x
|
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2016
|
|
|
|
OR
|
|
|
¨
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from
to
|
Delaware
|
|
20-4898921
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
117 Adams Street, Brooklyn, NY
|
|
11201
|
(Address of principal executive offices)
|
|
(Zip code)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock, par value $0.001 per share
|
|
The NASDAQ Stock Market LLC
(NASDAQ Global Select Market)
|
|
|
Page
|
|
Part I
|
|
Item 1.
|
Business
|
|
Item 1A.
|
Risk Factors
|
|
Item 1B.
|
Unresolved Staff Comments
|
|
Item 2.
|
Properties
|
|
Item 3.
|
Legal Proceedings
|
|
Item 4.
|
Mine Safety Disclosures
|
|
|
Part II
|
|
Item 5.
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
Item 6.
|
Selected Consolidated Financial and Other Data
|
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
Consolidated Balance Sheets as of December 31, 2015 and 2016
|
|
|
Consolidated Statements of Operations for the years ended December 31, 2014, 2015 and 2016
|
|
|
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2014, 2015 and 2016
|
|
|
Consolidated Statement of Changes in Convertible Preferred Stock and Stockholders' Equity for the years ended December 31, 2014, 2015 and 2016
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2015 and 2016
|
|
|
Notes to Consolidated Financial Statements
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
|
Item 9A.
|
Controls and Procedures
|
|
Item 9B.
|
Other Information
|
|
|
Part III
|
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
|
Item 11.
|
Executive Compensation
|
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
|
Item 14.
|
Principal Accounting Fees and Services
|
|
|
Part IV
|
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
|
Item 16.
|
Form 10-K Summary
|
|
|
Signatures
|
|
|
Exhibit Index
|
Etsy Sellers
|
•
|
87%
identify as women;
|
•
|
73%
consider their Etsy shop to be a business;
|
•
|
33%
use their creative business as their sole occupation;
|
•
|
97%
run their shops from their homes;
|
•
|
81%
aspire to grow their sales in the future; and
|
•
|
62%
started their Etsy shop as a way to supplement income.
|
Key Components of Our Platform
|
•
|
Personalized search and discovery.
Our platform is engineered to provide a personalized experience to each Etsy buyer, adjusting in real time based on her interactions within it. An Etsy buyer may search for an item using our search tool bar and filter the results by color, price, location or other characteristics. Additionally, she may browse through items, creating an activity feed by “favoriting” items that catch her eye and by following shops and tastemakers. We glean insights from Etsy buyers’ purchases and other interactions within our platform through our machine learning
|
•
|
Connected experience across all devices
—
mobile and desktop.
We want to engage Etsy buyers wherever they are and to provide an enjoyable and accessible shopping experience no matter how they come to Etsy. Our Etsy.com website and iOS and Android mobile apps include search and discovery, curation, personalization and social shopping features. We offer a connected experience through each channel, desktop, mobile web, and mobile app, ensuring that no matter what device she uses she will have the best possible experience. To optimize our mobile experience, we use deep linking to automatically transition Etsy buyers from mobile web to the mobile app when they encounter a link to an Etsy shop or item. Buyers can sign-up and sign-in to Etsy through Facebook and Google and our payment and digital wallet options include Apple Pay, Google Wallet and others. Our mobile apps have been downloaded approximately
41 million
times as of
December 31, 2016
.
|
•
|
Global reach combined with local scale
. There are people using our platform to buy and sell in nearly every country in the world. Our platform makes it easy for Etsy buyers and Etsy sellers to connect 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, product ads, and conversations between Etsy buyers and Etsy sellers. Our payments platform makes it easy for Etsy sellers to offer Etsy buyers a wide range of payment options. In addition to providing buyers with access to global inventory, we are also building local communities and fostering local connections. For example, our localized search feature, which is available in the U.K., Australia, France, and Germany, surfaces local items more prominently in search results so that buyers can easily connect with and purchase from sellers within their respective countries. In
2016
,
33.3%
of Etsy sellers were located outside the United States, and
30.4%
of our GMS involved an Etsy seller or Etsy buyer outside of the United States.
|
•
|
Direct communication between sellers and buyers.
We believe human connection is central to Etsy buyers’ engagement. Etsy buyers and Etsy sellers use the Conversations tool on our platform to communicate, person to person, about their orders, to request custom goods or personalization of goods or simply to have a conversation about the product or the process. In
2016
,
56%
of our active buyers sent or received a conversation and
67%
of active sellers sent or received a conversation using our Conversations tool. In addition to our Conversations tool, we encourage engagement between Etsy buyers and Etsy sellers in a variety of ways, whether it be through sharing reviews on social media or connecting offline through the Etsy Local feature on our mobile app.
|
How an Etsy Seller Spends Her Time
|
•
|
Seller Services.
We offer a variety of services to help Etsy sellers build their personal brands, engage potential customers and complete transactions. We currently have four Seller Services, all of which were developed in-house:
|
•
|
Direct Checkout.
Direct Checkout allows Etsy sellers to accept various forms of payment such as credit cards, debit cards, PayPal, Google Wallet, Apple Pay and Etsy Gift Cards. Once an Etsy buyer makes payment, the Etsy seller receives the funds in her own bank account and in her local currency. As of
December 31, 2016
, Direct Checkout was available in
36
countries and
12
currencies, compared to
22
countries and
10
currencies as of December 31, 2015. During
2016
,
45.5%
of active sellers used Direct Checkout.
|
•
|
Promoted Listings.
Promoted Listings enables Etsy sellers to pay a cost-per-click based fee to feature and promote their goods in search results generated by Etsy buyers on our platform. This service allows Etsy sellers to target Etsy buyers who are specifically searching for goods similar to those she offers for sale. During
2016
,
15.9%
of active sellers used Promoted Listings.
|
•
|
Shipping Labels.
Shipping Labels allows Etsy sellers to purchase United States Postal Service, FedEx and Canada Post shipping labels through our platform with the appropriate amount of postage. The ability to print shipping labels at home reduces the cost and time it takes Etsy sellers to ship goods to Etsy buyers globally. During
2016
,
26.3%
of active sellers in the United States and Canada used Shipping Labels.
|
•
|
Pattern by Etsy.
With Pattern, Etsy sellers can create their own custom websites in minutes through our platform. Pattern imports listings and content from Etsy shops, syncs inventory and orders and utilizes our Direct Checkout and Shipping Label services. Since launching the service in April 2016, we have continued to introduce new features and enhancements, including additional layouts and themes, new search and image display options, guest checkout functionality and the ability for Pattern users to host a blog or send newsletters. Since the launch,
2.5%
of active sellers used Pattern (includes eight months of paid seller activity).
|
Use of Seller Services in 2016
|
•
|
Seller Tools.
In addition to our paid Seller Services, we provide a wide range of tools and features to support Etsy sellers run the administrative side of their businesses, including marketing and taxes. For example, our Google Shopping tool, which is complementary to our Promoted Listings service and the Google advertising we do on behalf of Etsy sellers,
enables Etsy sellers to reach a broader audience by advertising their listings in Google search results. Through our partnership with Intuit, Etsy sellers in the United States and United Kingdom can simplify their accounting and bookkeeping by seamlessly exporting their Etsy.com sales and expenses to QuickBooks Self-Employed. To easily monitor orders and track sales and analyze visits and listings, Etsy sellers can use our online dashboard. Etsy sellers can also access analytics on the dashboard, on our website or on our “Sell on Etsy” mobile app. Of our
2016
active sellers,
50.6%
used the Sell on Etsy mobile app in
2016
. In early 2017, we launched Shop Manager which will serve 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. This tool makes it easier for creative entrepreneurs to run multi-channel businesses on Etsy and moves us closer to our long-term goal of supporting Etsy sellers wherever they choose to pursue commerce.
|
•
|
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 own educational resources, Etsy sellers connect through self-organized Etsy Teams to build supportive personal relationships with other Etsy Sellers, collaborate, educate and support each other as they build their independent creative businesses.
|
•
|
Our active sellers and active buyers remain so for multiple years. For example,
32.3%
of active sellers and
42.5%
of active buyers as of December 31, 2012 continued to be active sellers and active buyers through their fourth year on the platform and
31.5%
of active sellers and
41.1%
of active buyers as of December 31, 2013 continued to be active sellers and active buyers through their fourth year on the platform. In addition, as of
December 31, 2016
,
15.2%
of active sellers
|
•
|
Repeat purchases demonstrate the loyalty of Etsy buyers. In
2016
, approximately
41.0%
of our active buyers made purchases on two or more days in the previous 12 months, up from
40.6%
in
2015
.
|
•
|
Unlike many other online commerce companies, the vast majority of visits come to Etsy from organic or direct sources. In
2016
,
88%
of visits came to Etsy.com from direct, organic or email sources. A visit represents activity from a unique browser or mobile app. A visit ends after 30 minutes of inactivity.
|
•
|
Etsy sellers and Etsy buyers engage with each other often. In
2016
56%
of our active buyers sent or received a conversation and
67%
of active sellers sent or received a conversation using our Conversations tool. As of
December 31, 2016
, approximately
20.1%
of active sellers belong to a self-organized Etsy Team, developing supportive personal relationships with other Etsy sellers as they build their independent creative businesses. Currently, nearly
14,000
Etsy Teams have formed around the world.
|
•
|
Ensuring that buyers can find and purchase the exact items they are looking for each time they come to Etsy is an important part of fostering engagement and loyalty. In
2016
, conversion rates increased across desktop, mobile web and mobile app compared to
2015
, demonstrating our ability to continuously optimize the shopping experience.
|
Active Buyers by Purchase Type
|
Visits Contribution by Source Type
|
•
|
Raise brand awareness of Etsy.com as an everyday shopping destination:
With nearly
45 million
listings within Etsy.com, there are unique items available for nearly every personality, style, occasion and budget. We are investing in initiatives to shape perceptions and highlight the breadth and depth of items available. Over time, we believe that raising awareness of Etsy.com as a go-to shopping destination, not just for special occasions, will help us attract a larger audience and also encourage existing buyers to make more frequent purchases. We launched our first global brand marketing campaign, called “Difference Makes Us,” in September 2016 to showcase this positioning, and plan to increase this investment in marketing in the future. We also plan to invest in paid advertising and marketing campaigns to attract new craft supplies buyers to Etsy Studio in 2017.
|
•
|
Make enhancements that encourage purchase frequency:
We want to offer an engaging way for Etsy buyers to discover and purchase Etsy sellers’ unique goods. We believe that making enhancements to personalized product recommendations for Etsy buyers and helping them to better find the exact items they are looking for are our largest near-term opportunities. We are continuing our work to augment our existing capabilities within search and recommendation on Etsy.com. We also make regular updates to our platform to improve the shopping experience and strengthen Etsy buyer trust, such as further optimizing the mobile experience and our payments platform. We recently launched multi-shop checkout on Etsy.com, which gives Etsy buyers the ability to purchase items from more than one seller in a single transaction, and we plan to introduce guest checkout in 2017. We believe that all of these improvements together will support improving conversion rates and will ultimately enable us to increase buyer frequency on Etsy.com.
|
•
|
Connect globally while continuing to scale locally:
Our vision is global and local, and our platform supports Etsy buyers and Etsy sellers in nearly every country in the world. Cross-border transactions are 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. We are also focused on building and deepening local Etsy communities around the world, each with its own ecosystem of Etsy sellers and Etsy buyers. GMS generated between a non-U.S. buyer and a non-U.S. seller both in the same country grew approximately
47%
in
2016
compared with
2015
, making it the fastest growing category of international GMS. We plan to continue to invest in local marketing and content and other locally relevant tools and enhancements around the world to encourage these connections.
|
•
|
Start:
According to our 2016 seller survey, more than half of Etsy sellers choose our markets as the first place to start their creative business. By setting up a shop in our markets, an Etsy seller gains access to a global audience of
28.6 million
active buyers looking for unique goods or craft supplies. We offer a wealth of educational resources and a variety of listing tools to make the process of starting as intuitive as possible. Additionally, our vibrant community, including our
14,000
Etsy Teams and active forums, serve as a unique source of support that new Etsy sellers can turn to for advice and encouragement when starting a creative business.
|
•
|
Manage:
We want to make it easier for Etsy sellers to run their businesses so that they can devote more time to making or designing their goods. We offer a wide range of services and tools that help Etsy sellers more effectively manage their business, from payments to shipping to accounting and taxes. For example, services and tools such as Direct Checkout, Shipping Labels and our partnership with Intuit all reduce the amount of time that a seller spends on time-consuming administrative tasks.
|
•
|
Scale:
We want sellers to come to Etsy not only to access our global community of
28.6 million
active buyers, but also because we offer sales and marketing opportunities that help them reach their business goals. Both Pattern and Etsy Wholesale are sales channels that Etsy sellers can use to reach new audiences. Additionally, Promoted Listings and our Google Shopping tool serve as powerful marketing tools for Etsy sellers looking to raise their profile on and off Etsy.com. We will continue to build each of these offerings and look to expand our marketing offerings into a suite of marketing services and analytics tools that empower Etsy sellers to drive and measure the growth of their businesses.
|
•
|
fluctuations in revenue generated from Etsy sellers on our platform, including as a result of the seasonality of market transactions and Etsy sellers’ use of Seller Services;
|
•
|
the amount and timing of our operating expenses;
|
•
|
our success in attracting and retaining Etsy sellers and Etsy buyers;
|
•
|
our success in executing on our Markets and Seller Services strategies;
|
•
|
the timing and success of new services and features we introduce;
|
•
|
the impact of our investment in marketing;
|
•
|
economic and market conditions, such as currency fluctuations and global events;
|
•
|
disruptions or defects in our markets, such as privacy or data security breaches or other incidents that impact the reliability of our platform;
|
•
|
the impact of competitive developments and our response to those developments;
|
•
|
our ability to manage our existing business and future growth; and
|
•
|
the impact of our revised global corporate structure that was implemented on January 1, 2015.
