Hi everyone, and welcome to Etsy's Third Quarter 2024 Earnings Conference Call. I'm Deb Wasser, VP of Investor Relations. Today's prepared remarks have been pre-recorded. Joining me today are Josh Silverman, our CEO, and Rachel Glaser, our CFO. Once we have finished with the presentation, we'll take questions from our participating sell-side analysts on video. Please keep in mind that our remarks today include forward-looking statements related to our financial guidance, our business, and our operating results, as noted in the slide deck posted to our website for your reference. Our actual results may differ materially. Forward-looking statements involve risks and uncertainties, some of which are described in today's earnings release and our most recent Form 10-Q, and which will be updated in future periodic reports that 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, which are reconciled to GAAP financial measures in today's earnings press release or in our slide deck posted on our IR website, along with the replay of this call. With that, I'll turn it over to Josh. Thanks, Deb, and good afternoon, everyone. We're pleased to have delivered solid consolidated revenue and profit despite a challenging GMS quarter for the Etsy marketplace, with overall performance roughly in line with our guidance. Consolidated GMS was $2.9 billion, down about 4.1% year-over-year. Revenue grew 4.1% to $662 million, benefiting from continued take-rate expansion, and we posted a very healthy Adjusted EBITDA margin of approximately 28%. While Etsy marketplace GMS was down about 6% year-over-year, it's encouraging to see our active buyer levels remain solid at approximately 91 million. We maintained strong revenue flow-through and profitability despite continued macro headwinds and multiple mind-share events this quarter. I'm excited to tell you more about how we're investing with focus and discipline in the things that we believe truly differentiate Etsy in order to get us growing as quickly and strongly as possible. Earlier this year, we outlined our commitment to driving consideration among our customers, centered around highlighting Etsy's quality, value, and reliability. We said we'd elevate gifting, prioritize quality in search, foster loyalty, and improve shipping. Fast forward to today, we've delivered on those goals. We've created a more intuitive gifting experience, enhanced our search algorithms to showcase higher quality and more diverse listings, launched the Etsy Insider Beta Loyalty Program to encourage repeat purchases, and reduced estimated global shipping times and charges on millions of items. Achievements like these are part of a bigger story. At a time when it feels like everyone else in retail is focused on slashing prices and offering steep discounts, we're approaching things differently. We know that our strength lies not in a race to the bottom. It's simply not who we are. It's not who our sellers are. Instead, we're choosing a different direction, choosing to double down on the things that make Etsy markedly different and markedly better as the best path to restarting our growth engine. And so far this year, I believe we've done more to holistically improve the customer experience than in any other year in my tenure. A lot of this work has been foundational in nature. Throughout the year, you've heard us talk about our journey to evolve from a historical focus on in-period conversion and incremental GMS banking to infuse engagement and better customer experiences as core metrics of success for our team. We've shifted the ways we hire, manage, and goal our people, how we manage our portfolio of product development investments, how we operate and measure success across teams, and how we deploy technology on the Etsy platform. We've moved with urgency, taking the steps that we believe are necessary to build a springboard for future growth, even as there's been some opportunity cost related to these initiatives. 2 areas where you'll start to see this shift are within our app and search. For the Etsy app, while it's early days, we've started making real progress. Getting a buyer to download the app increases their lifetime spend on Etsy by at least 40%, yet less than half of our GMS is transacted on the app, so there's tons of untapped potential. We've tasked our teams with revamping the app homepage to dedicate far more screen real estate to inspiring new shopping missions, but to do so without hurting conversion. That alone was a big undertaking, and just in time for the holidays, millions of users now see a dramatically improved experience with a 33% reduction in what we call rearview mirror impressions when we show you items influenced by your past shopping missions. Instead, we're using that real estate to offer fresh, exciting shopping inspiration, perfect for those who arrived without a clear idea of exactly what they're looking for. We also stepped up efforts to secure incremental app downloads by increasing the rate at which we intervened in mobile web visits, prompting more shoppers to download the app mid-journey. We're willing to briefly interrupt a shopper's current mission to promote better overall experiences. Initial experiments showed these bolder prompts led to incremental lifts in app downloads, which we believe is very promising. For example, in one experiment, we drove 3 million incremental app downloads from placing a prompt on the signed-out listing page on mobile web. We're also testing and learning with paid ads to drive downloads while we optimize our presence and placement in the app store. The other major area where we're building engagement more intentionally is within search. We've historically built our algorithms to help buyers find the specific thing that they're looking for. Now, we're working to also show the wide range of items that we have to offer. To do that, we're taking a 3-pronged approach focused on diversity, quality, and agency. Let's touch on each one. Starting with diversity. As you know, our teams are leveraging GenAI to increase variety in search results, creating a more inspiring and engaging and less repetitive shopping experience. As we shared last quarter, we drastically reduced search results that have identical