue to really differentiate it versus the rest of the market. I think the work that we're doing in quality, which you know you'll see as we roll through the second half of the year, is going to be very impactful and, in fact, pretty bold.

Joshua G. Silverman: I do think launching a loyalty program in beta like we're trying to launch is going to be interesting, and our economic model looks different than first party, and making economics work when you're a third-party seller is a little different. You're going to see us really lean in there.

Joshua G. Silverman: Variance much better continue to really differentiate that versus the rest of the market I think the work that we're doing in quality, which youll see as we roll through the second half of the year I think is going to be very impactful in fact pretty bold I do think launching a loyalty program.

Joshua G. Silverman: So we are very much looking for frame-breaking, attention-grabbing customer experiences that we can launch, more often whole cloth and less bit by bit, which has pros and cons, but I think in terms of catching consumer attention, it's really important. What I don't think is just spending a lot more is going to be the answer. So, if you know when we hear like marketing lean a lot more into marketing, we think we spend a rational amount of money on marketing.

Joshua G. Silverman: In beta like were trying to launch you'll see.

Joshua G. Silverman: It's going to be interesting in our economic model looks different first party and making the economics work when you have a third party seller so different.

Joshua G. Silverman: Youre going to see us really lean in there so.

Joshua G. Silverman: So we are very much looking for frame breaking attention grabbing customer experiences that we can launch more often whole cloth.

Joshua G. Silverman: And less bit by bit, which has pros and cons, but I think in terms of capturing consumer attention. It's really important what I don't think.

Joshua G. Silverman: We think we're very rational about what our cost of capital is, what you get if you invest a dollar, and how do we make sure every time we invest a dollar, we get more than our cost of capital back. We, I think, have a lot of science and a lot of discipline around that. The other thing I'll say is that minimizing waste is a really important value that we have always held dear. We're in our seventh year of efficiency now.

Joshua G. Silverman: Is just spending a lot more.

Joshua G. Silverman: Is going to be the answer so if when we hear like marketing lean a lot more in the marketing we think it's irrational amount of money on marketing, we're very rational.

Joshua G. Silverman: What is our cost of capital what do you get a few invested dollar in how do we make sure every time, we invested all we get more than our cost of capital, but we I think have a lot of science and a lot of discipline around that the other thing I'll say is you know minimizing waste is a really important value that we have always held the.

Joshua G. Silverman: Every single quarter, we look at every single dollar we spend, and so if you look at the KTLO, the keep the lights on activity required to support an organization of our size and scale, it is a pretty material effort to run a business of our size, scale, and complexity. We have resources to grow. They're not infinite, and so every year we pick a few battles, and we really lean into those with our resources. You could rightly say why last year and the year before were you not focused more on app downloads. The app download is a great idea.

Joshua G. Silverman: Yes.

Joshua G. Silverman: Year of efficiency now every single quarter, we look at every single dollar we spend and so if you look at the key TLO to keep the lights on activity required to support.

Joshua G. Silverman: An organization of our size and scale. It is a pretty material effort to run a business of our size scale and complexity.

Joshua G. Silverman: You should be doing it and I couldn't agree more. It's a great idea relative to the other things we were shipping last year. It didn't make the cut and we are every year making very tough decisions around what are the few things we really want to lean into that we think are bold, that we really think are going to drive growth. By the way, the work the team did last year, we very, we have conviction, we have a shit ton of measurement, sorry a lot of measurement, excuse me, a lot of measurement to say we think it drove up 1.5 billion dollars of incremental value from the products that team shipped last year and we have a lot of conviction that the work they're going to do this year with a 12 percent smaller team is going to drive even more.

Joshua G. Silverman: Yeah.

Joshua G. Silverman: Theyre not infinite and so every year, we pick a few battles and we really lean into those with our resources you could really say why last year a year before we do not focus more on outcomes. Idaho mode is a great idea you should be doing it and I couldn't agree more it's a great idea relative to the other things we were shipping last year it didn't make.

Joshua G. Silverman: The card and we are every year, making very tough decisions around what are the few things, we really want to lean into that we think are bold that we really think are going to drive growth by the way. The work the team did last year.

