x
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the fiscal year ended December 31, 2017
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OR
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from
to
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Delaware
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20-4898921
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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117 Adams Street, Brooklyn, NY
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11201
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(Address of principal executive offices)
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(Zip code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.001 per share
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The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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Emerging growth company
¨
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Page
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Part I
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Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Part II
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Consolidated Financial and Other Data
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Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Report of Independent Registered Public Accounting Firm
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Consolidated Balance Sheets as of December 31, 2017 and 2016
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Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015
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Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 2016 and 2015
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Consolidated Statement of Changes in Convertible Preferred Stock and Stockholders' Equity for the years ended December 31, 2017, 2016 and 2015
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Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015
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Notes to Consolidated Financial Statements
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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Part III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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Part IV
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Item 15.
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Exhibits, Financial Statement Schedules
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Exhibit Index
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Item 16.
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Form 10-K Summary
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Signatures
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2017 Estimated Annual Spend in Top Etsy Retail Categories and Core Geographies
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Key Components of Our Platform
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•
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Unique Products:
Our marketplace boasts a large assortment of handmade, vintage, and craft supply products from all of the world. There are currently more than
50 million
items listed across more than
50
retail categories. We intend to continue to invest in our search and discovery capabilities to help buyers efficiently find the unique items they are seeking and to create a more immersive and engaging discovery experience on Etsy.com.
|
•
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Global Reach:
Etsy’s six core geographic markets are the United States, United Kingdom, Canada, Australia, France, and Germany, and 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 interact across borders even if they do not speak the same language and wish to transact in different currencies. We use innovative machine translation technology to translate listings, reviews, promoted listings, and conversations between Etsy buyers and Etsy sellers. Our payments platform makes it easy for Etsy sellers to offer Etsy buyers a wide range of payment options. In
2017
,
35%
of Etsy sellers were located outside the United States, and
33%
of our GMS was generated between an Etsy seller, Etsy buyer, or both, located outside of the United States.
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•
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Organic Traffic Base:
We’ve built a loyal, global base of buyers on the platform without significant investment in acquisition marketing until 2013, eight years after being founded. Unlike many other ecommerce companies, the vast majority of visits to Etsy.com came through organic channels. In fact, approximately,
88%
of visits in
2017
were from organic sources, including a large portion from buyers visiting Etsy.com directly as well as from non-paid channels such as search, social, email, and push notifications.
|
•
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Connection Between Buyers and Sellers:
We believe that human connection is central to buyer engagement. Etsy buyers and Etsy sellers use the Conversations tool on our platform to communicate directly about their orders; to request custom goods or personalization of goods; or simply to have a conversation about the product. The ability to have items custom-made or personalized means that buyers can find special items that they can’t find anywhere else. We also encourage engagement between Etsy buyers and Etsy sellers in a variety of other ways, such as through sharing reviews on social media or connecting offline through the Etsy Local feature on our mobile app.
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•
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Connected Experience Across all Devices:
We want to engage Etsy buyers wherever they are and to provide an enjoyable and accessible shopping experience no matter how they come to 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, to help ensure that no matter what device our buyers use they 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 tap specific banners within our mobile web experience. Buyers can sign-up and sign-in to Etsy through Facebook and Google and our payment options include credit cards, debit cards,
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•
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Buyer Intent; People Come to Etsy to Browse and be Inspired:
Our platform is designed to provide a personalized search experience to Etsy buyers, adjusting in real time based on transaction data and previous browsing history. A large portion of our buyers come to Etsy not in search of a specific item, but to browse and be inspired. We are continuing to build more sophisticated algorithms that allow us to deliver more personalized results to our buyers, utilizing browse and transaction data to surface items they didn't know they wanted. In
2017
, we launched a number of products to enhance search, including context specific search ranking and guided search. All of this helps bring fun to the discovery and shopping experience. We believe we have several opportunities to further enhance our search and discovery capabilities and plan to leverage our machine learning technology to deliver an even more personalized shopping experience.
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Use of Seller Services in 2017
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•
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Etsy Payments (formerly called Direct Checkout).
Etsy Payments enables 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, 2017
, Etsy Payments was available in
36
countries and
12
currencies. As of May 2017, nearly all sellers in countries where Etsy Payments is available were required to use the service. Pricing is calculated at 3-4% of total transaction value plus an additional flat fee ranging from $0.20 - $0.51, charged in local currency. Etsy Payments is our largest Seller Services revenue stream and during
2017
,
49.9%
of active sellers used Etsy Payments up from
45.5%
in
2016
, and
85%
of total GMS flowed through Etsy Payments in 2017, up from
78%
in
2016
.
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•
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Promoted Listings.
Promoted Listings enable Etsy sellers to pay a cost-per-click based fee to feature and promote their goods in our marketplace in search results generated by Etsy buyers. This service allows Etsy sellers to target Etsy buyers who are specifically searching for goods similar to those she offers for sale. Promoted Listings is our second largest Seller Services revenue stream and during
2017
,
15.0%
of active sellers used Promoted Listings down from
15.9%
in
2016
. In
2017
, we enhanced Promoted Listings with new ad inventory on all devices (desktop, mobile app and mobile web). With this additional inventory and enhanced algorithms we saw higher click-through rates, which led to accelerated year-over-year revenue growth for this service.
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•
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Shipping Labels.
This service allows sellers in the United States and Canada to purchase discounted United States Postal Service, FedEx and Canada Post shipping labels through our platform. The ability to print the shipping labels at home reduces the cost and time it takes Etsy sellers to ship items to Etsy buyers, reduces the chance for administrative error through features such as auto population of shipping addresses, and automatically provides tracking information and shipping notifications to buyers. Shipping Labels is our third largest Seller Services revenue stream and during
2017
,
28.1%
of active sellers in the United States and Canada used Shipping Labels up from
26.3%
in
2016
.
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•
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Pattern.
With Pattern, Etsy sellers can create their own custom websites with unique domain names within minutes. Pattern imports listings and content from Etsy shops, syncs inventory and orders, and utilizes our Etsy Payments and Shipping Label services. In
2017
, we began allowing sellers to sell items or services on their Pattern website that don't follow the handmade and vintage guidelines within our Etsy.com marketplace. Sellers may use Pattern for free for the first 30 days, then they are charged $15/month, plus transaction and payment processing fees, and Shipping Label fees, if they choose to use this service. Pattern is our smallest Seller Services revenue stream and, during
2017
,
2.5%
of active sellers used Pattern, consistent with
2016
.
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•
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Seller Tools.
We offer a variety of free tools to Etsy sellers, including marketing tools such as our Google Shopping tool, sales and promotions tool, and social media tool, which help sellers with their marketing needs and allow them to stand out on and off the Etsy platform. Through a partnership with Intuit, sellers in the United States and the United Kingdom can simplify their accounting and bookkeeping. Our Shop Manager dashboard, which we launched in 2017, serves as a centralized hub for Etsy sellers to track orders, manage inventory, view metrics and statistics and have conversations with their customers across all of their Etsy shops.
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•
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Education.
We provide extensive educational resources to teach Etsy sellers how to start, manage and scale their businesses on our platform, including blog posts, video tutorials, the Etsy Seller Handbook (available on Etsy.com), Etsy.com online forums and insights from Etsy.com support teams. In addition to our resources, Etsy sellers connect through self-organized Etsy Teams to build personal relationships with other Etsy sellers, collaborate, educate and support each other as they build their independent creative businesses. Currently, over
15,000
Etsy Teams have formed around the world.
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How an Etsy Seller Spends Her Time
|
2016 seller survey
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•
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87%
identify as women;
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•
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73%
consider their Etsy shop to be a business;
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•
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97%
run their shops from their homes;
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•
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81%
aspire to grow their sales in the future; and
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•
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62%
started their Etsy shop as a way to supplement income.
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Etsy Sellers
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•
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Repeat purchases demonstrate the loyalty of Etsy buyers. In
2017
, approximately
39.6%
of our active buyers made purchases on two or more days in the previous 12 months.
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Active Buyers by Purchase Type
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Visits Contribution by Source Type
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Cohorts of 2014, 2013, 2012 and 2011 Active Sellers and Active Buyers
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•
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Improving trust and reliability:
Since our sellers have relatively unknown brands and unbranded items, we aim to ensure that the Etsy brand is recognized and valued for its trust and reliability throughout the buying experience. Our goal is to bolster trust in the Etsy brand, Etsy sellers, the items available in our marketplace and in the overall Etsy experience. In
2017
, we improved buyer confidence with the launch of several new products including a Best Seller badge, a structured return policy for sellers, and Multishop Checkout, among others.
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•
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Enhancing search and discovery:
With over
50 million
items listed on Etsy.com that don’t map to a catalog or a stock keeping unit (“SKU”), our challenge is delivering world-class search and discovery technology that surfaces the right product to the right buyer at the right time in order to drive conversion and buyer satisfaction. By utilizing artificial intelligence and machine learning we can help buyers more easily browse, filter and find the item they desire. Throughout
2017
, we continued to make more enhancements to improve the search and discovery experience in our marketplace. We launched Context Specific Search Ranking (“CSR”), which leverages transactional and user data to create a more personalized search experience and Guided Search which helps buyers narrow search results through suggested search reformulations. Also, we launched scarcity badges to alert buyers when items are only available in limited quantities. Scarcity badges reinforce the specialness of our marketplace, and we believe there is significant room for continued optimization with these kinds of buyer nudges.
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•
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Building world-class marketing capabilities:
We need outstanding marketing capabilities to amplify the voice and relevance of our sellers, and to get buyers to come back to Etsy.com more often. We believe we can do a better job of integrating our performance marketing efforts with the efforts of our sellers to potentially unlock additional marketing synergies. In
2017
, approximately
88%
of our visits came to us through organic channels such as direct, search engine optimization, email, and push notifications, and we see an opportunity to optimize these free traffic sources. For example, we have been in the process of migrating our e-mail system to a new customer relationship management (“CRM”), system to allow us to send more personalized and targeted emails to buyers. We believe these efforts will allow Etsy to stay top of mind with buyers and encourage them to come back more frequently. Additionally, we continue to invest in marketing to drive higher return-on-investment (“ROI”) from our paid marketing efforts. Our largest paid marketing channel is digital acquisition marketing in which we invest primarily in Google product listing ads and search engine marketing.
|
•
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Providing best-in-class Seller Services and tools
: Finally, we seek to provide sellers with best-in-class paid Seller Services and free tools. These resources address the numerous administrative tasks that our sellers face while running their businesses and provide educational materials to help them capitalize on growth and efficiency opportunities. Throughout
2017
, we introduced several new tools to help sellers run sales and promotions, offer free shipping, share their items on social media and assess the health and potential of their businesses. Leveraging our new sales and promotion tool, which allows sellers to create sales and run promotions for items in their shop, we held our first-ever site-wide sales over Labor Day and Cyber Monday, which gave buyers a reason to think of Etsy during additional shopping occasions.
|
•
|
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;
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•
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our ability to convert visits to Etsy.com into sales for our sellers;
|
•
|
the amount and timing of our operating expenses;
|
•
|
our success in attracting and retaining Etsy sellers and Etsy buyers;
|
•
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our success in executing on our strategy and the impact of any changes in our strategy;
|
•
|
the timing and success of product launches, including new services and features we may introduce;
|
•
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the success of our marketing efforts;
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•
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economic and market conditions, such as currency fluctuations and global events;
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•
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disruptions or defects in our marketplace, such as privacy or data security breaches or other incidents that impact the reliability of our platform;
|
•
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the impact of competitive developments and our response to those developments;
|
•
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our ability to manage our existing business and future growth;
|
•
|
our ability to recruit and retain employees;
|
•
|
the impact and success of the actions that we implemented during the second quarter of 2017 to increase efficiency, streamline our cost structure and improve our focus on key strategic growth opportunities; and
|
•
|
the impact of our revised global corporate structure that was implemented on January 1, 2015.
|
•
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negative perceptions based on recent headcount reductions or changes in senior management;
|
•
|
perceived uncertainties as to our commitment to our mission, values and culture;
|
•
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negative perceptions based on our history of decelerating GMS growth and ability to accelerate in the future;
|
•
|
engagement levels among existing employees and their work-life balance;
|
•
|
the ability to attract and retain qualified employees who support our mission and share our values;
|
•
|
promoting existing employees into leadership positions to help sustain and grow our culture;
|
•
|
hiring employees in multiple locations globally; and
|
•
|
responding to competitive pressures and changing business conditions in ways that do not divert us from our values.
|
•
|
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 marketplace, such as the increased pace of product experimentation, privacy or data security breaches, site outages, payment disruptions 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 marketplace;
|
•
|
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 and mission.
|
•
|
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;
|
•
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increased costs to distribute or use our mobile apps; or
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•
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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.
|
•
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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);
|
•
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fluctuations of foreign exchange rates;
|
•
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potentially heightened risk of fraudulent transactions;
|
•
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limitations on the repatriation of funds;
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•
|
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;
|
•
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varying levels of internet, e-commerce and mobile technology adoption and infrastructure;
|
•
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our ability to enforce contracts and intellectual property rights in jurisdictions outside the United States; and
|
•
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barriers to international trade, such as tariffs, customs or other taxes.
|
•
|
we may choose to prohibit the sale of items in our marketplace that are inconsistent with our policies even though we could benefit financially from the sale of those items; or
|
•
|
we may choose to revise our policies in ways that we believe will be beneficial to our community in the long term even though the changes may be perceived unfavorably, such as updates to the way we define “handmade.”
|
•
|
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;
|
•
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the global scale of our marketplace and the breadth of our online presence;
|
•
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the number and engagement of Etsy buyers;
|
•
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our seller education resources and tools;
|
•
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our policies and fees;
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•
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the ability to scale her business, including through Pattern or with a production partner;
|
•
|
our mobile apps;
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•
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the strength of our community; and
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•
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our values.
