Etsy

2019 

Integrated
Annual Report

Keeping Commerce Human

At Etsy, we often say economic empowerment is our day 
job. Each day, our team acts with boldness and urgency 
to support the millions of creative entrepreneurs around 
the world who depend on us. We help them build thriving 
businesses while doing something they love, bring them 
loyal buyers, and enable them to compete in an ever-
changing retail landscape. 

Our work has never felt more important or more relevant 
than it does in 2020. This year ushered in unprecedented 
global events that shuttered main streets, schools, and 
places of worship, while testing our mettle as individuals, 
families, and community members. Etsy has enabled small 
business owners around the world to stay open through 
these extraordinary circumstances, creating a virtual Main 
Street of 2.7 million1 shop owners, where person-to-person 
interactions endure in a time of social distancing. The  
65 million items in our Etsy marketplace represent moments 
in life that carry deep meaning, whether it’s commemorating 
a milestone event or simply taking comfort in spending 
more time with your family at home.  

Etsy stands for something different, important, and 
enduring. And that gives us confidence that, whatever 
volatility the world may face, Etsy will continue to play a 
vital role connecting buyers and sellers around the world, 
helping to keep commerce human. We take heart in the 
importance of our work and our team is inspired to go above 
and beyond, even during uncertain times. Our marketplace 
model allows us to scale our investments and respond to 
changing conditions more rapidly than traditional retail 
models, which have higher fixed costs, inventory liabilities, 
and cumbersome supply chains. This gives us the resilience 
and flexibility to build for the long term and achieve our 
full potential. Building upon Etsy’s solid foundation, our 
leadership team and more than 1,200 global employees2 
have continued to make Etsy a more meaningful place to 
shop and a more powerful platform on which to sell.

Our 2019 results are a proofpoint of these efforts. 
Consolidated Gross Merchandise Sales (GMS) grew 27% 
to nearly $5 billion, consolidated revenue rose 36% to 
approximately $818 million, and we recorded net income 
of approximately $96 million. We achieved these strong 
results through bold new initiatives, including engaging 
marketing campaigns, new product launches, the expansion 
of our reach beyond our core Etsy.com marketplace, and 
trailblazing impact initiatives that benefited our community 
and the planet.  

1  Active sellers as of December 31, 2019, including Reverb.
2  Etsy had 1,240 employees as of December 31, 2019, including Reverb employees.

Here are just a few highlights:

•  We made free shipping a core part of the shopping experience. 
Now, when buyers come to Etsy to discover amazing items they 
can’t find elsewhere, they won’t be surprised or discouraged by 
higher than anticipated shipping fees.

•  To increase brand awareness and keep Etsy top of mind, 
we ramped our investments in mid- and upper-funnel 
marketing channels. In particular, our U.S. TV campaigns 
focused on showcasing the breadth of categories and 
unique merchandise available only on Etsy. We are extremely 
encouraged by the results so far, which delivered a lift in visits 
and improved buyer purchase intent.

•  We significantly evolved our advertising services platform. 

Sellers can now take control of their onsite advertising through 
Etsy Ads, and our new Offsite Ads service will help sellers gain 
visibility on some of the world’s largest search engines and 
social media platforms without any upfront costs or risks.

•  In August 2019, we acquired Reverb, a marketplace that—

much like Etsy—is firmly grounded in creativity and human 
connection. Reverb has emerged as the destination for buying 
and selling musical instruments and we have a focused strategy 
for continued growth, leveraging the marketplace’s strengths 
combined with Etsy’s product and marketing experience. 

•  We moved swiftly to complete our migration to Google 

Cloud in early 2020. This transition has played a key role in 
accelerating our product development efforts, our ability 
to leverage machine learning, and further advance our 
improvements in search and discovery.

All of these efforts deepened our competitive moat, comprised 
of four key pillars that collectively form our “Right to Win.” By 
leveraging these elements, we believe we will continue to stand 
out among other e-commerce platforms and marketplaces, 
strengthen our relationships with our customers, attract more 
new buyers, and increase buyer engagement and frequency.  

Our Right to Win

Best-in-class 
search  
and discovery

Human 
connections

A trusted brand

Our collection of unique items

Keeping Commerce Human2019 Integrated Annual Report

•  Ecological impact: In February 2019, Etsy became the 

first global e-commerce platform to offset 100% of carbon 
emissions from shipping. This effort has garnered widespread 
attention from the business community and we’re encouraged 
to see a number of global companies have unveiled carbon 
neutral commitments over the past year. Placing messaging 
about the initiative on our cart page also led to a conversion 
lift, a clear signal that consumers are shopping their values 
and that being a good corporate citizen is not only the right 
thing to do, but is increasingly a competitive advantage.

We entered 2020 on solid footing and remain excited about our 
long-term market opportunity. Our team has always prioritized 
sustainable growth, and we will continue to take a balanced 
approach to investing in and building for our future. The world 
needs Etsy more than ever, and we are acting with urgency to 
serve our community and advance our mission. Thank you for 
joining us on this journey and for your continued support.

Onward

Josh Silverman,  
Chief Executive Officer, Etsy

We are also proud that this Annual Report is an integrated one. 
As you read through this 2019 Integrated Annual Report, you’ll 
see that we’ve once again included our impact results alongside 
our financial results. This reflects how we run our business. Our 
impact work is fully integrated within our operations – it’s part 
of our DNA and it makes us stronger. We have clear goals in 
place across each of our three impact pillars.

Economic impact
Make creative 

entrepreneurship a path 

to economic security and 

personal empowerment

Social impact
Enable equitable access  

to the opportunities that  

we create

Ecological impact
Build long-term resilience 

by eliminating our carbon 

impacts and fostering 

responsible resource use

Some highlights of our 2019 impact efforts include:

•  Economic impact: Our sellers’ success has a ripple effect. As 
they make more sales, they invest more into their businesses, 
which creates opportunities for others. In 2019, the Etsy 
marketplace drove over $6 billion in U.S. seller economic 
output and created 1.7 million jobs.3 That’s enough to employ 
the entire city of Phoenix, Arizona, which is the fifth largest 
city in the U.S.   

•  Social impact: Nurturing a diverse and inclusive workforce 
makes us a stronger, more resilient business. We are able to 
ideate, innovate, and serve our customers more effectively. For 
many years, Etsy has served as a clear leader when it comes to 
gender diversity in tech. Last year, we committed to taking a 
more focused approach to increasing the percentage of Black 
and Latinx employees in our workforce. I’m extremely proud 
of the progress we made in just one year. In 2019, Black and 
Latinx employees made up 15% of U.S. Etsy hires, increasing 
total representation to 10.4%, up from 8.5% in 2018. 

3  According to ECONorthwest.

UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-K 
_________________________

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2019

OR

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             

Commission File Number 001-36911 

_________________________

ETSY, INC.

(Exact name of registrant as specified in its charter)
_________________________

Delaware

20-4898921

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

117 Adams Street

Brooklyn NY

(Address of principal executive offices)

11201

(Zip code)

    (718) 880-3660 
(Registrant’s telephone number, including area code) 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class

Common Stock $0.001 par value per share

Trading Symbol(s)
ETSY

Name of each exchange on which registered
The Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 
Yes  

    No  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. 
Yes  

    No  

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to 
file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes 

No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period 
that the registrant was required to submit such files).    Yes  

    No  

 
 
  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller 
reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller 
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Non-accelerated filer

Accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period 
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange 

Act).    Yes  

    No  

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 
2019 (the last business day of the registrant’s most recently completed second fiscal quarter), was approximately 
$7,314,888,157.

The number of shares of common stock outstanding as of February 21, 2020 was 117,949,068.

Portions of the registrant’s Proxy Statement for its 2020 Annual Meeting of Stockholders, to be filed with the Securities and 
Exchange Commission no later than 120 days after December 31, 2019, are incorporated by reference in Part III of this Annual 
Report on Form 10-K. 

Documents Incorporated By Reference

 
Etsy, Inc.
Table of Contents

Note Regarding Forward-Looking Statements
Part I

Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

Item 5.

Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.

Item 10.
Item 11.
Item 12.

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

Part II

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Selected Consolidated Financial and Other Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information

Part III

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

Item 13.
Item 14.

Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

Part IV

Item 15.

Item 16.

Exhibits, Financial Statement Schedules
Exhibit Index
Form 10-K Summary
Signatures

Page

1
1
25
48
48
48
48
49
49

51
54
90
91
139
139
139
140
140
140
140

140
140
141
141
141
143
144

Unless the context otherwise requires, we use the terms “Etsy,” the “Company,” “we,” “us” and “our” in this Annual Report on 
Form 10-K, (“Annual Report”), to refer to Etsy, Inc. and, where appropriate, our consolidated subsidiaries.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating and Financial 
Metrics” for the definitions of the following terms used in this Annual Report: “active buyer,” “active seller,” “Adjusted 
EBITDA,” “GMS,” “international GMS,” and “mobile GMS.”

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws. 
Forward-looking statements include information relating to the strategic fit, benefit of and impact on our financial performance 
of our acquisition of Reverb Holdings, Inc. (“Reverb”), the impact of our strategy, marketing and product investments on future 
gross merchandise sales (“GMS”) and revenue growth, our ability to continue to benefit from our transition to the cloud, and 
the impact of our strategy, and the impact of our free shipping initiative and our revamped Etsy Ads platform launching in the 
second quarter of 2020 on our future financial performance. Forward-looking statements include all statements that are not 
historical facts. In some cases, forward-looking statements can be identified by terms such as “anticipates,” “believes,” “could,” 
“estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” or 
similar expressions and the negatives of those terms.

Forward-looking statements are not guarantees of performance and involve known and unknown risks, uncertainties, and other 
factors that may cause our actual results, performance, or achievements to be materially different from any future results, 
performance, or achievements expressed or implied by the forward-looking statements. Those risks include those described in 
the section titled “Risk Factors” and elsewhere in this Annual Report. Given these uncertainties, you should read this Annual 
Report in its entirety and not place undue reliance on any forward-looking statements in this Annual Report.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These 
statements are based upon information available to us as of the date of this Annual Report and, although we believe such 
information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements 
should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant 
information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. 

Moreover, we operate in a competitive and rapidly changing environment. New risks and uncertainties emerge from time to 
time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking 
statements made in this Annual Report. In light of these risks, uncertainties, and assumptions, the future events and trends 
discussed in this Annual Report may not occur and actual results could differ materially and adversely from those anticipated or 
implied in the forward-looking statements.

Forward-looking statements represent our beliefs and assumptions only as of the date of this Annual Report. We disclaim any 
obligation to update forward-looking statements.

Item 1. Business.

Overview

PART I.

Etsy operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers. Our mission is 
to “Keep Commerce Human,” and we’re committed to using the power of business and technology to strengthen communities 
and empower people around the world. Etsy was founded in 2005. 

Our primary marketplace, Etsy.com, is the global destination for unique and creative goods. The Etsy marketplace connects 
creative entrepreneurs with thoughtful consumers looking for items that are intended to be special, reflect their sense of style, 
or represent a meaningful occasion. Our sellers are the heart and soul of Etsy, and our technology platform allows our sellers to 
turn their creative passions into economic opportunity. We have a seller-aligned business model: we make money when our 
sellers make money. We offer Etsy sellers a marketplace with millions of buyers along with a range of seller tools and services 
that are specifically designed to help our creative entrepreneurs generate more sales and scale their businesses.

Buyers come to the Etsy marketplace to be inspired and delighted by items that are crafted and curated by our creative 
entrepreneurs. We are focused on attracting potential buyers to Etsy for those “special” purchase occasions that happen 
throughout the year, and everyday items that have meaning. We are deepening engagement with our existing buyers by 
inspiring purchases across our many retail categories and shopping occasions. These special purchase occasions can occur 
many times throughout the year and include items that reflect an individual's unique style; gifting that demonstrates thought 
and care; and celebrations that express creativity and fun. Buyers tell us that they come to Etsy because Etsy sellers offer items 
that they can’t find anywhere else. In fact, in a 2019 survey of Etsy buyers, 88% of buyers agreed that Etsy has items that you 
can’t find anywhere else. 

Special purchase occasions can happen many times throughout the year when a buyer is decorating a home, selecting an outfit 
for a special event, planning a celebration for a special moment, or buying a gift for someone special.

1

In August 2019, we acquired Reverb. The Reverb marketplace is a leading global online marketplace dedicated to buying and 
selling new, used, and vintage musical instruments, with a vibrant community of buyers and sellers all over the world. Reverb, 
now a wholly-owned subsidiary of Etsy, Inc., is included in all financial and other metrics from August 15, 2019 (the date of 
acquisition), unless otherwise noted.

As of December 31, 2019, the Etsy and Reverb marketplaces connected 2.7 million active sellers to 46.4 million active buyers. 
Our buyers and sellers are located all over the world and our six core geographic markets are the United States, United 
Kingdom, Canada, Germany, Australia, and France. We will continue to invest in these markets, as this is where we have our 
strongest concentration of both buyers and sellers, and continue to evaluate geographies in which to make strategic 
investments. There are currently nearly 66 million items for sale across many retail categories in our marketplaces. In 2019, our 
sellers generated $5.0 billion of Gross Merchandise Sales (“GMS”), approximately 58% of which came from purchases made 
on mobile devices. In 2019, our top six retail categories on the Etsy marketplace were homewares and home furnishings, 
jewelry and personal accessories, apparel, craft supplies, paper and party supplies, and beauty and personal care, and with the 
addition of Reverb, we now have significant exposure to the market for used musical instruments. We are a global company, 
and 36% of our 2019 GMS was generated when a seller or buyer, or both, were located outside of the United States.

Our revenue is diversified, generated from a mix of marketplace activities and other optional services we provide to sellers to 
help them generate more sales and scale their businesses.

Marketplace revenue is comprised of the fees a seller pays us for marketplace activities. Marketplace activities include listing 
an item for sale, completing transactions between a buyer and a seller, and using our payments platforms to process payments, 
including foreign currency payments. Etsy fees include the 5% transaction fee that an Etsy seller pays for each completed 
transaction, inclusive of shipping fees charged, the $0.20 listing fee for each item listed (for up to four months), and fees for 
Etsy Payments, our payment processing product. Etsy Payments processing fees vary between 3.0% to 4.5% of an item’s total 
sale price, including shipping, plus a flat fee per order, depending on the country in which a seller’s bank account is located. 
When a foreign currency payment is processed, Etsy earns additional fees. As of December 31, 2019, Etsy Payments was 
available in 36 countries and 12 currencies and nearly all sellers in countries where Etsy Payments is available are required to 
use the service. In fact, 89% of total GMS from the Etsy marketplace (“Etsy.com GMS”) was processed through Etsy Payments 
in 2019, up from 86% in 2018. Our ability to expand Etsy Payments into additional countries is dependent upon the third-party 
providers we use to support this service. Reverb  fees include the 3.5% transaction fee that a Reverb seller pays for each 
completed transaction, inclusive of shipping fees charged, and fees for payment processing. There are no listing fees for the 
Reverb marketplace. Marketplace revenue also includes revenue generated through our commercial partnerships, which was 
recorded in its own Other revenue line prior to the fourth quarter of 2019. 

Services revenue is comprised of the fees a seller pays us for our optional services (“Services”). For the Etsy marketplace, 
primary optional services include advertising services, which allow Etsy sellers to pay for prominent placement of their listings 
in search results, and Etsy Shipping Labels, which allows Etsy sellers in the United States, Canada, United Kingdom, and 
Australia to purchase discounted shipping labels. For the Reverb marketplace, optional services include Bump, an on-site 
advertising product that enables Reverb sellers to determine their own ad rates as a percentage of their item’s final sale price; 
and Reverb Shipping Labels, which gives Reverb sellers access to discounted shipping rates. 

2

Our Opportunity

We believe that the nature of commerce is continuing to evolve: more people are choosing to purchase goods online and many 
consumers are looking for unique items as an alternative to mass produced goods. We estimate that the online market size 
across all relevant retail categories for the Etsy marketplace within our six core geographic markets, United States, United 
Kingdom, Canada, Germany, Australia and France, represents a $249 billion market opportunity, and a $1.7 trillion market 
opportunity when offline is included. By 2023, we estimate that the online market opportunity will expand to $437 billion and 
$2 trillion when offline is included.

Our Platform

We leverage technology to connect people around the world through commerce. Our platform includes the Etsy and Reverb 
online marketplaces, our seller tools and services, our passionate and engaged sellers and buyers, and our technology. Our 
commitment to transparency and integrity underpins our platform and establishes trust within our marketplaces and our 
community. 

Key Components of Our Platform

Our Marketplaces

The Etsy Marketplace

Our primary marketplace, Etsy.com, is where thoughtful buyers come to discover a broad selection of unique goods that are 
hard to find elsewhere. In a world of increasing automation and commoditization, Etsy celebrates creativity and human 
interaction. We believe this marketplace is characterized by several unique qualities, including:

•  Unique Products: Etsy boasts a large assortment of handmade, customized, personalized, vintage, and craft supply 

products from all over the world. There are currently approximately 65 million items listed on the Etsy marketplace. We 
intend to continue to improve the customer experience by investing in our search and discovery capabilities to help buyers 
efficiently find the special items they are looking for and deliver a brand promise around shipping to align with our buyers’ 
expectations of when they can expect to receive our unique items. 

•  Global Reach: Etsy’s six core geographic markets are the United States, United Kingdom, Canada, Germany, Australia and 
France, in addition to sellers and buyers in nearly every other country around the world. Our platform makes it easy for 
Etsy buyers and Etsy sellers to interact across borders even if they do not speak the same language and wish to transact in 
different currencies. We use innovative machine translation technology to translate listings, reviews, Promoted Listings, 
and conversations between Etsy buyers and Etsy sellers. Our payments platform allows Etsy sellers to offer Etsy buyers a 
wide range of payment options. In 2019, 40% of Etsy sellers were located outside the United States, and 37% of our GMS 
was generated between an Etsy seller, Etsy buyer, or both, located outside of the United States.

•  Organic Traffic Base: We’ve built a loyal, global base of Etsy buyers on the platform without significant investment in 

acquisition marketing until 2013, eight years after being founded. The vast majority of visits to the Etsy marketplace came 
through organic channels, including a large portion from buyers visiting Etsy directly as well as from non-paid channels 
such as search, social, email, and push notifications. 

•  Connection Between Etsy Buyers and Sellers: We believe that human connection is central to buyer engagement. We 

emphasize that the items listed for sale on the Etsy marketplace are brought to life by real people. Additionally, buyers are 

3

able to connect directly with sellers in order to ask questions and personalize or customize items to their specifications. We 
believe that meaningful interactions with Etsy sellers differentiate us from other e-commerce platforms, drive buyer 
engagement, and keep our buyers coming back. When buyers and sellers interact on the platform their conversion rate and 
average order value is significantly higher.

•  Connected Experience Across all Devices: We want to engage Etsy buyers wherever they are and to provide an enjoyable 
and accessible shopping experience no matter how they come to the Etsy marketplace. Our mobile website and our “Buy 
on Etsy” mobile app for Etsy buyers include search and discovery, curation, personalization and social shopping features. 
We offer a connected experience through each channel, desktop, mobile web, and mobile app, to help ensure that no matter 
what device Etsy buyers use they will have the best possible experience. Additionally, our “Sell on Etsy” mobile app helps 
Etsy sellers operate their shops and manage orders. For the year ended December 31, 2019 approximately 59% of Etsy.com 
GMS was generated on a mobile device, up from 55% in 2018. We are focused on increasing conversion rates in general; 
however, we are particularly focused on our mobile app. Our mobile app conversion rate is the channel with the highest 
conversion rate, followed by desktop and mobile web, however, mobile web contributes the largest share of traffic 
followed by desktop and our mobile app. Therefore, if mobile app visits continue to grow as a percentage of overall visits, 
we believe it could be a tailwind to future conversion rate gains. 

•  Buyer Intent; People Come to the Etsy marketplace to Browse and be Inspired: Our platform is designed to provide a 
personalized search experience to Etsy buyers, adjusting in real time based on transaction data and previous browsing 
history. A large portion of our buyers come to Etsy not in search of a specific item, but to browse and be inspired. We are 
continuing to build more sophisticated algorithms that allow us to deliver more personalized results to our buyers, utilizing 
browse and transaction data to surface items they didn’t know they wanted. In 2019, we launched a number of initiatives to 
enhance search, including improving recommendations, making the home page more personalized and dynamic allowing 
buyers to more easily pick up where they left off, and incorporating more attributes to our search algorithm to improve 
search ranking. We also incorporated additional advanced machine learning techniques such as improved model engines 
and continuous feature expansion in order to drive further search improvements. All of this helps bring fun to the discovery 
and shopping experience. We believe we have significant opportunities to further enhance our search and discovery 
capabilities and plan to leverage our machine learning technology, including increased model complexity and further 
contextual cues to deliver an even more personalized shopping experience. Lastly, our full migration to Google Cloud, 
which we completed in the beginning of 2020, is expected to further improve our search and discovery effectiveness.

The Reverb Marketplace

Reverb, our wholly-owned subsidiary, operates as a standalone marketplace and was founded on the principle that buying 
musical instruments should be easy and affordable. This unique two-sided marketplace connects buyers and sellers of new, 
used, and vintage musical gear from all over the world. The foundation of Reverb is our community of musicians from all 
walks of life that utilize the platform for income to support their families, inspiration to fuel their passions, and instruments to 
create new music. 

We believe the unique characteristics of this marketplace include:

•  A strong brand in a large, fragmented market, with healthy growth dynamics.
•  On-site product promotion and a strong content-driven marketing strategy, which is in the early stages of fueling 

incremental growth for the platform.

•  Reverb's seller base spans many countries, including key international markets such as Canada, United Kingdom, France, 

Germany and Australia. However, the U.S. is Reverb’s largest market by GMS volume. 

Our Seller Tools and Services

Etsy Seller Tools and Services

Seller tools and services help Etsy sellers generate more sales and scale their businesses. In addition to driving incremental 
revenue streams, these offerings play a key role in supporting our sellers’ businesses and driving sales. We believe we can grow 
our optional paid services in three ways: expand the utility of existing services, expand the geographic reach of existing 
services, and launch new services offerings. Our paid services include:

•  Advertising: Etsy’s advertising platform allows sellers to pay for prominent placement of their listings in search results. 
During 2019, 16.6% of active Etsy sellers used our advertising platform, up from 15.1% in 2018. In 2019, we enhanced 
our dynamic cost-per-click onsite advertising, which we call Promoted Listings, by expanding inventory across all devices 
and applying our improved search algorithms to drive ad relevance and higher click-through rates, leading to accelerated 
4

year-over-year revenue growth for this service. In the third quarter of 2019 we combined Promoted Listings and Google 
Shopping, an off-site Etsy seller marketing tool, into one unified ad platform, called Etsy Ads. In the second quarter of 
2020, Etsy is planning to launch a new advertising service for Etsy sellers, called Offsite Ads. Etsy will pay the upfront 
costs to promote Etsy sellers’ listings on multiple internet platforms without any upfront costs for sellers. When a shopper 
clicks on an online offsite ad featuring a seller’s listing and purchases from their shop, the seller will pay Etsy an 
advertising fee on that order - only when they make a sale. The Etsy Ads service will be a dedicated on-site advertising 
program for Etsy sellers to promote their listings to shoppers on Etsy.

•  Etsy Shipping Labels: This service allows Etsy sellers in the United States, Canada, United Kingdom, and Australia to 

purchase discounted United States Postal Service, FedEx, Canada Post, Royal Mail, and DAI Post shipping labels through 
our platform. The ability to print the shipping labels at home reduces the cost and time it takes Etsy sellers to ship items to 
Etsy buyers, reduces the chance for administrative error through features such as auto population of shipping addresses, 
and automatically provides tracking information when available and shipping notifications to buyers. During 2019, 22.9% 
of active Etsy sellers in regions where Etsy Shipping Labels was offered used this product, down from 24.7% in 2018. The 
reduction in percentage of active sellers using Etsy Shipping Labels was driven by the expansion of the service in the 
United Kingdom and Australia in late 2018 where we continue to expand the scope of these services. In addition, 
throughout the year we’ve added Pitney Bowes, ChitChats, and UShip; logistics solutions that help Etsy sellers save time 
and money. 

In addition to our paid services, we provide a wide range of tools and educational resources to give Etsy sellers the support they 
need to manage the administrative side of their businesses. According to our bi-annual seller survey, most recently conducted in 
2020, for every hour that an Etsy seller spends making her products, she spends almost another hour doing business-related 
tasks, including inventory management, marketing, shipping, customer service, and accounting. Our tools and educational 
resources help manage these administrative burdens.

• 

Seller Tools: We offer a variety of free tools to Etsy sellers, including our Shop Manager dashboard, which we launched in 
2017, and which serves as a centralized hub for Etsy sellers to track orders, manage inventory, view metrics and statistics, 
and have conversations with their customers across all of their Etsy shops. We also made significant improvements to Etsy 
seller analytics pages in 2019 to provide additional insights regarding traffic acquisition for their shops. In 2018, we added 
a single, easy-to-use interface that streamlines sellers’ bills and payments accounts. Other marketing tools include Targeted 
Offers, our sales and promotions tool, and our social media tool, which help Etsy sellers with their marketing needs and 
allows them to stand out on and off the Etsy platform. Also, through a partnership with Intuit, Etsy sellers in the United 
States and the United Kingdom can simplify their accounting and bookkeeping.

•  Education: We provide extensive educational resources to teach Etsy sellers how to start, manage, and scale their 

businesses on our platform, including blog posts, video tutorials, the Etsy Seller Handbook (available on Etsy.com), 
Etsy.com online forums, and insights from Etsy.com support teams. In addition to our resources, Etsy sellers connect 
through self-organized Etsy Teams to build personal relationships with other Etsy sellers, collaborate, educate, and support 
each other as they build their independent creative businesses. 

5

Our focus on supporting our sellers in starting, managing, and scaling their businesses strengthens our marketplace and 
positions it for continued growth. When our sellers succeed, Etsy succeeds. 

How an Etsy Seller Spends Her Time

2020 seller survey

Reverb Services

Reverb has several services that drive velocity in the marketplace and relieve friction in the purchase funnel. 

Bump: This is an on-site advertising platform, which enables Reverb sellers to gain prominent placement in search in exchange 
for a higher percentage of their items’ final sale price. 

Reverb Shipping Labels: Reverb provides sellers access to shipping labels at wholesale discounts, which reduces the cost and 
time it takes Reverb sellers to ship musical gear, and provides transparency through tracking information of when a buyer can 
expect to receive their item.

Our Passionate and Engaged Etsy Sellers and Buyers

Etsy Sellers

Our sellers are the backbone of Etsy’s business and what matters most to them is our community of approximately 46 million 
buyers. In order to continue to support our sellers’ growth, we are focused on making Etsy the best place to start and run a 
creative business. We serve those creative entrepreneurs around the world who choose to pursue their passions, offering them a 
global base of millions of buyers and a cohesive suite of tools and services to help them run their business and drive sales. Etsy 
sellers range from hobbyists to professional merchants, and have a broad range of personal and professional goals. Our 2020 
seller survey found that 61% of Etsy sellers are multi-channel sellers and on average Etsy is their primary source of sales. 

According to the 2020 seller survey:

• 

• 

• 

• 

• 

83% identify as women;

66% consider their Etsy shop to be a business; 

95% run their shops from their homes;

82% aspire to grow their sales in the future; and

64% started their Etsy shop as a way to supplement income.

6

Our 2020 seller survey found that 29% of Etsy sellers were pursuing their creative business as their sole occupation. 

Etsy Sellers

Etsy Buyers

The Etsy marketplace supports a community of approximately 46 million buyers, who value self-expression, unique items, and 
buying directly from creative entrepreneurs. In a 2019 survey of Etsy buyers, 88% of buyers agreed that Etsy has items that you 
can’t find anywhere else. Etsy buyers can enjoy a personalized shopping experience and build relationships through direct 
interactions with Etsy sellers. Etsy buyers can also purchase customized items and craft supplies from Etsy sellers. By shopping 
on the Etsy marketplace, Etsy buyers are supporting creative entrepreneurs in their local communities and around the world. 
The vast majority of visits come to the Etsy marketplace from organic channels, including a large portion from buyers visiting 
Etsy directly as well as from non-paid channels such as search, social, email, and push notifications.

We are focused on driving more new buyers to the platform and encouraging existing buyers to purchase more often. New 
buyers are considered unique buyers that have never made a purchase on the Etsy marketplace. During 2019, we had 19 million 
new Etsy buyers. GMS from new buyers was up 11% year-over-year and represented approximately 16% of overall Etsy.com 
GMS GMS from existing Etsy buyers grew 24% year-over-year in 2019 and represented approximately 84% of overall 
Etsy.com GMS, an increase compared to last year.

Repeat Etsy buyers represent shoppers who made purchases on two or more days in the previous 12 months. We believe repeat 
purchases demonstrate the loyalty of Etsy buyers. In 2019, on the Etsy marketplace, approximately 41.4% of our active buyers 
were repeat buyers, a slight increase compared to last year. Within that category, we are particularly focused on increasing our 
number of habitual buyers, or Etsy buyers who have spent $200 or more and made purchases on six or more days in the 
previous 12 months. As of December 31, 2019 habitual buyers grew to 2.5 million, an increase of 22.9% compared to 2018. 
The growth in habitual buyers has accelerated for five consecutive quarters and is faster than overall active buyer growth, 
indicating our efforts to convert buyers into more loyal shoppers on the Etsy marketplace are seeing signs of success.

7

Active Buyers by Purchase Type

8

Etsy Seller & Buyer Retention

On the Etsy marketplace, our active sellers and active buyers typically remain so for multiple years. For example, 36.2% of 
active sellers and 37.9% of active buyers as of December 31, 2016 continued to be active sellers and active buyers through their 
fourth year on the platform and 33.1% of active sellers and 37.5% of active buyers as of December 31, 2015 continued to be 
active sellers and active buyers through their fourth year on the platform. In addition, as of December 31, 2019, 20.3% of active 
sellers have been selling on Etsy for more than four years. Likewise, as of December 31, 2019, 27.4% of active buyers have 
been Etsy buyers for more than four years.

Year 1

Year 2

Year 3

Year 4

Year 1

Year 2

Year 3

Year 4

AVG GMS

2012

$1,079

$2,598

$3,935

$4,557

AVG GMS

PER SELLER

2013

$1,260

$3,110

$4,190

$4,620

PER BUYER

2014

$1,465

$3,325

$4,228

$4,615

2012

2013

2014

$96

$96

$99

$163

$173

$181

$161

$168

$174

$157

$164

$169

2015

$1,558

$3,296

$4,062

$4,939

2015

$101

$158

$163

$180

2016

$1,660

$3,198

$4,278

$5,004

2016

$101

$157

$174

$187

Cohorts of 2016, 2015, 2014, 2013, and 2012 Active Sellers and Active Buyers

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our 
Performance—Growth and Retention of Active Buyers and Active Sellers” for more information.

9

          
Our Technology 

Our engineering team has built a sophisticated platform that enables millions of sellers and buyers to smoothly transact across 
borders, languages, and devices. We collect and analyze large volumes of data to enhance the performance of our platform and 
capture many user-generated events every day to produce personalized recommendations, improve our search experience and 
test features on our website. 

Our use of machine learning algorithms on the Etsy marketplace creates an engaging shopping experience and also helps Etsy 
sellers and Etsy buyers connect across our platform. We apply proprietary machine learning to the search and discovery 
processes, enabling shoppers to more easily browse, filter, and buy that perfect item, even when they may not have something 
specific in mind. Machine translation and machine learning also play an important role in making it easy for Etsy sellers and 
Etsy buyers to connect even if they don’t speak the same language. We translate listings within our Etsy marketplace, which we 
believe significantly increases the inventory available to non-English speaking Etsy buyers and gives Etsy sellers access to a 
truly global audience.

In addition, our technology infrastructure allows us to scale our efforts across the platform. In late 2017, we announced our 
migration to Google Cloud, which we believe will enable us to focus on growing the Etsy marketplace, prioritize the buyer and 
seller experience, improve our search and discovery effectiveness, and increase the pace of launching new features. We 
achieved a significant milestone in 2019 by successfully migrating our search infrastructure to Google Cloud, and in February 
2020 we completed the migration. We believe our cloud infrastructure will result in increased engineering efficiency shifting 
the focus from maintaining on-premise systems to product engineering work that is more strategic. We also believe it will 
enhance our overall infrastructure by providing faster processing speed, improved page load time, and more nimble fulfillment 
to capacity on an as needed basis.

Commitment to Integrity and Transparency

Members of our community rely on us to maintain trusted marketplaces. The trustworthiness of our platform and the 
connections among people in our community are cornerstones of our business. Our policies are designed to encourage 
transparency and clearly outline the rights and responsibilities of sellers and buyers participating on our platform. Transparency 
within our community helps to support our trustworthiness. For example, we have an impact strategy on which we provide our 
progress in this Annual Report. 

We are focused on enhancing customer service for our sellers and buyers, which we believe bolsters the trustworthiness of our 
platform. For example, in 2019, we continued to evolve our offerings with Zendesk to improve our customer experience. We 
expanded live chat support to our sellers, and phone support is now available for both buyers and sellers. 

On the Etsy marketplace, we strive to give the Etsy buyer comfort that she is purchasing goods from a shop that adheres to 
certain principles. Fundamentally, we require that goods listed on Etsy be handmade or unique and assembled with production 
partners, vintage, or craft supplies. Etsy buyers have a high degree of insight into Etsy sellers’ business practices. Our policies 
ask Etsy sellers to be transparent about themselves, their businesses and the goods they sell. We also annually report statistics 
regarding Etsy shops that do not meet our guidelines or which list items that infringe third party rights. 

We have dedicated teams and sophisticated tools to help enforce our policies. For example, our Integrity team uses a 
combination of machine learning, automated systems, and community-generated flags to review items listed on the Etsy 
marketplace and Etsy shops that may violate our policies. Our Trust and Safety team helps to prevent and detect fraud through 
human review and automated tools and algorithms. We also recognize that sometimes transactions don’t go as planned. When 
that happens, our online Case System provides a way for Etsy sellers and buyers to communicate with each other to resolve 
disputes. We also establish trust by emphasizing the person behind every transaction. We deepen connections between Etsy 
sellers and buyers through our direct communication tools, seller stories on our website and apps, and in-person events, 
highlighting personal relationships as a key part of the Etsy experience. 

10

Our Strategy 

Since mid-2017, we have focused our strategy on growing the Etsy marketplace in our six core geographies and executing upon 
four key initiatives to make Etsy a better place to shop and sell. These initiatives involved making investments and 
improvements in search and discovery, trust and reliability, marketing capabilities, and seller tools and services. Successfully 
delivering on these initiatives has resulted in significant improvements to and growth of our marketplace.

In order to deliver sustainable long-term growth, we are building upon this strategy to incorporate additional elements that we 
believe, over time, will make Etsy a best-in-class marketplace. Our investments in product, marketing, and talent will be 
focused on capitalizing on what we believe are our core competitive advantages; or what we think of as our “Right to Win.”

The foundation of Etsy’s competitive advantage is our collection of our seller’s unique items, which we believe, when 
combined with best-in-class search and discovery, human connections, and a trusted brand, will enable us to continue to stand 
out among other e-commerce platforms and marketplaces. We lean into the humanity and vibrancy of our market, increasing 
the connection between Etsy buyers and sellers, establishing strong trust signals for product quality and customer experience, 
removing barriers to purchase, and giving Etsy sellers more ways to generate sales and scale their businesses.

Ultimately, the goal of our long-term strategy is to drive more new buyers to the website, give existing buyers reasons to come 
back more often, encourage buyers to spend more per order, and fuel success for our sellers, which we believe will drive 
growth. The Etsy marketplace has a significant number of habitual buyers (Etsy buyers who have purchased $200 or more on 
Etsy and have made purchases on six or more purchase days in the last 12 months) and we believe we have the ability to attract 
many more buyers like them to the Etsy marketplace and convert them into habitual buyers. For example, we believe we can 
deepen engagement with our existing buyers by inspiring purchases in additional categories and on additional occasions. We 
also plan to continue supporting our sellers by focusing on enhancing the seller tools and services that will drive buyer demand. 
We see a number of similarities between the levers of growth for the Etsy and Reverb marketplaces, including improving 
search and discovery, making selling and buying easier, and building a global brand and user community. We believe that we 
are just getting started improving the virtuous cycle of growth for our marketplaces.

Further expanding on these two primary components of our long-term strategy we will:

1. Focus on the Etsy marketplace in our six core geographies:

The first component and foundation of our growth strategy remains to focus on the Etsy marketplace in our six core 
geographies (United States, United Kingdom, Canada, Germany, Australia and France). These six locations are where we have 
our largest concentrations of Etsy buyers and sellers and, consequently, where we believe we have the most significant 
opportunities for growth. We are building local marketplaces globally, deepening local Etsy communities around the world, 
each with its own ecosystem of Etsy sellers and buyers. A barometer of our local market vibrancy is the performance of our 
international domestic trade route, by which we mean GMS generated between a non-U.S. buyer and a non-U.S. seller both in 
the same country. Etsy.com GMS from this trade route grew approximately 37% in 2019 compared to 2018, making it the 
fastest growing category of international GMS. We see significant opportunity to deliver a more localized shopping experience 
to non-U.S. buyers in the future, including investments in the elevation of local products and sellers in search, improving non-
English search, and more local specific marketing and campaigns.

11

While we focus on our six core markets, we will also continue to evaluate additional geographies in which to make strategic 
investments. For example, our initial investments in India, particularly in regard to seller acquisition, have led to the region 
becoming a focus area outside of our core geographies. 

Our growth strategy also includes inorganic investments. Our 2018 strategic referral agreement with DaWanda in Germany and 
the 2019 acquisition of Reverb are examples of these types of investments. We may continue to acquire additional 
complementary marketplaces that are a strategic fit for the business and brand. 

2. Build a sustainable competitive advantage:

As described above, the second component of our strategy is predicated around building a sustainable competitive advantage 
centered on these four key elements:

Our Collection of our Sellers' Unique Items: The foundation of Etsy’s competitive advantage is our collection of our sellers’ 
unique items. Etsy sellers’ unique items are a privilege we earn by being the best place for them to start and grow a creative 
business. The unique nature of the inventory we sell requires investment in a distinctive set of capabilities that helps high-
quality items get made, listed, found, sold and delivered through our marketplace. The Etsy marketplace features approximately 
65 million items listed across multiple retail categories, and boasts a large assortment of unique, handmade, vintage, and craft 
supply products from all over the world. This unique inventory is the result of having created a community that attracts, 
supports, and retains some of the world’s most talented makers. In a 2019 survey of Etsy buyers, 88% agreed that Etsy has 
items that you can’t find anywhere else - that something “special in a sea of sameness.” We believe the Etsy marketplace is the 
only place where you can find the depth and breadth of one-of-a-kind items, including millions that can be customized and 
personalized. The breadth and depth of the special items listed in the Etsy marketplace is the linchpin of our long-term strategy. 
However, the unique nature of these items requires that we invest in the other three elements of our long-term strategy: search 
and discovery, human connections, and our trusted brand in order deliver a best-in-class marketplace experience.

Best-in-class search and discovery: We are focused on continuing to develop a search and discovery experience that unlocks 
the value of the unique items in the Etsy marketplace. With millions of items listed on Etsy that don’t map to a catalog or a 
stock keeping unit (“SKU”), our challenge is delivering world-class search and discovery technology that surfaces the right 
product to the right buyer at the right time in order to drive sales and buyer satisfaction. We are utilizing artificial intelligence 
and machine learning to help personalize the search experience and enable Etsy buyers to more easily browse, filter and find 
the item they desire.

In 2019, we significantly enhanced the search and discovery experience on the Etsy marketplace. As a result of migrating our 
search efforts to Google Cloud, we made foundational upgrades to our search ranking algorithms, which will continue to enable 
us to provide more relevant search results to buyers on the Etsy.com platform. We’ve transitioned from linear to nonlinear 
models, which now leverage a deeper understanding of the relationship between items, attributes and users. As we continue to 
iterate on our search initiatives, our algorithms will learn and deliver a more personalized shopping experience, deepening 
buyer engagement and driving greater visit and purchase frequency. 

The power of human connections: Our mission to “Keep Commerce Human” is a vital part of our strategy. We will continue to 
emphasize the role that humans play in every aspect of our business. What makes the Etsy marketplace special isn’t just the 
items in our marketplace; it’s also the stories of how those items were brought to life by the hands of real people. Our Etsy 
buyer experience highlights the story behind each item, and also allows Etsy buyers to create their own stories by working with 
an Etsy seller to personalize or customize items to their exact specifications. In fact, data shows that when an Etsy buyer 
reaches out to an Etsy seller with a question they are significantly more likely to purchase a listing from that seller, and 
conversion rate goes up as response time gets shorter.

In 2019, we rebranded our conversation tool on the Etsy marketplace and transformed the look and feel of the interface from an 
e-mail-like platform to a chat-like experience, enabling faster interactions that are more focused on shopping. We believe that 
fostering and elevating the quality of these interactions will enable us to drive buyer engagement, loyalty, and purchase 
frequency, and continue to differentiate Etsy from other e-commerce platforms. Shifting over time from our current item-first 
framework to one that highlights Etsy shops and sellers is a way to elevate the role of our makers and their creative processes. 
Our goal is to bring human connections to life through improvements in member support, seller forums management, our brand 
and marketing campaigns, and other ways that we promote the Etsy marketplace. Lastly, we plan to deepen loyalty by creating 
opportunities for Etsy buyers to experience Etsy across categories and occasions.

12

A brand you can trust: We will continue to focus on being a brand that inspires trust in our customers across the buyer journey 
-- when they search, purchase, anticipate and receive their special items, and all the steps in between. Since Etsy sellers have 
relatively unknown brands and unbranded items, we aim to ensure that the Etsy brand is recognized and valued for providing 
an excellent end-to-end experience. There are two key elements to being a trusted brand: standing for something that customers 
understand and rely on, and delivering a purchasing experience that feels safe and supportive. Our goal is to bolster trust in the 
Etsy brand, Etsy sellers, the items available on Etsy, and in the overall Etsy experience. In 2019, we implemented free shipping 
on the Etsy marketplace by providing sellers with tools and support that enable them to offer free shipping on orders of $35 or 
more to U.S. buyers. In September, we launched a campaign to notify Etsy buyers of the new program, highlighting shops that 
are offering free shipping on their orders. As of December 31, 2019, 65% of items on the Etsy marketplace offered free 
shipping to U.S. buyers, 74% of U.S. listing views were eligible to ship for free, and 48% of orders were delivered with free 
shipping.

We plan to continue to optimize the Etsy buyer shopping experience - to make it less fragmented and to remove friction. This 
will involve making sure that Etsy buyers can find what they want, can easily keep exploring for inspiration, and have the right 
information to make a purchase decision at every step along the way. We see significant room for additional improvements to 
our landing pages, our ability to surface recommendations, and continued improvements to friction in the purchase funnel. By 
focusing on free shipping, transparent delivery and returns, we can help buyers better understand what to expect across the Etsy 
marketplace.

In addition, we plan to evolve our marketing strategy and investments to reinforce our core brand promise in the minds of Etsy 
buyers. We believe that we can continue to broaden our channel mix in the marketing funnel from predominately investing in 
performance marketing, which we expect to continue to drive buyer growth through channels such as product listings ads on 
Google or search engine marketing. We also expect to continue spend on upper funnel strategies like TV, expand new 
marketing channels such as social, optimize our spend in these channels and work with sellers to help them better understand 
the impact of marketing on their business (for example, with improved seller analytics tools), and to promote their shops to 
Etsy buyers.

In addition to growth of the Etsy marketplace, our growth strategy includes continuing to evaluate opportunities for inorganic 
growth through investment, including geographic expansions (such as our 2018 agreement with DaWanda), adjacent 
marketplaces (such as our 2019 purchase of Reverb), vertical marketplace extensions, and technology additions, to name some 
examples. 

13

Our Mission, Guiding Principles, and Team

Mission

Our mission to “Keep Commerce Human” is rooted in our belief that, although automation and commoditization are parts of 
modern life, human creativity cannot be automated and human connection cannot be commoditized. This is what makes us 
distinct from mass retailers. Our mission guides our daily decisions, sets the path for our long-term success and reinforces our 
commitment to make a positive social, economic, and environmental impact.

Guiding Principles

Our guiding principles define who we strive to be, inform our business decisions, and enable us to achieve our mission. Our 
guiding principles are:

We commit to our craft. Our work has the power to change lives. That’s why we strive to continuously learn and excel at what 
we do.

We minimize waste. Time, resources, and energy are precious, so we focus only on what will have the greatest impact.

We embrace differences. Diverse teams are stronger, and inclusive cultures are more resilient. When we seek out different 
perspectives, we make better decisions and build better products.

We dig deeper. The best solutions to meaningful challenges are rarely easy or obvious. We stay curious, balance our intuition 
with insights, and decide with confidence.

We lead with optimism. We believe in our mission, and we believe in each other. We see the world as it is, set ambitious goals, 
and inspire one another with generosity of spirit. Together, we reimagine what’s possible.

Our Team

We pride ourselves on our action-oriented, values-based, and purpose-driven work culture. Our employees work hard to bring 
innovative ideas and energy every day to strengthen the experience for our sellers and buyers. As of December 31, 2019, we 
had 1,240 employees worldwide, 184 of which were Reverb employees.

14

d
o
o
g

e
r
a

t
a
h
t

s
n
o
i
t
u
l
o
s

n
i
w
-
n
i
w
d
l
i
u
b

l
l
i

w
d
e
e
c
c
u
s

o
t

d
e
n
o
i
t
i
s
o
p

t
s
e
b

s
e
i
n
a
p
m
o
c

e
h
t

t
a
h
t

d
n
a

t
r
o
p
p
u
s

y
e
h
t

s
e
s
s
e
n
i
s
u
b

e
h
t

f
o

e
r
o
m
g
n
i
d
n
a
m
e
d

e
r
a

s
r
e
m
u
s
n
o
c

t
a
h
t

e
v
e
i
l
e
b

e

W

.
y
g
e
t
a
r
t
s

s
s
e
n
i
s
u
b

d
n
a

,
s
e
l
p
i
c
n
i
r
p

g
n
i
d
i
u
g

,
n
o
i
s
s
i
m

r
u
o

g
n
i
n
g
i
l
a

y
b

y
l
b
a
n
i
a
t
s
u
s

g
n
i
w
o
r
g

o
t

d
e
t
t
i

m
m
o
c

e
r
a

e

W

.
t
i
f
o
r
p

d
n
a

,
t
e
n
a
l
p

e
h
t

,
e
l
p
o
e
p

r
o
f

d
n
a

,
e
l
b
a
r
u
s
a
e
m

,
c
i
f
i
c
e
p
s

e
r
o
m
e
b

o
t

s
l
a
o
g

r
u
o

f
o

e
m
o
s

d
e
t
a
d
p
u

d
n
a

d
e
r
u
t
a
m
e
v
a
h

e
w

,
7
1
0
2

n
i

y
g
e
t
a
r
t
s

t
c
a
p
m

i

r
u
o

g
n
i
c
n
u
o
n
n
a

e
c
n
i
S

.
y
g
e
t
a
r
t
s

s
s
e
n
i
s
u
b

r
u
o

g
n
i
t
n
e
m
e
l
p
m
o
c

9
1
0
2

r
u
o

n
i

b
r
e
v
e
R
d
e
d
u
l
c
n
i

e
v
a
h

e
w

,
e
l
b
a
c
i
l
p
p
a

e
r
e
h
W

.
s
l
a
o
g

t
c
a
p
m

i

r
u
o

o
t

s
e
t
a
l
e
r

t
i

s
a

y
l
t
n
e
r
a
p
s
n
a
r
t

s
t
l
u
s
e
r

r
u
o

t
r
o
p
e
r

o
t

e
u
n
i
t
n
o
c

l
l
i

w
e
w
d
n
a

,
y
g
e
t
a
r
t
s

s
i
h
t

n
o

e
t
u
c
e
x
e

e
w
s
a

s
s
e
r
g
o
r
p

r
u
o
e
r
a
h
s

o
t

d
e
s
a
e
l
p
e
r
a

e

W

.
t
n
e
i
l
i
s
e
r

e
r
o
m
d
n
a

r
e
g
n
o
r
t
s

s
u

e
k
a
m
y
e
h
t

,
r
e
h
t
e
g
o
t

d
n
a

;
s
c
i
r
t
e
m

l
a
i
c
n
a
n
i
f

r
u
o

o
d

e
w
s
a

,
s
c
i
r
t
e
m

t
c
a
p
m

i

r
u
o

o
t

y
t
i
l
i
b
a
t
n
u
o
c
c
a

d
n
a

e
n
i
l
p
i
c
s
i
d

,
s
u
c
o
f

e
m
a
s

e
h
t
y
l
p
p
a

e

W

.
s
e
r
u
t
a
m
k
r
o
w

t
c
a
p
m

i

r
u
o

d
n
a
w
o
r
g

e
w
s
a

e
r
u
t
u
f

e
h
t

n
i

y
g
e
t
a
r
t
s

t
c
a
p
m

i

r
u
o

e
v
l
o
v
e

o
t

e
u
n
i
t
n
o
c

o
t

t
c
e
p
x
e

e

W

.
d
n
u
o
b

e
m

i
t

d
n
a

g
n
i
c
n
a
v
d
a

e
l
i
h
w
d
l
r
o
w
e
h
t

n
o

e
v
a
h

o
t

t
n
a
w
e
w

t
c
a
p
m

i

l
a
t
n
e
m
n
o
r
i
v
n
e

d
n
a

,
l
a
i
c
o
s

,
c
i
m
o
n
o
c
e

e
v
i
t
i
s
o
p

e
h
t

s
t
c
e
l
f
e
r

t
a
h
t

y
g
e
t
a
r
t
s

t
c
a
p
m

i

n
a

d
e
p
o
l
e
v
e
d

e
v
a
h

e

W

.
s
t
h
g
i
l
h
g
i
h

s
s
e
r
g
o
r
P

:
y
l
b
a
t
o
n

t
s
o
m

,
g
n
i
d
u
l
c
n
i

,
s
a
e
r
a

s
u
c
o
f

r
u
o

f
o

e
e
r
h
t

l
l
a

s
s
o
r
c
a

s
s
e
r
g
o
r
p

t
n
a
c
i
f
i
n
g
i
s

e
d
a
m
e
w

,
9
1
0
2

n
I

n
o
b
r
a
c

a

e
m
o
c
e
b

o
t

y
e
n
r
u
o
j

r
u
o
g
n
i
t
e
l
p
m
o
c

,
g
n
i
p
p
i
h
s
m
o
r
f

s
n
o
i
s
s
i
m
e

f
o
%
0
0
1

t
e
s
f
f
o

o
t

n
o
i
t
a
n
i
t
s
e
d

g
n
i
p
p
o
h
s

e
n
i
l
n
o

r
o
j
a
m

t
s
r
i
f

e
h
t

e
m
a
c
e
b

e
c
a
l
p
t
e
k
r
a
m
y
s
t
E
e
h
T

e
l
b
u
o
d

o
t

l
a
o
g

r
u
o

g
n
i
d
e
e
c
x
e

d
n
a

,
e
c
n
a
l
a
b

r
e
d
n
e
g

n
i

y
r
t
s
u
d
n
i

e
h
t

g
n
i
d
a
e
l

,
y
t
i
s
r
e
v
i
d

h
g
u
o
r
h
t

d
e
n
e
h
t
g
n
e
r
t
s

,
t
n
e
l
a
t

s
s
a
l
c
-
d
l
r
o
w
n
i
a
t
e
r

d
n
a

t
c
a
r
t
t
a

o
t

d
e
u
n
i
t
n
o
c

e

W

d
n
a

;
9
1
0
2

n
i

y
s
t
E

t
a

s
e
i
t
i
r
o
n
i
m
d
e
t
n
e
s
e
r
p
e
r
-
r
e
d
n
u

f
o

g
n
i
r
i
h

.
y
n
a
p
m
o
c

l
a
r
t
u
e
n

;
e
n
i
l
e
s
a
b

8
1
0
2

r
u
o
m
o
r
f

%
7
.
4
1

p
u

,
y
m
o
n
o
c
e

.

.

S
U
e
h
t

o
t

n
o
i
l
l
i
b

6
1
.
6
$

d
e
t
u
b
i
r
t
n
o
c

s
r
e
l
l
e
s

y
s
t
E

•

•

•

s
s
e
r
g
o
r
P
d
n
a

y
g
e
t
a
r
t
S
t
c
a
p
m

I

r
u
O

5
1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
r
o
f

s
e
i
t
i
n
u
t
r
o
p
p
o

i

c
m
o
n
o
c
e
w
o
r
g

d
n
a

e
t
a
e
r
C

.
s
r
u
e
n
e
r
p
e
r
t
n
e

e
v
i
t
a
e
r
c

3
7
.
5
$

f
o

e
n

i
l

e
s
a
b

r
u
o
m
o
r
f

e
s
a
e
r
c
n

i

%
7
.
4
1

a

,
y
m
o
n
o
c
e

.

.

S
U
e
h
t

o
t

n
o

i
l
l
i

b

6
1
.
6
$

t

d
e
u
b
i
r
t
n
o
C

-

i

c
m
o
n
o
c
e

’

s
r
e

l
l

e
s

y
s
t
E

.

.

S
U
e
b
u
o
D

l

3
2
0
2

y
b

t
u
p
t
u
o

e
h
t

o
t

e
t
u
b
i
r
t
n
o
c

s
e
t
a
t
S
d
e
t
i
n
U
e
h
t

n

i

:
s
r
e

l
l

e
s

s
r
e

l
l

e
s

y
s
t
E
s
y
a
w
e
h
t

l

e
r
o
p
x
e

o
t

,

m

r
i
f

g
n
i
t
l
u
s
n
o
c

i

c
m
o
n
o
c
e

y
s
t
E

,
9
1
0
2

n

i

t
a
h
t

d
n
u
o
f

e
W

.
e
p
a
c
s
d
n
a

l

i

c
m
o
n
o
c
e

l

a
n
o

i
t

a
n

t
n
e
d
n
e
p
e
d
n

i

n
a

,
t
s
e
w
h
t
r
o
N
O
C
E
h
t
i

w
y
d
u
t
s

t
c
a
p
m

i

i

c
m
o
n
o
c
e

d
n
o
c
e
s

’

s
y
s
t
E
d
e
n
o
s
s
m
m
o
C

i

i

S
L
A
O
G
0
2
0
2

S
S
E
R
G
O
R
P
9
1
0
2

S
L
A
O
G
9
1
0
2

t
c
a
p
m

I

c
i
m
o
n
o
c
E
r
u
o
g
n
d
n
a
p
x
E

i

t
n
e
m
r
e
w
o
p
m
e

l

a
n
o
s
r
e
p

d
n
a

y
t
i
r
u
c
e
s

i

c
m
o
n
o
c
e

o

t

t

h
a
p

a

i

p
h
s
r
u
e
n
e
r
p
e
r
t
n
e

e
v
i
t
a
e
r
c

e
k
a
M

:
t
c
a
p
m

I

c
i
m
o
n
o
c
E

i

c
m
o
n
o
c
e

’

s
r
e

l
l

e
s

y
s
t
E

.

.