|
•
|
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 markets, such as privacy or data security breaches or other incidents that impact the reliability of our platform;
|
•
|
lack of awareness of our policies;
|
•
|
changes to our policies that members of our community perceive as inconsistent with our values or that are not clearly articulated;
|
•
|
a failure to enforce our policies effectively, fairly and transparently, including, for example, by allowing the widespread listing of prohibited items in our markets;
|
•
|
a failure to respond to feedback from our community; or
|
•
|
a failure to operate our business in a way that is consistent with our values.
|
•
|
we may choose to prohibit the sale of items in our markets that we believe are inconsistent with our values even though we could benefit financially from the sale of those items;
|
•
|
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; or
|
•
|
we may take actions, such as investing in alternative forms of shipping or locating our servers in low-impact data centers, that reduce our environmental footprint even though these actions may be more costly than other alternatives.
|
•
|
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.
|
•
|
complying with different (and sometimes conflicting) laws and regulatory standards (particularly including those related to the use and disclosure of personal information, online payments, intellectual property, consumer protection, online platform liability and taxation of goods and services);
|
•
|
fluctuations of foreign exchange rates;
|
•
|
potentially heightened risk of fraudulent 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; and
|
•
|
barriers to international trade, such as tariffs, customs or other taxes.
|
•
|
our brand awareness;
|
•
|
the extent to which our Seller Services can ease the administrative tasks that an Etsy seller might encounter in running her business, wherever she chooses to pursue commerce;
|
•
|
the global scale of our markets and the breadth of our online presence;
|
•
|
the number and engagement of Etsy buyers;
|
•
|
our seller education resources and tools;
|
•
|
our policies and fees;
|
•
|
the ability to scale her business through Pattern, Etsy Wholesale or Etsy Manufacturing;
|
•
|
our mobile apps;
|
•
|
the strength of our community; and
|
•
|
our values.
|
•
|
the breadth of unique goods that Etsy sellers list in our markets;
|
•
|
our brand awareness;
|
•
|
the person-to-person commerce experience;
|
•
|
our reputation for trustworthiness;
|
•
|
our mobile apps;
|
•
|
ease of payment; and
|
•
|
the availability and reliability of our platform.
|
•
|
preserving our company culture as we grow;
|
•
|
continuing to attract and retain employees who share our values;
|
•
|
promoting existing employees into leadership positions to help sustain and grow our culture;
|
•
|
hiring employees in multiple locations globally;
|
•
|
responding to competitive pressures and changing business conditions in ways that do not divert us from our values; and
|
•
|
integrating new personnel and businesses from acquisitions.
|
•
|
integrating new businesses and technologies into our infrastructure;
|
•
|
consolidating operational and administrative functions;
|
•
|
coordinating outreach to our community;
|
•
|
maintaining morale and culture and retaining and integrating key employees;
|
•
|
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.
|
•
|
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.
|
•
|
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;
|
•
|
announcements of new services or enhancements, strategic alliances or significant agreements or other developments by us or our competitors;
|
•
|
announcements by us or our competitors of mergers or acquisitions or rumors of such transactions involving us or our competitors;
|
•
|
changes in our board of directors, management or other key personnel;
|
•
|
disruptions in our markets 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.
|
•
|
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;
|
•
|
restrict the forum for certain litigation against us to Delaware; 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.
|
|
2015
|
|
2016
|
||||||||||||
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
N/A
|
|
|
N/A
|
|
|
$
|
9.40
|
|
|
$
|
6.04
|
|
||
Second Quarter (beginning April 16, 2015)
|
$
|
35.74
|
|
|
$
|
13.78
|
|
|
10.10
|
|
|
7.60
|
|
||
Third Quarter
|
23.44
|
|
|
11.85
|
|
|
15.70
|
|
|
9.08
|
|
||||
Fourth Quarter
|
15.11
|
|
|
7.91
|
|
|
16.05
|
|
|
10.84
|
|
Period
|
(a) Total Number of Shares Purchased
|
|
(b) Average Price Paid per Share
|
|
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||||
October 1 - 31, 2016(1)
|
45,058
|
|
|
$
|
14.28
|
|
|
—
|
|
|
—
|
|
November 1 - 30, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
December 1 - 31, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
45,058
|
|
|
$
|
14.28
|
|
|
—
|
|
|
—
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands except share and per share amounts)
|
||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Markets
|
$
|
55,330
|
|
|
$
|
78,544
|
|
|
$
|
108,732
|
|
|
$
|
132,648
|
|
|
$
|
158,204
|
|
Seller Services
|
15,863
|
|
|
42,817
|
|
|
82,502
|
|
|
136,608
|
|
|
200,857
|
|
|||||
Other
|
3,409
|
|
|
3,661
|
|
|
4,357
|
|
|
4,243
|
|
|
5,906
|
|
|||||
Total revenue
|
74,602
|
|
|
125,022
|
|
|
195,591
|
|
|
273,499
|
|
|
364,967
|
|
|||||
Cost of revenue(1)
|
24,493
|
|
|
47,779
|
|
|
73,633
|
|
|
96,979
|
|
|
123,328
|
|
|||||
Gross profit
|
50,109
|
|
|
77,243
|
|
|
121,958
|
|
|
176,520
|
|
|
241,639
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketing(1)
|
10,902
|
|
|
17,850
|
|
|
39,655
|
|
|
66,771
|
|
|
82,799
|
|
|||||
Product development(1)
|
18,653
|
|
|
27,548
|
|
|
36,634
|
|
|
42,694
|
|
|
55,083
|
|
|||||
General and administrative(1)
|
21,909
|
|
|
31,112
|
|
|
51,920
|
|
|
68,939
|
|
|
86,180
|
|
|||||
Total operating expenses
|
51,464
|
|
|
76,510
|
|
|
128,209
|
|
|
178,404
|
|
|
224,062
|
|
|||||
(Loss) income from operations
|
(1,355
|
)
|
|
733
|
|
|
(6,251
|
)
|
|
(1,884
|
)
|
|
17,577
|
|
|||||
Other expense, net
|
(1,175
|
)
|
|
(675
|
)
|
|
(4,009
|
)
|
|
(26,110
|
)
|
|
(20,453
|
)
|
|||||
(Loss) income before income taxes
|
(2,530
|
)
|
|
58
|
|
|
(10,260
|
)
|
|
(27,994
|
)
|
|
(2,876
|
)
|
|||||
Benefit (provision) for income taxes
|
145
|
|
|
(854
|
)
|
|
(4,983
|
)
|
|
(26,069
|
)
|
|
(27,025
|
)
|
|||||
Net loss
|
$
|
(2,385
|
)
|
|
$
|
(796
|
)
|
|
$
|
(15,243
|
)
|
|
$
|
(54,063
|
)
|
|
$
|
(29,901
|
)
|
Net loss per share attributable to common stockholders—basic and diluted
|
$
|
(0.09
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(0.59
|
)
|
|
$
|
(0.26
|
)
|
Weighted average common shares outstanding—basic and diluted
|
30,281,842
|
|
|
32,667,242
|
|
|
40,246,663
|
|
|
91,122,291
|
|
|
113,562,738
|
|
(1)
|
Includes total stock-based compensation expense as follows:
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Cost of revenue
|
$
|
166
|
|
|
$
|
200
|
|
|
$
|
1,113
|
|
|
$
|
871
|
|
|
$
|
1,057
|
|
Marketing
|
57
|
|
|
79
|
|
|
216
|
|
|
560
|
|
|
971
|
|
|||||
Product development
|
436
|
|
|
785
|
|
|
1,461
|
|
|
2,860
|
|
|
5,079
|
|
|||||
General and administrative
|
3,435
|
|
|
2,770
|
|
|
7,260
|
|
|
6,550
|
|
|
8,794
|
|
|||||
Total stock-based compensation expense
|
$
|
4,094
|
|
|
$
|
3,834
|
|
|
$
|
10,050
|
|
|
$
|
10,841
|
|
|
$
|
15,901
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands except percentages)
|
||||||||||||||||||
Other Operational and Financial Data(2):
|
|
|
|
|
|
|
|
|
|
||||||||||
GMS
|
$
|
895,152
|
|
|
$
|
1,347,833
|
|
|
$
|
1,931,981
|
|
|
$
|
2,388,387
|
|
|
$
|
2,841,985
|
|
Adjusted EBITDA
|
$
|
10,669
|
|
|
$
|
16,947
|
|
|
$
|
23,081
|
|
|
$
|
31,007
|
|
|
$
|
57,124
|
|
Active sellers
|
830
|
|
|
1,074
|
|
|
1,353
|
|
|
1,563
|
|
|
1,748
|
|
|||||
Active buyers
|
9,317
|
|
|
14,032
|
|
|
19,810
|
|
|
24,046
|
|
|
28,566
|
|
|||||
Percent mobile visits
|
N/A
|
|
|
41
|
%
|
|
54
|
%
|
|
60
|
%
|
|
64
|
%
|
|||||
Percent mobile GMS
|
N/A
|
|
|
30
|
%
|
|
37
|
%
|
|
43
|
%
|
|
48
|
%
|
|||||
Percent international GMS
|
28.4
|
%
|
|
28.4
|
%
|
|
30.9
|
%
|
|
29.8
|
%
|
|
30.4
|
%
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Net loss
|
$
|
(2,385
|
)
|
|
$
|
(796
|
)
|
|
$
|
(15,243
|
)
|
|
$
|
(54,063
|
)
|
|
$
|
(29,901
|
)
|
Excluding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest and other non-operating expense, net
|
438
|
|
|
256
|
|
|
549
|
|
|
1,202
|
|
|
5,502
|
|
|||||
(Benefit) provision for income taxes
|
(145
|
)
|
|
854
|
|
|
4,983
|
|
|
26,069
|
|
|
27,025
|
|
|||||
Depreciation and amortization
|
7,930
|
|
|
12,380
|
|
|
17,223
|
|
|
18,550
|
|
|
22,525
|
|
|||||
Stock-based compensation expense
|
4,094
|
|
|
3,834
|
|
|
5,920
|
|
|
8,981
|
|
|
13,168
|
|
|||||
Stock-based compensation expense—acquisitions
|
—
|
|
|
—
|
|
|
4,130
|
|
|
1,860
|
|
|
2,733
|
|
|||||
Loss on asset impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
551
|
|
|||||
Net unrealized loss on warrant and other liabilities
|
737
|
|
|
419
|
|
|
411
|
|
|
3,133
|
|
|
—
|
|
|||||
Foreign exchange loss
|
—
|
|
|
—
|
|
|
3,049
|
|
|
21,775
|
|
|
14,951
|
|
|||||
Acquisition-related expenses
|
—
|
|
|
—
|
|
|
2,059
|
|
|
—
|
|
|
570
|
|
|||||
Contribution to Good Work Institute (formerly Etsy.org)
|
—
|
|
|
—
|
|
|
—
|
|
|
3,500
|
|
|
—
|
|
|||||
Adjusted EBITDA
|
$
|
10,669
|
|
|
$
|
16,947
|
|
|
$
|
23,081
|
|
|
$
|
31,007
|
|
|
$
|
57,124
|
|
|
As of December 31,
|
||||||||||||||
|
2013
|
|
2014
|
|
2015
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands)
|
||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents and short-term investments
|
$
|
54,870
|
|
|
$
|
88,843
|
|
|
$
|
292,864
|
|
|
$
|
282,086
|
|
Net working capital
|
55,764
|
|
|
85,608
|
|
|
278,932
|
|
|
287,024
|
|
||||
Total assets
|
104,900
|
|
|
246,203
|
|
|
553,061
|
|
|
581,193
|
|
||||
Deferred revenue
|
2,760
|
|
|
3,452
|
|
|
4,712
|
|
|
5,648
|
|
||||
Long-term liabilities
|
1,466
|
|
|
57,450
|
|
|
142,441
|
|
|
152,428
|
|
||||
Convertible preferred stock
|
80,212
|
|
|
80,212
|
|
|
—
|
|
|
—
|
|
||||
Total stockholders’ equity
|
4,003
|
|
|
67,088
|
|
|
330,498
|
|
|
344,757
|
|
•
|
Our GMS was
$2.8 billion
in
2016
, up
19.0%
over
2015
, and was
$2.4 billion
in
2015
, up
23.6%
over
2014
.
|
•
|
Our revenue was
$365.0 million
in
2016
, up
33.4%
over
2015
. In
2016
, our Markets revenue was
$158.2 million
, up
19.3%
over
2015
, and our Seller Services revenue was
$200.9 million
, up
47.0%
over
2015
. Our revenue was
$273.5 million
in
2015
, up
39.8%
over
2014
. In
2015
, our Markets revenue was
$132.6 million
, up
22.0%
over
2014
, and our Seller Services revenue was
$136.6 million
, up
65.6%
over
2014
.
|
•
|
As of
December 31, 2016
, our number of active sellers was
1.7 million
, up
11.8%
since
December 31, 2015
, and our number of active buyers was
28.6 million
, up
18.8%
since
December 31, 2015
. As of
December 31, 2015
, our number of active sellers was
1.6 million
, up
15.5%
since
December 31, 2014
, and our number of active buyers was
24.0 million
, up
21.4%
since
December 31, 2014
.
|
•
|
Etsy sellers and Etsy buyers have transacted across borders since our first year of business, and our international community continues to grow. International GMS was
30.4%
as a percentage of total GMS in
2016
, compared to
29.8%
of GMS in
2015
and
30.9%
of GMS in
2014
. In
2016
, GMS generated between a non-U.S. buyer and a non-U.S. seller both located in the same country increased approximately
47%
from
2015
. In 2015, this component of GMS increased approximately
58%
from 2014, partially due to the acquisition of ALM in June 2014. Currently, Etsy sellers and Etsy buyers are based in nearly every country in the world and our Etsy.com market is available in
10
languages.
|
•
|
During
2016
, we continued to enhance our mobile offerings. Mobile visits represented approximately
64%
of visits in
2016
,
60%
of visits in
2015
and
54%
of visits in
2014
. Mobile GMS represented approximately
48%
of GMS in
2016
, increasing from approximately
43%
of GMS in
2015
and approximately
37%
of total GMS in
2014
. As of
December 31, 2016
, our mobile apps have been downloaded
41 million
times.