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•
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the breadth of unique goods that Etsy sellers list in our marketplace;
|
•
|
the ease of finding the special item a buyer is looking for;
|
•
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our brand awareness;
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•
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the person-to-person commerce experience;
|
•
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our reputation for trustworthiness;
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•
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our mobile apps;
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•
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ease of payment; and
|
•
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the availability and reliability of our platform.
|
•
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integrating new businesses and technologies into our infrastructure;
|
•
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consolidating operational and administrative functions;
|
•
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coordinating outreach to our community;
|
•
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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
|
•
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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 and our failure to meet or exceed the estimates of such analysts;
|
•
|
announcements of new services or enhancements, strategic alliances or significant agreements or other developments by us or our competitors;
|
•
|
announcements by us or our competitors of mergers or acquisitions or rumors of such transactions involving us or our competitors;
|
•
|
the amount and timing of our operating expenses and the success of any cost-savings actions we take;
|
•
|
changes in our Board of Directors, management or other key personnel;
|
•
|
disruptions in our marketplace 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.
|
|
2017
|
|
2016
|
||||||||||||
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
$
|
13.61
|
|
|
$
|
9.41
|
|
|
$
|
9.40
|
|
|
$
|
6.04
|
|
Second Quarter
|
15.46
|
|
|
9.90
|
|
|
10.10
|
|
|
7.60
|
|
||||
Third Quarter
|
17.90
|
|
|
13.58
|
|
|
15.70
|
|
|
9.08
|
|
||||
Fourth Quarter
|
21.86
|
|
|
15.27
|
|
|
16.05
|
|
|
10.84
|
|
Period
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share(2)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(3)(4)
|
|
Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs
(in thousands)(3) |
||||||
October 1 - 31, 2017(1)
|
90,852
|
|
|
$
|
16.85
|
|
|
—
|
|
|
$
|
—
|
|
November 1 - 30, 2017(1)
|
221,272
|
|
|
17.01
|
|
|
220,173
|
|
|
96,253
|
|
||
December 1 - 31, 2017
|
366,058
|
|
|
17.91
|
|
|
366,058
|
|
|
89,699
|
|
||
Total
|
678,182
|
|
|
$
|
17.47
|
|
|
586,231
|
|
|
$
|
89,699
|
|
(2)
|
Average price paid per share excludes broker commissions.
|
(3)
|
On November 17, 2017, we announced that our Board of Directors had approved a stock repurchase program for the repurchase of up to
$100 million
of our common stock. The stock repurchase program has no expiration date.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017 (1)
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands except share and per share amounts)
|
||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketplace
|
$
|
179,492
|
|
|
$
|
158,204
|
|
|
$
|
132,648
|
|
|
$
|
108,732
|
|
|
$
|
78,544
|
|
Seller Services
|
258,453
|
|
|
200,857
|
|
|
136,608
|
|
|
82,502
|
|
|
42,817
|
|
|||||
Other
|
3,286
|
|
|
5,906
|
|
|
4,243
|
|
|
4,357
|
|
|
3,661
|
|
|||||
Total revenue
|
441,231
|
|
|
364,967
|
|
|
273,499
|
|
|
195,591
|
|
|
125,022
|
|
|||||
Cost of revenue(2)
|
150,986
|
|
|
123,328
|
|
|
96,979
|
|
|
73,633
|
|
|
47,779
|
|
|||||
Gross profit
|
290,245
|
|
|
241,639
|
|
|
176,520
|
|
|
121,958
|
|
|
77,243
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketing(2)
|
109,085
|
|
|
82,248
|
|
|
66,771
|
|
|
39,655
|
|
|
17,850
|
|
|||||
Product development(2)
|
74,616
|
|
|
55,083
|
|
|
42,694
|
|
|
36,634
|
|
|
27,548
|
|
|||||
General and administrative(2)
|
91,486
|
|
|
86,180
|
|
|
68,939
|
|
|
51,920
|
|
|
31,112
|
|
|||||
Asset impairment charges
|
3,162
|
|
|
551
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses
|
278,349
|
|
|
224,062
|
|
|
178,404
|
|
|
128,209
|
|
|
76,510
|
|
|||||
Income (loss) from operations
|
11,896
|
|
|
17,577
|
|
|
(1,884
|
)
|
|
(6,251
|
)
|
|
733
|
|
|||||
Other income (expense), net
|
20,369
|
|
|
(20,453
|
)
|
|
(26,110
|
)
|
|
(4,009
|
)
|
|
(675
|
)
|
|||||
Income (loss) before income taxes
|
32,265
|
|
|
(2,876
|
)
|
|
(27,994
|
)
|
|
(10,260
|
)
|
|
58
|
|
|||||
Benefit (provision) for income taxes(3)
|
49,535
|
|
|
(27,025
|
)
|
|
(26,069
|
)
|
|
(4,983
|
)
|
|
(854
|
)
|
|||||
Net income (loss)
|
$
|
81,800
|
|
|
$
|
(29,901
|
)
|
|
$
|
(54,063
|
)
|
|
$
|
(15,243
|
)
|
|
$
|
(796
|
)
|
Net income (loss) per share attributable to common stockholders:
|
|||||||||||||||||||
Basic
|
$
|
0.69
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.59
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(0.02
|
)
|
Diluted
|
$
|
0.68
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.59
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(0.02
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
118,538,687
|
|
|
113,562,738
|
|
|
91,122,291
|
|
|
40,246,663
|
|
|
32,667,242
|
|
|||||
Diluted
|
122,267,673
|
|
|
113,562,738
|
|
|
91,122,291
|
|
|
40,246,663
|
|
|
32,667,242
|
|
(1)
|
Includes the impact of
$13.9 million
in restructuring and other exit costs recognized in the year ended
December 31, 2017
. For a summary of restructuring and other exit costs see “
Note 3—Restructuring and Other Exit Costs
” in the Notes to Consolidated Financial Statements.
|
(2)
|
Includes total stock-based compensation expense as follows:
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Cost of revenue
|
$
|
1,739
|
|
|
$
|
1,057
|
|
|
$
|
871
|
|
|
$
|
1,113
|
|
|
$
|
200
|
|
Marketing
|
1,933
|
|
|
971
|
|
|
560
|
|
|
216
|
|
|
79
|
|
|||||
Product development
|
8,274
|
|
|
5,079
|
|
|
2,860
|
|
|
1,461
|
|
|
785
|
|
|||||
General and administrative
|
14,613
|
|
|
8,794
|
|
|
6,550
|
|
|
7,260
|
|
|
2,770
|
|
|||||
Total stock-based compensation expense
|
$
|
26,559
|
|
|
$
|
15,901
|
|
|
$
|
10,841
|
|
|
$
|
10,050
|
|
|
$
|
3,834
|
|
(3)
|
In the year ended
December 31, 2017
, we recognized an income tax benefit associated with the enactment of the Tax Cuts and Jobs Act (the “Act”). As a result of the Act, our deferred taxes at
December 31, 2017
have been revalued at the reduced 21% corporate income tax rate. The revaluation resulted in a non-recurring benefit for income taxes of approximately
$31.1 million
for the year ended
December 31, 2017
.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands except percentages)
|
||||||||||||||||||
Other Operational and Non-GAAP Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
GMS
|
$
|
3,253,609
|
|
|
$
|
2,841,985
|
|
|
$
|
2,388,387
|
|
|
$
|
1,931,981
|
|
|
$
|
1,347,833
|
|
Adjusted EBITDA
|
$
|
80,009
|
|
|
$
|
57,124
|
|
|
$
|
31,007
|
|
|
$
|
23,081
|
|
|
$
|
16,947
|
|
Active sellers
|
1,933
|
|
|
1,748
|
|
|
1,563
|
|
|
1,353
|
|
|
1,074
|
|
|||||
Active buyers
|
33,364
|
|
|
28,566
|
|
|
24,046
|
|
|
19,810
|
|
|
14,032
|
|
|||||
Percent mobile visits
|
66
|
%
|
|
64
|
%
|
|
60
|
%
|
|
54
|
%
|
|
41
|
%
|
|||||
Percent mobile GMS
|
51
|
%
|
|
48
|
%
|
|
43
|
%
|
|
37
|
%
|
|
30
|
%
|
|||||
Percent international GMS
|
33
|
%
|
|
30
|
%
|
|
30
|
%
|
|
31
|
%
|
|
28
|
%
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Net income (loss)
|
$
|
81,800
|
|
|
$
|
(29,901
|
)
|
|
$
|
(54,063
|
)
|
|
$
|
(15,243
|
)
|
|
$
|
(796
|
)
|
Excluding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest and other non-operating expense, net
|
8,736
|
|
|
5,502
|
|
|
1,202
|
|
|
549
|
|
|
256
|
|
|||||
(Benefit) provision for income taxes
|
(49,535
|
)
|
|
27,025
|
|
|
26,069
|
|
|
4,983
|
|
|
854
|
|
|||||
Depreciation and amortization
|
27,197
|
|
|
22,525
|
|
|
18,550
|
|
|
17,223
|
|
|
12,380
|
|
|||||
Stock-based compensation expense(4)
|
19,953
|
|
|
13,168
|
|
|
8,981
|
|
|
5,920
|
|
|
3,834
|
|
|||||
Stock-based compensation expense—acquisitions
|
3,904
|
|
|
2,733
|
|
|
1,860
|
|
|
4,130
|
|
|
—
|
|
|||||
Foreign exchange (gain) loss
|
(29,105
|
)
|
|
14,951
|
|
|
21,775
|
|
|
3,049
|
|
|
—
|
|
|||||
Asset impairment charges
|
3,162
|
|
|
551
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring and other exit costs
|
13,897
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Acquisition-related expenses
|
—
|
|
|
570
|
|
|
—
|
|
|
2,059
|
|
|
—
|
|
|||||
Net unrealized loss on warrant and other liabilities
|
—
|
|
|
—
|
|
|
3,133
|
|
|
411
|
|
|
419
|
|
|||||
Contribution to Good Work Institute (formerly Etsy.org)
|
—
|
|
|
—
|
|
|
3,500
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted EBITDA
|
$
|
80,009
|
|
|
$
|
57,124
|
|
|
$
|
31,007
|
|
|
$
|
23,081
|
|
|
$
|
16,947
|
|
(4)
|
$2.7 million
of restructuring-related stock-based compensation expense has been excluded from the year ended
December 31, 2017
and is included in the restructuring and other exit costs line.
|
|
As of December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents and short-term investments
|
$
|
340,550
|
|
|
$
|
282,086
|
|
|
$
|
292,864
|
|
|
$
|
88,843
|
|
|
$
|
54,870
|
|
Net working capital
|
336,787
|
|
|
287,024
|
|
|
278,932
|
|
|
85,608
|
|
|
55,764
|
|
|||||
Total assets
|
605,583
|
|
|
581,193
|
|
|
553,061
|
|
|
246,203
|
|
|
104,900
|
|
|||||
Deferred revenue
|
6,262
|
|
|
5,648
|
|
|
4,712
|
|
|
3,452
|
|
|
2,760
|
|
|||||
Long-term liabilities
|
106,212
|
|
|
152,428
|
|
|
142,441
|
|
|
57,450
|
|
|
1,466
|
|
|||||
Convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
80,212
|
|
|
80,212
|
|
|||||
Total stockholders’ equity
|
396,894
|
|
|
344,757
|
|
|
330,498
|
|
|
67,088
|
|
|
4,003
|
|
•
|
Improving trust and reliability.