Joshua G. Silverman: We have conviction.

Joshua G. Silverman: And a measurement sorry, a lot of measurement.

Joshua G. Silverman: Excuse me.

Joshua G. Silverman: A lot of measurement.

Joshua G. Silverman: So we think the work we're doing is meaningfully driving growth. It's driving strong ROI, and you know we're going to keep leaning into things that we think get customers to reconsider. They think they know Etsy. Here's things you didn't know about Etsy that will make you want to come back and come back more often. I just want to slip in a couple quick data points. First of all, the definition of MVP is the most valuable.

Joshua G. Silverman: To say, we think it drove up $1 5 billion.

Joshua G. Silverman: Book value from the products that team shipped last year, and we have a lot of conviction that the work theyre going to do this year with a 12% smaller team is going to drive even more so we think the work we're doing is meaningfully driving growth, it's driving strong ROI.

Unknown Executive: It's the minimum viable product. Minimum viable product, yeah. So that's our shorthand for shipping, not being agile, not waiting for the whole thing to be fully baked.

Joshua G. Silverman: And we're going to keep leaning into things that we think get customers to reconsider they think they know etsy youre things didn't know about that so that gets you to one thing I just want to slip.

Unknown Executive: Second of all, there's a couple of data points that just point to strength. I mean, I think one of the things we feel internally is that we're building really great products and we have really great marketing initiatives, and we're walking straight up that hill into the wind with these macro pressures bearing down on us, and when the wind shifts, we are going to be very well poised, for you know we have a phenomenal product offering, and we have a terrific differentiation from other players out there.

Unknown Executive: So quick data points first of all let me Dennis the MVP most valuable.

Unknown Executive: Minimum.

Unknown Executive: The minimum viable product.

Unknown Executive: That's a short hand for us shipping not.

Unknown Executive: Being agile and not waiting to have the whole thing to be fully baked and.

Unknown Executive: Second of all there's a couple of data points that just points of strength and I think that one of the things. We feel internally is that one really great product and they have really great marketing initiatives and Milwaukee.

Unknown Executive: Okay.

Unknown Executive: And a couple of data points I would point to when we again look at our household income differentiation between lower household incomes and higher household incomes, those above $200,000. We see continued separation that the higher household incomes are actually growing, while the lower household incomes are not. So you can see that behavior quite clearly that people are looking for discounts, they're spending on essentials and things like healthcare, gas, food, whatever, and they just don't have money left in their bank account for things that are highly discretionary.

Unknown Executive: With these macro pressure in China.

Speaker Change: Yes, we are going to be very well poised for.

Unknown Executive: Phenomenal product offering in EMEA are terrific differentiation from other players out there in a couple of data points I would point to.

Unknown Executive: Again, when we look at our household income differentiation between warehouses.

Unknown Executive: And upper and especially the highest household incomes are about two to one.

Unknown Executive: <unk> thousand seat continues.

Unknown Executive: Separation at the higher household incomes are actually growing.

Unknown Executive: So with that.

Unknown Executive: Secondly, our GMS per buyer is still 25% higher than it was in 2019, and the reason that's important is if you look at, I don't know if you've got a chance to listen to the whole call, but we show this slide, and you can look after it shows consumer discretionary spending is coming down and down and down, and it's not all the way down to the levels it was in yes in 2019. It's still about eight percent higher than it was then, but our spend GMS per buyer is 25% higher than it was then.

Unknown Executive: Incomes are not equal you can see quite clearly that people are looking for discounts, they're spending on essentials and things like health care gas food whatever.

Unknown Executive: And they just don't have.

Unknown Executive: Latin America accounts for things that are highly discretionary.

Unknown Executive: Secondly, our gms per buyer is still 25% higher.

Unknown Executive: Then it was in 2019 and naphtha importantly, looking at it.

Unknown Executive: And so listen to the whole call, but we showed a slide and you can look out there as soon as consuming consumer discretionary spending has come down and down and down and it's not all the way down to the level that was in yes. In 2019, it's still about 8% higher than that went bad but our spend gms per buyer is 25% and that was that.