S
U
e
b
u
o
D

l

:
t
e
g
r
a
T

;
8
1
0
2
n

i

n
o

i
l
l
i

b

.
3
2
0
2

y
b

t
u
p
t
u
o

e
h
t

l

y
o
p
m
e

o
t

s
b
o

j

h
g
u
o
n
e

,
y
m
o
n
o
c
e

r
e
k
r
o
w

t
n
e
d
n
e
p
e
d
n

i

e
h
t

n

i

s
b
o

j

n
o

i
l
l
i

m
7
.
1

;

Z
A

i

,
x
n
e
o
h
P

f

o

t

d
e
a
e
r
C

-

y
t
i
c

e
r
i
t

n
e

t
n
e
m
r
e
w
o
p
m
e

l

a
n
o
s
r
e
p

d
n
a

i

c
m
o
n
o
c
e

l

.
s
r
e
d
o
h
e
k
a
t
s

r
u
o

r
e
t
s
o
F

g
n
o
m
a

r
o
f

s
e
i
t
i
n
u
t
r
o
p
p
o

i

c
m
o
n
o
c
e

e
t
o
m
o
r
P

-

.
s
r
u
e
n
e
r
p
e
r
t
n
e

e
v
i
t
a
e
r
c

:
t
a
h
t

s
m
a
r
g
o
r
p

l

i

a
c
o
s

n

i

t
s
e
v
n
I

:
t
e
g
r
a
T

n

i

l

e
p
o
e
p

o
t

n
o
i
t
a
c
u
d
e

l

i

a
c
s
u
m
e
d
v
o
r
P

i

-

i

g
n
g
n
i
r
b

d
n
a

y
t
i
v
i
t
a
e
r
c

r
i
e
h
t

i

g
n
s
s
e
n
r
a
h

y
b

e
u
a
v

l

i

c
m
o
n
o
c
e

l

a
n
o
i
t
i
d
d
a

n

i

n
o

i
l
l
i

b

5
4
.
3
$

d
e
c
u
d
o
r
P

,
d
n
a

;
e
m
o
c
n

i

n

i

n
o

i
l
l
i

b

2
$

n
a
h
t

e
r
o
m
d
e
a
r
e
n
e
G

t

-

-

i

,
p
h
s
r
u
e
n
e
r
p
e
r
t
n
e

e
v
i
t
a
e
r
c

l

e
b
a
n
e

t
a
h
t

s
e
v
i
t
a
i
t
i
n

i

d
n
a

s
m
a
r
g
o
r
p

n

i

d
n
a
s
u
o
h
t

0
8
5
$

r
e
v
o

d
e
t
s
e
v
n

I

.
t
e
k
r
a
m
o
t

s
t
c
u
d
o
r
p

e
u
q
n
u

i

y
p
o
r
h
t
n
a

l
i

h
P

h
g
u
o
r
h
t

d
n
a

,
t
n
e
m
r
e
w
o
p
m
e

l

a
n
o
s
r
e
p

d
n
a

y
t
i
r
u
c
e
s

i

c
m
o
n
o
c
e

o
t

s
h
t
a
p

r
i
e
h
t

n
o

s
r
e

l
l

e
s

y
s
t
E

t
r
o
p
p
u
s

.
y

l
l

a
b
o
g

l

s
e
v
i
t
a
i
t
i
n

i

n
o
i
t
a
c
u
d
e

l

i

a
c
s
u
m
s
t
r
o
p
p
u
s

i

h
c
h
w

i

,
s
e
v
G
b
r
e
v
e
R

t
n
e
m
e
g
a
g
n
E
y
t
i
n
u
m
m
o
— C

t
a
h
t

s
m
a
r
g
o
r
p

f
e

i
l

e
R

i

r
e
t
s
a
s
D
y
s
t
E
d
n
a

i

,
p
h
s
r
u
e
n
e
r
p
e
r
t
n
E

t
f
a
r
C

,
s
e
i
t
i

C

r
e
k
a
M

r
u
o

i

g
n
d
u
c
n

l

i

.
d
e
e
n

s
e
i
t
i
n
u
m
m
o
c

r
i
e
h
t

n

i

e
m

i
t

r
e
e
t
n
u
o
v

l

f
o

s
r
u
o
h

0
0
4
,
3

r
e
v
o

d
e
t
a
n
o
d

s
e
e
y
o
p
m
e

l

y
s
t
E

l

,
y
e
v
i
t
c
e

l
l

o
C

.

m
a
r
g
o
r
p

f
f

i

l

O
e
m
T
r
e
e
t
n
u
o
V
s
y
s
t
E
h
g
u
o
r
h

’

t

s
r
u
e
n
e
r
p
e
r
t
n
E
e
v
i
t
a
e
r
C
r
o
f
g
n
i
t
a
c
o
v
d
A

r
u
o

e
c
n
a
v
d
a

t
a
h
t

s
e
c

i

i
l

o
p

c

i
l

b
u
p

r
o
f

e
t
a
c
o
v
d
A

,
t
n
e
m
r
e
w
o
p
m
e

i

c
m
o
n
o
c
e

o
t

s
t
n
e
m

t
i

m
m
o
c

.
y
t
i
l
i

i

b
a
n
a
t
s
u
s

l

i

a
c
g
o
o
c
e

l

d
n
a

,
y
t
i
u
q
e

e
s
a
e
r
c
n

i

t
a
h
t

s
e
c

i

i
l

o
p

c

i
l

b
u
p

e
c
n
a
v
d
A

:
t
e
g
r
a
T

e
v
i
t
a
r
t
s
n
m
d
a

i

i

e
c
u
d
e
r

d
n
a

y
t
i
r
u
c
e
s

i

c
m
o
n
o
c
e

.
s
r
u
e
n
e
r
p
e
r
t
n
e

e
v
i
t
a
e
r
c

r
o
f

s
n
e
d
r
u
b

r
i
e
h
t

w
o
r
g

d
n
a

t
r
a
t
s

o
t

s
r
u
e
n
e
r
p
e
r
t
n
e

e
v
i
t
a
e
r
c

l

e
b
a
n
e

t
a
h
t

s
e
c

i

i
l

o
p

c

i
l

b
u
p

l

i

e
b
s
n
e
s

,
n
o
i
t
a
c
i
f
i
l

p
m
s

i

x
a
t

,
s
t
i
f
e
n
e
b

l

e
b
a
t
r
o
p

,
s
n
o
i
t
c
e
t
o
r
p

y
t
i
l

a
r
t
u
e
n

r
o
f

t
e
n

g
n
i
t
a
c
o
v
d
a

d
e
u
n

i
t

n
o
C

i

g
n
d
u
c
n

l

i

,
s
e
s
s
e
n
s
u
b

i

d
e
i
f
i
t
s
e

t

,
s
i
r
a
P
d
n
a

l

,
s
e
s
s
u
r
B

,
.

C
D

.

i

,
n
o
t
g
n
h
s
a
W
n

i

s
e
u
s
s

i

e
v
o
b
a

e
h
t

n
o

d
e
t
a
c
o
v
d
a

s
r
e

l
l

e
s

y
s
t
E

s
r
e
l
l
e
S
y
s
t
E

f
o
r
e
w
o
P
e
h
t
g
n
i
t
a
v

i
t
c
— A

.
e
d
a
r
t

r
e
d
r
o
b
-
s
s
o
r
c

o
t

s
r
e
i
r
r
a
b

f
o

n
o
i
t
c
u
d
e
r

d
n
a

,
n
o
i
t

l

a
u
g
e
r

m
r
o

f
t

a
p

l

s
r
e
k
a
m
w
a

l

o
t

s
e
g
a
s
s
e
m
0
0
0
,
2
1

r
e
v
o

d
e
t
a
r
e
n
e
g

d
n
a

6
1

,
e
e
t
t
i

m
m
o
C
e
c
n
a
n
F
e
t
a
n
e
S

i

.

.

S
U
e
h

t

e
r
o
e
b

f

.
y
t
i
n
u
m
m
o
c

r
u
o

f

o

f
l

a
h
e
b

n
o

l

s
r
e
d
o
h
e
k
a
t
s

r
u
o

l

a
n
o
s
r
e
p

d
n
a

y
t
i
r
u
c
e
s

i

c
m
o
n
o
c
e

r
o
f

t
n
e
m
r
e
w
o
p
m
e

e
s
a
e
r
c
n

i

t

a
h

t

s
e
c

i

i
l

o
p

c

i
l

b
u
p

e
c
n
a
v
d
A

e
v
i
t

a
e
r
c

r
o

f

s
n
e
d
r
u
b

e
v
i
t
a
r
t
s
n
m
d
a

i

i

s
r
u
e
n
e
r
p
e
r
t
n
e

e
c
u
d
e
r

d
n
a

y
t
i
r
u
c
e
s

i

c
m
o
n
o
c
e

r
e
t
s
o

f

t

a
h

t

s
m
a
r
g
o
r
p

l

i

a
c
o
s

n

i

t
s
e
v
n
I

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
e
r
a

t
a
h
t

s
e
c
r
o
f
k
r
o
w
e
v
s
u
c
n

l

i

i

d
n
a

e
s
r
e
v
d

i

d

l
i

u
B

f
o

e
g
a
t
n
e
c
r
e
p

e
h
t

l

e
b
u
o
d

i

l

y
e
t
a
m
x
o
r
p
p
A

-

y
b

y
s
t
E

t
a

s
e
e
y
o
p
m
e

l

x
n
i
t
a
L

d
n
a

k
c
a
B

l

.
3
2
0
2

.
s
e
i
t
i
n
u
m
m
o
c

r
i
e
h
t

f
o

e
v
i
t
a
t
n
e
s
e
r
p
e
r

l

y
d
a
o
r
b

:
s
t
e
g
r
a
T

’

s
b
r
e
v
e
R

r
o
f

l

s
a
o
g

d
n
a

e
n

i
l

e
s
a
b

a

t
e
S

-

g
n
i
r
i
h

,
s
e
c
i
t
c
a
r
p

y
a
p

d
n
a

e
c
n
a
m
r
o
f
r
e
p

.
y
g
e
t
a
r
t
s

i

n
o
s
u
c
n

l

i

&
y
t
i
s
r
e
v
d

i

d
n
a

,
c
i
r
b
u
r

f
o

l

i

u
f
g
n
n
a
e
m
e
d
a
m
d
n
a

l

a
o
g

g
n
i
r
i
h
M
R
U
9
1
0
2

r
u
o

d
e
d
e
e
c
x
e

e
w

,
s
t
r
o
f
f
e

s
s
e
n
e
r
a
w
a

d
n
a
r
b

y
s
t
E

.

.

S
U

f
o
%
5
1

p
u

e
d
a
m
s
e
e
y
o
p
m
e

l

x
n
i
t
a
L

d
n
a

k
c
a
B

l

,
9
1
0
2

n
I

.
l
a
o
g

3
2
0
2

r
u
o

d
r
a
w
o

t

l

r
e
y
o
p
m
e

s
s
e
r
g
o
r
p

d
e
w
e
n
e
r

d
n
a

,
)

M
R
U

(

i

s
e
i
t
i
r
o
n
m
d
e
t
n
e
s
e
r
p
e
r
r
e
d
n
u

f
o

t
n
e
m

t
i
u
r
c
e
r

d
e
t
e
g
r
a
t

n
o

i

g
n
s
u
c
o

f

y
B

t
n
e
l
a
T
e
s
r
e
v
D
g
n
i
t
c
a
r
t
t

i

— A

s
t
n
e
v
e

l

a
n
r
e
t
x
e

d
n
a

l

a
n
r
e
t
n

i

,
s
m
a
r
g
o
r
p

t
n
e
m
p
o
e
v
e
d

l

d
n
a

i

g
n
n
r
a
e

l

d
e
s
u
c
o
f

f
o

i

e
v
s
u
c
n

l

i

,
t
r
o
p
p
u
s

.
t
r
o
p
p
u
s

g
n
i
t
i
u
r
c
e
r

d
e
t
a
c
d
e
d

i

d
n
a

,
t
r
o
p
p
u
s

g
n

i
t

e
k
r
a
m
d
n
a

e
n

i
l

e
s
a
b

i

e
v
s
n
e
h
e
r
p
m
o
c

a

d
e
p
o
e
v
e
d

l

d
n
a

,
9
1
0
2

n

i

d
n
e
p
s

r
e

i
l

p
p
u
s

’

s
y
s
t
E

f
o
%
4
8

,
s
r
e

i
l

p
p
u
s

’

s
y
s
t
E

f
o
%
5
4
m
o
r
f

a
t
a
d

t
c
a
p
m

i

d
e
t
c
e

l
l

o
c

,

m
a
r
g
o
r
p

g
n
i
t
t
e
v

r
e

i
l

p
p
u
s

r
u
o

h
g
u
o
r
h
T

g
n

i
t

n
e
s
e
r
p
e
r

.
0
2
0
2

n

i

t
u
o

l
l

o
r

o
t

n
a
p

l

e
w
h
c
h
w

i

,

m
a
r
g
o
r
p

i

p
h
s
r
o
s
n
o
p
s

c
i
f
i
c
e
p
s
-
g
n
i
r
e
e
n
g
n
e

i

n
a

r
o

f

n
o

i
t

a
d
n
u
o

f

r
u
o

t
c
u
d
n
o
c

o
t

e
r
a
p
e
r
p

e
w
s
a

s
s
e
n
s
u
b

i

e
h
t

t
u
o
h
g
u
o
r
h
t

s
e
c
i
t
c
a
r
p

y
a
p

r
i
a
f

e
r
u
s
n
e

o

t

d
e
u
n

i
t

n
o
C

.
0
2
0
2

n

i

y
d
u
t
s

y
t
i

u
q
e

y
a
p

d
n
o
c
e
s

y
t
i
l
i

b
i
s
n
o
p
s
e
R
n
a
h
C
y
p
p
u
S

l

i

y
t
i
u
q
E
y
a
— P

n

i

%
5
.
8
m
o
r
f

p
u

,
e
c
r
o
f
k
r
o
w

r
u
o

f
o
%
4
.
0
1

p
u

e
k
a
m
e
p
o
e
p

l

x
n
i
t
a
L

d
n
a

k
c
a
B

l

,
t
l

u
s
e
r

a

s
A

.
s
e
r
i
h

.

8
1
0
2

s
e
v
i
t
a
i
t
i
n
I

.
s
e
v
i
t
a
i
t
i
n

i

t
n
e
m
p
o
e
v
e
d

l

i

p
h
s
r
e
d
a
e

l

d
n
a

n
o
i
t
n
e
t
e
r

d
e
s
u
c
o
f
-

M
R
U

,
d
e
t
e
g
r
a

t

d
e
h
c
n
u
a
L

n
o
i
t
n
e
t
e
R
d
n
a

t
n
e
m
e
g
a
g
n
E
e
e
y
o
p
m
— E

l

e
h
t

a

h
t
i

w
d
e
p
p
u
q
e

i

l

y
w
e
n

,
e
v
i
t
a
i
t
i
n

i

p
u
o
r
G
e
c
r
u
o
s
e
R
e
e
y
o
p
m
E
y
s
t
E
e
h
t

l

i

g
n
h
c
n
u
a
e
r

l

d
e
d
u
c
n

l

i

d
a

i

l

o
s
a

l

e
W

.

i

m
a
r
g
o
r
P
p
h
s
r
o
t
n
e
M
a

f
o

h
c
n
u
a

l

e
h
t

d
n
a

,

m
a
r
g
o
r
p

n
o
i
t
i
n
g
o
c
e
r

d
n
a

s
d
r
a
w
e
r

t

e
g
a
n
e
c
r
e
p

e
h

t

l

e
b
u
o
d

l

i

y
e
t
a
m
x
o
r
p
p
A

n

i

s
e
e
y
o
p
m
e

l

x
n
i
t
a
L

d
n
a

k
c
a
B

l

f
o

3
2
0
2

y
b

e
c
r
o
f
k
r
o
w
s
y
s
t
E

’

.
s
r
o
d
n
e
v

r
u
o

d
n
a

y
n
a
p
m
o
c

r
u
o

o
t

e
u
a
v

l

g
n
i
r
b

d
n
a

s
n
o
i
t
a
r
e
p
o

r
u
o

t
r
o
p
p
u
s

o
t

i

n
a
h
c

l

y
p
p
u
s

-
l
l

a
m
s

’

s
y
s
t
E

f
o
%
0
5

t
s
a
e

l

t
a

e
r
u
s
n
E

:
t
e
g
r
a
T

l

e
b
a
n
a
t
s
u
s

i

d
n
a

l

,
e
b
a
t
i
u
q
e

,
e
s
r
e
v
d

i

a

d

l
i

u
B

y
b

s
n
a
r
e
t
e
v

r
o

e
r
a

s
r
e

i
l

p
p
u
s

e
s
i
r
p
r
e
t
n
e

,
s
e
i
t
i
r
o
n
m

i

i

d
e
z
s
-
m
u
d
e
m
d
n
a

i

,
n
e
m
o
w
y
b

d
e
n
w
o

.
2
2
0
2

d
n
a

l
l

e
s

o
t

s
e
c
a
p

l

i

e
v
s
u
c
n

l

i

d
n
a

i

,
g
n
m
o
c
e
w

l

e
c
n
a
m
r
o
f
r
e
p

y
e
k

a

e
n
i
f
e
d

,
1
2
0
2

y
B

:
t
e
g
r
a
T

.
p
o
h
s

,
e
s
r
e
v
d

i

e
r
a

l

s
e
c
a
p
t
e
k
r
a
m

r
u
o

e
r
u
s
n
E

r
o
f

e
n

i
l

e
s
a
b

a

h
s

i
l

b
a
t
s
e

d
n
a

r
o
t
a
c
d
n

i

i

i

.
y
t
i
v
s
u
c
n

l

i

d
n
a

y
t
i
s
r
e
v
d

i

l

e
c
a
p
t
e
k
r
a
m

)
s
e
e
y
o
p
m
e

l

0
5
2

o
t

p
u

s
r
o
t
e
i
r
p
o
r
p

l

e
o
s
(

s
r
e

i
l

p
p
u
s

i

d
e
z
s
-
m
u
d
e
m
d
n
a

i

l
l

a
m
s

’

s
y
s
t
E

f

o
%
6
4

-

,
d
n
a

;
l
a
o
g

n
o

i
t
c
u
d
e
r

i

s
n
o
s
s
m
e

i

s
a
g

e
s
u
o
h
n
e
e
r
g

a

t
e
s

e
v
a
h

t
a
h
t

i

s
e
n
a
p
m
o
c

o
t

t
n
e
w
d
n
e
p
s

’

s
y
s
t
E

f

o
%
9
5

-

:
t
a
h
t

d
n
u
o
f

e
w

,
9
1
0
2

n

i

d
e
s
s
e
s
s
a

s
r
e

i
l

p
p
u
s

f

O

.
s
r
o
t
a
c
d
n

i

i

y
e
k

s
s
o
r
c
a

t
c
a
p
m

i

i

n
a
h
c

l

y
p
p
u
s

r
u
o

.
s
n
a
r
e
t
e
v

r
o

s
e
i
t
i
r
o
n
m

i

,
n
e
m
o
w
y
b

d
e
n
w
o

e
r
a

y
t
i
s
r
e
v
D
r
e

i

i
l

p
p
u
— S

e
W

i

.
n
a
h
c

l

y
p
p
u
s

r
u
o

s
s
o
r
c
a

n
o
i
t
a
t
n
e
s
e
r
p
e
r

e
s
r
e
v
d

i

e
v
a
h

e
w
e
r
u
s
n
e

o
t

s
p
e
t
s

e
r
a

e
w

,
s
e
i
t
i
n
u
t
r
o
p
p
o

i

c
m
o
n
o
c
e

o
t

s
s
e
c
c
a

l

e
b
a
t
i
u
q
e

l

e
b
a
n
e

o
t

t
n
e
m

t
i

m
m
o
c

’

s
y
s
t
E
h

t
i

w
e
n

i
l

n

I

l

i

u
f
g
n
n
a
e
m
g
n
k
a

i

t

t

h
o
b

o

t

e
u
a
v

l

t
r
o
p
p
u
s

o

t

i

n
a
h
c

g
n
i
r
b

l

y
p
p
u
s

l

e
b
a
n
a
t
s
u
s

i

d
n
a

s
n
o
i
t
a
r
e
p
o

r
u
o

s
r
o
d
n
e
v

r
u
o

d
n
a

y
s
t
E

d
n
a

,

l

e
b
a
t
i
u
q
e

,
e
s
r
e
v
d

i

a

d

l
i

u
B

-

i

m
u
d
e
m
d
n
a

-
l
l

a
m
s

’

s
y
s
t
E

f
o
%
0
5

t
s
a
e

l

t
a

,
2
2
0
2

y
b

t
a
h
t

e
r
u
s
n
e

o
t

l

a
o
g
m
r
e
t
-
t
r
o
h
s

a

g
n

i
t
t

e
s

e
r
a

l
l
’

e
w

,
e
m

i
t

e
m
a
s

e
h
t

t

A

.
s
n
a
r
e
t
e
v

r
o

,
s
e
i
t
i
r
o
n
m

i

,
n
e
m
o
w
y
b

d
e
n
w
o

e
r
a

s
r
e

i
l

p
p
u
s

e
s
i
r
p
r
e
n
e

t

d
e
z
s

i

i

c
m
o
n
o
c
e

d
n
a

l

i

a
c
g
o
o
c
e

l

e
h
t

s
s
e
r
d
d
a

t
a
h
t

s
t
e
g
r
a
t

h
s

i
l

b
a
t
s
e

o
t

k
r
o
w

l

a
n
o
i
t
a
d
n
u
o

f

r
u
o

e
u
n

i
t

n
o
c

i

i

g
n
d
v
o
r
p

s
r
e

i
l

p
p
u
s

y
s
t
E

r
o
f

s
e
c
i
t
c
a
r
p

t
n
e
m
y
o
p
m
e

l

f
o

t
n
e
m
s
s
e
s
s
a

h
t
p
e
d
-
n

i

e
r
o
m
a

d
e
c
u
d
o
r
t
n

I

.
e
c
r
o
f
k
r
o
w
d
e
t
c
a
r
t
n
o
c

n
g
i
s
e
D

t
c
u
d
o
r
P
n

i

y
t
i
s
r
e
v
i
D
g
n
d
d
e
b
m
E

i

s
e
c
i
t
c
a
r
P
r
o
b
a
L
e
b
s
n
o
p
s
e
— R

i

l

i

.
n
a
h
c

l

y
p
p
u
s

r
u
o

f

o

s
t
c
a
p
m

i

o
t

i

g
n
d
n
a
p
x
e

,
t
c
u
d
o
r
p

r
u
o

o
t
n

i

s
t
h
g
s
n

i

i

r
u
o

i

g
n
d
d
e
b
m
e

,
k
r
o
w

f
o
m
a
e
r
t
s

i

s
h
t

n

i

g
n
i
t
s
e
v
n

i

d
e
u
n

i
t

n
o
C

y
r
e
g
a
m

i

t
c
u
d
o
r
p

.
n
o
s
a
e
s

e
s
r
e
v
d

i

d
n
a

l

s
e
d
o
m
x
n
i
t
a
L

d
n
a

k
c
a
B

l

f
o

r
e
b
m
u
n

e
h
t

d
e
s
a
e
r
c
n

i

y

l
l

i

f

u
g
n
n
a
e
M

y
a
d

i
l

o
h

7
1

k
a
e
p

e
h
t

g
n
i
r
u
d

l

e
c
a
p
t
e
k
r
a
m
y
s
t
E
e
h
t

r
o
f

l

s
a
i
r
e
t
a
m
g
n

i
t

e
k
r
a
m
n
h

i

t
i

w

.
e
c
n
e
i
r
e
p
x
e

r
e
s
u

i

e
v
s
u
c
n

l

i

d
n
a

g
n
i
t
i
v
n

i

n
a

g
n
d

i

l
i

u
b

d
n
a

,
s
r
e

l
l

e
s

r
u
o

d
n
a

s
r
e
y
u
b

r
u
o

t

h
o
b

n
o

s
u
c
o

f

d
n
a

i

e
v
s
u
c
n

l

i

e
r
o
m
a

y
s
t
E
e
k
a
M

g
n
i
t
e
k
r
a
M
e
v

i

s
u
c
— I
n

l

s
d
n
u
o
r
g
k
c
a
b

d
e
t
n
e
s
e
r
p
e
r
r
e
d
n
u
m
o
r
f

l

e
p
o
e
p

r
o

f

l

e
c
a
p
t
e
k
r
a
m
g
n
m
o
c
e
w

l

i

d
n
a

s
e
c
r
u
o
s
e
r

,
g
n
i
f
f
a
t
s

d
e
t
a
c
d
e
d

i

h
t
i

w

,
e
r
u
t
c
u
r
t
s
a
r
f
n

i

i

n
o
s
u
c
n
I

l

&
y
t
i
s
r
e
v
D

i

t
s
u
b
o
r

a

d
e
h
s

i
l

b
a
t
s
E

S
L
A
O
G
0
2
0
2

S
S
E
R
G
O
R
P
9
1
0
2

S
L
A
O
G
9
1
0
2

e
r
u
t
c
u
r
t
s
a
r
f
n

I

n
o
i
s
u
l
c
n

I

&
y
t
i
s
r
e
v
i
D
r
u
o
g
n
d
n
a
p
x
E

i

t

e
a
e
r
c

e
w

t

a
h

t

s
e

i
t
i

n
u
t
r
o
p
p
o

e
h
t

o
t

s
s
e
c
c
a

l

e
b
a
t
i
u
q
e

l

e
b
a
n
E

:
t
c
a
p
m

I

l
a
i
c
o
S

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
d
n
a

,
e
s
u

y
g
r
e
n
e

r
u
o

f
o

y
t
i
s
n
e
t
n

i

e
h
t

i

g
n
c
u
d
e
r

,
y
t
i
c
i
r
t
c
e
e

l

l

e
b
a
w
e
n
e
r

%
0
0
1

i

g
n
c
r
u
o
s

y
b

.
s
n
o
i
t
a
r
e
p
o

e
t
s
a
w
o
r
e
z

i

g
n
n
n
u
r

f
o

y
t
i
s
n
e
t
n

i

e
h
t

n

i

n
o
i
t
c
u
d
e
r

%
5
2

a

i

e
v
e
h
c
A

-

.
5
2
0
2

y
b

e
s
u

y
g
r
e
n
e

’

s
y
s
t
E

m
o
r
f

y
t
i
c
i
r
t
c
e
e

l

’

s
y
s
t
E

f
o
%
0
0
1

e
c
r
u
o
S

-

.
0
2
0
2

y
b

s
e
c
r
u
o
s

l

e
b
a
w
e
n
e
r

:
s
t
e
g
r
a
T

s
n
o
i
t
a
r
e
p
o

l

e
b
a
n
a
t
s
u
s

i

l

s
s
a
c
-
n
i
-
t
s
e
b

i

e
v
e
h
c
A

e
t
a
r

i

n
o
s
r
e
v
d

i

e
t
s
a
w
%
0
9

a

i

n
a
t
n
a
M

i

-

r
o
f

g
n
i
t
n
u
o
c
c
a

s
r
e
t
n
e
c

a
t
a
d

d
e
t
a
c
o
o
c

l

h
t
i

w

,
h
W
M
7
5
8
,
9

s
a
w

t
n
i
r
p
t
o
o
f

y
g
r
e
n
e

l

a
o

t

t

y
g
r
e
n
e

g
n
i
t
a
c
o

l
l

a

h
t
i

w
d
e
t
a
c
o
s
s
a

i

s
e
g
n
e

l
l

a
h
c

y
t
i
l
i

b
a

l
i

a
v
a

a
t
a
d

s
s
e
r
d
d
a

o
T

e
s
U
y
g
r
e
n
— E

r
u
o

,

9
1
0
2

n

I

.

h
W
M
1
8
0
4

,

r
u
o

r
o
f

t
n
u
o
c
c
a

o
t

l

y
g
o
o
d
o
h
t
e
m
n
o
i
t
a
m

i
t
s
e

n
a

d
e
p
o
e
v
e
d

l

s
a
h

y
s
t
E

,
d
u
o
c

l

e
h
t

m
o
r
f

n
o

i
t

p
m
u
s
n
o
c

.
h
W
M
5
9
2
,
2

e
b

o
t

9
1
0
2

n

i

P
C
G
m
o
r
f

n
o
i
t
p
m
u
s
n
o
c

y
g
r
e
n
e

r
u
o

e
t
a
m

i
t
s
e

e
w

l

,
y
g
o
o
d
o
h
e
m

t

i

s
h
t

n
o

d
e
s
a
B

.
s
t
r
e
p
x
e

y
r
t
s
u
d
n

i

y
b

d
e
w
e
v
e
r

i

n
e
e
b

s
a
h

i

h
c
h
w

,
t
n
i
r
p
t
o
o
f

g
n

i
t

u
p
m
o
c
P
C
G

e
t
a
v
i
t
c
a

d
n
a

l

e
r
o
p
x
e

y

l
l

i

u
f
g
n
n
a
e
m
o
t

s
u
w
o

l
l

a

l
l
i

w
n
o
i
t
p
m
u
s
n
o
c

y
g
r
e
n
e

d
u
o
c

l

r
u
o

f
o

n
o

i
t

a
c
i
f
i
t

n
a
u
Q

n
a
p

l

e
W

.
t
n
i
r
p
t
o
o
f

g
n
i
t
u
p
m
o
c

r
u
o

n

i

i

s
e
c
n
e
c
i
f
f
e

i

y
g
r
e
n
e

d
n
a

t
s
o
c

r
e
h
t
r
u
f

e
v
i
r
d

o
t

e
g
n
a
h
c

,
c

i
l

b
u
p

l

y
g
o
o
d
o
h
t
e
m
s
h
t

i

i

g
n
k
a
m
y
B

.
r
a
e
y

i

s
h
t

r
e
t
a

l

y
c

l

i
l

b
u
p

l

y
g
o
o
d
o
h
t
e
m
n
o
i
t
a
m

i
t
s
e

r
u
o

,
y
c
n
e
r
a
p
s
n
a
r
t

e
v
i
r
d

o
t

d
n
a

,
h
c
a
o
r
p
p
a

i

s
h
t

n
o

d

l
i

u
b

d
n
a

e
s
u

o
t

s
r
e
e
p

r
o
f

i

r
e
s
a
e

t
i

e
k
a
m
o

t

f

o

s
r
e
v
e

l

e
r
a
h
s

o

t

e
p
o
h

e
w

,
2

,
1

e
p
o
c
S
d
e
r
u
s
a
e
m

f
o
%
0
0
1

t
e
s
f
f

O

:
t
e
g
r
a
T

r
e
n
e
e
r
g

i

g
n
p
o
e
v
e
d

l

i

.
s
n
o
s
s
m
e

i

3

d
n
a

d
n
a

,
s
m
r
a
f

l

r
a
o
s

d
n
a

i

d
n
w
g
n
i
r
o
s
n
o
p
s

,
s
t
s
e
r
o
f

g
n
i
t
c
e
t
o
r
p

,
s
R
E
V
0
0
0
0
9
1

,

r
e
v
o

e
c
r
e
m
m
o
c
-
e

y
l
d
n
e
i
r
F
-
e
t
a
m

i
l

C
r
o
f
g
n
i
t
a
c
o
v
d
— A

.
s
t
r
a
p

o
t
u
a

i

g
n
c
u
d
o
r
p

r
o

f

s
d
o
h
e
m

t

.
s
s
e
n
s
u
b

i

l

a
r
t
u
e
n

n
o
b
r
a
c

a

n
u
R

n

i

g
n
i
t
s
e
v
n

i

y
b

i

s
n
o
s
s
m
e

i

d
e
r
u
s
a
e
m

r
u
o

f
o

l
l

a

d
e
c
n
a
a
b

l

’

e
v
e
W

.
s
s
e
n
s
u
b

i

l

a
r
t
u
e
n

n
o
b
r
a
c

a

n
e
e
b

s
a
h
m
o
c
.
y
s
t
E

,
9
1
0
2

y
r
a
u
r
b
e
F
e
c
n
S

i

.
5
1
0
2

e
c
n
s

i

e
n
o
d

e
v
a
h

e
w
h
c
h
w

i

i

,
s
n
o
s
s
m
e

i

n
o
b
r
a
c

i

g
n
n
n
u
r

l

a
b
o
g

l

r
u
o

s
s
o
r
c
a

)
t
o
o
f

e
r
a
u
q
s

r
e
p

h
W
k
(

y
t
i
s
n
e
t
n

i

y
g
r
e
n
e

n

i

n
o
i
t
c
u
d
e
r

%
3
3

a

d
e
v
e
h
c
a

i

e
w

,
l

o
r
t
n
o
c

.
e
n

i
l

e
s
a
b
6
1
0
2
a
n
o
d
e
s
a
b
s
n
o

i
t

a
r
e
p
o

f
o
%
0
0
1

g
n
i
t
t
e
s
f
f
o

y
b

t
n
i
r
p
t
o
o
f

r
u
o

e
c
n
a
a
b

l

o
t

n
o
i
t
c
a

i

e
t
a
d
e
m
m

i

d
e
c
n
u
o
n
n
a

e
w

,
9
1
0
2

y
r
a
u
r
b
e
F
n

I

i

g
n
p
p
h
S

i

t
e
s
f
f

O
n
o
b
r
a
C

r
u
o

h
t
i

w
s
e
t
a
n
o
s
e
r

o
s
a

l

d
n
a

,
t
e
n
a
p

l

e
h
t

r
o
f

d
o
o
g

s

i

i

g
n
p
p
h
s

i

t
e
s
f
f
o
-
n
o
b
r
a
C

.
)
s
R
E
V

(

s
n
o

i
t
c
u
d
e
r

i

s
n
o
s
s
m
e

i

d
e
i
f
i
r
e
v

n

i

t
n
e
m
t
s
e
v
n

i

h
g
u
o
r
h
t

i

i

g
n
p
p
h
s
m
o
c
.
y
s
t
E
m
o
r
f

d
e
t
a
r
e
n
e
g

i

s
n
o
s
s
m
e

i

r
u
o

i

g
n
g
a
s
s
e
m
d
e
d
u
c
n

l

i

e
w
n
e
h
w
e
g
a
p

t
u
o
k
c
e
h
c

r
u
o

n
o

e
s
a
e
r
c
n

i

s
e
t
a
r

i

n
o
s
r
e
v
n
o
c
w
a
s

e
w
s
a

,
s
r
e
y
u
b

r
e
h
t
o

r
u
o

g
n
i
t
t
e
s
f
f
o

f
o

y
c
a
g
e

l

r
u
o

n
o

s
d

l
i

u
b

t
r
o
f
f
e

i

s
h
T

.
s
e
v
i
t
a
i
t
i
n

i

y
t
i
l

a
r
t
u
e
n

n
o
b
r
a
c

r
u
o

t

u
o
b
a

e
h
t

n

i

n
o
i
t
c
u
d
e
r

n
o
b
r
a
c

e
v
i
r
d

o
t

l

p
e
h

l
l
i

w

t
a
h
t

s
n
o
i
t
u
o
s

l

f
o

t
r
o
p
p
u
s

n

i

n
o
i
t
c
a

e
k
a
t

o

t

e
u
n

i
t

n
o
c

e
W

d
n
a

e
t
a
m

i
l

c

i

e
v
s
n
e
h
e
r
p
m
o
c

r
o
f

l

e
v
e

l

e
t
a
t
s

d
n
a

l

a
r
e
d
e
f

e
h
t

t
a

g
n
i
t
a
c
o
v
d
a

i

g
n
d
u
c
n

l

i

,

m
r
e

t

g
n
o

l

r
o
f

s
n
o
i
t
a
n
i
t
s
e
d

s
a

l

s
e
c
a
p
t
e
k
r
a
m

r
u
o

h
s

i
l

b
a
t
s
E

m
o
r
f

s
n
o
i
t
a
r
e
p
o

r
e
t
n
e
c

a
t
a
d

d
n
a

e
c
i
f
f
o
m
o
r
f

d
e
t
a
r
e
n
e
g

e
t
s
a
w

f
o
%
3
9

d
e
t
r
e
v
d

i

y
s
t
E

,

9
1
0
2

n

I

l
l
i
f
d
n
a
L
m
o
r
f
n
o
s
r
e
v
D

i

i

i

s
u
o
c
s
n
o
c

d
n
a

s
r
e
p
p
o
h
s

l

i

d
e
d
n
m
-
y
b
a
n
a
t
s
u
s

i

n
o
i
t
c
u
r
t
s
n
o
c

i

g
n
d
u
c
n

l

i

,
s
n
o
i
t
a
r
e
p
o

l

a
b
o
g

l

l
l

a

s
s
o
r
c
a

d
e
t
a
r
e
n
e
g

e
t
s
a
w

f
o
%
4
8

d
e
t
r
e
v
d

i

d
n
a

,
l
l
i
f

d
n
a

l

y
c
n
e
c
i
f
f
e

i

e
v
i
r
d

o
t

s
t
r
o
f
f
e

i

e
d
w
-
y
r
t
s
u
d
n

i

n
o

s
r
e
e
p

h
t
i

w
g
n
i
t
a
r
o
b
a

l
l

o
c

d
n
a

,
s
e
c

i

i
l

o
p

n
o
i
t
c
u
d
e
r

n
o
b
r
a
c

.
r
o
t
c
e
s

s
c
i
t
s
g
o

i

l

d
n
a

i

g
n
p
p
h
s

i

e
h
t

n

i

e
c
n
e

i
l
i

s
e
r

d
n
a

.
s
n
o
i
t
a
r
e
p
o

l

a
b
o
g

l

s
s
o
r
c
a

l

a
n
o
i
t
a
r
e
p
o

i

i

s
n
a
t
n
a
m
y
s
t
E
e
r
e
h
w
s
e
c
i
f
f
o

n
I

.
h
W
M
1
8
4
,
3

s
a
w

t
n
i
r
p
t
o
o
f

y
g
r
e
n
e

e
c
i
f
f

o

9
1
0
2

r
u
O

y
c
n
e

i

c

i
f
f

E
y
g
r
e
n
— E

.
g
n
i
t
u
p
m
o
c

i

t
n
e
c
i
f
f
e

n

i

s
s
e
r
g
o
r
p

d
n
a

y
t
i
l
i

t

b
a
n
u
o
c
c
a

i

l

y
b
s
n
o
p
s
e
r

y
g
r
e
n
e

e
c
r
u
o
s

d
n
a

e
z

i
l
i
t

U

s
n
o

i
t

a
r
e
p
o

r
u
o

r
e
w
o
p

n
a
c

e
w

t
a
h
t

o
s

r
u
o

f

o

y
t
i
s
n
e
n

t

i

e
h
t

e
c
u
d
e
r

d
n
a

0
2
0
2

y
b

y
t
i
c
i
r
t
c
e
e

l

l

e
b
a
w
e
n
e
r

%
0
0
1

h
t
i

w

5
2
0
2

y
b
%
5
2

y
b

e
s
u

y
g
r
e
n
e

r
u
o

f

o

t
c
a
p
m

i

l

i

a
c
g
o
o
c
e

l

n
o
b
r
a
c

g
n
i
r
e
f
f
o

y
b

e
h
t

e
t
a
g
i
t
i

M

l

e
c
a
p
t
e
k
r
a
m

f

o
%
0
0
1
n
o
g
n
p
p
h
s

i

i

l

a
r
t
u
e
n

0
2
0
2

y
b

s
n
o
i
t
c
a
s
n
a
r
t

.
y
t
i
l
i

i

b
a
n
a
t
s
u
s

l

e
c
a
p
t
e
k
r
a
m

e
h
t

h
g
u
o
r
h
t

s
e
i
t
i
l
i

c
a
F
e
t
s
a
W
o
r
e
Z
E
U
R
T
s
a

s
e
c
i
f
f
o

e
r
o
c

’

s
y
s
t
E

f
o

l
l

a

f
o

n
o
i
t
a
c
i
f
i
t
r
e
c

l

t

d
e
e
p
m
o
C

8
1

.

m
a
r
g
o
r
p

n
o
i
t
a
c
i
f
i
t
r
e
c

s

’
l
i

c
n
u
o
C
g
n
d

i

l
i

u
B
n
e
e
r
G

.

.

S
U

e
c
n
a
m
r
o
f
r
e
p

y
e
k

a

e
n
i
f
e
d

,
1
2
0
2

y
B

:
t
e
g
r
a
T

.
g
n
v

i

i
l

.
s
t
c
e
o
r
p

j

l

a
t
i

p
a
c
m
o
r
f

r
o
f

e
n

i
l

e
s
a
b

a

h
s

i
l

b
a
t
s
e

d
n
a

r
o
t
a
c
d
n

i

i

s
e
i
t
i
l
i
c
a
F
e
t
s
a
W
o
r
e
Z
d
e

e
t
s
a
w

i
f
i
t
r
e
— C

0
2
0
2

y
b

s
n
o

i
t

a
r
e
p
o

e
t
s
a
w
o
r
e
z

n
u
R

s
e
d
u
c
n

l

i

i

s
h
T

.
8
1
0
2

n

i

%
8
5
m
o
r
f

p
u

,
s
e
c
r
u
o
s

l

e
b
a
w
e
n
e
r

m
o
r
f

y
t
i
c
i
r
t
c
e
e

l

r
u
o

f

o
%
6
7

n

i

d
a
o

l

g
n
i
t
u
p
m
o
c

’

s
m
o
c
.
y
s
t
E
d
n
a

,
s
e
c
i
f
f
o

l

a
b
o
g

l

’

s
b
r
e
v
e
R
d
n
a

y
s
t
E

r
e
w
o
p

o
t

.
)

P
C
G

(

l

l

m
r
o
f
t
a
P
d
u
o
C
e
g
o
o
G
d
n
a

l

s
r
e
t
n
e
c

d
e
s
u

t

a
a
d

d
e
r
u
c
o
r
P

y
t
i
c
i
r
t
c
e
e

l

t

d
e
a
c
o
o
c

l

S
L
A
O
G
0
2
0
2

S
S
E
R
G
O
R
P
9
1
0
2

S
L
A
O
G
9
1
0
2

y
t
i
c
i
r
t
c
e
l
E
e
b
a
w
e
n
e
R

l

e
s
u

e
c
r
u
o
s
e
r

l

i

e
b
s
n
o
p
s
e
r

g
n
i
r
e
t
s
o

f

d
n
a

s
t
c
a
p
m

i

n
o
b
r
a
c

r
u
o

g
n

i
t

a
n
m

i

i
l

e

y
b

e
c
n
e

i
l
i

s
e
r

m
r
e
t
-
g
n
o

l

d

l
i

u
B

:
t
c
a
p
m

I

l
a
c
i
g
o
o
c
E

l

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
e
r
a

s
t
r
o
f
f
e

n
o
i
s
u
l
c
n
i

&
y
t
i
s
r
e
v
i
d

r
u
O

.
e
c
n
e
i
r
e
p
x
e

n
a
m
u
h

e
h
t

f
o

s
s
e
n
h
c
i
r

d
n
a

,
y
t
i
c
i
t
n
e
h
t
u
a

,
s
s
e
n
e
u
q
i
n
u

e
h
t

e
t
a
r
b
e
l
e
c

e
w

t
a
h
t

s
n
a
e
m
”
n
a
m
u
H
e
c
r
e
m
m
o
C
p
e
e
K
“

o
t

n
o
i
s
s
i
m

r
u
O

.
s
s
e
s
s
o
p

e
l
p
o
e
p

s
e
i
t
i
l
a
u
q

l
a
i
c
e
p
s

d
n
a

e
u
q
i
n
u

f
o
m
u
r
t
c
e
p
s

t
n
a
r
b
i
v

e
h
t

g
n
i
t
a
r
b
e
l
e
c

d
n
a

g
n
i
c
i
v
r
e
s

f
o

s
s
e
n
i
s
u
b

e
h
t

n
i

s
i

t
a
h
t

e
n
o

,
y
l
e
m
a
n

;
y
n
a
p
m
o
c

a

s
a

e
r
a

e
w
o
h
w
o
t

l
a
r
g
e
t
n
i

.
p
u
o
r
G
y
l
i

m
a
F
b
o
J

g
n
i
r
e
e
n
i
g
n
E
e
h
t

n
i
h
t
i

w
k
r
o
w
o
h
w
s
e
e
y
o
l
p
m
e

e
s
o
h
t

s
a

d
e
n
i
f
e
d

e
r
a

s
e
e
y
o
l
p
m
e

g
n
i
r
e
e
n
i
g
n
E

.
e
v
o
b
a

d
n
a

l
e
v
e
l

r
o
t
c
e
r
i

D
s
a

d
e
n
i
f
e
d

s
i

p
i
h
s
r
e
d
a
e
L

.
y
l
l
a
b
o
l
g

r
e
h
t
O

.
s
m
a
e
t

n
o
i
t
a
r
t
s
i
n
i
m
d
A
s
m
e
t
s
y
S
l
a
i
c
n
a
n
i
F
d
n
a

n
o
i
t
a
m
r
o
f
n
I

R
H
d
n
a

s
c
i
t
y
l
a
n
A

,
g
n
i
r
e
e
n
i
g
n
E

,
t
c
u
d
o
r
P
n
o

k
r
o
w
o
h
w
s
e
e
y
o
l
p
m
e

e
s
o
h
t

s
a

d
e
n
i
f
e
d

e
r
a

s
e
e
y
o
l
p
m
e

h
c
e
T

s
e
e
y
o
l
p
m
e

l
l
a

e
d
u
l
c
n
i

s
c
i
r
t
e
m

l
l
a
r
e
v
O

.
r
a
e
y

d
e
t
a
t
s

e
h
t

f
o

1
3

r
e
b
m
e
c
e
D

f
o

s
a

e
r
a
w
o
l
e
b

s
c
i
r
t
e
m

l
l

A

.
y
t
i
s
r
e
v
i
d

e
c
r
o
f
k
r
o
w
n
o

y
l
t
n
e
r
a
p
s
n
a
r
t

g
n
i
t
r
o
p
e
r

o
t

d
e
t
t
i

m
m
o
c

e
r
a

e

W

s
c
i
r
t
e
m
e
g
a

d
n
a

r
e
d
n
e
G

.
s
n
o
i
t
i
s
o
p

p
i
h
s
r
e
d
a
e
L
h
c
e
t
-
n
o
n

f
o

e
v
i
s
u
l
c
n
i

s
i

d
n
a

,
n
o
i
t
i
n
i
f
e
d

h
c
e
T
e
h
t

f
o

e
d
i
s
t
u
o

s
e
l
o
r

n
i

k
r
o
w
o
h
w
s
e
e
y
o
l
p
m
e

e
s
o
h
t

s
a

d
e
n
i
f
e
d

e
r
a

s
e
l
o
r

s
s
e
n
i
s
u
b

s
c
i
r
t
e
m
e
l
i
h
w

,
s
e
e
y
o
l
p
m
e

b
r
e
v
e
R
d
n
a

y
s
t
E
h
t
o
b

e
d
u
l
c
n
i

s
c
i
r
t
e
m
9
1
0
2

.
y
l
n
o

s
e
e
y
o
l
p
m
e

.

.

S
U

t
n
e
s
e
r
p
e
r

s
c
i
r
t
e
m
y
t
i
c
i
n
h
t
e

d
n
a

e
c
a
r

e
l
i
h
w

,
e
s
a
b

e
e
y
o
l
p
m
e

l
a
b
o
l
g

r
u
o

t
n
e
s
e
r
p
e
r

.
s
e
e
y
o
l
p
m
e

b
r
e
v
e
R
e
d
u
l
c
n
i

t
o
n

o
d

s
r
a
e
y

s
u
o
i
v
e
r
p
m
o
r
f

l

s
e
o
R
s
s
e
n
i
s
u
B
r
e
h
t
O

g
n
i
r
e
e
n
g
n
E

i

h
c
e
T

i

p
h
s
r
e
d
a
e
L

l
l

a
r
e
v
O

d
r
a
o
B

t
a

l

e
b
a

l
i

a
v
a

e
r
a

l

y
g
o
o
d
o
h
t
e
m
a
t
a
d

d
n
a

s

l
i

a
t
e
d

l
l

u
F

.
9
1
0
2

,
1
3

r
e
b
m
e
c
e
D

f
o

s
a

s
c
i
r
t
e
m
y
t
i
s
r
e
v
d

i

r
u
o

o
t

t
c
e
p
s
e
r

h
t
i

w
s
e
r
u
d
e
c
o
r
p

t
s
e

t
t

a
m
r
o
f
r
e
p

o

t

y
t
r
a
p

d
r
i
h

t

l

a
n
r
e
t
x
e

n
a

i

d
e
n
o
s
s
m
m
o
c

i

y
s
t
E
†

9
1

.
s
e
r
u
d
e
c
o
r
p

t
s
e
t
t
a

i

s
u
o
v
e
r
p

o

t

j

t
c
e
b
u
s

n
e
e
b

o
s
a

l

s
a
h

t

a
a
d

l

a
c
i
r
o
t
s
h

i

.

m
o
c
.
y
s
t
e
.
s
r
o
t
s
e
v
n

i

i

h
c
h
w

r
o
f

s
c
i
r
t
e
 M
‡

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
l

s
e
o
R
s
s
e
n
i
s
u
B
r
e
h
t
O

g
n
i
r
e
e
n
g
n
E

i

h
c
e
T

i

p
h
s
r
e
d
a
e
L

l
l

a
r
e
v
O

†
9
1
0
2

‡
8
1
0
2

7
1
0
2

†
9
1
0
2

‡
8
1
0
2

7
1
0
2

†
9
1
0
2

‡
8
1
0
2

7
1
0
2

†
9
1
0
2

‡
8
1
0
2

7
1
0
2

†
9
1
0
2

‡
8
1
0
2

7
1
0
2

%
2
0

.

%
7
7

.

%
9
5

.

%
7
5

.

%
4
2

.

%
3
0

.

%
5
8

.

%
5
5

.

%
2
5

.

%
7
2

.

%
3
0

.

%
0
7

.

%
4
5

.

%
8
3

.

%
5
3

.

%
—

%
—

%
—

%
—

%
—

%
—

%
—

%
—

%
—

%
1
0

.

%
1
0

.

%
2
0

.

%
0
0
2

.

%
9
1
2

.

%
4
0
2

.

%
1
1
2

.

%
6
2
2

.

%
9
0
2

.

%
5
5
1

.

%
3
9
1

.

%
9
6
1

.

%
3
5
1

.

%
5
6
1

.

%
9
3
1

.

%
1
5

.

%
5
5

.

%
1
4

.

%
2
3

.

%
1
5

.

%
2
3

.

%
2
4

.

%
2
4

.

%
2

%
6
4

.

%
7
4

.

%
6
3

.

%
6
2

.

%
7
4

.

%
3

%
3
3

.

%
5
4

.

%
1
2

.

%
7
2

.

%
8
1

.

%
7
2

.

%
—

%
4
3

.

%
3
2

.

%
4
3

.

%
7
1

.

%
1
5

.

%
2
5

.

%
2
5

.

%
1
3

.

%
7
3

.

%
8
4

.

%
8
2

.

%
4
4

.

%
1
4

.

%
7
2

.

%
1
2
7

.

%
8
4
7

.

%
1
8
7

.

%
4
8
5

.

%
8
0
6

.

%
5
6

%
8
8
5

.

%
8
0
6

.

%
6
5
6

.

%
7
2
7

.

%
5
7

%
9
2
7

.

%
6
4
6

.

%
0
7
6

.

%
8
1
7

.

%
0
6

.

%
3

%
9
1

.

%
9
6

.

%
8
5

.

%
2
4

.

%
2
7

.

%
3
6

.

%
6
3

.

%
6
4

.

%
—

%
—

%
5
6

.

%
1
5

.

%
9
2

.

L
A
B
O
L
G
-
S
C
R
T
E
M
E
G
A

I

†
9
1
0
2

‡
8
1
0
2

7
1
0
2

%
3
4

.

%
3
5

.

%
2
4

.

%
6
7
2

.

%
9
7
2

.

%
4
8
2

.

%
9
4
3

.

%
2
2
3

.

%
1
4
3

.

%
5
9
1

.

%
8
0
2

.

%
2
1
2

.

%
0
1
1

.

%
1
1
1

.

%
4
9

.

%
7
2

.

%
7
2

.

%
7
2

.

r
e
g
n
u
o
y
d
n
a
s
r
a
e
y
4
2

s
r
a
e
y
9
2
5
2

-

s
r
a
e
y
4
3
0
3

-

s
r
a
e
y
9
3
5
3

-

s
r
a
e
y
9
4
0
4

-

s
r
a
e
y
+
0
5

Y
L
N
O

.

.

I

S
U
-
S
C
R
T
E
M
Y
T
C
N
H
T
E
&
E
C
A
R

I

I

e
v
i
t
a
N
a
k
s
a
A
r
o
n
a
d
n

l

i

I

n
a
c
i
r
e
m
A

i

n
a
s
A

n
a
c
i
r
e
m
A
n
a
c
i
r
f
A
/
k
c
a
B

l

s
e
c
a
R
e
r
o
M

r
o
o
w
T

d
e
r
a
c
e
D

l

t
o
N

e
t
i
h
W

i

c
n
a
p
s
H

i

t
a

l

e
b
a

l
i

a
v
a

e
r
a

l

y
g
o
o
d
o
h
t
e
m
a
t
a
d

d
n
a

s

l
i

a
t
e
d

l
l

u
F

.
9
1
0
2

,
1
3

r
e
b
m
e
c
e
D

f
o

s
a

s
c
i
r
t
e
m
y
t
i
s
r
e
v
d

i

r
u
o

o
t

t
c
e
p
s
e
r

h
t
i

w
s
e
r
u
d
e
c
o
r
p

t
s
e

t
t

a
m
r
o
f
r
e
p

o

t

y
t
r
a
p

d
r
i
h

t

l

a
n
r
e
t
x
e

n
a

i

d
e
n
o
s
s
m
m
o
c

i

y
s
t
E
†

0
2

.
s
e
r
u
d
e
c
o
r
p

t
s
e
t
t
a

i

s
u
o
v
e
r
p

o

t

j

t
c
e
b
u
s

n
e
e
b

o
s
a

l

s
a
h

t

a
a
d

l

a
c
i
r
o
t
s
h

i

.

m
o
c
.
y
s
t
e
.
s
r
o
t
s
e
v
n

i

i

h
c
h
w

r
o
f

s
c
i
r
t
e
 M
‡

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SASB Disclosure

The Sustainability Accounting Standards Board’s (SASB) mission is to develop sustainability metrics for public corporations to 
disclose material, decision-useful information to investors. Etsy supports work that contributes directly to generating 
comparable and consistent data. We have considered SASB’s Consumer Goods Sector – E-Commerce industry standard and 
have provided key details below. 

SASB Metrics

SASB Code Metric
CG-EC-000.A

Entity-defined measure of
user activity

CG-EC-000.B

Data processing capacity

Active buyers (thousands)

Active sellers (thousands)

2017
33,364

1,933

2018
39,447

2,115

2019
46,351

2,699

In December 2017, Etsy announced our Google Cloud Partnership, an initiative to transition
Etsy.com infrastructure to Google Cloud Platform (GCP). In February 2020, we completed
our full migration to GCP. We believe this transition will result in increased engineering
efficiency, and enhance our overall infrastructure by providing faster processing speed,
improved page load time, and more nimble fulfillment to capacity on an as needed basis.

Percentage outsourced

100%

100%

100%

Hardware Infrastructure Energy & Water Management

CG-EC-130a.1

Total energy consumed, MWh (Etsy only)

Percentage renewable energy (Etsy only)

Percentage grid electricity (Etsy only)

7,111

32%

100%

7,330

65%

100%

6,376

89%

100%

CG-EC-130.a

Discussion of the integration of environmental considerations into strategic planning for data center needs. Etsy’s 
goals include powering our operations with 100% renewable electricity by 2020, and reducing the intensity of our energy 
use by 25% by 2025. These goals are included as key considerations as we plan for our computing needs, and have been 
a focus of our sustainability efforts. When transitioning to a cloud computing infrastructure, we selected GCP, a partner that 
shares our commitment to 100% renewable electricity. Their highly efficient data centers are expected to help us save 
significant energy. Moreover, moving to flexible cloud-based infrastructure should enable us to reduce major idle time and 
associated energy consumption. 

We actively monitor and manage energy consumption from our computing infrastructure. In 2019, our colocated data 
centers consumed 4,081 MWh and we estimate that our energy consumption in GCP was 2,295 MWh, based on a 
methodology developed by Etsy and reviewed by industry experts. Quantification of our cloud energy consumption will 
allow us to meaningfully explore and activate levers of change to drive further cost and energy efficiencies in our computing 
footprint. Our 2019 hardware infrastructure footprint does not include Reverb, but we plan to include Reverb’s computing 
footprint in our 2020 analysis.

In 2018, Etsy entered into a virtual power purchase agreement for solar energy in Virginia. Once operational, this project is 
expected to provide us with renewable attributes to apply to our operations and computing infrastructure, furthering our 
goals of creating a cleaner internet and reducing our impact on the planet. 

Data Privacy and Advertising Standards

CG-EC-220a.2

Description of the policies and practices relating to behavioral advertising and user privacy. We care deeply about 
privacy and we’re committed to being upfront about our privacy practices, including how we treat personal information. 
Etsy’s Privacy Policy provides a detailed explanation of our privacy practices. Among other things, our Privacy Policy 
covers the user information that Etsy collects or receives, the choices and control that a user has in relation to this data 
including based on type and sensitivity, the purpose for which Etsy uses such information (including first and third party 
advertising purposes), our policies relating to our usage and sharing within Etsy and its affiliates, and user controls for 
sharing and controlling such information with third parties. 

Data Security

CG-EC-230a.1

Description of approach to identifying and addressing data security risks. Data security is overseen by our Chief 
Information Security Officer who reports to our Chief Technology Officer. We strive to protect sensitive information through 
various means, such as technical safeguards, procedural requirements and policies, an intensive program of monitoring on 
both our web platform and within our corporate network, continuous testing of aspects of our security posture internally and 
with outside vendors, a robust incident response program, and regular training for employees.

Employee Recruitment, Inclusion and Performance

CG-EC-330a.1

Employee engagement as a percentage (Etsy only)

60%

70%

76%

Employee engagement as a percentage and discussion of methodology. In May 2019, Etsy conducted an 
engagement survey of all global employees. Of employees surveyed, 93% submitted a response. Seventy-six percent of 
respondents reported favorable employee engagement. The survey was conducted through the Culture Amp platform and 
consisted of 51 questions - 48 rating questions on which employees were asked to indicate their level of agreement with a 
statement based on a five-point scale from Strongly Agree to Strongly Disagree, and three free-text questions to which 
employees were asked to write out a response. The responses were analyzed against the results from a similar survey 
conducted in 2018, as well as Culture Amp's 2019 New Tech - 500+ Benchmark, which consists of survey results from 
companies that are primarily internet-based or focused on creating new technologies, and that have between 500 and 
5,000 employees.

CG-EC-330a.3

Gender and racial/ethnic group representation for leadership,
technical staff and other business functions

See Impact Strategy section for detailed metrics.

Discussion of diversity and inclusion strategy and performance

See Impact Strategy - Social Impact for details.

21

SASB Metrics

SASB Code Metric

CG-EC-330a.4

Percentage of technical employees who are H-1B visa holders

Product Packaging and Distribution

2017

2018

2.5%

2019

3.5%

CG-EC-410a.1

Total greenhouse gas (GHG) footprint of product shipments in metric 
tons CO2e (Etsy only)

118,153‡

135,459‡

154,078†

CG-EC-410a.2

Discussion of strategies to reduce the environmental impact of product delivery. The delivery of products sold on our 
marketplace represents the majority of Etsy’s carbon footprint. As a peer-to-peer marketplace, Etsy does not directly control 
seller shipping or the associated logistics networks, however, we are committed to addressing carbon emissions from 
shipping. In February 2019, we announced immediate action to balance our footprint by offsetting 100% of our emissions 
generated from Etsy.com shipping through investment in verified emissions reductions. In addition, we continue to take 
action in support of solutions that will help to drive carbon reduction in the long term, including advocating at the federal and 
state level for comprehensive climate and carbon reduction policies, and collaborating with peers on industry-wide efforts to 
drive efficiency and resilience in the shipping and logistics sector. Our 2019 shipping footprint does not include Reverb.com 
shipments, but we plan to include Reverb’s shipping emissions in our 2020 footprint.

