Hi, everyone, and welcome to Etsy's Third Quarter 2022 Earnings Conference Call. I'm Deb Wasser, VP of Investor Relations and ESG Engagement. And joining me today are Josh Silverman, Chief Executive Officer; Rachel Glaser, Chief Financial Officer; and Jessica Schmidt, Senior Director of Investor Relations. Today's prepared remarks have been prerecorded. The slide deck has also been posted to our website for your reference. Once we are finished with Josh and Rachel's presentations, we will transition to a live video webcast Q&A session. Questions can be submitted via the Q&A window chat displayed on your screen. Feel free to use it at any time, as it will remain open throughout the entire conference call. I'll be reading your questions, and Jessica will help me to try to get to as many as we can. Please keep in mind that our remarks today include forward-looking statements related to our financial guidance, key drivers thereof, and underlying assumptions, the global macroeconomic uncertainty and volatility, including the impacts, general market, political, economic and business conditions may have on our business strategy or operating results, uncertainty regarding overall levels of consumer spending and e-commerce generally, the impact and duration of reopening headwinds and stabilization of COVID-19-driven economic trends, our levers for GMS growth and our plans for investments in our marketplaces and in our member support programs, the potential impact of our strategic, marketing and product initiatives and the anticipated return on our investments and their ability to drive growth. Our actual results may differ materially. Forward-looking statements involve risks and uncertainties, which are described in today's earnings release and in our Form 10-Q filed with the SEC on July 28, 2022, and which will be updated in any future periodic reports we file with the SEC. Any forward-looking statements that we make on this call are based on our beliefs and assumptions today, and we disclaim any obligation to update them. Also during the call, we'll present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which you can find on our Investor Relations website along with the replay of this call. With that, I'll turn it over to Josh.