|
•
|
We have continued to enhance our Seller Services offerings, most recently including the launch of Pattern in 2016. Seller Services revenue has increased as a percentage of total revenue in the past six years from less than 3% in 2011 to approximately
55%
in
2016
. Seller Services increased as a percentage of total revenue to
55%
in
2016
, up from approximately
50%
in
2015
and
42%
in
2014
.
|
•
|
In
2016
, we
incurred a net loss
of
$29.9 million
, compared to
$54.1 million
in
2015
and
$15.2 million
in
2014
. In
2016
, we reported Adjusted EBITDA of
$57.1 million
compared to
$31.0 million
in
2015
and
$23.1 million
in
2014
.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands except percentages)
|
||||||||||
GMS
|
|
$
|
1,931,981
|
|
|
$
|
2,388,387
|
|
|
$
|
2,841,985
|
|
Revenue
|
|
$
|
195,591
|
|
|
$
|
273,499
|
|
|
$
|
364,967
|
|
Markets revenue
|
|
$
|
108,732
|
|
|
$
|
132,648
|
|
|
$
|
158,204
|
|
Seller Services revenue
|
|
$
|
82,502
|
|
|
$
|
136,608
|
|
|
$
|
200,857
|
|
Net loss
|
|
$
|
(15,243
|
)
|
|
$
|
(54,063
|
)
|
|
$
|
(29,901
|
)
|
Adjusted EBITDA
|
|
$
|
23,081
|
|
|
$
|
31,007
|
|
|
$
|
57,124
|
|
|
|
|
|
|
|
|
||||||
Active sellers
|
|
1,353
|
|
|
1,563
|
|
|
1,748
|
|
|||
Active buyers
|
|
19,810
|
|
|
24,046
|
|
|
28,566
|
|
|||
Percent mobile visits
|
|
54
|
%
|
|
60
|
%
|
|
64
|
%
|
|||
Percent mobile GMS
|
|
37
|
%
|
|
43
|
%
|
|
48
|
%
|
|||
Percent international GMS
|
|
30.9
|
%
|
|
29.8
|
%
|
|
30.4
|
%
|
•
|
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
or changes in the fair value of warrants;
|
•
|
Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
|
•
|
Adjusted EBITDA does not consider the impact of
foreign exchange loss
;
|
•
|
Adjusted EBITDA does not consider the impact of
loss on asset impairment
;
|
•
|
Adjusted EBITDA does not reflect
acquisition-related expenses
;
|
•
|
Adjusted EBITDA does not reflect other non-operating expenses, net of other non-operating income, including
net interest expense
;
|
•
|
Adjusted EBITDA does not reflect the impact of our
contributions to Good Work Institute (formerly Etsy.org)
; and
|
•
|
other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
|
(in thousands)
|
||||||||||
Net loss
|
$
|
(15,243
|
)
|
|
$
|
(54,063
|
)
|
|
$
|
(29,901
|
)
|
Excluding:
|
|
|
|
|
|
||||||
Interest and other no
n-operating expense, net(1)
|
549
|
|
|
1,202
|
|
|
5,502
|
|
|||
Provision for income taxes
|
4,983
|
|
|
26,069
|
|
|
27,025
|
|
|||
Depreciation and amortization(1)
|
17,223
|
|
|
18,550
|
|
|
22,525
|
|
|||
Stock-based compensation expense
|
5,920
|
|
|
8,981
|
|
|
13,168
|
|
|||
Stock-based compensation expense—acquisitions
|
4,130
|
|
|
1,860
|
|
|
2,733
|
|
|||
Loss on asset impairment
|
—
|
|
|
—
|
|
|
551
|
|
|||
Net unrealized loss on warrant and other liabilities
|
411
|
|
|
3,133
|
|
|
—
|
|
|||
Foreign exchange loss
|
3,049
|
|
|
21,775
|
|
|
14,951
|
|
|||
Acquisition-related expenses
|
2,059
|
|
|
—
|
|
|
570
|
|
|||
Contribution to Good Work Institute (formerly Etsy.org)(2)
|
—
|
|
|
3,500
|
|
|
—
|
|
|||
Adjusted EBITDA
|
$
|
23,081
|
|
|
$
|
31,007
|
|
|
$
|
57,124
|
|
Cohort of 2011, 2012 and 2013 Active Sellers
|
Cohort of 2011, 2012 and 2013 Active Buyers
|
•
|
Revenue from Direct Checkout consists of fees an Etsy seller pays us to process credit, debit and Etsy Gift Card payments. Direct Checkout fees vary between 3-4% of the item’s total sale price plus a flat fee per order, depending on the country in which her bank account is located. Direct Checkout fees are based on an item’s total sale price, including shipping.
|
•
|
Revenue from Promoted Listings consists of cost-per-click fees an Etsy seller pays us for prominent placement of her listings in search results generated by Etsy buyers in our markets.
|
•
|
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 and Canada Post at discounted pricing due to the volume of purchases through our platform.
|
•
|
Revenue from Pattern by Etsy consists of monthly subscription and annual domain registration fees, an optional add-on, an Etsy seller pays to use our custom website services.
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
|
|
|
|
|
|
||||||
|
(in thousands)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Markets
|
$
|
108,732
|
|
|
$
|
132,648
|
|
|
$
|
158,204
|
|
Seller Services
|
82,502
|
|
|
136,608
|
|
|
200,857
|
|
|||
Other
|
4,357
|
|
|
4,243
|
|
|
5,906
|
|
|||
Total revenue
|
195,591
|
|
|
273,499
|
|
|
364,967
|
|
|||
Cost of revenue
|
73,633
|
|
|
96,979
|
|
|
123,328
|
|
|||
Gross profit
|
121,958
|
|
|
176,520
|
|
|
241,639
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Marketing
|
39,655
|
|
|
66,771
|
|
|
82,799
|
|
|||
Product development
|
36,634
|
|
|
42,694
|
|
|
55,083
|
|
|||
General and administrative
|
51,920
|
|
|
68,939
|
|
|
86,180
|
|
|||
Total operating expenses
|
128,209
|
|
|
178,404
|
|
|
224,062
|
|
|||
(Loss) income from operations
|
(6,251
|
)
|
|
(1,884
|
)
|
|
17,577
|
|
|||
Other expense, net
|
(4,009
|
)
|
|
(26,110
|
)
|
|
(20,453
|
)
|
|||
Loss before income taxes
|
(10,260
|
)
|
|
(27,994
|
)
|
|
(2,876
|
)
|
|||
Provision for income taxes
|
(4,983
|
)
|
|
(26,069
|
)
|
|
(27,025
|
)
|
|||
Net loss
|
$
|
(15,243
|
)
|
|
$
|
(54,063
|
)
|
|
$
|
(29,901
|
)
|
|
|
|
|
|
|
||||||
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Markets
|
55.6
|
%
|
|
48.5
|
%
|
|
43.3
|
%
|
|||
Seller Services
|
42.2
|
|
|
49.9
|
|
|
55.0
|
|
|||
Other
|
2.2
|
|
|
1.6
|
|
|
1.6
|
|
|||
Total revenue
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|||
Cost of revenue
|
37.6
|
|
|
35.5
|
|
|
33.8
|
|
|||
Gross profit
|
62.4
|
|
|
64.5
|
|
|
66.2
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Marketing
|
20.3
|
|
|
24.4
|
|
|
22.7
|
|
|||
Product development
|
18.7
|
|
|
15.6
|
|
|
15.1
|
|
|||
General and administrative
|
26.5
|
|
|
25.2
|
|
|
23.6
|
|
|||
Total operating expenses
|
65.5
|
|
|
65.2
|
|
|
61.4
|
|
|||
(Loss) income from operations
|
(3.2
|
)
|
|
(0.7
|
)
|
|
4.8
|
|
|||
Other expense, net
|
(2.0
|
)
|
|
(9.5
|
)
|
|
(5.6
|
)
|
|||
Loss before income taxes
|
(5.2
|
)
|
|
(10.2
|
)
|
|
(0.8
|
)
|
|||
Provision for income taxes
|
(2.5
|
)
|
|
(9.5
|
)
|
|
(7.4
|
)
|
|||
Net loss
|
(7.8
|
)
|
|
(19.8
|
)
|
|
(8.2
|
)
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2015
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Markets
|
|
$
|
132,648
|
|
|
$
|
158,204
|
|
|
$
|
25,556
|
|
|
19.3
|
%
|
Percentage of total revenue
|
|
48.5
|
%
|
|
43.3
|
%
|
|
|
|
|
|||||
Seller Services
|
|
$
|
136,608
|
|
|
$
|
200,857
|
|
|
$
|
64,249
|
|
|
47.0
|
%
|
Percentage of total revenue
|
|
49.9
|
%
|
|
55.0
|
%
|
|
|
|
|
|||||
Other
|
|
$
|
4,243
|
|
|
$
|
5,906
|
|
|
$
|
1,663
|
|
|
39.2
|
%
|
Percentage of total revenue
|
|
1.6
|
%
|
|
1.6
|
%
|
|
|
|
|
|||||
Total revenue
|
|
$
|
273,499
|
|
|
$
|
364,967
|
|
|
$
|
91,468
|
|
|
33.4
|
%
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2015
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Cost of revenue
|
|
$
|
96,979
|
|
|
$
|
123,328
|
|
|
$
|
26,349
|
|
|
27.2
|
%
|
Percentage of total revenue
|
|
35.5
|
%
|
|
33.8
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2015
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Marketing
|
|
$
|
66,771
|
|
|
$
|
82,799
|
|
|
$
|
16,028
|
|
|
24.0
|
%
|
Percentage of total revenue
|
|
24.4
|
%
|
|
22.7
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2015
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Product development
|
|
$
|
42,694
|
|
|
$
|
55,083
|
|
|
$
|
12,389
|
|
|
29.0
|
%
|
Percentage of total revenue
|
|
15.6
|
%
|
|
15.1
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2015
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
General and administrative
|
|
$
|
68,939
|
|
|
$
|
86,180
|
|
|
$
|
17,241
|
|
|
25.0
|
%
|
Percentage of total revenue
|
|
25.2
|
%
|
|
23.6
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2015
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Provision for income taxes
|
|
$
|
(26,069
|
)
|
|
$
|
(27,025
|
)
|
|
$
|
(956
|
)
|
|
3.7
|
%
|
Percentage of total revenue
|
|
(9.5
|
)%
|
|
(7.4
|
)%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2014
|
|
2015
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Markets
|
|
$
|
108,732
|
|
|
$
|
132,648
|
|
|
$
|
23,916
|
|
|
22.0
|
%
|
Percentage of total revenue
|
|
55.6
|
%
|
|
48.5
|
%
|
|
|
|
|
|||||
Seller Services
|
|
$
|
82,502
|
|
|
$
|
136,608
|
|
|
$
|
54,106
|
|
|
65.6
|
%
|
Percentage of total revenue
|
|
42.2
|
%
|
|
49.9
|
%
|
|
|
|
|
|||||
Other
|
|
$
|
4,357
|
|
|
$
|
4,243
|
|
|
$
|
(114
|
)
|
|
(2.6
|
)%
|
Percentage of total revenue
|
|
2.2
|
%
|
|
1.6
|
%
|
|
|
|
|
|||||
Total revenue
|
|
$
|
195,591
|
|
|
$
|
273,499
|
|
|
$
|
77,908
|
|
|
39.8
|
%
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2014
|
|
2015
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Cost of revenue
|
|
$
|
73,633
|
|
|
$
|
96,979
|
|
|
$
|
23,346
|
|
|
31.7
|
%
|
Percentage of total revenue
|
|
37.6
|
%
|
|
35.5
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2014
|
|
2015
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Marketing
|
|
$
|
39,655
|
|
|
$
|
66,771
|
|
|
$
|
27,116
|
|
|
68.4
|
%
|
Percentage of total revenue
|
|
20.3
|
%
|
|
24.4
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2014
|
|
2015
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
General and administrative
|
|
$
|
51,920
|
|
|
$
|
68,939
|
|
|
$
|
17,019
|
|
|
32.8
|
%
|
Percentage of total revenue
|
|
26.5
|
%
|
|
25.2
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
||||||||||
|
|
2014
|
|
2015
|
|
$
|
|
%
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
(in thousands except percentages)
|
||||||||||||
Provision for income taxes
|
|
$
|
(4,983
|
)
|
|
$
|
(26,069
|
)
|
|
$
|
(21,086
|
)
|
|
NM
|
Percentage of total revenue
|
|
(2.5
|
)%
|
|
(9.5
|
)%
|
|
|
|
|
|
Three Months Ended
|
|||||||||||||||||||||||
|
Mar. 31,
2015 |
June 30,
2015 |
Sept. 30,
2015 |
Dec. 31,