We want to ensure that the Etsy brand delivers trust and reliability throughout the buying experience.
|
•
|
Enhancing search and discovery
. Helping buyers better navigate the over
50 million
items on Etsy.com is a key area of focus.
|
•
|
Building world-class marketing capabilities
. We are focused on driving traffic to Etsy. com utilizing our own marketing efforts and the efforts of our sellers, primarily through digital acquisition marketing, search engine optimization (“SEO”), social channels and email.
|
•
|
Providing best-in-class Seller Services and tools
. We plan to continue to invest in free tools and paid Seller Services to help Etsy sellers start, manage and scale their businesses.
|
•
|
Improving trust and reliability:
We added a Best Seller badge, a new structured return policy for sellers and Multishop checkout.
|
•
|
Enhancing search and discovery:
We launched Context Specific Search Ranking, which leverages transactional and user data to create a more personalized search experience, and Guided Search, which helps buyers narrow search results through suggested search reformulations. We also launched scarcity badges to alert buyers when items are available only in limited quantities.
|
•
|
Building world-class marketing capabilities:
We are in the process of migrating our email marketing system to a new customer relationship management (“CRM”), system to allow us to send more personalized and targeted emails to buyers. Additionally, we continue to invest in digital acquisition marketing, in which we invest primarily in Google product listing ads and search engine marketing.
|
•
|
Providing best-in-class Seller Services and tools:
We transitioned nearly all sellers in eligible countries to Etsy Payments, optimized Promoted Listings with additional inventory and improved algorithms, and allowed sellers to list items on their Pattern site that are not listed in the Etsy marketplace. Additionally, we launched a tool that allows sellers to create sales and run promotions for items in their shops, which allowed us to host our first-ever site-wide sales over Labor Day and Cyber week.
|
|
|
Year Ended December 31,
|
|
% Growth
Y/Y |
|
Year Ended December 31,
|
|
% Growth
Y/Y |
||||||||||
|
|
2017
|
|
2016
|
|
|
2015
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
(in thousands except percentages)
|
||||||||||||||||
GMS
|
|
$
|
3,253,609
|
|
|
$
|
2,841,985
|
|
|
14.5
|
%
|
|
$
|
2,388,387
|
|
|
19.0
|
%
|
Revenue
|
|
$
|
441,231
|
|
|
$
|
364,967
|
|
|
20.9
|
%
|
|
$
|
273,499
|
|
|
33.4
|
%
|
Marketplace revenue
|
|
$
|
179,492
|
|
|
$
|
158,204
|
|
|
13.5
|
%
|
|
$
|
132,648
|
|
|
19.3
|
%
|
Seller Services revenue
|
|
$
|
258,453
|
|
|
$
|
200,857
|
|
|
28.7
|
%
|
|
$
|
136,608
|
|
|
47.0
|
%
|
Net income (loss)
|
|
$
|
81,800
|
|
|
$
|
(29,901
|
)
|
|
373.6
|
%
|
|
$
|
(54,063
|
)
|
|
44.7
|
%
|
Adjusted EBITDA
|
|
$
|
80,009
|
|
|
$
|
57,124
|
|
|
40.1
|
%
|
|
$
|
31,007
|
|
|
84.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Active sellers
|
|
1,933
|
|
|
1,748
|
|
|
10.6
|
%
|
|
1,563
|
|
|
11.8
|
%
|
|||
Active buyers
|
|
33,364
|
|
|
28,566
|
|
|
16.8
|
%
|
|
24,046
|
|
|
18.8
|
%
|
|||
Percent mobile visits
|
|
66
|
%
|
|
64
|
%
|
|
200
|
bps
|
|
60
|
%
|
|
400
|
bps
|
|||
Percent mobile GMS
|
|
51
|
%
|
|
48
|
%
|
|
300
|
bps
|
|
43
|
%
|
|
500
|
bps
|
|||
Percent international GMS
|
|
33
|
%
|
|
30
|
%
|
|
300
|
bps
|
|
30
|
%
|
|
—
|
|
•
|
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 (gain) loss
;
|
•
|
Adjusted EBITDA does not consider the impact of
asset impairment charges
;
|
•
|
Adjusted EBITDA does not reflect
acquisition-related expenses
;
|
•
|
Adjusted EBITDA does not consider the impact of restructuring and other exit costs related to the Actions;
|
•
|
Adjusted EBITDA does not reflect the impact of our
contributions to Good Work Institute (formerly Etsy.org)
;
|
•
|
Adjusted EBITDA does not reflect other non-operating expenses, net of other non-operating income, including net interest expense; 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,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(in thousands)
|
||||||||||
Net income (loss)
|
$
|
81,800
|
|
|
$
|
(29,901
|
)
|
|
$
|
(54,063
|
)
|
Excluding:
|
|
|
|
|
|
||||||
Interest and other no
n-operating expense, net(1)
|
8,736
|
|
|
5,502
|
|
|
1,202
|
|
|||
Provision (benefit) for income taxes
|
(49,535
|
)
|
|
27,025
|
|
|
26,069
|
|
|||
Depreciation and amortization(1)
|
27,197
|
|
|
22,525
|
|
|
18,550
|
|
|||
Stock-based compensation expense(2)
|
19,953
|
|
|
13,168
|
|
|
8,981
|
|
|||
Stock-based compensation expense—acquisitions
|
3,904
|
|
|
2,733
|
|
|
1,860
|
|
|||
Foreign exchange (gain) loss
|
(29,105
|
)
|
|
14,951
|
|
|
21,775
|
|
|||
Asset impairment charges
|
3,162
|
|
|
551
|
|
|
—
|
|
|||
Restructuring and other exit costs(3)
|
13,897
|
|
|
—
|
|
|
—
|
|
|||
Acquisition-related expenses
|
—
|
|
|
570
|
|
|
—
|
|
|||
Net unrealized loss on warrant and other liabilities
|
—
|
|
|
—
|
|
|
3,133
|
|
|||
Contribution to Good Work Institute (formerly Etsy.org)(4)
|
—
|
|
|
—
|
|
|
3,500
|
|
|||
Adjusted EBITDA
|
$
|
80,009
|
|
|
$
|
57,124
|
|
|
$
|
31,007
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(in thousands)
|
||||||||||
Interest expense
|
$
|
9,000
|
|
|
$
|
5,337
|
|
|
$
|
—
|
|
Depreciation
|
3,276
|
|
|
2,186
|
|
|
—
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenue
|
$
|
1,739
|
|
|
$
|
1,057
|
|
|
$
|
871
|
|
Marketing
|
1,933
|
|
|
971
|
|
|
560
|
|
|||
Product development
|
8,274
|
|
|
5,079
|
|
|
2,860
|
|
|||
General and administrative
|
14,613
|
|
|
8,794
|
|
|
6,550
|
|
|||
Total stock-based compensation expense
|
$
|
26,559
|
|
|
$
|
15,901
|
|
|
$
|
10,841
|
|
(3)
|
Total restructuring and other exit costs included in the Consolidated Statements of Operations are as follows:
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenue
|
$
|
738
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketing
|
2,950
|
|
|
—
|
|
|
—
|
|
|||
Product development
|
3,232
|
|
|
—
|
|
|
—
|
|
|||
General and administrative
|
6,977
|
|
|
—
|
|
|
—
|
|
|||
Total restructuring and other exit costs
|
$
|
13,897
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(4)
|
Etsy made a one-time contribution of 188,235 shares of common stock totaling $3.2 million and $0.3 million to Good Work Institute (formerly Etsy.org) during the first and second quarters of 2015, respectively.
|
•
|
many of these costs were or will be settled in cash;
|
•
|
there is no certainty that restructuring and other exit costs will not recur; and
|
•
|
other companies, including companies in our industry, may adjust for similar items in a different manner, or may not exclude such charges, which reduces its usefulness as a comparative measure.
|
|
Year Ended December 31, 2017
|
||||||||||
|
As Reported
|
|
Restructuring and Other Exit Costs
|
|
Excluding Restructuring and Other Exit Costs
|
||||||
|
|
|
|
|
|
||||||
|
(in thousands)
|
||||||||||
Revenue
|
$
|
441,231
|
|
|
$
|
—
|
|
|
$
|
441,231
|
|
Cost of revenue
|
150,986
|
|
|
738
|
|
|
150,248
|
|
|||
Gross profit
|
290,245
|
|
|
738
|
|
|
290,983
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Marketing
|
109,085
|
|
|
2,950
|
|
|
106,135
|
|
|||
Product development
|
74,616
|
|
|
3,232
|
|
|
71,384
|
|
|||
General and administrative
|
91,486
|
|
|
6,977
|
|
|
84,509
|
|
|||
Asset impairment charges
|
3,162
|
|
|
—
|
|
|
3,162
|
|
|||
Total operating expenses
|
278,349
|
|
|
13,159
|
|
|
265,190
|
|
|||
Income from operations
|
$
|
11,896
|
|
|
$
|
13,897
|
|
|
$
|
25,793
|
|
Cohort of 2014, 2013, 2012 and 2011 Active Sellers
|
Cohort of 2014, 2013, 2012 and 2011 Active Buyers
|
•
|
Revenue from Etsy Payments consists of fees an Etsy seller pays us to process credit, debit and Etsy Gift Card payments. Etsy Payments 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. Etsy Payments 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 marketplace.
|
•
|
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 consists of monthly subscription and annual domain registration fees an Etsy seller pays to use our custom website services.