Thanks, Deb, and good evening, everyone. We're pleased to once again be reporting strong results. Etsy's consolidated third quarter 2022 GMS was $3 billion. Revenue grew to $594 million and our adjusted EBITDA margin was again very strong. Etsy marketplace GMS was $2.6 billion this past quarter, compared with about $1 billion in the same quarter three years ago. And when adjusting for rather formidable currency headwinds, GMS for our core marketplace was up a bit on a year-over-year basis. We believe this performance is the direct result of the actions we've taken to put our larger size and scale to work, investing in our sellers and aiming to drive long-term growth in our active buyer base, with strategies designed to fuel awareness with new audiences, retention, reactivation and frequency. And these investments have really paid off. Not only is the Etsy marketplace over two times bigger than we were three years ago, but overall, we've held most of our gains. This speaks volumes to the work done by teams across Etsy, particularly within the context of a fully reopened world and ongoing macro challenges. In my opinion, this is a great setup for future growth. Another reason that we believe our business has held up so well in this post-pandemic environment is that in a world of mass commodities supplied by companies obsessed with speed and scale, Etsy is the antidote. Etsy offers something different, and we've continued to invest to bring even more joy to the very human experiences of selling and buying on Etsy. During the pandemic, tens of millions of buyers tried Etsy for the first time or for the first time in a long time. And our customer research indicates that most buyers were delighted with the experience. I've spoken with so many buyers who described how it was better than they expected or than they remembered, easier to find great products, easier to buy them and with a more trustworthy and reliable post-purchase experience. And of course, they found the human touch from our sellers to be so differentiated and special. So while millions came to us during the pandemic because they had limited choices, it's clear to me that they're coming back again and again now because they want to. We're just getting started advancing our Right to Win, our playbook for ensuring that Etsy is the first stop when you want to shop your tastes and values. By simultaneously succeeding in all four of its elements, we differentiate our value proposition in a highly competitive environment. As we explained on prior calls, this year, we've organized our investments around making Etsy feel more made for you, more efficient and inspirational, making Etsy more reliable and continuing to support our sellers' growth by offering them more agency and scalability. Some of you have asked if we're running out of ideas to fuel future growth. In fact, the opposite is true. Even as the team has scaled significantly, we're seeing return metrics like incremental GMS produced per squad holding steady at very high levels. While our backlog of great ideas significantly exceeds our capacity. One of the needle-moving innovations I'm most excited about is the journey we're on to leverage personalization to better tailor Etsy to the tastes and needs of each buyer. Etsy buyers struggle with our tyranny of choice. For example, user feedback I saw recently from an Etsy shopper who complained about his search for lamps. '400,000 results? Hmm. No, thanks. I'm going to take a hard pass on that.' That's why it's so important that we narrow search results and get you to the good stuff fast, especially challenging since each person has their own idea of what the good stuff is. We need world-class search technology married with world-class personalization. Your search and discovery journeys, on-site experiences and e-mails, push notifications, app engagement all need to be relevant to you and the mission you're on, whether to find something for yourself or for a loved one, to find just the right thing that truly reflects your style and tastes or to just hang back and be inspired, which, of course, is also a very personal experience. In this way, we can make Etsy feel made for you. And because it's so challenging, our investments here are a key source of our competitive differentiation. Every quarter, we'll expect to make progress on this journey, and I'm especially proud of the progress we've made in the past few months. In our effort to get you to the good stuff fast, we began to incorporate signals into our search engine correlated with quality, such as seller reviews, on-time shipping performance, customer responsiveness and price. In this way, we don't simply prioritize items that match your search query, but rather items that are the most likely to result in a delightful purchase experience. I'm excited that this quarter, we added videos to search results. Similar to the add-to-cart button in search we mentioned last quarter, we're now able to bring highly differentiated information to buyers directly on the search result page without needing to click through to the listing, creating a very social shopping feel on Etsy that we believe can be inherently more personalized. We also had some early wins incorporating buyer tastes and interests to create more interpretable and personalized recommendations. For example, if we believe you like mid-century modern style and you do a search for lamps, we'd be more likely to show you lamps that fit the mid-century modern aesthetic. We're making great progress expanding search capabilities in non-U.S. markets, launching in-session personalized ranking to better rank order results, introducing dynamic information retrieval, which helps us to choose more relevant listings for you and adding neural models that help us to understand what you're looking for, even if you don't know how to describe it. And speaking of making it easier for buyers who may have trouble finding the right words to describe an item, just a few days ago, we launched a new capability for iOS buyers to take or upload a picture of an item and search on Etsy for items that are visually similar. Cool technology advances like this support the notion that you can find virtually anything on Etsy. And more often than not, that item will be different and more special than what you might find elsewhere. I'd encourage you to check it out around your own homes. It's a powerful way to see the breadth, depth and versatility of merchandise on Etsy. Our personalization journey is not just in product development. Our marketing teams are also doing great work here, contributing to the great buyer retention and reactivation we've had this year. We're finding so many ways to bring buyers back to Etsy, by reinforcing what our brand stands for in bold and creative ways and offering evermore relevant updates, triggers and pathways to keep you coming back. For example, this year, we've created a personalization engine that models and predicts the next best action a buyer should take on Etsy and then sends personalized content specifically to them, bringing to life a timely and relevant message. This might be a reminder to visit a shop you favorited, whose listing is now on sale, or go back to your cart to complete a purchase, or suggesting you favorite a listing you recently viewed so you can get alerted if it's about to sell out or go on sale. In addition to our focus on improving buyer experiences, 2022 has also been a year of tremendous investment in our sellers. We're always listening and trying our best to respond with care. In fact, every month, we hear from hundreds of thousands of sellers through research groups, surveys, forums and social channels, support lines and community events. It's been really encouraging for us to see that our seller sentiment metrics continue to trend favorably. We strive to understand our sellers' passions, their craft and the scale of their business better than any other platform. We provide affordable access to our global marketplace, scalable tools, support and services for shop management and growing customer relationships. And we elevate their unique items in a global marketing campaign that they could not create alone. A major area of focus is to give our sellers agency, the ability to understand what can drive their success, enabling them to act on that understanding and be rewarded for it in ways that ultimately grow their sales. One great example of how we do this is our Star Seller program, which provides sellers with a dashboard highlighting the metrics buyers care about, such as being responsive, shipping on time and getting great reviews. It then rewards with badging and increased prominence those sellers that best deliver in these key areas. The number of sellers in the program has increased over 150% year-over-year, and they represent a growing percentage of our GMS. Our data indicates that those sellers who have the badge earn about 18% more GMS than their similarly situated non-Star Seller counterparts. Even more importantly, we continue to see the Star Seller program positively impact responsiveness and shipping practices across the marketplace, resulting in an elevated experience for Etsy buyers. We're also continuing to give sellers insights to help them understand the macroeconomic