2015 |
Mar. 31,
2016 |
June 30,
2016 |
Sept. 30,
2016 |
Dec. 31,
2016 |
||||||||||||||||
|
(in thousands except share and per share amounts)
|
|||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Markets
|
$
|
30,151
|
|
$
|
30,469
|
|
$
|
32,232
|
|
$
|
39,796
|
|
$
|
35,730
|
|
$
|
37,405
|
|
$
|
38,133
|
|
$
|
46,936
|
|
Seller Services
|
27,279
|
|
29,770
|
|
32,329
|
|
47,230
|
|
43,533
|
|
47,069
|
|
48,511
|
|
61,744
|
|
||||||||
Other
|
1,113
|
|
1,126
|
|
1,135
|
|
869
|
|
2,584
|
|
875
|
|
918
|
|
1,529
|
|
||||||||
Total revenue
|
58,543
|
|
61,365
|
|
65,696
|
|
87,895
|
|
81,847
|
|
85,349
|
|
87,562
|
|
110,209
|
|
||||||||
Cost of revenue
|
20,709
|
|
21,909
|
|
24,165
|
|
30,196
|
|
27,911
|
|
29,098
|
|
29,314
|
|
37,005
|
|
||||||||
Gross profit
|
37,834
|
|
39,456
|
|
41,531
|
|
57,699
|
|
53,936
|
|
56,251
|
|
58,248
|
|
73,204
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Marketing
|
12,210
|
|
15,543
|
|
16,542
|
|
22,476
|
|
15,847
|
|
17,205
|
|
18,736
|
|
31,011
|
|
||||||||
Product development
|
10,009
|
|
10,072
|
|
11,406
|
|
11,207
|
|
12,230
|
|
11,840
|
|
14,897
|
|
16,116
|
|
||||||||
General and administrative
|
20,457
|
|
17,632
|
|
15,250
|
|
15,600
|
|
19,076
|
|
22,537
|
|
21,942
|
|
22,625
|
|
||||||||
Total operating expenses
|
42,676
|
|
43,247
|
|
43,198
|
|
49,283
|
|
47,153
|
|
51,582
|
|
55,575
|
|
69,752
|
|
||||||||
(Loss) income from operations
|
(4,842
|
)
|
(3,791
|
)
|
(1,667
|
)
|
8,416
|
|
6,783
|
|
4,669
|
|
2,673
|
|
3,452
|
|
||||||||
Other (expense) income, net
|
(21,019
|
)
|
2,346
|
|
(1,129
|
)
|
(6,308
|
)
|
8,023
|
|
(7,719
|
)
|
(709
|
)
|
(20,048
|
)
|
||||||||
(Loss) income before income taxes
|
(25,861
|
)
|
(1,445
|
)
|
(2,796
|
)
|
2,108
|
|
14,806
|
|
(3,050
|
)
|
1,964
|
|
(16,596
|
)
|
||||||||
Provision for income taxes
|
(10,725
|
)
|
(4,909
|
)
|
(4,095
|
)
|
(6,340
|
)
|
(13,614
|
)
|
(4,261
|
)
|
(4,363
|
)
|
(4,787
|
)
|
||||||||
Net (loss) income
|
$
|
(36,586
|
)
|
$
|
(6,354
|
)
|
$
|
(6,891
|
)
|
$
|
(4,232
|
)
|
$
|
1,192
|
|
$
|
(7,311
|
)
|
$
|
(2,399
|
)
|
$
|
(21,383
|
)
|
Net (loss) income per share attributable to common stockholders—basic and diluted
|
$
|
(0.84
|
)
|
$
|
(0.07
|
)
|
$
|
(0.06
|
)
|
$
|
(0.04
|
)
|
$
|
0.01
|
|
$
|
(0.06
|
)
|
$
|
(0.02
|
)
|
$
|
(0.19
|
)
|
Weighted average common shares outstanding—basic
|
43,703,508
|
|
96,503,149
|
|
111,329,917
|
|
111,677,599
|
|
112,129,470
|
|
113,045,888
|
|
113,757,212
|
|
115,296,380
|
|
||||||||
Weighted average common shares outstanding—diluted
|
43,703,508
|
|
96,503,149
|
|
111,329,917
|
|
111,677,599
|
|
115,368,566
|
|
113,045,888
|
|
113,757,212
|
|
115,296,380
|
|
|
Three Months Ended
|
|||||||||||||||
|
Mar. 31,
2015 |
June 30,
2015 |
Sept. 30,
2015 |
Dec. 31,
2015 |
Mar. 31,
2016 |
June 30,
2016 |
Sept. 30,
2016 |
Dec. 31,
2016 |
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
||||||||
Markets
|
51.5
|
%
|
49.7
|
%
|
49.1
|
%
|
45.3
|
%
|
43.7
|
%
|
43.8
|
%
|
43.5
|
%
|
42.6
|
%
|
Seller Services
|
46.6
|
|
48.5
|
|
49.2
|
|
53.7
|
|
53.2
|
|
55.1
|
|
55.4
|
|
56.0
|
|
Other
|
1.9
|
|
1.8
|
|
1.7
|
|
1.0
|
|
3.2
|
|
1.0
|
|
1.0
|
|
1.4
|
|
Total revenue
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
Cost of revenue
|
35.4
|
|
35.7
|
|
36.8
|
|
34.4
|
|
34.1
|
|
34.1
|
|
33.5
|
|
33.6
|
|
Gross profit
|
64.6
|
|
64.3
|
|
63.2
|
|
65.6
|
|
65.9
|
|
65.9
|
|
66.5
|
|
66.4
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Marketing
|
20.9
|
|
25.3
|
|
25.2
|
|
25.6
|
|
19.4
|
|
20.2
|
|
21.4
|
|
28.1
|
|
Product development
|
17.1
|
|
16.4
|
|
17.4
|
|
12.8
|
|
14.9
|
|
13.9
|
|
17.0
|
|
14.6
|
|
General and administrative
|
34.9
|
|
28.7
|
|
23.2
|
|
17.7
|
|
23.3
|
|
26.4
|
|
25.1
|
|
20.5
|
|
Total operating expenses
|
72.9
|
|
70.5
|
|
65.8
|
|
56.1
|
|
57.6
|
|
60.4
|
|
63.5
|
|
63.3
|
|
(Loss) income from operations
|
(8.3
|
)
|
(6.2
|
)
|
(2.5
|
)
|
9.6
|
|
8.3
|
|
5.5
|
|
3.1
|
|
3.1
|
|
Other (expense) income, net
|
(35.9
|
)
|
3.8
|
|
(1.7
|
)
|
(7.2
|
)
|
9.8
|
|
(9.0
|
)
|
(0.8
|
)
|
(18.2
|
)
|
(Loss) income before income taxes
|
(44.2
|
)
|
(2.4
|
)
|
(4.3
|
)
|
2.4
|
|
18.1
|
|
(3.6
|
)
|
2.2
|
|
(15.1
|
)
|
Provision for income taxes
|
(18.3
|
)
|
(8.0
|
)
|
(6.2
|
)
|
(7.2
|
)
|
(16.6
|
)
|
(5.0
|
)
|
(5.0
|
)
|
(4.3
|
)
|
Net (loss) income
|
(62.5
|
)
|
(10.4
|
)
|
(10.5
|
)
|
(4.8
|
)
|
1.5
|
|
(8.6
|
)
|
(2.7
|
)
|
(19.4
|
)
|
|
Three Months Ended
|
|||||||||||||||||||||||
|
Mar. 31,
2015 |
June 30,
2015 |
Sept. 30,
2015 |
Dec. 31,
2015 |
Mar. 31,
2016 |
June 30,
2016 |
Sept. 30,
2016 |
Dec. 31,
2016 |
||||||||||||||||
|
(in thousands except percentages)
|
|||||||||||||||||||||||
Other financial and operations data(1):
|
||||||||||||||||||||||||
GMS
|
$
|
531,915
|
|
$
|
546,197
|
|
$
|
568,787
|
|
$
|
741,488
|
|
$
|
629,853
|
|
$
|
669,704
|
|
$
|
677,221
|
|
$
|
865,207
|
|
Revenue
|
$
|
58,543
|
|
$
|
61,365
|
|
$
|
65,696
|
|
$
|
87,895
|
|
$
|
81,847
|
|
$
|
85,349
|
|
$
|
87,562
|
|
$
|
110,209
|
|
Markets revenue
|
$
|
30,151
|
|
$
|
30,469
|
|
$
|
32,232
|
|
$
|
39,796
|
|
$
|
35,730
|
|
$
|
37,405
|
|
$
|
38,133
|
|
$
|
46,936
|
|
Seller Services revenue
|
$
|
27,279
|
|
$
|
29,770
|
|
$
|
32,329
|
|
$
|
47,230
|
|
$
|
43,533
|
|
$
|
47,069
|
|
$
|
48,511
|
|
$
|
61,744
|
|
Net (loss) income
|
$
|
(36,586
|
)
|
$
|
(6,354
|
)
|
$
|
(6,891
|
)
|
$
|
(4,232
|
)
|
$
|
1,192
|
|
$
|
(7,311
|
)
|
$
|
(2,399
|
)
|
$
|
(21,383
|
)
|
Adjusted EBITDA
|
$
|
6,673
|
|
$
|
4,061
|
|
$
|
6,224
|
|
$
|
14,049
|
|
$
|
14,751
|
|
$
|
14,040
|
|
$
|
13,056
|
|
$
|
15,277
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Active sellers
|
1,428
|
|
1,484
|
|
1,533
|
|
1,563
|
|
1,603
|
|
1,654
|
|
1,706
|
|
1,748
|
|
||||||||
Active buyers
|
20,837
|
|
21,697
|
|
22,603
|
|
24,046
|
|
25,027
|
|
26,104
|
|
27,140
|
|
28,566
|
|
||||||||
Percent mobile visits
|
58
|
%
|
60
|
%
|
60
|
%
|
61
|
%
|
63
|
%
|
64
|
%
|
65
|
%
|
65
|
%
|
||||||||
Percent mobile GMS
|
41
|
%
|
43
|
%
|
44
|
%
|
44
|
%
|
47
|
%
|
47
|
%
|
49
|
%
|
49
|
%
|
||||||||
Percent international GMS
|
30.5
|
%
|
30.2
|
%
|
29.3
|
%
|
29.2
|
%
|
30.3
|
%
|
30.7
|
%
|
30.4
|
%
|
30.4
|
%
|
(1)
|
See “—
Key Operating and Financial Metrics
” for the definitions of the following terms: “active buyer,” “active seller,” “Adjusted EBITDA,” “GMS,” “international GMS,” “mobile visits” and “mobile GMS.”
|
|
Three Months Ended
|
|||||||||||||||||||||||
|
Mar. 31,
2015 |
June 30,
2015 |
Sept. 30,
2015 |
Dec. 31,
2015 |
Mar. 31,
2016 |
June 30,
2016 |
Sept. 30,
2016 |
Dec. 31,
2016 |
||||||||||||||||
|
(in thousands)
|
|||||||||||||||||||||||
Net (loss) income
|
$
|
(36,586
|
)
|
$
|
(6,354
|
)
|
$
|
(6,891
|
)
|
$
|
(4,232
|
)
|
$
|
1,192
|
|
$
|
(7,311
|
)
|
$
|
(2,399
|
)
|
$
|
(21,383
|
)
|
Excluding:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest expense, net
|
178
|
|
308
|
|
453
|
|
263
|
|
97
|
|
1,333
|
|
2,046
|
|
2,026
|
|
||||||||
Provision for income taxes
|
10,725
|
|
4,909
|
|
4,095
|
|
6,340
|
|
13,614
|
|
4,261
|
|
4,363
|
|
4,787
|
|
||||||||
Depreciation and amortization
|
4,341
|
|
4,732
|
|
4,968
|
|
4,509
|
|
4,731
|
|
5,103
|
|
5,786
|
|
6,905
|
|
||||||||
Stock-based compensation expense
|
2,133
|
|
2,222
|
|
2,204
|
|
2,422
|
|
2,581
|
|
3,452
|
|
2,975
|
|
4,160
|
|
||||||||
Stock-based compensation expense—acquisitions
|
1,841
|
|
598
|
|
719
|
|
(1,298
|
)
|
656
|
|
816
|
|
1,110
|
|
151
|
|
||||||||
Loss on asset impairment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
551
|
|
||||||||
Net unrealized (gain) loss on warrant and other liabilities
|
(12
|
)
|
3,151
|
|
(3
|
)
|
(3
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Foreign exchange loss (gain)
|
20,853
|
|
(5,805
|
)
|
679
|
|
6,048
|
|
(8,120
|
)
|
6,386
|
|
(1,337
|
)
|
18,022
|
|
||||||||
Acquisition-related expenses
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
512
|
|
58
|
|
||||||||
Contribution to Good Work Institute (formerly Etsy.org)
|
3,200
|
|
300
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Adjusted EBITDA
|
$
|
6,673
|
|
$
|
4,061
|
|
$
|
6,224
|
|
$
|
14,049
|
|
$
|
14,751
|
|
$
|
14,040
|
|
$
|
13,056
|
|
$
|
15,277
|
|
|
|
As of December 31,
|
||||||
|
|
2015
|
|
2016
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
271,244
|
|
|
$
|
181,592
|
|
Short-term investments
|
|
21,620
|
|
|
100,494
|
|
||
Accounts receivable, net
|
|
20,275
|
|
|
26,426
|
|
||
Net working capital
|
|
278,932
|
|
|
287,024
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2015
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
12,087
|
|
|
$
|
29,211
|
|
|
$
|
46,759
|
|
Investing activities
|
|
(20,723
|
)
|
|
(23,283
|
)
|
|
(135,430
|
)
|
|||
Financing activities
|
|
45,237
|
|
|
199,608
|
|
|
5,810
|
|
|
|
Total
|
|
Less than 1
Year
|
|
1–3
Years
|
|
3–5
Years
|
|
More than
5 Years
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Capital lease obligations
|
|
$
|
12,125
|
|
|
$
|
6,829
|
|
|
$
|
5,258
|
|
|
$
|
38
|
|
|
$
|
—
|
|
Operating lease obligations
|
|
27,294
|
|
|
3,026
|
|
|
7,604
|
|
|
6,189
|
|
|
10,475
|
|
|||||
Long-term obligations
|
|
474
|
|
|
232
|
|
|
242
|
|
|
—
|
|
|
—
|
|
|||||
Interest payments
|
|
1,615
|
|
|
1,140
|
|
|
475
|
|
|
—
|
|
|
—
|
|
|||||
Facility financing obligations
|
|
93,425
|
|
|
5,883
|
|
|
18,832
|
|
|
19,876
|
|
|
48,834
|
|
|||||
Purchase obligations
|
|
11,089
|
|
|
6,005
|
|
|
4,437
|
|
|
647
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$
|
146,022
|
|
|
$
|
23,115
|
|
|
$
|
36,848
|
|
|
$
|
26,750
|
|
|
$
|
59,309
|
|
•
|
Revenue from Direct Checkout consists of fees an Etsy seller pays us to process credit, debit and Etsy Gift Card payments. Direct Checkout fees vary between
3
–
4%
of the item’s total sale price plus a flat fee per order, depending on the country in which her bank account is located. Direct Checkout fees are based on the item’s total sale price, including shipping. Revenue from Direct Checkout is recognized when the corresponding transaction is made.