Greenhouse Gas (“GHG”) Emissions Summary (tCO2e)

2017

2018

2019

GHG Emissions by Scope

Scope 1

Scope 2 - Market

Scope 2 - Location

Scope 3

Scope 3 GHG Emissions by Activity Source

Shipping (Etsy only)

Air Travel

Commuting

Remote Workers

Cloud Computing - Market (Etsy only)

Waste

Water

Electricity, Transmission and Distribution Losses

467‡

2,209‡

3,152‡

372‡

1,213‡

2,923‡

371†

652†

1,859†

119,444

137,042

155,967

118,153‡

135,459‡

550‡

663

64

7

4

3

943‡

544

87

6

3

<1

154,078†

1,217†

510

114

29†

13

6

<1

Our 2019 greenhouse gas emissions include both Etsy and Reverb, unless otherwise stated, while previous years include only Etsy. Reverb’s
footprint has been accounted for from the date of acquisition forward. Etsy has included emissions generated from our colocated data centers
as Scope 2 emissions, consistent with prior years. Emissions generated from cloud computing are classified as Scope 3 emissions.

† Etsy commissioned an external third party to perform attest procedures with respect to our carbon and energy metrics for the period from 
January 1, 2019 to December 31, 2019. Full details and data methodology are available at investors.etsy.com.

‡  Metrics for which historical data has also been subject to previous attest procedures.

22

Competition

Sellers can list their goods for sale with online retailers or sell their goods through local consignment and vintage stores and 
other venues and marketplaces, including through commerce channels on social networks like Facebook and Instagram. They 
may also sell wholesale directly to traditional retailers, including large national retailers, who discover their goods in our 
marketplaces or otherwise. We also compete with companies that sell software and services to small businesses, enabling 
sellers to sell from their own website or otherwise run their business independently of our platform. We are able to compete for 
sellers based on our brand awareness, the global scale of our marketplaces and the breadth of our online presence, the number 
and engagement of buyers, our seller tools and services, our seller education resources, our policies and fees, our mobile apps, 
the strength of our community, and our values.

We also compete with retailers for the attention of the buyer. A buyer has the choice of shopping with any online or offline 
retailer, whether large marketplaces or national retail chains or local consignment and vintage stores or other venues or 
marketplaces. We are able to compete for buyers based on the unique goods that sellers list in our marketplaces, our brand 
awareness, the person-to-person commerce experience, customer service, our reputation for trustworthiness, our mobile apps, 
the availability of fair and free shipping offered by sellers, ease of payment, and the availability and reliability of our platform.

Intellectual Property

Protection of our technology and intellectual property is an important component of our success. We rely on intellectual 
property laws, including patent, trade secret, copyright, and trademark laws, in the United States and abroad. We also use 
confidentiality procedures, defensive licensing and acquisitions, non-disclosure agreements, invention assignment agreements, 
and other contractual rights to protect us and our intellectual property.

We file patents and register domain names, trademarks, copyrights, and service marks in the United States and abroad. We rely 
upon unregistered copyrights and common law protection for certain trademarks. We also use internal and external brand 
protection mechanisms that are intended to protect our brands from misuse by third parties. 

Government Regulation

As with any company operating on the internet, we are subject to a growing number of local, national, and international laws 
and regulations. These laws are often complex, sometimes contradict other laws, and are frequently changing. Laws may be 
interpreted and enforced in different ways in various locations around the world, posing a significant challenge to our global 
business. For example, U.S. federal and state laws, E.U. directives, and other national laws govern the processing of payments, 
consumer protection, and the privacy of consumer information; other laws define and regulate unfair and deceptive trade 
practices. Still other laws dictate when and how sales or other taxes must be collected. Laws of defamation apply online and 
vary by country. The growing regulation of e-commerce worldwide could impose additional compliance burdens and costs on 
us or on sellers and could subject us to significant liability for any failure to comply. Additionally, because we operate 
internationally, we need to comply with various laws associated with doing business outside of the United States, including 
anti-money laundering, sanctions, anti-corruption, and export control laws.

23

Available Information

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, (“the Exchange Act”), 
and file or furnish reports, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on 
Form 8-K, and amendments to these reports, proxy statements and other information with the Securities and Exchange 
Commission, (the “SEC”). These reports are available free of charge on our website at investors.etsy.com as soon as reasonably 
practicable after we have filed or furnished them to the SEC. The information on our website is not incorporated into this 
Annual Report and investors should not rely on such information in deciding whether to invest in our common stock. Copies of 
our SEC reports and other documents are also available, without charge, by sending a letter to Investor Relations, Etsy, Inc., 
117 Adams Street, Brooklyn, NY 11201, by sending an email to ir@etsy.com or by calling (347) 382-7582. 

Our SEC reports are also available on the SEC’s website at www.sec.gov free of charge as soon as reasonably practicable after 
we have filed or furnished them to the SEC.

24

Item 1A. Risk Factors.

Investing in our securities involves a high degree of risk. You should consider carefully the risks and uncertainties described 
below, our Consolidated Financial Statements and related notes, and the other information in this Annual Report on Form 10-
K. If any of these risks actually occur, our business, financial condition, results of operations, and prospects could be adversely 
affected. As a result, the price of our securities could decline and you could lose part or all of your investment. In addition, 
factors other than those discussed below or in other of our reports filed with or furnished to the SEC also could adversely affect 
our business, financial condition or results of operations. We cannot assure you that the risk factors described below or 
elsewhere in our reports address all potential risks that we may face. These risk factors also serve to describe factors which 
may cause our results to differ materially from those described in forward-looking statements included herein or in other 
documents or statements that make reference to this Annual Report. See “Note Regarding Forward-looking Statements.”

Risks Related to Our Business and Industry

Our quarterly operating results may fluctuate, which could cause our stock price to decline.

Our quarterly operating results, as well as our key metrics, may fluctuate for a variety of reasons, many of which are beyond 
our control, including:

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

fluctuations in GMS or revenue, including as a result of the seasonality of market transactions, and our sellers’ use of 
services;

our ability to convert visits into sales for our sellers;

the amount and timing of our operating expenses;

our success in attracting and retaining sellers and buyers;

our success in executing on our strategy and the impact of any changes in our strategy;

the timing and success of product launches, including new services and features we may introduce, such as our free 
shipping initiative and changes to our on-site and off-site ads products, including changes to our advertising products that 
we intend to launch in the second quarter of 2020;

the success of our marketing efforts;

the success of our integration of acquired businesses, such as Reverb, which we acquired in 2019; 

adverse economic and market conditions, such as currency fluctuations and adverse global events;

disruptions or defects in our marketplaces, such as privacy or data security breaches, errors in our software, or other 
incidents that impact the availability, reliability, or performance of our platform;

the impact of competitive developments and our response to those developments;

our ability to manage our business and future growth; and 

our ability to recruit and retain employees.

Fluctuations in our quarterly operating results and key metrics may cause those results to fall below our financial guidance or 
other projections, or the expectations of analysts or investors, which could cause the price of our common stock to decline. 
Fluctuations in our results could also cause a number of other problems. For example, analysts or investors might change their 
models for valuing our common stock, we could experience short-term liquidity issues, our ability to retain or attract key 
personnel may diminish, and other unanticipated issues may arise.

In addition, we believe that our quarterly operating results and key metrics may vary in the future and that period-to-period 
comparisons of our operating results may not be meaningful. For example, our overall historical growth rate may have 
overshadowed the effect of seasonal variations on our historical operating results. These seasonal effects may become more 
pronounced over time, which could also cause our operating results and key metrics to fluctuate. You should not rely on the 
results of one quarter as an indication of future performance.

25

If we are unable to successfully execute on our business strategy or if our strategy proves to be ineffective, our business, 
financial performance and growth could be adversely affected. 

Our ability to execute our strategy is dependent on a number of factors, including the ability of our senior management team 
and key team leaders to execute the strategy, our ability to maintain our pace of product experiments coupled with the success 
of such initiatives and our ability to meet the changing needs of our sellers and buyers, and the ability of our employees to 
perform at a high level. If we are unable to execute our strategy, if our strategy does not drive the growth that we anticipate, if 
the public perception is that we are not executing on our strategy, or if our market opportunity is not as large as we have 
estimated, it could adversely affect our business, financial performance and growth.

Our business, financial performance and growth depends on our ability to attract and retain an active and engaged 
community of buyers and sellers.

Our financial performance has been and will continue to be significantly determined by our success in attracting and retaining 
active buyers and active sellers. For example, our revenue is driven by the number of active buyers and buyer engagement, as 
well as the number of active sellers and seller engagement. We must encourage buyers to return to us and purchase items in our 
marketplaces more frequently. We must also continue to encourage our sellers to list items for sale and use our services. 

We believe that many new buyers and sellers find us by word of mouth and other non-paid referrals from existing buyers and 
sellers. If existing buyers do not find our platform appealing, whether because of a negative experience, lack of competitive 
shipping costs, inadequate customer service, lack of buyer-friendly features, declining interest in the nature of the goods offered 
by our sellers, or other factors, they may make fewer purchases and they may stop referring others to us. Likewise, if existing 
sellers are dissatisfied with their experience on our platform, they may stop listing items in our marketplaces and using our 
services and may stop referring others to us. Under any of these circumstances, we may have difficulty attracting new buyers 
and sellers without incurring additional expense. 

Our GMS and revenue is concentrated in our most active buyers and sellers. If we lose those buyers and sellers, our financial 
performance and growth could be harmed. Even if we are able to attract new buyers and sellers to replace the ones that we lose, 
they may not maintain the same level of activity, and the GMS and revenue generated from new buyers and sellers may not be 
as high as the GMS and revenue generated from the ones who leave our marketplaces. If we are unable to retain existing buyers 
and sellers and attract new buyers and sellers who contribute to an active community, our business, financial performance, and 
growth would be harmed.

Additionally, the demand for the goods listed in our marketplaces is dependent on consumer preferences which can change 
quickly and may differ across generations and cultures. If demand for the goods that our sellers offer declines, we may not be 
able to attract and retain our buyers and our business would be harmed. Trends in socially-conscious consumerism and buying 
unique or vintage rather than mass produced goods, which has historically been beneficial to our business, could also shift or 
slow which would make it more difficult to attract new buyers and sellers. In addition, our growth would also be harmed if the 
shift from brick and mortar retail to e-commerce does not continue.

Our company has only recently become profitable, and we may not maintain the current rate of revenue growth or 
profitability in the future.

We have experienced rapid growth in our business, in the number of buyers and sellers and in the number of countries in which 
we have sellers and buyers, and we plan to continue to grow in the future. Our costs may increase as we continue to invest in 
the development of our platform, including our services and technological enhancements, and increase our marketing efforts, 
expand our operations, and hire additional employees. Further, the growth of our business places significant demands on our 
management team and pressure to expand our operational and financial infrastructure. For example, we may need to continue 
to develop and improve our operational, financial, and management controls and enhance our reporting systems and procedures 
in line with our current growth. If we do not manage our growth effectively, the increases in our operating expenses could 
outpace any increases in our revenue and our business could be harmed. In addition, our revenue may decline and our revenue 
growth rate may decelerate for a number of reasons, including the deceleration of our GMS growth rate and other factors 
described elsewhere in these Risk Factors. For further information about the rate of revenue and GMS growth, see 
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Revenue.” 
You should not rely on growth rates of prior periods as an indication of our future performance. 

26

 
Our business could be adversely affected by economic downturns, natural disasters, public health crises, political crises 
or other unexpected events.

Macroeconomic conditions may adversely affect our business. If general economic conditions deteriorate in the United States 
or other markets where we operate, consumer discretionary spending may decline and demand for the goods and services 
available in our platform may be reduced. This would cause our Marketplace and Services revenue to decline and adversely 
impact our business. Conversely, if recent trends supporting self-employment and the desire for supplemental income were to 
reverse, the number of sellers offering their goods in our marketplaces could decline and the number of goods listed in our 
marketplaces could decline. In addition, currency exchange rates may directly and indirectly impact our business. For example, 
continued uncertainty around the United Kingdom’s exit from the European Union, or E.U., commonly referred to as Brexit, 
may result in future exchange rate volatility, which may strengthen the U.S. dollar against foreign currencies. If the U.S. dollar 
strengthens against foreign currencies, our translation of foreign currency denominated GMS and revenue will result in lower 
U.S. denominated GMS and revenue. Currency exchange rates may also dampen demand from buyers outside the United States 
for goods denominated in U.S. dollars, which could impact GMS and revenue. For the year ended December 31, 2019, 
approximately 81% of our GMS was denominated in U.S. dollars. 

Natural disasters and other adverse weather and climate conditions, public health crises, political instability or crises, terrorist 
attacks, war or other unexpected events, could disrupt our operations, internet or mobile networks, or the operations of one or 
more of our third-party service providers. Certain events, such as hurricanes and other natural disasters, political instability or 
crises, public health crises and significant news items in the United States or internationally that distract the public, may impact 
buyer behavior for discretionary goods and sellers’ ability to run their businesses on our marketplaces and ship their goods, 
which may increase seller defaults and delinquencies. These kinds of events may also impact consumer perceptions of well-
being and security, which may adversely impact consumer discretionary spending. If any of these events occurs, our business 
could be adversely affected.

Our ability to recruit and retain employees is important to our success.

Our ability to attract, retain, and motivate employees, including our management team, is important to our success. We strive to 
attract, retain, and motivate employees, from our office administrators to our engineers to our management team, who share our 
dedication to our community and our mission to “Keep Commerce Human.” We cannot guarantee we will continue to attract 
and retain the number or caliber of employees we need to maintain our competitive position.

Some of the challenges we face in attracting and retaining employees include:

• 

• 

• 

• 

• 

• 

• 

• 

perceived uncertainties as to our commitment to our mission, guiding principles and culture;

skepticism regarding our ability to continue to accelerate GMS growth in the future; 

continuing to offer competitive compensation and benefits;

enhancing engagement levels among existing employees and supporting their work-life balance;

attracting and retaining qualified employees who support our mission and guiding principles;

promotion opportunities for employees into leadership positions;

hiring employees in multiple locations globally; and

responding to competitive pressures and changing business conditions in ways that do not divert us from our guiding 
principles.

Filling engineering, product management, and other technical positions, particularly in New York City, San Francisco, and 
Chicago is challenging. Qualified individuals are limited and in high demand, and we may incur significant costs to attract, 
develop, and motivate them. Even if we were to offer higher compensation and other benefits, people with suitable technical 
skills may choose not to join us or to continue to work for us. In addition, job candidates and existing employees often consider 
the value of the stock awards they receive in connection with their employment. If the perceived value of our stock awards 
declines, it may adversely affect our ability to recruit and retain highly skilled employees.

In general, our employees, including our management team, work for us on an at-will basis. The unexpected loss of or failure to 
retain one or more of our key employees, such as our Chief Executive Officer, Chief Financial Officer or Chief Technology 
Officer, or unsuccessful succession planning, could adversely affect our business. Other companies, including our competitors, 

27

may be successful in recruiting and hiring our employees, and it may be difficult for us to find suitable replacements on a 
timely basis or on competitive terms.

If we experience increased voluntary attrition in the future and if we are unable to attract and retain qualified employees, 
particularly in critical areas of operations such as engineering, we may not achieve our strategic goals and our business and 
operations could be harmed.

The trustworthiness of our marketplaces and the connections within our community are important to our success. If we 
are unable to maintain them, our ability to attract and retain sellers and buyers could suffer.

We are focused on ensuring that our marketplaces embody our values-based culture and that we deliver trust and reliability 
throughout the buyer experience. Our reputation depends upon our sellers, the quality of their offerings and their adherence to 
our policies. 

The trustworthiness of our marketplaces and the connections among the members of our community are the cornerstones of our 
business. Many things could undermine these cornerstones, such as:

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

complaints or negative publicity about us, our platform or our policies and guidelines, even if factually incorrect or based 
on isolated incidents;

an inability to gain the trust of prospective buyers;

disruptions or defects in our marketplaces, such as the increased pace of product experimentation, privacy or data security 
breaches, website outages, payment disruptions or other incidents that impact the reliability of our platform;

lack of awareness of our policies or confusion about how they are applied;

changes to our policies that members of our community perceive as inconsistent with their best interests or our mission, or 
that are not clearly articulated;

inadequacies in our terms of use; 

frequent product launches or updates that could deteriorate member trust; 

a failure to enforce our policies effectively, fairly and transparently, including, for example, by allowing the widespread 
listing of prohibited items in our marketplaces;

inadequate or unsatisfactory customer service experiences;

a failure to respond to feedback from our community; or

a failure to operate our business in a way that is consistent with our guiding principles and mission.

Creating a trusted brand is one of the key elements of our strategy. In particular, we are focused on enhancing customer service 
for sellers and buyers. For example, in 2019, we continued to evolve our offerings with Zendesk to improve our customer 
experience on the Etsy marketplace. In addition, we plan to introduce new customer service features and tools to support a 
positive user experience on the Etsy marketplace. If our efforts to enhance customer service are unsuccessful or if our customer 
service platform fails to meet our needs, we may need to invest additional resources in customer service and our ability to 
maintain trustworthy marketplaces could be harmed.

If we are unable to maintain trustworthy marketplaces and encourage connections among members of our community, then our 
ability to attract and retain sellers and buyers could be impaired and our reputation and business could be adversely affected.

If we are not able to keep pace with technological changes and enhance our current offerings and develop new offerings 
to respond to the changing needs of sellers and buyers, our business, financial performance and growth may be harmed.

Our industry is characterized by rapidly changing technology, new service and product introductions, and changing customer 
demands and we are not able to predict the effect of these changes on our business. The technologies that we currently use to 
support our platform may become inadequate or obsolete and the cost of incorporating new technologies into our products and 
services may be substantial. We strive to respond to evolving customer needs and regularly launch new products, features and 
services including, for example, Etsy’s free shipping initiative and the planned changes to our advertising products expected to 
launch in the second quarter of 2020. Our sellers and buyers, however, may not be satisfied with our enhancements or new 

28

offerings or may perceive that these offerings do not respond to their needs or create value for them. Additionally, as we 
experiment with new offerings or changes to our platform, our sellers and buyers may find these changes to be disruptive and 
may perceive them negatively. In addition, developing new services and features is complex, and the timetable for public 
launch is difficult to predict and may vary from our historical experience. As a result, the introduction of new offerings may 
occur after anticipated release dates or they may be introduced as pilot programs, which may not be continued for various 
reasons. In addition, new offerings may not be successful due to defects or errors, negative publicity, or our failure to market 
them effectively.

New offerings may not drive GMS or revenue growth, may require substantial investment and planning, and may bring us more 
directly into competition with companies that are better established or have greater resources than we do.

If we do not continue to cost-effectively develop new offerings that satisfy sellers and buyers, then our competitive position and 
growth prospects may be harmed. In addition, new offerings may not drive the GMS or revenue that we anticipate, may have 
lower margins than we anticipate or than existing offerings, and our revenue from the new offerings may not be enough to 
offset the cost of developing and maintaining them, which could adversely affect our business, financial performance and 
growth.

Our marketing efforts to help grow our business may not be effective.

Maintaining and promoting awareness of our marketplaces and services is important to our ability to attract and retain sellers 
and buyers. One of the key parts of our strategy for the Etsy marketplace is to bring more new buyers to the marketplace and 
create more habitual buyers by inspiring purchases across multiple categories and special occasions. 

We continue to iterate on our marketing strategies, which may not succeed for a variety of reasons, including our inability to 
execute and implement our plans. External factors beyond our control may also impact the success of our marketing initiatives. 
Our primary marketing efforts currently include search engine optimization, search engine marketing, affiliate marketing and 
display advertising, as well as social media, mobile push notifications, and email. Additionally, we engage in brand advertising 
via channels such as television and digital video advertising. We obtain a significant number of visits via search engines such as 
Google. Search engines frequently change the algorithms that determine the ranking and display of results of a user’s search 
and may make other changes to the way results are displayed, which can negatively affect the placement of links to our 
marketplaces and, therefore, reduce the number of visits to our marketplaces. We also obtain a significant number of visits from 
social media platforms such as Facebook, Instagram and Pinterest. Search engines, social networks, and other third-parties 
typically require compliance with their policies and procedures, which may be subject to change or new interpretation with 
limited ability to negotiate, which could negatively impact our marketing capabilities (including marketing services for our 
sellers) and GMS. The growing use of online ad-blocking software, including on mobile devices, may also impact the success 
of our marketing efforts because we may reach a smaller audience and fail to bring more buyers to our platform. In addition, 
ongoing privacy regulatory changes, such as the EU General Data Protection Regulation (“GDPR”) and California Consumer 
Privacy Act of 2018 (“CCPA”), may impact the scope and effectiveness of marketing and advertising services generally, 
including those used on our platform.

We also obtain a significant number of visits through email. If we are unable to successfully deliver emails to our sellers and 
buyers, or if our sellers and buyers do not open our emails, whether by choice, because those emails are marked as low priority 
or spam, or for other reasons, our business could be adversely affected. As e-commerce, search, and social networking evolve, 
we must continue to evolve our marketing tactics accordingly and, if we are unable to do so, our business could be adversely 
affected.

If the mobile solutions available to sellers and buyers are not effective, the use of our marketplaces could decline.

Purchases made on mobile devices by consumers, including our buyers, have increased significantly in recent years. The 
smaller screen size and reduced functionality associated with some mobile devices may make the use of our platform more 
difficult or less appealing. Our sellers are also increasingly using mobile devices to operate their businesses on our platform. If 
we are not able to deliver a rewarding experience on mobile devices, our sellers’ ability to manage and scale their businesses 
may be harmed and, consequently, our business may suffer. Further, although we strive to provide engaging mobile experiences 
for both sellers and buyers who visit our mobile websites using a browser on their mobile device, we depend on our sellers and 
buyers using our mobile apps for the optimal mobile experience. Mobile web conversion rate is lower than our desktop and 
Buy on Etsy app conversion rates. Therefore, if mobile web visits continue to grow as a percentage of overall visits, it could be 
a headwind to future conversion rate gains and result in less GMS and revenue for us. 

29

As new mobile devices and mobile platforms are released, we may encounter problems in developing or supporting apps for 
them. In addition, supporting new devices and mobile device operating systems may require substantial time and resources.

The success of our mobile apps could also be harmed by factors outside our control, such as:

• 

• 

• 

• 

actions taken by providers of mobile operating systems or mobile app download stores;

unfavorable treatment received by our mobile apps, especially as compared to competing apps, such as the placement of 
our mobile apps in a mobile app download store;

increased costs to distribute or use our mobile apps; or

changes in mobile operating systems, such as iOS and Android, that degrade the functionality of our mobile website or 
mobile apps or that give preferential treatment to competitive products.

If sellers and buyers encounter difficulty accessing or using our platform on their mobile devices, or if they choose not to use 
our platform on their mobile devices, our business, financial performance, and growth may be adversely affected.

Expanding our community outside of the United States is part of our strategy and the growth of our business could be 
harmed if our expansion efforts do not succeed. 

Our vision is both global and local and we are focused on growing our business outside of the United States. Although we have 
a significant number of sellers and buyers outside of the United States, we are a U.S.-based company with less experience 
developing local markets outside the United States and may not execute our strategy successfully. Operating outside of the 
United States also requires significant management attention, including managing operations over a broad geographic area with 
varying cultural norms and customs, and adapting our platform to local markets.

Despite our execution efforts, the goods that sellers list on our sites may not appeal to non-U.S. consumers in the same way as 
they do to consumers in the United States. In addition, non-U.S. buyers are not as familiar with the Etsy and Reverb brands as 
buyers in the United States and may not perceive us as relevant or trustworthy. Also, visits to our marketplaces from buyers 
outside the United States may not convert into sales as often as visits from within the United States, including due to the impact 
of the strong U.S. dollar relative to other currencies and the fact that most of the goods listed on our platform are denominated 
in U.S. dollars. 

Our ability to grow our international operations may also be adversely affected by any circumstances that reduce or hinder 
cross-border trade. For example, the shipping of goods cross-border is typically more expensive and slower than domestic 
shipping and often involves complex customs and duty inspections and the dependency of national postal carrier systems. If 
jurisdictions become increasingly fragmented, with additional tariffs and customs that increase the cost or complexity of cross-
border trade, whether on the seller’s sourcing of materials or between the seller and buyer, our business could be adversely 
impacted. 

Our success outside the United States depends upon our ability to attract sellers and buyers from the same countries in order to 
enable the growth of local markets. If we are not able to expand outside of the United States successfully, our growth prospects 
could be harmed. An inability to develop our community globally or to otherwise grow our business outside of the United 
States on a cost-effective basis could adversely affect our GMS, revenue, and operating results. 

Competition is also likely to intensify outside of the United States, both where we operate now and where we plan to expand. 
Local companies based outside the United States may have a substantial competitive advantage because of their greater 
understanding of, and focus on, their local markets. Some of our competitors may also be able to develop and grow 
internationally more quickly than we will.

Continued expansion outside of the United States may also require significant financial investment. For example, in June 2018, 
we announced a referral agreement with DaWanda, a German e-commerce marketplace, which encouraged the migration of 
DaWanda buyers and sellers to Etsy’s marketplace and helped expand Etsy’s presence in Central Europe. Etsy also made initial 
investments to explore growth opportunities in India, a dynamic market where we have limited operating experience. We plan 
to invest in seller and buyer acquisition marketing, enhancing our machine translation and machine learning to help sellers and 
buyers connect even if they do not speak the same language, forming relationships with third-party service providers, 
supporting operations in multiple countries, and potentially acquiring companies based outside the United States and 
integrating those companies with our operations. Our investment outside of the United States may be more costly than we 
expect or unsuccessful. 

30

Further expansion outside of the United States will subject us to risks associated with operations abroad.

Doing business outside of the United States subjects us to increased risks and burdens such as:

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

complying with different (and sometimes conflicting) laws and regulatory standards (particularly including those related to 
the use and disclosure of personal information, online payments and money transmission, intellectual property, consumer 
protection, online platform liability and taxation of goods and services);

fluctuations of foreign exchange rates;

potentially heightened risk of fraudulent or other illegal transactions;

limitations on the repatriation of funds;

exposure to liabilities under anti-corruption, anti-money laundering and export control laws, including the U.S. Foreign 
Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act of 2010, trade controls and sanctions administered by the 
U.S. Office of Foreign Assets Control, and similar laws and regulations in other jurisdictions;

varying levels of internet, e-commerce, and mobile technology adoption and infrastructure;

our ability to enforce contracts and intellectual property rights in jurisdictions outside the United States; 

geopolitical events such as natural disasters, terrorism and acts of war;

uncertainties and instability in U.K. and European markets caused by Brexit; and

barriers to international trade, such as tariffs, customs or other taxes.

Our sellers face similar risks in conducting their businesses across borders. Even if we are successful in managing the risks of 
conducting our business across borders, if our sellers are not, our business could be adversely affected. In particular, buyers and 
sellers seeking to engage in cross-border sales may become subject to an increasing number of barriers to international trade 
such as tariffs, customs or other taxes.

If we invest substantial time and resources to expand our operations outside of the United States and cannot manage these risks 
effectively, the costs of doing business in those markets may be prohibitive or our expenses may increase disproportionately to 
the revenue generated in those markets.

Legal, political and economic uncertainty surrounding the United Kingdom’s recent departure from the European 
Union may be a source of instability in international markets, create significant currency fluctuations, adversely affect 
our operations in the United Kingdom and pose additional risks to our business, revenue, financial condition, and 
results of operations.

On January 31, 2020, the United Kingdom formally withdrew from the E.U. Under the terms of its withdrawal, the United 
Kingdom will be subject to a transition period until December 31, 2020, during which the United Kingdom will remain in the 
single market and customs union. The United Kingdom and the E.U. have begun negotiations to determine these relationships 
following the expiration of the transition period. 

Lack of clarity about future U.K. laws and regulations as the United Kingdom determines which E.U. rules and regulations to 
replace or replicate, including financial laws and regulations, tax and free trade agreements, intellectual property rights, supply 
chain logistics, privacy and information security laws, environmental, health and safety laws and regulations, immigration laws 
and employment laws, could decrease foreign direct investment in the United Kingdom, increase costs and depress economic 
activity. In addition, depending on the terms of the United Kingdom’s withdrawal from the E.U., the United Kingdom could 
lose the benefits of global trade agreements negotiated by the E.U. on behalf of its members. The long-term effects of Brexit 
will depend on any agreements (or lack thereof) between the United Kingdom and the E.U. and, in particular, any arrangements 
for the United Kingdom to retain access to E.U. markets going forward. 

The United Kingdom is one of our core markets. We are continuing to monitor Brexit developments to enable us to adjust our 
business and operations as appropriate with the goal of continuing to provide services to our United Kingdom and E.U. buyers 
and sellers after the transition period ends, including in the event of loss of all U.K. access to E.U. markets as well as lack of 
favorable resolution with regard to other E.U. rules and regulations. A failure by the U.K. and E.U. to negotiate agreements 
favorable to the United Kingdom by the end of the transition period and ongoing uncertainty with respect to potential divergent 

31

regulatory standards, however, could result in additional operational, regulatory and compliance costs to us as well as decreased 
revenue, all of which could adversely affect our business, results of operations and financial condition.

Regulation in the areas of privacy and protection of user data could harm our business.

In addition to the actual and potential changes in law described elsewhere in these Risk Factors, global developments in privacy 
and data security regulations are changing some of the ways we and our vendors collect, use, and share personal information. 
Compliance with these changing regulations have necessitated some specific product changes for our non-U.S. activities. The 
GDPR extends the scope of E.U. data protection law to certain non-E.U. companies processing data of E.U. persons. The 
GDPR seeks to harmonize the data protection regulations throughout the entire E.U. The regulation contains numerous 
requirements and changes from previous E.U. law, including more robust obligations on data processors, greater rights for data 
subjects (requiring potentially significant changes to both our technology and operations), security and accountability 
obligations, and significantly heavier documentation and record-keeping requirements for data protection compliance 
programs. Specifically, the GDPR introduced numerous privacy-related changes for companies operating in the E.U., including 
greater control over personal data by data subjects (e.g., the “right to be forgotten”), increased data portability, access and 
redress rights for E.U. consumers, data breach notification requirements, increased rules for online and e-mail marketing, and 
stronger regulatory enforcement regimes. The GDPR requirements apply to some third-party transactions (such as commercial 
contracts with partners and vendors) and to transfers of information between us and our subsidiaries, including user and 
employee information. GDPR requirements may also apply, depending on interpretation of its reach, to some users in our 
worldwide community of sellers. We may experience difficulty retaining or obtaining new E.U. sellers or new sellers selling 
into the E.U. due to the legal requirements, compliance cost, potential risk exposure, and uncertainty for them in respect of their 
own compliance obligations with respect to GDPR. In addition, although our sellers are independent businesses, it is possible 
that a privacy authority could deem us jointly and severally liable for actions of our sellers, which would increase our potential 
liability exposure and costs of compliance, which could negatively impact our business. We could face potential liability, 
regulatory investigation, and costly litigation, which may not be adequately covered by insurance. 

In the United States, the CCPA became effective on January 1, 2020. The CCPA introduced new requirements regarding the 
handling of personal information of California consumers and households. The law gives individuals the right to request access 
to and deletion of their information, and the right to opt out of sales of their personal information. The CCPA also authorizes 
private lawsuits to recover statutory damages for certain data breaches. The CCPA may increase our compliance costs and 
potential liability with respect to other personal information we collect about California residents.

GDPR, CCPA, and similar laws coming into effect in other jurisdictions may continue to change the data protection landscape 
globally and could result in potentially significant operational costs for internal compliance and risk to our business. Some of 
these requirements may introduce friction into the buying and selling experience on our platform and may impact the scope and 
effectiveness of our marketing efforts, which could negatively impact our business and future outlook. Beyond GDPR and 
CCPA, individual jurisdictions continue to pass laws related to data protection, such as data privacy and data breach 
notification, resulting in a diverse set of requirements across states, countries and regions. Non-compliance with these laws 
could result in proceedings against us by one or more data protection authorities, other public authorities, third parties, or 
individuals. Under GDPR alone, noncompliance could result in fines of up to 20 million Euros or up to 4% of the annual global 
revenue of the noncompliant company, whichever is greater.

In addition, the laws relating to the transfer of personal data outside of the E.U. continue to evolve and remain uncertain. 
Although we are taking steps to comply and mitigate the potential impact to us, the efficacy and longevity of these steps are 
uncertain. We may find it necessary to establish systems to maintain personal data originating from the E.U. in the European 
Economic Area, which may involve substantial expense and distraction from other aspects of our business. In the meantime, the 
evolving data protection landscape also creates uncertainty as to how to comply with E.U. privacy law, including potentially 
inconsistent guidance, rulings or requirements from multiple authorities in the E.U., as well as in the U.S. and worldwide. 
Further, we may not be entirely successful in our compliance efforts due to various factors either within our control (such as 
limited internal resource allocation) or outside our control (such as a lack of vendor cooperation, new regulatory interpretations, 
or lack of regulatory guidance in respect of certain GDPR requirements).

We also publish privacy policies and other documentation regarding our collection, processing, use and disclosure of personal 
data. Although we endeavor to comply with our published policies and documentation, we may at times fail to do so or may be 
perceived to have failed to do so. Moreover, despite our efforts, we may not be successful in achieving compliance if our 
employees or third party providers fail to comply with our published policies and documentation. Such failures can subject us 
to potential international, local, state and federal action if they are found to be deceptive, unfair, or misrepresentation of our 
actual practices. 

32

Our payments systems depend on third-party providers, require ongoing investment, and are subject to evolving laws, 
regulations, rules, and standards.

Our buyers primarily pay for purchases using our payments services (i.e., Etsy Payments and Reverb Payments) or PayPal. In 
the United States and other countries where our payments services are available, our sellers accept various forms of payments 
such as credit cards, debit cards, gift cards, PayPal, Google Wallet and Apple Pay. 

We rely upon third-party service providers to perform underlying compliance, credit card processing and payment disbursing, 
currency exchange, identity verification, sanctions screening, and fraud analysis services. If these service providers do not 
perform adequately or if our relationships with these service providers were to change or terminate, our sellers’ ability to 
receive orders or payment could be adversely affected and certain financial compliance measures, including fraud prevention 
and detection tools may not be effective, which could increase costs, lead to potential legal liability, and negatively impact our 
business. In addition, we and our third-party service providers may experience service outages from time to time that 
negatively impact payments on our platform. We have in the past experienced, and may in the future experience, such service 
outages and, if we are unable to provide an alternative payment solution, our business could be harmed. In addition, if our 
third-party providers increase the fees they charge us, our operating expenses could increase. If we respond by increasing the 
fees we charge to our sellers, some of our sellers may stop listing new items for sale or even close their accounts altogether.

Various laws and regulations govern payments, and these laws are complex, evolving, and subject to change and vary across 
different jurisdictions in the United States and globally. Moreover, even in regions where such laws have been harmonized, 
regulatory interpretations of such laws may differ. As a result, we are required to spend significant time and effort determining 
whether various licensing and registration laws relating to payments apply to us and taking steps to comply with applicable 
laws and licensing regulations. Any failure or claim of our failure to comply, or any failure by our third-party service providers 
to comply, could cost us substantial resources, could result in liabilities, could cause us significant reputational damage, or 
could force us to stop offering our payments services in certain markets. Additionally, changes in payment regulation may 
occur that could render our payments systems less profitable. For example, any significant change in credit or debit card 
interchange rates in the United States or other markets, including as a result of changes in interchange fee limitations, may 
negatively impact payments on our platform.

We plan to invest ongoing internal resources into our payments tools and infrastructure in order to maintain existing 
availability, expand into additional markets and offer new payment methods and tools to our buyers and sellers. If we fail to 
invest adequate resources into payments on our platform, or if our investment efforts are unsuccessful or unreliable, our 
payments services may not function properly or keep pace with competitive offerings, which could negatively impact their 
usage and our marketplaces. Further, our ability to expand our payments services into additional countries is dependent upon 
the third-party providers we use to support these services. As we expand the availability of our payments services to additional 
markets or offer new payment methods to our sellers and buyers in the future, we may become subject to additional and 
evolving regulations, compliance requirements, and may be exposed to heightened fraud risk, which could lead to an increase 
in our operating expenses. 

Further, through our agreements with our third-party payment processors, we are indirectly subject to payment card association 
operating rules and certification requirements, including the Payment Card Industry Data Security Standard, which are subject 
to change. Failure to comply with these rules and certification requirements could impact our ability to meet our contractual 
obligations with our third-party payment processors and could result in potential fines. We are also subject to rules governing 
electronic funds transfers. Any change in these rules and requirements, including as a result of a change in our designation by 
major payment card providers, could make it difficult or impossible for us to comply and could require a change in our business 
operations. In addition, similar to a potential increase in costs from third-party providers described above, any increased costs 
associated with compliance with payment card association rules or payment card provider rules could lead to increased fees for 
us or our sellers, which may negatively impact payments on our platform, usage of our payments services, and our 
marketplaces.

If we experience a communications or technology disruption or failure that results in a loss of information, if personal 
data or sensitive information about members of our community or employees is misused or disclosed, or if we or our 
third-party providers are subject to cyber attacks, members of our community may curtail use of our platform, we may 
be exposed to liability, and our reputation could suffer.

Like all online services, we are vulnerable to power outages, telecommunications failures, and catastrophic events, as well as 
computer viruses, break-ins, phishing attacks, denial-of-service attacks, and other cyber attacks. Any of these incidents could 
lead to interruptions or shutdowns of our platform, loss of data or unauthorized disclosure of personal or financial information 
of our members or employees. As we grow our business, expand internationally, and gain greater public visibility, we may face 

33

a higher risk of being targeted by cyber attacks. Although we rely on a variety of security measures, including security testing, 
encryption of sensitive information, and authentication technology, we cannot assure you that such measures will provide 
absolute security, particularly given the increasingly sophisticated tools and methods used by hackers and cyber terrorists. In 
addition, we have experienced in the past, and may experience in the future, security breaches as a result of non-technical 
issues, including intentional, inadvertent, or social engineering breaches occurring through our employees or employees of our 
third-party service providers. In addition, if our employees or employees of our third-party service providers fail to comply 
with our internal security policies and practices, member or employee data may be improperly accessed, used, or disclosed. 
Cyber attacks could also result in the theft of our intellectual property.

A successful cyberattack could occur and persist for an extended period of time before being detected. In addition, because any 
investigation of a cybersecurity incident would be inherently unpredictable, the extent of a particular cybersecurity incident and 
the path of investigating the incident may not be immediately clear. It may take a significant amount of time before an 
investigation can be completed and full and reliable information about the incident is known. While an investigation is ongoing, 
we may not necessarily know the extent of the harm or how best to remediate it, certain errors or actions could be repeated or 
compounded before they are discovered and remediated, and communication to the public, regulators, members of our 
community and other stakeholders may be inaccurate, any or all of which could further increase the costs and consequences of 
a cybersecurity incident.

We are also reliant on the security practices of our third party service providers, which may be outside of our direct control. 
Additionally, some of our third party service providers, such as identity verification and payment processing providers, 
regularly have access to some confidential and sensitive member data. If these third parties fail to adhere to adequate security 
practices, or experience a breach of their networks, our members’ data may be improperly accessed, used or disclosed. 

Cyber attacks aimed at disrupting our and our third-party service providers’ services have occurred regularly in the past, and we 
expect they will continue to occur in the future. If we or our third-party service providers experience security breaches that 
result in marketplace performance or availability problems or the loss, compromise, or unauthorized disclosure of personal data 
or other sensitive information, or if we fail to respond appropriately to any security breaches that we may experience, people 
may become unwilling to provide us the information necessary to set up an account with us. Existing sellers and buyers may 
stop listing new items for sale, decrease their purchases or close their accounts altogether. We could also face damage to our 
reputation, potential liability, regulatory investigations in multiple jurisdictions, costly remediation efforts and litigation, which 
may not be adequately covered by insurance. Any of these results could harm our growth prospects, our business, and our 
reputation for maintaining trusted marketplaces.

We may expand our business through acquisitions of other businesses or assets, which may divert management’s 
attention and/or prove to be unsuccessful, including our acquisition of Reverb.

We have acquired a number of other businesses in the past, including our 2019 acquisition of Reverb, and may acquire 
additional businesses or technologies, or enter into strategic partnerships, in the future. We may not realize the anticipated 
benefits of our acquisitions, including the acquisition of Reverb, or any partnerships, and the integration of Reverb and possible 
future acquisitions or relationships may disrupt our business and divert management’s time and attention. Acquisitions also may 
require us to spend a substantial portion of our available cash, issue stock, incur debt or other liabilities, amortize expenses 
related to intangible assets, or incur write-offs of goodwill or other assets. In addition, integrating an acquired business or 
technology is risky. The Reverb acquisition and any future acquisitions may result in unforeseen operational difficulties and 
expenditures associated with: 

• 

• 

• 

• 

• 

integrating new businesses and technologies into our infrastructure;

implementing growth initiatives;

integrating administrative functions;

retaining and integrating key employees; 

supporting and enhancing morale and culture;

•  maintaining or developing controls, procedures and policies (including effective internal control over financial reporting 

and disclosure controls and procedures); and

• 

assuming liabilities related to the activities of the acquired business before and after the acquisition, including liabilities for 
violations of laws and regulations, commercial disputes, cyber attacks, taxes, and other matters.

34

We also may issue additional equity securities in connection with an acquisition, which could cause dilution to our 
stockholders. Finally, acquisitions could be viewed negatively by analysts, investors or the members of our community.

Adherence to our guiding principles and our focus on our mission and long-term sustainability may negatively influence 
our financial performance. Further, our reputation could be harmed if we fail to meet our impact strategy goals.

We intend to operate in line with our guiding principles, focus on the long-term sustainability of our business, and work toward 
our mission to “Keep Commerce Human.” We may take actions in line with our mission and guiding principles that we believe 
will benefit our business and, therefore, our stockholders over a longer period of time, even if those actions do not maximize 
short- or medium-term financial performance. However, these longer-term benefits may not materialize within the time frame 
we expect or at all. For example:

•  we may choose to prohibit the sale of items in our marketplaces that are inconsistent with our policies even though we 

could benefit financially from the sale of those items; or

•  we may choose to revise our policies in ways that we believe will be beneficial to our community in the long term even 

though the changes may be perceived unfavorably, such as updates to the way we define “handmade.”

Additionally, we have developed an impact strategy that focuses on leveraging Etsy’s core business to generate value for our 
community and stakeholders through positive economic, social and ecological efforts. Our impact strategy aims to create more 
economic opportunity for sellers, greater diversity in our workforce and build long-term resilience by reducing our carbon 
footprint. If we don’t demonstrate progress against our impact strategy or if our impact strategy is not perceived to be adequate, 
our reputation could be harmed. We could also damage our reputation and the value of our brand if we fail to demonstrate that 
our commitment to our impact strategy enhances our overall financial performance.

Failure to deal effectively with fraud or other illegal activity could harm our business.

We have measures in place to detect and limit the occurrence of fraudulent and other illegal activity in our marketplaces, 
however, those measures may not always be effective. Further, the measures that we use to detect and limit the occurrence of 
fraudulent and other illegal activity must be dynamic, as new technologies and ways to commit fraud and other illegal activity 
are continually evolving, and regulations requiring marketplaces to detect and limit these activities are increasing. If we fail to 
limit the impact of fraudulent and other illegal activity in our marketplaces, our business, reputation, financial performance and 
growth could be adversely affected.

For example, our sellers occasionally receive orders placed with fraudulent or stolen credit card data. Under current credit card 
chargeback rules, we could be held liable for orders placed through our payments services with fraudulent credit card data even 
if the associated financial institution approved the credit card transaction. Although we attempt to detect or challenge fraudulent 
transactions, we may not be able to do so effectively. As a result, our business could be adversely affected. We could also incur 
significant fines or lose our ability to give the option of paying with credit cards if we fail to follow payment card industry data 
security standards or payment card association rules or fail to limit fraudulent transactions conducted in our marketplaces.

We have adopted policies and procedures that are intended to ensure compliance with anti-corruption, anti-money laundering, 
export controls, and trade sanctions requirements. In addition, as stated elsewhere in these Risk Factors, we rely upon third-
party service providers to perform certain underlying compliance, credit card processing identity verification, and fraud 
analysis services. If we or our service providers do not perform adequately, certain of our fraud prevention and detection tools 
may not be effective, which could increase our expenses, lead to potential legal liability, and negatively impact our business.

Negative publicity and sentiment resulting from fraudulent, illegal, or deceptive conduct by members of our community or the 
perception that our levels of responsiveness and support for our sellers and buyers are inadequate could reduce our ability to 
attract and retain our sellers and buyers and damage our reputation.

We are subject to risks related to our corporate social responsibility metrics.

We voluntarily report certain corporate social responsibility metrics. This transparency is consistent with our commitment to 
executing on a strategy that reflects the positive economic, social, and ecological impact we want to have on the world while 
advancing and complementing our business strategy. These metrics, whether it be the standards we set for ourselves and/or our 
failure to meet such metrics, may influence our reputation and the value of our brand. For example, the perception held by our 
buyers or sellers, our partners or vendors, other key stakeholders, or the communities in which we do business may depend, in 
part, on the metrics we have chosen to aspire to and whether or not we meet these metrics on a timely basis, if at all. While 

35

selected metrics receive limited assurance from an independent third party, this is inherently a less rigorous process than 
reasonable assurance sought in a typical auditing engagement. Our failure to achieve progress on our metrics on a timely basis, 
or at all, could adversely affect our business, financial performance, or growth. 

By electing to set and share publicly these corporate social responsibility metrics, our business may also face increased scrutiny 
related to environmental, social, and governance activities. As a result, we could damage our reputation and the value of our 
brand if we fail to act responsibly in the areas in which we report, such as economic security and personal empowerment, 
diversity and inclusion, energy and water management, carbon footprint, and data privacy or if we are perceived not to have 
rigorously measured our achievement against such metrics. Any harm to our reputation resulting from setting these metrics or 
our failure or perceived failure to meet such metrics could impact: employee engagement and retention; the willingness of our 
buyers and sellers and our partners and vendors to do business with us; or investors’ willingness to purchase or hold shares of 
our common stock, any of which could adversely affect our business, financial performance, and growth.

We face intense competition and may not be able to compete effectively.

Operating e-commerce marketplaces is highly competitive and we expect competition to increase in the future. To be 
successful, we need to attract and retain sellers and buyers. As a result, we face competition from a wide range of online and 
offline competitors. 

We compete for sellers with both retailers and companies that sell software and services to small businesses. For example, in 
addition to listing her goods for sale on Etsy, an Etsy seller can list her goods with other online retailers, such as Amazon, eBay, 
or Alibaba, or sell her goods through local consignment and vintage stores and other venues or marketplaces, including through 
commerce channels on social networks like Facebook and Instagram. She may also sell wholesale directly to traditional 
retailers, including large national retailers, who discover her goods in our marketplaces or otherwise. We also compete with 
companies that sell software and services to small businesses, enabling a seller to sell from her own website or otherwise run 
her business independently of our platform, such as Bigcommerce, and Shopify.

We compete to attract, engage, and retain sellers based on many factors, including:

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

our brand awareness;

the global scale of our marketplaces and the breadth of our online presence;

the extent to which our tools and services can ease the administrative tasks that a seller might encounter in running her 
business;

the number and engagement of buyers;

seller education resources and tools;

our policies and fees;

the ability to scale her business; 

our mobile apps;

the strength of our community; and

our mission.

In addition, we compete with retailers for the attention of buyers. A buyer has the choice of shopping with any online or offline 
retailer, including large e-commerce marketplaces, such as Amazon, eBay or Alibaba, national retail chains, such as West Elm 
or Target, local consignment and vintage stores, social commerce channels like Instagram, event-driven platforms and vertical 
experiences like Zola and Wayfair, and other venues or marketplaces. Many of these competitors offer low-cost or free 
shipping, fast shipping times, favorable return policies, and other features that may be difficult or impossible for our sellers to 
match.

We compete to attract, engage, and retain buyers based on many factors, including:

• 

• 

the breadth and quality of items that sellers list in our marketplaces;

the ease of finding the item a buyer is looking for; 

36

• 

• 

• 

• 

• 

• 

• 

• 

our brand awareness;

the person-to-person commerce experience;

customer service;

our reputation for trustworthiness;

our mobile apps;

the availability of fair and free shipping offered by Etsy sellers to Etsy buyers;

ease of payment; and

the availability and reliability of our platform.

Many of our competitors and potential competitors have longer operating histories, greater resources, better name recognition, 
or more customers than we do. 

They may invest more to develop and promote their services than we do, and they may offer lower fees to sellers than we do. 
Additionally, we believe that it is relatively easy for new businesses to create online commerce offerings or tools or services 
that enable entrepreneurship.

Local companies or more established companies based in markets where we operate outside of the United States may also have 
a better understanding of local customs, providing them a competitive advantage. For example, in certain markets outside the 
United States, we compete with smaller, but similar, local online marketplaces with a focus on unique goods that are attempting 
to attract sellers and buyers in those markets.

If we are unable to compete successfully, or if competing successfully requires us to expend significant resources in response to 
our competitors’ actions, our business could be adversely affected.

We rely on our sellers to provide a fulfilling experience to our buyers.

A small portion of buyers complain to us about their experience with our platform. For example, buyers may report that they 
have not received the items that they purchased, that the items received were not as represented by a seller or that a seller has 
not been responsive to their questions.

Negative publicity and sentiment generated as a result of these types of complaints could reduce our ability to attract and retain 
our sellers and buyers or damage our reputation. A perception that our levels of responsiveness and support for our sellers and 
buyers are inadequate could have similar results. In some situations, we may choose to reimburse our buyers for their purchases 
to help avoid harm to our reputation, but we may not be able to recover the funds we expend for those reimbursements. 
Although we are focused on enhancing customer service, our efforts may be unsuccessful and our sellers and buyers may be 
disappointed in their experience and not return.

Anything that prevents the timely processing of orders or delivery of goods to our buyers could harm our sellers. Service 
interruptions and delivery delays may be caused by events that are beyond the control of our sellers, such as interruptions in 
order or payment processing, transportation disruptions, natural disasters, inclement weather, terrorism, public health crises, or 
political unrest. Disruptions in the operations of a substantial number of our sellers could also result in negative experiences for 
a substantial number of our buyers, which could harm our reputation and adversely affect our business. 

Our reputation may be harmed if members of our community use illegal or unethical business practices.

Our emphasis on our mission and guiding principles makes our reputation particularly sensitive to allegations of illegal or 
unethical business practices by our sellers or other members of our community. Our policies promote legal and ethical business 
practices, such as encouraging Etsy sellers to work only with manufacturers who do not use child or involuntary labor, who do 
not discriminate, and who promote sustainability and humane working conditions. However, we do not control our sellers or 
other members of our community or their business practices and cannot ensure that they comply with our policies. If members 
of our community engage in illegal or unethical business practices or are perceived to do so, we may receive negative publicity 
and our reputation may be harmed.

37

Our business depends on network and mobile infrastructure provided by third parties and on our ability to maintain 
and scale the technology underlying our platform.

The reliability of our platform is important to our ability to generate and grow revenue, reputation and our ability to attract and 
retain our sellers and buyers. As the number of sellers and buyers, volume of traffic, number of transactions, and the amount of 
information shared on our platform grow, our need for additional network capacity and computing power will also grow. The 
operation of the technology underlying our platform is expensive and complex, and we could experience operational failures. If 
we fail to accurately predict the rate or timing of the growth of our platform, we may be required to incur significant additional 
costs to maintain reliability. The investments we make in our platform are designed to grow our business and to improve our 
operating results in the long term, but these investments could also delay our ability to achieve profitability or reduce 
profitability in the near term. Upgrading our platform, software and networks may also subject us to disruptions, failures or 
delays.

We also depend on the development and maintenance of the internet, cloud and mobile infrastructure, and increasingly rely on 
the availability, features, cost, and reliability of third-party service providers and platforms. For example, this includes 
maintenance of reliable internet and mobile networks with the necessary speed, data capacity, and security, as well as timely 
development of complementary products. 

Third-party providers host much of our technology infrastructure and are likely to host more in the future. Any disruption in 
their services, or any failure of our providers to handle the demands of our marketplaces could significantly harm our business. 
For example, any significant disruption of, or interference with, our use of cloud infrastructure would negatively impact our 
operations and our business would be seriously harmed. We exercise little control over these providers, which increases our 
vulnerability to their financial conditions and to problems with the services they provide, such as security concerns. Our efforts 
to update our infrastructure may not be successful or may take longer than anticipated. If we experience failures in our 
technology infrastructure or do not expand our technology infrastructure successfully, then our ability to attract and retain our 
sellers and buyers could be adversely affected, which could harm our growth prospects and our business. 

We rely on Google Cloud for a substantial portion of the computing, storage, data processing, networking, and other 
services for Etsy.com.

Google Cloud Platform provides a distributed computing infrastructure as a service platform for business operations, and we 
have migrated Etsy’s data centers to Google Cloud, increasing our reliance on cloud infrastructure. Any transition of the cloud 
services currently provided by Google Cloud to another cloud provider would be difficult to implement and will cause us to 
incur significant time and expense. Any significant disruption of, or interference with, our use of Google Cloud would 
negatively impact our operations and our business would be seriously harmed. In addition, if hosting costs increase over time 
and if we require more computing or storage capacity, our costs could increase disproportionately. If we are unable to grow our 
revenues faster than the cost of utilizing the services of Google or similar providers, our business and financial condition could 
be adversely affected.

We may be subject to claims that items listed in our marketplace are counterfeit, infringing, or illegal.

We frequently receive communications alleging that items listed in our marketplaces infringe third-party copyrights, 
trademarks, patents, or other intellectual property rights. We have intellectual property complaint and take-down procedures in 
place to address these communications, and we believe such procedures are important to promote confidence in our 
marketplaces, along with anti-counterfeiting measures our platform employs and continues to develop. We follow these 
procedures to review complaints and relevant facts to determine the appropriate action, which may include removal of the item 
from our marketplaces and, in certain cases, closing the shops of sellers who violate our policies.

Our procedures may not effectively reduce or eliminate our liability. For example, on the Etsy marketplace we use a 
combination of automatic and manual tools and depend upon human review in many circumstances. Our tools and procedures 
may be subject to error or enforcement failures and may not be adequately staffed, and we may be subject to erroneous or 
fraudulent demands to remove content. In addition, we may be subject to civil or criminal liability for activities carried out by 
sellers on our platform, especially outside the United States where laws may offer less protection for intermediaries and 
platforms than the United States. Under current U.S. copyright law and the Communications Decency Act, we may benefit 
from statutory safe harbor provisions that protect us from copyright liability for content posted on our platform by sellers and 
buyers. However, trademark and patent laws do not include similar statutory provisions, and liability for these forms of 
intellectual property is often determined by court decisions. These safe harbors and court rulings may change unfavorably. In 
that event, we may be held secondarily liable for the intellectual property infringement of our sellers.

38

Regardless of the validity of any claims made against us, we may incur significant costs and efforts to defend against or settle 
them. If a governmental authority determines that we have aided and abetted the infringement or sale of counterfeit goods or if 
legal changes result in us potentially being liable for actions by sellers on our platform, we could face regulatory, civil, or 
criminal penalties. Successful claims by third-party rights owners could require us to pay substantial damages or refrain from 
permitting any further listing of the relevant items. These types of claims could force us to modify our business practices, 
which could lower our revenue, increase our costs or make our platforms less user-friendly. These claims, or legal and 
regulatory changes, could require the removal of non-infringing or completely unrelated content, which could negatively 
impact our business and our ability to retain sellers. Moreover, public perception that counterfeit or other unauthorized items 
are common in our marketplaces, even if factually incorrect, could result in negative publicity and damage to our reputation.

Our business and our sellers and buyers may be subject to sales and other taxes.

The application of indirect taxes, such as sales and use tax, value-added tax, provincial tax, goods and services tax, business 
tax, withholding tax, digital service tax, and gross receipt tax, to businesses like ours and to our sellers and buyers is a complex 
and evolving issue. Significant judgment is required to evaluate applicable tax obligations and as a result amounts recorded are 
estimates and are subject to adjustments. In many cases, the ultimate tax determination is uncertain because it is not clear when 
and how new and existing statutes might apply to our business or to our sellers’ businesses. If we are found to be deficient in 
how we have addressed our tax obligations, our business could be adversely impacted. 

Various jurisdictions (including the U.S. states and European Union member states) are seeking to, or have recently imposed 
additional reporting, record-keeping, or indirect tax collection and remittance obligations on businesses like ours that facilitate 
online commerce. If requirements like these become applicable in additional jurisdictions, our business, collectively with Etsy 
sellers’ businesses, could be harmed. For example, taxing authorities in many U.S. states and in other countries have identified 
e-commerce platforms as a means to calculate, collect, and remit indirect taxes for transactions taking place over the internet, 
and have enacted laws and others are considering related legislation. Additionally, the Supreme Court’s recent decision in South 
Dakota v. Wayfair, Inc. et al overturned existing law that sellers are not required to collect sales and use tax unless they have a 
physical presence in the buyer’s state. As a result of the Wayfair decision, U.S. states have begun to adopt and enforce laws 
requiring us or our sellers to calculate, collect, and remit taxes on their sales. Such changes to current law or new legislation 
could adversely affect our business if the requirement of tax to be charged on items sold on our marketplaces causes our 
marketplaces to be less attractive to current and prospective buyers, which could materially impact our business, financial 
performance, and growth. Additionally, this legislation could require us or our sellers to incur substantial costs in order to 
comply, including costs associated with tax calculation, collection, remittance, and audit requirements, which could make 
selling in our marketplaces less attractive. If we are found to be deficient in the calculation, collection and remittance of taxes 
in the jurisdictions in which we do business our business and results of operations could be adversely impacted. 