pressures and think about creating pricing strategies for their listings, including adding systems for tracking their expenses and income, considering discounting in their pricing strategies and participations in sales events on Etsy. Being the platform sellers love to sell on also means having their back when things affect their business that are out of their control. For example, when Hurricane Ian made landfall last month, we saw devastating impacts across Florida, where we have a meaningful concentration of sellers. We reached out to impacted sellers with guidance to help them manage their shops in the wake of the hurricane, and among other things, offered bill deferments and the extension of Star Seller status to ease their burden. As you know, we're on a multi-year journey to deepen buyer loyalty and trust, a journey we believe will bring even more buyers to Etsy and get them coming back more frequently. The Etsy Purchase Protection Program was launched August 1 as a set of policies built to ensure our customers, both sellers and buyers have a positive experience on Etsy. While it's early days, we're very pleased with how the launch has gone, helping to make shopping and selling on Etsy far clearer, easier and more reliable. Since launch, average resolution times for order issues escalated to Etsy have been cut in half, while customer satisfaction scores related to how we handle these cases have meaningfully improved. We've had conversion rate wins from adding purchase protection messaging on listing pages and in cart. And our customer support team is seeing positive trends across issues management and ticket volume. The program is off to a great start, well in time for the holiday season. Another key element of trust is returns. During Q3, we announced significant improvements, moving from having sellers set a single policy for their entire shop to allowing them to set return policies at the individual listing level. This is important, as sellers often sell a range of items, for example, some best sellers where returns are accepted and others personalized or customized where returns are not. These return policies have been developed as highly customizable parameters that can meet a wide array of sellers' requirements. And by quarter end, approximately 70% of global Etsy listings had a listing-level return policy, offering buyers a great deal more clarity in time for the holiday season. All of this work contributes to a KPI we're tracking for easy resolution rate, how all of our initiatives, such as delivery transparency, purchase protection and return policies work together to help us resolve buyer problems more quickly and easily, to instill a brand promise that you can trust and rely on. And I'm pleased to report this KPI has been steadily climbing all year. Moving now to our Super Bowl season, the holiday shopping period. We recently completed a survey to gain insights for how consumers in our top three core markets were thinking about the holiday season. Our data shows that while holiday shoppers and, even more so, Etsy buyers, will be looking for sales and discounts with an eye on affordability. Finding meaningful high-quality gifts is actually the most important to them. So we'll be leaning into our message of extraordinary, handmade, affordable this holiday season, reminding buyers that for gifting moments, big and small, Etsy has it. We're pulling out all the stops, as we do every year, to help make sure Etsy sellers have the best holiday season they can, particularly in the face of continued economic uncertainty. In September, we held Etsy Up: Holiday Edition, our first-ever global holiday kickoff event for sellers around the world. Think of it as a one-stop shop for all things holiday prep. The interactive online experience included insider access to trends, tools and actionable takeaways to help sellers' shops get discovered and grow, topics like marketplace insights and trends, social media strategies and SEO tips. With about 80,000 registered attendees, nearly 500,000 views across all content and a 97% like rate from sellers, this virtual event was also the largest-ever gathering of Etsy sellers in our history. Turning now to our subsidiary brands. When we purchased Depop and Elo7 in mid-2021, we based those decisions on the long-term growth potential we saw in their businesses, their alignment with our core mission and highly differentiated marketplace model and our belief that over time, they could benefit from Etsy's operational and financial playbook to perform better as part of Etsy than they could alone, making the sum greater than the individual parts. In hindsight, given what we've seen happen to technology and consumer company valuations as well as macro business headwinds and other factors such as rising interest rates, our timing on those acquisitions certainly could have been better. While Rachel will review how these and other factors necessitated the adjustment of goodwill we took in the quarter, I want to reiterate that we have tremendous conviction that we're in the early days realizing value from our House of Brands strategy. At Depop, Kruti is settling in as the new CEO, focused on building momentum in the business, developing her vital view for 2023, identifying the fewest most impactful things to reaccelerate growth and improve operational efficiency in service of the Depop community. The team will be leaning into some themes that should sound familiar to you, like launching the right growth initiatives to scale conversion and influence user engagement in order to deliver an experience that brings more people to Depop and keeps them coming back over and over again. Depop is focused on making it faster and easier for users to explore their style and find the items they're looking for. Similar to Etsy, we know today's consumer is looking for both great style and great value. So they're equally focused on improving the value of the shopping experience during a time when the dollar or the pound isn't going as far as it used to. Accelerating the velocity of product experimentation is a foundational focus area for Depop, as well as optimizing initiatives that potentially scale revenue, such as our newly-launched Boosted Listing Ad Platform. We would then look to reinvest that revenue into areas like marketing that spur further growth, really getting the marketplace flywheel moving. If these initiatives sound familiar, it's because they're the same ones Kruti helped lead back in 2017, which reignited Etsy's marketplace growth. Elo7's business has been building momentum in 2022, as Brazil is beginning to see some rebalancing of wallet share between e-commerce and brick-and-mortar, and our GMS from event-driven categories is now above pre-pandemic levels. We're focused on rebuilding top-of-mind awareness for the brand, which suffered during the pandemic. Elo7 has collaborated with the Etsy team to improve search, optimize performance marketing and negotiate better carrier relationships that bring reduced shipping costs to sellers. Reverb has continued to perform well this year in a challenging environment, with growth outpacing the musical instruments market in the quarter. Reverb had several work streams to make great deals available on the marketplace, improving search functionality to highlight popular listings priced to sell efficiently; enhancing its price guide, an important tool that allows both sellers and buyers to better understand gear pricing; and partnering directly with manufacturers, brands and authorized dealers to highlight refurbished B stock and demo gear to bring more great deals to musicians. I want to take a moment to thank our team for continuing to drive innovation and bring more buyers to our millions of sellers around the world in ways that are inherently human, special and different. In particular, I'd like to thank our CTO, Mike Fisher, who will step down from his role at the end of the year. Fish has helped lead Etsy through a period of transformation and growth over the last five years, indicative of our strong bench of talent and thoughtful succession planning, I'm thrilled to congratulate Rachana Kumar, who will step into the role of CTO come January. Her promotion is a testament to her tremendous accomplishments during her eight years at Etsy and to the followership she's earned throughout the company. Rachana has played a leading role in so many of our critical engineering initiatives and has been a tremendous talent magnet, coach and mentor across the business. I'll wrap it up today by addressing a question a lot of you have been asking lately, what will the 2022 holiday shopping season look like? The truth is, we don't know. Whether consumers will spend more or less on gift-giving or whether they'll do more shopping online or in the mall. But the good news is, our business, with differentiated inventory across our House of Brands and a variable cost model, doesn't depend on us taking huge bets on these questions in the same way most retailers or e-tailers must. So we'll keep focusing on the things we can control, delighting our customers, investing with discipline and care and helping our people minimize distractions and get the job done. Thanks for your time. And with that, I'll turn it over to Rachel.