Unknown Executive: So we're still strong among is it like a giant among um, I don't know. You're picking on me. I've already messed up our language enough. We're still quite strong, and we're laying down these initiatives brick by brick that just aren't really getting the benefit of the, the true consumer demand that we would expect to get once we're not facing these strong pressures.

Unknown Executive: So strong.

Unknown Executive: Yes.

Unknown Executive: No.

Unknown Executive: Yeah.

Unknown Executive: I've already.

Unknown Executive: Mess up our language enough.

Unknown Executive: [laughter] quite strong and we're laying down information and threat.

Unknown Executive: Okay. One quick follow-up, just on the big game, I think you would call it, spending. I almost said the super name, but you now have succeeded in 90 days to kind of judge the impact of all brand spending. You really leaned into brand spending. What have you seen as the impact? Where has it worked? Where hasn't it worked?

Unknown Executive: Just arent really getting the benefit.

Speaker Change: That's true.

Unknown Executive: Consumer demand that we may get one we're not facing a song.

Unknown Executive: There are pressures.

Unknown Executive: Understood.

Unknown Executive: Quick follow up just on the <unk> the.

Unknown Executive: The Big game, I think you call it yes.

Joshua G. Silverman: Is it frequency? Occasional buyers? New buyers? What is it?

Unknown Executive: <unk>.

Unknown Executive: I was almost.

Joshua G. Silverman: Super name, but with the <unk>.

Joshua G. Silverman: You know.

Joshua G. Silverman: And 90 days kind of judge the impact of in all brand spending you really leaned into brands I mean, what have you seen as jampacked, whereas it worked warehousing it worked.

Joshua G. Silverman: So if we're talking about, are we talking about the big game ad in particular, or are we talking about GIF mode kind of more generally?

Unknown Executive: No, no, I'm talking about the big game, but I'm also talking about brand advertising. That's a big push on brands.

Joshua G. Silverman: So, in the big game, I'm happy we did it. It did what we wanted it to do, which was to ignite a conversation around the nation about Etsy's new product, GIFL. And that was the goal.

Unknown Executive: Is it frequency occasional buyers what new buyers what is it. So if we're talking about are we done with the big game out in particular with him a gift motive kind of more generally don't know I'm talking about the big game, but I'm also talking about brand advertising, okay, great Big push on brand.

Joshua G. Silverman: I want to compliment the team. We managed to secure the single most viewed spot during the entire big game. And our ad did super well for things like recall and breakthrough and generating interest to try it. So, I think the team's execution of it was really good, but the strategic goal was that we had something to say. And that is that Etsy is the place to go for gifting, and we're launching this new thing.

Joshua G. Silverman: So in big game.

Speaker Change: I am happy we did it.

Joshua G. Silverman: It did what we wanted it to do which was to ignite a conversation around the nation.

Joshua G. Silverman: And that was the goal.

Joshua G. Silverman: Yeah.

Joshua G. Silverman: I want to come with the team we managed to secure the single most viewed.

Joshua G. Silverman: Yes.

Joshua G. Silverman: During the entire big game.

Joshua G. Silverman: Super well for things like recall and break through in generating interest to try so I think the team's execution of it was really good.

Joshua G. Silverman: And I think that that big game ad did a good job. And, you know, we shared some data in the call about, you know, a 200% increase in conversations mentioning Etsy, a significant increase in people associating Etsy as a place to help find gifts. And if we look at gifting GMS, that grew significantly faster than sitewide GMS and was positive in the first quarter. All those, I think, are helpful data points.

Joshua G. Silverman: Paul was yourself.

Joshua G. Silverman: Okay.

Joshua G. Silverman: And that is that Etsy is the place to go giving them. We're launching this new thing and I think that <unk> did a good job, but we showed some data in the call about.

Joshua G. Silverman: 200% increase in conversations.

Joshua G. Silverman: Does that mean we would do it again next year? I'm not sure. It really would depend on, do we have something we really want to announce? Do we have something we really want to say? But getting back to your first question, fast has really taken root. You hear it in the halls of Etsy every single day.

Joshua G. Silverman: And then maybe etsy.