Our business is subject to a large number of U.S. and non-U.S. laws, many of which are evolving.

We are subject to a variety of laws and regulations in the United States and around the world, including those relating to 
traditional businesses, such as employment laws and taxation, and laws and regulations focused on e-commerce and online 
marketplaces, such as online payments, privacy, anti-spam, data security and protection, online platform liability, intellectual 
property, and consumer protection. In light of our international operations, we need to comply with various laws associated 
with doing business outside of the United States, including anti-money laundering, sanctions, anti-corruption, and export 
control laws. In some cases, non-U.S. privacy, data security, consumer protection, e-commerce, and other laws and regulations 
are more detailed than those in the United States and, in some countries, are actively enforced. 

These laws and regulations are continuously evolving, and compliance is costly and can require changes to our business 
practices and significant management time and effort. 

Additionally, it is not always clear how existing laws apply to online marketplaces as many of these laws do not address the 
unique issues raised by online marketplaces or e-commerce. For example, as described elsewhere in these Risk Factors, laws 
relating to privacy are evolving differently in different jurisdictions. Federal, state, and non-U.S. governmental authorities, as 
well as courts interpreting the laws, continue to evaluate and assess the privacy requirements that are applicable to Etsy. 

New platform liability laws, potential amendments to existing laws, and ongoing regulatory and judicial interpretation of these 
laws imparting liability for conduct by users of a platform may create costs and uncertainty for both Etsy and sellers on our 
platform. For example, the European Union recently passed a directive expanding online platform liability for copyright 
infringement, which member states are expected to implement by 2021. In addition, there have been various Congressional 
efforts to restrict the scope of the protections available to online platforms under Section 230 of the Communications Decency 

39

Act, and our current protections from liability for third-party content in the United States could decrease or change. We could 
incur significant costs investigating and defending such claims and, if we are found liable, significant damages.

Some providers of consumer devices and web browsers have implemented, or have announced plans to implement, ways to 
block tracking technologies which, if widely adopted, could also result in online tracking methods becoming significantly less 
effective. Any reduction in our ability to make effective use of such technologies could harm our ability to personalize the 
experience of buyers, increase our costs and limit our ability to attract and retain our sellers and buyers on cost-effective terms. 
As a result, our business could be adversely affected.

Existing and future laws and regulations enacted by federal, state, or non-U.S. governments or the inconsistent enforcement of 
such laws and regulations could impede the growth of e-commerce or online marketplaces, which could have a negative impact 
on our business and operations. Examples include data localization requirements, limitation on marketplace scope or 
ownership, intellectual property intermediary liability rules, regulation of online speech, limits on network neutrality, and rules 
related to security, privacy, or national security, which may impede us or our users. We could also face regulatory challenges or 
be subject to discriminatory or anti-competitive practices that could impede both our and our sellers’ growth prospects, increase 
our costs, and harm our business.

We strive to comply with all applicable laws, but they may conflict with each other, and by complying with the laws or 
regulations of one jurisdiction, we may find that we are violating the laws or regulations of another jurisdiction. Despite our 
efforts, we may not have fully complied in the past and may not in the future. If we become liable under laws or regulations 
applicable to us, we could be required to pay significant fines and penalties, our reputation may be harmed and we may be 
forced to change the way we operate. That could require us to incur significant expenses or to discontinue certain services, 
which could negatively affect our business.

Additionally, if third parties with whom we work violate applicable laws or our policies, those violations could result in other 
liabilities for us and could harm our business. Furthermore, the circumstances in which we may be held liable for the acts, 
omissions or responsibilities of our sellers is uncertain, complex, and evolving. For example, certain laws have recently been 
enacted seeking to hold marketplaces like ours responsible for certain compliance obligations for which sellers have 
traditionally been responsible. If an increasing number of such laws are passed, the resulting compliance costs and potential 
liability risk could negatively impact our business.

Our software is highly complex and may contain undetected errors.

The software underlying our platform is highly interconnected and complex and may contain undetected errors or 
vulnerabilities, some of which may only be discovered after the code has been released. We rely heavily on a software 
engineering practice known as “continuous deployment,” meaning that we typically release software code many times per day. 
This practice may result in the more frequent introduction of errors or vulnerabilities into the software underlying our platform, 
which can impact the user experience on our marketplaces. Additionally, due to the interconnected nature of the software 
underlying our platform, updates to certain parts of our code, including changes to our or third party APIs on which we rely, 
could have an unintended impact on other sections of our code, which may result in errors or vulnerabilities to our platform that 
negatively impact the user experience and functionality of our marketplaces. Any errors or vulnerabilities discovered in our 
code after release could result in damage to our reputation, loss of our community members, loss of revenue or liability for 
damages, any of which could adversely affect our growth prospects and our business.

Our business depends on continued and unimpeded access to the internet and mobile networks.

Our sellers and buyers rely on access to the internet or mobile networks to access our marketplaces. Internet service providers 
may choose to disrupt or degrade access to our platform or increase the cost of such access. Mobile network operators or 
operating system providers could block or place onerous restrictions on the ability to download and use our mobile apps.

Internet service providers or mobile network operators could also attempt to charge us for providing access to our platform. In 
addition, we could face discriminatory or anticompetitive practices that could impede both our and our sellers’ growth 
prospects, increase our costs, and harm our business. In 2015, rules approved by the Federal Communications Commission 
(“FCC”) went into effect that prohibited internet service providers from charging content providers higher rates in order to 
deliver their content over certain “fast traffic” lanes; however, those rules were repealed in June 2018, and efforts to challenge 
the repeal in the courts have failed to reverse the FCC’s 2018 decision, and in October 2019, the U.S. Court of Appeals for the 
D.C. Circuit provided a mixed ruling that did not reverse the FCC’s 2015 decision in its entirety. Although this recent court 
ruling allows states to enact their own net neutrality rules, the repeal of federal protections may make it more difficult or costly 
for many small businesses such as our community of sellers, as well as our buyers, to access our platform and may result in 

40

increased costs for us, which could significantly harm our business, and the millions of microbusinesses that utilize our 
platform. 

Outside of the United States, it is possible that governments of one or more countries may seek to censor content available on 
our platform or may even attempt to block access to our platform. If we are restricted from operating in one or more countries, 
our ability to attract and retain sellers and buyers may be adversely affected and we may not be able to grow our business as we 
anticipate.

Our business could be negatively affected as a result of actions of activist stockholders.

The actions of activist stockholders could adversely affect our business. Specifically, responding to common actions of an 
activist stockholder, such as requests for special meetings, potential nominations of candidates for election to our Board of 
Directors, requests to pursue a strategic combination, or other transaction or other special requests, could disrupt our 
operations, be costly and time-consuming, or divert the attention of our management and employees. In addition, perceived 
uncertainties as to our future direction in relation to the actions of an activist stockholder may result in the loss of potential 
business opportunities or the perception that we are unstable as a company, which may make it more difficult to attract and 
retain qualified employees. Our ability to continue to commit to our mission, guiding principles and culture may also be 
questioned, which could impact our ability to attract and retain buyers and sellers. Actions of an activist stockholder may also 
cause fluctuations in our stock price based on speculative market perceptions or other factors that do not necessarily reflect the 
underlying fundamentals and prospects of our business.

We may be subject to intellectual property claims, which are extremely costly to defend, could require us to pay 
significant damages, and could limit our ability to use certain technologies in the future.

Companies in the internet and technology industries are frequently subject to litigation based on allegations of infringement or 
other violations of intellectual property rights. We periodically receive communications that claim we have infringed, 
misappropriated, or misused others’ intellectual property rights. To the extent we gain greater public recognition, we may face a 
higher risk of being the subject of intellectual property claims. Third parties may have intellectual property rights that cover 
significant aspects of our technologies or business methods and prevent us from expanding our offerings. Third parties may 
also allege a company is secondarily liable for intellectual property infringement, or that it is a joint infringer with another 
party, including claims that Etsy is liable, either directly, indirectly or vicariously, for infringement claims against sellers or 
third parties, and that statutory, judicial or other immunities and defenses do not protect us. Any intellectual property claim 
against us, with or without merit, could be time consuming and expensive to settle or litigate and could divert the attention of 
our management. Litigation regarding intellectual property rights is inherently uncertain due to the complex issues involved, 
and we may not be successful in defending ourselves in such matters. In addition, some of our competitors have extensive 
portfolios of issued patents. Many potential litigants, including some of our competitors, patent holding companies and other 
intellectual property rights holders, have the ability to dedicate substantial resources to enforcing their perceived intellectual 
property rights. Any claims successfully brought against us could subject us to significant liability for damages and we may be 
required to stop using technology or other intellectual property alleged to be in violation of a third party’s rights in one or more 
jurisdictions where we do business. We also might be required to seek a license for third-party intellectual property. Even if a 
license is available, we could be required to pay significant royalties or submit to unreasonable terms, which would increase 
our operating expenses. We may also be required to develop alternative non-infringing technology, which could require 
significant time and expense. If we cannot license or develop technology for any allegedly infringing aspect of our business, we 
would be forced to limit our service and may be unable to compete effectively. Any of these results could harm our business.

We may be unable to protect our intellectual property adequately.

Our intellectual property is an essential asset of our business. To establish and protect our intellectual property rights, we rely 
on a combination of trade secret, copyright, trademark, and patent laws, as well as confidentiality procedures and contractual 
provisions. The efforts we have taken to protect our intellectual property may not be sufficient or effective. We generally do not 
elect to register our copyrights, relying instead on the laws protecting unregistered intellectual property, which may not be 
sufficient. We rely on both registered and unregistered trademarks, which may not always be comprehensive in scope. In 
addition, our copyrights and trademarks, whether or not registered, and patents may be held invalid or unenforceable if 
challenged, and may be of limited territorial reach. While we have obtained or applied for patent protection with respect to 
some of our intellectual property, patent filings may not be adequate alone to protect our intellectual property, and we rely on 
trade secret protection for parts of our technology and intellectual property. To the extent we do seek patent protection, any U.S. 
or other patents issued to us may not be sufficiently broad to protect our proprietary technologies.

41

In addition, we may not be effective in policing unauthorized use of our intellectual property and authorized uses may not have 
the intended effect. Even if we do detect violations, we may need to engage in litigation or licensing to enforce our intellectual 
property rights. Any enforcement efforts we undertake, including litigation, could be time-consuming and expensive and could 
divert our management’s attention. In addition, our efforts may be met with defenses and counterclaims challenging the validity 
and enforceability of our intellectual property rights or may result in a court determining that our intellectual property rights are 
unenforceable. The legal framework surrounding protection of intellectual property changes frequently throughout the world, 
particularly as to technologies used in e-commerce, and these changes may impact our ability to protect our intellectual 
property and defend against third party claims. If we are unable to cost-effectively protect our intellectual property rights, then 
our business could be harmed.

We are subject to the terms of open source licenses because our platform incorporates open source software.

The software powering our platform incorporates software covered by open source licenses. In addition, we regularly 
contribute source code to open source software projects and release internal software projects under open source licenses, and 
we anticipate doing so in the future. The terms of many open source licenses relied upon by us and the internet and technology 
industries have been interpreted by only a few court decisions and there is a risk that the licenses could be construed in a 
manner that imposes unanticipated conditions or restrictions on our ability to operate our marketplaces. Under certain open 
source licenses, if certain conditions were met, we could be required to publicly release aspects of the source code of our 
software or to make our software available under open source licenses. To avoid the public release of the affected portions of 
our source code, we could be required to expend substantial time and resources to re-engineer some or all of our software. In 
addition, use of open source software can lead to greater risks than use of third-party commercial software because open source 
licensors generally do not provide warranties or controls on the origin of the software. Use of open source software may also 
present additional security risks because the public availability of such software may make it easier for hackers and other third 
parties to determine how to compromise our platform, and availability of patches or fixes may not be consistent or quickly 
available, as it may be subject to the continued community engagement in a particular open source project. Additionally, 
because any software source code we contribute to open source projects is publicly available, while we may benefit from the 
contributions of others, our ability to protect our intellectual property rights in such software source code may be limited or lost 
entirely, and we will be unable to prevent our competitors or others from using such contributed software source code. Any of 
these risks could be difficult to eliminate or manage and, if not addressed, could adversely affect our business, financial 
performance and growth.

We may experience fluctuations in our tax obligations and effective tax rate.

We are subject to a variety of taxes and tax collection obligations in the United States and in numerous other foreign 
jurisdictions. We record tax expense, including indirect taxes, based on current tax payments and our estimates of future tax 
payments, which may include reserves for estimates of probable or likely settlements of tax audits. We may recognize 
additional tax expense and be subject to additional tax liabilities, including tax collection obligations, due to changes in tax law 
such as legislation commonly referred to as the U.S. Tax Cuts and Jobs Act of 2017, including regulations, administrative 
practices, outcomes of court cases and changes to the global tax framework. Further, our effective tax rate and cash taxes paid 
in a given financial statement period may be adversely impacted by results of our business operations including changes in the 
mix of revenue among different jurisdictions, acquisitions, investments, entry into new geographies, the relative amount of 
foreign earnings, changes in foreign currency exchanges rates, changes in our stock price, intercompany transactions, changes 
to accounting rules, expectation of future profits, changes in our deferred tax assets and liabilities and our assessment of their 
realizability, and changes to our ownership or capital structure. Fluctuations in our tax obligations and effective tax rate could 
adversely affect our business.

In the ordinary course of our business, there are numerous transactions and calculations for which the ultimate tax 
determination is uncertain. Although, we believe that our tax positions and related provisions reflected in the financial 
statements are fully supportable, we recognize that these tax positions and related provisions may be challenged by various tax 
authorities. These tax positions and related provisions are reviewed on an ongoing basis and are adjusted as additional facts and 
information become available, including progress on tax audits, changes in interpretation of tax laws, developments in case law 
and closing of statute of limitations. To the extent that the ultimate results differ our original or adjusted estimates, our effective 
tax rate can be adversely affected.

The provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant 
facts and laws in the jurisdictions in which the Company operates. Future changes in applicable laws, projected levels of 
taxable income and tax planning could change the effective tax rate and tax balances recorded by the Company. In addition, tax 
authorities periodically review income tax returns filed by the Company and can raise issues regarding its filing positions, 

42

timing and amount of income and deductions, and the allocation of income among the jurisdictions in which the Company 
operates. A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an 
issue raised by a revenue authority with respect to that return. Any adjustments as a result of any examination, may result in 
additional taxes or penalties against the Company. If the ultimate result of these audits differs from original or adjusted 
estimates, they could have a material impact our effective tax rate and tax liabilities.

At any one time, multiple tax years could be subject to audit by various taxing jurisdictions. As a result, we could be subject to 
higher than anticipated tax liabilities as well as ongoing variability in our quarterly tax rates as audits close and exposures are 
re-evaluated. 

We may be involved in litigation and regulatory matters that are expensive and time consuming.

In addition to intellectual property claims, we may become involved in other litigation matters, including class action or 
shareholder derivative lawsuits. We may become subject to heightened regulatory scrutiny, inquiries or investigations, 
including with respect to our community, relating to broad, industry-wide concerns, such as antitrust and privacy, that could 
lead to increased expenses or reputational damage.

Under certain circumstances, we have contractual and other legal obligations to indemnify and to incur legal expenses on 
behalf of current and former directors, officers, and underwriters. Any lawsuit to which we are a party, with or without merit, 
may result in an unfavorable judgment. We also may decide to settle lawsuits on unfavorable terms. Any such negative outcome 
could result in payments of substantial damages or fines, damage to our reputation, or adverse changes to our offerings or 
business practices. Any of these results could adversely affect our business. In addition, defending claims is costly and can 
impose a significant burden on our management.

Actions brought against us may result in lawsuits, enforcement actions, injunctions, settlements, damages, fines or penalties, 
which could have a material adverse effect on our financial condition or results of operations or require changes to our 
business. Although we establish accruals for our litigation and regulatory matters in accordance with applicable accounting 
guidance when those matters proceed to a stage where they present loss contingencies that are both probable and reasonably 
estimable, there may be a material exposure to loss in excess of any amounts accrued, or in excess of any loss contingencies 
disclosed as reasonably possible. Such loss contingencies may not be probable and reasonably estimable until the proceedings 
have progressed significantly, which could take several years and occur close to resolution of the matter.

If our insurance coverage is insufficient or our insurers are unable to meet their obligations, our insurance may not 
mitigate the risks facing our business.

Our insurance policies cover a number of risks and potential liabilities, such as general liability, property coverage, errors, and 
omissions liability, employment liability, business interruptions, data breaches, crime, product liability, and directors’ and 
officers’ liability. For certain types of business risk, we may not be able to, or may choose not to, acquire insurance. In addition, 
our insurance may not adequately mitigate the risks we face or we may have to pay high premiums and/or deductibles for the 
coverage we do obtain. Additionally, if any of our insurers becomes insolvent, it would be unable to pay any claims that we 
make.

If we are unable to maintain effective internal control over financial reporting, investors may lose confidence in the 
accuracy of our financial reports.

As a public company, we are required to maintain internal control over financial reporting and to report any material 
weaknesses in such internal controls. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the 
effectiveness of our internal control over financial reporting. It also requires our independent registered public accounting firm 
to attest to our evaluation of our internal controls over financial reporting. Although our management has determined, and our 
independent registered public accounting firm has attested, that our internal control over financial reporting was effective as of 
December 31, 2019, we cannot assure you that we or our independent registered public accounting firm will not identify a 
material weakness in our internal controls in the future. We are currently integrating Reverb into our operations and financial 
internal control processes and, pursuant to the SEC’s guidance that an assessment of a recently acquired business may be 
omitted from the scope of an assessment in the year of acquisition, the scope of our assessment of the effectiveness of our 
internal controls over financial reporting at December 31, 2019 will not include Reverb. We cannot assure you that Reverb will 
be effectively integrated into our operational or financial internal control processes or that that we or our independent registered 
public accounting firm will not identify a material weakness relating to Reverb in our internal control processes in the future.

43

If we have a material weakness in our internal control over financial reporting in the future, we may not detect errors on a 
timely basis. If we have difficulty implementing and maintaining effective internal control over financial reporting at 
businesses that we acquire, or if we identify a material weakness in our internal control over financial reporting in the future, it 
could harm our operating results, adversely affect our reputation, cause our stock price to decline, or result in inaccurate 
financial reporting or material misstatements in our annual or interim financial statements. We could be required to implement 
expensive and time-consuming remedial measures. Further, if there are material weaknesses or failures in our ability to meet 
any of the requirements related to the maintenance and reporting of our internal controls, such as Section 404 of the Sarbanes-
Oxley Act, investors may lose confidence in the accuracy and completeness of our financial reports and that could cause the 
price of our common stock to decline. We could become subject to investigations by Nasdaq, the SEC or other regulatory 
authorities, which could require additional management attention and which could adversely affect our business.

In addition, our internal control over financial reporting will not prevent or detect all errors and fraud, and individuals, 
including employees and contractors, could circumvent such controls. Because of the inherent limitations in all control systems, 
no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all 
control issues and instances of fraud will be detected.

We have a significant amount of debt and may incur additional debt in the future. We may not have sufficient cash flow 
from our business to pay our substantial debt when due.

Our ability to pay our debt when due or to refinance our indebtedness, including the 0% Convertible Senior Notes due 2023 we 
issued in March 2018 and the 0.125% Convertible Senior Notes due 2026 we issued in September 2019 (together, the “Notes”), 
depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. 
Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make 
necessary capital expenditures. In addition, any required repurchase of the Notes for cash as a result of a fundamental change 
would lower our current cash on hand such that we would not have those funds available for us in our business. If we are 
unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring 
debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our 
indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any 
of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. 

In addition, we and our subsidiaries may be able to incur substantial additional debt in the future, subject to the restrictions 
contained in our debt instruments, some of which may be secured debt. If, for example, we incur additional debt, secure 
existing or future debt or recapitalize our debt, these actions may diminish our ability to make payments on our substantial debt 
when due.

The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a 
material effect on our reported financial results.

Under Accounting Standards Codification 470-20—Debt with Conversion and Other Options, (“ASC 470-20”), an entity must 
separately account for the liability and equity components of the convertible debt instruments (such as the Notes) that may be 
settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The equity 
components of the Notes are required to be included in the additional paid-in capital section of stockholders’ equity on our 
Consolidated Balance Sheet, and the value of the equity component would be treated as original issue discount for purposes of 
accounting for the debt component of the Notes. As a result, we will be required to record non-cash interest expense in current 
periods presented as a result of the amortization of the discounted carrying value of the Notes to their face amount over the 
term of the Notes. We will report lower net income in our financial results because ASC 470-20 requires interest to include both 
the current period’s amortization of the debt discount and the instrument’s coupon interest, which could adversely affect our 
reported or future financial results, the trading price of our common stock and the trading price of the Notes.

In addition, under certain circumstances, convertible debt instruments (such as the Notes) that may be settled entirely or partly 
in cash are currently accounted for utilizing the treasury stock method, the effect of which is that the shares issuable upon 
conversion of the Notes are not included in the calculation of diluted earnings per share except to the extent that the conversion 
value of the Notes exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the 
transaction is accounted for as if the number of shares of common stock that would be necessary to settle such excess, if we 
elected to settle such excess in shares, are issued. We cannot be sure that the accounting standards in the future will continue to 
permit the use of the treasury stock method. If we are unable to use the treasury stock method in accounting for the shares 
issuable upon conversion of the Notes, then our diluted earnings per share would be adversely affected.

44

 
 
The terms of our debt instruments may restrict our ability to pursue our business strategies.

We do not currently have any obligations outstanding under our credit facility. However, our credit facility requires us to 
comply with various covenants that limit our ability to take actions such as:

• 

• 

• 

• 

• 

disposing of assets;

completing mergers or acquisitions;

incurring additional indebtedness;

encumbering our properties or assets;

paying dividends or making other distributions;

•  making specified investments; and

• 

engaging in transactions with our affiliates.

These restrictions could limit our ability to pursue our business strategies. If we default under our credit facility and if the 
default is not cured or waived, the lenders could terminate their commitments to lend to us and cause any amounts outstanding 
to be payable immediately. Such a default could also result in cross defaults under other debt instruments. Moreover, any such 
default would limit our ability to obtain additional financing, which may have an adverse effect on our cash flow and liquidity.

We may need additional capital, which may not be available to us on acceptable terms or at all.

We believe that our existing cash and cash equivalents and short-term investments, together with cash generated from 
operations will be enough to meet our anticipated cash needs for at least the next 12 months. However, we may require 
additional cash resources due to changes in business conditions or other developments, such as acquisitions or investments we 
may decide to pursue. We may seek to borrow funds under our credit facility or sell additional equity or debt securities. The 
sale of additional equity or convertible debt securities could result in dilution to our existing stockholders. Any debt financing 
that we may secure in the future could result in additional operating and financial covenants that would limit or restrict our 
ability to take certain actions, such as incurring additional debt, making capital expenditures or declaring dividends. It is also 
possible that financing may not be available to us in amounts or on terms acceptable to us, if at all. Weakness and volatility in 
capital markets and the economy in general could limit our access to capital markets and increase our costs of borrowing.

Risks Related to Ownership of Our Common Stock

The price of our common stock has been and will likely continue to be volatile and declines in the price of common stock 
could subject us to litigation.

The price of our common stock has been and is likely to continue to be volatile. For example, since January 1, 2019, our 
common stock’s daily closing price on Nasdaq has ranged from a low of $40.51 to a high of $72.77 through February 21, 2020. 
The price of our common stock may fluctuate significantly for numerous reasons, many of which are beyond our control, such 
as:

• 

• 

• 

• 

variations in our operating results and other financial and operational metrics, including the key financial and operating 
metrics disclosed in this Annual Report, as well as how those results and metrics compare to analyst and investor 
expectations;

forward-looking statements related to our financial guidance or projections, our failure to meet or exceed our financial 
guidance or projections or changes in our financial guidance or projections;

failure of analysts to initiate or maintain coverage of our company, changes in their estimates of our operating results or 
changes in recommendations by analysts that follow our common stock or a negative view of our financial guidance or 
projections and our failure to meet or exceed the estimates of such analysts;

announcements of new services or enhancements, strategic alliances or significant agreements or other developments by 
us or our competitors;

45

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

announcements by us or our competitors of mergers or acquisitions or rumors of such transactions involving us or our 
competitors;

the amount and timing of our operating expenses and the success of any cost-savings actions we take;

changes in our Board of Directors or senior management team;

disruptions in our marketplaces due to hardware, software or network problems, security breaches, or other issues;

the strength of the global economy or the economy in the jurisdictions in which we operate, currency fluctuations, and 
market conditions in our industry and those affecting members of our community;

the trading activity of our largest stockholders;

the number of shares of our common stock that are available for public trading;

litigation or other claims against us;

stockholder activism;

the performance of the equity markets in general and in our industry;

the operating performance of other similar companies;

changes in legal requirements relating to our business; and

any other factors discussed in this Annual Report.

In addition, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the 
price of our common stock could decline for reasons unrelated to our business, financial performance, or growth. Stock prices 
of many internet and technology companies have historically been highly volatile. Some companies that have experienced 
volatility in the trading price of their stock have been the subject of securities class action litigation. We have experienced 
securities class action lawsuits in the past and may experience more such litigation following future periods of volatility or 
declines in our stock price. Any securities litigation, could result in substantial costs and divert our management’s attention and 
resources, which could adversely affect our business.

Our stock repurchases are discretionary and even if effected, they may not achieve the desired objectives.

In November 2018, our Board of Directors approved a stock repurchase program authorizing us to repurchase up to $200 
million of our common stock. There can be no assurance that these stock repurchases will enhance stockholder value because 
the market price of our common stock may decline below the levels at which we repurchased such shares. In addition, there is 
no guarantee that our stock repurchases in the past or in the future will be able to successfully mitigate the dilutive effect of 
recent and future employee stock option exercises and restricted stock vesting. The amounts and timing of the repurchases may 
also be influenced by general market conditions and the prevailing price and trading volumes of our common stock. If our 
financial condition deteriorates or we decide to use our cash for other purposes, we may suspend repurchase activity.

We do not intend to pay dividends on our capital stock, so any returns will be limited to increases in the value of our 
common stock.

We have never declared or paid any cash dividends on our capital stock. We currently anticipate that we will retain future 
earnings for the operation and expansion of our business and do not anticipate declaring any dividends in the foreseeable 
future. In addition, our ability to pay cash dividends on our capital stock is restricted by the terms of our credit facility. As a 
result, stockholders will not receive dividends or other distributions and may only receive a return on their investment if the 
trading price of our common stock increases.

46

Future sales and issuances of our common stock or rights to purchase common stock could result in additional dilution 
to our stockholders and could cause the price of our common stock to decline.

We may issue additional common stock, convertible securities, or other equity in the future, including as a result of conversion 
of the outstanding Notes. We also issue common stock to our employees, directors, and other service providers pursuant to our 
equity incentive plans. Such issuances could be dilutive to investors and could cause the price of our common stock to decline. 
New investors in such issuances could also receive rights senior to those of current stockholders.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company 
more difficult, could limit attempts to make changes in our management and could depress the price of our common 
stock.

Provisions in our certificate of incorporation and bylaws and the Delaware General Corporation Law may have the effect of 
delaying or preventing a change in control of our company or limiting changes in our management. Among other things, these 
provisions:

• 

• 

• 

• 

• 

• 

• 

• 

• 

provide for a classified board of directors so that not all members of our Board of Directors are elected at one time;

permit our Board of Directors to establish the number of directors and fill any vacancies and newly created directorships;

provide that directors may only be removed for cause;

require super-majority voting to amend some provisions in our certificate of incorporation and bylaws;

authorize the issuance of “blank check” preferred stock that our Board of Directors could use to implement a stockholder 
rights plan;

eliminate the ability of our stockholders to call special meetings of stockholders;

prohibit stockholder action by written consent, which means all stockholder actions must be taken at a meeting of our 
stockholders;

provide that our Board of Directors is expressly authorized to amend or repeal any provision of our bylaws; and

require advance notice for nominations for election to our Board of Directors or for proposing matters that can be acted 
upon by stockholders at annual stockholder meetings.

These provisions may delay or prevent attempts by our stockholders to replace members of our management by making it more 
difficult for stockholders to replace members of our Board of Directors, which is responsible for appointing the members of our 
management. In addition, Section 203 of the Delaware General Corporation Law may delay or prevent a change in control of 
our company by imposing certain restrictions on mergers, business combinations and other transactions between us and holders 
of 15% or more of our common stock. Anti-takeover provisions could depress the price of our common stock by acting to delay 
or prevent a change in control of our company.

Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for 
substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a 
favorable judicial forum for disputes with us or our directors, officers or employees.

Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any 
derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a 
claim against us arising pursuant to the DGCL, our certificate of incorporation or our bylaws or any action asserting a claim 
against us that is governed by the internal affairs doctrine. This choice of forum provision may limit a stockholder’s ability to 
bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and 
may discourage these types of lawsuits. Alternatively, if a court were to find the choice of forum provision contained in our 
certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with 
resolving such action in other jurisdictions.

47

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our headquarters are located in Brooklyn, New York where we occupy approximately 225,135 square feet under a lease that 
expires in 2026. We use these facilities for our principal administration, technology and development and engineering activities. 

We believe that our current facilities are suitable and adequate to meet our ongoing needs and that, if we require additional 
space, we will be able to obtain additional facilities.

Item 3. Legal Proceedings.

See “Note 14—Commitments and Contingencies—Legal Proceedings” in the Notes to Consolidated Financial Statements.

Item 4. Mine Safety Disclosures.

Not applicable.

48

PART II.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 
Securities.

Market for Etsy’s Common Stock

Our common stock has been listed on the Nasdaq Global Select Market under the symbol “ETSY” since April 16, 2015. Prior 
to that date, there was no public trading market for our common stock. 

Holders of Record

As of the close of business on February 21, 2020, there were approximately 196 stockholders of record of our common stock. 
The number of stockholders of record is based upon the actual number of holders registered on this date and does not include 
holders of common stock in “street name” by brokers or other entities on behalf of stockholders.

Dividend Policy

We have never declared or paid cash dividends on our capital stock. We intend to retain all available funds and future earnings 
and do not anticipate paying cash dividends in the foreseeable future. Any future decision to declare cash dividends will be 
made at the discretion of our Board of Directors, subject to applicable laws and will depend on a number of factors, including 
our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions, and 
other factors that our Board of Directors think are relevant. 

Issuer Purchases of Equity Securities

The table below provides information with respect to repurchases of shares of our common stock during the three months 
ended December 31, 2019:

Period

October 1 - 31, 2019 (1)

November 1 - 30, 2019 (1)

December 1 - 31, 2019 (1)

Total

Total Number of
Shares Purchased

Average Price Paid
per Share(2)

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs(3)(4)

Approximate Dollar
Value of Shares that
May Yet be Purchased
under the Plans or
Programs
(in thousands)(3)

409,052

$

175,619

3,995

588,666

55.81

46.35

43.39

52.90

255,360

$

169,718

—

425,078

110,371

102,500

102,500

102,500

(1)  The total number of shares purchased includes 163,588 shares withheld to satisfy tax withholding obligations in 

connection with the vesting of employee restricted stock units (“RSUs”). 

(2)  Average price paid per share excludes broker commissions.

(3)  On November 6, 2018, we announced that our Board of Directors had approved a stock repurchase program for the 
repurchase of up to $200 million of our common stock. The stock repurchase program has no expiration date. 

(4)  A portion of these shares were purchased pursuant to a 10b5-1 trading plan. Share repurchases may be executed through 
open market repurchases, privately negotiated transactions or by other means, including repurchase plans designed to 
comply with Rule 10b5-1 and other derivative, accelerated share repurchase and other structured transactions. The 
timing and exact amount of any common stock repurchases will depend on various factors, including market conditions, 
common stock trading price, our liquidity and financial performance and legal considerations.

49

Performance Graph

Our 2018 Annual Report on Form 10-K included a comparison of the cumulative total return of our common stock with the 
NASDAQ Composite Index and the Russell 2000 Index since our initial public offering on April 16, 2015. As a result of 
changes in 2019 to the indices that Etsy is included in, we believe that the S&P MidCap 400 and the Russell 1000 Index are 
more appropriate indices for comparison of our stock performance. If a company selects a different index from that used in the 
immediately preceding fiscal year, the company’s stock performance must be compared with both the newly-selected index and 
the index used in the immediately preceding year. Accordingly, the following graph shows a comparison from April 16, 2015 
(the date our common stock commenced trading on Nasdaq) through December 31, 2019, of the cumulative total returns for our 
common stock, the S&P MidCap 400, the Russell 1000 Index, the Nasdaq Composite Index, and the Russell 2000 Index. The 
graph assumes $100 was invested at the market close on April 16, 2015 in the common stock of Etsy, Inc. Such returns are 
based on historical results and are not intended to suggest future performance. The S&P Mid Cap 400, the Russell 1000 Index, 
the Nasdaq Composite Index, and the Russell 2000 Index assume reinvestment of any dividends.

This performance graph shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or 
incorporated by reference into any of our other filings under the Securities Act or the Exchange Act.

50

 
Item 6. Selected Consolidated Financial and Other Data.

The following tables show selected consolidated financial data. The selected Consolidated Statements of Operations data for 
the years ended December 31, 2019, 2018, and 2017, and the selected Consolidated Balance Sheets data as of December 31, 
2019 and 2018, are derived from our audited Consolidated Financial Statements and related notes included elsewhere in this 
Annual Report on Form 10-K. The selected Consolidated Statements of Operations data for the years ended December 31, 2016 
and 2015, and the selected Consolidated Balance Sheets data as of December 31, 2017, 2016, and 2015 is derived from our 
audited Consolidated Financial Statements and related notes not included in this Annual Report.

The following tables also show certain unaudited operational and non-GAAP financial measures as well as a reconciliation 
between certain GAAP and non-GAAP measures. The selected consolidated financial data and key metrics should be read 
together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated 
Financial Statements and related notes included elsewhere in this Annual Report. See “Management’s Discussion and Analysis 
of Financial Condition and Results of Operations—Key Operating and Financial Metrics” for the definitions of the following 
terms: “active buyers,” “active sellers,” “Adjusted EBITDA,” “GMS,” “international GMS,” and “mobile GMS.” 

Our historical results and key metrics are not necessarily indicative of future results.

Consolidated Statements of Operations Data:

Revenue:

Marketplace (2)

Services

Total revenue

Cost of revenue (3)(4)

Gross profit

Operating expenses:

Marketing (3)(4)

Product development (3)(4)

General and administrative (3)(4)

Asset impairment charges

Total operating expenses

Income (loss) from operations

Other (expense) income, net

Income (loss) before income taxes

Benefit (provision) for income taxes (5)

2019 (1)

2018

2017

2016

2015

Year Ended December 31,

(in thousands, except share and per share amounts)

$

593,646

$

444,765

$

329,362

$

275,534

$

208,576

224,733

818,379

271,036

547,343

215,570

121,878

121,134

—

458,582

88,761

(8,115)

80,646

15,248

158,928

603,693

190,762

412,931

158,013

97,249

82,883

—

338,145

74,786

(19,708)

55,078

22,413

111,869

441,231

150,986

290,245

109,085

74,616

91,486

3,162

278,349

11,896

20,369

32,265

49,535

89,433

364,967

123,328

241,639

82,248

55,083

86,180

551

224,062

17,577

(20,453)

(2,876)

(27,025)

64,923

273,499

96,979

176,520

66,771

42,694

68,939

—

178,404

(1,884)

(26,110)

(27,994)

(26,069)

(54,063)

Net income (loss)

$

95,894

$

77,491

$

81,800

$

(29,901) $

Net income (loss) per share attributable to common stockholders:

Basic

Diluted

$

$

0.80

0.76

$

$

0.64

0.61

$

$

0.69

0.68

$

$

(0.26) $

(0.26) $

(0.59)

(0.59)

Weighted average common shares outstanding:

Basic

Diluted

119,665,248

120,146,076

118,538,687

113,562,738

91,122,291

125,720,073

127,084,785

122,267,673

113,562,738

91,122,291

(1)  The financial results of Reverb have been included in our consolidated financial results from August 15, 2019 (the date 

of acquisition).

51

 
 
 
(2)  In the fourth quarter of 2019, we reclassified Other revenue to Marketplace revenue. The following table provides our 

Marketplace and Other revenue under our previous and current presentation:

Previous Presentation

Current Presentation

Marketplace Revenue

Other Revenue

Marketplace Revenue

Other Revenue

Year-to-Date Period Ended

$

440,740

$

4,025

$

444,765

$

(in thousands)

326,076

269,628

204,333

3,286

5,906

4,243

329,362

275,534

208,576

—

—

—

—

December 31, 2018

December 31, 2017

December 31, 2016

December 31, 2015

(3)  Includes total stock-based compensation expense as follows:

2019

2018

2017

2016

2015

Year Ended December 31,

(in thousands)

Cost of revenue

Marketing

Product development

General and administrative

Total stock-based compensation expense

$

$

5,787

$

3,357

$

1,739

$

1,057

$

3,774

21,085

13,749

2,507

21,234

11,133

1,933

8,274

14,613

971

5,079

8,794

871

560

2,860

6,550

44,395

$

38,231

$

26,559

$

15,901

$

10,841

(4)  Includes the impact of $0.2 million in restructuring and other exit income recognized in the year ended December 31, 
2018 and $13.9 million in restructuring and other exit costs recognized in the year ended December 31, 2017. For a 
summary of restructuring and other exit costs (income), see “Note 17—Restructuring and Other Exit Costs (Income)” in 
the Notes to Consolidated Financial Statements.

(5)  In the year ended December 31, 2019, we recognized an income tax benefit associated with stock-based compensation of 
$16.3 million and research and development credit of $9.9 million. Although these items are recurring in nature, the 
amount of the benefit derived is largely dependent on several factors, including our stock price and certain research and 
development expenses incurred in any given year. In the year ended December 31, 2018, we recognized an income tax 
benefit associated with the release of a valuation allowance on certain deferred tax assets. The valuation allowance 
release resulted in a non-recurring benefit for income taxes of $23.4 million for the year ended December 31, 2018. In 
the year ended December 31, 2017, we recognized an income tax benefit associated with the enactment of the Tax Cuts 
and Jobs Act (the “TCJA”). As a result of the TCJA, our deferred taxes at December 31, 2017 have been revalued at the 
reduced 21% corporate income tax rate. The revaluation resulted in a non-recurring benefit for income taxes of 
approximately $31.1 million for the year ended December 31, 2017.

2019 (1)

2018

2017

2016

2015

Year Ended December 31,

(in thousands, except percentages)

Other Operational and Non-GAAP Financial Data:

GMS

Adjusted EBITDA (Non-GAAP)

Active sellers

Active buyers

Percent mobile GMS

Percent international GMS

$

4,974,944

$

3,931,745

$

3,253,609

$

2,841,985

$

2,388,387

186,268

2,699

46,351

58%

36%

139,510

2,115

39,447

55%

35%

80,009

1,933

33,364

51%

33%

57,124

1,748

28,566

48%

30%

31,007

1,563

24,046

43%

30%

(1)  The financial results of Reverb have been included in our consolidated results from August 15, 2019 (the date of 

acquisition).

52

 
 
 
 
 
 
Net income (loss)

Excluding:

Interest and other non-operating expense, net

(Benefit) provision for income taxes

Depreciation and amortization

Stock-based compensation expense (2)

Foreign exchange (gain) loss

Acquisition-related expenses

Non-ordinary course disputes

Restructuring and other exit costs (income)

Asset impairment charges

Net unrealized loss on warrant and other
liabilities

Contribution to Good Work Institute (formerly
Etsy.org)

2019 (1)

2018

2017

2016

2015

Year Ended December 31,

$

95,894

$

77,491

$

81,800

$

(29,901) $

(54,063)

(in thousands)

11,121

(15,248)

48,031

44,395

(3,006)

3,917

1,164

—

—

—

—

13,221

(22,413)

26,742

38,231

6,487

—

—

(249)

—

—

—

8,736

(49,535)

27,197

23,857

(29,105)

—

—

13,897

3,162

—

—

5,502

27,025

22,525

15,901

14,951

570

—

—

551

—

—

1,202

26,069

18,550

10,841

21,775

—

—

—

—

3,133

3,500

31,007

Adjusted EBITDA

$

186,268

$

139,510

$

80,009

$

57,124

$

(1)  The financial results of Reverb have been included in our consolidated results from August 15, 2019 (the date of 

acquisition).

(2)  $2.7 million of restructuring-related stock-based compensation expense has been excluded from the year ended 

December 31, 2017, and is included in the restructuring and other exit costs (income) line.

2019 (1)

2018

2017

2016

2015

As of December 31,

(in thousands)

Consolidated Balance Sheet Data:

Cash, cash equivalents and short- and long-term
investments

Net working capital

Total assets

Long-term debt, net (2)

Long-term liabilities

Total stockholders’ equity

$

906,595

$

624,287

$

340,550

$

282,086

$

732,510

1,542,352

785,126

947,190

406,634

568,227

901,851

276,486

388,891

400,898

336,787

605,583

—

106,212

396,894

287,024

581,193

—

152,428

344,757

292,864

278,932

553,061

—

142,441

330,498

(1)  The financial results of Reverb have been included in our consolidated results from August 15, 2019 (the date of 

acquisition).

(2)  In September 2019, we issued $650.0 million aggregate principal amount of 0.125% Convertible Senior Notes due 
2026 (the “2019 Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the 
Securities Act of 1933, as amended (the “Securities Act”). In March 2018, we issued $345.0 million aggregate 
principal amount of 0% Convertible Senior Notes due 2023 (the “2018 Notes”) in a private placement to qualified 
institutional buyers pursuant to the Securities Act. For more information on the 2019 and 2018 Notes, see “Note 13—
Debt” in the Notes to Consolidated Financial Statements.

53

 
 
 
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our 
Consolidated Financial Statements and related notes and other financial information included elsewhere in this Annual Report 
on Form 10-K. This discussion, particularly information with respect to our outlook, our plans and strategy for our business 
and our performance and future success, includes forward-looking statements that involve risks and uncertainties. Our actual 
results could differ materially from those discussed below. Factors that could cause or contribute to these differences include 
those discussed below and elsewhere in this Annual Report, particularly in the “Risk Factors” section. For more information 
regarding key factors affecting our performance, see “Key Factors Affecting Our Performance” below.

Overview

Business 

Etsy operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers. Our mission is 
to “Keep Commerce Human,” and we’re committed to using the power of business and technology to strengthen communities 
and empower people around the world. 

Our primary marketplace, Etsy.com, is the global destination for unique and creative goods. The Etsy marketplaceconnects 
creative entrepreneurs with thoughtful consumers looking for items that are intended to be special, reflect their sense of style, 
or represent a meaningful occasion.Our sellers are the heart and soul of Etsy, and our technology platform allows our sellers to 
turn their creative passions into economic opportunity. We have a seller-aligned business model: we make money when our 
sellers make money. We offer Etsy sellers a marketplace with millions of buyers along with a range of seller tools and services 
that are specifically designed to help our creative entrepreneurs generate more sales and scale their businesses.

We are focused on attracting potential buyers to the Etsy marketplace for those “special” purchaseoccasions that happen 
throughout the year, and for everyday items that have meaning. We are deepening engagement with our existing buyers by 
inspiring purchases across our many retail categories and special occasions. Special purchases for use in the every day include 
handmade or vintage unique clothing, accessories, household items, or furniture that the buyer wants to reflect her sense of 
style. Special purchase occasions can occur many times throughout the year and include shopping for special occasions that 
reflects an individual’s unique style; gifting that demonstrates thought and care; and celebrations that express creativity and 
fun. Buyers tell us that they come to Etsy because Etsy sellers offer items that they can’t find anywhere else.

On August 15, 2019, we acquired all of the outstanding capital stock of Reverb Holdings, Inc. (“Reverb”) for $270.4 million, 
net of cash acquired. The Reverb marketplace is a leading global online marketplace dedicated to buying and selling new, used, 
and vintage musical instruments, with a vibrant community of buyers and sellers all over the world. Reverb, now a wholly-
owned subsidiary of Etsy, Inc., is included in all financial and other metrics from August 15, 2019 (the date of acquisition), 
unless otherwise noted.

Our revenue is diversified, generated from a mix of marketplace activities and other optional services we provide to sellers to 
help them generate more sales and scale their businesses.

Marketplace revenue is comprised of the fees a seller pays us for marketplace activities. Marketplace activities include listing 
an item for sale, completing transactions between a buyer and a seller, and using our payments services to process payments, 
including foreign currency transactions. Marketplace revenue also includes revenue generated through our commercial 
partnerships, which was recorded in its own Other revenue line prior to the fourth quarter of 2019. 

Services revenue is comprised of the fees a seller pays us for our optional other services (“Services”). Services primarily 
include advertising services, which allows sellers to pay for prominent placement of their listings in search results; and 
shipping labels, which allows sellers in the United States, Canada, United Kingdom, and Australia to purchase discounted 
shipping labels.

Our strategy is focused on growing the Etsy marketplace in our six core geographies and building a sustainable competitive 
advantage around four elements of our business that we believe differentiate us from our competitors, or what we call our 
“Right to Win.” The foundation of Etsy’s competitive advantage is our collection of our seller’s unique items, which, we 
believe, when combined with best-in-class search and discovery, human connections, and a trusted brand, will enable us to 
continue to stand out among other e-commerce platforms and marketplaces. Our investments in product, marketing, and talent 
will be focused on capitalizing on these four elements of our business. Ultimately, the goal of our long-term strategy is to drive 

54

more new buyers to the website, give existing buyers reasons to come back more often, encourage buyers to spend more per 
order, and fuel success for our sellers. We see a number of similarities between the levers of growth for the Etsy and Reverb 
marketplaces, including improving search and discovery, making selling and buying easier, and building a global brand and 
user community. 

Year Highlights

Total revenue was $818.4 million in the year ended December 31, 2019, driven by growth in both Marketplace and Services 
revenue. In the year ended December 31, 2019, we recorded net income of $95.9 million, and non-GAAP Adjusted EBITDA of 
$186.3 million. See “Non-GAAP Financial Measures” for more information and for a reconciliation of Adjusted EBITDA to 
net income, the most directly comparable financial measure calculated in accordance with GAAP.

As of December 31, 2019, our marketplaces connected 2.7 million active sellers and 46.4 million active buyers, in nearly every 
country in the world. In the year ended December 31, 2019, sellers generated GMS of $5.0 billion of which approximately 
58% came from purchases made on mobile devices. We are a global company and approximately 36% of our GMS in the year 
ended December 31, 2019 came from transactions where either a seller or a buyer was located outside of the United States. 

Other Operational Highlights

In 2019 we focused on growing the Etsy marketplace in our six core geographies, and owning special purchase occasions – 
style, gifting, and celebrations – throughout the year. Below are key operational highlights:

•  We continued to launch new product enhancements and build upon prior launches to help Etsy buyers find the right 

product at the right time, or discover inspiration among the items in the Etsy marketplace. Product experiment velocity 
reached a record high during the year. We made a foundational upgrade to our ranking algorithms, which will continue 
to enable us to provide more relevant search results to Etsy buyers. In addition, we continued to improve our mobile 
app, highlighting items that are similar to items Etsy buyers have made a favorite in the past, launched variation 
photos, and integrated several shipping solutions, all geared to helping improve their shopping experience. We focused 
on our collection of unique items by enhancing the image quality for listings on desktop, our largest channel by 
device, which is intended to convert more visits into purchases. 

•  We continued to focus on utilizing our marketing efforts to drive new and existing buyers to Etsy. We launched a new 
national television campaign, which had a positive impact on visits and purchase intent. We also launched our 2019 
holiday television campaign in the second half of the year, which continued to positively move brand metrics on 
purchase intent and brand awareness. We kicked off our first international television campaign towards the end of 
2019. 

•  We continued to enhance, expand, and introduce new product offerings and seller tools. In July, we began providing 
Etsy sellers with tools and support to make it easy for them to guarantee free shipping on orders of $35 or more to 
U.S. buyers. We also launched a regional sales feature, which allows for Etsy sellers to set a country-specific sale, 
with a focus on their domestic listings. As of the end of the year, 65% of U.S. buyer GMS shipped for free, 74% of 
U.S. listing views were eligible to ship for free, and 48% of orders were delivered with free shipping.

•  We made progress simplifying our marketing tools for Etsy sellers to enable them to more easily invest in their 
growth. In the third quarter of 2019, we streamlined Promoted Listings, Etsy’s onsite ads platform, and Google 
Shopping, an off-site marketing tool for Etsy.com sellers, into one unified ad platform, called Etsy Ads. Etsy Ads 
enables Etsy sellers to set a budget and Etsy then allocates that budget between channels, targeting optimal return on 
seller spend. With the initial launch of Etsy Ads, our Promoted Listings service was no longer offered as a standalone 
advertising option during the fourth quarter of 2019.

•  We progressed on our impact goals, including our ecological goal to build long-term resilience by eliminating our 
carbon impacts and fostering responsible resource use. In February 2019, we began offsetting 100% of carbon 
emissions generated by shipping on Etsy.com, which represent 97% of our total measured emissions.

•  We have also focused on growth investments, such as our migration to Google Cloud. In 2019, we achieved 

significant milestones in the process by beginning to serve our search traffic from Google Cloud and migrating a 
majority of our systems to Google Cloud, including our machine learning efforts. As a result of migrating our 
Etsy.com search efforts to Google Cloud, we were able to make the foundational upgrade to our ranking algorithms for 
the Etsy marketplace. We spent approximately $30 million on cloud migration costs in 2019, which includes 

55

implementation costs and costs related to cloud usage for growth initiatives, and completed the migration in February 
2020.

While our Etsy Ads platform delivered positive returns for many Etsy sellers and revenue growth for Etsy in the fourth quarter 
of 2019, we will be iterating on our advertising offerings to help sellers more effectively drive traffic to their listings. In the 
second quarter of 2020, Etsy is planning to launch a new advertising service for Etsy sellers, called Offsite Ads. Etsy will pay 
the upfront costs to promote Etsy sellers’ listings on multiple internet platforms without any upfront costs for sellers. When a 
shopper clicks on an online offsite ad featuring a seller’s listing and purchases from their shop, the seller will pay Etsy an 
advertising fee on that order - only when they make a sale. The Etsy Ads service will be a dedicated on-site advertising 
program for sellers to promote their listings to shoppers on Etsy.

Debt

In September 2019, we issued $650.0 million aggregate principal amount of the 2019 Notes in a private placement to qualified 
institutional buyers pursuant to the Securities Act. The initial conversion price of the 2019 Notes represented a premium of 
approximately 47.5% over the price of our common stock. The net proceeds from the sale of the 2019 Notes were $639.5 
million after deducting the initial purchasers' discount and offering expenses. The 2019 Notes will mature on October 1, 2026, 
unless earlier converted, redeemed or repurchased.

We used $76.2 million of the net proceeds from the 2019 Notes offering to enter into separate capped call transactions (“2019 
Capped Call Transactions”) with certain financial institutions. The 2019 Capped Call Transactions effectively increase the 
premium for conversion of the 2019 Notes at maturity to 100% and are generally expected to reduce potential dilution to our 
common stock upon any conversion of the 2019 Notes and offset any payments we make upon conversion.

In addition, we used $124.5 million of the net proceeds from the 2019 Notes to repurchase 2,094,196 shares of our common 
stock. We intend to use the remainder of the net proceeds from the 2019 Notes offering for general corporate purposes.

On February 25, 2019, we entered into a $200.0 million senior secured revolving credit facility pursuant to a Credit Agreement 
with several lenders (the “2019 Credit Agreement”). The 2019 Credit Agreement will mature in February 2024. The 2019 
Credit Agreement includes a letter of credit sublimit of $30.0 million and a swingline loan sublimit of $10.0 million.

For more information on the 2019 Notes, 2019 Capped Call Transactions, and 2019 Credit Agreement, see “Note 13—Debt” in 
the Notes to Consolidated Financial Statements.

Reclassification of Revenue Categories

In the fourth quarter of 2019, we reclassified Other revenue to Marketplace revenue. The following table provides our 
Marketplace revenue and Other revenue under our previous and current presentation for the years ended December 31, 2018 
and 2017:

Year-to-Date Period Ended

Marketplace Revenue

Other Revenue

Marketplace Revenue

Other Revenue

Previous Presentation

Current Presentation

December 31, 2018

December 31, 2017

$

440,740

$

326,076

(in thousands)

4,025

$

3,286

444,765

$

329,362

—

—

56

Key Operating and Financial Metrics 

We collect and analyze operating and financial data to evaluate the health and performance of our business and allocate our 
resources (such as capital, people, and technology investments). The financial results of Reverb have been included in our 
consolidated financial results from August 15, 2019 (the date of acquisition). We are providing Etsy.com standalone 
information in certain instances where particularly relevant. The unaudited non-GAAP financial measure and key operating and 
financial metrics we use are:

GMS (1)

Revenue (2)

Marketplace revenue (3)

Services revenue

Net income

Adjusted EBITDA (Non-GAAP)

Active sellers (4)

Active buyers (4)

Percent mobile GMS

Percent international GMS (1)

Year Ended December 31,

2019

2018

% Growth
Y/Y

Year Ended
December 31,

2017

% Growth
(Decline) 
Y/Y

(in thousands, except percentages)

$

$

$

$

$

$

4,974,944

818,379

593,646

224,733

95,894

186,268

$

$

$

$

$

$

3,931,745

603,693

444,765

158,928

77,491

139,510

26.5%

35.6%

33.5%

41.4%

23.7%

33.5%

$

$

$

$

$

$

3,253,609

441,231

329,362

111,869

81,800

80,009

2,699

46,351

58%

36%

2,115

39,447

55%

35%

27.6%

17.5%

300 bps

100 bps

1,933

33,364

51%

33%

20.8%

36.8%

35.0%

42.1%

(5.3)%

74.4%

9.4%

18.2%

400 bps

200 bps

(1)  GMS for the year ended December 31, 2019, includes Reverb’s GMS of $242.4 million. Percent international GMS 

includes Reverb’s percent international GMS of 18% for the year ended December 31, 2019. Etsy.com GMS for the year 
ended December 31, 2019 was $4.7 billion. 

(2)  Revenue for the year ended December 31, 2019, includes Reverb’s revenue of $19.1 million. Etsy.com revenue for the year 

ended December 31, 2019 was $799.3 million.

(3)  In the fourth quarter of 2019, we reclassified Other revenue to Marketplace revenue. See “Management’s Discussion and 
Analysis of Financial Condition and Results of Operations—Overview—Reclassification of Revenue Categories” for our 
Marketplace and Other revenue under our previous and current presentation for the years ended December 31, 2018 and 
2017.

(4)  Active sellers and active buyers includes Reverb’s active sellers and active buyers of 162 thousand and 624 thousand, 

respectively, as of December 31, 2019. Reverb active sellers and active buyers are sellers and buyers who have incurred at 
least one charge or made at least one purchase, respectively, from Reverb in the last 12 months. Etsy.comactive sellers and 
active buyers were approximately 2.5 million and 45.7 million, respectively.

GMS

Gross merchandise sales (“GMS”) is the dollar value of items sold in our marketplaces within the applicable period, excluding 
shipping fees and net of refunds associated with canceled transactions. GMS does not represent revenue earned by us. GMS is 
largely driven by transactions in our marketplaces and is not directly impacted by Services activity. However, because our 
revenue and cost of revenue depend significantly on the dollar value of items sold in our marketplace, we believe that GMS is 
an indicator of the success of our sellers, the satisfaction of our buyers, and the health, scale, and growth of our business. We 
track “Paid GMS” for the Etsy marketplace, and define it as Etsy.com GMS that is attributable to our performance marketing 
efforts, which excludes most of our marketing investments focused on brand awareness like TV and digital video.

Adjusted EBITDA

Adjusted EBITDA represents our net income (loss) adjusted to exclude: interest and other non-operating expense, net; (benefit) 
provision for income taxes; depreciation and amortization; stock-based compensation expense; foreign exchange (gain) loss; 
acquisition-related expenses; non-ordinary course disputes; restructuring and other exit costs (income); asset impairment 
charges; net unrealized loss on warrant and other liabilities; and contributions to Good Work Institute (formerly Etsy.org). See 
“Non-GAAP Financial Measures” for more information regarding our use of Adjusted EBITDA, including its limitations as a 
financial measure, and for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial 
measure calculated in accordance with GAAP.

57

 
 
 
Active Sellers

An active seller is a seller who has incurred at least one charge from us in the last 12 months. Charges include Marketplace and 
Services Revenue fees discussed in “Note 1—Basis of Presentation and Summary of Significant Accounting Policies —
Revenue Recognition” in the Notes to Consolidated Financial Statements. A seller is separately identified in each of our 
marketplaces by a unique e-mail address; a single person can have multiple seller accounts and can count as a distinct active 
seller in each of our marketplaces. We succeed when sellers succeed, so we view the number of active sellers as a key indicator 
of the awareness of our brand, the reach of our platform, the potential for growth in GMS and revenue, and the health of our 
business.

Active Buyers

An active buyer is a buyer who has made at least one purchase in the last 12 months. A buyer is separately identified in each of 
our marketplaces by a unique e-mail address; a single person can have multiple buyer accounts and can count as a distinct 
active buyer in each of our marketplaces. We generate revenue when buyers order items from sellers, so we view the number of 
active buyers as a key indicator of our potential for growth in GMS and revenue, the reach of our platform, awareness of our 
brand, the engagement and loyalty of buyers, and the health of our business.

Mobile GMS

Mobile GMS is GMS that results from a transaction completed on a mobile device, such as a tablet or a smartphone. Mobile 
GMS excludes orders initiated on mobile devices but ultimately completed on a desktop. When calculating the percentage of 
mobile GMS, we do not take into account refunds associated with canceled transactions. We believe that mobile GMS indicates 
our success in converting mobile activity into mobile purchases and demonstrates our ability to grow GMS and revenue. 