Thanks, Josh, and thank you, everyone, for joining us for our third quarter earnings call. My commentary today will cover consolidated results, key drivers of performance and Etsy marketplace stand-alone results where appropriate. As a reminder, Reverb, Depop and Elo7 are all reflected in our consolidated financial results and KPIs for the third quarter of 2022, with Elo7 and Depop included as of July 2 and July 12, 2021, respectively. On a consolidated basis, our third quarter GMS was down 3% year-over-year to $3 billion. Our revenue increased 11.7% year-over-year to $594 million, and adjusted EBITDA was $168 million with a strong 28% margin. Our adjusted EBITDA margin was driven by both revenue strength and disciplined operational expense management. On a currency-neutral basis, GMS increased 0.7% year-over-year, as FX headwinds accelerated 100 basis points to a 400 basis point headwind in the quarter. We continue to face challenging comparisons as our consolidated GMS increased 18% year-over-year in the third quarter of 2021 on top of a 119% increase in the third quarter of 2020 due to pandemic lockdowns, stimulus benefits and other factors. Our business has continued to stabilize, similar to the trends we discussed on our last earnings call. And our investment discipline is evident in the strong adjusted EBITDA margin. On a consolidated basis, marketplace revenue increased 12% year-over-year, and services revenue expanded 10% year-over-year. The growth of our marketplace revenue was primarily driven by a full quarter benefit of the Etsy marketplace transaction fee increase from 5% to 6.5%. Within services revenue, consolidated ads revenue increased 14% year-over-year due to ongoing growth in Etsy ads, impacted by prior period improvements such as ads on our homepage, as well as a new capability that utilizes computer vision to help determine buyer intent and serve a more personalized ad experience. This initiative led to higher click-through rates, ad impressions and conversion rates. Solid Etsy payments performance and better-than-expected growth of Etsy ads drove higher-than-expected consolidated take rate, which was 19.8%. Consolidated adjusted EBITDA margins declined on a year-over-year basis due to factors we've noted on prior calls, investments in headcount growth and increased compensation and, to a lesser extent, higher cloud computing costs related to greater development activity. We delivered strong profitability again this quarter, with overall adjusted EBITDA margins largely stable over the past three quarters. Our subsidiaries continue to represent a headwind to our overall adjusted EBITDA margin. Moving to our investment areas. Consolidated product development spend increased 47% year-over-year to $108 million, primarily driven by headcount growth. Our product development line is where most of our engineers sit and represents the largest portion of our headcount growth since 2020, both for Etsy as well as the addition of Depop and Elo7. As we previously highlighted, we scaled our engineering team in a thoughtful and sustainable way during the pandemic, significantly lagging our growth in GMS and revenue. This was followed by a pickup in our pace of hiring in 2021 and early 2022. As our growth rate slowed in the second quarter of 2022, we similarly slowed hiring. Third quarter product development spend reflects a full quarter of the prior quarter's headcount additions, now representing 18% of revenue, up from 14% last year, which we believe is an appropriate level to enable future growth. During the third quarter, we increased our consolidated marketing spend by 12% year-over-year to $147 million, primarily driven by an 8% increase in performance marketing spend, which represents the majority of our spend. A combination of optimized attribution models and a higher buyer LTV related to our transaction fee increase allowed us to lean into performance marketing, while maintaining our ROI hurdles. It's important to keep in mind that with our 30-day attribution model, some of the return on this higher spend will be earned in future quarters. Etsy brand campaigns in our top three core markets, including out-of-home brand marketing in Germany, drove brand marketing spend up 25% over the prior year. In addition to seller-driven promotions, the Etsy marketing team has continued to use highly targeted Etsy funded promotions to drive retention and engagement in a disciplined ROI-focused way. We have long stood by the principle of a fair exchange of value related to the commissions we earn on marketplace sales. When we increase a fee to a seller, we do this in exchange for value we provide them, creating a virtuous flywheel that helps sellers grow and invest in their businesses. The pie chart on Slide 20 illustrates our estimated annualized reinvestment of incremental revenue generated from our transaction fee increase. First, engineering headcount is our largest bucket of spend, and we are allocating a meaningful portion to product development initiatives to improve customer experience. Second, we are continuing to increase our marketing spend commensurate with a higher LTV. Third, we are focused on building loyalty and strengthening our brand with our new Etsy Purchase Protection Program. It's worth noting that our Etsy Purchase Protection Program issue report rate, resolution rate and refunded GMS estimates are all trending generally in line with our forecasts. Lastly, we continue to increase our investments in trust and safety and customer support, as we've described on previous calls. Moving to our Etsy marketplace performance on a standalone basis. During the third quarter, Etsy marketplace GMS declined 3.8% year-over-year and increased 134% on a year-over three-year basis as top line trends stabilized following two quarters of deceleration. In particular, we believe we have experienced the majority of reopening headwinds that have weighed on our GMS performance for most of the year. The third quarter was relatively stable on a monthly basis, and our year-over three-year growth rate trended slightly higher in October, further increasing our confidence that reopening headwinds are largely behind us. We do continue to see quite a bit of volatility in week-to-week GMS trends from the broad macroeconomic factors impacting consumer discretionary spending such as inflation. On a currency neutral basis, Etsy marketplace GMS increased 0.2% from the prior year, as you can see in the navy bar on this slide. We grew on a year-over-year basis and are well over twice as big as we were in the third quarter of 2019. While thankfully, face masks are in the rearview mirror, it's worth mentioning that in the third quarter of 2021, we benefited from an increase in GMS due to the Delta variant surge, which accounted for an approximately 100 basis point headwind in the third quarter of 2022. From a geographic perspective, 44% of Etsy marketplace GMS in the third quarter of 2022 was from transactions where either the buyer or seller or both were outside the United States. Non-US GMS increased 9% year-over-year on a currency-neutral basis, driven in part by the continued strength in Germany, where we have recently been investing to build brand awareness. As would be expected, the strong US dollar has driven growth in the US imports for the Etsy marketplace, which is providing additional support to our sellers in international markets. Overall, we are pleased with the domestic vibrancy we built in the UK and Germany, where we have domestic demand balanced with domestic supply. This equilibrium between supply and demand is what we strive for in other emerging markets. For example, in preparation to serve the India domestic market, we launched new pricing capabilities to allow sellers to easily add domestic and global prices, partnered with a local provider to enable payments functionality and added domestic carriers to our shipping options during the third quarter. From a category perspective, the diversity of our listings continues to be part of an important part of our value proposition. Our eggs are not all in one basket, so to speak. For example, during the quarter, we saw strong trends in fashion-forward clothing, bags and purses, as well as gifting and holiday home and living items. We achieved a 25% year-over-year increase in GMS from items related to back-to-school purchases. And items associated with Halloween increased 17% from the prior year. Two categories which have been most pressured by reopening headwinds, home and living and craft supplies, showed signs of stabilization in the third quarter. GMS per active buyer on a trailing 12-month basis for the Etsy marketplace was $135 in the third quarter, which was down only slightly on a sequential basis, providing further evidence that trends are stabilizing at levels far above our $102 in the third quarter of 2019, as shown on this slide. GMS per active buyer on a currency-neutral basis for those buyers who purchased in the third quarter, once again, increased slightly from the prior year, suggesting that we are maintaining the majority of our pandemic gains. Encouragingly, our buyers are shopping more frequently, with average purchase days up 25% on a year-over-three-year basis. Our buyer metrics remained mostly stable across active, habitual and repeat buyers. We ended the quarter with 88.3 million active buyers, a slight increase sequentially, after two quarters of modest declines. We had 7.6 million habitual buyers, down 2% sequentially. While, of course, we are seeing some degradation in this number as the lockdown periods roll out of our trailing 12-month figures, these loyal buyers accounted for 46% of our GMS in the third quarter. And habitual buyer growth in Germany and Australia remained a bright spot. We also continue to see healthy new buyer acquisition and great performance in the reactivation of our lapsed buyers. In the third quarter, we added over 6 million new buyers, relatively flat sequentially and nearly 50% higher than our average in pre-pandemic periods, but down 10% year-over-year. We continue to make progress with buyers to identify as male, which represented 37% of US new buyers in the quarter. One interesting data point on new buyers is that we have seen their average number of purchase days increase about 9% on a year-over-three-year basis, meaning we are making great progress getting new buyers more engaged with Etsy. We reactivated over 5 million lapsed buyers in the quarter, representing an increase on a sequential basis. In fact, we've reactivated more buyers in each quarter of 2022 compared with the corresponding quarter last year. Before moving to the balance sheet, I'll comment on the non-cash impairment charge of about $1 billion we recorded on the goodwill of Depop and Elo7, eliminating the full amount of goodwill we were carrying for each brand. We purchased these businesses when technology and consumer company valuations were at much higher levels. For instance, many peers have seen enterprise values decline by 70% or more. And you have all seen the recent announcement of the sale of Poshmark to Naver for less than half of its IPO value in 2021. Another key factor that impacted our valuation analysis was the significant change in the discount rate, driven by an increase in interest rates following a series of Fed rate hikes totaling 300 basis points since the time of acquisition, leading to higher cost of equity and debt alongside increased inflation expectations in the UK and Brazil. Other factors that went into our conclusion to impair the goodwill included the performance to-date and near-term forecast of both businesses impacted by the macroeconomic conditions you are all quite familiar with, such as reopening headwinds, inflationary factors, consumer discretionary spending trends, foreign exchange rate volatility and ongoing geopolitical events. The impairment charge had a diluted loss per share impact of $8.20, resulting in a diluted loss per share of $7.62, or a net loss of $963 million. Despite the timing of these acquisitions, we continue to believe in the long-term growth opportunities for both businesses. As of September 30, we had $1.1 billion in cash, cash equivalents and short and long-term investments and a $200 million revolver that is currently undrawn. During the third quarter, we repurchased $151 million in stock under our $600 million May 2022 Board authorized repurchase program. Operating cash flow for the quarter was a healthy $207 million this quarter, converting 123% of EBITDA to cash flow. Now turning to the outlook, I want to first highlight that our guidance assumes currency exchange rates remain unchanged at current levels, and we do not use currency hedges. As a reminder, we reported consolidated GMS growth of 17% on a year-over-year basis in the fourth quarter of 2021. And GMS increased 154% from the fourth quarter of 2019 with a resurgence in COVID cases related to Omicron and global supply chain issues impacting many competitors, providing Etsy with strong tailwinds during the all-important holiday season last year. As I previously mentioned, we are encouraged to see that our year-over-three-year growth rate in October trended slightly higher than Q3, marking about five months of overall GMS stabilization and suggesting reopening trends have largely normalized. That said, our guidance range for Q4 takes into account the dynamic and somewhat unpredictable period we are in. We currently estimate our fourth quarter 2022 consolidated GMS to be approximately $3.6 billion to $4 billion, down about 10% at the midpoint compared to the fourth quarter of last year and up approximately 130% compared to the fourth quarter of 2019. For the Etsy marketplace, this implies a year-over-year decline of roughly high single digits. We are also encouraged that our overall trends in our subsidiaries are broadly showing early signs of stabilization this quarter. We don't yet know how the holiday season will play out for e-commerce in general, so we have incorporated a worsening macroeconomic environment and, therefore, a weak holiday period into the bottom end of our guidance. We're forecasting revenue of $700 million to $780 million, up about 3% at the midpoint compared to the fourth quarter of last year and up 174% compared to the fourth quarter of 2019. We currently expect an adjusted EBITDA margin of approximately 27%, with seasonally higher marketing spend being the primary driver of the sequential decline. In particular, you should assume a typical seasonal trend in marketing investments, where we will increase both performance and brand spend. We currently expect a consolidated take rate for the fourth quarter to be a bit lower on a sequential basis due to normal seasonality. On a full year basis, using the midpoint of our Q4 guidance, we would expect to deliver about $13 billion in GMS in 2022, down about 3% compared with 2021, and revenue of about $2.5 billion, up about 7% with strong profitability throughout the year. We are encouraged by the stability in recent quarters, indicating we have indeed kept the vast majority of our pandemic gains. As you think about 2023, recall that the strong start to 2022 from a COVID surge that kept many of us still at home gives us a significant comp to grow over in the first quarter and that we started to see reopening headwinds in mid-February that didn't start to moderate until May. So while the year may start off slowly, we are optimistic for growth to resume in 2023 unless macro headwinds intensify.