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(in thousands)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Marketplace
|
$
|
179,492
|
|
|
$
|
158,204
|
|
|
$
|
132,648
|
|
Seller Services
|
258,453
|
|
|
200,857
|
|
|
136,608
|
|
|||
Other
|
3,286
|
|
|
5,906
|
|
|
4,243
|
|
|||
Total revenue
|
441,231
|
|
|
364,967
|
|
|
273,499
|
|
|||
Cost of revenue
|
150,986
|
|
|
123,328
|
|
|
96,979
|
|
|||
Gross profit
|
290,245
|
|
|
241,639
|
|
|
176,520
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Marketing
|
109,085
|
|
|
82,248
|
|
|
66,771
|
|
|||
Product development
|
74,616
|
|
|
55,083
|
|
|
42,694
|
|
|||
General and administrative
|
91,486
|
|
|
86,180
|
|
|
68,939
|
|
|||
Asset impairment charges
|
3,162
|
|
|
551
|
|
|
—
|
|
|||
Total operating expenses
|
278,349
|
|
|
224,062
|
|
|
178,404
|
|
|||
Income (loss) from operations
|
11,896
|
|
|
17,577
|
|
|
(1,884
|
)
|
|||
Other income (expense), net
|
20,369
|
|
|
(20,453
|
)
|
|
(26,110
|
)
|
|||
Income (loss) before income taxes
|
32,265
|
|
|
(2,876
|
)
|
|
(27,994
|
)
|
|||
Benefit (provision) for income taxes
|
49,535
|
|
|
(27,025
|
)
|
|
(26,069
|
)
|
|||
Net income (loss)
|
$
|
81,800
|
|
|
$
|
(29,901
|
)
|
|
$
|
(54,063
|
)
|
|
|
|
|
|
|
||||||
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Marketplace
|
40.7
|
%
|
|
43.3
|
%
|
|
48.5
|
%
|
|||
Seller Services
|
58.6
|
|
|
55.0
|
|
|
49.9
|
|
|||
Other
|
0.7
|
|
|
1.6
|
|
|
1.6
|
|
|||
Total revenue
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|||
Cost of revenue
|
34.2
|
|
|
33.8
|
|
|
35.5
|
|
|||
Gross profit
|
65.8
|
|
|
66.2
|
|
|
64.5
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Marketing
|
24.7
|
|
|
22.5
|
|
|
24.4
|
|
|||
Product development
|
16.9
|
|
|
15.1
|
|
|
15.6
|
|
|||
General and administrative
|
20.7
|
|
|
23.6
|
|
|
25.2
|
|
|||
Asset impairment charges
|
0.7
|
|
|
0.2
|
|
|
—
|
|
|||
Total operating expenses
|
63.1
|
|
|
61.4
|
|
|
65.2
|
|
|||
Income (loss) from operations
|
2.7
|
|
|
4.8
|
|
|
(0.7
|
)
|
|||
Other income (expense), net
|
4.6
|
|
|
(5.6
|
)
|
|
(9.5
|
)
|
|||
Income (loss) before income taxes
|
7.3
|
|
|
(0.8
|
)
|
|
(10.2
|
)
|
|||
Benefit (provision) for income taxes
|
11.2
|
|
|
(7.4
|
)
|
|
(9.5
|
)
|
|||
Net income (loss)
|
18.5
|
%
|
|
(8.2
|
)%
|
|
(19.8
|
)%
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Marketplace
|
|
$
|
179,492
|
|
|
$
|
158,204
|
|
|
$
|
21,288
|
|
|
13.5
|
%
|
Percentage of total revenue
|
|
40.7
|
%
|
|
43.3
|
%
|
|
|
|
|
|||||
Seller Services
|
|
$
|
258,453
|
|
|
$
|
200,857
|
|
|
$
|
57,596
|
|
|
28.7
|
%
|
Percentage of total revenue
|
|
58.6
|
%
|
|
55.0
|
%
|
|
|
|
|
|||||
Other
|
|
$
|
3,286
|
|
|
$
|
5,906
|
|
|
$
|
(2,620
|
)
|
|
(44.4
|
)%
|
Percentage of total revenue
|
|
0.7
|
%
|
|
1.6
|
%
|
|
|
|
|
|||||
Total revenue
|
|
$
|
441,231
|
|
|
$
|
364,967
|
|
|
$
|
76,264
|
|
|
20.9
|
%
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Cost of revenue
|
|
$
|
150,986
|
|
|
$
|
123,328
|
|
|
$
|
27,658
|
|
|
22.4
|
%
|
Percentage of total revenue
|
|
34.2
|
%
|
|
33.8
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Marketing
|
|
$
|
109,085
|
|
|
$
|
82,248
|
|
|
$
|
26,837
|
|
|
32.6
|
%
|
Percentage of total revenue
|
|
24.7
|
%
|
|
22.5
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Product development
|
|
$
|
74,616
|
|
|
$
|
55,083
|
|
|
$
|
19,533
|
|
|
35.5
|
%
|
Percentage of total revenue
|
|
16.9
|
%
|
|
15.1
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Other income (expense), net
|
|
$
|
20,369
|
|
|
$
|
(20,453
|
)
|
|
$
|
40,822
|
|
|
199.6
|
%
|
Percentage of total revenue
|
|
4.6
|
%
|
|
(5.6
|
)%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Marketplace
|
|
$
|
158,204
|
|
|
$
|
132,648
|
|
|
$
|
25,556
|
|
|
19.3
|
%
|
Percentage of total revenue
|
|
43.3
|
%
|
|
48.5
|
%
|
|
|
|
|
|||||
Seller Services
|
|
$
|
200,857
|
|
|
$
|
136,608
|
|
|
$
|
64,249
|
|
|
47.0
|
%
|
Percentage of total revenue
|
|
55.0
|
%
|
|
49.9
|
%
|
|
|
|
|
|||||
Other
|
|
$
|
5,906
|
|
|
$
|
4,243
|
|
|
$
|
1,663
|
|
|
39.2
|
%
|
Percentage of total revenue
|
|
1.6
|
%
|
|
1.6
|
%
|
|
|
|
|
|||||
Total revenue
|
|
$
|
364,967
|
|
|
$
|
273,499
|
|
|
$
|
91,468
|
|
|
33.4
|
%
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Cost of revenue
|
|
$
|
123,328
|
|
|
$
|
96,979
|
|
|
$
|
26,349
|
|
|
27.2
|
%
|
Percentage of total revenue
|
|
33.8
|
%
|
|
35.5
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Marketing
|
|
$
|
82,248
|
|
|
$
|
66,771
|
|
|
$
|
15,477
|
|
|
23.2
|
%
|
Percentage of total revenue
|
|
22.5
|
%
|
|
24.4
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Product development
|
|
$
|
55,083
|
|
|
$
|
42,694
|
|
|
$
|
12,389
|
|
|
29.0
|
%
|
Percentage of total revenue
|
|
15.1
|
%
|
|
15.6
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
General and administrative
|
|
$
|
86,180
|
|
|
$
|
68,939
|
|
|
$
|
17,241
|
|
|
25.0
|
%
|
Percentage of total revenue
|
|
23.6
|
%
|
|
25.2
|
%
|
|
|
|
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
(in thousands except percentages)
|
|||||||||||||
Provision for income taxes
|
|
$
|
(27,025
|
)
|
|
$
|
(26,069
|
)
|
|
$
|
956
|
|
|
3.7
|
%
|
Percentage of total revenue
|
|
(7.4
|
)%
|
|
(9.5
|
)%
|
|
|
|
|
(1)
|
Includes restructuring and other exit costs of $0.9 million, $1.8 million and $11.3 million recognized in the quarter ended
December 31, 2017
, September 30, 2017 and June 30, 2017, respectively. For a summary of restructuring and other exit costs see “
Note 3—Restructuring and Other Exit Costs
” in the Notes to Consolidated Financial Statements.
|
(2)
|
In the quarter ended
December 31, 2017
, we recognized an income tax benefit associated with the enactment of the Tax Cuts and Jobs Act (the “Act”). As a result of the Act, our deferred taxes at
December 31, 2017
have been revalued at the reduced 21% corporate income tax rate. The revaluation resulted in a non-recurring benefit for income taxes of approximately
$31.1 million
for the quarter ended
December 31, 2017
.
|
|
Three Months Ended
|
|||||||||||||||
|
Dec. 31,
2017 |
Sept. 30,
2017 |
June 30,
2017 |
Mar. 31,
2017 |
Dec. 31,
2016 |
Sept. 30,
2016 |
June 30,
2016 |
Mar. 31,
2016 |
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
||||||||
Marketplace
|
39.8
|
%
|
39.9
|
%
|
41.4
|
%
|
42.1
|
%
|
42.6
|
%
|
43.5
|
%
|
43.8
|
%
|
43.7
|
%
|
Seller Services
|
60.4
|
|
59.6
|
|
57.8
|
|
55.7
|
|
56.0
|
|
55.4
|
|
55.1
|
|
53.2
|
|
Other
|
(0.2
|
)
|
0.6
|
|
0.8
|
|
2.3
|
|
1.4
|
|
1.0
|
|
1.0
|
|
3.2
|
|
Total revenue
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
Cost of revenue
|
32.5
|
|
34.2
|
|
35.1
|
|
35.8
|
|
33.6
|
|
33.5
|
|
34.1
|
|
34.1
|
|
Gross profit
|
67.5
|
|
65.8
|
|
64.9
|
|
64.2
|
|
66.4
|
|
66.5
|
|
65.9
|
|
65.9
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Marketing
|
25.4
|
|
22.1
|
|
27.1
|
|
24.2
|
|
27.6
|
|
21.4
|
|
20.2
|
|
19.4
|
|
Product development
|
13.1
|
|
15.9
|
|
21.4
|
|
18.7
|
|
14.6
|
|
17.0
|
|
13.9
|
|
14.9
|
|
General and administrative
|
13.4
|
|
20.8
|
|
27.9
|
|
23.5
|
|
20.5
|
|
25.1
|
|
26.4
|
|
23.3
|
|
Asset impairment charges
|
2.3
|
|
—
|
|
—
|
|
—
|
|
0.5
|
|
—
|
|
—
|
|
—
|
|
Total operating expenses
|
54.1
|
|
58.8
|
|
76.4
|
|
66.4
|
|
63.3
|
|
63.5
|
|
60.4
|
|
57.6
|
|
Income (loss) from operations
|
13.4
|
|
7.0
|
|
(11.5
|
)
|
(2.2
|
)
|
3.1
|
|
3.1
|
|
5.5
|
|
8.3
|
|
Other (expense) income, net
|
—
|
|
5.5
|
|
13.7
|
|
0.6
|
|
(18.2
|
)
|
(0.8
|
)
|
(9.0
|
)
|
9.8
|
|
Income (loss) before income taxes
|
13.4
|
|
12.4
|
|
2.2
|
|
(1.5
|
)
|
(15.1
|
)
|
2.2
|
|
(3.6
|
)
|
18.1
|
|
Benefit (provision) for income taxes
|
19.4
|
|
11.8
|
|
9.3
|
|
1.1
|
|
(4.3
|
)
|
(5.0
|
)
|
(5.0
|
)
|
(16.6
|
)
|
Net income (loss)
|
32.8
|
%
|
24.3
|
%
|
11.5
|
%
|
(0.4
|
)%
|
(19.4
|
)%
|
(2.7
|
)%
|
(8.6
|
)%
|
1.5
|
%
|
|
Three Months Ended
|
|||||||||||||||||||||||
|
Dec. 31,
2017 |
Sept. 30,
2017 |
June 30,
2017 |
Mar. 31,
2017 |
Dec. 31,
2016 |
Sept. 30,
2016 |
June 30,
2016 |
Mar. 31,
2016 |
||||||||||||||||
|
(in thousands except percentages)
|
|||||||||||||||||||||||
Other financial and operations data(1):
|
||||||||||||||||||||||||
GMS
|
$
|
1,019,452
|
|
$
|
766,354
|
|
$
|
748,762
|
|
$
|
719,041
|
|
$
|
865,207
|
|
$
|
677,221
|
|
$
|
669,704
|
|
$
|
629,853
|
|
Adjusted EBITDA
|
$
|
34,822
|
|
$
|
22,769
|
|
$
|
12,696
|
|
$
|
9,722
|
|
$
|
15,277
|
|
$
|
13,056
|
|
$
|
14,040
|
|
$
|
14,751
|
|
Active sellers
|
1,933
|
|
1,891
|
|
1,834
|
|
1,801
|
|
1,748
|
|
1,706
|
|
1,654
|
|
1,603
|
|
||||||||
Active buyers
|
33,364
|
|
31,680
|
|
30,584
|
|
29,669
|
|
28,566
|
|
27,140
|
|
26,104
|
|
25,027
|
|
||||||||
Percent mobile visits
|
67
|
%
|
67
|
%
|
65
|
%
|
66
|
%
|
65
|
%
|
65
|
%
|
64
|
%
|
63
|
%
|
||||||||
Percent mobile GMS
|
52
|
%
|
52
|
%
|
51
|
%
|
51
|
%
|
49
|
%
|
49
|
%
|
47
|
%
|
47
|
%
|
||||||||
Percent international GMS
|
33
|
%
|
34
|
%
|
32
|
%
|
32
|
%
|
30
|
%
|
30
|
%
|
31
|
%
|
30
|
%
|
(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
|
|||||||||||||||||||||||
|
Dec. 31,
2017 |
Sept. 30,
2017 |
June 30,
2017 |
Mar. 31,
2017 |
Dec. 31,
2016 |
Sept. 30,
2016 |
June 30,
2016 |
Mar. 31,
2016 |
||||||||||||||||
|
(in thousands)
|
|||||||||||||||||||||||
Net income (loss)
|
$
|
44,750
|
|
$
|
25,802
|
|
$
|
11,669
|
|
$
|
(421
|
)
|
$
|
(21,383
|
)
|
$
|
(2,399
|
)
|
$
|
(7,311
|
)
|
$
|
1,192
|
|
Excluding:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest and other non-operating expense, net
|
2,177
|
|
2,254
|
|
2,153
|
|
2,152
|
|
2,026
|
|
2,046
|
|
1,333
|
|
97
|
|
||||||||
(Benefit) provision for income taxes
|
(26,484
|
)
|
(12,562
|
)
|
(9,437
|
)
|
(1,052
|
)
|
4,787
|
|
4,363
|
|
4,261
|
|
13,614
|
|
||||||||
Depreciation and amortization
|
6,577
|
|
7,022
|
|
6,660
|
|
6,938
|
|
6,905
|
|
5,786
|
|
5,103
|
|
4,731
|
|
||||||||
Stock-based compensation expense(1)
|
5,197
|
|
5,832
|
|
4,881
|
|
4,043
|
|
4,160
|
|
2,975
|
|
3,452
|
|
2,581
|
|
||||||||
Stock-based compensation expense—acquisitions
|
725
|
|
724
|
|
1,613
|
|
842
|
|
151
|
|
1,110
|
|
816
|
|
656
|
|
||||||||
Foreign exchange (gain) loss
|
(2,153
|
)
|
(8,069
|
)
|
(16,103
|
)
|
(2,780
|
)
|
18,022
|
|
(1,337
|
)
|
6,386
|
|
(8,120
|
)
|
||||||||
Restructuring and other exit costs
|
871
|
|
1,766
|
|
11,260
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Asset impairment charges
|
3,162
|
|
—
|
|
—
|
|
—
|
|
551
|
|
—
|
|
—
|
|
—
|
|
||||||||
Acquisition-related expenses
|
—
|
|
—
|
|
—
|
|
—
|
|
58
|
|
512
|
|
—
|
|
—
|
|
||||||||
Adjusted EBITDA
|
$
|
34,822
|
|
$
|
22,769
|
|
$
|
12,696
|
|
$
|
9,722
|
|
$
|
15,277
|
|
$
|
13,056
|
|
$
|
14,040
|
|
$
|
14,751
|
|
(1)
|
$0.1 million
,
$1.0 million
and
$1.7 million
of restructuring-related stock-based compensation expense has been excluded from the three months ended
December 31, 2017
, September 30, 2017 and June 30, 2017, respectively, and is included in the restructuring and other exit costs line.