|
•
|
Revenue from Promoted Listings consists of cost-per-click fees an Etsy seller pays us for prominent placement of her listings in search results generated by Etsy buyers in our markets. Revenue is recognized when the Promoted Listing is clicked.
|
•
|
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 shipping labels from the United States Postal Service, FedEx and Canada Post at a discounted price 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 not the primary obligor in the delivery of these services.
|
•
|
Revenue from Pattern consists of monthly subscription and annual domain registration fees, an optional add-on, an Etsy seller pays to use our custom website services. We recognize revenue from Pattern ratably over the term of the subscription.
|
•
|
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 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. As we do not have sufficient historical experience for determining the expected term of the stock option awards granted, 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. For grants to non-employees, the expected term is equal to the contractual term, which is generally ten years.
|
•
|
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.
|
|
|
Year Ended
December 31,
|
||||
|
|
2014
|
|
2015
|
|
2016
|
Assumptions:
|
|
|
|
|
|
|
Expected volatility
|
|
43.0% - 49.0%
|
|
40.4% - 45.0%
|
|
38.6% - 44.6%
|
Risk-free interest rate
|
|
1.7% - 2.1%
|
|
1.3% - 1.9%
|
|
1.1% - 2.1%
|
Expected term (in years)
|
|
5.5 - 6.1
|
|
5.5 - 6.1
|
|
5.5 - 6.3
|
Dividend rate
|
|
—%
|
|
—%
|
|
—%
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets as of December 31, 2015 and 2016
|
|
Consolidated Statements of Operations for the years ended December 31, 2014, 2015 and 2016
|
|
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2014, 2015 and 2016
|
|
Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity for the years ended December 31, 2014, 2015 and 2016
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2015 and 2016
|
|
Notes to Consolidated Financial Statements
|
|
As of December 31,
|
||||||
|
2015
|
|
2016
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
271,244
|
|
|
$
|
181,592
|
|
Short-term investments
|
21,620
|
|
|
100,494
|
|
||
Accounts receivable, net
|
20,275
|
|
|
26,426
|
|
||
Prepaid and other current assets
|
9,521
|
|
|
15,571
|
|
||
Deferred tax charge—current
|
17,132
|
|
|
17,132
|
|
||
Funds receivable and seller accounts
|
19,262
|
|
|
29,817
|
|
||
Total current assets
|
359,054
|
|
|
371,032
|
|
||
Restricted cash
|
5,341
|
|
|
5,341
|
|
||
Property and equipment, net
|
105,021
|
|
|
126,407
|
|
||
Goodwill
|
27,752
|
|
|
35,657
|
|
||
Intangible assets, net
|
2,871
|
|
|
7,507
|
|
||
Deferred tax charge—net of current portion
|
51,396
|
|
|
34,264
|
|
||
Other assets
|
1,626
|
|
|
985
|
|
||
Total assets
|
$
|
553,061
|
|
|
$
|
581,193
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
14,382
|
|
|
$
|
10,978
|
|
Accrued expenses
|
31,253
|
|
|
24,179
|
|
||
Capital lease obligations—current
|
5,610
|
|
|
6,829
|
|
||
Funds payable and amounts due to sellers
|
19,262
|
|
|
29,817
|
|
||
Deferred revenue
|
4,712
|
|
|
5,648
|
|
||
Other current liabilities
|
4,903
|
|
|
6,557
|
|
||
Total current liabilities
|
80,122
|
|
|
84,008
|
|
||
Capital lease obligations—net of current portion
|
7,571
|
|
|
5,296
|
|
||
Deferred tax liabilities
|
61,420
|
|
|
65,068
|
|
||
Facility financing obligation
|
51,804
|
|
|
57,360
|
|
||
Other liabilities
|
21,646
|
|
|
24,704
|
|
||
Total liabilities
|
222,563
|
|
|
236,436
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock ($0.001 par value, 1,400,000,000 shares authorized as of December 31, 2015 and 2016; 112,563,354 and 115,973,039 shares issued and outstanding as of December 31, 2015 and 2016, respectively)
|
113
|
|
|
116
|
|
||
Additional paid-in capital
|
406,020
|
|
|
442,510
|
|
||
Accumulated deficit
|
(86,440
|
)
|
|
(116,341
|
)
|
||
Accumulated other comprehensive income
|
10,805
|
|
|
18,472
|
|
||
Total stockholders’ equity
|
330,498
|
|
|
344,757
|
|
||
Total liabilities and stockholders’ equity
|
$
|
553,061
|
|
|
$
|
581,193
|
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Revenue
|
$
|
195,591
|
|
|
$
|
273,499
|
|
|
$
|
364,967
|
|
Cost of revenue
|
73,633
|
|
|
96,979
|
|
|
123,328
|
|
|||
Gross profit
|
121,958
|
|
|
176,520
|
|
|
241,639
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Marketing
|
39,655
|
|
|
66,771
|
|
|
82,799
|
|
|||
Product development
|
36,634
|
|
|
42,694
|
|
|
55,083
|
|
|||
General and administrative
|
51,920
|
|
|
68,939
|
|
|
86,180
|
|
|||
Total operating expenses
|
128,209
|
|
|
178,404
|
|
|
224,062
|
|
|||
(Loss) income from operations
|
(6,251
|
)
|
|
(1,884
|
)
|
|
17,577
|
|
|||
Other (expense) income:
|
|
|
|
|
|
||||||
Interest expense and amortization of deferred financing costs
|
(590
|
)
|
|
(1,526
|
)
|
|
(7,204
|
)
|
|||
Interest and other income
|
41
|
|
|
324
|
|
|
1,702
|
|
|||
Net unrealized loss on warrant and other liabilities
|
(411
|
)
|
|
(3,133
|
)
|
|
—
|
|
|||
Foreign exchange loss
|
(3,049
|
)
|
|
(21,775
|
)
|
|
(14,951
|
)
|
|||
Total other expense
|
(4,009
|
)
|
|
(26,110
|
)
|
|
(20,453
|
)
|
|||
Loss before income taxes
|
(10,260
|
)
|
|
(27,994
|
)
|
|
(2,876
|
)
|
|||
Provision for income taxes
|
(4,983
|
)
|
|
(26,069
|
)
|
|
(27,025
|
)
|
|||
Net loss
|
$
|
(15,243
|
)
|
|
$
|
(54,063
|
)
|
|
$
|
(29,901
|
)
|
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic and diluted
|
$
|
(0.38
|
)
|
|
$
|
(0.59
|
)
|
|
$
|
(0.26
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic and diluted
|
40,246,663
|
|
|
91,122,291
|
|
|
113,562,738
|
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Net loss
|
$
|
(15,243
|
)
|
|
$
|
(54,063
|
)
|
|
$
|
(29,901
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Cumulative translation adjustment
|
(4,091
|
)
|
|
14,746
|
|
|
7,675
|
|
|||
Unrealized losses on marketable securities, net of tax
|
(3
|
)
|
|
(7
|
)
|
|
(8
|
)
|
|||
Total other comprehensive (loss) income
|
(4,094
|
)
|
|
14,739
|
|
|
7,667
|
|
|||
Comprehensive loss
|
$
|
(19,337
|
)
|
|
$
|
(39,324
|
)
|
|
$
|
(22,234
|
)
|
|
Series A and A-1
Convertible
Preferred
Stock
|
|
Series B
Convertible
Preferred
Stock
|
|
Series C
Convertible
Preferred
Stock
|
|
Series D and D-1
Convertible
Preferred
Stock
|
|
Series E
Convertible
Preferred
Stock
|
|
Series 1
Convertible
Preferred
Stock
|
|
Series F
Convertible
Preferred
Stock
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated Deficit
|
|
Accumulated Other
Compre-hensive(Loss)
Income
|
|
Total
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013
|
2,363,786
|
|
|
$
|
808
|
|
|
1,128,425
|
|
|
$
|
865
|
|
|
1,222,282
|
|
|
$
|
3,361
|
|
|
4,215,610
|
|
|
$
|
27,870
|
|
|
396,727
|
|
|
$
|
6,201
|
|
|
203,399
|
|
|
$
|
1,322
|
|
|
11,594,203
|
|
|
$
|
39,785
|
|
|
|
33,082,948
|
|
|
$
|
33
|
|
|
$
|
20,944
|
|
|
$
|
(17,134
|
)
|
|
$
|
160
|
|
|
$
|
4,003
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
6,110
|
|
|
—
|
|
|
—
|
|
|
6,110
|
|
||||||||||||
Exercise of vested options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
4,215,628
|
|
|
4
|
|
|
7,952
|
|
|
—
|
|
|
—
|
|
|
7,956
|
|
||||||||||||
Issuance of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3,301,887
|
|
|
3
|
|
|
34,997
|
|
|
—
|
|
|
—
|
|
|
35,000
|
|
||||||||||||
Issuance of stock at acquisition date
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3,580,476
|
|
|
4
|
|
|
27,719
|
|
|
—
|
|
|
—
|
|
|
27,723
|
|
||||||||||||
Stock-based compensation—acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
756
|
|
|
—
|
|
|
—
|
|
|
756
|
|
||||||||||||
Excess tax benefit from the exercise of options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
4,877
|
|
|
—
|
|
|
—
|
|
|
4,877
|
|
||||||||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,094
|
)
|
|
(4,094
|
)
|
||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,243
|
)
|
|
—
|
|
|
(15,243
|
)
|
||||||||||||
Balance as of December 31, 2014
|
2,363,786
|
|
|
808
|
|
|
1,128,425
|
|
|
865
|
|
|
1,222,282
|
|
|
3,361
|
|
|
4,215,610
|
|
|
27,870
|
|
|
396,727
|
|
|
6,201
|
|
|
203,399
|
|
|
1,322
|
|
|
11,594,203
|
|
|
39,785
|
|
|
|
44,180,939
|
|
|
44
|
|
|
103,355
|
|
|
(32,377
|
)
|
|
(3,934
|
)
|
|
67,088
|
|
||||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
9,444
|
|
|
—
|
|
|
—
|
|
|
9,444
|
|
||||||||||||
Exercise of vested options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
1,315,735
|
|
|
2
|
|
|
3,624
|
|
|
—
|
|
|
—
|
|
|
3,626
|
|
||||||||||||
Exercise of warrants, net of shares withheld
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
96,869
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Common stock issued through public offering
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
13,333,333
|
|
|
14
|
|
|
194,347
|
|
|
—
|
|
|
—
|
|
|
194,361
|
|
||||||||||||
Contribution of stock to Good Work Institute (formerly Etsy.org)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
188,235
|
|
|
—
|
|
|
3,200
|
|
|
—
|
|
|
—
|
|
|
3,200
|
|
||||||||||||
Stock-based compensation—acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
1,122
|
|
|
—
|
|
|
—
|
|
|
1,122
|
|
||||||||||||
Conversion of liability-classified restricted shares upon vesting
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
1,755
|
|
|
—
|
|
|
—
|
|
|
1,755
|
|
||||||||||||
Conversion of preferred stock upon public offering
|
(2,363,786
|
)
|
|
(808
|
)
|
|
(1,128,425
|
)
|
|
(865
|
)
|
|
(1,222,282
|
)
|
|
(3,361
|
)
|
|
(4,215,610
|
)
|
|
(27,870
|
)
|
|
(396,727
|
)
|
|
(6,201
|
)
|
|
(203,399
|
)
|
|
(1,322
|
)
|
|
(11,594,203
|
)
|
|
(39,785
|
)
|
|
|
53,448,243
|
|
|
53
|
|
|
80,159
|
|
|
—
|
|
|
—
|
|
|
80,212
|
|
||||||||||||
Conversion of liability-classified warrants upon public offering
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
5,070
|
|
|
—
|
|
|
—
|
|
|
5,070
|
|
||||||||||||
Excess tax benefit from the exercise of options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
3,944
|
|
|
—
|
|
|
—
|
|
|
3,944
|
|
||||||||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,739
|
|
|
14,739
|
|
||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54,063
|
)
|
|
—
|
|
|
(54,063
|
)
|
||||||||||||
Balance as of December 31, 2015
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
112,563,354
|
|
|
113
|
|
|
406,020
|
|
|
(86,440
|
)
|
|
10,805
|
|
|
330,498
|
|
||||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
13,960
|
|
|
—
|
|
|
—
|
|
|
13,960
|
|
||||||||||||
Exercise of vested options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2,535,620
|
|
|
3
|
|
|
10,565
|
|
|
—
|
|
|
—
|
|
|
10,568
|
|
||||||||||||
Vesting of restricted stock units, net of shares withheld
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
144,651
|
|
|
—
|
|
|
(1,258
|
)
|
|
—
|
|
|
—
|
|
|
(1,258
|
)
|
||||||||||||
Exercise of warrants, net of shares withheld
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
80,011
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Retirement of restricted shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(36,346
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Issuance of common stock at acquisition date
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
685,749
|
|
|
—
|
|
|
6,966
|
|
|
—
|
|
|
—
|
|
|
6,966
|
|
||||||||||||
Stock-based compensation—acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
1,080
|
|
|
—
|
|
|
—
|
|
|
1,080
|
|
||||||||||||
Conversion of liability-classified restricted shares upon vesting
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
1,942
|
|
|
—
|
|
|
—
|
|
|
1,942
|
|
||||||||||||
Excess tax benefit from the exercise of options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
3,235
|
|
|
—
|
|
|
—
|
|
|
3,235
|
|
||||||||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,667
|
|
|
7,667
|
|
||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,901
|
)
|
|
—
|
|
|
(29,901
|
)
|
||||||||||||