International GMS

International GMS is GMS from transactions where either the billing address for the seller or the shipping address for the buyer 
at the time of sale is outside of the United States. When calculating percent international GMS, we do not take into account 
refunds associated with canceled transactions. We believe that international GMS shows the level of engagement of our 
community outside the United States and demonstrates our ability to grow GMS and revenue.

Currency-Neutral GMS Growth

We calculate currency-neutral GMS growth by translating current period GMS for goods sold that were listed in non-U.S. 
dollar currencies into U.S. dollars using prior year foreign currency exchange rates.

As reported and currency-neutral GMS growth for the periods presented below is as follows and include the operations of 
Reverb since August 15, 2019 (the date of acquisition):

Year-to-Date Period Ended

December 31, 2019

December 31, 2018

December 31, 2017

As Reported

Currency-
Neutral

FX Impact

26.5%

20.8%

14.5%

27.5%

20.4%

14.3%

(1.0)%

0.4%

0.2%

58

Non-GAAP Financial Measures 

Adjusted EBITDA

In this Annual Report on Form 10-K, we provide Adjusted EBITDA, a non-GAAP financial measure that represents our net 
income adjusted to exclude: interest and other non-operating expense, net; benefit for income taxes; depreciation and 
amortization; stock-based compensation expense; foreign exchange (gain) loss; acquisition-related expenses; non-ordinary 
course disputes; restructuring and other exit costs (income); and asset impairment charges. Below is a reconciliation of 
Adjusted EBITDA to net income, the most directly comparable GAAP financial measure.

We have included Adjusted EBITDA because it is a key measure used by our management and Board of Directors to evaluate 
our operating performance and trends, allocate internal resources, prepare and approve our annual budget, develop short- and 
long-term operating plans, determine incentive compensation, and assess the health of our business. As our Adjusted EBITDA 
increases, we are able to invest more in our platform.

We believe that Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our business as it removes 
the impact of certain non-cash items and certain variable charges.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis 
of our results as reported under GAAP. Some of these limitations are:

•  Adjusted EBITDA does not reflect other non-operating expenses, net of other non-operating income, including net interest 

expense;

•  Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;

•  although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be 
replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements 
or for new capital expenditure requirements;

•  Adjusted EBITDA does not consider the impact of stock-based compensation expense;

•  Adjusted EBITDA does not consider the impact of foreign exchange (gain) loss;

•  Adjusted EBITDA does not reflect acquisition-related expenses;

•  Adjusted EBITDA does not consider the impact of non-ordinary course disputes; 

•  Adjusted EBITDA does not consider the impact of restructuring and other exit costs (income);

•  Adjusted EBITDA does not consider the impact of asset impairment charges;

•  other  companies,  including  companies  in  our  industry,  may  calculate Adjusted  EBITDA  differently,  which  reduces  its 

usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including 
net income and our other GAAP results.

59

The following table reflects the reconciliation of net income to Adjusted EBITDA for each of the periods indicated:

Net income

Excluding:

Interest and other non-operating expense, net (1)

Benefit for income taxes

Depreciation and amortization (1)

Stock-based compensation expense (2)

Foreign exchange (gain) loss (3)

Acquisition-related expenses (4)

Non-ordinary course disputes

Restructuring and other exit costs (income) (5)

Asset impairment charges (6)

Adjusted EBITDA

Year Ended December 31,

2019

2018

2017

$

95,894

$

77,491

$

81,800

(in thousands)

11,121

(15,248)

48,031

44,395

(3,006)

3,917

1,164

—

—

13,221

(22,413)

26,742

38,231

6,487

—

—

(249)

—

$

186,268

$

139,510

$

8,736

(49,535)

27,197

23,857

(29,105)

—

—

13,897

3,162

80,009

(1)  Included in interest and depreciation expense amounts above are interest and depreciation expense related to our 

headquarters. As part of the adoption of ASU 2016-02—Leases in the first quarter of 2019, we now account for our 
headquarters as a financing lease. Previously, we accounted for our headquarters under build-to-suit accounting 
requirements. For further information, see “Note 1—Basis of Presentation and Summary of Significant Accounting 
Policies—Recently Adopted Accounting Pronouncements” in the Notes to Consolidated Financial Statements. For the 
years ended December 31, 2019, 2018, and 2017 those amounts are as follows:

Interest expense

Depreciation

Year Ended December 31,

2019

2018

2017

(in thousands)

$

2,675

$

8,789

8,996

$

3,276

9,000

3,276

(2)   $2.7 million of restructuring-related stock-based compensation expense has been excluded from the year ended 

December 31, 2017 and is included in the restructuring and other exit costs (income) line. See footnote (5) below. Total 
stock-based compensation expense included in the Consolidated Statements of Operations is as follows:

Cost of revenue

Marketing

Product development

General and administrative

Total stock-based compensation expense

Year Ended December 31,

2019

2018

2017

$

$

(in thousands)

5,787

$

3,357

$

3,774

21,085

13,749

2,507

21,234

11,133

44,395

$

38,231

$

1,739

1,933

8,274

14,613

26,559

(3)   See “Results of Operations—Other Expense, net” for more information on the fluctuation in foreign exchange (gain) 

loss in the years ended December 31, 2019, 2018, and 2017.

(4)  Acquisition-related expenses are expenses related to our acquisition of Reverb. For further information, see “Note 5—

Business Combinations” in the Notes to Consolidated Financial Statements.

60

 
 
 
 
 
 
 
(5)  See “Note 17—Restructuring and Other Exit Costs (Income)” in the Notes to Consolidated Financial Statements for a 

description of the matters related to these events.

Total restructuring and other exit costs (income) included in the Consolidated Statements of Operations are as follows:

Cost of revenue

Marketing

Product development

General and administrative

Total restructuring and other exit costs (income)

Year Ended December 31,

2019

2018

2017

$

$

(in thousands)

— $

(19) $

—

—

—

(82)

(110)

(38)

— $

(249) $

738

2,950

3,232

6,977

13,897

(6) 

In the fourth quarter of 2017, we made the decision to discontinue certain product offerings, including Etsy Studio and 
Etsy Manufacturing, which resulted in the recognition of a $3.2 million impairment charge to write the related 
capitalized web development and internal-use software assets down to zero. This decision was based on our strategy to 
focus on the growth of the Etsy.com marketplace. 

61

 
 
 
Key Factors Affecting Our Performance 

We believe that our performance and future success depend on a number of factors that present significant opportunities for us 
but also pose risks and challenges, including those discussed in the section titled “Risk Factors.” Our primary marketplace, 
Etsy.com, is the largest driver of our business and thus the following key factors affecting our performance most significantly 
relate to the Etsy marketplace. 

Growth and Retention of Active Buyers and Active Sellers on the Etsy Marketplace

Our success depends in part on the growth and retention of our active buyers and active sellers. Our revenue is driven by the 
number of active buyers, buyer engagement, active sellers, seller engagement, and our ability to maintain a trusted marketplace. 
We believe two of our most significant opportunities to drive growth in our primary marketplace are to bring new buyers to 
Etsy.com and encourage existing Etsy buyers to purchase more frequently. We are particularly focused on increasing our 
number of habitual buyers, or buyers who have spent $200 or more and made purchases on six or more purchase days in the 
year. We are also focused on keeping our best sellers on the platform and helping them grow their businesses by enhancing the 
seller tools and services that help drive buyer demand. 

During 2019, the Etsy marketplace had 19 million new Etsy 
buyers, or buyers who made their first-ever purchase on Etsy. 
GMS from new buyers was up 11% year-over-year and 
represented approximately 16% of overall Etsy.com GMS, a 
decrease compared to last year. Etsy.com GMS from existing 
buyers grew 24% year-over-year in 2019 and represented 
approximately 84% of overall Etsy.com GMS, an 
increase compared to last year. Repeat purchases demonstrate 
the loyalty of Etsy buyers. In 2019, on the Etsy marketplace, 
approximately 41.4% of our active buyers made purchases on 
two or more days in the previous 12 months, up from 40.1% in 
2018. 

Habitual buyers represented approximately 5.5% of Etsy.com’s 
active buyers as of December 31, 2019. Habitual buyers grew 
to 2.5 million as of December 31, 2019, an increase of 22.9% 
compared to 2018. We aim to increase repeat purchases and 
habitual buyers by inspiring purchases in additional categories 
and on additional occasions, building trust in the Etsy brand, 
and removing friction from the buying experience to improve 
conversion rates. 

To analyze our retention rates on the Etsy marketplace, we 
measure repeat activity by active buyers and active sellers.

62

 
Active Buyer Cohorts on the Etsy Marketplace

We refer to active buyers as of December 31, 2016 as “2016 Active Buyers,” as of December 31, 2015 as “2015 Active 
Buyers,” as of December 31, 2014 as “2014 Active Buyers,” as of December 31, 2013 as “2013 Active Buyers,” and as of 
December 31, 2012 as “2012 Active Buyers.” Of total 2016 Active Buyers, 37.9% remained active buyers through their fourth 
year on the platform, compared to 37.5% for 2015 Active Buyers, 38.7% for 2014 Active Buyers, 41.1% for 2013 Active 
Buyers, and 42.5% for 2012 Active Buyers. The average annual GMS per 2016 Active Buyer during their fourth year on the 
platform was 85% higher than their first year, compared to 78% for 2015 Active Buyers, 70% for 2014 Active Buyers, 81% for 
2013 Active Buyers, and 88% for 2012 Active Buyers. We note that 2013 was the first year we started to significantly invest in 
our paid acquisition marketing efforts to grow our buyer base.

AVG GMS

PER BUYER

Year 1

Year 2

Year 3

Year 4

2012

2013

2014

2015

2016

$96

$96

$99

$101

$101

$163

$161

$157

$158

$157

$173

$168

$164

$163

$174

$181

$174

$169

$180

$187

Etsy Cohort of 2016, 2015, 2014, 2013, and 2012 Active Buyers

These cohort data demonstrate our ability to consistently retain buyers over a multi-year period and reflects the loyalty of our 
buyer base. We have identified our ability to increase purchase frequency among these long-term and habitual buyers as one of 
our significant opportunities for growth and we are focused on improving search and recommendations to better match our 
buyers with the millions of items listed on Etsy.com, driving buyer growth and retention.

63

Active Seller Cohorts on the Etsy Marketplace

We refer to active sellers as of December 31, 2016 as “2016 Active Sellers,” as of December 31, 2015 as “2015 Active Sellers,” 
as of December 31, 2014 as “2014 Active Sellers,” as of December 31, 2013 as “2013 Active Sellers” and December 31, 2012 
as “2012 Active Sellers.” Of the 2016 Active Sellers, 36.2% remained active through their fourth year on the platform, 
compared to 33.1% for 2015 Active Sellers, 31.8% for 2014 Active Sellers, 31.5% for 2013 Active Sellers, and 32.3% for 2012 
Active Sellers. The average annual GMS per 2016 Active Seller during their fourth year on the platform was three times higher 
than their first year, compared to over three times higher for 2015 Active Sellers, also over three times higher for 2014 Active 
Sellers, almost four times higher for 2013 Active Sellers, and over four times higher for 2012 Active Sellers.

AVG GMS

PER SELLER

Year 1

Year 2

Year 3

Year 4

$1,079

$2,598

$3,935

$4,557

$1,260

$3,110

$4,190

$4,620

$1,465

$3,325

$4,228

$4,615

$1,558

$3,296

$4,062

$4,939

$1,660

$3,198

$4,278

$5,004

2012

2013

2014

2015

2016

Etsy Cohort of 2016, 2015, 2014, 2013, and 2012 Active Sellers

These cohort data demonstrate our success in retaining sellers over a multi-year period, with the sellers that remain on our 
platform maintaining consistent GMS growth. We believe there is significant opportunity for growth by fueling seller success 
through continued investment in paid services and tools to help Etsy sellers generate more sales on our platform.

64

Services Growth

We have a seller-aligned business model: we make money when sellers make money. Our goal is to enhance the seller tools and 
services that will drive buyer demand. To achieve this, we continue to invest our resources in developing a cohesive platform of 
paid services and free tools specifically designed to help our creative entrepreneurs generate more sales and scale their 
businesses. We believe we can grow our optional paid services in three ways: expand the utility of existing services, expand the 
geographic reach of existing services, and launch new services offerings. As of December 31, 2019, on the Etsy marketplace, 
16.6% of active sellers used advertising services, and 22.9% of active sellers in the United States, Canada, United Kingdom, 
and Australia used Etsy Shipping Labels. 

Investment in Marketing

We are focusing on initiatives to drive traffic to Etsy and shape perceptions of the Etsy marketplace as the go-to shopping 
destination for special purchases and special purchase occasions by investing primarily in digital and other marketing 
initiatives, such as search engine optimization and television channels, and in our team to support marketing activities. We 
believe that we can continue to grow our acquisition marketing efforts, both in scaling and improving our current efforts and by 
expanding into new marketing channels. In 2019, Paid GMS was 15% of total Etsy.com GMS and grew 7% compared to 2018. 
Paid GMS only reflects Etsy.com GMS related to performance marketing spend and excludes brand marketing channels such as 
TV. In 2018, we ran our first-ever Etsy television advertising campaign in the United States and also began to test offline 
marketing campaigns. We continued these marketing campaigns during 2019. We believe these campaigns can increase brand 
awareness, visits, and purchase intent.

In 2019, we spent $215.6 million on marketing expenses, or 26.3% of revenue, up 36.4% over 2018. In 2018, we spent $158.0 
million on marketing expenses, or 26.2% of revenue, up 44.9% over 2017. We increased digital marketing spend, which 
excludes brand marketing channels such as TV, by 19% in 2019 to $134.0 million, including $129.3 million of which was 
spend for the Etsy marketplace, up 15% from 2018. 

Investment in Technology

Our engineering team has built a platform that enables millions of Etsy sellers and buyers to smoothly transact across borders, 
languages and devices. We have made, and will continue to make, significant investments in our platform to attract buyers and 
sellers to the Etsy marketplace and enhance their experience. 

In September 2016, we acquired Blackbird Technologies, Inc., (“Blackbird”), a machine learning company, and, during 2017, 
fully integrated it into our search team. During 2017, we launched Context Specific Ranking (“CSR”), which leverages our 
internal data to create a more personalized search experience. On the Etsy marketplace, we continued to improve the search 
experience using CSR throughout 2018 and migrated to non-linear search models in 2019. We completed our migration to 
Google Cloud in February 2020, and our technology infrastructure allows us to scale our efforts across the platform. We expect 
to continue to leverage artificial intelligence and machine learning to enable shoppers to more easily browse, filter and transact 
on the Etsy marketplace, even when they may not have something specific in mind.   

In 2019, we spent $121.9 million on product development expenses, or 14.9% of revenue, up 25.3% over 2018, and in 2018 we 
spent $97.2 million on product development expenses, or 16.1% of revenue, up 30.3% over 2017. In addition, we capitalized 
website development and internal-use software costs of $8.7 million and $22.1 million in 2019 and 2018, respectively, on a 
consolidated basis. Additionally, in 2019 we acquired developed technology valued at $30.3 million in the Reverb acquisition. 
We plan to continue to invest in innovation to address the needs of our community and increase our efforts to recruit and hire 
employees to work on our engineering teams.

Investment in Connected Experience—Mobile and Desktop

We want to engage buyers wherever they are and to provide an enjoyable and accessible shopping experience no matter what 
device they use to access our marketplaces. Mobile is integrated into everything that we do, and expanding our mobile 
capabilities is an important focus area. Our mobile websites and mobile apps include search, discovery, curation, 
personalization, and social shopping features, optimized for a personal mobile experience. Etsy.com mobile GMS was 59% of 
total Etsy.com GMS in 2019, up from 55% in 2018. We are focused on increasing conversion rates in general; however, we are 
particularly focused on mobile web, which continued to be the largest driver of overall visits growth. If mobile web visits 
continue to grow as a percentage of overall visits, it could be a headwind to future conversion rate gains. We are focused on 
continuing to enhance the buyer experience through mobile offering improvements in 2020.

65

International Growth

Our growth will depend in part on international sellers and international buyers constituting an increasing portion of our 
community. Our vision is global and local. Our websites are available in many languages and supports buyers and sellers in 
nearly every country in the world. In 2018, we entered into a referral agreement with DaWanda GmbH (“DaWanda”), a 
privately held Germany-based marketplace for gifts and handmade items. As part of this agreement, DaWanda agreed to 
encourage its community of buyers and sellers to migrate to the Etsy platform. The referral agreement with DaWanda allowed 
us to grow our international business by expanding our footprint in Central Europe, particularly in Germany, one of our core 
geographic markets. 

On a consolidated basis, international GMS was 36% of total GMS in 2019 compared to 35% in 2018. 

For the Etsy marketplace, we expect international GMS to continue to grow faster than U.S. GMS in 2020, assuming that 
currency rates remain stable compared to average levels in December 2019, driven by our efforts to build local communities 
and foster local connections. In 2019, 40% of Etsy sellers were located outside the United States. Cross-border transactions is 
the largest component of international GMS and we remain committed to reducing barriers such as language and currency so 
that sellers and buyers from different countries can easily connect and transact. For the Etsy marketplace, GMS generated 
between a non-U.S. buyer and a non-U.S. seller both in the same country grew approximately 37% in 2019 compared 
with 2018, making it the fastest growing category of international GMS. The Reverb marketplace has a smaller percent of 
international GMS relative to the Etsy marketplace.

We are focused on building local marketplaces globally, and deepening local communities around the world, each with its own 
ecosystem of sellers and buyers. To execute on our international strategy, we plan to continue to invest in local marketing and 
other locally-relevant tools and enhancements, such as local search boost, to encourage these connections around the world. 

Our Company Culture 

Our success depends, in part, on our ability to attract, retain, and motivate exceptional employees who share our dedication to 
our community and our mission to “Keep Commerce Human.” We believe that our action-oriented, values-based and purpose-
driven work culture is a competitive advantage in attracting and retaining top talent. 

We are focused on employee engagement, which is linked with high performance, retention, innovation, and growth. We are 
also committed to fostering a diverse and inclusive workplace because we firmly believe that diverse backgrounds, thoughts, 
and experiences are beneficial to innovation, decision making, and our business as a whole. We are proud that as of 
December 31, 2019, our Board of Directors and leadership were at least 50% female.

Components of Our Results of Operations 

Revenue

Our revenue consists of Marketplace revenue and Services revenue.

Etsy.com Marketplace revenue.  Marketplace revenue is primarily comprised of the 5% transaction fee that an Etsy seller pays 
for each completed transaction, inclusive of shipping fees charged, the listing fee of $0.20 she pays for each item she lists (for 
up to four months) on Etsy.com, and Etsy Payments, our payment processing service. On July 16, 2018, we increased our seller 
transaction fee from 3.5% to 5%, and now apply it to the cost of shipping in addition to the cost of the item. Etsy Payments 
processing fees vary between 3.0% to 4.5% of an item’s total sale price, including shipping, plus a flat fee per order, depending 
on the country in which a seller’s bank account is located. The Company earns additional fees on transactions in which 
currency conversions are performed. Marketplace revenue also includes revenue generated through our commercial 
partnerships, which was recorded in its own Other revenue line prior to the fourth quarter of 2019. 

Reverb.com Marketplace revenue. The Reverb seller transaction fee is a variable fee, which is 3.5% of each completed 
transaction, including both the cost of the item and the shipping. There are no Reverb listing fees. Variable fees also include 
payments fees for processing payments, including foreign currency payments. Payments processing fees vary between 2.5% - 
2.7% of an item’s total sale price, including shipping, plus a flat fee per order, depending on the currency in which a listing is 
denominated. 

66

Etsy.com Services revenue.  Services revenue is derived from optional services offered to sellers, which primarily include 
advertising services and shipping labels.

•  Revenue from Promoted Listings, our on-site advertising service, consists of cost-per-click fees an Etsy seller pays us for 
prominent placement of her listings in search results in our marketplace. In the third quarter of 2019, Etsy streamlined 
Promoted Listings and Google Shopping, an off-site marketing tool for Etsy sellers, into one unified ad platform called 
Etsy Ads, where Etsy sellers can set a budget, which allows Etsy to allocate that budget between channels, targeting 
optimal return on seller spend. Due to this new offering, Etsy no longer offered its Promoted Listings service as a 
standalone advertising service after September 30, 2019. Revenue from Etsy Ads consists of cost-per-click fees, which are 
nonrefundable and are charged to a seller’s Etsy bill when the ad is clicked. The revenue that we recognize related to Etsy 
Ads is recorded on a gross basis in Services revenue with an offsetting expense recorded in cost of revenue.

•  Revenue from shipping labels consists of fees an Etsy seller pays us when she purchases shipping labels directly through 
our platform, net of the cost we incur in purchasing those shipping labels. We are able to provide our sellers shipping 
labels from the United States Postal Service, FedEx, Canada Post, Royal Mail, and DAI Post at discounted pricing due to 
the volume of purchases through our platform.

Reverb.com Services revenue.  Reverb has its own on-site advertising service called Bump advertising. Reverb sellers have the 
ability to determine their own ad rate as a percentage of their item’s final sale price. Reverb also provides its sellers access to 
purchase shipping labels at discounted pricing due to the volume of purchases through its platform. Revenue from shipping 
labels consists of fees a Reverb seller pays us when they purchase shipping labels directly through the Reverb platform, net of 
the cost we incur in purchasing those shipping labels.

Our revenue recognition policies are discussed under “Critical Accounting Policies and Significant Judgments and Estimates.”

Cost of Revenue

Cost of revenue primarily consists of the cost of interchange and other fees for credit card processing services, credit card 
verification service fees, and credit card chargebacks to support payments revenue, and costs of refunds made to buyers that we 
are not able to collect from sellers. Cost of revenue also includes expenses associated with the usage of cloud infrastructure, 
including employee-related costs, hosting and bandwidth costs, and depreciation and amortization. With the shift to Etsy Ads in 
the third quarter of 2019, amounts spent on Google Shopping, which were previously recorded on a net basis in Other revenue, 
are recorded on a gross basis in Services revenue with an offsetting expense recorded in cost of revenue. Our cost of revenue as 
a percentage of revenue may change over time as our revenue mix changes; for example, to the extent that payments revenue 
increases as a percentage of revenue, there may be a dampening effect on our gross margin, as our payments services are lower 
margin products compared to our other offerings.

Operating Expenses

Operating expenses consist of marketing, product development, general and administrative expenses, and asset impairment 
charges. Direct and indirect employee-related expenses are the most significant component of the product development and 
general and administrative expense categories. We include stock-based compensation expense in the applicable operating 
expense category based on the respective equity award recipient’s function. We include restructuring and other exit costs 
(income) related to the Actions in the applicable operating expense category of the impacted function.

Marketing:  Marketing expenses largely consist of direct marketing and indirect employee-related expenses to support our 
marketing initiatives. Direct marketing includes digital marketing, brand marketing, television and video, public relations and 
communications, market research, marketing partnerships, and customer relationship management. Digital marketing, also 
referred to as performance marketing, primarily consists of targeted promotional campaigns through electronic channels, such 
as product listing ads, search engine marketing, affiliate programs, display advertising and social channels, which are focused 
on buyer acquisition and retargeting.

Product development:  Product development expenses consist primarily of employee-related expenses for our engineering, 
product management, product design, and product research activities. Additional expenses include consulting costs related to 
the development, quality assurance, and testing of new technology and enhancement of our existing technology.

General and administrative.  General and administrative expenses consist primarily of employee-related expenses for our 
general corporate functions. General and administrative expenses also include costs associated with the use of facilities and 
equipment, including depreciation and amortization and office overhead, and certain professional services expenses. 

67

Asset impairment charges: Asset impairment charges consist primarily of non-cash charges related to our decisions to 
discontinue certain product offerings and the impairment of the related capitalized web development and internal-use software 
costs. 

Other (Expense) Income, net 

Other (expense) income, net consists of interest expense, interest and other income, and foreign exchange gain (loss). Interest 
expense consists primarily of non-cash interest and amortization of debt issuance costs related to our Convertible Senior Notes 
due 2023 and 2026. As part of the adoption of ASU 2016-02—Leases in the first quarter of 2019, interest expense includes 
interest associated with our Brooklyn headquarters lease, and, to a lesser extent, interest on our hosting and computer 
equipment leases, both accounted for as finance leases. Prior to 2019, interest expense included interest associated with the 
build-to-suit accounting treatment of our Brooklyn headquarters lease, and, to a lesser extent, interest on our hosting and 
computer equipment leases, accounted for as capital lease obligations. Interest and other income is primarily comprised of 
interest and dividend income from our investment accounts. 

Benefit for Income Taxes 

Our effective tax rate and the benefit for income taxes is subject to significant variation due to several factors, including 
variability in accurately predicting our pre-tax income or loss and the mix of jurisdictions to which they relate, taxable income 
and loss in each jurisdiction, changes in our stock price, audit-related developments, acquisitions, changes in our deferred tax 
assets and liabilities and their valuation, foreign currency gains (losses), changes in statutes, regulations, case law, and 
administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, 
competition, and other laws and accounting rules in various jurisdictions, and relative changes of expenses or losses for which 
tax benefits are not recognized. Additionally, the effective tax rate can be more or less volatile based on the magnitude of pre-
tax income or loss. For example, the impact of discrete items and non-deductible expenses on the effective tax rate is greater 
when pre-tax income is lower.

Although management believes its tax positions and related provisions reflected in the Consolidated Financial Statements are 
fully supportable, it recognizes that these tax positions and related provisions may be challenged by various tax authorities. 
These tax positions and related provisions are reviewed on an ongoing basis and are adjusted as additional facts and 
information become available, including progress on tax audits, changes in interpretation of tax laws, developments in case law 
and closing of statutes of limitations. To the extent that the results differ from our original or adjusted estimates of the 
Company, the effect will be recorded in (provision) benefit for income taxes. 

The (provision) benefit for income taxes involves a significant amount of management judgment regarding interpretation of 
relevant facts and laws in the jurisdictions in which the we operate. Future changes in applicable laws, projected levels of 
taxable income and tax planning could change the effective tax rate and tax balances recorded by us. In addition, tax authorities 
periodically review income tax returns filed by us and can raise issues regarding our filing positions, timing and amount of 
income and deductions, and the allocation of income among the jurisdictions in which we operate. A significant period of time 
may elapse between the filing of an income tax return and the ultimate resolution of an issue raised by a revenue authority with 
respect to that return. Any adjustments as a result of any examination may result in additional taxes or penalties against us. If 
the ultimate result of these audits differ from original or adjusted estimates, they could have a material impact on our tax 
provision and results of operations.

68

Results of Operations 

The following tables show our results of operations for the periods presented and express the relationship of certain line items 
as a percentage of revenue for those periods. The period-to-period comparison of financial results is not necessarily indicative 
of future results. 

Revenue:

Marketplace

Services

Total revenue

Cost of revenue

Gross profit

Operating expenses:

Marketing

Product development

General and administrative

Asset impairment charges

Total operating expenses

Income from operations

Other (expense) income, net

Income before income taxes

Benefit for income taxes

Net income

Revenue:

Marketplace

Services

Total revenue

Cost of revenue

Gross profit

Operating expenses:

Marketing

Product development

General and administrative

Asset impairment charges

Total operating expenses

Income from operations

Other (expense) income, net

Income before income taxes

Benefit for income taxes

Net income

Year Ended 
 December 31,

2019

2018

2017

(in thousands)

$

593,646

$

444,765

$

224,733

818,379

271,036

547,343

215,570

121,878

121,134

—

458,582

88,761

(8,115)

80,646

15,248

158,928

603,693

190,762

412,931

158,013

97,249

82,883

—

338,145

74,786

(19,708)

55,078

22,413

$

95,894

$

77,491

$

329,362

111,869

441,231

150,986

290,245

109,085

74,616

91,486

3,162

278,349

11,896

20,369

32,265

49,535

81,800

Year Ended 
 December 31,

2019

2018

2017

72.5%

73.7%

74.6%

27.5

100.0

33.1

66.9

26.3

14.9

14.8

—

56.0

10.8

(1.0)

9.9

1.9

11.7%

26.3

100.0

31.6

68.4

26.2

16.1

13.7

—

56.0

12.4

(3.3)

9.1

3.7

12.8%

25.4

100.0

34.2

65.8

24.7

16.9

20.7

0.7

63.1

2.7

4.6

7.3

11.2

18.5%

69

 
 
 
 
 
Comparison of Years Ended December 31, 2019 and 2018 

Revenue 

Revenue:

Marketplace

Percentage of total revenue

Services

Percentage of total revenue

Total revenue

Year Ended  
December 31,

Change

2019

2018

$

%

(in thousands, except percentages)

$

$

$

593,646

72.5%

224,733

27.5%

818,379

$

$

$

444,765

73.7%

158,928

26.3%

603,693

$

$

$

148,881

65,805

214,686

33.5%

41.4%

35.6%

GMS increased $1.0 billion, or 26.5%, to $5.0 billion in the year ended December 31, 2019, which included $242.4 million 
related to the results of Reverb, compared to the year ended December 31, 2018. On a currency-neutral basis (excluding the 
direct impact of currency translation on GMS from goods that are not listed in U.S. dollars) GMS growth for the year ended 
December 31, 2019 would have been 27.5%, or approximately 100 basis points higher than the reported 26.5% growth. 
Supporting this growth in GMS, active sellers increased 27.6% to 2.7 million, driven in large part by growth in international 
sellers and the acquisition of Reverb, and active buyers increased 17.5% to 46.4 million at December 31, 2019 compared to 
December 31, 2018. In the year ended December 31, 2019, GMS from new buyers grew 16% year-over-year and represented 
approximately 17% of overall GMS, a decrease compared to last year. In the year ended December 31, 2019, GMS from 
existing buyers grew 37% year-over-year and represented approximately 83% of overall GMS, an increase compared to last 
year. We anticipate continued visit growth and improved conversion in 2020. We believe conversion improvements will be 
driven primarily by product launches enhancing the buyer experience.

During the year ended December 31, 2019, mobile GMS increased as a percentage of total GMS to approximately 58% up 
from approximately 55% for the year ended December 31, 2018. Mobile GMS growth during the year ended December 31, 
2019 was approximately 34%, with mobile web and mobile app GMS each continuing to grow faster than desktop GMS during 
the year.

For the year ended December 31, 2019, international GMS increased as a percentage of total GMS to approximately 36%, up 
from approximately 35% for the year ended December 31, 2018. International GMS was up approximately 32% in the year 
ended December 31, 2019 compared to the year ended December 31, 2018, driven by our fastest growing international trade 
route, international domestic, which is GMS generated between a non-U.S. buyer and a non-U.S. seller both in the same 
country, and by GMS between U.S. buyers and international sellers. International domestic GMS grew approximately 40% in 
2019 compared with 2018. The increase in international GMS was partially offset by decreases related to changes in foreign 
currency rates year-over-year. On a currency-neutral basis international GMS growth for the year ended December 31, 
2019 would have been 37%. We expect international GMS to continue to grow faster than U.S. GMS on a currency-neutral 
basis, driven by our global product enhancements and marketing.

Revenue increased $214.7 million, or 35.6%, to $818.4 million in the year ended December 31, 2019, which included $19.1 
million related to the results of Reverb, compared to the year ended December 31, 2018, of which 72.5% consisted of 
Marketplace revenue and 27.5% consisted of Services revenue.

Marketplace revenue increased $148.9 million, or 33.5%, to $593.6 million in the year ended December 31, 2019 compared to 
the year ended December 31, 2018. This growth corresponded with a 26.5% increase in GMS to a total of $5.0 billion for the 
year ended December 31, 2019. Marketplace revenue increased at a faster rate than GMS primarily due to the increase in 
transaction revenue and payments revenue for the year ended December 31, 2019 compared to the year ended December 31, 
2018. Transaction revenue increased 48.9% year-over-year, primarily driven by our 2018 pricing updates, which drove 
approximately 30% of the 48.9% increase. Payments revenue increased 25.7%, largely driven by overall GMS growth trends. 
The share of Etsy.com GMS processed through our Etsy Payments platform was 89% for the year ended December 31, 2019, 
up from 86% for the year ended December 31, 2018, primarily due to the transition of sellers in eligible countries to the 
platform. Listing fee revenue grew 16.6%, driven by an increase in charged listings year-over-year corresponding with the 
increase in overall GMS growth. Marketplace revenue also increased due to the acquisition of Reverb.

70

 
 
 
 
Services revenue increased $65.8 million, or 41.4%, to $224.7 million in the year ended December 31, 2019 compared to the 
year ended December 31, 2018. The growth in Services revenue was primarily driven by an increase in advertising revenue 
(formerly referred to as Promoted Listings and Google Shopping), up 51.3%. We launched our new unified ad platform, Etsy 
Ads, in the third quarter of 2019, which combines Promoted Listings, Etsy.com’s on-site ads platform, and Google Shopping, 
an off-site marketing tool for Etsy.com sellers. With the shift to Etsy Ads, amounts spent on Google Shopping, which were 
previously recorded on a net basis in Other revenue, are recorded on a gross basis in Services revenue with an offsetting 
expense recorded in cost of revenue. The increase in advertising revenue was due to higher click volume and revenue from 
Google Shopping. At December 31, 2019, 16.6% of Etsy active sellers used Etsy advertising services.

Cost of Revenue

Cost of revenue

Percentage of total revenue

Year Ended  
December 31,

Change

2019

2018

$

%

$

271,036

$

190,762

$

80,274

42.1%

(in thousands, except percentages)

33.1%

31.6%

Cost of revenue increased $80.3 million, or 42.1%, to $271.0 million in the year ended December 31, 2019 compared to the 
year ended December 31, 2018, primarily driven by increased costs related to processing Etsy Payments, corresponding to the 
increase in Etsy Payments revenue, and increased costs related to the Google Shopping portion of the new Etsy Ads platform. 
With the shift to Etsy Ads, Google Shopping expense is recorded in cost of revenue, but was previously recorded on a net basis 
in Other revenue. The increase in cost of revenue was also driven by increased cloud-related hosting and bandwidth costs, the 
cost of revenue associated with the Reverb business, which includes amortization expense for developed technology, and, to a 
lesser extent, employee-related expenses, including stock-based compensation, primarily driven by increases in average salary 
and headcount. We spent approximately $30 million on cloud migration in 2019, which includes implementation costs and 
costs related to cloud usage for growth initiatives, and completed the migration in February 2020. Starting in the second quarter 
of 2020, Etsy will no longer recognize costs related to the Google Shopping portion of the original Etsy Ads platform in Cost of 
Revenue, but will instead recognize the costs related to Offsite Ads in Marketing expense.

Operating Expenses

There were a total of 1,240 employees on December 31, 2019, of which 184 were Reverb employees, compared with 874 on 
December 31, 2018. 

Marketing

Year Ended  
December 31,

Change

2019

2018

$

%

(in thousands, except percentages)

Marketing

$

215,570

$

158,013

$

57,557

36.4%

Percentage of total revenue

26.3%

26.2%

Marketing expenses increased $57.6 million, or 36.4%, to $215.6 million in the year ended December 31, 2019 compared to the 
year ended December 31, 2018. The increase was primarily a result of increased spend related to buyer acquisition, including 
the launch of our holiday television ad campaign, and the acquisition of Reverb. Paid GMS was 15% of overall Etsy.com GMS 
in the year ended December 31, 2019, down from paid GMS of 17% in the year ended December 31, 2018, which we believe is 
a result of our television ad campaigns driving more organic traffic. In 2020, we expect to increase our investment in 
marketing, including into channels such as television. Beginning in the second quarter of 2020, Marketing expense will include 
costs related to our new Offsite Ads product.

71

 
 
 
 
 
 
Product development

Product development

Percentage of total revenue

Year Ended  
December 31,

Change

2019

2018

$

%

$

121,878

$

97,249

$

24,629

25.3%

(in thousands, except percentages)

14.9%

16.1%

Product development expenses increased $24.6 million, or 25.3%, to $121.9 million in the year ended December 31, 2019 
compared to the year ended December 31, 2018, primarily as a result of an increase in employee-related expenses, including 
stock-based compensation, mainly the result of an increase in average headcount. This increase was also driven, to a lesser 
extent, by a decrease in the amount of employee-related costs capitalized as a result of several larger project launches in 2018, 
mainly related to cloud migration.

General and administrative

General and administrative

Percentage of total revenue

Year Ended  
December 31,

Change

2019

2018

$

%

$

121,134

$

82,883

$

38,251

46.2%

(in thousands, except percentages)

14.8%

13.7%

General and administrative expenses increased $38.3 million, or 46.2%, to $121.1 million in the year ended December 31, 2019 
compared to the year ended December 31, 2018, primarily due to increased amortization expense related to the change in 
accounting treatment for our Brooklyn headquarters lease associated with the adoption of ASU 2016-02—Leases in the first 
quarter of 2019. The increase in general and administrative expenses is also driven by increased bad debt expense, primarily 
related to countries not covered by Etsy Payments. Additionally, there were increases in professional services as well as 
employee-related expenses, including stock-based compensation, which were mainly the result of an increase in average 
headcount.

Other Expense, net 

Other expense, net:

Interest expense

Percentage of total revenue

Interest and other income

Percentage of total revenue

Foreign exchange gain (loss)

Percentage of total revenue

Other expense, net

Percentage of total revenue

Year Ended  
December 31,

Change

2019

2018

$

%

(in thousands, except percentages)

$

$

$

$

(24,320)

(3.0)%

13,199

1.6 %

3,006

0.4 %

(8,115)

(1.0)%

$

$

$

$

(22,178)

(3.7)%

8,957

1.5 %

(6,487)

(1.1)%

(19,708)

(3.3)%

$

$

$

$

(2,142)

9.7 %

4,242

47.4 %

9,493

(146.3)%

11,593

(58.8)%

Other expense, net was $8.1 million in the year ended December 31, 2019, which decreased $11.6 million from $19.7 
million in the year ended December 31, 2018. The decrease in expense was primarily driven by the decrease in non-functional 
currency intercompany balances, and the change in U.S. Dollar to Euro exchange rates on our intercompany and other non-
functional currency balances, increased interest and dividend income related to our investment accounts, and decreased interest 
expense related to the change in accounting treatment for our Brooklyn headquarters lease associated with the adoption of ASU 

72

 
 
 
 
 
 
 
 
 
 
 
 
2016-02—Leases in the first quarter of 2019. This was partially offset by non-cash interest related to our convertible debt 
issued in the third quarter of 2019.

Benefit for Income Taxes 

Benefit for income taxes

Percentage of total revenue

Year Ended  
December 31,

Change

2019

2018

$

%

$

15,248

$

22,413

$

(7,165)

(32.0)%

(in thousands, except percentages)

1.9%

3.7%

Our income tax benefit for the years ended December 31, 2019 and 2018 was $15.2 million and $22.4 million, respectively.

The primary drivers of our income tax benefit for the year ended December 31, 2019 were excess tax benefits from employee 
stock-based compensation of $16.3 million, and a benefit related to research and development tax credit of $9.9 million, 
partially offset by tax expense on pretax book income of $11.5 million.

The primary driver of our income tax benefit for the year ended December 31, 2018 were tax benefit related to valuation 
allowance of $28.7 million, stock-based compensation of $11.7 million, and our research and development tax credit of $4.1 
million. These were partially offset by tax expense related to income before income taxes of $11.3 million, state and local tax 
expense of $3.8 million, and the inclusion of additional taxes of $3.9 million due to certain tax provision introduced by the Tax 
Cuts and Jobs Act of 2017, as enacted by the U.S. Federal Government on December 22, 2017, (the “TCJA”). 

For both periods, other drivers include the mix of income and losses in jurisdictions with a wide range of tax rates.

73

 
 
 
 
Comparison of Years Ended December 31, 2018 and 2017

Revenue

Revenue:

Marketplace

Percentage of total revenue

Services

Percentage of total revenue

Total revenue

Year Ended  
December 31,

Change

2018

2017

$

%

(in thousands, except percentages)

$

$

$

444,765

73.7%

158,928

26.3%

603,693

$

$

$

329,362

74.6%

111,869

25.4%

441,231

$

$

$

115,403

47,059

162,462

35.0%

42.1%

36.8%

GMS increased $678.1 million, or 20.8%, to $3.9 billion in the year ended December 31, 2018 compared to the year ended 
December 31, 2017. On a currency-neutral basis (excluding the direct impact of currency translation on GMS from goods that 
are not listed in U.S. dollars) GMS growth for the year ended December 31, 2018 would have been 20.4%, or approximately 40 
basis points lower than the reported 20.8% growth. Supporting this growth in GMS, active sellers increased 9.4% to 2.1 million 
and active buyers increased 18.2% to 39.4 million at December 31, 2018 compared to December 31, 2017. In the year ended 
December 31, 2018, GMS from new buyers increased 16% year-over-year and represented approximately 18% of overall GMS, 
a decrease compared to last year. In the year ended December 31, 2018, GMS from existing buyers increased 23% year-over-
year and represented approximately 82% of overall GMS, an increase compared to last year.

During the year ended December 31, 2018, mobile GMS increased as a percentage of total GMS to approximately 55%, up 
from approximately 51% for the year ended December 31, 2017. We believe this increase was a result of increased mobile 
traffic, and, to a lesser extent, continued improvements in our mobile offerings for Etsy buyers. Mobile GMS growth during the 
year ended December 31, 2018 was approximately 30%, with mobile web and mobile app GMS each continuing to grow faster 
than desktop GMS during the year.

For the year ended December 31, 2018, international GMS increased as a percentage of total GMS to 35%, up from 
approximately 33% for the year ended December 31, 2017. International GMS was up approximately 28% in the year ended 
December 31, 2018 compared to the year ended December 31, 2017, driven by GMS between U.S. buyers and international 
sellers and by our fastest growing international trade route, international domestic, which is GMS generated between a non-
U.S. buyer and a non-U.S. seller both in the same country. International domestic GMS grew approximately 36% in 2018 
compared with 2017. On a currency-neutral basis international GMS growth for the year ended December 31, 2018 would have 
been 27%.

Revenue increased $162.5 million, or 36.8%, to $603.7 million in the year ended December 31, 2018 compared to the year 
ended December 31, 2017, of which 73.7% consisted of Marketplace revenue and 26.3% consisted of Services revenue.

Marketplace revenue increased $115.4 million, or 35.0%, to $444.8 million in the year ended December 31, 2018 compared to 
the year ended December 31, 2017. This growth corresponded with a 20.8% increase in GMS to a total of $3.9 billion in the 
year ended December 31, 2018. Marketplace revenue increased at a faster rate than GMS primarily due to the increase in 
transaction revenue and Etsy Payments revenue for the year ended December 31, 2018 compared to the year ended December 
31, 2017. Transaction revenue increased 59.6% year-over-year, primarily driven by our 2018 pricing updates, which drove 
approximately 41% of the 59.6% increase. Etsy Payments revenue increased 24.4%, largely driven by overall GMS growth 
trends and increased seller adoption. The share of GMS processed through our Etsy Payments platform was 86%, for the year 
ended December 31, 2018, up from 85% in the year ended December 31, 2017, primarily due to the transition of sellers in 
eligible countries to the platform. During the second quarter of 2018, we reached the anniversary of the Etsy Payments 
adoption requirement, which has been a substantial driver of year-over-year Etsy Payments revenue growth, and therefore, we 
expect Etsy Payments to grow more closely in-line with year-over-year GMS growth in future quarters. Listing fee revenue 
grew 17.0%, driven by an increase in charged listings year-over-year corresponding with the increase in overall GMS growth. 
Listing fee revenue increased at a slower rate than GMS primarily due to the issuance of free listings in our international 
markets, including France and Germany.

74

 
 
 
 
Services revenue increased $47.1 million, or 42.1%, to $158.9 million in the year ended December 31, 2018 compared to the 
year ended December 31, 2017. The growth in Services revenue was primarily driven by an increase in Promoted Listings, up 
41.4%, and, to a lesser extent, Etsy Shipping Labels, up 39.9%. The increase in Promoted Listings revenue was due to higher 
click volume and overall product enhancements, including expansion of Promoted Listing budgets and context specific ranking 
on Promoted Listings, which increased the relevance of promoted ads in our search results. The increase in Etsy Shipping Label 
revenue was primarily driven by a combination of an increase in label volume and an increase in average margin per label. 
Additionally, Etsy Shipping Label revenue reflects a one-time adjustment to recognize prior period revenue which drove $2.8 
million of the increase. At December 31, 2018, 15.1% of active sellers used Promoted Listings, and 24.7% of active sellers in 
the United States, Canada, United Kingdom, and Australia used Etsy Shipping Labels. 

Cost of Revenue

Cost of revenue

Percentage of total revenue

Year Ended  
December 31,

Change

2018

2017

$

%

$

190,762

$

150,986

$

39,776

26.3%

(in thousands, except percentages)

31.6%

34.2%

Cost of revenue increased $39.8 million, or 26.3%, to $190.8 million in the year ended December 31, 2018 compared to the 
year ended December 31, 2017, primarily driven by additional costs as a result of the increase in transactions and related 
revenue generated on the Etsy platform. The remaining increase was driven by hosting and bandwidth costs incurred as a result 
of our migration to the cloud while also maintaining our current infrastructure, and, to a lesser extent, increases in employee-
related and professional services expenses. Cost of revenue decreased as a percentage of revenue largely due to 2018 changes 
in our pricing.

Operating Expenses

There were a total of 874 employees on December 31, 2018, compared with 744 on December 31, 2017. 

Marketing

Year Ended  
December 31,

Change

2018

2017

$

%

(in thousands, except percentages)

Marketing

$

158,013

$

109,085

$

48,928

44.9%

Percentage of total revenue

26.2%

24.7%

Marketing expenses increased $48.9 million, or 44.9%, to $158.0 million in the year ended December 31, 2018 compared to the 
year ended December 31, 2017, primarily as a result of increased spend on digital marketing related to buyer acquisition, and, 
to a lesser extent, increased direct marketing expenses associated with our television ad campaigns. These increases were offset 
by decreases in employee-related expenses due to a reduction in average headcount and $3.0 million of restructuring and other 
exit costs associated with the Actions included in marketing expense for the year ended December 31, 2017 that did not recur in 
2018.

75

 
 
 
 
 
 
 
 
Product development

Product development

Percentage of total revenue

Year Ended  
December 31,

Change

2018

2017

$

%

$

97,249

$

74,616

$

22,633

30.3%

(in thousands, except percentages)

16.1%

16.9%

Product development expenses increased $22.6 million, or 30.3%, to $97.2 million in the year ended December 31, 2018 
compared to the year ended December 31, 2017, primarily as a result of an increase in employee-related expenses, including 
stock-based compensation, and professional services expenses for consultants working on our product and engineering teams. 
The increase in employee-related expenses includes approximately $8.5 million of expense in connection with certain 
employee departures, including $7.0 million in expense resulting from the modification of stock options and RSUs. 
Additionally, $3.2 million of restructuring and other exit costs associated with the Actions is included in product development 
expenses for the year ended December 31, 2017. 

General and administrative

General and administrative

Percentage of total revenue

Year Ended  
December 31,

Change

2018

2017

$

%

$

82,883

$

91,486

$

(8,603)

(9.4)%

(in thousands, except percentages)

13.7%

20.7%

General and administrative expenses decreased $8.6 million, or 9.4%, to $82.9 million in the year ended December 31, 2018 
compared to the year ended December 31, 2017, primarily due to decreased employee-related expenses, including stock-based 
compensation, mainly the result of a reduction in average headcount and $7.0 million of restructuring and other exit costs 
associated with the Actions included in general and administrative expenses for the year ended December 31, 2017 that did not 
recur in 2018. 

Asset impairment charges

Year Ended  
December 31,

Change

2018

2017

$

%

(in thousands, except percentages)

Asset impairment charges

Percentage of total revenue

$

— $

—%

3,162

$

(3,162)

(100.0)%

0.7%

There were no asset impairment charges in the year ended December 31, 2018. Asset impairment charges were $3.2 million 
in the year ended December 31, 2017. In the fourth quarter of 2017, we made the decision to discontinue certain product 
offerings, including Etsy Studio and Etsy Manufacturing, which resulted in the recognition of a $3.2 million impairment charge 
to write the related capitalized web development and internal-use software assets down to zero. This decision was based on our 
strategy to focus on the growth of the Etsy.com marketplace.

76

 
 
 
 
 
 
 
 
 
 
 
 
Other (Expense) Income, net 

Other (expense) income, net:

Interest expense

Percentage of total revenue

Interest and other income

Percentage of total revenue

Foreign exchange (loss) gain

Percentage of total revenue

Other (expense) income, net

Percentage of total revenue

Year Ended  
December 31,

Change

2018

2017

$

%

(in thousands, except percentages)

$

$

$

$

(22,178)

(3.7)%

8,957

1.5 %

(6,487)

(1.1)%

(19,708)

(3.3)%

$

$

$

$

(11,130)

(2.5)%

2,394

0.5 %

29,105

6.6 %

20,369

4.6 %

$

$

$

$

(11,048)

99.3 %

6,563

274.1 %

(35,592)

(122.3)%

(40,077)

(196.8)%

Other expense, net was $19.7 million in the year ended December 31, 2018, which increased $40.1 million from other income, 
net of $20.4 million in the year ended December 31, 2017. The increase in expense was primarily driven by the change in U.S. 
Dollar to Euro exchange rates on our intercompany and other non-functional currency balances, and higher interest expense, 
mainly non-cash interest related to our convertible debt issued in the first quarter of 2018, partially offset by increased interest 
and dividend income related to our investment accounts. Interest expense also includes non-cash interest expense associated 
with the build-to-suit lease accounting related to our corporate headquarters, which remained flat year-over-year.

Benefit for Income Taxes 

Benefit (provision) for income taxes

Percentage of total revenue

Year Ended  
December 31,

Change

2018

2017

$

%

$

22,413

$

49,535

$

(27,122)

54.8%

(in thousands, except percentages)

3.7%

11.2%

Our income tax benefit for the years ended December 31, 2018 and 2017 was $22.4 million and $49.5 million, respectively. 

The primary driver of the income tax benefit for the year ended December 31, 2018 were tax benefit related to valuation 
allowance of $28.7 million, stock-based compensation of $11.7 million, and our research and development tax credit of $4.1 
million. These were partially offset by tax expense related to income before income taxes of $11.3 million, state and local tax 
expense of $3.8 million, and the inclusion of additional taxes of $3.9 million due to certain provisions of the Tax Cuts and Jobs 
Act of 2017, as enacted by the U.S. Federal Government on December 22, 2017 (the “TCJA”). 

The primary drivers of our income tax benefit for the year ended December 31, 2017 was the impact on deferred taxes from the 
reduction in the U.S. federal corporate tax rate beginning in 2018. As a result of the TCJA, which reduced the corporate income 
tax rate from 35% to 21%, our deferred taxes and certain unrecognized tax benefits at December 31, 2017 have been revalued 
at the reduced 21% rate. The revaluation resulted in a benefit for income taxes of approximately $31.1 million for the year 
ended December 31, 2017. 

The secondary driver of the income tax benefit for the year ended December 31, 2017 was the recognition of excess tax 
benefits from stock-based compensation as a result of the adoption of ASU 2016-09—Stock Compensation: Improvements to 
Employee Share-based Payment Accounting in the first quarter of 2017. As a result of this updated guidance, we recorded $12.8 
million of excess tax benefits, rather than additional paid-in capital, for the year ended December 31, 2017.

For both periods, other drivers include the mix of income and losses in jurisdictions with a wide range of tax rates, the 
disallowance of the benefit of losses in certain foreign jurisdictions and the amount of non-deductible stock-based 
compensation expense.

77

 
 
 
 
 
 
 
 
Quarterly Results of Operations 

The following tables show selected unaudited quarterly results of operations and other unaudited operational and non-GAAP 
financial data for the eight quarters ended December 31, 2019 and the percentage that each line item in the following results of 
operations data represents of revenue. The results of operations data for each of these quarters have been prepared on the same 
basis as the audited annual Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K and 
includes all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our results of 
operations for these periods. This data should be read in conjunction with our Consolidated Financial Statements and related 
notes included elsewhere in this Annual Report. Our quarterly results of operations and operational and non-GAAP financial 
data will vary in the future. These quarterly operating results are not necessarily indicative of our operating results for any 
future quarter or year.

Dec. 31,
2019 (1)

Sept. 30,
2019 (1)

June 30,
2019

Mar. 31,
2019

Dec. 31,
2018 (2)

Sept. 30,
2018

June 30,
2018

Mar. 31,
2018

(in thousands, except share and per share amounts)

Three Months Ended

Revenue:

Marketplace (3)

Services

$

189,651 $

141,628 $

135,199 $

127,168 $

151,406 $

112,172 $

92,880 $

80,347

56,319

45,896

42,171

48,622

38,194

39,507

88,307

32,605

Total revenue

269,998

197,947

181,095

169,339

200,028

150,366

132,387

120,912

Cost of revenue (4)(5)

90,824

68,949

58,605

52,658

57,111

46,947

179,174

128,998

122,490

116,681

142,917

103,419

45,409

86,978

41,295

79,617

Gross profit

Operating expenses:

Marketing (4)(5)

Product development (4)
(5)

General and
administrative (4)(5)

Total operating
expenses

Income from operations

Other expense, net

Income before income taxes

Benefit (provision) for income
taxes (6)

84,034

50,098

45,994

35,444

63,362

39,516

28,941

26,194

35,701

32,465

28,765

24,947

28,542

24,418

23,568

20,721

34,401

32,203

29,883

24,647

21,524

20,748

21,707

18,904

154,136

114,766

104,642

85,038

113,428

84,682

74,216

65,819

25,038

(2,287)

14,232

(4,143)

17,848

(1,479)

31,643

(206)

29,489

(6,613)

18,737

(4,141)

12,762

(8,137)

13,798

(817)

22,751

10,089

16,369

31,437

22,876

14,596

4,625

12,981

8,540

4,712

1,854

142

18,375

5,298

(1,246)

(14)

Net income

$

31,291 $

14,801 $

18,223 $

31,579 $

41,251 $

19,894 $

3,379 $

12,967

Net income per share attributable to common stockholders:

Basic

Diluted (7)

$

$

0.26 $

0.25 $

0.12 $

0.12 $

0.15 $

0.14 $

0.26 $

0.24 $

0.34 $

0.32 $

0.17 $

0.15 $

0.03 $

0.03 $

0.11

0.10

Weighted average common shares outstanding:

Basic

Diluted (7)

118,403,74
7

120,351,09
5

120,198,52
6

119,679,14
9

120,192,91
2

119,870,71
1

119,450,19
4

121,267,09
2

123,397,25
5

126,243,16
8

130,807,74
3

130,237,87
5

129,012,50
8

129,086,13
7

125,551,75
9

125,772,31
5

(1)  The financial results of Reverb have been included in our consolidated results from August 15, 2019 (the date of 

acquisition).

(2)  During the three months ended December 31, 2018, we recorded adjustments to correct errors in the years ended 

December 31, 2018 and 2017 that increased income before income taxes by $1.6 million in the current quarter and 
decreased net income by $1.8 million in the current quarter. We have concluded that the errors and their correction were 
not material to the Consolidated Financial Statements for any of the periods impacted nor are they material for results in 
the fourth quarter of 2018.

78

 
 
 
(3)  In the fourth quarter of 2019, we reclassified Other revenue to Marketplace revenue. The following table provides our 

Marketplace and Other revenue under our previous and current presentation:

Quarter-to-Date Period Ended

Previous Presentation

Updated Presentation

Marketplace
Revenue

Other Revenue

Marketplace
Revenue

Other Revenue

(in thousands)

$

140,966

$

134,403

126,130

150,540

110,927

91,306

87,967

662

796

1,038

866

1,245

1,574

340

$

141,628

$

135,199

127,168

151,406

112,172

92,880

88,307

—

—

—

—

—

—

—

September 30, 2019

June 30, 2019

March 31, 2019

December 31, 2018

September 30, 2018

June 30, 2018

March 31, 2018

(4)  Includes total stock-based compensation expense as follows:

Dec. 31,
2019

Sept. 30,
2019

June 30,
2019

Mar. 31,
2019

Dec. 31,
2018

Sept. 30,
2018

June 30,
2018

Mar. 31,
2018

Three Months Ended

(in thousands)

Cost of revenue

$

1,658 $

1,574 $

1,456 $

1,099 $

990 $

894 $

927 $

1,224

6,519

3,938

1,196

5,752

3,615

723

5,294

3,364

631

3,520

2,832

688

9,873

2,693

642

4,697

2,683

699

4,025

2,966

546

478

2,639

2,791

Marketing

Product development (a)

General and administrative

Total stock-based
compensation expense

$

13,339 $

12,137 $

10,837 $

8,082 $

14,244 $

8,916 $

8,617 $

6,454

(a) 

Product development includes $6.0 million and $1.0 million of expense resulting from the modification of stock 
options and RSUs in the three months ended December 31, 2018 and September 30, 2018, respectively, in 
connection with certain employee departures See “Note 16—Stock-based Compensation” in the Notes to 
Consolidated Financial Statements for additional information.

(5)  Includes restructuring and other exit income, as shown in the quarterly reconciliation of net income to Adjusted EBITDA 

below. For a summary of restructuring and other exit costs (income) see “Note 17—Restructuring and Other Exit Costs 
(Income)” in the Notes to Consolidated Financial Statements.

(6)  In the year ended December 31, 2018, we recognized an income tax benefit associated with the release of a valuation 

allowance on certain deferred tax assets. The valuation allowance release resulted in a non-recurring benefit for income 
taxes of $23.4 million for the year ended December 31, 2018.

