BROOKLYN, N.Y., Feb. 25, 2021 /PRNewswire/ — Etsy, Inc. (NASDAQ: ETSY), which operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world, today announced financial results for its fourth quarter and full year ended December 31, 2020.
“Exceptional fourth quarter performance, with consolidated GMS and revenue growth of approximately 118% and 129% respectively, capped off a transformative year for Etsy,” said Josh Silverman, Etsy, Inc. Chief Executive Officer. “2020 was an inflection point in history for e-commerce and for Etsy, with millions of buyers choosing us for their everyday needs as we lived up to our mission to ‘Keep Commerce Human.’ We are particularly gratified that circumstance met preparedness, highlighting the agility of our team and the power of our differentiated strategy.”
Fourth Quarter 2020 Highlights
Factors contributing to Etsy’s very strong fourth quarter performance included acceleration in non-mask product categories, better than expected macro conditions, successful product and marketing initiatives and an extended holiday buying season including a record-setting ‘Cyber Five’ on Etsy.com.
Many of these factors drove traffic of new and repeat buyers, positively impacting conversion rate and GMS.
Marketing: we expanded investments across all marketing channels to bring new buyers and help drive frequency among existing buyers:
- In television and digital video, our U.S strategy included both direct response ads and those designed to create an emotional connection with consumers. We ran holiday campaigns in the United Kingdom and Germany, and rolled out our first-ever Spanish language ads. These campaigns delivered strong return on investment and positively impacted Etsy brand metrics.
- Brand marketing spend, including television and digital video, was 23% of our overall marketing spend in the fourth quarter, or approximately $49 million.
- We launched new on-site landing page experiences to help buyers more easily navigate holiday listings, extended the duration of our Cyber campaign, and expanded our successful influencer partnerships.
Product: focused on our Right to Win strategy, we improved customer experiences across the Etsy marketplace including:
- Making additional progress closing the semantic gap to improve search, driving higher conversion and repeat purchase rates, as we translate search queries to what buyers actually want, show more listings, and reduce null result searches.
- Expanding personalized search to other devices, such as our app, improving recommendations by showing same-shop recommendations based on previous listing views, and adding pathways to the ‘similar items’ page.
- Deepening human connections through engagement and adoption of listing videos, which expanded to approximately 3.2 million by December 31, 2020. We’re featuring videos in many of our marketing channels, including site-wide Cyber Week sales.
- Building trust by focusing on the core buying experience, improving shipping transparency and post-purchase experiences. For example, we added an expected delivery date filter to show items available by a certain date.
- Launching ‘buy now, pay later’ installment options for U.S. buyers, making higher priced items more accessible, and expanding Etsy Payments to two new countries.
- Enhancing our Etsy Ads service, improving the functionality and user experience for sellers, contributing to 74% year-over-year consolidated on-site advertising revenue growth in the fourth quarter.
- Offsite Ads, our advertising program which promotes Etsy sellers’ listings on multiple platforms, continued to yield encouraging returns, with opt-out rates less than 2% during the quarter. We began charging sellers this ‘success based’ transaction fee on May 4, 2020; with 9% of Etsy GMS subject to these fees in the second half of 2020.
Financial Guidance and Outlook
Given the continued uncertainty of future macroeconomic conditions as a result of the ongoing COVID-19 pandemic, Etsy will currently not issue guidance for the full year 2021, and will continue providing guidance on a quarterly basis until otherwise stated. Below is Etsy’s guidance for consolidated GMS, revenue and Adjusted EBITDA for the first quarter of 2021.