Joshua G. Silverman: We can increase in people associate etsy as a place to help.

Joshua G. Silverman: And if you look at gifting BMS that grew significantly faster than seismic Gms was positive in the first quarter all of those I think are helpful to Duane.

Joshua G. Silverman: Is this bold? It is fast. And a little story behind that, the team pitched it to me in the summer of 2023 and said, "We have this great idea for gift mode. We think it's going to be amazing." And we think we can do it. Great. It's going to be bold, and we propose to launch it in the big game of 2020. And Josh, if you're prepared to be bold, this would be a way to do it.

Joshua G. Silverman: Next im not sure it really would depend on do we have something we really want to announce.

Joshua G. Silverman: Do we have.

Joshua G. Silverman: To say, we're getting back to your first question.

Joshua G. Silverman: That's really taken root.

Joshua G. Silverman: Here in the halls of Etsy every single day is this bold is fast and a little story behind Us <unk> me.

Joshua G. Silverman: In the summer of 2023 and said we have this great idea for gift no we could kind of amazing.

Joshua G. Silverman: And I said, I am prepared to be bold. And I'll meet you halfway, because we're going to do it in the big game of 2024. And that team built and shipped that in four months. And I think it's a great example.

Joshua G. Silverman: And we think you could do it simple.

Joshua G. Silverman: Simple.

Joshua G. Silverman: Okay.

Joshua G. Silverman: Hum.

Joshua G. Silverman: In 2020.

Joshua G. Silverman: I'm proud of the work that that team did. And as we said, it's the kickoff, not the mic drop. There's now a lot more work that's going to happen to make GIF mode better, better, and better.

Joshua G. Silverman: And how should we be prepared to be bolt this would be a way to do it and I said I am prepared to bolt on me you half way, because we're going to do it.

Joshua G. Silverman: But it's that kind of urgency and the willingness to place a bet that I think is exactly what we're talking about. Now, a big game ad is not going to make or break a company. It either works, or it doesn't work.

Joshua G. Silverman: Before.

Joshua G. Silverman: And that team building ships that four months.

Joshua G. Silverman: And I think a great example, I'm proud of the work that that team Dan as we've said, it's the kickoff nice drop there is not a lot more work that's going to happen.

Joshua G. Silverman: If we don't do it the next quarter, it's fine. You know, we're not betting the company on these things. We're putting a few million extra dollars into a spot. And from that, we learn. And, you know, we'll see whether we do it next year or not, but it would be predicated on having some important launch that we really want to talk about. Thank you so much. Thank you.

Joshua G. Silverman: Alright.

Joshua G. Silverman: Is that kind of urgency and a willingness to place a bet that.

Joshua G. Silverman: I think that's exactly what we're talking about now a big game out is not going to make or break the clip works or it doesn't work we don't deal with the next quarter. It's fine we're not been accompanied with these things we're putting.

Unknown Executive: Thanks so much. Thank you. Thank you.

Unknown Executive: $2 million in too.

Unknown Executive: Our final question comes from Mark Kelly with Stiefel.

Unknown Executive: Spot and from that we learn and you will see whether we do it next year or not it would be appreciated.

Mark Patrick Kelley: Hey Mark. Hey, how is everybody? Thank you very much for squeezing me, and I appreciate it. Thanks for staying late. Yeah, of course. My first question, and I know you touched on this a little bit in your prepared remarks, but can you just walk me through the dynamics of Easter a little bit? Was it not as much of a tailwind because it was like the exact last day of the quarter and maybe some shipments occurred in Q2? I guess maybe some of the dynamics there would be helpful just to start.

Mark Patrick Kelley: Some portable.

Mark Patrick Kelley: The only one I would talk about.

Speaker Change: Thanks, So much change on thank you.

Mark Patrick Kelley: Okay.

Mark Patrick Kelley: And the Q1, if I get it.

Mark Patrick Kelley: Okay.

Mark Patrick Kelley: From Mark Kelley with Stifel.

Mark Patrick Kelley: Hey, Mark.

Mark Patrick Kelley: Thank you very much for squeezing me in I appreciate it thanks for staying late yeah of course.