Balance as of December 31, 2016
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
|
115,973,039
|
|
|
$
|
116
|
|
|
$
|
442,510
|
|
|
$
|
(116,341
|
)
|
|
$
|
18,472
|
|
|
$
|
344,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net loss
|
$
|
(15,243
|
)
|
|
$
|
(54,063
|
)
|
|
$
|
(29,901
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Stock-based compensation expense
|
5,920
|
|
|
8,981
|
|
|
13,168
|
|
|||
Stock-based compensation expense—acquisitions
|
4,130
|
|
|
1,860
|
|
|
2,733
|
|
|||
Contribution of stock to Good Work Institute (formerly Etsy.org)
|
—
|
|
|
3,200
|
|
|
—
|
|
|||
Depreciation and amortization expense
|
17,223
|
|
|
18,550
|
|
|
22,525
|
|
|||
Bad debt expense
|
1,881
|
|
|
1,780
|
|
|
1,770
|
|
|||
Foreign exchange loss
|
3,049
|
|
|
21,775
|
|
|
14,951
|
|
|||
Amortization of debt issuance costs
|
68
|
|
|
167
|
|
|
184
|
|
|||
Non-cash interest expense
|
—
|
|
|
—
|
|
|
5,337
|
|
|||
Interest on marketable securities
|
—
|
|
|
—
|
|
|
914
|
|
|||
Net unrealized loss on warrant and other liabilities
|
411
|
|
|
3,133
|
|
|
—
|
|
|||
Loss on disposal of assets
|
79
|
|
|
1,319
|
|
|
1,143
|
|
|||
Loss on asset impairment
|
—
|
|
|
—
|
|
|
551
|
|
|||
Amortization of deferred tax charge
|
—
|
|
|
17,132
|
|
|
17,132
|
|
|||
Excess tax benefit from exercise of stock options
|
(4,877
|
)
|
|
(3,944
|
)
|
|
(3,235
|
)
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
(6,197
|
)
|
|
(6,739
|
)
|
|
(8,192
|
)
|
|||
Funds receivable and seller accounts
|
(3,975
|
)
|
|
(9,025
|
)
|
|
(10,910
|
)
|
|||
Prepaid expenses and other current assets
|
(5,820
|
)
|
|
(266
|
)
|
|
(6,186
|
)
|
|||
Other assets
|
(1,446
|
)
|
|
225
|
|
|
438
|
|
|||
Accounts payable
|
1,046
|
|
|
6,728
|
|
|
(3,585
|
)
|
|||
Accrued and other current liabilities
|
11,463
|
|
|
12,395
|
|
|
11,193
|
|
|||
Funds payable and amounts due to sellers
|
3,880
|
|
|
9,025
|
|
|
10,910
|
|
|||
Deferred revenue
|
693
|
|
|
1,279
|
|
|
964
|
|
|||
Other liabilities
|
(198
|
)
|
|
(4,301
|
)
|
|
4,855
|
|
|||
Net cash provided by operating activities
|
12,087
|
|
|
29,211
|
|
|
46,759
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Acquisition of businesses, net of cash acquired
|
(4,688
|
)
|
|
—
|
|
|
(7,880
|
)
|
|||
Purchases of property and equipment
|
(1,304
|
)
|
|
(11,116
|
)
|
|
(35,981
|
)
|
|||
Development of internal-use software
|
(8,280
|
)
|
|
(9,719
|
)
|
|
(11,769
|
)
|
|||
Purchases of marketable securities
|
(21,698
|
)
|
|
(26,040
|
)
|
|
(160,504
|
)
|
|||
Sales of marketable securities
|
20,588
|
|
|
23,592
|
|
|
80,704
|
|
|||
Net increase in restricted cash
|
(5,341
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(20,723
|
)
|
|
(23,283
|
)
|
|
(135,430
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Proceeds from public offering
|
—
|
|
|
199,467
|
|
|
—
|
|
|||
Proceeds from the issuance of common stock
|
35,000
|
|
|
—
|
|
|
—
|
|
|||
Repurchase of stock
|
—
|
|
|
—
|
|
|
(1,258
|
)
|
|||
Proceeds from exercise of stock options
|
7,956
|
|
|
3,626
|
|
|
10,568
|
|
|||
Excess tax benefit from the exercise of stock options
|
4,877
|
|
|
3,944
|
|
|
3,235
|
|
|||
Payments on capitalized lease obligations
|
(1,480
|
)
|
|
(3,377
|
)
|
|
(6,086
|
)
|
|||
Deferred payments on acquisition of business
|
(75
|
)
|
|
—
|
|
|
(649
|
)
|
|||
Payments relating to public offering
|
(1,041
|
)
|
|
(4,052
|
)
|
|
—
|
|
|||
Net cash provided by financing activities
|
45,237
|
|
|
199,608
|
|
|
5,810
|
|
|||
Effect of exchange rate changes on cash
|
(3,737
|
)
|
|
(3,951
|
)
|
|
(6,791
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
32,864
|
|
|
201,585
|
|
|
(89,652
|
)
|
|||
Cash and cash equivalents at beginning of period
|
36,795
|
|
|
69,659
|
|
|
271,244
|
|
|||
Cash and cash equivalents at end of period
|
$
|
69,659
|
|
|
$
|
271,244
|
|
|
$
|
181,592
|
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Supplemental cash flow disclosures:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
342
|
|
|
$
|
1,346
|
|
|
$
|
2,000
|
|
Cash paid for income taxes
|
$
|
217
|
|
|
$
|
7,604
|
|
|
$
|
10,559
|
|
Supplemental non-cash disclosures:
|
|
|
|
|
|
||||||
Equipment acquired under capital lease obligations
|
$
|
5,564
|
|
|
$
|
11,657
|
|
|
$
|
5,030
|
|
Stock-based compensation capitalized in development of capitalized software
|
$
|
190
|
|
|
$
|
463
|
|
|
$
|
792
|
|
Non-cash additions to development of internal-use software and property and equipment
|
$
|
2,510
|
|
|
$
|
12,721
|
|
|
$
|
2,239
|
|
Non-cash addition to construction in progress related to build-to-suit lease and facility financing obligation
|
$
|
50,320
|
|
|
$
|
1,484
|
|
|
$
|
—
|
|
Non-cash addition to capitalized public offering costs
|
$
|
1,413
|
|
|
$
|
13
|
|
|
$
|
—
|
|
Fair value of common stock issued in acquisition
|
$
|
27,723
|
|
|
$
|
—
|
|
|
$
|
6,966
|
|
•
|
Revenue from Direct Checkout consists of fees an Etsy seller pays the Company to process credit, debit and Etsy Gift Card payments. Direct Checkout fees vary between
3
-
4%
of the item’s total sale price plus a flat fee per order, depending on the country in which her bank account is located. Direct Checkout fees are based on the item’s total sale price, including shipping. Revenue from Direct Checkout is recognized when the corresponding transaction is made.
|
•
|
Revenue from Promoted Listings consists of cost-per-click fees an Etsy seller pays for prominent placement of her listings in search results generated by Etsy buyers in the Company's markets. Revenue is recognized when the Promoted Listing is clicked.
|
•
|
Revenue from 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 shipping labels from the United States Postal Service, FedEx and Canada Post at a discounted price due to the volume of purchases through its platform. The Company recognizes Shipping Label revenue when an Etsy seller purchases a shipping label. The Company recognizes Shipping Label revenue on a net basis as it is not the primary obligor in the delivery of these services.
|
•
|
Revenue from Pattern consists of monthly subscription and annual domain registration fees, an optional add-on, an Etsy seller pays to use our custom website services. The Company recognizes revenue from Pattern ratably over the term of the subscription.
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Markets
|
$
|
108,732
|
|
|
$
|
132,648
|
|
|
$
|
158,204
|
|
Seller Services
|
82,502
|
|
|
136,608
|
|
|
200,857
|
|
|||
Other
|
4,357
|
|
|
4,243
|
|
|
5,906
|
|
|||
Revenue
|
$
|
195,591
|
|
|
$
|
273,499
|
|
|
$
|
364,967
|
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Balance as of the beginning of period
|
$
|
1,279
|
|
|
$
|
1,841
|
|
|
$
|
2,071
|
|
Bad debt expense
|
1,881
|
|
|
1,780
|
|
|
1,770
|
|
|||
Write-offs, net of recoveries and other adjustments
|
(1,319
|
)
|
|
(1,550
|
)
|
|
(1,842
|
)
|
|||
Balance as of the end of period
|
$
|
1,841
|
|
|
$
|
2,071
|
|
|
$
|
1,999
|
|
Cash paid
|
$
|
8,050
|
|
Common shares
|
6,966
|
|
|
Total purchase consideration
|
$
|
15,016
|
|
Net working capital
|
$
|
81
|
|
Developed technology
|
7,200
|
|
|
Customer relationships
|
1,250
|
|
|
Goodwill
|
8,660
|
|
|
Deferred tax liability
|
(2,175
|
)
|
|
Net assets acquired
|
$
|
15,016
|
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2016
|
||||
Revenue
|
$
|
273,616
|
|
|
$
|
365,786
|
|
Net loss
|
(65,106
|
)
|
|
(35,401
|
)
|
||
Basic and diluted net loss per share
|
(0.71
|
)
|
|
(0.31
|
)
|
Cash paid
|
$
|
5,290
|
|
Common shares
|
25,521
|
|
|
Total purchase consideration
|
$
|
30,811
|
|
Net working capital
|
$
|
625
|
|
Property and equipment and other assets
|
95
|
|
|
Developed technology
|
1,636
|
|
|
Customer relationships
|
1,693
|
|
|
Trademarks
|
775
|
|
|
Goodwill
|
27,309
|
|
|
Deferred tax liability
|
(757
|
)
|
|
Other long-term liabilities
|
(565
|
)
|
|
Net assets acquired
|
$
|
30,811
|
|
Cash paid
|
$
|
1,040
|
|
Common shares
|
2,202
|
|
|
Total purchase consideration
|
$
|
3,242
|
|
Net working capital
|
$
|
85
|
|
Developed technology
|
2,000
|
|
|
Customer relationships
|
600
|
|
|
Trademarks
|
200
|
|
|
Goodwill
|
991
|
|
|
Deferred tax liability
|
(634
|
)
|
|
Net assets acquired
|
$
|
3,242
|
|
|
As of December 31, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Asset
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
212,390
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
212,390
|
|
U.S. Government bills
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
|
212,393
|
|
|
—
|
|
|
—
|
|
|
212,393
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
U.S. Government and agency bills
|
21,620
|
|
|
—
|
|
|
—
|
|
|
21,620
|
|
||||
|
$
|
234,013
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
234,013
|
|
Liability
|
|
|
|
|
|
|
|
||||||||
Post-combination compensation classified as liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,357
|
|
|
$
|
2,357
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,357
|
|
|
$
|
2,357
|
|
|
As of December 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Asset
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
98,161
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
98,161
|
|
U.S. Government bills
|
1,950
|
|
|
—
|
|
|
—
|
|
|
1,950
|
|
||||
Commercial paper
|
—
|
|
|
2,997
|
|
|
—
|
|
|
2,997
|
|
||||
|
100,111
|
|
|
2,997
|
|
|
—
|
|
|
103,108
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
—
|
|
|
17,146
|
|
|
—
|
|
|
17,146
|
|
||||
Corporate bonds
|
—
|
|
|
33,303
|
|
|
—
|
|
|
33,303
|
|
||||
U.S. Government and agency bills
|
50,045
|
|
|
—
|
|
|
—
|
|
|
50,045
|
|
||||
|
50,045
|
|
|
50,449
|
|
|
—
|
|
|
100,494
|
|
||||
|
$
|
150,156
|
|
|
$
|
53,446
|
|
|
$
|
—
|
|
|
$
|
203,602
|
|
Liability
|
|
|
|
|
|
|
|
||||||||
Post-combination compensation classified as liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,067
|
|
|
$
|
2,067
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,067
|
|
|
$
|
2,067
|
|
|
Year Ended
December 31, |
||||||
|
2015
|
|
2016
|
||||
Balance at beginning of period
|
$
|
5,310
|
|
|
$
|
2,357
|
|
Changes to liability-classified stock awards
|
739
|
|
|
1,652
|
|
||
Conversion of liability-classified instruments to equity
|
(6,825
|
)
|
|
(1,942
|
)
|
||
Net unrealized loss on warrants
|
3,133
|
|
|
—
|
|
||
Balance at end of period
|
$
|
2,357
|
|
|
$
|
2,067
|
|
|
Cost
|
|
Gross
Unrealized Holding Loss |
|
Gross
Unrealized Holding Gain |
|
Fair Value
|
||||||||
December 31, 2015
|
|
|
|
|
|
|
|
||||||||
U.S. Government and agency bills
|
$
|
21,636
|
|
|
$
|
(16
|
)
|
|
$
|
—
|
|
|
$
|
21,620
|
|
|
$
|
21,636
|
|
|
$
|
(16
|
)
|
|
$
|
—
|
|
|
$
|
21,620
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
17,146
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,146
|
|
Corporate bonds
|
33,318
|
|
|
(16
|
)
|
|
1
|
|
|
33,303
|
|
||||
U.S. Government and agency bills
|
50,059
|
|
|
(15
|
)
|
|
1
|
|
|
50,045
|
|
||||
|
$
|
100,523
|
|
|
$
|
(31
|
)
|
|
$
|
2
|
|
|
$
|
100,494
|
|
|
|
|
As of
December 31, |
||||||
|
Estimated useful lives
|
|
2015
|
|
2016
|
||||
Computer equipment
|
3 years
|
|
$
|
27,054
|
|
|
$
|
30,378
|
|
Furniture and equipment
|
2 - 4 years
|
|
1,959
|
|
|
5,920
|
|
||
Software
|
1 - 3 years
|
|
1,427
|
|
|
856
|
|
||
Leasehold improvements
|
Shorter of life of asset or lease term
|
|
8,097
|
|
|
10,155
|
|
||
Construction in progress(1)
|
Not applicable
|
|
71,106
|
|
|
—
|
|
||
Building
|
25 years
|
|
—
|
|
|
81,957
|
|
||
Website development
|
3 years
|
|
33,469
|
|
|
43,294
|
|
||
|
|
|
143,112
|
|
|
172,560
|
|
||
|
|
|
|
|
|
||||
Less: Accumulated depreciation and amortization
|
|
|
38,091
|
|
|
46,153
|
|
||
|
|
|
$
|
105,021
|
|
|
$
|
126,407
|
|
(1)
|
The Company capitalizes construction in progress and records a corresponding long-term liability for build-to-suit lease arrangements where it is considered the owner, for accounting purposes, during the construction period. The Company completed construction on its new Brooklyn, NY headquarters in May 2016.