(7)  Since the Company expects to settle in cash the principal outstanding under the 2019 Notes (see “Note 13—Debt”), we 
use the treasury stock method when calculating the potential dilutive effect of the conversion spread on diluted net 
income per share, if applicable. We used the if-converted method when calculating the dilutive effect of the 2018 Notes 
for the three months ended December 31, 2019 and September 30, 2019 and used the treasury stock method for the three 
months ended June 30, 2019, March 31, 2019, and all quarterly periods in 2018.

79

Revenue:

Marketplace

Services

Total revenue

Cost of revenue

Gross profit

Operating expenses:

Marketing

Product development

General and
administrative

Total operating
expenses

Income from operations

Other expense, net

Income before income taxes

Benefit (provision) for income
taxes

Dec. 31,
2019

Sept. 30,
2019

June 30,
2019

Mar. 31,
2019

Dec. 31,
2018

Sept. 30,
2018

June 30,
2018

Mar. 31,
2018

Three Months Ended

70.2%

71.5%

74.7%

75.1%

75.7%

74.6%

70.2%

73.0%

29.8

100.0

33.6

66.4

31.1

13.2

12.7

57.1

9.3

(0.8)

8.4

3.2

28.5

100.0

34.8

65.2

25.3

16.4

16.3

58.0

7.2

(2.1)

5.1

2.4

25.3

100.0

32.4

67.6

25.4

15.9

16.5

57.8

9.9

(0.8)

9.0

1.0

24.9

100.0

31.1

68.9

20.9

14.7

14.6

50.2

18.7

(0.1)

18.6

24.3

100.0

28.6

71.4

31.7

14.3

10.8

56.7

14.7

(3.3)

11.4

0.1

18.6%

9.2

20.6%

Three Months Ended

25.4

100.0

31.2

68.8

26.3

16.2

13.8

56.3

12.5

(2.8)

9.7

3.5

13.2%

29.8

100.0

34.3

65.7

21.9

17.8

16.4

56.1

9.6

(6.1)

3.5

(0.9)

2.6%

27.0

100.0

34.2

65.8

21.7

17.1

15.6

54.4

11.4

(0.7)

10.7

—

10.7%

Net income

11.6%

7.5%

10.1%

Dec. 31,
2019

Sept. 30,
2019

June 30,
2019

Mar. 31,
2019

Dec. 31,
2018

Sept. 30,
2018

June 30,
2018

Mar. 31,
2018

(in thousands, except percentages)

Other financial and operations data (1):

GMS

GMS growth

Currency-neutral GMS
growth

Adjusted EBITDA

Active sellers

Active buyers

$1,655,716

$1,200,371

$1,094,829

$1,024,028

$1,246,472

$ 922,513

$ 901,685

$ 861,075

32.8%

30.1%

21.4%

18.9%

22.3%

20.4%

20.4%

19.8%

33.0%

31.1%

22.8%

20.6%

23.1%

20.8%

19.3%

17.6%

$

54,624

$

42,076

$

39,701

$

49,867

$

51,359

$

34,035

$

27,695

$

26,421

2,699

46,351

2,592

44,807

2,333

42,742

2,227

41,029

2,115

39,447

2,043

37,134

1,983

35,830

1,970

34,693

Percent mobile GMS

Percent international GMS

58%

35%

59%

36%

58%

38%

58%

38%

56%

36%

56%

35%

55%

34%

54%

35%

(1) See “Key Operating and Financial Metrics” for the definitions of the following terms: “active buyers,” “active sellers,” 

“Adjusted EBITDA,” “GMS,” “currency-neutral GMS growth,” “international GMS,” and “mobile GMS.” 

80

 
 
 
 
 
 
 
The following table reflects the reconciliation of net income to Adjusted EBITDA for each of the periods indicated:

Dec. 31,
2019

Sept. 30,
2019

June 30,
2019

Mar. 31,
2019

Dec. 31,
2018

Sept. 30,
2018

June 30,
2018

Mar. 31,
2018

Three Months Ended

(in thousands)

$

31,291 $

14,801 $

18,223 $

31,579 $

41,251 $

19,894 $

3,379 $

12,967

6,372

2,194

1,287

1,268

3,099

3,768

3,687

2,667

(8,540)

(4,712)

(1,854)

(142)

(18,375)

(5,298)

1,246

15,271

12,808

9,810

10,142

7,626

13,339

12,137

10,837

8,082

14,244

(4,085)

976

—

—

1,949

1,735

1,164

—

192

(1,062)

3,514

1,206

—

—

—

—

—

—

—

—

6,439

8,916

373

—

—

6,357

8,617

4,450

—

—

14

6,320

6,454

(1,850)

—

—

(57)

(41)

(151)

Net income

Excluding:

Interest and other non-
operating expense, net
(Benefit) provision for
income taxes
Depreciation and
amortization
Stock-based
compensation expense
Foreign exchange (gain)
loss
Acquisition-related
expenses
Non-ordinary course
disputes
Restructuring and other
exit costs (income)

Adjusted EBITDA

$

54,624 $

42,076 $

39,701 $

49,867 $

51,359 $

34,035 $

27,695 $

26,421

Seasonality

Etsy sellers experience increased sales and use more Services during the fourth-quarter holiday shopping season. This has 
resulted in increased GMS and revenue for us during the fourth quarter of each fiscal year, which can compare to lower GMS 
and revenue in the first quarter of the following fiscal year. For example, revenue in the first quarter of 2019 decreased when 
compared with revenue in the fourth quarter of 2018. We expect this seasonality to continue in future years. Our cost of revenue 
and marketing expenses also follow this trend, with the highest costs corresponding with the fourth quarter and lower costs in 
the first quarter of each fiscal year. As our growth rates moderate, the impact of these seasonality trends on our results of 
operations may become more pronounced.

Our quarterly revenue increased sequentially quarter-to-quarter for all periods presented above, other than the first quarter of 
2019, corresponding to our GMS performance in the same periods. We cannot assure you that this pattern of sequential revenue 
and GMS growth will continue. We believe that it is generally more meaningful to compare year-over-year results than 
sequential quarter-over-quarter results.

81

 
 
Liquidity and Capital Resources 

The following tables show our cash and cash equivalents, short-term investments, accounts receivable, long-term investments, 
and net working capital as of the dates indicated:

Cash and cash equivalents

Short-term investments

Accounts receivable, net

Long-term investments

Net working capital

As of December 31,

2019

2018

(in thousands)

$

443,293

$

373,959

15,386

89,343

732,510

366,985

257,302

12,244

—

568,227

As of December 31, 2019, our cash and cash equivalents, a majority of which were held in cash deposits and money market 
funds, were held in the United States for future investments, working capital funding, and general corporate purposes. 

We invest in short- and long-term instruments, including fixed-income funds and U.S. Government and agency securities 
aligned with our investment strategy. These investments are intended to allow us to preserve our principal, maintain the ability 
to meet our liquidity needs, deliver positive yields across a balanced portfolio, and continue to provide us with direct fiduciary 
control. In accordance with our investment policy, all investments have maturities no longer than 37 months, with the average 
maturity of these investments maintained at 12 months or less.

Sources of Liquidity

In September 2019, we issued the 2019 Notes pursuant to the Securities Act. The initial conversion price of the 2019 Notes 
represented a premium of approximately 47.5% over the price of Etsy's common stock. The net proceeds from the sale of the 
2019 Notes were $639.5 million after deducting initial purchasers' discount and offering expenses. The 2019 Notes will mature 
on October 1, 2026, unless earlier converted or repurchased. For more information on the 2019 Notes, see “Note 13—Debt” in 
the Notes to Consolidated Financial Statements.

On February 25, 2019, we entered into a $200.0 million senior secured revolving credit facility pursuant to a Credit Agreement 
with several lenders (the “2019 Credit Agreement”). The 2019 Credit Agreement will mature in February 2024. The 2019 
Credit Agreement includes a letter of credit sublimit of $30.0 million and a swingline loan sublimit of $10.0 million. See “Note 
13—Debt” in the Notes to Consolidated Financial Statements for additional information.

In March 2018, we issued the 2018 Notes pursuant to the Securities Act. The initial conversion price of the 2018 Notes 
represented a premium of approximately 37.5% over the price of Etsy’s common stock. The net proceeds from the sale of the 
2018 Notes were $335.0 million after deducting initial purchasers’ discount and offering expenses. The 2018 Notes will mature 
on March 1, 2023, unless earlier converted or repurchased. Based on the daily closing prices of our common stock during the 
quarter ended December 31, 2019, holders of the 2018 Notes are not eligible to convert their 2018 Notes during the first quarter 
of 2020. When a conversion notice is received, we have the option to pay or deliver cash, shares of our common stock, or a 
combination thereof. Accordingly, we cannot be required to settle the 2018 Notes in cash and, therefore, the 2018 Notes are 
classified as long-term debt as of December 31, 2019. For more information on the 2018 Notes, see “Note 13—Debt” in the 
Notes to Consolidated Financial Statements.

We believe that our existing cash and cash equivalents and short- and long-term investments, together with cash generated from 
operations, will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our future capital requirements 
and the adequacy of available funds will depend on many factors, including those described in “Key Factors Affecting Our 
Performance” above and in our “Risk Factors” in this Annual Report on Form 10-K.

The majority of our cash and cash equivalents and short- and long-term investments are held in the United States. We fund our 
international operations from our funds held in the United States on an as-needed basis.

82

 
 
 
Historical Cash Flows

Cash provided by (used in):

Operating activities

Investing activities

Financing activities

Year Ended December 31,

2019

2018

2017

(in thousands)

$

206,920

$

198,925

$

(488,373)

359,607

(285,393)

144,006

69,101

61,836

6,555

Net Cash Provided by Operating Activities 

Our cash flows from operations are largely dependent on the amount of revenue generated on our platform, as well as 
associated cost of revenue and other operating expenses. Our primary source of cash from operating activities is cash 
collections from our customers. Net cash provided by operating activities in each period presented has been influenced by 
changes in working capital.

Net cash provided by operating activities was $206.9 million in the year ended December 31, 2019, primarily driven by cash 
net income of $196.9 million as a result of increased revenue generated on our platform, and changes in our operating assets 
and liabilities that provided $10.0 million in cash, driven by the timing of payables offset by prepayments made in the period 
and collections of accounts receivable.

Net cash provided by operating activities was $198.9 million in the year ended December 31, 2018, primarily driven by cash 
net income of $139.6 million as a result of increased revenue generated on our platform, and changes in our operating assets 
and liabilities that provided $59.3 million in cash, largely driven by timing of collections of accounts receivable due to the 
launch of our redesigned payment account in the fourth quarter of 2018, which now automatically deducts our fees and 
applicable taxes from the seller’s funds earned through sales using Etsy Payments prior to settlement of those funds to the 
seller’s bank account and payment timing of payables.

Net cash provided by operating activities was $69.1 million in the year ended December 31, 2017, primarily driven by cash net 
income of $68.8 million as a result of increased revenue generated on our platform and changes in our operating assets and 
liabilities that provided $0.3 million in cash.

Net Cash (Used in) Provided by Investing Activities 

Our primary investing activities consist of cash paid in the acquisition of Reverb, sales and purchases of short- and long-term 
marketable securities, cash paid to purchase intangible assets and capital expenditures, including investments in capitalized 
website development and internal-use software and purchases of property and equipment to support our overall business 
growth.

Net cash used in investing activities was $488.4 million in the year ended December 31, 2019. This was primarily attributable 
to $270.4 million in cash paid to acquire Reverb, net purchases of marketable securities of $200.7 million, and $15.3 million in 
capital expenditures, including $7.8 million for website development and internal-use software as we continued to invest in 
projects adding new features and functionality to the Etsy platform and focused on growth investments, such as our migration 
to Google Cloud.

Net cash used in investing activities was $285.4 million in the year ended December 31, 2018. This was primarily attributable 
to net purchases of marketable securities of $229.3 million, $35.3 million in cash paid for the DaWanda intangible asset 
acquisition, and $20.6 million in capital expenditures, including $19.5 million for website development and internal-use 
software.

Net cash provided by investing activities was $61.8 million in the year ended December 31, 2017. This was primarily 
attributable to net sales of marketable securities of $75.0 million, offset by $13.2 million in capital expenditures, including $9.2 
million for capitalized website development and internal-use software and $4.0 million for purchases of property and 
equipment.

83

 
 
 
Net Cash Provided by Financing Activities 

Our primary financing activities include proceeds from the issuance of notes, repurchase of common stock under share 
repurchase programs, payments related to capped call transactions with the initial purchasers and/or their respective affiliates in 
connection with notes, shares withheld to satisfy tax withholding obligations in connection with the vesting of employee RSUs, 
proceeds from exercise of stock options, payments on finance lease obligations, and payments on our facility financing 
obligation related to the build-to-suit accounting treatment of our Brooklyn headquarters lease prior to the adoption of ASC 
842, Leases.

Net cash provided by financing activities was $359.6 million in the year ended December 31, 2019. This was primarily 
attributable to proceeds from the issuance of the 2019 Notes of $650.0 million, partially offset by stock repurchases of $177.0 
million, payments of $76.2 million for the 2019 Capped Call Transactions, payment of tax obligations on vested equity awards 
of $32.5 million, payment of debt issuance costs of $11.9 million and payments on finance lease obligations of $10.8 million, 
partially offset by proceeds from the exercise of stock options of $9.8 million.

Net cash provided by financing activities was $144.0 million in the year ended December 31, 2018. This was primarily 
attributable to proceeds from the issuance of the 2018 Notes of $345.0 million and proceeds from the exercise of stock options 
of $18.3 million, partially offset by stock repurchases under share repurchase programs of $134.6 million, payments of $34.2 
million for the 2018 Capped Call Transactions, stock repurchases of vested RSUs withheld to satisfy tax obligations of $24.1 
million, payments on our facility financing obligation of $10.2 million, related to our Brooklyn headquarters lease, and $10.0 
million of debt issuance cost payments.

Net cash provided by financing activities was $6.6 million in the year ended December 31, 2017. This was primarily 
attributable to proceeds from the exercise of stock options of $33.8 million and proceeds from other financing activities of $3.1 
million, partially offset by repurchase of stock under the share repurchase program of $10.3 million, payments on capital lease 
obligations of $7.8 million, stock repurchases of vested RSUs withheld to satisfy tax obligations of $6.4 million, and payments 
on our facility financing obligation of $5.9 million, related to our Brooklyn headquarters lease.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, in 2019, 2018, or 
2017.

84

Contractual Obligations

The following table summarizes our future fixed contractual obligations as of December 31, 2019:

Finance lease obligations, including imputed
interest

Operating lease obligations, including
imputed interest

Long-term obligations

Interest payments

Purchase obligations

Total

Less than 1
Year

2–3
Years

4–5
Years

More than
5 Years

(in thousands)

$

70,948

$

10,805

$

21,829

$

21,277

$

17,037

29,989

995,089

5,703

97,710

5,152

89

828

34,153

9,870

—

1,625

62,857

9,279

345,000

1,625

700

5,688

650,000

1,625

—

Total contractual obligations

$

1,199,439

$

51,027

$

96,181

$

377,881

$

674,350

Finance lease obligations consist of obligations under finance leases for computer and hosting equipment and the portion of our 
headquarters in Brooklyn, New York that is accounted for as a finance lease.

Operating lease obligations consist of obligations under non-cancelable operating leases for our headquarters in Brooklyn, New 
York and for our offices in San Francisco, Hudson (New York), Chicago, Dublin, and London. 

Long-term obligations primarily consist of the issuance of Convertible Senior Notes in 2019 and 2018, which will mature 
on October 1, 2026 and March 1, 2023, respectively, unless earlier converted or repurchased.

Interest payments consist of interest due in connection with our 2019 Notes.

Purchase obligations consist of commitments related to cloud computing and other support services. For those agreements with 
variable terms, we do not estimate what the total obligation may be beyond any minimum quantities and/or pricing.

In addition, we have uncertain tax positions of $19.9 million and non-income tax related contingency reserves of $7.2 million, 
which amounts are not reflected in the table as the ultimate resolution and timing are uncertain. These non-income tax 
contingency reserves include $4.8 million due to the acquisition of Reverb, which is wholly offset by an indemnification asset 
of $3.7 million and a deferred tax asset of $1.1 million.

Critical Accounting Policies and Significant Judgments and Estimates 

Our management’s discussion and analysis of our financial condition and results of operations is based on our Consolidated 
Financial Statements, which have been prepared in accordance with GAAP. The preparation of these Consolidated Financial 
Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenue, 
expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on 
historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual 
results could differ from these estimates.

We believe that the assumptions and estimates associated with stock-based compensation; income taxes, including the 
evaluation of uncertain tax positions; purchase price allocations for business combinations, valuation of the acquired 
intangibles purchased in a business combination, and valuation of goodwill and intangible assets; leases, including determining 
the incremental borrowing rate; and fair value of financial instruments have the greatest potential impact on our Consolidated 
Financial Statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information 
on all of our significant accounting policies, see “Note 1—Basis of Presentation and Summary of Significant Accounting 
Policies” in the Notes to Consolidated Financial Statements.

Revenue Recognition

Our revenue is diversified; generated from a mix of marketplace activities and other optional services to help sellers generate 
more sales and scale their businesses. We recognize revenue as we transfer control of promised goods or services to sellers, in 
an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We evaluate 
whether it is appropriate to recognize revenue on a gross or net basis based upon our evaluation of whether we obtain control of 
the specified goods or services by considering if we are primarily responsible for fulfillment of the promise, have inventory 

85

risk, and have latitude in establishing pricing and selecting suppliers, among other factors. Based on our evaluation of these 
factors, revenue is recorded either gross or net of costs associated with the transaction. With the exception of shipping labels, 
our revenues are recognized on a gross basis. Sales and usage-based taxes are excluded from revenues.

Etsy.com Marketplace revenue: As members of the Etsy.com marketplace, Etsy sellers receive the benefit of marketplace 
activities, including listing items for sale, completing sales transactions, and payments processing, which represents a single 
stand-ready performance obligation. Etsy sellers pay a fixed listing fee of $0.20 for each item listed on Etsy.com for a period of 
four months or, if earlier, until a sale occurs. Variable fees include the 5% transaction fee that an Etsy seller pays for each 
completed transaction, inclusive of shipping fees charged, and fees for processing payments, including foreign currency 
payments. On July 16, 2018, we increased our seller transaction fee from 3.5% to 5% of each completed transaction, and now 
apply it to the cost of shipping in addition to the cost of the item. Payments processing fees vary between 3.0% to 4.5% of an 
item’s total sale price, including shipping, plus a flat fee per order, depending on the country in which a seller’s bank account is 
located. When a foreign currency payment is processed, an additional transaction fee is applied. 

The listing fee is recognized ratably over a four-month listing period, unless the item is sold or the seller re-lists it, at which 
time any remaining listing fee is recognized. The transaction fee and payments processing fees are recognized when the 
corresponding transaction is consummated. Listing fees are nonrefundable while transaction fees and payments processing fees 
are recorded net of refunds.

Marketplace revenue also includes revenue generated through our commercial partnerships, which was recorded in its own 
Other revenue line prior to the fourth quarter of 2019. 

Reverb.com Marketplace revenue: The Reverb seller transaction fee is a variable fee, which is 3.5% of each completed 
transaction, including both the cost of the item and the shipping. There are no Reverb listing fees. Variable fees also include 
payments fees for processing payments, including foreign currency payments. Payments processing fees vary between 2.5% - 
2.7% of an item’s total sale price, including shipping, plus a flat fee per order, depending on the currency in which a listing is 
denominated. 

Etsy.com Services revenue: Services revenue is derived from optional services we offer to Etsy sellers, which primarily include 
advertising services (formerly Promoted Listings) and shipping labels. Each service below represents an individual obligation 
that we must perform when an Etsy seller chooses to use the service.

•  Revenue from Promoted Listings, Etsy.com’s on-site advertising service, consists of cost-per-click fees an Etsy seller pays 
for prominent placement of her listings in search results in the Etsy.com marketplace. Promoted Listings fees are based on 
an auction system, which utilizes the budget that each Etsy seller sets when using Promoted Listings to determine the cost-
per-click fee. Promoted Listing fees are nonrefundable and are charged to a seller’s Etsy bill when the Promoted Listing is 
clicked, at which time revenue is recognized. In the third quarter of 2019, Etsy streamlined Promoted Listings and Google 
Shopping, an off-site marketing tool for Etsy sellers, into one unified ad platform called Etsy Ads, where Etsy sellers can 
set a budget, which allows Etsy to allocate that budget between channels, targeting optimal return on seller spend. Due to 
this new offering, Etsy no longer offers its Promoted Listings service as a standalone advertising service after September 
30, 2019. Revenue from Etsy Ads consists of cost-per-click fees, which are nonrefundable and are charged to a seller’s 
Etsy bill when the ad is clicked, at which time revenue is recognized. The revenue we recognize related to Etsy Ads is 
recorded on a gross basis in Services revenue with an offsetting expense recorded in Cost of Revenue.

•  Revenue from shipping labels consists of fees an Etsy seller pays us when she purchases shipping labels through our 

platform, net of the cost we incur in purchasing those shipping labels. We provide our sellers access to purchase shipping 
labels from the United States Postal Service, FedEx, Canada Post, Royal Mail and DAI Post at discounted pricing due to 
the volume of purchases through its platform. We recognize shipping label revenue when an Etsy seller purchases a 
shipping label. We recognize shipping label revenue on a net basis as we are an agent in this arrangement and do not take 
control of shipping labels prior to transferring the labels to the Etsy Seller. Shipping label revenue is recorded net of 
refunds.

Reverb Services revenue: Reverb has its own on-site advertising service called Bump advertising. Reverb sellers have the 
ability to determine their own ad rate as a percentage of their item’s final sale price. Revenue from Bump advertising is 
recognized at the time the item is sold. Reverb also provides its sellers access to purchase shipping labels at discounted pricing 
due to the volume of purchases through its platform. Revenue from shipping labels consists of fees a Reverb seller pays when 
they purchase shipping labels directly through the Reverb platform, net of the cost we incur in purchasing those shipping labels. 
Reverb recognizes shipping label revenue when a Reverb seller purchases a shipping label. Reverb recognizes shipping label 
revenue on a net basis as it is an agent in this arrangement and does not take control of shipping labels prior to transferring the 
labels to the Reverb seller. Shipping label revenue is recorded net of refunds.

86

Stock-Based Compensation

We account for our stock-based compensation awards in accordance with Accounting Standards Codification (“ASC”) 
Topic 718—Compensation—Stock Compensation (“ASC 718”). Stock options and RSUs are awarded to employees and 
members of our Board of Directors and are measured at fair value at each grant date. For both options and RSUs, vesting is 
typically over a four-year period and is contingent upon continued employment on each vesting date. In general, options 
granted to newly-hired employees prior to July 2018 vest 25% after the first year of service and ratably each month over the 
remaining 36-month period. In general, RSUs granted to newly-hired employees prior to July 2018 vest 25% after the first year 
following the vesting commencement date, which is the first day of the fiscal quarter closest to the date of grant, and then vest 
ratably each quarter over the remaining 12-quarter period. In general, for current employees who received an additional grant 
prior to March 2018, options vest ratably each month over a 48-month period. In general, for current employees who received 
an additional grant prior to March 2018, RSUs vest ratably each quarter over a 16-quarter period following the vesting 
commencement date, which is the first day of the fiscal quarter closest to the date of grant.

Beginning in July 2018, in general, for newly-hired employees, both options and RSUs vest 25% after the first year of service 
and ratably each six-month period over a four-year period following the vesting commencement date, which is the first day of 
the month closest to the date of grant. Beginning in March 2018, in general, for current employees who receive an additional 
grant, both options and RSUs vest ratably each six-month period over a four-year period following the vesting commencement 
date.

Stock-based compensation cost is measured on the grant date, based on the estimated fair value of the award using a Black-
Scholes pricing model and recognized as an expense over the employee’s or director’s requisite service period on a straight-line 
basis. The fair value of RSUs is determined based on the closing price of our common stock on Nasdaq on the grant date. The 
Company recognizes forfeitures as they occur. We expect to continue to grant stock options and RSUs in the future, and, to the 
extent that we do, our stock-based compensation expense recognized in future periods will likely increase.

Key Assumptions

Our Black-Scholes option-pricing model requires the input of subjective assumptions, including the fair value of the underlying 
common stock, the expected volatility of the price of our common stock, risk-free interest rates, the expected term of the 
option, and the expected dividend yield of our common stock. These estimates involve inherent uncertainties and the 
application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation 
expense could be materially different in the future.

•  Fair Value of Our Common Stock:  Prior to our initial public offering in April 2015, our Board of Directors considered 

numerous objective and subjective factors to determine the fair value of our common stock at each meeting at which 
awards were approved. The factors included: contemporaneous third-party valuations of our common stock; the prices, 
rights, preferences, and privileges of our preferred stock relative to those of our common stock; the prices of preferred 
stock sold by us to third-party investors in arms-length transactions; the prices of common stock sold to third-party 
investors by us and in secondary transactions or repurchased by us in arms-length transactions; the lack of marketability of 
our common stock; our operating and financial results; current business conditions and projections; and the likelihood of 
achieving a liquidity event, such as an initial public offering or sale of our company, given then prevailing market 
conditions. Since our initial public offering, we have used the market closing price for our common stock as reported on 
the Nasdaq to determine the fair value of our common stock.

•  Expected Volatility:  As we do not have a sufficient trading history for our common stock, the expected stock price 

volatility for our common stock is estimated by taking the average historical price volatility for Etsy and certain industry 
peers based on daily price observations over a period equivalent to the expected term of the stock option grants. Industry 
peers, which we have selected, consist of several public companies in the industry similar in size, stage of life cycle, and 
financial leverage. We intend to continue to consistently apply this process using the same or similar public companies 
until a sufficient amount of historical information regarding the volatility of our own common stock share price becomes 
available, or unless circumstances change such that the identified companies are no longer similar to us, in which case 
more suitable companies whose share prices are publicly available would be used in the calculation.

•  Risk-free Interest Rate:  The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar 

to the expected term of the options for each option group.

•  Expected Term:  The expected term represents the period that our stock-based awards are expected to be outstanding. We 
base our expected term for awards issued to employees or members of our Board of Directors on the simplified method, 
which represents the average period from vesting to the expiration of the stock option. 

87

•  Expected Dividend Yield:  We have never declared or paid any cash dividends to common stockholders and do not 

presently plan to pay cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero.

In determining the fair value of stock options granted, the following weighted-average assumptions were used in the Black-
Scholes option-pricing model for awards granted in the periods indicated:

Expected volatility

Risk-free interest rate

Expected term (in years)

Dividend rate

Income Taxes

Year Ended
December 31,

2019

2018

2017

39.1% - 39.5%

38.6% - 47.8%

41.7% - 44.2%

1.6% - 2.5%

2.6% - 2.9%

1.9% - 2.2%

5.5 - 6.2

—%

5.5 - 6.3

—%

5.5 - 6.3

—%

We account for the income tax benefit based on income before income taxes using the asset and liability method. Under this 
method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the 
financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences 
are expected to settle. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or 
expense in the period that includes the enactment date. We assess the need for a valuation allowance on a quarterly basis to 
reduce deferred tax assets to the amounts we expect to be realized.

On December 22, 2017 the TCJA was signed into law. The TCJA requires us to make an accounting policy election of either (1) 
treating taxes due on future U.S. inclusions in taxable income related to Global Intangible Low Taxed Income (“GILTI”) as a 
current period expense when incurred (the “period cost method”) or (2) factoring such amounts into our measurement of our 
deferred taxes (the “deferred method”). We recorded tax expense related to GILTI in our effective tax rate beginning in 2018, 
and have elected to treat taxes due on future U.S. inclusions in taxable income related to GILTI using the period cost method.

We account for uncertainty in income taxes using a recognition threshold and a measurement attribute for the financial 
statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For benefits to be 
recognized, a tax position must be more likely than not to be sustained upon examination by the taxing authorities. The amount 
recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate 
audit settlement. 

We recognize interest and penalties, if any, associated with tax matters as part of the income tax provision and include accrued 
interest and penalties with the related tax liability in our Consolidated Balance Sheets.

Business Combinations, Intangible Assets and Goodwill

In accordance with the guidance for business combinations, we determine whether a transaction is a business combination, 
which requires that the assets acquired and liabilities assumed constitute a business. The Company accounts for business 
combinations using the acquisition method of accounting. If the assets acquired are not a business, we account for the 
transaction as an asset acquisition. Under both methods, the purchase price is allocated to the assets acquired and liabilities 
assumed using the fair values determined by management as of the acquisition date. The results of businesses acquired in a 
business combination are included in the Company’s Consolidated Financial Statements from the date of acquisition. 

Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and 
estimates, including estimates of future revenue and adjusted earnings before interest and taxes and discount rates. Our 
estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and 
unpredictable and, as a result, actual results may differ materially from estimates. Our estimates associated with the accounting 
for business combinations may change as additional information becomes available regarding the assets acquired and liabilities 
assumed. Any change in facts and circumstances that existed as of the acquisition date and impacts our preliminary estimates is 
recorded to goodwill if identified within the measurement period. Subsequent to the measurement period or our final 
determination of fair value of assets and liabilities whichever is earlier the adjustments will affect our earnings.

Acquisition-related expenses incurred by the Company in a business combination are not included as a component of 
consideration transferred, but are accounted for as an expense in the period in which the costs are incurred.

Goodwill represents the excess of the aggregate fair value of the consideration transferred in a business combination over the 
fair value of the assets acquired, net of liabilities assumed. Goodwill is not amortized, but is subject to an annual impairment 

88

 
 
test. Management has determined that we have two operating segments, which qualify for aggregation as one reportable 
segment, for purposes of allocating resources and evaluating financial performance. As a result, we have determined we have 
two reporting units. We perform our annual goodwill impairment test during the fourth quarter or more frequently if events or 
changes in circumstances indicate that the goodwill may be impaired. As a result of the annual goodwill impairment test of the 
two reporting units conducted in the fourth quarter of 2019, no goodwill impairment was recognized.

We have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a 
determination that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If, after 
assessing the totality of events or circumstances, we determine it is not more likely than not that the fair value of the reporting 
unit is less than its carrying amount, then additional impairment testing is not required. However, if we conclude otherwise, we 
are then required to perform a quantitative assessment for impairment. 

The quantitative assessment involves comparing the estimated fair value of each of the reporting units with its respective book 
value, including goodwill. If we determine that the estimated fair value exceeds book value, goodwill is considered not to be 
impaired and no additional steps are necessary. If, however, we determine that the book value of a reporting unit exceeds the 
fair value, we would recognize an impairment loss in an amount equal to the excess, not to exceed the total amount of goodwill 
allocated to that reporting unit.

Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the 
unique facts and circumstances present. Operating leases are included in other assets, other current liabilities, and other 
liabilities on the Company’s Consolidated Balance Sheets. Finance leases are included in property and equipment, net, finance 
lease obligations, current, and finance lease obligations, net of current portion on the Company’s Consolidated Balance Sheets.

Leases with a term greater than one year are recognized on the Consolidated Balance Sheet as right-of-use (“ROU”) assets, 
lease obligations and, if applicable, long-term lease obligations in the line items cited above. The Company has elected not to 
recognize leases with terms of one year or less on the Consolidated Balance Sheet. Lease obligations and their corresponding 
ROU assets are recorded based on the present value of lease payments over the expected lease term. As the interest rate implicit 
in lease contracts is typically not readily determinable, the Company utilizes the appropriate incremental borrowing rate, which 
is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar 
economic environment. Certain adjustments to the ROU asset may be required for items such as initial direct costs paid or 
incentives received. The lease term may include options to extend or terminate the lease when it is reasonably certain that the 
Company will exercise that option. 

The components of a lease should be split into three categories: lease components, including land, building, or other similar 
components; non-lease components, including common area maintenance, maintenance, consumables, or other similar 
components; and non-components, including property taxes, insurance, or other similar components. However, the Company 
has elected to combine lease and non-lease components as a single component. The lease expense is recognized over the 
expected term on a straight-line basis.

Fair Value of Financial Instruments

In accounting for the issuance of the 2019 and 2018 Notes discussed in “Liquidity and Capital Resources—Sources of 
Liquidity,” we used estimates and assumptions to calculate the carrying amounts of the liability and equity components by 
measuring the fair value of similar securities. See “Note 13—Debt” in the Notes to Consolidated Financial Statements for 
additional information.

Recent Accounting Pronouncements

For information regarding our recently issued accounting pronouncements and recently adopted accounting pronouncements, 
please see “Note 1—Basis of Presentation and Summary of Significant Accounting Policies” in the Notes to Consolidated 
Financial Statements.

89

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We have operations both within the United States and internationally and we are exposed to market risks in the ordinary course 
of our business, including the effects of interest rate changes and foreign currency fluctuations. Information relating to 
quantitative and qualitative disclosures about these market risks is described below.

Interest Rate Sensitivity

As of December 31, 2019 and December 31, 2018, the majority of our cash and cash equivalents and short- and long-term 
investments were held in cash deposits, money market funds, certificates of deposit, fixed-income funds, and U.S. Government 
and agency securities. The fair value of our cash, cash equivalents, and short- and long-term investments would not be 
significantly affected by either an increase or decrease in interest rates due mainly to the relatively short maturities of these 
instruments. The majority of our current interest expense is attributable to debt discount related to our Notes and interest 
associated with our Brooklyn headquarters lease, which is accounted for as a finance lease, and is not impacted by external 
factors on interest rates. A 10% increase or decrease in our current interest rate would not have a significant impact on our 
interest expense.

Currency Risk

We operate global marketplaces. Our revenues are denominated in the currencies in which the seller is paid, and our operating 
expenses are denominated in the currencies of the countries in which our operations are located. In addition, in the fourth 
quarter of 2018, Etsy launched a redesigned payment account and began processing seller charges in our seller’s ledger 
currencies. Prior to this launch, only Etsy Payments revenues were processed in our seller’s ledger currencies. As a result of 
transacting business in multiple foreign currencies, primarily the Euro and Pound Sterling, we are subject to the risk of 
fluctuations in foreign currency exchange rates against the U.S. dollar. 

In the year ended December 31, 2019, approximately 19% of GMS was from goods that were not listed in U.S. dollars and, 
therefore, subject to currency exchange fluctuations. On a currency-neutral basis, GMS growth for the year ended December 
31, 2019 would have been 27.5%, or approximately 100 basis points higher than the reported 26.5% growth. On a currency-
neutral basis, GMS growth for the three months ended December 31, 2019 would have been 33.0% compared with the reported 
32.8% growth.

In the year ended December 31, 2018, approximately 17% of GMS was from goods that were not listed in U.S. dollars and, 
therefore, subject to currency exchange fluctuations. On a currency-neutral basis, GMS growth for the year ended December 
31, 2018 would have been 20.4%, or approximately 40 basis points lower than the reported 20.8% growth.

On January 1, 2015, we implemented a revised corporate structure to more closely align our structure with our global 
operations and future expansion plans outside of the United States, which resulted in a U.S. dollar-denominated intercompany 
debt on a Euro-denominated ledger that was subject to continued currency exchange rate risk through the middle of the fourth 
quarter of 2017. In the fourth quarter of 2017, we established a new legal entity based in Ireland with a U.S. dollar functional 
currency to help mitigate the currency rate risk on our intercompany debt.

For the purpose of analyzing foreign currency exchange risk, we considered the historical trends in foreign currency exchange 
rates and determined that it was reasonably possible that adverse changes in exchange rates of 10% could be experienced in the 
near term. An adverse 10% foreign currency exchange rate would have resulted in a decrease to revenue of $21.0 million or 
approximately 2.6% of total revenue and a currency exchange loss of $11.5 million for the year ended December 31, 2019. This 
compares to a revenue decrease of $7.5 million or approximately 1.2% of total revenue and currency exchange loss of $17.0 
million based on the same analysis performed for the year ended December 31, 2018.

90

Item 8. Financial Statements and Supplementary Data.

The supplementary financial information required by this item is included in “Management’s Discussion and Analysis of 
Financial Condition and Results of Operations.”

Etsy, Inc.

Index to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2019 and 2018

Consolidated Statements of Operations for the years ended December 31, 2019, 2018, and 2017

Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018,
and 2017

Consolidated Statement of Changes in Stockholders' Equity for the years ended December 31, 2019,
2018, and 2017
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018, and 2017
Notes to Consolidated Financial Statements

92
95

96

97

98
99
101

91

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Etsy, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Etsy, Inc. and its subsidiaries (the “Company”) as of 
December 31, 2019 and 2018, and the related consolidated statements of operations, comprehensive income, changes in 
stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, including the related 
notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control 
over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework 
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial 
position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the 
three years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the United 
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over 
financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) 
issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts 
for leases in 2019.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal 
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included 
in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to 
express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial 
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight 
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. 
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the 
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, 
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material 
respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement 
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. 
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated 
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by 
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal 
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the 
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based 
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the 
circumstances. We believe that our audits provide a reasonable basis for our opinions.

92

Management has excluded Reverb Holdings, Inc. from its assessment of internal control over financial reporting as of 
December 31, 2019 because it was acquired by the Company in a purchase business combination during 2019. We have also 
excluded Reverb Holdings, Inc. from our audit of internal control over financial reporting. Reverb Holdings, Inc. is a wholly-
owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal 
control over financial reporting represent 2% and 2%, respectively, of the related consolidated financial statement amounts as 
of and for the year ended December 31, 2019.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the 
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally 
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures 
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and 
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to 
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and 
expenditures of the company are being made only in accordance with authorizations of management and directors of the 
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or 
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate 
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial 
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or 
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or 
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated 
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate 
opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Customer Relationships and Trademark Intangible Assets Acquired in the Reverb Holdings Inc. Acquisition

As described in Notes 1 and 5 to the consolidated financial statements, the Company acquired all of the outstanding capital 
stock of Reverb Holdings, Inc. for total cash consideration of $270.4 million, net of cash acquired, which resulted in $172.9 
million of customer relationships and trademark intangible assets being recorded. Determining the fair value of assets acquired 
and liabilities assumed requires management to use significant judgment and estimates, including estimates of future revenue, 
adjusted earnings before interest and tax, and discount rates.

The principal considerations for our determination that performing procedures relating to the valuation of customer 
relationships and trademark intangible assets acquired in the Reverb Holdings, Inc. acquisition is a critical audit matter are that 
there was significant judgment by management when developing the fair value estimates of the intangible assets. This in turn 
led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s cash flow 
projections and significant assumptions, including estimates of future revenue.

93

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall 
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to 
acquisition accounting, including controls over management’s valuation of the customer relationships and trademark intangible 
assets and controls over development of management’s cash flow projections and assumptions related to the valuation of these 
intangible assets, including estimates of future revenue. These procedures also included, among others (i) reading the purchase 
agreement, (ii) testing management’s process for developing the fair value estimates of intangible assets, and (iii) evaluating the 
appropriateness of the discounted cash flow models, testing the completeness and accuracy of underlying data used in the 
models, and evaluating the significant assumptions used by management, including the estimates of future revenue. Evaluating 
the reasonableness of the estimates of future revenue involved considering the past performance of the acquired business, the 
past performance of the Company, and relevant industry data.

/s/ PricewaterhouseCoopers LLP
New York, New York
February 26, 2020 

We have served as the Company’s auditor since 2012.

94

Etsy, Inc.

Consolidated Balance Sheets 
(In thousands, except share and per share amounts)

ASSETS

Current assets:

Cash and cash equivalents

Short-term investments

Accounts receivable, net

Prepaid and other current assets

Funds receivable and seller accounts

Total current assets

Restricted cash

Property and equipment, net

Goodwill

Intangible assets, net

Deferred tax assets

Long-term investments

Other assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Finance lease obligations—current

Funds payable and amounts due to sellers

Deferred revenue

Other current liabilities

Total current liabilities

Finance lease obligations—net of current portion

Deferred tax liabilities

Facility financing obligation

Long-term debt, net

Other liabilities

Total liabilities

Commitments and contingencies (Note 14)

Stockholders’ equity:

Common stock ($0.001 par value, 1,400,000,000 shares authorized as of December 31,
2019 and 2018; 118,342,772 and 119,771,702 shares issued and outstanding as of
December 31, 2019 and 2018, respectively)

Preferred stock ($0.001 par value, 25,000,000 shares authorized as of December 31, 2019
and 2018)

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive loss

Total stockholders’ equity

Total liabilities and stockholders’ equity

As of December 31,

2019

2018

$

443,293

$

373,959

15,386

38,614

49,786

921,038

5,341

144,864

138,731

199,236

14,257

89,343

29,542

366,985

257,302

12,244

22,686

21,072

680,289

5,341

120,179

37,482

34,589

23,464

—

507

1,542,352

$

901,851

$

$

26,324

$

88,345

8,275

49,786

7,617

8,181

188,528

53,611

64,497

—

785,126

43,956

1,135,718

119

—

642,628

(227,414)

(8,699)

406,634

$

1,542,352

$

26,545

49,158

3,884

21,072

7,478

3,925

112,062

2,095

30,455

59,991

276,486

19,864

500,953

120

—

562,033

(153,442)

(7,813)

400,898

901,851

The accompanying notes are an integral part of these Consolidated Financial Statements

95

 
Etsy, Inc.

Consolidated Statements of Operations 
(In thousands, except share and per share amounts)

Revenue

Cost of revenue

Gross profit

Operating expenses:

Marketing

Product development

General and administrative

Asset impairment charges

Total operating expenses

Income from operations

Other (expense) income:

Interest expense

Interest and other income

Foreign exchange gain (loss)

Total other (expense) income

Income before income taxes

Benefit for income taxes

Net income

Net income per share attributable to common stockholders:

Basic

Diluted

Weighted average common shares outstanding:

Basic

Diluted

Year Ended  
December 31,

2019

2018

2017

$

818,379

$

603,693

$

271,036

547,343

215,570

121,878

121,134

—

458,582

88,761

(24,320)

13,199

3,006

(8,115)

80,646

15,248

190,762

412,931

158,013

97,249

82,883

—

338,145

74,786

(22,178)

8,957

(6,487)

(19,708)

55,078

22,413

95,894

$

77,491

$

441,231

150,986

290,245

109,085

74,616

91,486

3,162

278,349

11,896

(11,130)

2,394

29,105

20,369

32,265

49,535

81,800

$

$

$

0.80

0.76

$

$

0.64

0.61

$

$

0.69

0.68

119,665,248

120,146,076

118,538,687

125,720,073

127,084,785

122,267,673

The accompanying notes are an integral part of these Consolidated Financial Statements

96

 
 
 
 
Etsy, Inc.

Consolidated Statements of Comprehensive Income 
(In thousands)

Net income

Other comprehensive (loss) income:

Cumulative translation adjustment

Unrealized gains (losses) on marketable securities, net of tax expense (benefit) of
$65, $0, and ($15), respectively

Total other comprehensive loss

Comprehensive income

Year Ended  
December 31,

2019

2018

2017

$

95,894

$

77,491

$

81,800

(1,078)

(1,399)

(24,898)

192

(886)

(35)

(1,434)

$

95,008

$

76,057

$

47

(24,851)

56,949

The accompanying notes are an integral part of these Consolidated Financial Statements

97

 
 
 
l
a
t
o
T

d
e
t
a
l
u
m
u
c
c
A

r
e
h
t
O

e
v
i
s
n
e
h
e
r
p
m
o
C

)
s
s
o
L
(

e
m
o
c
n

I

d
e
t
a
l
u
m
u
c
c
A

t
i
c
i
f
e
D

l
a
n
o
i
t
i
d
d
A

n
i
-
d
i
a
P

l
a
t
i
p
a
C

k
c
o
t
S
n
o
m
m
o
C

t
n
u
o
m
A

s
e
r
a
h
S

y
t
i
u
q
E
’
s
r
e
d
l
o
h
k
c
o
t
S
n
i

s
e
g
n
a
h
C

f
o

s
t
n
e
m
e
t
a
t

S
d
e
t
a
d
i
l
o
s
n
o
C

)
s
t
n
u
o
m
a
e
r
a
h
s

t
p
e
c
x
e

,
s
d
n
a
s
u
o
h
t
n
I
(

.
c
n
I

,
y
s
t
E

7
5
7
,
4
4
3

)
4
6
3
,
1
5
(

4
9
5
,
6
2

8
3
8
,
3
3

)
7
1
4
,
6
(

)
1
0
3
,
0
1
(

8
3
8
,
2

)
1
5
8
,
4
2
(

0
0
8
,
1
8

4
9
8
,
6
9
3

3
8
4
,
0
4

3
5
2
,
8
1

3
2
3
,
3
5

)
0
0
4
,
5
2
(

)
5
6
0
,
4
2
(

)
7
4
6
,
4
3
1
(

)
4
3
4
,
1
(

1
9
4
,
7
7

8
9
8
,
0
0
4

6
1
1
,
7

7
9
6
,
5
4

1
9
7
,
9

0
8
9
,
5
1
1

)
4
2
3
,
8
5
(

)
7
4
5
,
2
3
(

)
5
8
9
,
6
7
1
(

)
6
8
8
(

4
9
8
,
5
9

4
3
6
,
6
0
4

$

2
7
4
,
8
1

$

)
1
4
3
,
6
1
1
(

$

0
1
5
,
2
4
4

$

6
1
1

$

9
3
0
,
3
7
9
,
5
1
1

6
1
0
2

,
1
3

r
e
b
m
e
c
e
D

f
o

s
a

e
c
n
a
a
B

l

—

—

—

—

—

—

)
1
5
8
,
4
2
(

—

)
9
7
3
,
6
(

—

—

—

—

—

—

—

)
4
3
4
,
1
(

)
3
1
8
,
7
(

—

—

—

—

—

—

—

—

)
6
8
8
(

—

—

—

)
9
4
4
,
1
5
(

)
0
0
3
,
0
1
(

—

—

0
0
8
,
1
8

)
0
9
2
,
6
9
(

—

—

—

—

—

)
3
4
6
,
4
3
1
(

—

1
9
4
,
7
7

6
1
1
,
7

)
2
4
4
,
3
5
1
(

—

—

—

—

—

)
2
8
9
,
6
7
1
(

—

4
9
8
,
5
9

5
8

4
9
5
,
6
2

2
3
8
,
3
3

)
8
1
4
,
6
(

—

8
3
8
,
2

—

—

—

—

6

1

)
1
(

—

—

—

—

—

—

—

—

7
6
1
,
2
2
6

)
1
3
2
,
6
8
5
(

3
6
2
,
0
6
7
,
5

3
8
4
,
0
4

2
5
2
,
8
1

3
2
3
,
3
5

)
0
0
4
,
5
2
(

)
6
6
0
,
4
2
(

—

—

—

—

1

—

—

1

)
4
(

—

—

—

—

—

—

—

9
7
7
,
8
8
5
,
1

2
0
1
,
0
6
8

)
7
1
4
,
6
4
4
,
4
(

3
3
0
,
2
6
5

0
2
1

2
0
7
,
1
7
7
,
9
1
1

1
4
4
,
9
9
4

2
2
1

8
3
2
,
9
6
7
,
1
2
1

—

7
9
6
,
5
4

0
9
7
,
9

0
8
9
,
5
1
1

)
4
2
3
,
8
5
(

)
8
4
5
,
2
3
(

—

—

—

—

—

1

—

—

1

)
3
(

—

—

—

—

—

—

5
3
8
,
0
4
8

—

—

2
4
6
,
2
3
8

)
7
0
4
,
2
0
1
,
3
(

$

)
9
9
6
,
8
(

$

)
4
1
4
,
7
2
2
(

$

8
2
6
,
2
4
6

$

9
1
1

$

2
7
7
,
2
4
3
,
8
1
1

6
1
-
6
1
0
2
U
S
A

f
o

n
o
i
t
p
o
d
a

e
h
t

o
t

d
e
t
a
e
r

l

t
n
e
m
t
s
u
d
a

j

t
c
e
f
f
e

l

e
v
i
t
a
u
m
u
C

l

d
e
h
h
t
i

w
s
e
r
a
h
s

f
o

t
e
n

,
s
t
i
n
u

k
c
o
t
s

d
e
t
c
i
r
t
s
e
r

f
o

g
n
i
t
s
e
V

e
s
a
h
c
r
u
p
e
r

k
c
o
S

t

n
o
i
t
a
s
n
e
p
m
o
c

d
e
s
a
b
-
k
c
o
t
S

s
n
o

i
t
p
o

d
e
t
s
e
v

f
o

i

e
s
c
r
e
x
E

g
n
i
t
s
e
v

n
o
p
u

s
e
r
a
h
s

d
e
t
c
i
r
t
s
e
r

d
e
i
f
i
s
s
a
c
-
y
t
i
l
i

l

b
a

i
l

f
o

i

n
o
s
r
e
v
n
o
C

s
e
x
a
t

d
n
a

s
t
s
o
c

e
c
n
a
u
s
s

i

f
o

t
e
n

,
s
e
t
o
n

i

r
o
n
e
s

l

e
b
i
t
r
e
v
n
o
c

f
o

e
c
n
a
u
s
s
I

l

d
e
h
h
t
i

w
s
e
r
a
h
s

f
o

t
e
n

,
s
t
i
n
u

k
c
o
t
s

d
e
t
c
i
r
t
s
e
r

f
o

g
n
i
t
s
e
V

s
e
x
a
t

f
o

t
e
n

,
l
l

a
c

d
e
p
p
a
c

f
o

e
s
a
h
c
r
u
P

s
s
o

l

i

e
v
s
n
e
h
e
r
p
m
o
c

r
e
h
O

t

e
m
o
c
n

i

t
e
N

7
1
0
2

,
1
3

r
e
b
m
e
c
e
D

f
o

s
a

e
c
n
a
a
B

l

n
o
i
t
a
s
n
e
p
m
o
c

d
e
s
a
b
-
k
c
o
t
S

s
n
o
i
t
p
o

d
e
t
s
e
v

f
o

i

e
s
c
r
e
x
E

d
r
a
d
n
a
t
s

i

g
n
s
a
e

l

e
h
t

f
o

n
o
i
t
p
o
d
a

e
h
t

o
t

d
e
t
a
e
r

l

t
n
e
m
t
s
u
d
a

j

t
c
e
f
f
e

l

e
v
i
t
a
u
m
u
C

n
o
i
t
a
s
n
e
p
m
o
c

d
e
s
a
b
-
k
c
o
t
S

s
n
o

i
t
p
o

d
e
t
s
e
v

f
o

i

e
s
c
r
e
x
E

s
s
o

l

i

e
v
s
n
e
h
e
r
p
m
o
c

r
e
h
O

t

e
s
a
h
c
r
u
p
e
r

k
c
o
S

t

e
m
o
c
n

i

t
e
N

8
1
0
2

,
1
3

r
e
b
m
e
c
e
D

f
o

s
a

e
c
n
a
a
B

l

s
e
x
a
t

d
n
a

s
t
s
o
c

e
c
n
a
u
s
s

i

f
o

t
e
n

,
s
e
t
o
n

i

r
o
n
e
s

l

e
b
i
t
r
e
v
n
o
c

f
o

e
c
n
a
u
s
s
I

l

d
e
h
h
t
i

w
s
e
r
a
h
s

f
o

t
e
n

,
s
t
i
n
u

k
c
o
t
s

d
e
t
c
i
r
t
s
e
r

f
o

g
n
i
t
s
e
V

s
e
x
a
t

f
o

t
e
n

,
l
l

a
c

d
e
p
p
a
c

f
o

e
s
a
h
c
r
u
P

s
s
o

l

i

e
v
s
n
e
h
e
r
p
m
o
c

r
e
h
O

t

e
s
a
h
c
r
u
p
e
r

k
c
o
S

t

e
m
o
c
n

i

t
e
N

9
1
0
2

,
1
3

r
e
b
m
e
c
e
D

f
o

s
a

e
c
n
a
a
B

l

s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
i

F
d
e
t
a
d
i
l
o
s
n
o
C
e
s
e
h
t

f
o

t
r
a
p

l
a
r
g
e
t
n
i

n
a

e
r
a

s
e
t
o
n

g
n
i
y
n
a
p
m
o
c
c
a

e
h
T

8
9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Etsy, Inc.

Consolidated Statements of Cash Flows
(In thousands)

Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities:

Stock-based compensation expense
Depreciation and amortization expense
Bad debt expense
Foreign exchange (gain) loss
Amortization of debt issuance costs
Non-cash interest expense
Interest (income) expense on marketable securities
Loss on disposal of assets
Asset impairment charges
Deferred income taxes
Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable
Funds receivable and seller accounts
Prepaid expenses and other current assets
Other assets
Accounts payable
Accrued and other current liabilities
Funds payable and amounts due to sellers
Deferred revenue
Other liabilities

Net cash provided by operating activities

Cash flows from investing activities

Cash paid for asset acquisition and intangible assets
Acquisition of businesses, net of cash acquired
Purchases of property and equipment
Development of internal-use software
Purchases of marketable securities
Sales of marketable securities

Net cash (used in) provided by investing activities

Cash flows from financing activities

Payment of tax obligations on vested equity awards
Repurchase of stock
Proceeds from exercise of stock options
Proceeds from issuance of convertible senior notes
Payment of debt issuance costs
Purchase of capped call
Payments on finance lease obligations
Payments on facility financing obligation
Other financing, net

Net cash provided by financing activities

Effect of exchange rate changes on cash
Net increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period

$

99

Year Ended  
December 31,

2019

2018

2017

$

95,894

$

77,491

$

81,800

44,395
48,031
10,963
(5,708)
2,006
19,108
(4,182)
1,667
—
(15,248)

(12,656)
(23,177)
(14,156)
4,045
(953)
37,410
23,177
191
(3,887)
206,920

(1,963)
(270,409)
(7,528)
(7,750)
(661,821)
461,098
(488,373)

(32,547)
(176,985)
9,791
650,000
(11,904)
(76,180)
(10,833)
—
8,265
359,607
(1,846)
76,308
372,326
448,634

$

38,231
26,742
4,124
5,997
1,191
10,968
(2,887)
136
—
(22,414)

17,215
23,436
(4,785)
43
13,364
23,079
(23,436)
1,331
9,099
198,925

(35,494)
—
(1,019)
(19,537)
(514,286)
284,943
(285,393)

(24,065)
(134,647)
18,253
345,000
(9,962)
(34,224)
(6,057)
(10,164)
(128)
144,006
(5,995)
51,543
320,783
372,326

$

26,559
27,197
2,497
(27,424)
463
3,117
426
520
3,162
(49,535)

(8,826)
(13,477)
3,024
(28)
2,837
(2,659)
13,477
434
5,537
69,101

—
—
(3,948)
(9,208)
(62,348)
137,340
61,836

(6,417)
(10,301)
33,838
—
—
—
(7,798)
(5,883)
3,116
6,555
(3,642)
133,850
186,933
320,783

 
 
Etsy, Inc.

Consolidated Statements of Cash Flows
(In thousands)

Supplemental cash flow disclosures:

Cash paid for interest

Cash paid for income taxes

Supplemental non-cash disclosures:

Stock-based compensation capitalized in development of capitalized software

Additions to development of internal-use software and property and equipment included
in accounts payable and accrued expenses

Right-of-assets obtained in exchange for new lease liabilities:

Finance Leases

Year Ended 
 December 31,

2019

2018

2017

$

$

$

$

$

3,206

2,084

1,302

1,148

$

$

$

$

10,002

966

2,252

1,211

$

$

$

$

7,555

1,003

807

956

849

$

2,122

$

5,586

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated 
Balance Sheets that sum to the total of the same such amounts shown above:

Beginning balance:

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents, and restricted cash

Ending balance:

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents, and restricted cash

As of December 31,

2019

2018

2017

$

$

$

$

366,985

$

315,442

5,341

5,341

372,326

$

320,783

443,293

$

366,985

5,341

5,341

448,634

$

372,326

$

$

$

$

181,592

5,341

186,933

315,442

5,341

320,783

The accompanying notes are an integral part of these Consolidated Financial Statements

100

 
 
Etsy, Inc.

Notes to Consolidated Financial Statements 

Note 1—Basis of Presentation and Summary of Significant Accounting Policies 

Description of Business

Etsy, Inc. (the “Company” or “Etsy”) was incorporated in Delaware in February 2006. Etsy is the global marketplace for unique 
and creative goods. The Company generates revenue primarily from transaction and listing fees, payments processing fees, 
advertising services, and shipping label sales.

Basis of Consolidation

The Consolidated Financial Statements include the accounts of Etsy and its wholly-owned subsidiaries. All intercompany 
balances and transactions have been eliminated in consolidation. On August 15, 2019, Etsy acquired all of the issued and 
outstanding capital stock of Reverb Holdings, Inc. (“Reverb”). The financial results of Reverb have been included in Etsy’s 
Consolidated Financial Statements from the date of acquisition. See “Note 5—Business Combinations.”

Reclassifications

Certain items in the prior years’ Consolidated Financial Statements have been reclassified to conform to the current year 
presentation reflected in the Consolidated Financial Statements. Specifically, the Company reclassified $4.0 million and $3.3 
million previously included in Other revenue to Marketplace revenue (see “Note 2—Revenue”) for the years ended 
December 31, 2018 and 2017, respectively, to conform to the current year presentation.

Use of Estimates

The preparation of the Company’s Consolidated Financial Statements in conformity with accounting principles generally 
accepted in the United States of America (“GAAP”) requires management to make estimates and judgments that affect the 
reported amounts of assets and liabilities and disclosure of contingent assets, liabilities, and equity at the date of the 
Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. The 
accounting estimates that require management’s most difficult and subjective judgments include: leases, including determining 
the incremental borrowing rate; income taxes, including the accounting for uncertain tax positions; purchase price allocations 
for business combinations, valuation of the acquired intangibles purchased in a business combination; valuation of goodwill and 
intangible assets; stock-based compensation; and fair value of financial instruments. The Company evaluates its estimates and 
judgments on an ongoing basis and revises them when necessary. Actual results may differ from the original or revised 
estimates.