Hi, everyone. Good evening. I'm going to dive right into questions. I know our prepared remarks went a little long, so thank you for your patience. The first question is for Josh from Marvin Fong at BTIG. Last quarter, you lost about 1 million Etsy buyers, but this quarter, you gained 200,000 with a similar number of gross additions. Can we say that churn improved this quarter? If so, which of your key initiatives do you believe contributed most to the improvement in buyer retention?

Yes, thank you for the question. The short answer is yes, that is a fair assumption. Churn decreased even further, and gross additions held up well as we continue to reactivate lapsed buyers. If you look at our trends, the reopening challenges we experienced were most pronounced between January and May, and active buyers is a trailing 12-month metric. As those challenges fade into the past, we believe things will stabilize further. During the pandemic, we saw our active buyers increase from about 40 million to close to 90 million. Many of those buyers came to us during a time when shopping offline was limited, and online shopping faced shipping delays and supply chain issues. We were all curious whether those buyers would return. Now, in Q3 of 2022, there are many more options available, and we are pleased to see that most people are coming back. Regarding what keeps them returning, I believe the key factor is that they truly enjoy the experience. They find it easier to discover products, receive them in a timely manner, appreciate the fair pricing, and are delighted when they arrive. It's really about the overall experience, which stands out compared to others. Additionally, we are utilizing effective marketing strategies to ensure that Etsy comes to mind at the right moments, which is significant. We're also focused on enhancing our product with personalized features, which I believe makes a big difference by helping users find relevant items and delivering meaningful communications through emails, push notifications, and on-site recommendations. I think there's great potential in this area, and we have much more opportunity ahead of us.