|
|
|
As of December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
315,442
|
|
|
$
|
181,592
|
|
Short-term investments
|
|
25,108
|
|
|
100,494
|
|
||
Accounts receivable, net
|
|
33,677
|
|
|
26,426
|
|
||
Net working capital
|
|
336,787
|
|
|
287,024
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
67,420
|
|
|
$
|
49,994
|
|
|
$
|
33,155
|
|
Investing activities
|
|
61,836
|
|
|
(135,430
|
)
|
|
(23,283
|
)
|
|||
Financing activities
|
|
3,439
|
|
|
2,575
|
|
|
195,664
|
|
|
|
Total
|
|
Less than 1
Year
|
|
1–3
Years
|
|
3–5
Years
|
|
More than
5 Years
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Capital lease obligations
|
|
$
|
9,913
|
|
|
$
|
5,798
|
|
|
$
|
4,115
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating lease obligations
|
|
24,980
|
|
|
3,907
|
|
|
7,478
|
|
|
5,427
|
|
|
8,168
|
|
|||||
Long-term obligations
|
|
405
|
|
|
172
|
|
|
233
|
|
|
—
|
|
|
—
|
|
|||||
Interest payments
|
|
1,258
|
|
|
899
|
|
|
359
|
|
|
—
|
|
|
—
|
|
|||||
Facility financing obligations
|
|
87,542
|
|
|
9,381
|
|
|
18,973
|
|
|
20,874
|
|
|
38,314
|
|
|||||
Purchase obligations
|
|
77,329
|
|
|
14,320
|
|
|
30,009
|
|
|
33,000
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$
|
201,427
|
|
|
$
|
34,477
|
|
|
$
|
61,167
|
|
|
$
|
59,301
|
|
|
$
|
46,482
|
|
•
|
Revenue from Etsy Payments consists of fees an Etsy seller pays us to process credit, debit and Etsy Gift Card payments. Etsy Payments 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. Etsy Payments fees are based on the item’s total sale price, including shipping. Revenue from Etsy Payments is recognized when the corresponding transaction is consummated.
|
•
|
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 marketplace. 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 discounted pricing due to the volume of purchases through its platform. We recognize Shipping Label revenue when an Etsy seller purchases a shipping label. We recognize Shipping Label revenue on a net basis as we are 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.
|
•
|
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,
|
||||
|
|
2017
|
|
2016
|
|
2015
|
Expected volatility
|
|
41.7% - 44.2%
|
|
38.6% - 44.6%
|
|
40.4% - 45.0%
|
Risk-free interest rate
|
|
1.9% - 2.2%
|
|
1.1% - 2.1%
|
|
1.3% - 1.9%
|
Expected term (in years)
|
|
5.5 - 6.3
|
|
5.5 - 6.3
|
|
5.5 - 6.1
|
Dividend rate
|
|
—%
|
|
—%
|
|
—%
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets as of December 31, 2017 and 2016
|
|
Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015
|
|
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 2016 and 2015
|
|
Consolidated Statement of Changes in Convertible Preferred Stock and Stockholders' Equity for the years ended December 31, 2017, 2016 and 2015
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015
|
|
Notes to Consolidated Financial Statements
|
|
As of December 31,
|
||||||
|
2017
|
|
2016
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
315,442
|
|
|
$
|
181,592
|
|
Short-term investments
|
25,108
|
|
|
100,494
|
|
||
Accounts receivable, net
|
33,677
|
|
|
26,426
|
|
||
Prepaid and other current assets
|
20,379
|
|
|
15,571
|
|
||
Deferred tax charge—current
|
—
|
|
|
17,132
|
|
||
Funds receivable and seller accounts
|
44,658
|
|
|
29,817
|
|
||
Total current assets
|
439,264
|
|
|
371,032
|
|
||
Restricted cash
|
5,341
|
|
|
5,341
|
|
||
Property and equipment, net
|
117,617
|
|
|
126,407
|
|
||
Goodwill
|
38,541
|
|
|
35,657
|
|
||
Intangible assets, net
|
4,100
|
|
|
7,507
|
|
||
Deferred tax charge—net of current portion
|
—
|
|
|
34,264
|
|
||
Other assets
|
720
|
|
|
985
|
|
||
Total assets
|
$
|
605,583
|
|
|
$
|
581,193
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
13,622
|
|
|
$
|
10,978
|
|
Accrued expenses
|
28,743
|
|
|
24,179
|
|
||
Capital lease obligations—current
|
5,798
|
|
|
6,829
|
|
||
Funds payable and amounts due to sellers
|
44,658
|
|
|
29,817
|
|
||
Deferred revenue
|
6,262
|
|
|
5,648
|
|
||
Other current liabilities
|
3,394
|
|
|
6,557
|
|
||
Total current liabilities
|
102,477
|
|
|
84,008
|
|
||
Capital lease obligations—net of current portion
|
4,115
|
|
|
5,296
|
|
||
Deferred tax liabilities
|
23,786
|
|
|
65,068
|
|
||
Facility financing obligation
|
60,049
|
|
|
57,360
|
|
||
Other liabilities
|
18,262
|
|
|
24,704
|
|
||
Total liabilities
|
208,689
|
|
|
236,436
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock ($0.001 par value, 1,400,000,000 shares authorized as of December 31, 2017 and 2016; 121,769,238 and 115,973,039 shares issued and outstanding as of December 31, 2017 and 2016, respectively)
|
122
|
|
|
116
|
|
||
Preferred stock ($0.001 par value, 25,000,000 shares authorized as of December 31, 2017 and 2016)
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
499,441
|
|
|
442,510
|
|
||
Accumulated deficit
|
(96,290
|
)
|
|
(116,341
|
)
|
||
Accumulated other comprehensive (loss) income
|
(6,379
|
)
|
|
18,472
|
|
||
Total stockholders’ equity
|
396,894
|
|
|
344,757
|
|
||
Total liabilities and stockholders’ equity
|
$
|
605,583
|
|
|
$
|
581,193
|
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
$
|
441,231
|
|
|
$
|
364,967
|
|
|
$
|
273,499
|
|
Cost of revenue
|
150,986
|
|
|
123,328
|
|
|
96,979
|
|
|||
Gross profit
|
290,245
|
|
|
241,639
|
|
|
176,520
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Marketing
|
109,085
|
|
|
82,248
|
|
|
66,771
|
|
|||
Product development
|
74,616
|
|
|
55,083
|
|
|
42,694
|
|
|||
General and administrative
|
91,486
|
|
|
86,180
|
|
|
68,939
|
|
|||
Asset impairment charges
|
3,162
|
|
|
551
|
|
|
—
|
|
|||
Total operating expenses
|
278,349
|
|
|
224,062
|
|
|
178,404
|
|
|||
Income (loss) from operations
|
11,896
|
|
|
17,577
|
|
|
(1,884
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense and amortization of deferred financing costs
|
(11,130
|
)
|
|
(7,204
|
)
|
|
(1,526
|
)
|
|||
Interest and other income
|
2,394
|
|
|
1,702
|
|
|
324
|
|
|||
Net unrealized loss on warrant and other liabilities
|
—
|
|
|
—
|
|
|
(3,133
|
)
|
|||
Foreign exchange gain (loss)
|
29,105
|
|
|
(14,951
|
)
|
|
(21,775
|
)
|
|||
Total other income (expense)
|
20,369
|
|
|
(20,453
|
)
|
|
(26,110
|
)
|
|||
Income (loss) before income taxes
|
32,265
|
|
|
(2,876
|
)
|
|
(27,994
|
)
|
|||
Benefit (provision) for income taxes
|
49,535
|
|
|
(27,025
|
)
|
|
(26,069
|
)
|
|||
Net income (loss)
|
$
|
81,800
|
|
|
$
|
(29,901
|
)
|
|
$
|
(54,063
|
)
|
Net income (loss) per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.69
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.59
|
)
|
Diluted
|
$
|
0.68
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.59
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
118,538,687
|
|
|
113,562,738
|
|
|
91,122,291
|
|
|||
Diluted
|
122,267,673
|
|
|
113,562,738
|
|
|
91,122,291
|
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income (loss)
|
$
|
81,800
|
|
|
$
|
(29,901
|
)
|
|
$
|
(54,063
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Cumulative translation adjustment
|
(24,898
|
)
|
|
7,675
|
|
|
14,746
|
|
|||
Unrealized gains (losses) on marketable securities, net of tax
|
47
|
|
|
(8
|
)
|
|
(7
|
)
|
|||
Total other comprehensive (loss) income
|
(24,851
|
)
|
|
7,667
|
|
|
14,739
|
|
|||
Comprehensive income (loss)
|
$
|
56,949
|
|
|
$
|
(22,234
|
)
|
|
$
|
(39,324
|
)
|
|
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
|
|
Accumul-
ated Deficit
|
|
Accumul-
ated 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, 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 inco
me
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
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
|
|
|||||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
23,462
|
|
|
—
|
|
|
—
|
|
|
23,462
|
|
|||||||||||||
Exercise of vested options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
5,760,263
|
|
|
6
|
|
|
33,832
|
|
|
—
|
|
|
—
|
|
|
33,838
|
|
|||||||||||||
Vesting of restricted stock units, net of shares withheld
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
622,167
|
|
|
1
|
|
|
(6,418
|
)
|
|
—
|
|
|
—
|
|
|
(6,417
|
)
|
|||||||||||||
Stock repurchase
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(586,231
|
)
|
|
(1
|
)
|
|
—
|
|
|
(10,300
|
)
|
|
—
|
|
|
(10,301
|
)
|
|||||||||||||
Stock-based compensation—acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
3,132
|
|
|
—
|
|
|
—
|
|
|
3,132
|
|
|||||||||||||
Conversion of liability-classified restricted shares upon vesting
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
2,838
|
|
|
—
|
|
|
—
|
|
|
2,838
|
|
|||||||||||||
Cumulative effect adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
85
|
|
|
(51,449
|
)
|
|
—
|
|
|
(51,364
|
)
|
|||||||||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,851
|
)
|
|
(24,851
|
)
|
|||||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
81,800
|
|
|
—
|
|
|
81,800
|
|
|||||||||||||
Balance as of December 31, 2017
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
|
121,769,238
|
|
|
$
|
122
|
|
|
$
|
499,441
|
|
|
$
|
(96,290
|
)
|
|
$
|
(6,379
|
)
|
|
$
|
396,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
81,800
|
|
|
$
|
(29,901
|
)
|
|
$
|
(54,063
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Stock-based compensation expense
|
22,655
|
|
|
13,168
|
|
|
8,981
|
|
|||
Stock-based compensation expense—acquisitions
|
3,904
|
|
|
2,733
|
|
|
1,860
|
|
|||
Contribution of stock to Good Work Institute (formerly Etsy.org)
|
—
|
|
|
—
|
|
|
3,200
|
|
|||
Depreciation and amortization expense
|
27,197
|
|
|
22,525
|
|
|
18,550
|
|
|||
Bad debt expense
|
2,497
|
|
|
1,770
|
|
|
1,780
|
|
|||
Foreign exchange (gain) loss
|
(29,105
|
)
|
|
14,951
|
|
|
21,775
|
|
|||
Amortization of debt issuance costs
|
463
|
|
|
184
|
|
|
167
|
|
|||
Non-cash interest expense
|
3,117
|
|
|
5,337
|
|
|
—
|
|
|||
Interest on marketable securities
|
426
|
|
|
914
|
|
|
—
|
|
|||
Net unrealized loss on warrant and other liabilities
|
—
|
|
|
—
|
|
|
3,133
|
|
|||
Loss on disposal of assets
|
520
|
|
|
1,143
|
|
|
1,319
|
|
|||
Asset impairment charges
|
3,162
|
|
|
551
|
|
|
—
|
|
|||
Deferred income taxes
|
(47,972
|
)
|
|
2,194
|
|
|
(4,146
|
)
|
|||
Amortization of deferred tax charge
|
—
|
|
|
17,132
|
|
|
17,132
|
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
(8,826
|
)
|
|
(8,192
|
)
|
|
(6,739
|
)
|
|||
Funds receivable and seller accounts
|
(13,477
|
)
|
|
(10,910
|
)
|
|
(9,025
|
)
|
|||
Prepaid expenses and other current assets
|
(4,429
|
)
|
|
(6,186
|
)
|
|
(266
|
)
|
|||
Other assets
|
(28
|
)
|
|
438
|
|
|
225
|
|
|||
Accounts payable
|
2,837
|
|
|
(3,585
|
)
|
|
6,728
|
|
|||
Accrued and other current liabilities
|
3,207
|
|
|
11,193
|
|
|
12,395
|
|
|||
Funds payable and amounts due to sellers
|
13,477
|
|
|
10,910
|
|
|
9,025
|
|
|||
Deferred revenue
|
434
|
|
|
964
|
|
|