Mark Patrick Kelley: My first question and I know you touched on this a little bit in the prepared remarks, but can you just walk me through the dynamics of Easter a little bit is it.

Unknown Executive: Okay, so the headline is that it was a bigger headwind for March than we expected, and an equal better tailwind for April than we expected. We obviously knew when Easter was, we obviously forecasted it, and so it was just a bigger impact than we expected. And from what I can see from others, and I can't validate this, but with little data, it looks like it might have been a bigger impact for us than for other people.

Unknown Executive: Was it not as much of a tailwind because there was like the exact last day of the quarter and maybe some shipments occurred in Q2, I guess, maybe some of the dynamics there would be helpful. Just to start.

Unknown Executive: Okay. So the headline is that it was a bigger headwind to march than we expected and an equal.

Unknown Executive: Better tailwind to April.

Speaker Change: Got it.

Unknown Executive: And the truth is we have several hypotheses as to why, but no really great data. It candidly wouldn't matter because it was a headwind to March and a tailwind to April of roughly equal and opposite size. The only reason it matters is it fell right smack between Q1 and Q2.

Unknown Executive: He obviously knew when east was obviously forecast to them and so it was just a bigger impact because we track that and from what I can see from others and I can't.

Unknown Executive: Oh <unk>.

Unknown Executive: Look.

Unknown Executive: So that's been a bigger impact for us than for our people.

Unknown Executive: If it was all in March, it wouldn't matter. So we haven't spent an enormous amount of time trying to dissect something that, ultimately, was just a timing shift. But that's what it was.

Unknown Executive: And the truth is we have several hypotheses as to what no really great data. It candidly wouldn't matter because it was a headwind to margin and help with the April of roughly equal and opposite cause.

Unknown Executive: I'll just add, it's not just Easter; it's spring break. And what happens when people go on spring break is they're spending money on travel instead of spending money on Etsy. And they're also traveling, so they're not shopping. And that shift, we think, had a pretty big impact, more so than we thought it would in March. And so that's why, in a way, it's a tailwind to April, because last year when they were traveling, and it was, We get them back now because they're not traveling anymore.

Unknown Executive: The only reason that matters is it fell right smack between Q1 and Q2.

Unknown Executive: Okay.

Unknown Executive: If it's all in March it was.

Unknown Executive: Yeah.

Unknown Executive: Our Miss in my time trying to dissect that ultimately was just a timing shift.

Unknown Executive: But that's where.

Unknown Executive: It's not just Easter and spring break.

Unknown Executive: And what happens when people go into spring break and they're spending money on travel and spending money on it teams are traveling they're not shopping and access we think kind of the impact more so than we thought it would on March and so that's why in a way tailwind to April because last year when they were traveling in it.

Unknown Executive: They're focusing on commerce. Also, Easter's not a huge holiday for Etsy. I'm told I'm Jewish, but it's not such a huge gifting holiday. So, you know, people do buy things for their brunches and their dinners and things like that. Easter baskets and apparel for the kids and stuff like that.

Unknown Executive: Okay.

Unknown Executive: When we get them back.

Unknown Executive: Okay.

Unknown Executive: They're not traveling.

Unknown Executive: Something on it.

Unknown Executive: But it's not like Mother's Day or a winter holiday, so to speak. It was really more of the way we forecasted it and the time spent shopping. Yeah, and what Rachel said, you know, the leading hypothesis of ours is that travel during that period impacted this holiday more than others. And it again speaks to the macro that people are just having to make tougher choices. And if they're spending their discretionary budget traveling to see the family, it's just fewer dollars, they've got to make tougher choices, and they're going to just have to spend less on discretionary products.

Unknown Executive: Commerce.

Unknown Executive: Easter is not a huge holiday for us.

Unknown Executive: Okay.

Unknown Executive: Tom.

Unknown Executive: Okay. All right.

Unknown Executive: And if they can't get the same holiday so people do buy things were there.

Unknown Executive: Brexit and dinner.

Unknown Executive: At eastern assets.

Unknown Executive: Apparel for kids and stuff like that but it's not like our mothers day or.

Unknown Executive: Or.