Great. Thanks, Josh. Okay. So the next, I have two questions on take rate, and I want to combine them. One is from Laura Champine at Loop Capital, and the other one is from Anna Andreeva at Needham & Co., and I'll give this one to you, Rachel. The guide seems to imply a negative take rate trend sequentially. Is that right? And what would account for that? First part of question. And the second part is how should we model the take rate going forward into 2023?

Thank you for the question and for joining the call. I believe your calculations are correct. Our guidance does suggest a slight decrease in the take rate, although we don't provide a specific forecast for it. We've mentioned in previous calls that typically in the fourth quarter, Etsy Ads account for a lower percentage relative to our gross merchandise sales. This happens because it requires fewer page views per purchase, as the conversion rate increases significantly, which lowers the proportion of Etsy Ads. In other words, while Etsy Ads will perform well, our gross merchandise sales will perform even better, which in turn reduces the take rate. We have not provided guidance on the take rate for 2023, so you could track the seasonal trends in our take rates from quarter to quarter to estimate what the take rate may look like next year. However, we are not suggesting that the decline in the take rate in Q4 reflects the entire year of 2023.

Okay, great. Thanks, Rachel. The next question is from Anna at Needham. Josh, could you discuss the customer reception of the Purchase Protection Program? After that, I will follow up with Rachel on a financial question related to purchase protection. But Josh, if you could provide insights on the overall reception, that would be great.

Sure. I'm delighted to talk about it. We're really happy with how it's going. So most importantly, on the rare occasion that a customer does have an issue and creates what we call a case, internally, those cases are getting resolved much faster. In fact, the time to resolve has been cut roughly in half, because the policies are just super clear. Etsy steps in and covers those costs in many cases when we might not have in the past. And that saves time, hassle and stress for everyone. So we're really happy to see that the customer experience is getting a lot better. It's also true that as we're promoting purchase protection in places like checkout, we're actually seeing some conversion rate lifts. So it's yielding some incremental GMS, so that feels great. And, I guess, we'll let Rachel talk about costs.

Yes. So they’re weakened, but the costs come in line for the third quarter was a specific question. How is it feeling versus the $25 million annualized run rate that we gave?

Yes, all of our metrics are tracking pretty close to how we originally forecasted them or better in terms of cost, the costs are in line. In terms of other metrics like issue resolution rate and things like that, those are tracking right where we want them to be.

Thank you. The next question is from Tom Forte at D.A. Davidson. Does buying and selling within the country protect you from fluctuations in foreign exchange rates, such as when a buyer and seller are based in the UK? If that is the case, does it reduce the impact of a strong dollar on your performance compared to e-commerce competitors like Amazon?

No, it doesn't. The sale occurs between a buyer and a seller within the same country, but we convert the transactions back to USD for our financial reporting. We benefit from a natural hedge on operating expenses in some markets, particularly where we engage in performance marketing and have offices, as the exchange rate can work in our favor. Additionally, the metrics we've provided regarding the balance of supply and demand in those markets indicate that foreign exchange rates do not adversely affect buyer spending habits. When transactions occur within their own currency, changes in FX rates do not disrupt demand and supply when converting to USD.

Great. Thanks, Rachel. Next one is for Josh from Corbin Weyer at R.W. Baird. You had $1 billion write-down after only a year from these acquisitions. What are your learnings from this experience? And how should we get comfortable that this doesn't happen again?