|
|
Year Ended
December 31, |
||||||
|
2015
|
|
2016
|
||||
Balance as of the beginning of the period
|
$
|
31,156
|
|
|
$
|
33,469
|
|
Additions to website development, excluding stock-based compensation
|
9,719
|
|
|
11,769
|
|
||
Additions to website development—stock-based compensation
|
463
|
|
|
792
|
|
||
Less: Retirements
|
7,869
|
|
|
2,736
|
|
||
|
33,469
|
|
|
43,294
|
|
||
Less: Accumulated amortization
|
19,676
|
|
|
24,155
|
|
||
|
$
|
13,793
|
|
|
$
|
19,139
|
|
|
Year Ended
December 31, |
||||||
|
2015
|
|
2016
|
||||
Balance as of the beginning of the period
|
$
|
30,831
|
|
|
$
|
27,752
|
|
Acquisitions(1)
|
—
|
|
|
8,660
|
|
||
Currency and other adjustments(2)
|
(3,079
|
)
|
|
(755
|
)
|
||
Balance as of the end of the period
|
$
|
27,752
|
|
|
$
|
35,657
|
|
(1)
|
Includes goodwill as a result of the Blackbird Technologies acquisition. See “
Note 2—Business Combinations
” for more information.
|
(2)
|
Includes the effect of foreign currency translation and in 2015 includes an adjustment to purchase price allocation of
$0.6 million
.
|
|
As of December 31, 2015
|
|
As of December 31, 2016
|
||||||||||||||||||||
|
Gross book
value (1) |
|
Accumulated
amortization (1) |
|
Net book
value |
|
Gross book
value (1) |
|
Accumulated
amortization (1) |
|
Net book
value |
||||||||||||
Trademarks
|
$
|
822
|
|
|
$
|
(427
|
)
|
|
$
|
395
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Technology
|
3,882
|
|
|
(2,341
|
)
|
|
1,541
|
|
|
10,466
|
|
|
(3,536
|
)
|
|
6,930
|
|
||||||
Customer relationships
|
1,959
|
|
|
(1,024
|
)
|
|
935
|
|
|
1,250
|
|
|
(673
|
)
|
|
577
|
|
||||||
Intangible assets, net
|
$
|
6,663
|
|
|
$
|
(3,792
|
)
|
|
$
|
2,871
|
|
|
$
|
11,716
|
|
|
$
|
(4,209
|
)
|
|
$
|
7,507
|
|
(1)
|
Excludes the gross book value and accumulated amortization of fully amortized intangibles.
|
2017
|
$
|
3,407
|
|
2018
|
2,400
|
|
|
2019
|
1,700
|
|
|
Thereafter
|
—
|
|
|
Total amortization expense
|
$
|
7,507
|
|
|
Series C
|
||
|
December 31,
|
||
|
2014
|
||
Risk-free interest rate
|
1.1
|
%
|
|
Expected term (in years)
|
3
|
|
|
Estimated dividend yield
|
—
|
%
|
|
Weighted-average estimated volatility
|
43.1
|
%
|
|
Fair value (in thousands)
|
$
|
579
|
|
|
Series D
|
||
|
December 31,
|
||
|
2014
|
||
Risk-free interest rate
|
0.5
|
%
|
|
Expected term (in years)
|
0.5
|
|
|
Estimated dividend yield
|
—
|
%
|
|
Weighted-average estimated volatility
|
38.9
|
%
|
|
Fair value (in thousands)
|
$
|
1,156
|
|
|
Series E
|
||
|
December 31,
|
||
|
2014
|
||
Risk-free interest rate
|
1.1
|
%
|
|
Expected term (in years)
|
3
|
|
|
Estimated dividend yield
|
—
|
%
|
|
Weighted-average estimated volatility
|
43.1
|
%
|
|
Fair value (in thousands)
|
$
|
185
|
|
|
Shares
Authorized
|
|
Shares
Outstanding
|
|
Carrying
Values
|
||||
Series A and A-1 preferred stock
|
2,363,786
|
|
|
2,363,786
|
|
|
$
|
808
|
|
Series B preferred stock
|
1,128,431
|
|
|
1,128,425
|
|
|
865
|
|
|
Series C preferred stock
|
1,234,084
|
|
|
1,222,282
|
|
|
3,361
|
|
|
Series D and D-1 preferred stock
|
4,240,120
|
|
|
4,215,610
|
|
|
27,870
|
|
|
Series E preferred stock
|
401,450
|
|
|
396,727
|
|
|
6,201
|
|
|
Series 1 preferred stock
|
203,399
|
|
|
203,399
|
|
|
1,322
|
|
|
Series F preferred stock
|
11,594,203
|
|
|
11,594,203
|
|
|
39,785
|
|
|
Total convertible preferred stock
|
21,165,473
|
|
|
21,124,432
|
|
|
$
|
80,212
|
|
|
Price Per Share
|
||||||||||
|
Original Issue
Price
|
|
Conversion
Price
|
|
Liquidation
Preference
|
||||||
Series A preferred stock
|
$
|
0.2429
|
|
|
$
|
0.04858
|
|
|
$
|
0.2429
|
|
Series A-1 preferred stock
|
0.3915
|
|
|
0.07830
|
|
|
0.3915
|
|
|||
Series B preferred stock
|
0.80
|
|
|
0.160
|
|
|
0.80
|
|
|||
Series C preferred stock
|
2.67
|
|
|
0.534
|
|
|
2.67
|
|
|||
Series D preferred stock
|
6.63
|
|
|
1.326
|
|
|
6.63
|
|
|||
Series D-1 preferred stock
|
6.63
|
|
|
1.326
|
|
|
6.63
|
|
|||
Series E preferred stock
|
15.88
|
|
|
3.176
|
|
|
15.88
|
|
|||
Series 1 preferred stock
|
6.45
|
|
|
1.290
|
|
|
6.45
|
|
|||
Series F preferred stock
|
3.45
|
|
|
6.90
|
|
|
3.45
|
|
|
Year Ended
December 31, |
||||
|
2014
|
|
2015
|
|
2016
|
Volatility
|
43.0% - 49.0%
|
|
40.4% - 45.0%
|
|
38.6% - 44.6%
|
Risk-free interest rate
|
1.7% - 2.1%
|
|
1.3% - 1.9%
|
|
1.1% - 2.1%
|
Expected term (in years)
|
5.5 - 6.1
|
|
5.5 - 6.1
|
|
5.5 - 6.3
|
Dividend rate
|
—%
|
|
—%
|
|
—%
|
|
Shares
|
|
Weighted-Average
Exercise Price |
|
Weighted-Average
Remaining Contract Term (in years) |
|
Aggregate
Intrinsic Value |
|||||
Outstanding at December 31, 2013
|
13,190,420
|
|
|
$
|
3.10
|
|
|
|
|
|
||
Granted
|
3,206,717
|
|
|
10.28
|
|
|
|
|
|
|||
Exercised
|
(4,215,628
|
)
|
|
1.89
|
|
|
|
|
|
|||
Forfeited/Canceled
|
(656,230
|
)
|
|
6.58
|
|
|
|
|
|
|||
Outstanding at December 31, 2014
|
11,525,279
|
|
|
5.34
|
|
|
|
|
|
|||
Granted
|
1,660,170
|
|
|
16.19
|
|
|
|
|
|
|||
Exercised
|
(1,315,735
|
)
|
|
2.76
|
|
|
|
|
|
|||
Forfeited/Canceled
|
(800,855
|
)
|
|
9.94
|
|
|
|
|
|
|||
Outstanding at December 31, 2015
|
11,068,859
|
|
|
6.94
|
|
|
|
|
|
|||
Granted
|
1,700,234
|
|
|
9.35
|
|
|
|
|
|
|||
Exercised
|
(2,535,620
|
)
|
|
4.17
|
|
|
|
|
|
|||
Forfeited/Canceled
|
(893,906
|
)
|
|
9.51
|
|
|
|
|
|
|||
Outstanding at December 31, 2016
|
9,339,567
|
|
|
7.89
|
|
|
6.64
|
|
$
|
43,613
|
|
|
Total exercisable at December 31, 2016
|
6,352,071
|
|
|
6.29
|
|
|
5.76
|
|
38,257
|
|
||
Total vested and expected to vest at December 31, 2016
|
9,166,097
|
|
|
7.82
|
|
|
6.60
|
|
43,364
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Weighted average grant date fair value of options granted
|
$
|
4.86
|
|
|
$
|
6.89
|
|
|
$
|
4.03
|
|
Intrinsic value of options exercised
|
24,788
|
|
|
15,148
|
|
|
19,130
|
|
|||
Fair value of awards vested
|
4,691
|
|
|
8,337
|
|
|
9,533
|
|
|
Shares
|
|
Weighted-Average
Fair Value |
|||
Unvested at December 31, 2014
|
—
|
|
|
$
|
—
|
|
Granted
|
407,368
|
|
|
13.78
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Forfeited/Canceled
|
(11,522
|
)
|
|
16.76
|
|
|
Unvested at December 31, 2015
|
395,846
|
|
|
13.70
|
|
|
Granted
|
3,200,297
|
|
|
10.29
|
|
|
Vested
|
(255,868
|
)
|
|
10.64
|
|
|
Forfeited/Canceled
|
(205,094
|
)
|
|
10.15
|
|
|
Unvested at December 31, 2016
|
3,135,181
|
|
|
10.70
|
|
|
Total vested and expected to vest at December 31, 2016
|
2,843,448
|
|
|
10.68
|
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Cost of revenue
|
$
|
1,113
|
|
|
$
|
871
|
|
|
$
|
1,057
|
|
Marketing
|
216
|
|
|
560
|
|
|
971
|
|
|||
Product development
|
1,461
|
|
|
2,860
|
|
|
5,079
|
|
|||
General and administrative
|
7,260
|
|
|
6,550
|
|
|
8,794
|
|
|||
Total stock-based compensation expense
|
$
|
10,050
|
|
|
$
|
10,841
|
|
|
$
|
15,901
|
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Domestic
|
$
|
6,084
|
|
|
$
|
25,627
|
|
|
$
|
25,910
|
|
International
|
(16,344
|
)
|
|
(53,621
|
)
|
|
(28,786
|
)
|
|||
Loss before income taxes
|
$
|
(10,260
|
)
|
|
$
|
(27,994
|
)
|
|
$
|
(2,876
|
)
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
5,378
|
|
|
$
|
24,524
|
|
|
$
|
22,084
|
|
State
|
21
|
|
|
3,843
|
|
|
2,623
|
|
|||
Foreign
|
401
|
|
|
579
|
|
|
580
|
|
|||
Total current
|
5,800
|
|
|
28,946
|
|
|
25,287
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(50
|
)
|
|
(2,863
|
)
|
|
2,008
|
|
|||
State
|
(186
|
)
|
|
108
|
|
|
(247
|
)
|
|||
Foreign
|
(581
|
)
|
|
(122
|
)
|
|
(23
|
)
|
|||
Total deferred
|
(817
|
)
|
|
(2,877
|
)
|
|
1,738
|
|
|||
Total income tax provision
|
$
|
4,983
|
|
|
$
|
26,069
|
|
|
$
|
27,025
|
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Income tax benefit at federal statutory rate
|
$
|
(3,488
|
)
|
|
$
|
(9,798
|
)
|
|
$
|
(1,007
|
)
|
State and local taxes net of federal benefit
|
(109
|
)
|
|
2,575
|
|
|
1,545
|
|
|||
Foreign income tax rate differential
|
3,255
|
|
|
11,584
|
|
|
5,849
|
|
|||
Non-deductible stock-based compensation
|
1,963
|
|
|
1,571
|
|
|
1,412
|
|
|||
Net unrealized loss on warrant and other liabilities
|
140
|
|
|
1,097
|
|
|
—
|
|
|||
Non-deductible items
|
152
|
|
|
1,314
|
|
|
267
|
|
|||
Uncertain tax positions
|
398
|
|
|
5,523
|
|
|
4,033
|
|
|||
Return to provision adjustment
|
36
|
|
|
(25
|
)
|
|
(498
|
)
|
|||
Non-deductible acquisition costs
|
582
|
|
|
10
|
|
|
199
|
|
|||
Change in valuation allowance
|
2,065
|
|
|
7,957
|
|
|
4,911
|
|
|||
Research and development credit
|
—
|
|
|
(7,684
|
)
|
|
(2,170
|
)
|
|||
Deferred charge on restructuring
|
—
|
|
|
12,168
|
|
|
12,168
|
|
|||
Other
|
(11
|
)
|
|
(223
|
)
|
|
316
|
|
|||
Total income tax provision
|
$
|
4,983
|
|
|
$
|
26,069
|
|
|
$
|
27,025
|
|
|
As of December 31,
|
||||||
|
2015
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
7,961
|
|
|
$
|
13,084
|
|
Research and development credit carryforwards
|
898
|
|
|
898
|
|
||
Stock-based compensation expense
|
3,953
|
|
|
5,692
|
|
||
Accrued VAT liability
|
74
|
|
|
68
|
|
||
Alternative minimum tax credit
|
717
|
|
|
274
|
|
||
Allowance for doubtful accounts
|
650
|
|
|
611
|
|
||
Deferred rent
|
146
|
|
|
644
|
|
||
Accrued vacation
|
640
|
|
|
1,035
|
|
||
Unrealized loss on foreign currency
|
3,035
|
|
|
—
|
|
||
Other, net
|
1,143
|
|
|
1,418
|
|
||
Total deferred tax assets
|
19,217
|
|
|
23,724
|
|
||
Less valuation allowance
|
9,540
|
|
|
13,839
|
|
||
Total net deferred tax asset
|
9,677
|
|
|
9,885
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation
|
(4,490
|
)
|
|
(6,618
|
)
|
||
Restructuring Liability
|
(65,585
|
)
|
|
(64,460
|
)
|
||
Unrealized gain on foreign currency
|
—
|
|
|
(1,059
|
)
|
||
Other liabilities
|
(1,022
|
)
|
|
(2,816
|
)
|
||
Total deferred tax liabilities
|
(71,097
|
)
|
|
(74,953
|
)
|
||
Net deferred tax liabilities
|
$
|
(61,420
|
)
|
|
$
|
(65,068
|
)
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Balance as of the beginning of period
|
$
|
—
|
|
|
$
|
1,892
|
|
|
$
|
9,540
|
|
Additions charged to expense
|
3,915
|
|
|
7,983
|
|
|
4,886
|
|
|||
Deletions credited to expense
|
(1,850
|
)
|
|
—
|
|
|
—
|
|
|||
Currency translation
|
(173
|
)
|
|
(335
|
)
|
|
(587
|
)
|
|||
Balance as of the end of period
|
$
|
1,892
|
|
|
$
|
9,540
|
|
|
$
|
13,839
|
|
|
As of December 31,
|
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Balance as of the beginning of period
|
$
|
—
|
|
|
$
|
398
|
|
|
$
|
22,229
|
|
Additions based on tax positions related to the current year
|
398
|
|
|
21,797
|
|
|
1,071
|
|
|||
Additions for tax positions of prior years
|
—
|
|
|
34
|
|
|
274
|
|
|||
Reductions for tax provisions of prior years
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance as of the end of period
|
$
|
398
|
|
|
$
|
22,229
|
|
|
$
|
23,574
|
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
Net loss
|
$
|
(15,243
|
)
|
|
$
|
(54,063
|
)
|
|
$
|
(29,901
|
)
|
Basic and diluted shares:
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
40,246,663
|
|
|
91,122,291
|
|
|
113,562,738
|
|
|||
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic and diluted net loss per share applicable to common stockholders
|
$
|
(0.38
|
)
|
|
$
|
(0.59
|
)
|
|
$
|
(0.26
|
)
|
|
Year Ended
December 31, |
||||||||||
|
2014
|
|
2015
|
|
2016
|
||||||
United States
|
$
|
153,866
|
|
|
$
|
213,389
|
|
|
$
|
276,537
|
|
International
|
41,725
|
|
|
60,110
|
|
|
88,430
|
|
|||
Revenue
|
$
|
195,591
|
|
|
$
|
273,499
|
|
|
$
|
364,967
|
|
|
Capital Lease
Obligations |
|
Operating
Leases |
|
Build-to-Suit
Lease |
||||||
Periods ending
|
|
|
|
|
|
||||||
2017
|
$
|
7,970
|
|
|
$
|
3,026
|
|
|
$
|
5,883
|
|
2018
|
4,436
|
|
|
3,787
|
|
|
9,381
|
|
|||
2019
|
1,296
|
|
|
3,817
|
|
|
9,451
|
|
|||
2020
|
38
|
|
|
3,471
|
|
|
9,522
|
|
|||
2021
|
—
|
|
|
2,718
|
|
|
10,354
|
|
|||
Thereafter
|
—
|
|
|
10,475
|
|
|
48,834
|
|
|||
Total minimum payments required
|
$
|
13,740
|
|
|
$
|
27,294
|
|
|
$
|
93,425
|
|
Amounts representing interest
|
1,615
|
|
|
|
|
|
|||||
Present value of net minimum payments
|
12,125
|
|
|
|
|
|
|||||
Current maturities
|
6,829
|
|
|
|
|
|
|||||
Long-term payment obligations
|
$
|
5,296
|
|
|
|
|
|
ETSY, INC.