Unknown Executive: Holiday so to speak.

Unknown Executive: It was really more of the.

Unknown Executive: Well mainly for asset isn't it.

Unknown Executive: <unk> and shopping.

Unknown Executive: And then what Rachel said, the leading hypothesis of ours.

Unknown Executive: That travel during that period impacted this holiday more than others and that again speaks to the macro that people are just hanging around for choices.

Unknown Executive: Perfect, you clarifying that and making you repeat yourself. The second one is, you know, just the commentary around, you know, the team building GIF mode in four months. Can you talk a little bit more about just using large language models to be more efficient on the R&D side? That sounds like a pretty short window, and maybe, you know, what else we could think about there in the future? Yeah, well, large language models were really helpful for gift mode. So, for example, there are 200 different personas in gift mode. And then, within each persona, there are three to five different gift ideas.

Unknown Executive: And if they're spending discretionary budget traveling to see the family. It's just fewer dollars they've got to make tougher choices and they're kind of just spent less discretionary.

Unknown Executive: Okay.

Unknown Executive: Okay.

Unknown Executive: So you've got clarifying that and then making you repeat yourself.

Unknown Executive: The second one is just the commentary around.

Unknown Executive: The team building gift mode in four months.

Unknown Executive: Can you talk a little bit more about this.

Unknown Executive: Using large language models to be more efficient on the R&D side that sounds like a pretty short window and maybe.

Joshua G. Silverman: And the ability to ask large language models, what are 200 examples of personas, and it wasn't quite this simple. But, you know, it does give you a head start on that. If I'm a foodie who also loves to travel, what are three things I might buy on Etsy, three different ideas for gifts on Etsy?

Joshua G. Silverman: Or what else, we could think about their industry.

Joshua G. Silverman: Large language models were really helpful for gift mode. So for example, there's 200 different persona and gift mode and then within each persona there are.

Joshua G. Silverman: Three to five different gift ideas.

Joshua G. Silverman: Like, it does help to come up with a lot of ideas more quickly. The productivity gains, large language models are starting to help us with coding productivity as well. But in addition to that, we talked last year about paved paths and democratizing machine learning, and that work is paying off. Not all of this is large language model machine learning, but we use a lot of machine learning. For example, once we have an idea for a gift, what are the five very best examples of that idea amongst tens of thousands of opportunities on Etsy? We use machine learning for that, and so the democratization of machine learning has also been really helpful.

Joshua G. Silverman: And the ability to ask a large language models. What are 200 examples of persona and it wasn't quite that simple, but it does give you a head start on that if I'm a <unk>.

Joshua G. Silverman: <unk>, who also loves to travel what are the three things I might bond etsy three different ideas for gifts on etsy.

Joshua G. Silverman: It does help.

Joshua G. Silverman: To come up with a lot of ideas more quickly.

Joshua G. Silverman: The.

Joshua G. Silverman: Productivity gains.

Joshua G. Silverman: Large language models are starting to help us with coding productivity as well.

Joshua G. Silverman: But in the data that we talked last year about key paths and democratizing machine learning and that work is paying off and not all of this is large language model machine learning, but we use a lot of machine learning once we have an idea of our gift what's the five very best examples of that idea amongst tens of thousands of.

Joshua G. Silverman: We do make steady investments in allowing the teams to work more quickly, and those pay off. So I'm proud of the engineering culture at Etsy that allows our teams to move really quickly. We have a very entrepreneurial and really agile, really fast development culture at Etsy, and this is a great example of that. All right, perfect. Thank you very much. I appreciate you listening.

Joshua G. Silverman: Of opportunities on let's see we will see learning for that and so the democratization of machine learning has also been really helpful. We do make steady investments in allowing the team to work more quickly and those both pay off so I am proud of the engineering culture.

Joshua G. Silverman: At Etsy that allows our teams to move really quickly we have a very entrepreneurial and really agile really fast development culture.

Joshua G. Silverman: And this is a great example of that.

Speaker Change: Alright perfect.

Joshua G. Silverman: Very much appreciate you asking that.

Speaker Change: Operator, I think that's it for Tonight.

Speaker Change: Thank you all.