1,279
|
|
|||
Other liabilities
|
5,561
|
|
|
2,661
|
|
|
(155
|
)
|
|||
Net cash provided by operating activities
|
67,420
|
|
|
49,994
|
|
|
33,155
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Acquisition of businesses, net of cash acquired
|
—
|
|
|
(7,880
|
)
|
|
—
|
|
|||
Purchases of property and equipment
|
(3,948
|
)
|
|
(35,981
|
)
|
|
(11,116
|
)
|
|||
Development of internal-use software
|
(9,208
|
)
|
|
(11,769
|
)
|
|
(9,719
|
)
|
|||
Purchases of marketable securities
|
(62,348
|
)
|
|
(160,504
|
)
|
|
(26,040
|
)
|
|||
Sales of marketable securities
|
137,340
|
|
|
80,704
|
|
|
23,592
|
|
|||
Net cash provided by (used in) investing activities
|
61,836
|
|
|
(135,430
|
)
|
|
(23,283
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Proceeds from public offering
|
—
|
|
|
—
|
|
|
199,467
|
|
|||
Repurchase of stock for tax on RSU vesting
|
(6,417
|
)
|
|
(1,258
|
)
|
|
—
|
|
|||
Repurchase of stock
|
(10,301
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from exercise of stock options
|
33,838
|
|
|
10,568
|
|
|
3,626
|
|
|||
Payments on capital lease obligations
|
(7,798
|
)
|
|
(6,086
|
)
|
|
(3,377
|
)
|
|||
Deferred payments on acquisition of business
|
—
|
|
|
(649
|
)
|
|
—
|
|
|||
Payments on facility financing obligation
|
(5,883
|
)
|
|
—
|
|
|
—
|
|
|||
Payments relating to public offering
|
—
|
|
|
—
|
|
|
(4,052
|
)
|
|||
Net cash provided by financing activities
|
3,439
|
|
|
2,575
|
|
|
195,664
|
|
|||
Effect of exchange rate changes on cash
|
1,155
|
|
|
(6,791
|
)
|
|
(3,951
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
133,850
|
|
|
(89,652
|
)
|
|
201,585
|
|
|||
Cash and cash equivalents at beginning of period
|
181,592
|
|
|
271,244
|
|
|
69,659
|
|
|||
Cash and cash equivalents at end of period
|
$
|
315,442
|
|
|
$
|
181,592
|
|
|
$
|
271,244
|
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Supplemental cash flow disclosures:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
7,555
|
|
|
$
|
2,000
|
|
|
$
|
1,346
|
|
Cash paid for income taxes
|
$
|
1,003
|
|
|
$
|
10,559
|
|
|
$
|
7,604
|
|
Supplemental non-cash disclosures:
|
|
|
|
|
|
||||||
Equipment acquired under capital lease obligations
|
$
|
5,586
|
|
|
$
|
5,030
|
|
|
$
|
11,657
|
|
Stock-based compensation capitalized in development of capitalized software
|
$
|
807
|
|
|
$
|
792
|
|
|
$
|
463
|
|
Additions to development of internal-use software and property and equipment included in accounts payable and accrued expenses
|
$
|
956
|
|
|
$
|
2,239
|
|
|
$
|
12,721
|
|
Non-cash addition to construction in progress related to build-to-suit lease and facility financing obligation
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,484
|
|
Non-cash addition to capitalized public offering costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13
|
|
Fair value of common stock issued in acquisition
|
$
|
—
|
|
|
$
|
6,966
|
|
|
$
|
—
|
|
•
|
Revenue from Etsy Payments consists of fees an Etsy seller pays the Company to process credit, debit and Etsy Gift Card payments. Etsy Payments 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. Etsy Payments fees are based on the item’s total sale price, including shipping. Revenue from Etsy Payments is recognized when the corresponding transaction is consummated.
|
•
|
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 marketplace. 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 discounted pricing 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 Etsy seller pays to use the Company's custom website services. The Company recognizes revenue from Pattern ratably over the term of the subscription.
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Marketplace
|
$
|
179,492
|
|
|
$
|
158,204
|
|
|
$
|
132,648
|
|
Seller Services
|
258,453
|
|
|
200,857
|
|
|
136,608
|
|
|||
Other
|
3,286
|
|
|
5,906
|
|
|
4,243
|
|
|||
Revenue
|
$
|
441,231
|
|
|
$
|
364,967
|
|
|
$
|
273,499
|
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Balance as of the beginning of period
|
$
|
1,999
|
|
|
$
|
2,071
|
|
|
$
|
1,841
|
|
Bad debt expense
|
2,497
|
|
|
1,770
|
|
|
1,780
|
|
|||
Write-offs, net of recoveries and other adjustments
|
(1,809
|
)
|
|
(1,842
|
)
|
|
(1,550
|
)
|
|||
Balance as of the end of period
|
$
|
2,687
|
|
|
$
|
1,999
|
|
|
$
|
2,071
|
|
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,
|
||||||
|
2016
|
|
2015
|
||||
Revenue
|
$
|
365,786
|
|
|
$
|
273,616
|
|
Net loss
|
(35,401
|
)
|
|
(65,106
|
)
|
||
Basic and diluted net loss per share
|
(0.31
|
)
|
|
(0.71
|
)
|
|
Severance Charge
|
|
Stock-Based Compensation
|
|
Other Exit Costs
|
|
Total
|
||||||||
Balance, December 31, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total restructuring and other exit costs
|
8,972
|
|
|
1,668
|
|
|
620
|
|
|
11,260
|
|
||||
Costs charged against equity/assets
|
—
|
|
|
(1,668
|
)
|
|
—
|
|
|
(1,668
|
)
|
||||
Cash payments
|
(2,110
|
)
|
|
—
|
|
|
(278
|
)
|
|
(2,388
|
)
|
||||
Balance, June 30, 2017
|
6,862
|
|
|
—
|
|
|
342
|
|
|
7,204
|
|
||||
Total restructuring and other exit costs
|
871
|
|
|
965
|
|
|
(70
|
)
|
|
1,766
|
|
||||
Costs charged against equity/assets
|
—
|
|
|
(965
|
)
|
|
—
|
|
|
(965
|
)
|
||||
Cash payments
|
(4,385
|
)
|
|
—
|
|
|
(180
|
)
|
|
(4,565
|
)
|
||||
Balance, September 30, 2017
|
3,348
|
|
|
—
|
|
|
92
|
|
|
3,440
|
|
||||
Total restructuring and other exit costs
|
361
|
|
|
68
|
|
|
442
|
|
|
871
|
|
||||
Costs charged against equity/assets
|
—
|
|
|
(68
|
)
|
|
(286
|
)
|
|
(354
|
)
|
||||
Cash payments
|
(2,401
|
)
|
|
—
|
|
|
(214
|
)
|
|
(2,615
|
)
|
||||
Balance, December 31, 2017
|
$
|
1,308
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
1,342
|
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cost of revenue
|
$
|
738
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketing
|
2,950
|
|
|
—
|
|
|
—
|
|
|||
Product development
|
3,232
|
|
|
—
|
|
|
—
|
|
|||
General and administrative
|
6,977
|
|
|
—
|
|
|
—
|
|
|||
Total restructuring and other exit costs
|
$
|
13,897
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
As of December 31, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Asset
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
—
|
|
|
$
|
11,290
|
|
|
$
|
—
|
|
|
$
|
11,290
|
|
Money market funds
|
204,867
|
|
|
—
|
|
|
—
|
|
|
204,867
|
|
||||
U.S. Government and agency securities
|
24,989
|
|
|
—
|
|
|
—
|
|
|
24,989
|
|
||||
|
229,856
|
|
|
11,290
|
|
|
—
|
|
|
241,146
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
—
|
|
|
2,998
|
|
|
—
|
|
|
2,998
|
|
||||
Corporate bonds
|
—
|
|
|
12,748
|
|
|
—
|
|
|
12,748
|
|
||||
U.S. Government and agency securities
|
9,362
|
|
|
—
|
|
|
—
|
|
|
9,362
|
|
||||
|
9,362
|
|
|
15,746
|
|
|
—
|
|
|
25,108
|
|
||||
Funds receivable and seller accounts:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
14,144
|
|
|
—
|
|
|
—
|
|
|
14,144
|
|
||||
|
14,144
|
|
|
—
|
|
|
—
|
|
|
14,144
|
|
||||
|
$
|
253,362
|
|
|
$
|
27,036
|
|
|
$
|
—
|
|
|
$
|
280,398
|
|
|
As of December 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Asset
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
—
|
|
|
$
|
2,997
|
|
|
$
|
—
|
|
|
$
|
2,997
|
|
Money market funds
|
98,161
|
|
|
—
|
|
|
—
|
|
|
98,161
|
|
||||
U.S. Government and agency securities
|
1,950
|
|
|
—
|
|
|
—
|
|
|
1,950
|
|
||||
|
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 securities
|
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, |
||||||
|
2017
|
|
2016
|
||||
Balance at beginning of period
|
$
|
2,067
|
|
|
$
|
2,357
|
|
Changes to liability-classified stock awards
|
771
|
|
|
1,652
|
|
||
Conversion of liability-classified instruments to equity
|
(2,838
|
)
|
|
(1,942
|
)
|
||
Balance at end of period
|
$
|
—
|
|
|
$
|
2,067
|
|
|
Cost
|
|
Gross
Unrealized Holding Loss |
|
Gross
Unrealized Holding Gain |
|
Fair Value
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
11,290
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,290
|
|
U.S. Government and agency securities
|
24,990
|
|
|
(1
|
)
|
|
—
|
|
|
24,989
|
|
||||
|
36,280
|
|
|
(1
|
)
|
|
—
|
|
|
36,279
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
2,998
|
|
|
—
|
|
|
—
|
|
|
2,998
|
|
||||
Corporate bonds
|
12,754
|
|
|
(6
|
)
|
|
—
|
|
|
12,748
|
|
||||
U.S. Government and agency securities
|
9,352
|
|
|
(1
|
)
|
|
11
|
|
|
9,362
|
|
||||
|
25,104
|
|
|
(7
|
)
|
|
11
|
|
|
25,108
|
|
||||
|
$
|
61,384
|
|
|
$
|
(8
|
)
|
|
$
|
11
|
|
|
$
|
61,387
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
2,997
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,997
|
|
|
2,997
|
|
|
—
|
|
|
—
|
|
|
2,997
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
17,146
|
|
|
—
|
|
|
—
|
|
|
17,146
|
|
||||
Corporate bonds
|
33,318
|
|
|
(16
|
)
|
|
1
|
|
|
33,303
|
|
||||
U.S. Government and agency securities
|
50,059
|
|
|
(15
|
)
|
|
1
|
|
|
50,045
|
|
||||
|
100,523
|
|
|
(31
|
)
|
|
2
|
|
|
100,494
|
|
||||
|
$
|
103,520
|
|
|
$
|
(31
|
)
|
|
$
|
2
|
|
|
$
|
103,491
|
|
|
|
|
As of
December 31, |
||||||
|
Estimated useful lives
|
|
2017
|
|
2016
|
||||
Computer equipment
|
3 years
|
|
$
|
35,587
|
|
|
$
|
30,378
|
|
Furniture and equipment
|
2 - 4 years
|
|
6,194
|
|
|
5,920
|
|
||
Software
|
1 - 3 years
|
|
908
|
|
|
856
|
|
||
Leasehold improvements
|
Shorter of life of asset or lease term
|
|
10,929
|
|
|
10,155
|
|
||
Building
|
25 years
|
|
81,892
|
|
|
81,957
|
|
||
Website development
|
3 years
|
|
48,333
|
|
|
43,294
|
|
||
|
|
|
183,843
|
|
|
172,560
|
|
||
|
|
|
|
|
|
||||
Less: Accumulated depreciation and amortization
|
|
|
66,226
|
|
|
46,153
|
|
||
|
|
|
$
|
117,617
|
|
|
$
|
126,407
|
|
|
Year Ended
December 31, |
||||||
|
2017
|
|
2016
|
||||
Balance as of the beginning of the period
|
$
|
43,294
|
|
|
$
|
33,469
|
|
Additions to website development, excluding stock-based compensation
|
10,028
|
|
|
11,769
|
|
||
Additions to website development—stock-based compensation
|
807
|
|
|
792
|
|
||
Less: Retirements
|
625
|
|
|
2,736
|
|
||
Less: Impairments
|
5,171
|
|
|
—
|
|
||
|
48,333
|
|
|
43,294
|
|
||
Less:
|
|
|
|
||||
Accumulated amortization balance as of the beginning of the period
|
24,155
|
|
|
19,676
|
|
||
Amortization Expense
|
8,209
|
|
|
6,333
|
|
||
Less: Retirements
|
364
|
|
|
1,854
|
|
||
Less: Impairments
|
2,009
|
|
|
—
|
|
||
Accumulated amortization balance as of the end of the period
|
29,991
|
|
|
24,155
|
|
||
|
$
|
18,342
|
|
|
$
|
19,139
|
|
|
Year Ended
December 31, |
||||||
|
2017
|
|
2016
|
||||
Balance as of the beginning of the period
|
$
|
35,657
|
|
|
$
|
27,752
|
|
Acquisitions(1)
|
—
|
|
|
8,660
|
|
||
Foreign currency translation adjustments
|
2,884
|
|
|
(755
|
)
|
||
Balance as of the end of the period
|
$
|
38,541
|
|
|
$
|
35,657
|
|
(1)
|
Includes goodwill as a result of the Blackbird Technologies acquisition. See “
Note 2—Business Combinations
” for more information.