Thanks for the question. Fair question, I appreciate it. So, first, I'd say, acquisitions don’t happen overnight. And as we said at the time, we spent about two years courting these companies. They came to fruition, both of those acquisitions, coincidentally around the same time. And we felt great about the acquisitions. And in fact, the market felt overall, quite enthusiastic. I got a lot of really positive reactions from shareholders, and the general market reaction that we received at the time was positive. And then, reopening headwinds hit, they hit quite hard for Etsy, for Depop and Elo7 and for many, many other e-commerce companies. And then inflation happened and interest rates rose and then a war broke out, Russia invaded Ukraine, and a lot of things happened and the whole market went down across many, many e-commerce names. And you're seeing us acknowledge that. And so I own that, that's on me, the timing was wrong. We continue to feel great about the companies. We feel good about the strategy. And the timing didn't work out, so we will continue to do our best to make the best decisions we possibly can with the information we have. I think if you look back over the 5.5 years that this management team has been here, I think, on average and over time, we have been very good stewards of shareholder capital. We're very thoughtful. We care about profitable growth and making smart investments, and we're going to keep doing the best we can to be good stewards of shareholder capital.

Thank you, Josh. Okay, Rachel, I'm going to combine a couple of questions. I'll start with one from Alexandra Steiger at Goldman Sachs regarding guidance. What key factors could lead to an upside or downside surprise? Can you elaborate on the various components that influenced our guidance for the fourth quarter in relation to the GMS trajectory?

Thank you for the question, Alexandra. To begin with, we mentioned that Q3 showed signs of stabilization. As we discussed in our last call, we observed some slow down earlier in the year. However, throughout Q3, we experienced a relatively stable trend. In fact, conditions in October were better than those in Q3. The guidance we provided suggests that at the lower end of our range, we anticipate continued pressure that could reduce stabilization below what we're observing in October. Conversely, the upper end of the range indicates we might have a holiday season on par with 2019. Therefore, these are the key elements of our guidance. The factors that could negatively affect our numbers are largely beyond our control, such as macroeconomic conditions influencing consumer discretionary spending, and we do not have a clear forecast for how November and December will unfold. The higher end of our guidance reflects the trends we've been observing in September and October.

And Rachel, I just want to jump in to clarify, when you say stabilization on a three-year stack, meaning relative to pre-pandemic, right?

Yes.

We have received several questions regarding promotional activity and merchandising strategy. I will address inquiries from David Malinowski at Bank of America, Lauren Schenk at Morgan Stanley, and Lee Horowitz at Deutsche Bank. Firstly, how should we view your promotional schedule for the fourth quarter? Will the company be supported by more seller promotions or discounts, considering the expected highly competitive holiday season? I will answer this first and then follow up with a related question.

Yes. We have provided our sellers with more tools to promote their offerings, especially during important seasons like Halloween and back-to-school. These tools have allowed them to implement small discounts, such as offering 10% off on future purchases. I'd characterize these discounts as modest, not very significant. Additionally, Etsy has enhanced its CRM capabilities and has used some resources to offer our own discounts. When we utilize our resources in this way, we apply the same return on investment analysis that we use for all performance marketing. We assess the effects of these discounts on return visits and their impact on the conversion rates from our sellers. Consequently, I would view this aspect of our marketing spending as minimal in comparison to the larger amounts we allocate to performance marketing.

Yes. And maybe, Josh, the other part of the question came in from Lee Horowitz, which was more just about how we're thinking about our marketing strategy in general for this holiday season, given where we are in such a tough macro environment. Did you want to add a couple of thoughts on that too?

Sure. And just to build on Rachel's point, we are seeing a lot more promotional activity from our sellers. The vast majority of that is funded by the sellers. The sellers are choosing to give very targeted discounts. A tiny piece of that is funded by Etsy. But the vast majority of the promotional activity you're seeing is sellers choosing to put certain items on sale for certain buyers. In terms of our marketing spend for Q4, Q4 is an important time to remind people that Etsy is really relevant for them. And so, we lean in, in the holiday season. We plan to lean in, in this fourth quarter like we have in other fourth quarters. So we're going to be running brand TV spots, which really tell the story of Etsy and why Etsy matters and why it's different, as well as more direct response TV ads, which really highlight the kinds of items you can buy on Etsy and the shoulder tap of very specific kinds of categories where we're relevant. And then, we typically see on the performance marketing side, things like search queries for gifts go up on Google. And so that naturally drives more performance marketing for us. But again, with all of this, we take a strong ROI lens. We look very much at what kinds of returns we're getting. So the performance marketing side, there's quite a lot of science. It's very dynamic and it tends to adapt, our models adapt within hours or days to what we're seeing in the market. The brand side is the piece where we've got to make some bets. And so, we think that this is the right time for us to be telling our story. We expect to be telling that story in the fourth quarter. We love the creative that the team has developed, and that's reflected in the margins and the guidance that Rachel gave.

Great. Thanks, Josh. That's perfect. I have two questions from Steven Forbes at Guggenheim. The first one I will direct to Josh. As we look toward 2023, which categories do you think offer the best opportunities for Etsy to expand its market share?

One of the great things about Etsy is our wide variety. We have seven categories with over 15 million buyers and 15 categories with more than 1 million buyers. This shows that there are numerous occasions and categories where Etsy is relevant. With 15 million people shopping in these categories, it's likely that many can find something that appeals to them. I particularly love the new feature we highlighted in the earnings call, which allows you to take a photo of almost anything and discover similar items on Etsy. I encourage you to try it out; you might be surprised by how many great options we have. However, I do believe there’s room for improvement in the shopping experience across many categories. When buyers are asked where they prefer to shop online, Etsy is increasingly mentioned as one of the top three options. Yet, when it comes to home furnishings, very few people think of Etsy, and we don’t even rank in the top 10, with the 10th spot representing only 6% of mentions. Despite being our biggest category with billions in sales, we need to strengthen associations with specific segments like jewelry, home furnishings, fashion, and craft supplies. We're sold on various categories including pets and weddings, and our goal is to broaden our appeal in these areas. We're working on improving the shopping experience, particularly by organizing categories more effectively. For instance, if you browse home furnishings, the experience is unique compared to other sites, often taking you deep into niche categories. We believe there’s a significant opportunity to enhance this, and we’ll be focusing on it more in 2023.