|
|
Date: February 28, 2017
|
/s/ Kristina Salen
|
|
Kristina Salen
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
Signature
|
Title
|
Date
|
/s/ Chad Dickerson
Chad Dickerson
|
President, Chief Executive Officer, Chair (Principal Executive Officer)
|
February 28, 2017
|
/s/ Kristina Salen
Kristina Salen
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
February 28, 2017
|
/s/ M. Michele Burns
M. Michele Burns
|
Director
|
February 28, 2017
|
/s/ Jonathan D. Klein
Jonathan D. Klein
|
Director
|
February 28, 2017
|
/s/ Melissa Reiff
Melissa Reiff
|
Director
|
February 28, 2017
|
/s/ Josh Silverman
Josh Silverman
|
Director
|
February 28, 2017
|
/s/ Margaret M. Smyth
Margaret M. Smyth
|
Director
|
February 28, 2017
|
/s/ Fred Wilson
Fred Wilson
|
Director
|
February 28, 2017
|
Exhibit
Number
|
|
|
Incorporated by Reference
|
|
|
Filed
Herewith
|
|
|||||||||||||||||
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
|
|
|||||||||||||
3.1
|
Amended and Restated Certificate of Incorporation of Etsy, Inc.
|
|
8-K
|
|
001-36911
|
|
3.1
|
|
4/21/2015
|
|
|
|
||||||||||||
3.2
|
Amended and Restated Bylaws of Etsy, Inc.
|
|
8-K
|
|
001-36911
|
|
3.2
|
|
4/21/2015
|
|
|
|
||||||||||||
10.1
|
Form of Indemnification Agreement between Etsy, Inc. and each of its directors and executive officers
|
|
S-1/A
|
|
333-202497
|
|
10.1
|
|
3/31/2015
|
|
|
|
||||||||||||
10.2.1*
|
2006 Stock Plan, as amended, and forms of agreements thereunder
|
|
S-1
|
|
333-202497
|
|
10.2.1
|
|
3/4/2015
|
|
|
|
||||||||||||
10.2.2*
|
Form of Stock Option Agreement under 2006 Stock Plan with Chad Dickerson
|
|
S-1
|
|
333-202497
|
|
10.2.2
|
|
3/4/2015
|
|
|
|
||||||||||||
10.3*
|
2015 Equity Incentive Plan and form of agreement thereunder
|
|
S-1/A
|
|
333-202497
|
|
10.3
|
|
4/14/2015
|
|
|
|
||||||||||||
10.4*
|
2015 Employee Stock Purchase Plan
|
|
S-1/A
|
|
333-202497
|
|
10.4
|
|
3/31/2015
|
|
|
|
||||||||||||
10.5.1
|
Agreement of Lease, dated April 14, 2009, between Etsy, Inc. and 55 Washington Street LLC, as amended
|
|
S-1
|
|
333-202497
|
|
10.5
|
|
3/4/2015
|
|
|
|
||||||||||||
10.5.2
|
Lease Amendment for Partial Surrender & Termination Agreement, dated June 16, 2016, between Etsy, Inc. and 55 Washington Street LLC.
|
|
10-Q
|
|
001-36911
|
|
10.2
|
|
8/4/2016
|
|
|
|
||||||||||||
10.6
|
Agreement of Lease, dated May 12, 2014, among Etsy, Inc., 117 Adams Owner LLC and 55 Prospect Owner LLC
|
|
S-1
|
|
333-202497
|
|
10.6
|
|
3/4/2015
|
|
|
|
||||||||||||
10.7.1
|
Revolving Credit and Guaranty Agreement, dated May 16, 2014, between Etsy, Inc. and the other parties thereto, as amended as of April 15, 2015 (conformed copy)
|
|
S-1
|
|
333-202497
|
|
10.7
|
|
3/4/2015
|
|
|
|
||||||||||||
10.7.2
|
Amendment No. 2 to Revolving Credit and Guaranty Agreement, dated December 21, 2015, between Etsy, Inc. and the other parties thereto
|
|
10-K
|
|
001-36911
|
|
10.7.2
|
|
3/1/2016
|
|
|
|
||||||||||||
10.8*
|
Employment offer letter between Etsy, Inc. and Chad Dickerson, dated March 24, 2015
|
|
S-1/A
|
|
333-202497
|
|
10.8
|
|
3/31/2015
|
|
|
|
||||||||||||
10.9.1*
|
Employment offer letter between Etsy, Inc. and Kristina Salen, dated January 12, 2013, as amended
|
|
S-1/A
|
|
333-202497
|
|
10.9.1
|
|
3/31/2015
|
|
|
|
||||||||||||
10.9.2*
|
Relocation letter agreement between Etsy, Inc. and Kristina Salen, dated June 18, 2013
|
|
S-1/A
|
|
333-202497
|
|
10.9.2
|
|
3/31/2015
|
|
|
|
||||||||||||
10.9.3*
|
Retention letter agreement between Etsy Inc., and Kristina Salen, dated October 28, 2016
|
|
8-K
|
|
001-36911
|
|
10.1
|
|
11/1/2016
|
|
|
|
||||||||||||
10.10.1
|
Employment offer letter between Etsy, Inc. and Jordan Breslow, dated October 20, 2013
|
|
S-1/A
|
|
333-202497
|
|
10.10
|
|
3/31/2015
|
|
|
|
||||||||||||
10.10.2
|
Separation letter agreement between Etsy, Inc. and Jordan Breslow, dated August 31, 2016
|
|
|
|
|
|
|
|
|
|
X
|
|
10.11*
|
Severance Plan and form of Participation Notice thereunder.
|
|
S-1/A
|
|
333-202497
|
|
10.12
|
|
4/14/2015
|
|
|
|
||||||||||||
10.12*
|
Change in Control Severance Plan and form of Participation Notice thereunder
|
|
S-1
|
|
333-202497
|
|
10.13
|
|
3/4/2015
|
|
|
|
||||||||||||
10.13.1*
|
Management Cash Incentive Plan
|
|
S-1
|
|
333-202497
|
|
10.14
|
|
3/4/2015
|
|
|
|
||||||||||||
10.13.2*
|
Amendment No. 1 to the Etsy, Inc. Management Cash Incentive Plan
|
|
10-Q
|
|
001-36911
|
|
10.1
|
|
8/4/2016
|
|
|
|
||||||||||||
10.14.1*
|
Compensation Program for Non-Employee Directors
|
|
S-1
|
|
333-202497
|
|
10.15
|
|
3/4/2015
|
|
|
|
||||||||||||
10.14.2*
|
Amended and Restated Compensation Program for Non-Employee Directors
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
10.15*
|
Employment offer letter between Etsy, Inc. and Linda Kozlowski dated April 5, 2016
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
21.1
|
List of Subsidiaries of Etsy, Inc.
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
23.1
|
Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
24.1
|
Power of Attorney (contained in the signature page to this Annual Report on Form 10-K)
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
31.1
|
Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
31.2
|
Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
32.1†
|
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
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
32.2†
|
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
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
101.INS
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
101.SCH
|
XBRL Taxonomy Schema Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
101.CAL
|
XBRL Taxonomy Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
101.DEF
|
XBRL Taxonomy Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
101.LAB
|
XBRL Taxonomy Labels Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
||||||||||||
101.PRE
|
XBRL Taxonomy Presentation Linkbase Document
'
|
|
|
|
|
|
|
|
|
|
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.
|
•
|
“Good Reason” means (a) a material diminution in the your authority, duties or responsibilities; (b) a material reduction in the your base compensation; (c) a material change in the geographic location at which the you must perform services for the Company; or (d) any other action or inaction that constitutes a material breach by the Company of a material term of this offer letter.
|
•
|
“Cause” means your (a) unauthorized use or disclosure of the Company’s confidential information or trade secrets; (b) breach of any material terms of any material agreement between the you and the Company; (c) material failure to comply with the Company’s written policies or rules; (d) conviction of, or plea of
|
ETSY, INC.
|
EMPLOYEE
|
By: /s/
Brian Christman
|
Name
: /s/ Linda Kozlowski
NHName2/
|
Name: Brian Christman
|
Signature:
Linda Kozlowski
/NHSig2/
|
Title: VP, People Workplace & Sustainability
|
Date:
4/6/2016
|
|
Email:
###
|
•
|
Apartment fees/rent for your current San Francisco residence.
|
•
|
Lease break fees for your current San Francisco residence.
|
•
|
Broker/finder fees for your new residence in the New York City Area
|
•
|
Rent on new apartment in NYC.
|
•
|
Travel, lodging and meal expenses associated with trips to NYC for the purpose of searching for a new residence
|
•
|
Return trips to your former residence
|
•
|
Travel expenses for preliminary trips to the area for house hunting and any other related expenses when visiting the area, including lodging
|
•
|
Temporary housing/living expenses (in excess of benefit described in the Relocation Package section above)
|
•
|
Car rental (except if the car is used as transportation to the area, for the move)
|
•
|
Meal expenses in route
|
•
|
Room service
|
•
|
Storage charges that occur more than 30 days after your move
|
•
|
Truck rental or van line moving company expenses
|
•
|
Manual labor assistance to load and unload truck
|
•
|
Packing materials
|
•
|
Storing and insuring household goods and personal effects that occur within 30 consecutive days of moving from your old residence to your new residence
|
•
|
Transportation costs (airfare, train, car rental) for yourself and members of your household (please note: only one trip to your new home, per household member, is allowed as non-taxable; however, all members of your household do not have to travel together or at the same time)
|
•
|
Overnight lodging en route when traveling great distances
|
•
|
Actual gas receipts for personal vehicles or rental vehicles
|
•
|
Tolls, parking fees
|
•
|
Costs related to connecting/disconnecting utilities
|
•
|
Utility company deposits
|
•
|
Expenses of buying or selling a home
|
•
|
Real estate taxes
|
•
|
Security deposits
|
•
|
Any other items not specifically listed in the “Taxable” / “Non-Taxable” sections of this agreement, unless explicitly approved in writing by the Company.
|
/s/ Brian Christman 9/20/16
|
Brian Christman
|
SVP, People and Workplace
|
Etsy, Inc.
|
/s/ Jordan Breslow
|
Signature of Jordan Breslow
|
Dated: 9/19/2016 | 10:52 PDT
|
2.
|
New Director Fee
: Equity with fair value on the grant date equal to $262,500
|
3.
|
Additional Retainers
: Cash equal to:
|
D.
|
Expenses
|
Name of Subsidiary
|
|
Jurisdiction of Incorporation or Organization
|
Etsy Ireland UC
|
|
Ireland
|
Etsy France SAS
|
|
France
|
Etsy UK Limited
|
|
United Kingdom
|
1.
|
I have reviewed this Annual Report on Form 10-K of Etsy, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
1.
|
I have reviewed this Annual Report on Form 10-K of Etsy, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|