|
|
As of December 31, 2017
|
|
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 |
||||||||||||
Technology
|
$
|
7,200
|
|
|
$
|
(3,100
|
)
|
|
$
|
4,100
|
|
|
$
|
10,466
|
|
|
$
|
(3,536
|
)
|
|
$
|
6,930
|
|
Customer relationships
|
—
|
|
|
—
|
|
|
—
|
|
|
1,250
|
|
|
(673
|
)
|
|
577
|
|
||||||
Intangible assets, net
|
$
|
7,200
|
|
|
$
|
(3,100
|
)
|
|
$
|
4,100
|
|
|
$
|
11,716
|
|
|
$
|
(4,209
|
)
|
|
$
|
7,507
|
|
(1)
|
Excludes the gross book value and accumulated amortization of fully amortized intangibles.
|
2018
|
$
|
2,400
|
|
2019
|
1,700
|
|
|
Thereafter
|
—
|
|
|
Total amortization expense
|
$
|
4,100
|
|
|
Shares Repurchased
|
|
Average Price Paid per Share (1)
|
|
Value of Shares Repurchased
|
|
Remaining Amount Authorized
|
|||||||
Balance as of November 17, 2017
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
100,000
|
|
Repurchases of common stock for the three months ended:
|
|
|
|
|
|
|
|
|||||||
December 31, 2017
|
586,231
|
|
|
17.57
|
|
|
10,301
|
|
|
(10,301
|
)
|
|||
Balance as of December 31, 2017
|
586,231
|
|
|
$
|
17.57
|
|
|
$
|
10,301
|
|
|
$
|
89,699
|
|
|
Year Ended
December 31, |
||||
|
2017
|
|
2016
|
|
2015
|
Volatility
|
41.7% - 44.2%
|
|
38.6% - 44.6%
|
|
40.4% - 45.0%
|
Risk-free interest rate
|
1.9% - 2.2%
|
|
1.1% - 2.1%
|
|
1.3% - 1.9%
|
Expected term (in years)
|
5.5 - 6.3
|
|
5.5 - 6.3
|
|
5.5 - 6.1
|
Dividend rate
|
—%
|
|
—%
|
|
—%
|
|
Shares
|
|
Weighted-Average
Exercise Price |
|
Weighted-Average
Remaining Contract Term (in years) |
|
Aggregate
Intrinsic Value |
|||||
Outstanding at December 31, 2014
|
11,525,279
|
|
|
$
|
5.34
|
|
|
7.57
|
|
$
|
134,386
|
|
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
|
|
|
7.01
|
|
31,932
|
|
||
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
|
|
||
Granted
|
5,887,183
|
|
|
11.04
|
|
|
|
|
|
|||
Exercised
|
(5,760,263
|
)
|
|
5.87
|
|
|
|
|
|
|||
Forfeited/Canceled
|
(1,518,548
|
)
|
|
11.36
|
|
|
|
|
|
|||
Outstanding at December 31, 2017
|
7,947,939
|
|
|
11.02
|
|
|
7.93
|
|
74,996
|
|
||
Total exercisable at December 31, 2017
|
2,294,818
|
|
|
10.48
|
|
|
4.81
|
|
22,912
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Weighted average grant date fair value of options granted
|
$
|
4.85
|
|
|
$
|
4.03
|
|
|
$
|
6.89
|
|
Intrinsic value of options exercised
|
52,693
|
|
|
19,130
|
|
|
15,148
|
|
|||
Fair value of awards vested
|
19,826
|
|
|
9,533
|
|
|
8,337
|
|
|
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
|
|
|
Granted
|
2,360,315
|
|
|
12.17
|
|
|
Vested
|
(1,072,321
|
)
|
|
10.44
|
|
|
Forfeited/Canceled
|
(1,348,928
|
)
|
|
10.56
|
|
|
Unvested at December 31, 2017
|
3,074,247
|
|
|
11.98
|
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cost of revenue
|
$
|
1,739
|
|
|
$
|
1,057
|
|
|
$
|
871
|
|
Marketing
|
1,933
|
|
|
971
|
|
|
560
|
|
|||
Product development
|
8,274
|
|
|
5,079
|
|
|
2,860
|
|
|||
General and administrative
|
14,613
|
|
|
8,794
|
|
|
6,550
|
|
|||
Total stock-based compensation expense
|
$
|
26,559
|
|
|
$
|
15,901
|
|
|
$
|
10,841
|
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Domestic
|
$
|
(16,583
|
)
|
|
$
|
25,910
|
|
|
$
|
25,627
|
|
Foreign
|
48,848
|
|
|
(28,786
|
)
|
|
(53,621
|
)
|
|||
Income (loss) before income taxes
|
$
|
32,265
|
|
|
$
|
(2,876
|
)
|
|
$
|
(27,994
|
)
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(6,397
|
)
|
|
$
|
22,084
|
|
|
$
|
24,524
|
|
State
|
79
|
|
|
2,623
|
|
|
3,843
|
|
|||
Foreign
|
476
|
|
|
580
|
|
|
579
|
|
|||
Total current
|
(5,842
|
)
|
|
25,287
|
|
|
28,946
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(34,948
|
)
|
|
2,008
|
|
|
(2,863
|
)
|
|||
State
|
(8,778
|
)
|
|
(247
|
)
|
|
108
|
|
|||
Foreign
|
33
|
|
|
(23
|
)
|
|
(122
|
)
|
|||
Total deferred
|
(43,693
|
)
|
|
1,738
|
|
|
(2,877
|
)
|
|||
Total income tax (benefit) provision
|
$
|
(49,535
|
)
|
|
$
|
27,025
|
|
|
$
|
26,069
|
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Income tax benefit at federal statutory rate
|
$
|
11,308
|
|
|
$
|
(1,007
|
)
|
|
$
|
(9,798
|
)
|
State and local taxes net of federal benefit
|
(691
|
)
|
|
1,545
|
|
|
2,575
|
|
|||
Foreign income tax rate differential
|
(11,878
|
)
|
|
5,849
|
|
|
11,584
|
|
|||
Stock-based compensation
|
(12,584
|
)
|
|
1,412
|
|
|
1,571
|
|
|||
Net unrealized loss on warrant and other liabilities
|
—
|
|
|
—
|
|
|
1,097
|
|
|||
Non-deductible items
|
168
|
|
|
267
|
|
|
1,314
|
|
|||
Uncertain tax positions
|
789
|
|
|
4,033
|
|
|
5,523
|
|
|||
Return to provision adjustment
|
167
|
|
|
(498
|
)
|
|
(25
|
)
|
|||
Non-deductible acquisition costs
|
—
|
|
|
199
|
|
|
10
|
|
|||
Change in valuation allowance
|
(4,673
|
)
|
|
4,911
|
|
|
7,957
|
|
|||
Research and development credit
|
(1,098
|
)
|
|
(2,170
|
)
|
|
(7,684
|
)
|
|||
Deferred charge on restructuring
|
—
|
|
|
12,168
|
|
|
12,168
|
|
|||
U.S. tax reform
|
(31,063
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
20
|
|
|
316
|
|
|
(223
|
)
|
|||
Total income tax (benefit) provision
|
$
|
(49,535
|
)
|
|
$
|
27,025
|
|
|
$
|
26,069
|
|
|
As of December 31,
|
||||||
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
17,431
|
|
|
$
|
13,084
|
|
Research and development credit carryforwards
|
3,597
|
|
|
898
|
|
||
Stock-based compensation expense
|
3,776
|
|
|
5,692
|
|
||
Accrued VAT liability
|
42
|
|
|
68
|
|
||
Alternative minimum tax credit
|
274
|
|
|
274
|
|
||
Allowance for doubtful accounts
|
384
|
|
|
611
|
|
||
Deferred rent
|
573
|
|
|
644
|
|
||
Accrued vacation
|
623
|
|
|
1,035
|
|
||
Unrealized loss on foreign currency
|
527
|
|
|
—
|
|
||
Other, net
|
1,691
|
|
|
1,418
|
|
||
Total deferred tax assets
|
28,918
|
|
|
23,724
|
|
||
Less valuation allowance
|
11,021
|
|
|
13,839
|
|
||
Total net deferred tax asset
|
17,897
|
|
|
9,885
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation
|
(6,850
|
)
|
|
(6,618
|
)
|
||
Global corporate restructuring liability
|
(33,783
|
)
|
|
(64,460
|
)
|
||
Unrealized gain on foreign currency
|
—
|
|
|
(1,059
|
)
|
||
Other liabilities
|
(891
|
)
|
|
(2,816
|
)
|
||
Total deferred tax liabilities
|
(41,524
|
)
|
|
(74,953
|
)
|
||
Net deferred tax liabilities
|
$
|
(23,627
|
)
|
|
$
|
(65,068
|
)
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Balance as of the beginning of period
|
$
|
13,839
|
|
|
$
|
9,540
|
|
|
$
|
1,892
|
|
Additions charged to expense
|
—
|
|
|
4,886
|
|
|
7,983
|
|
|||
Deletions credited to expense
|
(4,691
|
)
|
|
—
|
|
|
—
|
|
|||
Currency translation
|
1,873
|
|
|
(587
|
)
|
|
(335
|
)
|
|||
Balance as of the end of period
|
$
|
11,021
|
|
|
$
|
13,839
|
|
|
$
|
9,540
|
|
|
As of December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Balance as of the beginning of period
|
$
|
23,574
|
|
|
$
|
22,229
|
|
|
$
|
398
|
|
Additions based on tax positions related to the current year
|
732
|
|
|
1,071
|
|
|
21,797
|
|
|||
Additions for tax positions of prior years
|
118
|
|
|
274
|
|
|
34
|
|
|||
Reductions for tax provisions of prior years
|
(7,411
|
)
|
|
—
|
|
|
—
|
|
|||
Balance as of the end of period
|
$
|
17,013
|
|
|
$
|
23,574
|
|
|
$
|
22,229
|
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
81,800
|
|
|
$
|
(29,901
|
)
|
|
$
|
(54,063
|
)
|
Net income (loss) allocated to participating securities under the two-class method
|
(80
|
)
|
|
—
|
|
|
—
|
|
|||
Net income (loss) applicable to common stockholders—basic
|
81,720
|
|
|
(29,901
|
)
|
|
(54,063
|
)
|
|||
Dilutive effect of net income allocated to participating securities under the two-class method
|
80
|
|
|
—
|
|
|
—
|
|
|||
Change in fair value of liability classified restricted stock
|
771
|
|
|
—
|
|
|
—
|
|
|||
Net income (loss) applicable to common stockholders—diluted
|
$
|
82,571
|
|
|
$
|
(29,901
|
)
|
|
$
|
(54,063
|
)
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Weighted average common shares outstanding—basic (1)
|
118,538,687
|
|
|
113,562,738
|
|
|
91,122,291
|
|
|||
Common equivalent shares from options to purchase common stock and restricted stock units
|
2,498,448
|
|
|
—
|
|
|
—
|
|
|||
Dilutive effect of assumed conversion of restricted stock units
|
1,177,799
|
|
|
—
|
|
|
—
|
|
|||
Diluted effective of assumed conversion of restricted stock from acquisition
|
52,739
|
|
|
—
|
|
|
—
|
|
|||
Weighted average common shares outstanding—diluted
|
122,267,673
|
|
|
113,562,738
|
|
|
91,122,291
|
|
|||
|
|
|
|
|
|
||||||
Net income (loss) per share applicable to common stockholders—basic
|
$
|
0.69
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.59
|
)
|
Net income (loss) per share applicable to common stockholders—diluted
|
$
|
0.68
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.59
|
)
|
(1)
|
114,963
shares of unvested stock are considered participating securities and are excluded from basic shares outstanding for
the year ended December 31, 2017
.