Revenue Recognition

The Company’s revenue is diversified; generated from a mix of marketplace activities and other optional services to help sellers 
to generate more sales and scale their businesses. Revenues are recognized as the Company transfers control of promised goods 
or services to sellers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those 
goods or services. The Company evaluates whether it is appropriate to recognize revenue on a gross or net basis based upon its 
evaluation of whether the Company obtains control of the specified goods or services by considering if it is primarily 
responsible for fulfillment of the promise, has inventory risk, and has the latitude in establishing pricing and selecting suppliers, 
among other factors. Based on its evaluation of these factors, revenue is recorded either gross or net of costs associated with the 
transaction. With the exception of shipping labels, the Company’s revenues are recognized on a gross basis. Sales and usage-
based taxes are excluded from revenues.

Etsy Marketplace revenue:  As members of the Etsy marketplace, Etsy sellers receive the benefit of marketplace activities, 
including listing items for sale, completing sales transactions, and payments processing, which represents a single stand-ready 
performance obligation. Etsy sellers pay a fixed listing fee of $0.20 for each item listed on Etsy.com for a period of four months 
or, if earlier, until a sale occurs. Variable fees include the 5% transaction fee that an Etsy seller pays for each completed 
transaction, inclusive of shipping fees charged, and Etsy Payments fees for processing payments, including foreign currency 
payments. On July 16, 2018, the Company increased the seller transaction fee from 3.5% to 5% of each completed transaction, 

101

Etsy, Inc.
Notes to Consolidated Financial Statements

and now applies it to the cost of shipping in addition to the cost of the item. Etsy Payments processing fees vary between 3.0% 
to 4.5% of an item’s total sale price, including shipping, plus a flat fee per order, depending on the country in which a seller’s 
bank account is located. The Company earns additional fees on transactions in which currency conversions are performed.

The listing fee is recognized ratably over a four-month listing period, unless the item is sold or the seller re-lists it, at which 
time any remaining listing fee is recognized. The transaction fee and Etsy Payments fees are recognized when the 
corresponding transaction is consummated. Listing fees are nonrefundable while transaction fees and Etsy Payments fees are 
recorded net of refunds.

Marketplace revenue also includes revenue generated through our commercial partnerships, which was recorded in its own 
Other revenue line prior to the fourth quarter of 2019. 

Reverb Marketplace revenue: The Reverb seller transaction fee is a variable fee, which is 3.5% of each completed transaction, 
including both the cost of the item and the shipping. There are no Reverb listing fees. Variable fees also include payments fees 
for processing payments, including foreign currency payments. Payments processing fees vary between 2.5% - 2.7% of an 
item’s total sale price, including shipping, plus a flat fee per order, depending on the currency in which a listing is denominated. 

Etsy Services revenue: Services revenue is derived from optional services offered to Etsy sellers, which primarily include 
advertising services and Etsy Shipping Labels. 

Each service below represents an individual obligation that the Company must perform when an Etsy seller chooses to use the 
service.

•  Revenue from Promoted Listings, Etsy.com’s on-site advertising service, consists of cost-per-click fees an Etsy seller pays 

for prominent placement of the seller’s listings in search results in the Etsy.com marketplace. Promoted Listings fees are 
based on an auction system, which utilizes the budget that each Etsy seller sets when using Promoted Listings to determine 
the cost-per-click fee. Promoted Listing fees are nonrefundable and are charged to a seller’s Etsy bill when the Promoted 
Listing is clicked, at which time revenue is recognized. In the third quarter of 2019, Etsy streamlined Promoted Listings 
and Google Shopping, an off-site marketing tool for Etsy sellers, into one unified ad platform called Etsy Ads, where Etsy 
sellers can set a budget, which allows Etsy to allocate that budget between channels, targeting optimal return on seller 
spend. Due to this new offering, Etsy no longer offered its Promoted Listings service as a standalone advertising service 
after September 30, 2019. Revenue from Etsy Ads consists of cost-per-click fees, which are nonrefundable and are charged 
to a seller’s Etsy bill when the ad is clicked, at which time revenue is recognized. The revenue the Company recognizes 
related to Etsy Ads is recorded on a gross basis in Services revenue with an offsetting expense recorded in cost of revenue.

•  Revenue from Etsy Shipping Labels consists of fees an Etsy seller pays the Company when she purchases shipping labels 
through its platform, net of the cost the Company incurs in purchasing those shipping labels. The Company provides its 
sellers access to purchase shipping labels from the United States Postal Service, FedEx, Canada Post, Royal Mail, and DAI 
Post at discounted pricing due to the volume of purchases through its platform. The Company recognizes Etsy Shipping 
Label revenue when an Etsy seller purchases a shipping label. The Company recognizes Etsy Shipping Label revenue on a 
net basis as it is an agent in this arrangement and does not take control of shipping labels prior to transferring the labels to 
the Etsy Seller. Etsy Shipping Label revenue is recorded net of refunds.

Reverb Services revenue: Reverb has its own on-site advertising service called Bump advertising. Reverb sellers have the 
ability to determine their own ad rate as a percentage of their item’s final sale price. Revenue from Bump advertising is 
recognized at the time the item is sold. Reverb also provides its sellers access to purchase shipping labels at discounted pricing 
due to the volume of purchases through its platform. Revenue from shipping labels consists of fees a Reverb seller pays when 
they purchase shipping labels directly through the Reverb platform, net of the cost we incur in purchasing those shipping labels. 
Reverb recognizes shipping label revenue when a Reverb seller purchases a shipping label. Reverb recognizes shipping label 
revenue on a net basis as it is an agent in this arrangement and does not take control of shipping labels prior to transferring the 
labels to the Reverb seller. Shipping label revenue is recorded net of refunds.

102

Etsy, Inc.
Notes to Consolidated Financial Statements

Cost of Revenue

Cost of revenue primarily consists of the cost of interchange and other fees for credit card processing services, credit card 
verification service fees, and credit card chargebacks to support payments revenue, and costs of refunds made to buyers that the 
Company is not able to collect from sellers. Cost of revenue also includes expenses associated with the operation and 
maintenance of the Company’s platform and its data centers, including employee-related costs, hosting and bandwidth costs, 
and depreciation and amortization. With the shift to Etsy Ads in the third quarter of 2019, amounts spent on Google Shopping, 
which were previously recorded on a net basis in Other revenue, are recorded on a gross basis in Services revenue with an 
offsetting expense recorded in cost of revenue. 

Marketing

Marketing expenses largely consist of direct marketing and indirect employee-related expenses to support our marketing 
initiatives. Direct marketing includes digital marketing, brand marketing, television and video, public relations and 
communications, market research, marketing partnerships, and customer relationship management. Digital marketing, also 
referred to as performance marketing, primarily consists of targeted promotional campaigns through electronic channels, such 
as product listing ads, search engine marketing, affiliate programs, display advertising, and social channels, which are focused 
on buyer acquisition and retargeting. Advertising expenses are recognized as incurred, with the exception of certain production 
expenses related to television and display advertising which are deferred until the first time an advertisement airs or is 
published. If such advertising is not expected to occur, costs are expensed immediately. Advertising expenses related to direct 
marketing, included in marketing expenses on the Consolidated Statements of Operations, were $175.2 million, $129.1 million, 
and $78.4 million in the years ended December 31, 2019, 2018, and 2017, respectively. 

Product Development

Product development expenses consist primarily of employee-related expenses for engineering, product management, product 
design, and product research activities. Additional expenses include consulting costs related to the development, quality 
assurance, and testing of new technology and enhancement of our existing technology.

Stock-Based Compensation

The Company accounts for its stock-based compensation awards in accordance with ASC Topic 718—Compensation—Stock 
Compensation (“ASC 718”). Stock options and restricted stock units (“RSUs”) are awarded to employees and members of the 
Company’s Board of Directors and are measured at fair value at each grant date. The Company calculates the fair value of stock 
options on the date of grant using the Black-Scholes option-pricing model and the expense is recognized over the requisite 
service period. Prior to the IPO, the Company utilized equity valuations based on comparable publicly-traded companies, 
discounted free cash flows, an analysis of the Company’s enterprise value, and other factors deemed relevant in estimating the 
fair value of its common stock. Subsequent to the IPO, the Company has used the closing price of its common stock on Nasdaq 
as the fair value of its common stock. The risk-free rate for periods within the contractual life of the option is based on the U.S. 
Treasury yield curve in effect at the time of grant. Expected volatilities are based on implied volatilities from market 
comparisons of Etsy and certain publicly traded companies, and other factors. The expected term of stock options granted has 
been determined using the simplified method, which uses the midpoint between the vesting date and the contractual term. The 
fair value of RSUs is determined based on the closing price of the Company’s common stock on Nasdaq on the grant date. The 
requisite service period for stock options and RSUs is generally four years from the date of grant. The Company recognizes 
forfeitures as they occur.

The Company accounted for stock-based compensation arrangements related to the A Little Market (“ALM”) acquisition in 
restricted shares, subject to a put option that allows the holder of the shares to put the shares back to the Company for cash, as 
liability-classified stock awards. These awards were re-measured at fair value each reporting period, with changes in fair value 
being charged to the Consolidated Statement of Operations. Compensation expense was recognized using a graded vesting 
methodology for each separately vesting tranche as though the award were, in substance, multiple awards. Unless the put option 
was exercised, the restricted shares were to be reclassified from a liability to an equity classified award upon the termination of 
the put option at the vesting of each separate tranche. In 2017, all outstanding restricted shares subject to a put option became 
fully vested and the Company is no longer required to remeasure these awards at fair value going forward. 

103

Etsy, Inc.
Notes to Consolidated Financial Statements

Foreign Currency

The Company has determined that the functional currency for each of its foreign operations is the currency of the primary cash 
flow of the operations, which is generally the local currency in which the operation is located. All assets and liabilities are 
translated into U.S. dollars using exchange rates in effect at the balance sheet date. Revenue and expenses are translated using 
average exchange rates during the period. Foreign currency translation adjustments are reflected in stockholders’ equity as a 
component of other comprehensive income (loss). Transaction gains and losses including intercompany balances denominated 
in a currency other than the functional currency of the entity involved are included in foreign exchange gain (loss) within other 
income (expense) in the Consolidated Statement of Operations.

Income Taxes

The income tax benefit is based on income before income taxes and is accounted for under the asset and liability method. Under 
this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between 
the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the 
differences are expected to settle. The Company recognizes future tax benefits, such as net operating losses and tax credits, to 
the extent that realizing these benefits is considered in its judgment to be more likely than not. The effect on deferred tax assets 
and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. The 
Company regularly reviews the recoverability of its deferred tax assets by considering its historic profitability, projected future 
taxable income, timing of the reversals of existing temporary differences and the feasibility of its tax planning strategies. Where 
appropriate the Company records a valuation allowance against deferred tax assets that are deemed more likely than not to be 
realizable.

On December 22, 2017 the Tax Cuts and Jobs Act of 2017 (the “TCJA”) was signed into law. The TCJA requires the Company 
to make an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to 
Global Intangible Low Taxed Income ("GILTI") as a current period expense when incurred (the “period cost method”) or (2) 
factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). The Company has 
recorded tax expense related to GILTI in its effective tax rate beginning in 2018, and has elected to treat taxes due on future 
U.S. inclusions in taxable income related to GILTI as a current period expense when incurred using the period cost method.

The Company accounts for uncertainty in income taxes using a recognition threshold and a measurement attribute for the 
financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For benefits to 
be recognized, a tax position must be more likely than not to be sustained upon examination by the taxing authorities. The 
amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon 
ultimate audit settlement.

The Company recognizes interest and penalties, if any, associated with income tax matters as part of the income tax provision 
and includes accrued interest and penalties with the related income tax liability in the Consolidated Balance Sheets.

Net Income (Loss) Per Share

Basic net income per share attributable to common stockholders is computed by dividing the net income attributable to 
common stockholders by the weighted-average number of common shares outstanding for the period. Diluted net income per 
share is computed by dividing net income for the period by the weighted-average number of shares of common stock and 
potentially dilutive common stock outstanding during the period. Net income in the diluted net income per share calculation is 
adjusted for income or loss from fair value adjustments on instruments accounted for as liabilities, but which may be settled in 
shares. The dilutive effect of outstanding options and stock-based compensation awards is reflected in diluted net income per 
share by application of the treasury stock and if-converted methods. Since the Company expects to settle in cash the principal 
outstanding under the 0.125% Convertible Senior Notes due 2026 (the “2019 Notes”) (see “Note 13—Debt”), it uses the 
treasury stock method when calculating the potential dilutive effect of the conversion spread on diluted net income per share, if 
applicable. The Company uses the if-converted method when calculating the dilutive effect of the 0% Convertible Senior Notes 
due 2023 (the “2018 Notes”) for the reporting periods starting in the third quarter of 2019, and used the treasury stock method 
for previous reporting periods.

104

Etsy, Inc.
Notes to Consolidated Financial Statements

The calculation of diluted net income (loss) per share excludes all anti-dilutive common shares. For periods in which the 
Company has reported net losses, diluted net loss per share attributable to common stockholders is the same as basic net loss 
per share attributable to common stockholders, because dilutive common shares are not assumed to have been issued if their 
effect is anti-dilutive. 

Segment Data

The Company identifies operating segments as components of an entity for which discrete financial information is available and 
is regularly reviewed by the chief operating decision maker in making decisions regarding resource allocation and performance 
assessment. The Company defines the term “chief operating decision maker” to be its chief executive officer. The Company has 
determined it has two operating segments, Etsy and Reverb, which qualify for aggregation as one reportable segment, for 
purposes of allocating resources and evaluating financial performance.

Cash and Cash Equivalents, and Short- and Long-term Investments

The Company considers all investments with an original maturity of three months or less at time of purchase to be cash 
equivalents. Cash restricted by third parties is not considered cash and cash equivalents. Short-term investments, consisting of 
U.S. Government and agency securities, corporate bonds, commercial paper, and certificates of deposit with original maturities 
of greater than three months but less than one year when purchased, are classified as available-for-sale and are reported at fair 
value using the specific identification method. Long-term investments, consisting of U.S. Government and agency securities, 
corporate bonds, and certificates of deposit with original maturities of greater than twelve months but less than 37 months when 
purchased, are classified as available-for-sale and are reported at fair value using the specific identification method. Unrealized 
gains and losses are excluded from earnings and reported as a component of other comprehensive income (loss), net of related 
estimated income tax provisions or benefits.

The following table provides cash and cash equivalents, and short- and long-term investments within the Consolidated Balance 
Sheets as of the dates indicated (in thousands):

Cash and cash equivalents

Short-term investments

Long-term investments

Total cash, cash equivalents, and short- and long-term investments

Concentration of Credit Risk

As of December 31,

2019

2018

$

$

443,293

$

373,959

89,343

906,595

$

366,985

257,302

—

624,287

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, 
short- and long-term investments, and funds receivable and seller accounts. The Company reduces credit risk by placing its cash 
and cash equivalents with major financial institutions with high credit ratings. At times, to the extent eligible, such amounts 
may exceed federally insured limits. The Company believes that minimal credit risk exists with respect to these investments due 
to the credit ratings of the financial institutions that hold its short- and long-term investments. In addition, funds receivable 
settle relatively quickly, and the Company’s historical experience of losses has not been significant.

Fair Value of Financial Instruments

Management believes that the fair value of financial instruments, consisting of cash and cash equivalents, short- and long-term 
investments, accounts receivable, funds receivable and seller accounts, accounts payable, and funds payable and seller accounts 
approximates carrying value due to the immediate or short-term maturity associated with these instruments.

In accounting for the issuance of the Notes discussed in “Note 13—Debt,” management used estimates and assumptions to 
calculate the carrying amounts of the liability and equity components by measuring the fair value of similar securities.

105

 
Etsy, Inc.
Notes to Consolidated Financial Statements

Accounts Receivable and Allowance for Doubtful Accounts

The Company’s trade accounts receivable are recorded at amounts billed to sellers and are presented on the Consolidated 
Balance Sheets net of the allowance for doubtful accounts. The allowance is determined by a number of factors, including age 
of the receivable, current economic conditions, historical losses, and management’s assessment of the financial condition of 
sellers. Receivables are written off once they are deemed uncollectible. Estimates of uncollectible accounts receivable are 
recorded to general and administrative expense. See “Note 2—Revenue” for additional information on payment terms related to 
the Company’s accounts receivable balances.

The following table summarizes the allowance activity during the periods indicated (in thousands):

Balance as of the beginning of period

Bad debt expense

Write-offs, net of recoveries and other adjustments

Balance as of the end of period

Year Ended  
December 31,

2019

2018

2017

$

$

4,720

$

2,687

$

10,963

(10,650)

4,124

(2,091)

5,033

$

4,720

$

1,999

2,497

(1,809)

2,687

Funds Receivable and Seller Accounts and Funds Payable and Amounts due to Sellers

The Company records funds receivable and seller accounts and funds payable and amounts due to sellers as current assets and 
liabilities, respectively, on the Consolidated Balance Sheets. Funds receivable and seller accounts represent amounts received or 
expected to be received from buyers via third-party credit card processors, which flow through a bank account for payment to 
sellers. This cash and related receivable represent the total amount due to sellers, and as such a liability for the same amount is 
recorded to funds payable and amounts due to sellers.

Property and Equipment

Property and equipment, consisting principally of capitalized website development and internal-use software, building, 
leasehold improvements, and computer equipment, are recorded at cost. Depreciation and amortization begin at the time the 
asset is placed into service and are recognized using the straight-line method in amounts sufficient to relate the cost of 
depreciable and amortizable assets to the Consolidated Statements of Operations over their estimated useful lives. Repairs and 
maintenance are charged to the Consolidated Statements of Operations as incurred. Upon sale or retirement of assets, the cost 
and related accumulated depreciation or amortization are removed from the balance sheet and the resulting gain or loss is 
reflected in the Consolidated Statements of Operations.

When events or changes in circumstances require, the Company assesses the likelihood of recovering the cost of tangible long-
lived assets based on its expectations of future profitability, undiscounted cash flows, and management’s plans with respect to 
operations to determine if the asset is impaired and subject to write-off. Measurement of any impairment loss is based on the 
excess of the carrying value of the asset over the fair value. See “Recently Adopted Accounting Pronouncements” below for 
information on the impact of ASU 2016-02—Leases on property and equipment balances.

Website Development and Internal-use Software Costs

Costs incurred to develop the Company’s website and software for internal-use are capitalized and amortized over the estimated 
useful life of the software, generally three to five years. In accordance with authoritative accounting guidance, capitalization of 
costs to develop software begin when preliminary development efforts are successfully completed, management has authorized 
and committed project funding, and it is probable that the project will be completed and the software will be used as intended. 
Costs related to the design or maintenance of website development and internal-use software are expensed as incurred. The 
Company periodically reviews capitalized website development and internal-use software costs to determine whether the 
projects will be completed, placed in service, removed from service, or replaced by other internally-developed or third-party 
software. If an asset is not expected to provide any future use, the asset is retired and any unamortized cost is expensed. 

106

 
 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

If an asset will continue to be used, but the net book value is not expected to be fully recoverable, the asset is impaired to its fair 
value. When events or changes in circumstances require, the Company assesses the likelihood of recovering the cost of website 
development and internal-use software costs based on its expectations of future profitability, undiscounted cash flows, and our 
plans with respect to operations to determine if the asset is impaired and subject to write-off. Measurement of any impairment 
loss is based on the excess of the carrying value of the asset over the fair value. No impairment of capitalized website 
development and internal-use software assets was recorded during the years ended December 31, 2019 and 2018. The Company 
recognized an asset impairment charge of $3.2 million related to capitalized web development and internal-use software assets 
in the year ended December 31, 2017 as a result of its decision to discontinue certain product offerings, including Etsy Studio 
and Etsy Manufacturing.

Capitalized website development and internal-use software costs are included in property and equipment within the 
Consolidated Balance Sheets.

Business Combinations 

In accordance with the guidance for business combinations, we determine whether a transaction is a business combination, 
which requires that the assets acquired and liabilities assumed constitute a business. The Company accounts for business 
combinations using the acquisition method of accounting. If the assets acquired are not a business, we account for the 
transaction as an asset acquisition. Under both methods, the purchase price is allocated to the assets acquired and liabilities 
assumed using the fair values determined by management as of the acquisition date. The results of businesses acquired in a 
business combination are included in the Company’s Consolidated Financial Statements from the date of acquisition. 

Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and 
estimates, including estimates of future revenue and adjusted earnings before interest and taxes and discount rates. Our 
estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and 
unpredictable and, as a result, actual results may differ materially from estimates. Our estimates associated with the accounting 
for business combinations may change as additional information becomes available regarding the assets acquired and liabilities 
assumed. Any change in facts and circumstances that existed as of the acquisition date and impacts our preliminary estimates is 
recorded to goodwill if identified within the measurement period. Subsequent to the measurement period or our final 
determination of fair value of assets and liabilities whichever is earlier the adjustments will affect our earnings.

Acquisition-related expenses incurred by the Company in a business combination are not included as a component of 
consideration transferred, but are accounted for as an expense in the period in which the costs are incurred.

Goodwill

Goodwill represents the excess of the aggregate fair value of the consideration transferred in a business combination over the 
fair value of the assets acquired, net of liabilities assumed. Goodwill is not amortized, but is subject to an annual impairment 
test. Management has determined that the Company has two operating segments, which qualify for aggregation as one 
reportable segment, for purposes of allocating resources and evaluating financial performance. As a result, the Company has 
determined it has two reporting units. The Company performs its annual goodwill impairment test during the fourth quarter or 
more frequently if events or changes in circumstances indicate that the goodwill may be impaired.

The Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances 
leads to a determination that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If, 
after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value 
of the reporting unit is less than its carrying amount, then additional impairment testing is not required. However, if the 
Company concludes otherwise, then it is required to perform a quantitative assessment for impairment.

The quantitative assessment involves comparing the estimated fair value of the reporting unit with its respective book value, 
including goodwill. If the estimated fair value exceeds book value, goodwill is considered not to be impaired. If, however, the 
book value of the reporting unit exceeds the fair value, an impairment loss is recognized in an amount equal to the excess, not 
to exceed the total amount of goodwill allocated to that reporting unit.

107

Etsy, Inc.
Notes to Consolidated Financial Statements

The Company completed a qualitative analysis for the Etsy reporting unit and a quantitative analysis for the Reverb reporting 
unit during the fourth quarter of 2019. No impairment of goodwill was recorded during the three years ended December 31, 
2019, 2018, and 2017.

Intangible Assets

Finite intangible assets are amortized over the estimated useful life of the asset. The estimated useful life of acquired 
technology is three years. The estimated useful lives of acquired customer relationships and trademarks are fifteen years and the 
estimated useful life of the referral agreement is ten years. When events or changes in circumstances require, the Company 
assesses the likelihood of recovering the cost of intangible assets based on its expectations of future profitability, undiscounted 
cash flows, and management’s plans with respect to operations to determine if the asset is impaired and subject to write-off. 
Measurement of any impairment loss is based on the excess of the carrying value of the asset over the fair value. No 
impairment of intangible assets was recorded during the years ended December 31, 2019, 2018, and 2017. 

Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the 
unique facts and circumstances present. Operating leases are included in other assets, other current liabilities, and other 
liabilities on the Company’s Consolidated Balance Sheets. Finance leases are included in property and equipment, net, finance 
lease obligations, current, and finance lease obligations, net of current portion on the Company’s Consolidated Balance Sheets.  

Leases with a term greater than one year are recognized on the Consolidated Balance Sheet as right-of-use (“ROU”) assets, 
lease obligations and, if applicable, long-term lease obligations in the financial statement line items cited above. The Company 
has elected not to recognize leases with terms of one year or less on the Consolidated Balance Sheet. Lease obligations and 
their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term. As the 
interest rate implicit in lease contracts is typically not readily determinable, the Company utilizes the appropriate incremental 
borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease 
payments in a similar economic environment. Certain adjustments to the ROU asset may be required for items such as initial 
direct costs paid or incentives received. The lease term may include options to extend or terminate the lease when it is 
reasonably certain that the Company will exercise that option. 

The components of a lease should be split into three categories: lease components, including land, building, or other similar 
components; non-lease components, including common area maintenance, maintenance, consumables, or other similar 
components; and non-components, including property taxes, insurance, or other similar components. However, the Company 
has elected to combine lease and non-lease components as a single component. The lease expense is recognized over the 
expected term on a straight-line basis. 

Contingencies

The Company accrues for loss contingencies when losses become probable and are reasonably estimable. If the reasonable 
estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded 
as a liability. The Company does not accrue for contingent losses that, in its judgment, are considered to be reasonably possible, 
but not probable; however, it discloses the range of such reasonably possible losses.

Recently Issued Accounting Pronouncements 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13—Financial Instruments—Credit 
Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments, and additional changes, modifications, 
clarifications, or interpretations related to this guidance thereafter, which require a reporting entity to estimate credit losses on 
certain types of financial instruments, and present assets held at amortized cost and available-for-sale debt securities at the 
amount expected to be collected. The new guidance is effective for annual and interim periods beginning after December 15, 
2019, and early adoption is permitted. The Company will adopt this standard in the first quarter of 2020, and the adoption is not 
expected to have a significant impact on its Consolidated Financial Statements.

108

 
Etsy, Inc.
Notes to Consolidated Financial Statements

In August 2018, the FASB issued ASU 2018-15—Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)
—Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, 
which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract 
with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new 
guidance is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted. The 
Company will adopt this standard in the first quarter of 2020. Upon adoption of the standard, the Company’s Consolidated 
Financial Statements will be impacted by the timing of amortization of the integration costs related to cloud computing 
arrangements.

In December 2019, the FASB issued ASU 2019-12—Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes, 
which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis 
step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-
period accounting for enacted changes in tax law. The standard will be effective for the Company in the first quarter of 2021, 
although early adoption is permitted. The Company is currently considering the date it will adopt this standard, and the 
adoption is not expected to have a significant impact on its Consolidated Financial Statements.

Recently Adopted Accounting Pronouncements 

In February 2016, the FASB issued ASU 2016-02—Leases (Topic 842), and additional changes, modifications, clarifications, or 
interpretations related to this guidance thereafter, which require a reporting entity to recognize ROU assets and lease liabilities 
on the balance sheet for operating leases to increase the transparency and comparability. Disclosure requirements have been 
enhanced with the objective of enabling financial statement users to assess the amount, timing, and uncertainty of cash flows 
arising from leases.

The Company adopted this standard in the first quarter of 2019, effective as of January 1, 2019, using the modified retrospective 
approach utilizing transition guidance introduced in ASU 2018-11—Leases: Targeted Improvements, and elected the ‘package of 
practical expedients’ permitted under the transition guidance within the new standard, which among other things, allowed the 
Company to carry forward the historical lease identification, classification, and initial direct costs. The Company did not elect the 
hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The 
Company also elected to continue to recognize lease payments related to short-term leases as an expense on a straight-line basis 
over the lease term. Upon adoption, the Company recognized new ROU assets and lease obligations on the Consolidated Balance 
Sheet for its operating leases of $25.4 million and $27.8 million, respectively. Additionally, upon adoption the Company renamed 
its capital lease obligations, current and capital lease obligations, net of current to finance lease obligations, current and finance 
lease obligations, net of current portion, respectively, in the Consolidated Balance Sheets.

In 2014 the Company applied build-to-suit accounting treatment to its headquarters lease in Brooklyn, New York, as the Company 
was deemed the accounting owner of the construction project because of the Company’s involvement in the build-out of the space. 
Upon transition, the Company derecognized the facility financing obligation and related building assets recorded as a result of the 
failed sale and leaseback transactions and recorded any difference as a cumulative-effect adjustment to accumulated deficit. The 
adoption of this standard had a material impact on the Company’s financial position but did not and is not expected to significantly 
affect the Company’s results of operations. The Company has derecognized the existing facility financing obligation and existing 
building asset for sale-leaseback transactions that currently do not qualify for sale accounting of $60.0 million and $51.1 million, 
respectively, and $22.1 million was reclassified from building to leasehold improvements and will be amortized over the remaining 
term of the lease. The Company recognized a gain of $9.3 million, offset by a tax impact of $2.2 million associated with this change 
through accumulated deficit as of January 1, 2019, with a net decrease to accumulated deficit of $7.1 million, and recognized a 
new ROU asset of $66.7 million and a lease liability in the same amount on the Consolidated Balance Sheets for the associated 
lease, which is accounted for as a financing lease. 

109

Etsy, Inc.
Notes to Consolidated Financial Statements

Note 2—Revenue 

The following table summarizes revenue by type of service for the periods presented (in thousands):

Marketplace revenue (1)

Services revenue

Revenue

Year Ended December 31,

2019

2018

2017

$

$

593,646

$

444,765

$

224,733

158,928

818,379

$

603,693

$

329,362

111,869

441,231

(1)  Other revenue for the years ended December 31, 2019, 2018, and 2017 has been reclassified and presented within 
Marketplace revenue. Comparative periods have been reclassified to conform to current period presentation.

See “Note 1—Basis of Presentation and Summary of Significant Accounting Policies —Revenue Recognition” for additional 
information on recognition.

Payment terms

Etsy

As of November 13, 2018, for Etsy sellers using Etsy Payments, all charges, including listing fees, transaction fees, Etsy 
Payments fees, advertising services fees, and Etsy Shipping Labels fees, are deducted from the funds credited to the seller’s 
shop payment account in the seller’s ledger currency prior to settlement of those funds to the seller’s bank account. Etsy sellers 
receive a statement electronically on the first day of each month outlining the previous month’s charges and any remaining 
amount due after the Company’s fees are deducted from the seller’s shop payment account. Etsy sellers who do not use Etsy 
Payments receive a statement electronically on the first day of each month for the previous month’s charges in U.S. Dollars, 
including all listing fees, transactions fees, advertising services fees, and Etsy Shipping Labels fees. Payment is due by the 15th 
of every month.

Prior to November 13, 2018, Etsy sellers would receive a statement electronically on the first day of each month for the 
previous month’s charges in U.S. Dollars, including all listing fees, transactions fees, advertising services fees, and Etsy 
Shipping Labels fees. Payment was due by the 15th of every month. Prior to November 13, 2018 only Etsy Payments fees were 
deducted from the funds credited to the seller’s shop payment account in the seller’s ledger currency prior to settlement of those 
funds to the seller’s bank account.

Reverb

For most transactions, Reverb buyers use a credit card to pay for the merchandise or service, when the order is placed. For these 
transactions, the Company collects the total amount due on the order, retains its fees due from the Reverb seller, and remits the 
net proceeds to the Reverb seller.

Contract balances 

Deferred revenues

The Company records deferred revenues when cash payments are received or due in advance of the completion of the listing 
period, which represents the value of the Company’s unsatisfied performance obligations. Deferred listing revenue is 
recognized ratably over the remainder of the four-month listing period, unless the item is sold or the seller re-lists it, at which 
time any remaining listing fee is recognized. The amount of revenue recognized in the year ended December 31, 2019 that was 
included in the deferred balance at the beginning of the period was $7.5 million.

110

Etsy, Inc.
Notes to Consolidated Financial Statements

Note 3—Income Taxes 

The following are the domestic and foreign components of the Company’s income before income taxes (in thousands):

Domestic

Foreign

Income before income taxes

The income tax benefit is comprised of the following (in thousands):

Current:

Federal

State

Foreign

Total current

Deferred:

Federal

State

Foreign

Total deferred

Total income tax benefit

Year Ended  
December 31,

2019

2018

2017

$

$

14,544

$

36,157

$

(16,583)

66,102

18,921

80,646

$

55,078

$

48,848

32,265

Year Ended  
December 31,

2019

2018

2017

$

(3,967) $

709

$

(6,397)

1,053

352

(2,562)

(19,734)

(1,564)

8,612

(12,686)

(578)

600

731

(3,343)

3,496

(23,297)

(23,144)

$

(15,248) $

(22,413) $

79

476

(5,842)

(34,948)

(8,778)

33

(43,693)

(49,535)

For the years ended December 31, 2019, 2018 and 2017, the Company recorded a benefit for income taxes of $15.2 million, $22.4 
million, and $49.5 million or an effective tax rate of (18.9)%, (40.7)% and (153.5)%, respectively.

A reconciliation of the income tax benefit at the U.S. federal statutory income tax rate to the Company’s total income tax benefit
is as follows (in thousands):

Income tax provision at the federal statutory rate (a)

State and local income taxes net of federal benefit

Foreign income tax rate differential

Stock-based compensation

Research and development credit

U.S. tax reform (b)

Non-deductible expenses

Uncertain tax positions

Change in valuation allowance (c)

Return to provision adjustment

Other

Total income tax benefit

Year Ended  
December 31,

2019

2018

2017

$

16,936

$

11,566

$

11,308

973

(5,454)

(16,281)

(9,864)

(4,197)

1,784

380

—

500

(25)

3,839

(298)

(11,717)

(4,115)

3,897

(329)

382

(28,733)

3,293

(198)

(691)

(11,878)

(12,584)

(1,098)

(31,063)

168

789

(4,673)

167

20

$

(15,248) $

(22,413) $

(49,535)

(a) The income tax provision at the U.S. federal statutory rate is computed using 21% in 2019 and 2018 and 35% in 2017. Refer 
to footnote (b) below.

111

 
 
 
 
 
 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

(b) On December 22, 2017, the U.S. government enacted the TCJA, as described above, which includes significant changes to the 
taxation of business entities. These changes include, among others, (1) a permanent reduction to the corporate income tax rate, (2) 
Global Intangible Low-Taxed Income (“GILTI”), a new tax on worldwide income, and (3) Foreign Derived Intangible Income 
(“FDII”) a deduction provided with respect to certain foreign earned income. Effective January 1, 2018, the Company is subject 
to several provisions of the TCJA including computations under GILTI and FDII.

For the year ended December 31, 2017, primarily as a result of the permanent change in U.S. corporate income tax rate, the 
Company recognized a net income tax benefit of $31.1 million associated with the TCJA. 

For the years ended December 31, 2019 and 2018, the Company has accounted for the impact of the new TCJA provisions, as well 
as any adjustments with respect to the re-measurement of its deferred taxes, as part of its income tax benefit using the currently 
available regulations and technical guidance on the interpretations of the TCJA. The Company has elected to account for GILTI 
as a period cost. The Company is not currently subject to the Base Erosion and Anti-Abuse Tax (“BEAT”) or Section 163(j) Interest 
Limitation. The Company will continue to monitor the forthcoming regulations and additional guidance of the GILTI, FDII, and 
BEAT provisions under the TCJA, which are complex and subject to continuing regulatory interpretation by the Internal Revenue 
Service (“IRS”).

(c) For the year ended December 31, 2018, the Company released valuation allowance recorded against deferred tax assets in 
certain foreign jurisdictions as it had achieved three years of cumulative pre-tax income. 

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for 
financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred 
tax assets (liabilities) are as follows (in thousands):

Deferred tax assets:

 Net operating loss carryforwards

 Research and development credit carryforwards

 Lease liability (a)

 Stock-based compensation expense

 Excess tax basis in intangible assets

 Accrued bonus

 Deferred rent (a)

 Other deferred tax assets

 Total deferred tax assets

 Less: valuation allowance

 Total net deferred tax asset

 Deferred tax liabilities:

 Excess book basis in intangible assets

 Restructuring liability

 Convertible debt

 Right-of-use asset (a)

 Depreciation (a)

 Other deferred tax liabilities

Total deferred tax liabilities

Net deferred tax liabilities

As of December 31,

2019

2018

$

19,599

$

13,133

18,666

7,642

3,572

4,065

—

3,944

70,621

883

69,738

(39,500)

(29,635)

(22,839)

(17,596)

(10,328)

(80)

(119,978)

$

(50,240) $

13,347

7,567

—

6,623

12,109

1,049

529

1,858

43,082

1,673

41,409

(362)

(33,730)

(7,283)

—

(6,933)

(92)

(48,400)

(6,991)

(a) As part of the Company’s adoption of ASC 842 beginning in 2019, the Company recorded adjustments to the GAAP basis of 
certain assets and liabilities and established other assets and liabilities (i.e., right-of-use asset and lease liability). The net adjustment 
was recorded as a retrospective adjustment to retained earnings. The adoption of ASC 842 does not change the Company’s tax 
basis in these assets and liabilities. However, as a result of the adoption, an adjustment was recorded to the historic deferred taxes, 
112

 
 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

through retained earnings, to account for the change in GAAP basis as well as establishing deferred taxes on the newly established 
right-of-use assets and lease liabilities.

The Company has not recorded deferred income taxes and withholding taxes with respect to undistributed earnings from its non-
U.S. subsidiaries as such earnings are intended to be reinvested indefinitely. The amount of undistributed earnings of non-U.S. 
subsidiaries at December 31, 2019, as well as the related deferred income tax, if any, is not material.

As of December 31, 2019, the Company had the following operating loss and tax credit carryforwards available to offset taxable 
income in future years:

U.S. Federal net operating loss carryforwards

U.S. Federal credit carryforwards

U.S. State net operating loss carryforwards

U.S. State credit carryforwards

Non-U.S. net operating loss carryforwards

December 31, 2019

Expiration Period

$

30,403

13,054

21,150

184

91,440

2035-Unlimited

2035-2039

2027-2039

2020-2024

Unlimited

Utilization of the net operating losses (“NOLs”) is dependent on generating sufficient taxable income from our operations in each 
of the respective jurisdictions to which the NOLs relate, while taking into account tax filing methodologies and limitations and/
or restrictions on our ability to use them. The Company’s U.S. federal NOLs were acquired as part of the acquisition of Reverb 
and are subject to limitations as promulgated under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). 
Section 382 of the Code limits the amount of NOLs that we can use on an annual basis to offset consolidated U.S. taxable income. 
The NOLs are also subject to review by relevant tax authorities in the jurisdictions to which they relate. The NOL deferred tax 
asset balance additionally includes losses in certain foreign jurisdictions that are currently subject to a valuation allowance. 

The Company assesses the likelihood of its ability to realize the benefit of its deferred tax assets in each jurisdiction by evaluating 
all relevant positive and negative evidence at each reporting date. To the extent the Company determines that some or all of its 
deferred tax assets are not more likely than not to be realized, it establishes a valuation allowance. 

For the year ended December 31, 2018, the Company achieved three years of cumulative pre-tax income in certain of its foreign 
jurisdictions, management determined that sufficient positive evidence existed as of December 31, 2018, to conclude that was 
more likely than not that deferred tax assets of $23.4 million will be utilized in those jurisdictions. 

The following table summarizes the valuation allowance activity for the periods indicated (in thousands): 

Balance as of the beginning of period

Additions charged to expense

Deletions credited to expense

Currency translation and other balance sheet activity

Balance as of the end of period

Year Ended  
December 31,

2019

2018

2017

$

$

1,673

$

32,455

$

504

(4)

(1,290)

—

(28,733)

(2,049)

883

$

1,673

$

13,839

16,743

—

1,873

32,455

113

 
 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

Unrecognized tax benefits

The following table summarizes the unrecognized tax benefit activity for the periods indicated (in thousands):

Balance as of the beginning of period

Additions based on tax positions related to the current year

Additions for tax positions of prior years

Reductions for tax provisions of prior years

Lapse of Statute of Limitation

Additions recorded through goodwill as part of business combination

Settlements

Balance as of the end of period

As of December 31,

2019

2018

2017

$

18,819

$

17,013

$

23,574

1,847

3,620

(2,423)

(184)

1,334

(3,080)

921

946

(61)

—

—

—

732

118

(7,411)

—

—

—

$

19,933

$

18,819

$

17,013

The amount of unrecognized tax benefits included on the Consolidated Balance Sheets as of December 31, 2019, 2018, and 2017 
are $19.9 million, $18.8 million, and $17.0 million, respectively. The total amount of unrecognized tax benefits that, if recognized, 
would favorably affect the effective tax rate is $19.4 million at December 31, 2019. 

We recognize interest and/or penalties related to uncertain tax positions in income tax expense. For the years ended 2019 and 2018, 
$(0.1) million and $0.3 million, respectively, was included in income tax (benefit)/expense for interest and penalties. The amount 
of interest and penalties accrued as of December 31, 2019 and 2018 was approximately $0.2 million and $0.5 million, respectively.

The total amount of unrecognized tax benefits relating to the Company's tax positions is subject to change based on future events 
including, but not limited to, the settlements of ongoing audits and/or the expiration of applicable statutes of limitations. The 
outcomes and timing of such events are highly uncertain and a reasonable estimate of the range of gross unrecognized tax benefits, 
excluding interest and penalties, that could potentially be reduced during the next 12 months cannot be made.

The Company is subject to taxation in the United States, New York, and various other states and foreign jurisdictions. As of 
December 31, 2019, tax year 2014 and later remain open to examination.

The Company is under examination, or may be subject to examination, by the IRS for calendar year 2014 and thereafter. These 
examinations may result in proposed adjustments to the Company’s income tax liability or tax attributes with respect to years 
under examination as well as subsequent periods. 

The provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant facts 
and laws in the jurisdictions in which the Company operates. Future changes in applicable laws, projected levels of taxable income 
and  tax  planning  could  change  the  effective  tax  rate  and  tax  balances  recorded  by  the  Company.  In  addition,  tax  authorities 
periodically review income tax returns filed by the Company and can raise issues regarding its filing positions, timing and amount 
of income and deductions, and the allocation of income among the jurisdictions in which the Company operates. A significant 
period of time may elapse between the filing of an income tax return and the ultimate resolution of an issue raised by a revenue 
authority with respect to that return. Any adjustments as a result of any examination may result in additional taxes or penalties 
against the Company. If the ultimate result of these audits differ from original or adjusted estimates, they could have a material 
impact on the Company’s tax provision.

114

 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

Note 4—Net Income Per Share 

The following table presents the calculation of basic and diluted net income per share for periods presented (in thousands, 
except share and per share amounts):

Numerator:

Net income

Net income allocated to participating securities under the two-class method

Net income attributable to common stockholders—basic

Dilutive effect of net income allocated to participating securities under the two-class method

Change in fair value of liability classified restricted stock

Net income attributable to common stockholders—diluted

Year Ended  
December 31,

2019

2018

2017

$

95,894

$

77,491

$

81,800

—

95,894

—

—

(37)

77,454

37

—

(80)

81,720

80

771

$

95,894

$

77,491

$

82,571

Denominator:

Weighted average common shares outstanding—basic (1)

Dilutive effect of assumed conversion of options to purchase common stock

Dilutive effect of assumed conversion of restricted stock units

Dilutive effect of assumed conversion of convertible debt (2)

Diluted effective of assumed conversion of restricted stock from acquisition

Weighted average common shares outstanding—diluted

119,665,248

120,146,076

118,538,687

4,516,413

1,521,719

—

16,693

4,238,622

1,721,658

900,580

77,849

2,498,448

1,177,799

—

52,739

125,720,073

127,084,785

122,267,673

Net income per share attributable to common stockholders—basic

Net income per share attributable to common stockholders—diluted

$

$

0.80

0.76

$

$

0.64

0.61

$

$

0.69

0.68

(1)  57,482, and 114,963 shares of unvested stock are considered participating securities and are excluded from basic shares 

outstanding for the year ended December 31, 2018 and 2017, respectively.

(2)  Since the Company expects to settle in cash the principal outstanding under the 2019 Notes (see “Note 13—Debt”), it 
uses the treasury stock method when calculating the potential dilutive effect of the conversion spread on diluted net 
income per share, if applicable. The Company uses the if-converted method when calculating the dilutive effect of the 
2018 Notes for the year ended December 31, 2019 and used the treasury stock method for the year ended December 31, 
2018. 

The following potential common shares were excluded from the calculation of diluted net income per share attributable to 
common stockholders because their effect would have been anti-dilutive for the periods presented:

Year Ended  
December 31,

2019

2018

475,238

136,998

—

2017

4,902,664

435,358

—

612,236

5,338,022

Stock options

Restricted stock units

Convertible senior notes

Total anti-dilutive securities

317,401

706,234

9,511,993

10,535,628

115

 
 
 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

Note 5—Business Combinations 

On August 15, 2019, the Company acquired all of the outstanding capital stock of Reverb, a leading online marketplace 
dedicated to buying and selling new, used, and vintage musical instruments. The acquisition enables the Company to expand 
into a new vertical, with a company that has a similar strategy and business model. The total cash consideration paid was 
$270.4 million, net of cash acquired.

The acquisition was accounted for under the acquisition method of accounting. Accordingly, the purchase price was allocated to 
the assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition. The excess of 
the purchase price over the estimated fair value of the net assets acquired was recorded as goodwill, which consists largely of 
synergies and acquisition of workforce. The resulting goodwill is not expected to be deductible for tax purposes. 

The Company has finalized the valuation of assets acquired and liabilities assumed for the acquisition of Reverb. The Company 
recognized certain measurement period adjustments as disclosed below during the three months ended December 31, 2019. The 
measurement period is closed as of December 31, 2019. 

Purchase Price Allocation

The following table summarizes the allocation of the purchase price (at fair value) to the assets acquired and liabilities assumed 
of Reverb as of August 15, 2019 (the date of acquisition) (in thousands):

Short-term investments

Other current assets (3)

Funds receivable and seller accounts

Property and equipment other

Developed technology

Trademark

Customer relationships

Goodwill

Other assets (3)

Other net working capital

Funds payable and amounts due to sellers

Other current liabilities (3)

Other liabilities (3)

Deferred tax liability, net

Total purchase price

Initial Fair Value
Estimate (1)

$

1,028

$

6,442

5,578

1,543

30,300

79,400

93,500

102,039
3,225
(208)
(5,578)

(8,520)

(2,497)

(34,898)

$

271,354

$

Measurement
Period
Adjustments (2)

Final Fair Value as
Adjusted

— $

(3,540)
—

—

—

—

—
(336)
3,518

—

—

4,836

(4,836)
(587)
(945) $

1,028

2,902

5,578

1,543

30,300

79,400

93,500

101,703

6,743
(208)
(5,578)
(3,684)
(7,333)
(35,485)
270,409

(1)  As previously reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019. This 

was the quarter in which the business combination was completed. 

(2)  The Company recorded measurement period adjustments in the fourth quarter of fiscal 2019 due to the final working 

capital adjustment as well as new facts and circumstances related to assets and liabilities which existed at the acquisition 
date. The adjustments included an increase in deferred tax liability of $0.6 million and a decrease in goodwill of $0.3 
million. Other adjustments are related to the classification of certain assets and liabilities within the balance sheet.

(3)  Other current liabilities and other liabilities are primarily related to non-income tax related contingency reserves, which are 

wholly offset by an indemnification asset and a deferred tax asset.

Revenue and net loss of Reverb from August 15, 2019 (the date of acquisition) through December 31, 2019 were $19.1 million 
and $9.9 million, respectively. Acquisition-related expenses are expensed as incurred. They were recorded in general and 
administrative expenses and were $3.9 million for the year ended December 31, 2019. They primarily related to advisory, legal, 
valuation and other professional fees.

116

Etsy, Inc.
Notes to Consolidated Financial Statements

Unaudited Supplemental Pro Forma Information 

The following unaudited pro forma summary presents consolidated information of the Company as if the business combination 
had occurred on January 1, 2018 (in thousands): 

Revenue

Net income

Year Ended December 31,

2019

2018

$

847,154

$

88,595

639,743

53,587

The pro forma financial information includes adjustments that are directly attributable to the business combination and are 
factually supportable. The pro forma adjustments include incremental amortization of intangible and developed technology 
assets, based on final values of each asset and acquisition-related expenses and are tax-effected. For the year ended 
December 31, 2019, the pro forma financial information excludes $6.1 million of non-recurring acquisition-related expenses. 
For the year ended December 31, 2018, the pro forma financial information includes $2.0 million of non-recurring acquisition-
related expenses. These pro forma results are illustrative only and not indicative of the actual results of operations that would 
have been achieved nor are they indicative of future results of operations. 

Note 6—Goodwill and Intangible Assets 

The following table summarizes the changes in the carrying amount of goodwill for the periods indicated (in thousands):

Balance as of the beginning of the period

Business combination

Foreign currency translation adjustments

Balance as of the end of the period

Year Ended  
December 31,

2019

2018

$

$

37,482

$

101,703

(454)

138,731

$

38,541

—

(1,059)

37,482

The Company has determined it has two operating segments, Etsy and Reverb, which qualify for aggregation as one reportable 
segment, for purposes of allocating resources and evaluating financial performance. As a result, the Company has determined it 
has two reporting units to test for goodwill impairment during the fourth quarter. The Company did not recognize any goodwill 
impairments during the years ended December 31, 2019, 2018, and 2017.

At December 31, 2019 and 2018, the gross book value and accumulated amortization of intangible assets were as follows (in 
thousands):

As of December 31, 2019

As of December 31, 2018

Gross book
value

Accumulated
amortization

Foreign
currency
translation

Net book
value

Gross book
value

Accumulated
amortization

Foreign
currency
translation

Net book
value

Customer
relationships
Trademark

Referral agreement

Technology

Patent licenses

$

93,500

$

(2,338) $

— $

91,162

$

79,400

37,127

7,200

332

(1,985)

(5,417)

(7,200)

(27)

—

(1,356)

—

—

77,415

30,354

—

305

— $

—

— $

—

35,323

7,200

172

(1,890)

(5,500)

(4)

— $

—

(712)

—

—

—

—

32,721

1,700

168

Intangible assets, net

$

217,559

$

(16,967) $

(1,356) $

199,236

$

42,695

$

(7,394) $

(712) $

34,589

The Company acquired intangible assets valued at $172.9 million in the Reverb acquisition on August 15, 2019. As part of the 
acquisition, the Company recorded acquired intangible assets for customer relationships and trademark. These are both 
amortized on a straight-line basis over a period of 15 years. See “Note 5—Business Combinations” for additional information 
on the acquisition of Reverb.

117

 
 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

On June 15, 2018, the Company entered into a referral agreement with DaWanda GmbH (“DaWanda”), a privately held 
Germany-based marketplace for gifts and handmade items. As part of this agreement, DaWanda agreed to encourage its 
community of buyers and sellers to migrate to the Etsy platform. DaWanda wound down its operations and shut down its site on 
August 30, 2018. Etsy did not acquire any of DaWanda’s assets, liabilities, or employees as part of this agreement. The 
Company accounted for the agreement as an asset acquisition and the referral agreement intangible asset is amortized on a 
straight-line basis over a period of 10 years.

Amortization expense for the years ended December 31, 2019, 2018, and 2017 was $9.6 million, $4.3 million, and $3.4 million, 
respectively.

The Company did not recognize any intangible asset impairment losses in the years ended December 31, 2019, 2018, and 2017. 

Based on amounts recorded at December 31, 2019, the Company estimates intangible asset amortization expense in each of the 
years ending December 31 as follows (in thousands):

2020

2021

2022

2023

2024

Thereafter

Total amortization expense

$

$

15,148

15,148

15,148

15,148

15,148

123,496

199,236

118

Etsy, Inc.
Notes to Consolidated Financial Statements

Note 7—Segment and Geographic Information 

The Company has determined it has two operating segments, Etsy and Reverb, which qualify for aggregation as one reportable 
segment, for purposes of allocating resources and evaluating financial performance.

Revenue by country is based on the billing address of the seller. The following table summarizes revenue, (loss) income before 
income taxes and net income by geographic area (in thousands):

United States

International

Revenue

United States (1)(2)

International

(Loss) income before income taxes

United States

International

Net income

Year Ended  
December 31,

2019

2018

2017

550,257

$

422,523

$

268,122

181,170

818,379

$

603,693

$

317,755

123,476

441,231

(23,702) $

7,460

$

(43,014)

104,348

47,618

80,646

$

55,078

$

510

$

7,175

$

95,384

70,316

95,894

$

77,491

$

75,279

32,265

7,029

74,771

81,800

$

$

$

$

$

$

(1)  The United States loss before income taxes in the year ended December 31, 2019 was primarily driven by a majority 

of operating expenses being incurred in the United States.

(2)  The United States loss before income taxes in the year ended December 31, 2017 was primarily driven by a foreign 
exchange loss, interest associated with the build-to-suit lease accounting related to our corporate headquarters, 
restructuring and other exit costs, and asset impairment charges. See “Note 17—Restructuring and Other Exit Costs 
(Income)” and “Note 10—Property and Equipment” for additional information on restructuring and other exit costs 
and asset impairment charges, respectively.

No individual international country’s revenue exceeded 10% of total revenue. All significant long-lived assets are located in the 
United States.

119

 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

Note 8—Fair Value Measurements 

The Company has characterized its investments in marketable securities, based on the priority of the inputs used to value the 
investments, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active 
markets for identical assets or liabilities (Level 1), and lowest priority to unobservable inputs (Level 3). If the inputs used to 
measure the investments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is 
significant to the fair value measurement of the investment. Investments recorded in the accompanying Consolidated Balance 
Sheets are categorized based on the inputs to valuation techniques as follows:

Level 1—These are investments where values are based on unadjusted quoted prices for identical assets in an active 

market that the Company has the ability to access.

Level 2—These are investments where values are based on quoted market prices in markets that are not active or model 

derived valuations in which all significant inputs are observable in active markets.

Level 3—These are financial instruments where values are derived from techniques in which one or more significant 

inputs are unobservable.

The following are the major categories of assets measured at fair value on a recurring basis as of the dates indicated (in 
thousands):

Asset

Cash equivalents:

Commercial paper

Certificate of deposit

Money market funds

Short-term investments:

Commercial paper

Certificate of deposit

Corporate bonds

U.S. Government and agency securities

Funds receivable and seller accounts:

Money market funds

Long-term investments:

Certificate of deposit

Corporate bonds

U.S. Government and agency securities

As of December 31, 2019

Level 1

Level 2

Level 3

Total

$

— $

—

228,859

228,859

—

—

—

204,305

204,305

18,168

18,168

—

—

46,051

46,051

5,794

$

— $

2,959

—

8,753

29,320

26,132

114,202

—

169,654

—

—

4,729

38,563

—

43,292

—

—

—

—

—

—

—

—

—

—

—

—

—

—

5,794

2,959

228,859

237,612

29,320

26,132

114,202

204,305

373,959

18,168

18,168

4,729

38,563

46,051

89,343

$

497,383

$

221,699

$

— $

719,082

120

 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

Asset

Cash equivalents:

Commercial paper

Money market funds

Short-term investments:

Commercial paper

Corporate bonds

U.S. Government and agency securities

Funds receivable and seller accounts:

Money market funds

As of December 31, 2018

Level 1

Level 2

Level 3

Total

$

— $

7,775

$

— $

244,856

244,856

—

—

62,641

62,641

9,229

9,229

—

7,775

147,860

46,801

—

194,661

—

—

—

—

—

—

—

—

—

—

7,775

244,856

252,631

147,860

46,801

62,641

257,302

9,229

9,229

$

316,726

$

202,436

$

— $

519,162

Level 1 instruments include investments in debt securities including money market funds and U.S. Government and agency 
securities, which are valued based on inputs including quotes from broker-dealers or recently executed transactions in the same 
or similar securities. 

Level 2 instruments include investments in debt securities, including fixed-income funds consisting of investments in 
commercial paper, corporate bonds, and certificates of deposit, which are valued based on quoted market prices in markets that 
are not active or model derived valuations in which all significant inputs are observable in active markets. 

The Company did not have any Level 3 instruments as of December 31, 2019 and December 31, 2018.

See “Note 9—Marketable Securities” for additional information on the Company’s marketable securities measured at fair value.

Disclosure of Fair Values

The Company’s financial instruments that are not remeasured at fair value include the 2018 Notes and the 2019 Notes (see 
“Note 13—Debt”). The Company estimates the fair value of the 2018 Notes and 2019 Notes through consideration of quoted 
market prices of similar instruments, classified as Level 2 as described above. The estimated fair value of the 2018 Notes 
was $310.3 million and $279.1 million as of December 31, 2019 and December 31, 2018, respectively. The estimated fair value 
of the 2019 Notes was $522.2 million as of December 31, 2019.

The carrying value of other financial instruments, including cash, accounts receivable, accounts payable, funds receivable and 
seller accounts, and funds payable and amounts due to sellers approximate fair value due to the immediate or short-term 
maturity associated with these instruments.

121

 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

Note 9—Marketable Securities 

Short- and long-term investments and certain cash equivalents consist of investments in debt securities that are available-for-
sale. The cost and fair value of available-for-sale securities were as follows as of the dates indicated (in thousands):

December 31, 2019

Cash equivalents:

Commercial paper

Certificate of deposit

Short-term investments:

Commercial paper

Certificate of deposit

Corporate bonds

U.S. Government and agency securities

Long-term investments:

Certificate of deposit

Corporate bonds

U.S. Government and agency securities

December 31, 2018

Cash equivalents:

Commercial paper

Short-term investments:

Commercial paper

Corporate bonds

U.S. Government and agency securities

Gross
Unrealized
Holding Loss

Gross
Unrealized
Holding Gain

Cost

Fair Value

$

5,794

$

— $

— $

2,958

8,752

29,319

26,129

114,068

204,246

373,762

4,727

38,582

46,017

89,326

—

—

(1)

(3)

(22)

(8)

(34)

—

(35)

(2)

(37)

1

1

2

6

156

67

231

2

16

36

54

5,794

2,959

8,753

29,320

26,132

114,202

204,305

373,959

4,729

38,563

46,051

89,343

471,840

$

(71) $

286

$

472,055

7,775

$

7,775

— $

—

147,860

46,836

62,638

257,334

—

(35)

(9)

(44)

$

265,109

$

(44) $

— $

—

—

—

12

12

12

$

7,775

7,775

147,860

46,801

62,641

257,302

265,077

$

$

The Company’s investments in marketable securities consist primarily of investments in commercial paper, certificates of 
deposit, and debt securities, including U.S. Government and agency securities and fixed-income funds. When evaluating 
investments for other-than-temporary impairment, the Company reviews factors such as length of time and extent to which fair 
value has been below cost basis, the financial condition of the issuer and the Company’s ability, and intent to hold the 
investment for a period of time, which may be sufficient for anticipated recovery in market value. The Company evaluates fair 
values for each individual security in the investment portfolio.