That's great, Josh. And the other part of the question from Steve was for Rachel about, do you have any high level thoughts about the potential to reduce the weight of the recent acquisitions on the consolidated margin structure? And what timeline should people be thinking about for that?

Hi, Steve. Thank you for your question. Before I respond, I want to highlight how impressive the Etsy Lens product is. You can open your app, click on the camera icon in the search bar, take a picture of any item in your home, and find related products on Etsy. It's really impressive. Regarding the impact of our recent acquisitions, I want to remind you that our three subsidiaries together represent less than 15% of our total Gross Merchandise Sales. They are almost negligible to our bottom line. While we acknowledge that they are a 400 basis points drag on our margins, even if they were breaking even, they would still be lower-margin businesses and would dilute our margins. So, the 400 basis points should not be directly interpreted as a simple percentage of our revenue to determine our investment. We believe that the investments we're making in these businesses are necessary for their growth. They should continue investing in growth, and our aim is to support their expansion rather than hinder it. They now operate similarly to Etsy, concentrating on key priorities and fostering a culture of experimentation to identify high-impact initiatives. They will consistently seek to optimize their strategies to ensure they make wise investments that drive the greatest growth.

Great. Thanks, Rachel. Next one is from Maria Ripps at Canaccord. I'm going to give this one to Josh. Recognizing that you aren't guiding for 2023, how are you thinking about investment priorities for next year?

Thank you for the question. One thing we highlighted is that we have significantly scaled our team over the past two years. We are not a company focused solely on growth at any cost. When our revenue nearly doubled very quickly, we did not double our headcount at the same pace, as that would not have been sustainable growth. We needed to ensure we were hiring highly qualified individuals and clearly defining their roles and responsibilities, as responsible scaling requires a certain pace. Thus, we took some time to align our team growth with our revenue increase. I take pride in our productivity metrics, such as GMS per squad, which are at their highest in years. This indicates that despite significantly increasing our team over the last two years, they continue to deliver at least the same value, if not more, than before the pandemic on a per squad basis. Our teams have numerous great ideas and are successfully executing them in ways that enhance the customer experience and build shareholder value. We have achieved a lot, including Etsy Purchase Protection, advancements in personalization, improvements in CRM, new marketing initiatives, and new TV advertisements. We even had to discard several initiatives because the call was getting too lengthy. Our team is accomplishing a great deal that contributes to a better customer experience and shareholder value. We are doing this with a sense of urgency and with our relatively small team, which we feel great about. We are not managing to a specific margin target; rather, we are focused on whether we are continuing to achieve meaningful and measurable growth with our existing team. We are satisfied with the team's current size and structure, and we will remain attentive to our investments next year, evaluating if increased investment leads to additional returns while maintaining profitable growth and striking the right balance.

I think this is a connected question, so I'm going to just ask it right away for you, Josh, from Kunal Madhukar at UBS. And you seem, at least somewhat optimistic for 2023, assuming the macro doesn't get worse is the way we've said that. But do we think that's more from sort of buyers, more buyers or more spend per buyer?

Over time, I believe we will continue to see both outcomes. I am pleased that, although new buyer growth has slowed since the pandemic, it remains 50% higher than pre-pandemic levels, which is quite encouraging. There are still many individuals in the US, UK, and particularly around the world who have yet to shop on Etsy. Therefore, we see a significant opportunity to attract new buyers. Additionally, there are 100 million lapsed buyers who have previously shopped on Etsy, generally having a positive experience, and they simply need a reminder to return or shop more frequently. I believe there is potential in reengaging these lapsed buyers and attracting new ones, and I also see a considerable opportunity to increase the frequency of purchases. Over time, I think we can encourage shoppers to have more purchase days and make more frequent purchases. Notably, seven categories have 15 million shoppers, yet very few customers shop across all categories. I believe people do not fully realize how often we can meet their needs, and that excites me. Lastly, there is the opportunity we have previously discussed regarding average order value. As we build trust and familiarity with Etsy, I think encouraging larger purchases for bigger items will also present a continued opportunity for us.

Great. And Rachel, I'm going to try to squeeze one in because it's a pretty hot topic that we get a lot from Noah Zatzkin at KeyBanc. I'm hoping you could provide a bit of insight around inflation, particularly as it relates to seller pricing. Have you seen sellers start to raise their prices? We haven't really seen that in Q2, so has anything changed there?

Yes. I thought we would get through this call without any questions about inflation. However, we haven't observed sellers significantly raising their prices. We analyze a basket of goods and find that sellers are not increasing their pricing materially. We do try to assist them in thinking strategically about pricing, but there's likely more we could do in that area. I would mention that this positions Etsy as a relatively good value compared to other places where prices are rising substantially. Some of our creative advertisements highlight this aspect, emphasizing that you can find unique items on Etsy that are made just for you without overspending. This serves as an additional differentiating factor for our marketplace.

Okay. Great. I'm going to call it there. Josh, do you have any closing remarks or good?

No, we feel really good about the progress. And again, if you'd asked us a year ago or two years ago in the midst of the pandemic, what would we hope for in terms of retaining buyers, retaining buyer spend, I'd say, I'm just delighted with how well our retention has been in light of people having so many more choices. And I do think it really comes down to the fact that they really like the experience and it's different, and being different in a way that's better matters. So we're grateful for it and we'll keep doing the best we can.

Great. Well, thank you all for your time tonight and we'll talk to you over the next weeks.

Thanks, everyone.

Thank you.