|
|
Year Ended
December 31, |
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
United States
|
$
|
317,755
|
|
|
$
|
276,537
|
|
|
$
|
213,389
|
|
International
|
123,476
|
|
|
88,430
|
|
|
60,110
|
|
|||
Revenue
|
$
|
441,231
|
|
|
$
|
364,967
|
|
|
$
|
273,499
|
|
|
|
|
|
|
|
||||||
United States
|
$
|
(44,931
|
)
|
|
$
|
7,926
|
|
|
$
|
11,973
|
|
International
|
77,196
|
|
|
(10,802
|
)
|
|
(39,967
|
)
|
|||
Income (loss) before income taxes
|
$
|
32,265
|
|
|
$
|
(2,876
|
)
|
|
$
|
(27,994
|
)
|
|
|
|
|
|
|
||||||
United States
|
$
|
5,113
|
|
|
$
|
(18,542
|
)
|
|
$
|
(13,639
|
)
|
International
|
76,687
|
|
|
(11,359
|
)
|
|
(40,424
|
)
|
|||
Net income (loss)
|
$
|
81,800
|
|
|
$
|
(29,901
|
)
|
|
$
|
(54,063
|
)
|
|
Capital Lease
Obligations |
|
Operating
Leases |
|
Build-to-Suit
Lease |
|
Purchase Obligations
|
||||||||
Periods ending
|
|
|
|
|
|
|
|
||||||||
2018
|
$
|
6,697
|
|
|
$
|
3,907
|
|
|
$
|
9,381
|
|
|
$
|
14,320
|
|
2019
|
3,556
|
|
|
3,912
|
|
|
9,451
|
|
|
13,332
|
|
||||
2020
|
918
|
|
|
3,566
|
|
|
9,522
|
|
|
16,677
|
|
||||
2021
|
—
|
|
|
2,819
|
|
|
10,354
|
|
|
16,000
|
|
||||
2022
|
—
|
|
|
2,608
|
|
|
10,520
|
|
|
17,000
|
|
||||
Thereafter
|
—
|
|
|
8,168
|
|
|
38,314
|
|
|
—
|
|
||||
Total minimum payments required
|
$
|
11,171
|
|
|
$
|
24,980
|
|
|
$
|
87,542
|
|
|
$
|
77,329
|
|
Amounts representing interest
|
1,258
|
|
|
|
|
|
|
|
|||||||
Present value of net minimum payments
|
9,913
|
|
|
|
|
|
|
|
|||||||
Current maturities
|
5,798
|
|
|
|
|
|
|
|
|||||||
Long-term payment obligations
|
$
|
4,115
|
|
|
|
|
|
|
|
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 forms of agreements 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
|
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
|
|
|
10.6.1*
|
Employment offer letter between Etsy, Inc. and Chad Dickerson, dated March 24, 2015
|
|
S-1/A
|
|
333-202497
|
|
10.8
|
|
3/31/2015
|
|
|
10.6.2*
|
Separation letter agreement between Etsy, Inc. and Chad Dickerson, dated May 2, 2017
|
|
10-Q
|
|
001-36911
|
|
10.3
|
|
8/7/2017
|
|
|
10.7.1*
|
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
|
|
|
10.7.2*
|
Relocation letter agreement between Etsy, Inc. and Kristina Salen, dated June 18, 2013
|
|
S-1/A
|
|
333-202497
|
|
10.9.2
|
|
3/31/2015
|
|
|
10.7.3*
|
Retention letter agreement between Etsy Inc., and Kristina Salen, dated October 28, 2016
|
|
8-K
|
|
001-36911
|
|
10.1
|
|
11/1/2016
|
|
|
10.8*
|
Employment offer letter between Etsy, Inc. and Linda Kozlowski dated April 5, 2016
|
|
10-K
|
|
001-36911
|
|
10.15
|
|
2/28/2017
|
|
|
10.9*
|
Letter Agreement between Etsy, Inc. and Josh Silverman, dated May 2, 2017
|
|
10-Q
|
|
001-36911
|
|
10.1
|
|
8/7/2017
|
|
|
10.10.1*
|
Letter Agreement between Etsy, Inc. and Rachel Glaser, dated April 2, 2017
|
|
8-K
|
|
001-38911
|
|
10.2.1
|
|
4/3/2017
|
|
|
10.10.2*
|
Amendment to Letter Agreement between Etsy, Inc. and Rachel Glaser, dated May 4, 2017
|
|
8-K
|
|
001-38911
|
|
10.2.2
|
|
4/3/2017
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
10.14*
|
Separation letter agreement between Etsy, Inc. and John Allspaw, dated May 3, 2017
|
|
10-Q
|
|
001-36911
|
|
10.4
|
|
8/7/2017
|
|
|
10.15*
|
Severance Plan and form of Participation Notice thereunder.
|
|
S-1/A
|
|
333-202497
|
|
10.12
|
|
4/14/2015
|
|
|
10.16*
|
Change in Control Severance Plan and form of Participation Notice thereunder
|
|
S-1
|
|
333-202497
|
|
10.13
|
|
3/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
10.18.1*
|
Management Cash Incentive Plan
|
|
S-1
|
|
333-202497
|
|
10.14
|
|
3/4/2015
|
|
|
10.18.2*
|
Amendment No. 1 to the Etsy, Inc. Management Cash Incentive Plan
|
|
10-Q
|
|
001-36911
|
|
10.1
|
|
8/4/2016
|
|
|
10.19.1*
|
Amended and Restated Compensation Program for Non-Employee Directors, effective November 15, 2016
|
|
10-Q
|
|
001-36911
|
|
10.14.2
|
|
2/28/2017
|
|
|
10.19.2*
|
Amended and Restated Compensation Program for Non-Employee Directors, effective August 15, 2017
|
|
10-Q
|
|
001-36911
|
|
10.1
|
|
11/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
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.
|
ETSY, INC.
|
|
Date: February 28, 2018
|
/s/ Rachel Glaser
|
|
Rachel Glaser
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
Signature
|
Title
|
Date
|
/s/ Josh Silverman
Josh Silverman
|
President, Chief Executive Officer, and Director (Principal Executive Officer)
|
February 28, 2018
|
/s/ Rachel Glaser
Rachel Glaser
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
February 28, 2018
|
/s/ Fred Wilson
Fred Wilson
|
Chair
|
February 28, 2018
|
/s/ M. Michele Burns
M. Michele Burns
|
Director
|
February 28, 2018
|
/s/ Jonathan D. Klein
Jonathan D. Klein
|
Director
|
February 28, 2018
|
/s/ Melissa Reiff
Melissa Reiff
|
Director
|
February 28, 2018
|
/s/ Margaret M. Smyth
Margaret M. Smyth
|
Director
|
February 28, 2018
|
•
|
You confirm that you have no legal obligations that would prohibit you from working for Etsy. For example, you have not signed a non-compete agreement with your current or former employer that would prevent you from working for Etsy.
|
•
|
You agree not to use, rely upon, or share any confidential information of your former employer (i.e., AKF Consulting dba AKF Partners or any of their clients) while working for Etsy.
|
•
|
You agree that during your employment with Etsy (and otherwise as described in your CPIA), you will not engage in any other employment, consulting, or business activity that would create a conflict with your position with Etsy.
|
(a)
|
your ability to work for Etsy and perform your job duties without violating any commitments you may have agreed to in the past or that you are otherwise subject to,
|
(b)
|
Etsy’s ownership of any ideas you come up with or technologies you develop while working for Etsy,
|
(c)
|
the need to keep confidential and protect certain information about Etsy and its members and employees both while working for Etsy and after you leave the company, and
|
(d)
|
your willingness not to compete with Etsy or take certain actions that could hurt Etsy’s legitimate interests while you are working for Etsy and for a short period of time afterward.
|
ETSY, INC.
|
EMPLOYEE
|
By: /s/ Carrissa Menendez
|
Name
: Michael Fisher
/NHName2/
|
Name: Carrissa Menendez
|
Signature:
/s/ Michael Fisher
/NH/NHSig2/
|
Title: VP, People and Workplace
|
Date:
7/28/2017
|
|
Email:
XXXXXXXXX
|
•
|
You confirm that you have no legal obligations that would prohibit you from working for Etsy. For example, you have not signed a non-compete agreement with your current or former employer that would prevent you from working for Etsy.
|
•
|
You agree not to use, rely upon, or share any confidential information of your former employer while working for Etsy.
|
•
|
You agree that during your employment with Etsy (and otherwise as described in your CPIA), you will not engage in any other employment, consulting, or business activity that would create a conflict with your position with Etsy.
|
(a)
|
your ability to work for Etsy and perform your job duties without violating any commitments you may have agreed to in the past or that you are otherwise subject to,
|
(b)
|
Etsy’s ownership of any ideas you come up with or technologies you develop while working for Etsy,
|
(c)
|
the need to keep confidential and protect certain information about Etsy and its members and employees both while working for Etsy and after you leave the company, and
|
(d)
|
your willingness not to compete with Etsy or take certain actions that could hurt Etsy’s legitimate interests while you are working for Etsy and for a short period of time afterward.
|
ETSY, INC.
|
EMPLOYEE
|
By: /s/ Brian Christman
|
Name
: Jill Simeone
/NHName2/
|
Name: Brian Christman
|
Signature:
/s/ Jill Simeone
/NHName2
/NHSig2/
|
Title: SVP of Human Resources
|
Date:
January 7, 2017
Email:
XXXXXXXXX
/NHEmail2/
|
|
|
|
|
a.
|
A payment in accordance with the Severance Plan Participation Notice you signed on July 17, 2015 equal to $65,000, payable in equal installments on the Company’s regular payroll dates over the course of three (3) months. Such payments shall commence within 60 days of the
|
b.
|
An additional one-time lump sum payment to you of $96,500
1
payable within 60 days of the Separation Date;
|
c.
|
Reimbursement of your COBRA premiums for the Cobra Payment Period of 5 months, commencing within 60 days following the Separation Date, provided that
|
d.
|
Outplacement services for a period of four (4) months after the Separation Date;
|
e.
|
The ability to continue to work for the Company during the Transition Period described in Section 5, below;
|
f.
|
Payment of your salary during the Transition Period;
|
g.
|
Continuation of your benefits during the Transition Period;
|
h.
|
Continued vesting of your outstanding equity awards through the Separation Date; and
|
i.
|
Acceleration of fifty percent (50%) of the stock options and RSUs awarded to you on March 1, 2016, such that such RSUs and stock options will be vested and exercisable and all such RSUs will be vested on and as of the Separation Date and settled as soon as practicable thereafter.
|
j.
|
The Company will reimburse up to $1,000 in legal fees that you incur in connection with this Agreement.
|
ETSY, INC.
|
EMPLOYEE
|
|
|
By: /s/ Brian Christman
|
Name:
Karen Mullane
|
Name: Brian Christman
|
Signature: /s/ Karen Mullane
|
Title: VP of Human Resources
|
Address: XXXXXXXXXX
|
|
|
|
IV.
|
CLAIMS AND APPEALS
|
V.
|
MISCELLANEOUS
|
2.
|
New Director Fee
: Equity with fair value on the grant date equal to $262,500
|
3.
|
Board Chair Fee
: Equity with fair value on the grant date equal to $100,000
|
4.
|
Additional Retainers
: Cash equal to:
|
|
|
Chairman of the Audit Committee
|
$18,000
|
Member of the Audit Committee
|
$9,000
|
Chairman of the Compensation Committee
|
$10,000
|
Member of the Compensation Committee
|
$5,000
|
Chairman of the Nominating and Corporate Governance Committee
|
$6,000
|
Member of the Nominating and Corporate Governance Committee
|
$3,000
|
Member of any other Committee constituted by the Board from time to time
|
$40,000 (unless otherwise determined by the Board or Compensation Committee)
|
D.
|
Expenses
|
Name of Subsidiary
|
|
Jurisdiction of Incorporation or Organization
|
Etsy Ireland UC
|
|
Ireland
|
Etsy France SAS
|
|
France
|
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:
|