See “Note 8—Fair Value Measurements” for additional information on the Company’s marketable securities measured at fair 
value.

122

Etsy, Inc.
Notes to Consolidated Financial Statements

Note 10—Property and Equipment 

Property and equipment consisted of the following as of the dates indicated (in thousands):

Estimated useful lives

2019

2018

As of
December 31,

Computer equipment (1)

Furniture and equipment

Leasehold improvements (2)

Construction in progress

Building (2)

3 years

2 - 4 years

Shorter of life of asset or lease term

Not applicable

25 years

Website development and internal-use software (3)

3 - 5 years

Less: Accumulated depreciation and amortization

$

35,190

$

7,999

48,688

206

66,650

106,215

264,948

120,084

$

144,864

$

36,670

6,574

10,731

551

81,892

69,201

205,619

85,440

120,179

(1)  Computer equipment includes leased equipment which are accounted for as finance leases since the adoption of ASU 

2016-02—Leases in the first quarter of 2019. These leases were previously accounted for as capital leases.

(2)  In 2014 the Company applied build-to-suit accounting treatment to its headquarters lease in Brooklyn, New York. Upon 
adoption of ASU 2016-02—Leases in the first quarter of 2019, the Company derecognized the existing facility financing 
obligation and existing building asset for sale-leaseback transactions that currently do not qualify for sale accounting 
of $60.0 million and $51.1 million, respectively, and $22.1 million was reclassified from building to leasehold 
improvements and the Company recognized a new ROU asset of $66.7 million for the associated lease. For more 
information on the adoption of ASU 2016-02—Leases see “Note 1—Basis of Presentation and Summary of Significant 
Accounting Policies.”

(3)  On August 15, 2019, the Company acquired Reverb in a business combination, including the developed technology which 

was recognized at fair value. This amount is included in website development and internal-use software and is amortized 
on a straight-line basis over a period of 3 years.

Depreciation and amortization expense on property and equipment was $38.4 million, $22.4 million, and $23.8 million for the 
years ended December 31, 2019, 2018, and 2017, respectively, which includes amortization expense for equipment acquired 
under finance leases of $4.3 million for the year ended December 31, 2019 and under capital leases of $5.9 million and $7.7 
million for the years ended December 31, 2018 and 2017, respectively. The gross balance of leased equipment as of December 
31, 2019 and 2018 was $30.4 million and $29.7 million, respectively. The related accumulated amortization of equipment under 
finance leases was $28.5 million at December 31, 2019 and under capital leases was $24.4 million at December 31, 2018.

123

 
 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

The following table summarizes capitalized website development and internal-use software activities during the periods 
indicated (in thousands):

Balance as of the beginning of the period

Additions to website development

Acquisition of developed technology

Less: Retirements

Less:

Accumulated amortization balance as of the beginning of the period

Amortization Expense

Less: Retirements

Accumulated amortization balance as of the end of the period

Year Ended  
December 31,

2019

2018

$

69,201

$

8,687

30,300

1,973

106,215

38,418

18,737

340

56,815

$

49,400

$

48,333

22,068

—

1,200

69,201

29,991

9,519

1,092

38,418

30,783

For the years ended December 31, 2019, 2018, and 2017, the Company recorded amortization expense relating to capitalized 
website development and internal-use software of $18.7 million, $9.5 million, and $8.2 million, respectively. The loss on write-
off for capitalized website development and internal-use software assets that were retired during the years ended December 31, 
2019, 2018, and 2017 was $1.6 million, $0.1 million, and $0.3 million, respectively.

On August 15, 2019, the Company acquired Reverb in a business combination, including the developed technology which was 
recognized at fair value. As of December 31, 2019, the gross book value and accumulated amortization of the acquired 
developed technology classified in property and equipment, net was $30.3 million and $3.8 million, respectively. The 
developed technology is amortized on a straight-line basis over a period of 3 years. Amortization expense from the developed 
technology of Reverb was $3.8 million for the period ended December 31, 2019 and was recorded in cost of revenue.

The Company recognized a $3.2 million impairment loss related to capitalized website development and internal-use software 
during the year ended December 31, 2017, included in asset impairment charges. During the fourth quarter of 2017, the 
Company made the decision to discontinue certain product offerings, including Etsy Studio and Etsy Manufacturing, which was 
an indicator that the carrying amount of certain capitalized website development and internal-use software assets may not be 
recoverable. The Company prepared an undiscounted cash flow analysis and determined that the values for these assets 
exceeded the expected future cash flows and impaired the remaining book values based on a negative present value of projected 
undiscounted cash flows.

124

Etsy, Inc.
Notes to Consolidated Financial Statements

Note 11—Leases  

As the lessee, the Company currently leases 225,135 square feet of real estate space for its corporate headquarters located in 
Brooklyn, New York, under a noncancelable lease that expires in 2026. The Company uses these facilities for its principal 
administration, technology and development, and engineering activities. The Company also leases office space for its offices in 
San Francisco, Hudson (New York), Chicago, Dublin, and London. Additionally, the Company has short-term leases in other 
locations around the world that meet short-term lease criteria and are not recognized on the Consolidated Balance Sheets. Most 
leases include one or more options to renew, and the exercise of these options is at the Company’s sole discretion. The 
Company determined that its options to break or renew would not be reasonably certain in determining the expected lease term, 
and therefore are not included as part of its ROU assets and lease liabilities. 

The Company entered into financing lease agreements with Dell Financial Services, LLC. (“DFS”) and ePlus Group, Inc. 
(“ePlus”) for hosting and computer equipment leases. The leases through DFS have a 36-month term, zero interest, and are 
payable in equal monthly installments with a buy-out option of $1 at the end of the lease term. The leases through ePlus have a 
36-month term, interest rate of 3.71%-6.94%, and are payable in equal monthly installments with a fair market value or a $1 
buy-out option at the end of the lease term depending on the equipment.

In calculating the present value of the lease payments, the Company has elected to utilize its estimated incremental borrowing 
rate based on the remaining lease term and not the original lease term. The depreciable life of assets and leasehold 
improvements are limited by the expected lease term. 

The elements of lease expense were as follows (in thousands): 

Operating lease cost

Finance lease cost:

Amortization of right-of-use assets

Interest on lease liabilities

Total finance lease cost

Other lease cost, net (1)

Total lease cost

Year Ended
December 31, 2019

$

$

5,405

13,124

3,205

16,329

1,149

22,883

(1)  Other lease cost, net includes short-term sublease income, short-term lease costs, and variable lease costs, which are 

immaterial.

The following table presents the lease-related assets and liabilities recorded on the Consolidated Balance Sheet (in thousands):

Operating leases:

Other assets

Other current liabilities

Other liabilities

Total operating lease liabilities

Finance leases:

Property and equipment, net

Finance lease obligations—current

Finance lease obligations—net of current portion

Total finance lease liabilities

125

As of December 31,
2019

$

$

$

$

$

$

24,362

4,134

22,322

26,456

59,696

8,275

53,611

61,886

Etsy, Inc.
Notes to Consolidated Financial Statements

The following table summarizes the weighted average remaining lease term and weighted average discount rate as of 
December 31, 2019:

Weighted average remaining lease term:

Operating leases

Finance leases

Weighted average discount rate:

Operating leases

Finance leases

Supplemental cash flow information related to leases was as follows (in thousands):

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows used in operating leases

Operating cash flows used in finance leases

Finance cash flows used in finance leases

As of December 31,
2019

5.94 years

6.37 years

4.26%

4.31%

Year Ended
December 31, 2019

$

(4,889)

(3,181)

(10,833)

Future minimum lease payments under non-cancelable leases for the years ending December 31, 2020, 2021, 2022, 2023, 2024 
and thereafter are as follows (in thousands):

2020

2021

2022

2023

2024

Thereafter

Total future minimum lease payments

Less imputed interest

Total

Operating Leases

Finance Leases

$

5,152

$

4,928

4,942

4,981

4,298

5,688

29,989

3,533

$

26,456

$

10,805

11,152

10,677

10,599

10,678

17,037

70,948

9,062

61,886

The following table represents the Company’s commitments under its previous presentation of its capital, operating, and build-
to-suit lease agreements as of December 31, 2018 (in thousands):

Periods ending

2019

2020

2021

2022

2023

Thereafter

Total minimum payments required

Amounts representing interest

Present value of net minimum payments

Current maturities

Long-term payment obligations

Capital Lease
Obligations

Operating
Leases

Build-to-Suit
Lease

4,392

$

4,904

$

1,754

481

—

—

—

4,783

4,185

4,180

4,205

9,760

6,627

$

32,017

$

9,451

9,522

10,354

10,520

10,599

27,715

78,161

648

5,979

3,884

2,095

$

$

$

126

Etsy, Inc.
Notes to Consolidated Financial Statements

Note 12—Accrued Expenses 

Accrued expenses consisted of the following as of the dates indicated (in thousands):

Sales and use tax payable

Vendor accruals

Accrued bonus

Payroll-related liabilities

Accrued vacation

Total accrued expenses

Note 13—Debt 

2019 Convertible Debt

As of December 31,

2019

2018

$

$

39,250

$

25,760

19,561

3,172

602

88,345

$

12,242

17,817

12,906

2,406

3,787

49,158

In September 2019, the Company issued $650.0 million aggregate principal amount of 0.125% Convertible Senior Notes due 
2026 (the “2019 Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act 
of 1933, as amended (the “Securities Act”). The net proceeds from the sale of the 2019 Notes were $639.5 million after 
deducting the initial purchasers’ discount and offering expenses.

The 2019 Notes are convertible based upon an initial conversion rate of 11.4040 shares of the Company’s common stock per 
$1,000 principal amount of 2019 Notes (equivalent to an initial conversion price of approximately $87.69 per share). The 
conversion rate will be subject to adjustment upon the occurrence of certain specified events, including certain distributions and 
dividends to all or substantially all of the holders of the Company’s common stock. The Company will settle any conversions of 
the 2019 Notes in cash, shares of the Company’s common stock, or a combination thereof, with the form of consideration 
determined at the Company’s election.

The 2019 Notes will mature on October 1, 2026, unless earlier converted or repurchased. Prior to the close of business on the 
business day immediately preceding June 1, 2026, holders may convert all or a portion of their 2019 Notes only under the 
following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2019 
(and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading 
days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day 
of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable 
trading day; (2) during the 5 business day period after any 10 consecutive trading day period (the “measurement period”) in 
which the trading price per $1,000 principal amount of 2019 Notes for each trading day of the measurement period was less 
than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such 
trading day; (3) with respect to any or all of the 2019 Notes called for redemption by the Company prior to the close of business 
on the business day immediately preceding June 1, 2026, holders may convert all or any portion of their 2019 Notes at any time 
prior to the close of business on the second scheduled trading day prior to the redemption date, even if the 2019 Notes are not 
otherwise convertible at such time; and (4) upon the occurrence of specified corporate events. On and after June 1, 2026 until 
the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 
2019 Notes at any time, regardless of the foregoing circumstances. As of December 31, 2019, the if-converted value of the 2019 
Notes was approximately $321.6 million lower than the aggregate principal amount, or $328.4 million.

If a fundamental change occurs prior to the maturity date, holders may require the Company to repurchase all or a portion of 
their 2019 Notes for cash at a price equal to 100% of the principal amount of the 2019 Notes to be repurchased. Holders of 
2019 Notes who convert their 2019 Notes in connection with a notice of a redemption or a make-whole fundamental change 
may be entitled to a premium in the form of an increase in the conversion rate of the 2019 Notes. As of December 31, 2019, 
none of the conditions permitting the holders of the 2019 Notes to early convert have been met. 

The 2019 Notes are general unsecured obligations of the Company. The 2019 Notes rank senior in right of payment to all of the 
Company’s future indebtedness that is expressly subordinated in right of payment to the 2019 Notes; rank equal in right of 
payment with all of our liabilities that are not so subordinated, including our 0% Convertible Senior Notes due 2023 (the “2018 

127

Etsy, Inc.
Notes to Consolidated Financial Statements

Notes”); are effectively junior to any of the Company’s secured indebtedness; and are structurally junior to all indebtedness and 
liabilities (including trade payables) of the Company’s subsidiaries.

In accounting for the issuance of the 2019 Notes, the Company separated the 2019 Notes into liability and equity components. 
The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not 
have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, 
which does not meet the criteria for separate accounting as a derivative as it is indexed to the Company’s own stock, was 
determined by deducting the fair value of the liability component from the par value of the 2019 Notes. The difference between 
the principal amount of the 2019 Notes and the liability component represents the debt discount, which is recorded as a direct 
deduction from the related debt liability in the Consolidated Balance Sheet and accreted over the period from the date of 
issuance to the contractual maturity date, resulting in the recognition of non-cash interest expense. The equity component of the 
2019 Notes of approximately $154.0 million is included in additional paid-in capital in the Consolidated Balance Sheet and is 
not remeasured as long as it continues to meet the conditions for equity classification. Transaction costs were allocated to the 
liability and equity components in the same proportion as the allocation of the proceeds. Transaction costs attributable to the 
liability component were recorded as a direct deduction from the related debt liability in the Consolidated Balance Sheet and 
are amortized to interest expense using the effective interest method over the term of the 2019 Notes, and transaction costs 
attributable to the equity component were netted with the equity component in stockholders’ equity.

The Company capitalized $10.5 million of debt issuance costs in connection with the 2019 Notes. Non-cash interest expense, 
including amortization of debt issuance costs, related to the 2019 Notes for the year ended December 31, 2019 was $5.6 
million. Total unamortized debt issuance costs were $7.8 million as of December 31, 2019.

The estimated fair value of the 2019 Notes was $522.2 million as of December 31, 2019. The estimated fair value of the 2019 
Notes was determined through consideration of quoted market prices for similar instruments. The fair value is classified as 
Level 2, as defined in “Note 8—Fair Value Measurements.”

2019 Capped Call Transactions

The Company used $76.2 million of the net proceeds from the 2019 Notes offering to enter into separate capped call 
transactions (“2019 Capped Call Transactions”) with the initial purchasers and/or their respective affiliates. The 2019 Capped 
Call Transactions are expected generally to reduce the potential dilution and/or offset the cash payments the Company is 
required to make in excess of the principal amount of the 2019 Notes upon conversion of the 2019 Notes in the event that the 
market price per share of the Company’s common stock is greater than the strike price of the 2019 Capped Call Transactions 
with such reduction and/or offset subject to a cap. The 2019 Capped Call Transactions have an initial cap price of $148.63 per 
share of the Company’s common stock, which represents a premium of 150% over the last reported sale price of the Company’s 
common stock on September 18, 2019, and is subject to certain adjustments under the terms of the 2019 Capped Call 
Transactions. Collectively, the 2019 Capped Call Transactions cover, initially, the number of shares of the Company’s common 
stock underlying the 2019 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2019 Notes.

The 2019 Capped Call Transactions do not meet the criteria for separate accounting as a derivative as they are indexed to the 
Company’s stock. The premiums paid for the 2019 Capped Call Transactions have been included as a net reduction to 
additional paid-in capital within stockholders’ equity.

2018 Convertible Debt

In March 2018, the Company issued the 2018 Notes, $345.0 million aggregate principal amount of 0% Convertible Senior 
Notes due 2023, in a private placement to qualified institutional buyers pursuant to the Securities Act. The net proceeds from 
the sale of the 2018 Notes were $335.0 million after deducting the initial purchasers’ discount and offering expenses. 

The 2018 Notes are convertible based upon an initial conversion rate of 27.5691 shares of the Company’s common stock 
per $1,000 principal amount of 2018 Notes (equivalent to an initial conversion price of approximately $36.27 per share). The 
conversion rate will be subject to adjustment upon the occurrence of certain specified events, including certain distributions and 
dividends to all or substantially all of the holders of the Company’s common stock. The Company will settle any conversions of 
the 2018 Notes in cash, shares of the Company’s common stock, or a combination thereof, with the form of consideration 
determined at the Company’s election. 

128

Etsy, Inc.
Notes to Consolidated Financial Statements

The 2018 Notes will mature on March 1, 2023, unless earlier converted or repurchased. Prior to the close of business on the 
business day immediately preceding November 1, 2022, holders may convert all or a portion of their 2018 Notes only under the 
following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2018 (and 
only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days 
(whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the 
immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; 
(2) during the 5 business day period after any 10 consecutive trading day period (the “measurement period”) in which the 
trading price per $1,000 principal amount of 2018 Notes for each trading day of the measurement period was less than 98% of 
the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; 
(3) with respect to any or all of the 2018 Notes called for redemption by the Company prior to the close of business on the 
business day immediately preceding November 1, 2022, holders may convert all or any portion of their 2018 Notes at any time 
prior to the close of business on the second scheduled trading day prior to the redemption date, even if the 2018 Notes are not 
otherwise convertible at such time; (4) upon the occurrence of specified corporate events. On and after November 1, 2022 until 
the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 
Notes at any time, regardless of the foregoing circumstances. 

If a fundamental change occurs prior to the maturity date, holders may require the Company to repurchase all or a portion of 
their 2018 Notes for cash at a price equal to 100% of the principal amount of the 2018 Notes to be repurchased. Holders of 
2018 Notes who convert their 2018 Notes in connection with a notice of a redemption or a make-whole fundamental change 
may be entitled to a premium in the form of an increase in the conversion rate of the 2018 Notes.

During any calendar quarter preceding November 1, 2022 in which the closing price of the Company’s common stock exceeds 
130% of the applicable conversion price of the 2018 Notes on at least 20 of the last 30 consecutive trading days of the quarter, 
holders may in the immediate quarter following convert all or a portion of their 2018 Notes. Based on the daily closing prices of 
the Company’s stock during the quarter ended December 31, 2019, holders of the 2018 Notes are not eligible to convert their 
2018 Notes during the first quarter of 2020. When a conversion notice is received, the Company has the option to pay or deliver 
cash, shares of the Company’s common stock, or a combination thereof. Accordingly, the Company cannot be required to settle 
the 2018 Notes in cash and, therefore, the 2018 Notes are classified as long-term debt as of December 31, 2019. As 
of December 31, 2019, the if-converted value of the 2018 Notes was approximately $76.4 million higher than the aggregate 
principal amount, or $421.4 million.

The 2018 Notes are general unsecured obligations of the Company. The 2018 Notes rank senior in right of payment to all of the 
Company’s future indebtedness that is expressly subordinated in right of payment to the Notes; rank equal in right of payment 
with all of our liabilities that are not so subordinated, including our 2019 Notes; are effectively junior to any of the Company’s 
secured indebtedness; and are structurally junior to all indebtedness and liabilities (including trade payables) of the Company’s 
subsidiaries.

In accounting for the issuance of the 2018 Notes, the Company separated the 2018 Notes into liability and equity components. 
The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not 
have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, 
which does not meet the criteria for separate accounting as a derivative as it is indexed to the Company’s own stock, was 
determined by deducting the fair value of the liability component from the par value of the 2018 Notes. The difference between 
the principal amount of the 2018 Notes and the liability component represents the debt discount, which is recorded as a direct 
deduction from the related debt liability in the Consolidated Balance Sheets and accreted over the period from the date of 
issuance to the contractual maturity date, resulting in the recognition of non-cash interest expense. The equity component of the 
2018 Notes of approximately $72.8 million is included in additional paid-in capital in the Consolidated Balance Sheets and is 
not remeasured as long as it continues to meet the conditions for equity classification. Transaction costs were allocated to the 
liability and equity components in the same proportion as the allocation of the proceeds. Transaction costs attributable to the 
liability component were recorded as a direct deduction from the related debt liability in the Consolidated Balance Sheets and 
are amortized to interest expense using the effective interest method over the term of the 2018 Notes, and transaction costs 
attributable to the equity component were netted with the equity component in stockholders’ equity.

129

Etsy, Inc.
Notes to Consolidated Financial Statements

The Company capitalized $10.0 million of debt issuance costs in connection with the 2018 Notes. Non-cash interest expense, 
including amortization of debt issuance costs, related to the 2018 Notes for the year ended December 31, 2019 and 2018 was 
$15.2 million and $12.2 million, respectively. Total unamortized debt issuance costs related to the 2018 Notes were $5.2 million 
and $6.7 million as of December 31, 2019 and 2018, respectively.

The estimated fair value of the 2018 Notes was $310.3 million and $279.1 million as of December 31, 2019 and 2018, 
respectively. The estimated fair value of the 2018 Notes was determined through consideration of quoted market prices for 
similar instruments. The fair value is classified as Level 2, as defined in “Note 8—Fair Value Measurements.” 

2018 Capped Call Transactions

The Company used $34.2 million of the net proceeds from the 2018 Notes offering to enter into separate capped call 
transactions (“2018 Capped Call Transactions”) with the initial purchasers and/or their respective affiliates. The 2018 Capped 
Call Transactions are expected generally to reduce the potential dilution and/or offset the cash payments the Company is 
required to make in excess of the principal amount of the 2018 Notes upon conversion of the 2018 Notes in the event that the 
market price per share of the Company’s common stock is greater than the strike price of the 2018 Capped Call Transactions 
with such reduction and/or offset subject to a cap. The 2018 Capped Call Transactions have an initial cap price of $52.76 per 
share of the Company’s common stock, which represents a premium of 100% over the last reported sale price of the Company’s 
common stock on March 8, 2018, and is subject to certain adjustments under the terms of the 2018 Capped Call Transactions. 
Collectively, the 2018 Capped Call Transactions cover, initially, the number of shares of the Company’s common stock 
underlying the 2018 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2018 Notes.

The Capped Call Transactions do not meet the criteria for separate accounting as a derivative as they are indexed to the 
Company’s stock. The premiums paid for the 2018 Capped Call Transactions have been included as a net reduction to 
additional paid-in capital within stockholders’ equity.

2019 Credit Agreement

On February 25, 2019, the Company entered into a $200.0 million senior secured revolving credit facility pursuant to a Credit 
Agreement (the “2019 Credit Agreement”) with lenders party thereto from time to time, and Citibank N.A., as administrative 
Agent. The 2019 Credit Agreement will mature in February 2024. The 2019 Credit Agreement includes a letter of credit 
sublimit of $30.0 million and a swingline loan sublimit of $10.0 million.

Borrowings under the 2019 Credit Agreement (other than swingline loans) bear interest, at the Company’s option, at (i) a base 
rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 0.50%, and (c) an adjusted LIBOR rate for a one-
month interest period plus 1.00%, in each case plus a margin ranging from 0.25% to 0.875% or (ii) an adjusted LIBOR rate plus 
a margin ranging from 1.25% to 1.875%. Swingline loans under the 2019 Credit Agreement bear interest at the same base rate 
(plus the margin applicable to borrowings bearing interest at the base rate). These margins are determined based on the senior 
secured net leverage ratio (defined as secured funded debt, net of unrestricted cash up to $100 million, to EBITDA) for the 
preceding four fiscal quarter period. The Company is also obligated to pay other customary fees for a credit facility of this size 
and type, including an unused commitment fee, ranging from 0.20% to 0.35% depending on the Company’s senior secured net 
leverage ratio, and fees associated with letters of credit. The 2019 Credit Agreement also permits the Company, in certain 
circumstances, to request an increase in the facility by an amount of up to $100.0 million at the same maturity, pricing and other 
terms and to request an extension of the maturity date for the facility. In connection with the 2019 Credit Agreement, the 
Company also paid the lenders certain upfront fees.

The 2019 Credit Agreement contains customary representations and warranties applicable to the Company and its subsidiaries 
and customary affirmative and negative covenants applicable to the Company and its restricted subsidiaries. The negative 
covenants include restrictions on, among other things, indebtedness, liens, certain fundamental changes (including mergers), 
investments, dispositions, restricted payments (including dividends and stock repurchases), prepayments of junior debt, and 
transactions with affiliates. These restrictions do not prohibit a subsidiary of the Company from making pro rata payments to 
the Company or any other person that owns an equity interest in such subsidiary. The 2019 Credit Agreement contains financial 
covenants, that require the Company and its subsidiaries to maintain (i) a secured net leverage ratio not to exceed 3.00 to 1.00, 
subject to an increase, at the option of the Company, to 3.50 to 1.00 for a specified period of time in the event of certain 
material acquisitions, tested as of the last day of each fiscal quarter and (ii) an interest coverage ratio (defined as the ratio of 
EBITDA to cash interest expense) of not less than 2.50 to 1.00, tested for each fiscal quarter.

130

Etsy, Inc.
Notes to Consolidated Financial Statements

The 2019 Credit Agreement includes customary events of default, including, but not limited to, nonpayment of principal or 
interest, breaches of representations and warranties, failure to perform or observe covenants, cross-defaults with certain other 
indebtedness, final judgments or orders, certain change of control events, and certain bankruptcy-related events or proceedings. 
Upon the occurrence of an event of default (subject to notice and grace periods), obligations under the 2019 Credit Agreement 
could be accelerated.

Subject to certain exceptions, to the extent the Company has any material domestic subsidiaries, the obligations under the 2019 
Credit Agreement would be required to be guaranteed by such material domestic subsidiaries. The obligations under the 2019 
Credit Agreement are secured by all or substantially all of the assets of the Company and any such subsidiary guarantors.

The Company capitalized $1.4 million of debt issuance costs in connection with the 2019 Credit Agreement. Non-cash interest 
expense related to debt issuance costs on the 2019 Credit Agreement for the year ended December 31, 2019 was $0.3 million. 
Total unamortized debt issuance costs related to the 2019 Credit Agreement were $1.1 million as of December 31, 2019.

At December 31, 2019, the Company did not have any borrowings under the 2019 Credit Agreement and was in compliance 
with all financial covenants. 

Note 14—Commitments and Contingencies 

Lease Commitments

Finance Leases

The Company adopted ASU 2016-02—Leases (Topic 842) in the first quarter of 2019. Prior to the adoption of this standard, the 
Company applied build-to-suit accounting treatment to its headquarters lease in Brooklyn, New York and accounted for leased 
computer equipment as capital leases. The Company now accounts for these as finance leases under the requirements of the 
standard. For more information on the adoption of ASU 2016-02—Leases see “Note 1—Basis of Presentation and Summary of 
Significant Accounting Policies.”

In May 2014, the Company entered into a 10-year lease agreement for approximately 199,000 rentable square feet of office 
space in Brooklyn, New York for the Company’s headquarters, which commenced in 2015. For the year ended December 31, 
2019, approximately 172,000 rentable square feet was accounted for as a finance lease and approximately 53,000 rentable 
square feet located in an adjacent building was accounted for as an operating lease. In connection with the lease agreement, the 
Company established a $5.3 million collateral account, reflected in the restricted cash balance on the Consolidated Balance 
Sheets.

The Company entered into a credit agreement with Dell Financial Services, LLC. (“DFS”) on February 17, 2016, which 
provided the Company with a credit line of up to $6.0 million for hosting equipment leases (the “DFS Line”), which was 
increased to $9.0 million during 2017. This credit line was reduced to $6.0 million in 2019. The DFS Line allows the Company 
to lease hosting equipment from DFS. The leases have a 36-month term, zero interest and are payable in equal monthly 
installments with a buy-out option of $1 at the end of the lease term. As of December 31, 2019, the Company has lease 
obligations of approximately $0.8 million related to leased hosting equipment using the previously active DFS Line.

The Company entered into a credit agreement with ePlus Group, Inc. (“ePlus”) on January 3, 2014, which provided the 
Company with a credit line of up to $8.0 million for computer equipment leases (the “ePlus Line”), which was increased to 
$18.0 million during 2015. The ePlus Line allows the Company to order equipment from any approved vendor. ePlus purchases 
the equipment on behalf of the Company and leases it back to the Company. The leases have a 36-month term, interest rate of 
3.71-6.94% and are payable in equal monthly installments with a fair market value or a $1 buy-out option at the end of the lease 
term depending on the equipment. As of December 31, 2019, the Company has lease obligations of approximately $2.0 million 
related to leased computer equipment using the ePlus Line.

For the years ended December 31, 2019, 2018, and 2017, the accompanying Consolidated Statement of Operations includes 
charges of approximately $0.5 million, $1.0 million, and $1.6 million for interest expense, respectively, related to the equipment 
leased using the DFS and ePlus Lines.

131

Etsy, Inc.
Notes to Consolidated Financial Statements

Operating Leases

The Company did not enter into any material operating leases or extensions in 2019, 2018, or 2017. Rent expense for the 
Company’s operating leases is recognized over the term of each respective lease on a straight-line basis. In addition, the 
Company leases other office facilities under shorter terms and cancelable leases.

Total rent expense for the years ended December 31, 2019, 2018, and 2017 was $5.4 million, $3.8 million, and $4.1 million, 
respectively.

Purchase Obligations

The Company has $97.7 million of non-cancelable contractual commitments as of December 31, 2019, primarily related to 
cloud computing, as well as other support services. These commitments are due within four years. The following table 
represents the Company’s commitments under its purchase obligations as of December 31, 2019 (in thousands):  

Periods ending

2020

2021

2022

2023

2024

Thereafter

Total purchase obligations

Long-Term Debt

Purchase
Obligations

$

$

34,153

30,735

32,122

700

—

—

97,710

In September 2019, the Company issued the 2019 Notes in a private placement to qualified institutional buyers pursuant to the 
Securities Act. The 2019 Notes will mature on October 1, 2026, unless earlier converted or repurchased. In March 2018, the 
Company issued the 2018 Notes in a private placement to qualified institutional buyers pursuant to the Securities Act. The 2018 
Notes will mature on March 1, 2023, unless earlier converted or repurchased, and there are no contractual payments required 
until maturity. For more information on the 2019 and 2018 Notes, see “Note 13—Debt.”

Non-Income Tax Contingencies

The Company had reserves of $7.2 million and $0.9 million at December 31, 2019 and 2018, respectively, for certain non-
income tax obligations, representing management’s best estimate of its potential liability. The 2019 reserve includes $4.8 
million due to the acquisition of Reverb, which is wholly offset by an indemnification asset of $3.7 million and a deferred tax 
asset of $1.1 million. The Company could also be subject to examination in various jurisdictions related to income tax and non-
income tax matters. The resolution of these types of matters, if in excess of the recorded reserve, could have an adverse impact 
on the Company’s business.

Legal Proceedings 

From time to time in the normal course of business, various other claims and litigation have been asserted or commenced 
against the Company. Due to uncertainties inherent in litigation and other claims, the Company can give no assurance that it 
will prevail in any such matters, which could subject the Company to significant liability for damages. Any claims or litigation, 
regardless of their success, could have an adverse effect on the Company’s Consolidated Results of Operations or Cash Flows 
in the period the claims or litigation are resolved. Although the results of litigation and claims cannot be predicted with 
certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on 
our business.

132

Etsy, Inc.
Notes to Consolidated Financial Statements

Note 15—Stockholders’ Equity 

At December 31, 2019 and 2018, the authorized capital stock of the Company included 1,400,000,000 shares of common stock. 
At December 31, 2019 and 2018 there were 25,000,000 shares of preferred stock authorized. 

Common Stock

At December 31, 2019 and 2018 there were 118,342,772 and 119,771,702 shares of common stock issued and outstanding, 
respectively. Holders of common stock are entitled to one vote per share. Holders of common stock are not entitled to receive 
dividends unless declared by the Board of Directors. No dividends have been declared through December 31, 2019. The 
common stock has a $0.001 par value.

Convertible Preferred Stock

Upon the closing of the IPO on April 21, 2015, all outstanding shares of convertible preferred stock were converted into 
53,448,243 shares of common stock. As of December 31, 2019, 2018, and 2017, there was no convertible preferred stock 
outstanding.

Share Repurchases

In September 2019, the Board of Directors approved a concurrent stock repurchase with the pricing of the 2019 Notes, pursuant 
to which the Company repurchased $124.5 million, or 2,094,196 shares of its common stock. This authorization was only 
applicable concurrent with the issuance of the 2019 Notes and, therefore, there are no further purchases authorized under this 
approval.

On November 1, 2018, the Board of Directors approved a stock repurchase program that enables the Company to repurchase up 
to $200 million of its common stock. The program does not have a time limit and may be modified, suspended, or terminated at 
any time by the Board of Directors. The number of shares repurchased and the timing of repurchases will depend on a number 
of factors, including, but not limited to, stock price, trading volume and general market conditions, along with Etsy’s working 
capital requirements, general business conditions and other factors.

In November 2017, the Board of Directors approved a stock repurchase program that enabled the Company to repurchase up to 
$100 million of its common stock. The program was completed in the second quarter of 2018.

Under the stock repurchase programs, the Company may purchase shares of its common stock through various means, 
including open market transactions, privately negotiated transactions, tender offers or any combination thereof. In addition, 
open market repurchases of common stock may be made pursuant to trading plans established pursuant to Rule 10b5-1 under 
the Securities Exchange Act of 1934, as amended, which would permit common stock to be repurchased at a time that the 
Company might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions.

133

Etsy, Inc.
Notes to Consolidated Financial Statements

The following table summarizes the Company’s cumulative share repurchase activity of the programs noted above, excluding 
shares withheld to satisfy tax withholding obligations in connection with the vesting of employee restricted stock units and 
excluding the concurrent stock repurchase with the pricing of the 2019 Notes (in thousands, except share and per share 
amounts):

New Authorization on November 17, 2017 of $100 million

— $

— $

— $

100,000

Shares
Repurchased

Average Price
Paid per Share
(1)

Value of
Shares
Repurchased
(1)

Remaining
Amount
Authorized

Repurchases of common stock for the three months ended:

December 31, 2017

Balance as of December 31, 2017

Repurchases of common stock for the three months ended:

March 31, 2018

June 30, 2018

September 30, 2018

New Authorization on November 1, 2018 of $200 million

Repurchases of common stock for the three months ended:

December 31, 2018

Balance as of December 31, 2018

Repurchases of common stock for the three months ended:

March 31, 2019

June 30, 2019

September 30, 2019

December 31, 2019

586,231

586,231

2,807,393

722,941

—

—

916,083

5,032,648

532,412

—

50,721

425,078

17.57

17.57

24.43

29.15

—

—

49.11

28.80

51.64

—

55.16

52.21

10,301

10,301

68,586

21,113

—

—

45,000

145,000

27,500

—

2,798

22,202

(10,301)

89,699

(68,586)

(21,113)

—

200,000

(45,000)

155,000

(27,500)

—

(2,798)

(22,202)

Balance as of December 31, 2019

6,040,859

$

32.68

$

197,500

$

102,500

(1)  Average price paid per share excludes broker commissions. Value of shares repurchased includes broker commissions.

All repurchases were made using cash resources and all repurchased shares of common stock have been retired.

Note 16—Stock-based Compensation 

The Company’s 2015 Equity Incentive Plan (the “2015 Plan”) was adopted by its Board of Directors and approved by 
stockholders in March 2015. The 2015 Plan became effective immediately upon adoption although no awards were made under 
it until the effective date of the IPO. The 2015 Plan replaced the 2006 Stock Plan, and no further grants were made under the 
2006 Stock Plan as of the effective date of the IPO. 

Under the 2006 Stock Plan, incentive and nonqualified stock options or rights to purchase common stock were granted to 
eligible participants. Options were generally granted for a term of 10 years and generally vested 25% after the first year of 
service and ratably each month over the remaining 36-month period contingent on continued employment with the Company on 
each vesting date. 

The 2015 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted 
stock, restricted stock units (“RSUs”), and performance cash awards to employees, directors, and consultants. Beginning in 
2016, the number of shares available for issuance under the 2015 Plan may be increased annually by an amount equal to the 
lesser of 7,050,000 shares of common stock, 5% of the outstanding shares of common stock as of the last day of the 
immediately preceding fiscal year, or such other amount as determined by the Company’s Board of Directors. The Board of 
Directors approved an increase of 5,917,139, 2,395,434, and 6,088,461 shares available for issuance under the 2015 Plan as of 
January 2, 2020, January 2, 2019, and January 2, 2018, respectively. Any awards issued under the 2015 Plan that are forfeited 
by the participant will become available for future grant under the 2015 Plan. The number of shares of the Company’s common 
stock initially reserved for issuance under the 2015 Plan equaled the sum of 14,100,000 shares plus up to 12,653,075 shares 

134

Etsy, Inc.
Notes to Consolidated Financial Statements

reserved for issuance or subject to outstanding awards under the 2006 Stock Plan. At December 31, 2019, 31,831,808 shares 
were authorized under the 2015 Plan and 20,494,369 shares were available for future grant.

In the year ended December 31, 2019, the Company granted nonqualified stock options and RSUs to eligible participants. 
Options were generally granted for a term of 10 years. For both options and RSUs, vesting is typically over a four-year period 
and is contingent upon continued employment with the Company on each vesting date. In general, options granted to newly-
hired employees prior to July 2018 vest 25% after the first year of service and ratably each month over the remaining 36-month 
period. In general, RSUs granted to newly-hired employees prior to July 2018 vest 25% after the first year following the vesting 
commencement date, which is the first day of the fiscal quarter closest to the date of grant, and then vest ratably each quarter 
over the remaining 12-quarter period. In general, for current employees who received an additional grant prior to March 2018, 
options vest ratably each month over a 48-month period. In general, for current employees who received an additional grant 
prior to March 2018, RSUs vest ratably each quarter over a 16-quarter period following the vesting commencement date, which 
is the first day of the fiscal quarter closest to the date of grant. The Company recognizes forfeitures as they occur.

Beginning in July 2018, in general, for newly-hired employees, both options and RSUs vest 25% after the first year of service 
and ratably each six-month period over a four-year period following the vesting commencement date, which is the first day of 
the month following the date of grant. Beginning in March 2018, in general, for current employees who receive an additional 
grant, both options and RSUs vest ratably each six-month period over a four-year period following the vesting commencement 
date.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model using the 
inputs below. Prior to the IPO, the Company utilized equity valuations based on comparable publicly-traded companies, 
discounted free cash flows, an analysis of the Company’s enterprise value, and other factors deemed relevant in estimating the 
fair value of its common stock. Subsequent to the IPO, the Company has used the closing price of its common stock on Nasdaq 
as the fair value of its common stock. The risk-free rate for periods within the contractual life of the option is based on the U.S. 
Treasury yield curve in effect at the time of grant for time periods that approximate the expected life of the option awards. 
Expected volatilities are based on implied volatilities from Etsy and market comparisons of certain publicly traded companies 
and other factors. The expected term of stock options granted has been determined using the simplified method, which uses the 
midpoint between the vesting date and the contractual term. The fair value of RSUs is determined based on the closing price of 
the Company’s common stock on Nasdaq (rounded to the nearest hundredth) for the 30 trading days immediately prior to and 
including the date of grant. The requisite service period for stock options and RSUs is generally four years from the date of 
grant.

The fair value of options granted in each year using the Black-Scholes pricing model has been based on the following 
assumptions:

Volatility

Risk-free interest rate

Expected term (in years)

Dividend rate

Year Ended  
December 31,

2019

2018

2017

39.1% - 39.5% 38.6% - 47.8% 41.7% - 44.2%

1.6% - 2.5%

2.6% - 2.9%

1.9% - 2.2%

5.5 - 6.2

—%

5.5 - 6.3

—%

5.5 - 6.3

—%

135

 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

The following table summarizes the activity for the Company’s options (in thousands, except share and per share amounts):

Shares

Weighted-Average
Exercise Price

Weighted-Average
Remaining Contract
Term (in years)

Aggregate
Intrinsic Value

Outstanding at December 31, 2016

9,339,567

$

Granted

Exercised

Forfeited/Canceled

Outstanding at December 31, 2017

Granted

Exercised

Forfeited/Canceled

Outstanding at December 31, 2018

Granted

Exercised

Forfeited/Canceled

Outstanding at December 31, 2019

Total exercisable at December 31, 2019

5,887,183

(5,760,263)

(1,518,548)

7,947,939

797,201

(1,588,779)

(265,367)

6,890,994

462,563

(840,835)

(217,803)

6,294,919

3,835,279

7.89

11.04

5.87

11.36

11.02

29.87

11.49

15.68

12.91

64.29

11.64

30.11

16.26

12.30

6.64

$

43,613

7.93

74,996

7.94

239,177

7.24

6.88

185,900

123,671

The following table summarizes the weighted-average grant date fair value of options granted, intrinsic value of options 
exercised and fair value of awards vested in periods indicated (in thousands, except per share amounts):

Year Ended December 31,

2019

2018

2017

Weighted average grant date fair value of options granted

$

26.75

$

13.33

$

Intrinsic value of options exercised

Fair value of awards vested

42,758

41,997

34,268

32,717

4.85

52,693

19,826

The total unrecognized compensation expense at December 31, 2019 was $22.6 million, which will be recognized over a 
weighted-average period of 2.47 years. 

The following table summarizes the activity for the Company’s unvested RSUs:

Unvested at December 31, 2016

Granted

Vested

Forfeited/Canceled

Unvested at December 31, 2017

Granted

Vested

Forfeited/Canceled

Unvested at December 31, 2018

Granted

Vested

Forfeited/Canceled

Unvested at December 31, 2019

Shares

Weighted-Average
Fair Value

3,135,181

$

2,360,315

(1,072,321)

(1,348,928)

3,074,247

2,448,169

(1,496,906)

(545,142)

3,480,368

1,464,785

(1,392,295)

(592,445)

2,960,413

10.70

12.17

10.44

10.56

11.98

28.22

13.80

18.47

22.87

61.92

22.67

31.25

40.61

The total unrecognized compensation at December 31, 2019 was $107.4 million, which will be recognized over a weighted-
average period of 2.98 years. 

136

 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

Total stock-based compensation expense included in the Consolidated Statements of Operations is as follows (in thousands):

Cost of revenue

Marketing

Product development

General and administrative

Total stock-based compensation expense

Year Ended  
December 31,

2019

2018

2017

$

$

5,787

$

3,357

$

3,774

21,085

13,749

2,507

21,234

11,133

44,395

$

38,231

$

1,739

1,933

8,274

14,613

26,559

The total stock-based compensation expense in the years ended December 31, 2019, 2018, and 2017 includes $1.3 million, $3.8 
million, and $3.9 million, in acquisition-related stock-based compensation expense, respectively.

During the year ended December 31, 2018, the Company incurred non-cash stock-based compensation expense of $7.0 million 
resulting from the modification of stock options and RSUs to accelerate vesting of certain stock-based compensation in 
connection with the departure of two employees. See “Note 17—Restructuring and Other Exit Costs (Income)” for information 
on stock modifications incurred in 2017 related to restructuring.

Note 17—Restructuring and Other Exit Costs (Income) 

On April 30, 2017, the Board of Directors approved a plan to increase efficiency and streamline the Company’s cost structure 
through headcount reductions and a reduction in internal program expenses (the “May Actions”). On June 16, 2017, the Board 
of Directors approved additional initiatives designed to improve focus on key strategic growth opportunities (together with the 
May Actions, the “Actions”). The Actions included total headcount reductions of 245 positions or 23% of the total workforce as 
of December 31, 2016, closing ALM, a marketplace in France, and closing or consolidating certain international offices.

In connection with the Actions, the Company incurred $13.9 million of restructuring and other exit costs in the year ended 
December 31, 2017, comprised of employee severance, stock compensation modifications, and other exit costs, largely made up 
of cash expenditures. The Company generated $0.2 million of income in the year ended December 31, 2018 due to changes in 
estimated severance costs. 

The following table displays restructuring and other exit costs (income) recorded related to the Actions and a rollforward of the 
charges to the accrued expenses balance as of December 31, 2019 (in thousands):

Balance, December 31, 2016

Total restructuring and other exit costs

Costs charged against equity/assets

Cash payments

Balance, December 31, 2017

Total restructuring and other exit income

Cash payments

Balance, December 31, 2018

Balance, December 31, 2019

$

$

—

13,897

(2,987)

(9,568)

1,342

(249)

(1,093)

—

—

Severance
Charge

Stock-Based
Compensation

Other Exit Costs

Total

— $

— $

— $

2,701

(2,701)

—

—

—

—

—

992

(286)

(672)

34

(5)

(29)

—

— $

— $

10,204

—

(8,896)

1,308

(244)

(1,064)

—

— $

137

 
 
 
Etsy, Inc.
Notes to Consolidated Financial Statements

Total restructuring and other exit costs (income) included in the Consolidated Statements of Operations are as follows (in 
thousands):

Cost of revenue

Marketing

Product development

General and administrative

Total restructuring and other exit costs (income)

Year Ended  
December 31,

2019

2018

2017

$

$

— $

(19) $

—

—

—

(82)

(110)

(38)

738

2,950

3,232

6,977

— $

(249) $

13,897

138

 
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the 
effectiveness of our disclosure controls and procedures as of December 31, 2019. “Disclosure controls and procedures,” as 
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are designed to ensure that information required to be 
disclosed by a company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized, 
and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) 
accumulated and communicated to the company’s management, including its principal executive officer and principal financial 
officer, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure 
controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and 
procedures were effective as of December 31, 2019 at the reasonable assurance level.

Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable 
assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well 
designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its 
objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or 
fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

Management’s Report on Internal Controls Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined 
in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Our management conducted an assessment of the effectiveness of our 
internal control over financial reporting as of December 31, 2019 based on the criteria set forth in Internal Control-Integrated 
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the 
assessment, our management has concluded that its internal control over financial reporting was effective as of December 31, 
2019 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements 
in accordance with GAAP. 

Management has excluded Reverb Holdings Inc. (“Reverb”) from its assessment of internal control over financial reporting as 
of December 31, 2019 because it was acquired by the Company on August 15, 2019. Reverb is a wholly-owned subsidiary 
whose total assets and total revenues represent 2% and 2%, respectively, of the related consolidated financial statement 
amounts as of and for the year ended December 31, 2019.

Our independent registered public accounting firm, PricewaterhouseCoopers LLP, has issued an audit report with respect to the 
effectiveness of our internal control over financial reporting as of December 31, 2019, which appears in Part II, Item 8 of this 
Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified during the fourth quarter ended December, 
31, 2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None.

139

Item 10. Directors, Executive Officers and Corporate Governance.

PART III.

The information required by this item is incorporated by reference to our Proxy Statement for the 2020 Annual Meeting of 
Stockholders (“Proxy Statement”) to be filed with the SEC within 120 days of the fiscal year ended December 31, 2019.

Our Board of Directors has adopted a Code of Conduct applicable to all officers, directors, and employees, which is available 
on our website (investors.etsy.com) under “Governance—Governance Documents.” We intend to satisfy the disclosure 
requirement under Item 5.05 of Form 8-K regarding amendments and waivers of our Code of Conduct by posting information 
on the website address specified above.

Item 11. Executive Compensation.

The information required by this item is incorporated by reference to our Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 

The information required by this item is incorporated by reference to our Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item is incorporated by reference to our Proxy Statement.

Item 14. Principal Accounting Fees and Services.

The information required by this item is incorporated by reference to our Proxy Statement.

140

PART IV.

Item 15. Exhibits, Financial Statement Schedules.

(a) The following documents are filed as part of this report:

(1)  Financial Statements. 

Our Consolidated Financial Statements are listed in the “Index to Consolidated Financial Statements” under Part II, Item 8
of this Annual Report on Form 10-K.

(2)  Financial Statement Schedules.

All schedules are omitted because they are not applicable or because the required information is shown in the Consolidated 
Financial Statements and Notes.

(3) Exhibits. 

Exhibit Index

Exhibit
Number

2.1

3.1

3.2

4.1

4.2

4.3

4.4

4.5

Exhibit Description
Agreement and Plan of Merger by and among 
Etsy, Inc., Polanco Acquisition Sub, Inc., 
Reverb Holdings, Inc. and Fortis Advisors LLC, 
dated as of July 21, 2019

Amended and Restated Certificate of 
Incorporation of Etsy, Inc.

Amended and Restated Bylaws of Etsy, Inc.
Indenture between Etsy, Inc. and U.S. Bank 
National Association, dated as of March 13, 
2018
Form of Global Note, representing Etsy Inc.’s 
0% Convertible Senior Notes due 2023 
(included as Exhibit A to the Indenture filed as 
Exhibit 4.1)
Indenture between Etsy, Inc. and U.S. Bank 
National Association, dated as of September 23, 
2019

Form of Global Note, representing Etsy, Inc.’s 
0.0125% Convertible Senior Notes due 2026 
(included as Exhibit A to the Indenture filed as 
Exhibit 4.3)

Incorporated by Reference

Form

File No.

Exhibit

Filing Date

Filed
Herewith

8-K

8-K

8-K

001-36911

001-36911

001-36911

2.1

3.1

3.2

7/22/2019

4/21/2015

4/21/2015

8-K

001-36911

4.1

3/14/2018

8-K

001-36911

4.2

3/14/2018

8-K

001-36911

4.1

9/23/2019

8-K

001-36911

4.2

9/23/2019

Form of Confirmation for Called Call 
Transaction

8-K

001-36911

99.2

9/23/2019

4.6

Description of Securities

Form of Indemnification Agreement between 
Etsy, Inc. and each of its directors and executive 
officers

2006 Stock Plan, as amended, and forms of 
agreements thereunder

10.1*

10.2*

10.3*

2015 Equity Incentive Plan

10.3.1*

Forms of agreements under 2015 Equity 
Incentive Plan

S-1/A

S-1

S-1/A

333-2024
97

333-2024
97

333-2024
97

10.1

3/31/2015

10.2.1

3/4/2015

10.3

4/14/2015

10-K

001-36911

10.3.1

2/28/2019

X

141

 
S-1/A

S-1

333-2024
97

333-2024
97

10.4

3/31/2015

10.6

3/4/2015

10-Q

001-36911

10.1

8/7/2017

8-K

001-36911

10.1

4/3/2017

10-Q

001-36911

10.2.2

8/7/2017

10-K

001-36911

10.11

3/1/2018

10-K

10-K

S-1

001-36911

001-36911
333-2024
97

10.12

10.11

3/1/2018

2/28/2019

10.14

3/4/2015

10-Q

001-36911

10.1

8/4/2016

10-K

001-36911

10.19.3

3/1/2018

10-Q

001-36911

10.1

5/9/2019

10-Q

001-36911

10.1

10/31/2019

8-K

001-36911

99.1

9/23/2019

10.4*

2015 Employee Stock Purchase Plan

Agreement of Lease, dated May 12, 2014, 
among Etsy, Inc., 117 Adams Owner LLC and 
55 Prospect Owner LLC

Letter Agreement between Etsy, Inc. and Josh 
Silverman, dated May 2, 2017

Letter Agreement between Etsy, Inc. and Rachel 
Glaser, dated April 2, 2017

10.5

10.6*

10.7*

10.7.1*

Amendment to Letter Agreement between Etsy, 
Inc. and Rachel Glaser, dated May 4, 2017

10.8*

10.9*

Employment offer letter between Etsy, Inc. and 
Michael Fisher, dated July 27, 2017

Employment offer letter between Etsy, Inc. and 
Jill Simeone, dated January 6, 2017

10.10* Executive Severance Plan 

10.11* Management Cash Incentive Plan

10.11.1*

10.12*

Amendment No. 1 to the Etsy, Inc. Management 
Cash Incentive Plan
Amended and Restated Compensation Program 
for Non-Employee Directors, effective January 
1, 2018

Amended and Restated Compensation Program 
for Non-Employee Directors, effective February 
18, 2020

10.12.1*

Credit Agreement, dated as of February 25, 
2019, among Etsy, Inc., Citibank, N.A. as 
administrative agent and the other lenders party 
thereto.

Waiver to Credit Agreement, dated as of 
September 18, 2019, among Etsy, Inc., Citibank, 
N.A. as administrative agent and the other 
lenders party thereto

Purchase Agreement, dated September 18, 2019 
by and among Etsy, Inc. and J.P. Morgan 
Securities LLC, Goldman Sachs & Co. LLC and 
Barclays Capital Inc. 

List of Subsidiaries of Etsy, Inc.

Consent of PricewaterhouseCoopers LLP, 
Independent Registered Public Accounting Firm

Power of Attorney (contained in the signature 
page to this Annual Report on Form 10-K)

Certification of Principal Executive Officer 
Required Under Rule 13a-14(a) and 15d-14(a) 
of the Securities Exchange Act of 1934, as 
amended

Certification of Principal Financial Officer 
Required Under Rule 13a-14(a) and 15d-14(a) 
of the Securities Exchange Act of 1934, as 
amended

Certification of Chief Executive Officer 
Required Under Rule 13a-14(b) of the Securities 
Exchange Act of 1934, as amended, and 
18 U.S.C. §1350

10.13

10.13.1

10.14

21.1

23.1

24.1

31.1

31.2

32.1†

142

X

X

X

X

X

X

X

Certification of Chief Financial Officer 
Required Under Rule 13a-14(b) of the Securities 
Exchange Act of 1934, as amended, and 
18 U.S.C. §1350

32.2†

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Schema Linkbase Document

101.CAL

XBRL Taxonomy Calculation Linkbase
Document

101.DEF

XBRL Taxonomy Definition Linkbase
Document

101.LAB XBRL Taxonomy Labels Linkbase Document

101.PRE

XBRL Taxonomy Presentation Linkbase 
Document’

The cover page of the Company’s Annual
Report on Form 10-K for the year ended Dec.
31, 2019, formatted in inline XBRL.**

104

X

X

X

X

X

X

X

* 
† 

** 

Indicates a management contract or compensatory plan. 
These certifications are not deemed to be filed with the SEC and are not to be incorporated by reference into any filing of 
Etsy, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. 
The cover page interactive data file is embedded within the inline XBRL document and included in Exhibit 101.

Item 16. Form 10-K Summary

None.

143

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this 
report to be signed on its behalf by the undersigned, thereunto duly authorized.

Signatures

ETSY, INC.

Date: February 26, 2020

/s/ Rachel Glaser

Rachel Glaser
Chief Financial Officer
(Principal Financial and Accounting Officer)

Power of Attorney

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and 
appoints Josh Silverman and Rachel Glaser, and each of them, as his or her true and lawful attorney-in-fact and agent with full 
power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 
10-K and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and 
Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every 
act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might 
or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute, may 
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following 
persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Josh Silverman
Josh Silverman

/s/ Rachel Glaser
Rachel Glaser

/s/ Fred Wilson
Fred Wilson

/s/ Gary Briggs
Gary Briggs

/s/ M. Michele Burns 
M. Michele Burns

/s/ Edith Cooper 
Edith Cooper

/s/ Jonathan D. Klein
Jonathan D. Klein

/s/ Melissa Reiff
Melissa Reiff

/s/ Margaret M. Smyth
Margaret M. Smyth

President, Chief Executive Officer, and Director
(Principal Executive Officer)

February 26, 2020

Chief Financial Officer (Principal Financial and
Accounting Officer)

February 26, 2020

Chair

Director

Director

Director

Director

Director

Director

February 26, 2020

February 26, 2020

February 26, 2020

February 26, 2020

February 26, 2020

February 26, 2020

February 26, 2020

144

Jonathan D. Klein 
Co-Founder and Deputy 
Chairman, Getty Images, Inc. 

Melissa Reiff 
Chief Executive Officer, The 
Container Store Group, Inc.

Josh Silverman 
Chief Executive Officer, Etsy, 
Inc. 

Margaret M. Smyth 
U.S. Chief Financial Officer, 
National Grid

Board of Directors

Fred Wilson 
Chair  
Managing Partner,  
Union Square Ventures

Gary S. Briggs 
Chairman of Hawkfish, 
LLC

M. Michele Burns 
Former Chief Executive 
Officer, Retirement Policy 
Center, Marsh & McLennan 
Companies, Inc. 

Edith W. Cooper 
Former Executive 
Vice President, Global 
Head, Human Capital 
Management, Goldman 
Sachs Group, Inc.

2019 Integrated Annual Report

Executive Officers 

Josh Silverman 
Chief Executive Officer 

Kruti Patel Goyal 
Chief Product Officer

Mike Fisher 
Chief Technology Officer 

Ryan Scott 
Chief Marketing Officer

Rachel Glaser 
Chief Financial Officer 

Jill Simeone 
General Counsel  
and Secretary

Raina Moskowitz 
Senior Vice President, People, 
Strategy, and Services

Common Stock 
Etsy’s common stock is listed on 
Nasdaq under the ticker symbol 
“ETSY” 

Transfer Agent 
Questions from stockholders 
of record regarding stock 
certificates, changes of address 
and other issues should be 
directed to: Computershare Trust 
Company, N.A. 
Attn: Shareholder Services 
P.O. Box 505000 
Louisville, KY 40233-5000 
1 (877) 373-6374 
Hearing Impaired:  
TDD 1 (800) 952-9245 
www.computershare.com 

Investor Relations 
Information about Etsy, press 
releases, blog posts, and other 
investor information is available on 
our website at: investors.etsy.com 
Stockholder inquiries can be sent 
via email to: IR@etsy.com 

Independent Registered Public 
Accounting Firm 
PricewaterhouseCoopers LLP 
300 Madison Avenue 
New York, NY 10017 

Corporate Headquarters 
Etsy, Inc. 
117 Adams Street 
Brooklyn, NY 11201 
Etsy.com

We love our planet. This report was printed on paper
that contains recycled content which is FSC® certified
and made with post-consumer waste.

This Annual Report includes forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements
include statements related to our outlook, business strategy, market size,
our ability to execute on our strategy to own special purchase occasions,
the impact of our key initiatives, our product roadmap and potential
future growth. Forward-looking statements include all statements that
are not historical facts. Forward-looking statements involve substantial
risks and uncertainties that may cause actual results to differ materially
from those that we expect, including those risks and uncertainties
identified in the section titled “Risk Factors” in the Form 10-K included
in this Annual Report. Forward-looking statements represent our beliefs
and assumptions only as of the date of this Annual Report. We disclaim
any obligation to update these forward-looking statements.

2019 Integrated Annual Report