Let's get right to the earnings themselves. You know, and a lot of the questioning was about, for sure, intelligence, which is not that much of a surprise. But I think the reaction to the print in the outlook is that investors are trying to understand why you don't have more visibility. You know, you know how the platform works. You know what's working well. So why can't you tell us through year end? What's going to bring people to Etsy? Well, we can talk about what's bringing people to Etsy. And we're really proud of the fact that in an environment where we're really swimming upstream with a really tough macro, and I think the story of this quarter has been for discretionary products in particular, it's a tough it's a tough time, and that's hitting the consumer directly. Basically, it's hitting the consumer directly. Wells Fargo published a report just recently saying 60% of Americans say that by the time they're done paying

their essential bills, they have very little money left over for anything else. And yet we are actually maintaining, you know, we have roughly the same number of active buyers are all-time high, 91 and a half million. We came in actually above the top of our guide or at the top of our guide on every metric. So we're really proud of how we're doing and we're aware that it's a super volatile macro. But in this time when we're swimming upstream and maintaining, we're building muscle that we know is going to make us stronger. And most importantly, we're not letting ourselves be dragged down. We're in a moment where there's a race to the bottom right now around who can sell things the cheapest. And Etsy is not focused on that. We're focused on making Etsy even more Etsy, leaning into our point of differentiation. And to your point about air is going to be so helpful for us because as you

know, there's over 120 million things
for sale on Etsy, and every single one of them is unique.
Every single one of them is made just for you.
So organizing that in a way that's easy to navigate is a very tough challenge.
It's no army of humans you could hire to do that, but our ones are really good at
organizing huge amounts of information in a way that's easy for humans to
understand. When I reflect on my experience of Etsy,
it's probably associated with events in my life.
When I got married, I used Etsy for gifts for groomsmen, for example, or
like when you're decorating the house, you go into the platform, and you're just
confronted with it with so much choice. So the focus of AI seems to be, okay,
you know what you're looking for. It's customization, right?
How are you going to get the customer that visits to close the deal, find the
thing they want, and then actually buy

it?
What we've done extraordinarily well over the past number of years is if you
already know what you want, we're going to get you there and help you buy it
really easily on Etsy, and you're going to get something special made just for
you. So if you can't find it anywhere else,
you come to Etsy, and we for sure have it, and we delight millions of people.
That's how we become the third most popular e-commerce site in America.
We have an even bigger opportunity now to be a place you go to start your
search when you're just planning a wedding.
We can do groomsmen gifts, we can do table scapes, we can do the invitations,
our sellers can do everything for you. So the basic idea, if I'm planning a
wedding, I'm redecorating my home. I think you might be doing some home
redecoration. We have so much for every room in your
home, helping to organize that in a way.

that's really easy to navigate.
So you don't need to already have a specific item in mind.
That's our next big opportunity, and it's going to be super hot.
So the question of this earnings season is, you've made the investment in AI.
Prove to me that it materializes as top line growth.
Do you have any evidence of that? Yeah.
So, for example, gift mode is something we launched just a couple of months ago
that is really helping you to find the perfect gift for someone else.
And we're using a lot of AI alarm technologies for that.
And we showed that for Mother's Day and Father's Day and graduation.
We very significantly outgrew the market for those holiday occasions.
And in fact, gifting grew 4% year over year while the rest of the site actually
shrank in the low single digits. And overall discretionary goods are
shrinking. So we're seeing overperformance and
gifting and we think that's great.

evidence of the future.
Josh, you've talked about Etsy's heritage. I guess in machine learning, right? AI is not that new to you necessarily, but I was speaking in the last 24 hours with Lisa Su, the CEO of AMD, upstream from you in the supply chain, but she just said there is a talent war in AI. You know, I think about how you are going to incentivize top engineering talent to stay with Etsy, come to Etsy and build out what you're outlining to me. Well, as you said, we've been hiring and building out our A.I. infrastructure for years now. And so the ability to understand what you want, not what you said. For example, if you come to Etsy now and you ask for cocktail attire for men, we're going to show you blue blazers, even though there's no words that are in common between those searches. And that's because we use neuro. Old net technology, neural net.

translator technology.
The same thing that powers Al Williams. We've been doing that for a little
while. How do we attract and retain great
talent? That's his mission.
Is keeping commerce human. There are 7 million sellers that wake up
every day counting on Etsy to bring its A-game.
91% are working from home. The vast majority are women.
We are one of the most important on ramps for small entrepreneurs to begin
their creative endeavor. That's a mission that I hold really
dear, and I think the employees of Etsy hold really dear.
And then a place where you can go work for a lot of places where you may not be
that aligned with the mission. I think the purpose of Etsy is
incredibly motivating, and I think our attrition rates, by the way, are well
below industry average. We've been able to hire world class
talent and I think the culture we've built and the mission that we have is a
really important part of that.

Josh, I think back to November of 2021, still kind of pandemic era. We talked about how events-driven decisions on Etsy can be a driver for you, but you guys were flying, you know, you were a great success story of the pandemic. And frankly, you know, the shares have been under pressure since. But based on everything we've discussed, you know, give me the sort of conclusion or summary of the post-pandemic Etsy, you know, how you scale to the future in a world where people behave differently now. Yeah, we were and are a great success story of the pandemic. And just to put that in perspective, we grew vastly more than any other e-commerce site. Etsy grew by about 250%, far more than anyone else. And we are as big today, almost as big today as we were at our pandemic peak. So we held it well up. Most of the other e-commerce sites grew

much less than us.
They also gave back all of their gains right after the pandemic.
We've been able to hold them all. So if you look at growth categories, for
example, Wayfair's got a growth figure of about 6%.
eBay's got a growth figure of about 2%. Etsy's growth figures, 19% since the
pandemic, dramatically different. And that's because tens of millions of
people came to Etsy during the pandemic when they had, frankly, very few other
options. But they've come back again and again.
Now, in spite of the macro headwinds, in spite of the fact that retail is
reopened because we offer something truly different and that I think is
incredibly exciting. And that's something that I think we
will be rewarded with. And our focus is making Etsy even more
Etsy delighting our customers and they'll love us when we win.

Etsy CEO on Earnings, AI Customization

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