images. To even further diversify results, we've been casting a wider net to also incorporate items with similar images, not just those that feature exact matches. We're now seeing an approximately 40% reduction in search results where at least a quarter of the listings look alike, and we're working to improve from here. We believe the impact of this work will be to better expose our buyers to the incredible breadth of offerings on Etsy, in turn leading to increased consideration and visit frequency over time. Onto quality. This year, we've retrained our search algorithms, adding indicators of high-caliber listings, like having a shipping charge that aligns with buyer expectations, providing return policy, and the shop's level of customer service. We want to not just match you with an item you're likely to buy, but with an overall purchase experience you're likely to love. We're encouraged that our experimentation in these areas appears to be leading to an increase in the number of 4 and 5-star buyer reviews and decreases in both the number of reviews that are 3 stars or lower, as well as the rate at which buyers request refunds. These are great signs that we're doing an even better job delivering consistently delightful buying experiences on Etsy, which we believe ought to lead to more purchase frequency and even better word of mouth. A key ingredient to bring these quality efforts to life is giving sellers more agency over what affects their search ranking. So in late August, we launched the Etsy Search Visibility page within the seller dashboard. This new page features tailored actions sellers can take to improve their position in search, such as listing image quality and quantity, return policies, message response times, and shipping charges for domestic listings. As sellers make these changes, they'll have the ability to track improvements in real time. In one example of this work in action, since launch, sellers have lowered shipping charges on approximately 2.5 million items to better meet buyer expectations. In fact, we've already seen excellent overall uptake in sellers taking an action that we've suggested, beating our internal adoption target by approximately 60%. We're positioning ourselves to evolve from being the place you come after you know exactly what you want and haven't been able to find it elsewhere, to also being the place you come early on for inspiration and to discover what you want in the first place. Connected to our focus on highlighting what makes Etsy different and special, in July, we introduced Creativity Standards to help fortify our position as the marketplace for original items from real people. We pulled these Creativity Standards through to the shopping experience, adding descriptors for each item to underscore the role the seller played in making or designing that item and to show buyers why what they're seeing belongs on Etsy. We spent much of the third quarter refining label accuracy and are continuing to explore how to highlight them to buyers in areas like search, discovery, and new marketing experiences. This effort, involving dozens of product development and marketing staff, exemplifies this year's shift towards long-term customer experience improvements, prioritizing fundamental changes that will benefit Etsy in the long run rather than focusing primarily on short-term metrics like conversion rate and GMS. These updates were accompanied by what I consider to be our most profoundly human marketing campaign to date, featuring real Etsy sellers in the throes of creating their bespoke items. The campaign resonated with buyers. Our research shows that "Supporting Small" was among the top recalled messages, along with themes of originally made and handcrafted goods. These findings align with our belief that there's no one better positioned to tell the world what creativity means than Etsy and our sellers. Now let's talk loyalty. In mid-September, we began officially inviting a highly targeted group of occasional buyers to join Etsy Insider through email, push, and on-site prompts, with the app driving the majority of sign-ups across platforms so far. We're just beginning to glean insights on how to best approach buyers and pique their interest. We plan to evolve our beta offering along the way as we formulate a rewards program that is uniquely Etsy and encourages buyers to think of us first and shop with us more often. Our gifting strategy is the gift that keeps on giving, with a number of product improvements this quarter. We've introduced new ways to browse and discover unique gifts while tripling the number of gift ideas available to buyers. We've also increased buyer adoption of existing gifting features. For instance, approximately 1.1 million gift lists have been created, and 1.3 million incremental visits came from people who received a Gift Teaser and then went directly to the site. We've also just started rolling out physical Etsy Gift Cards at more than 20,000 stores in the U.S., including major pharmacies and retailers. Starting today, U.S. consumers can also purchase and ship physical cards directly from Etsy.com, another way to help people give the perfect gift as we head into the holidays. Gift cards represent less than 1% of our GMS, compared to industry estimates of a few% of GMS for pure specialty retailers, so we see significant opportunity here. And naturally, gifting takes center stage in our holiday marketing this season, with an amazing lineup of creative content on-site and off. Turning to our house of brands, Depop has been a stellar top-line performer, with GMS growth accelerating on a sequential basis. In July, the marketplace removed U.S. selling fees and introduced a small buyer marketplace fee following their U.K. model. This change has made Depop more appealing to sellers, increasing listings and giving buyers a wider selection. Since launch, U.S. listing growth has accelerated by 26 percentage points. In August, Depop rolled out its biggest-ever U.S. marketing campaign, amplifying the no-selling fees proposition to more than 70 million people, building on its position of strength as a market share gainer in U.S. resale. On Reverb, used music gear sales growth in the U.S. continues to outpace new gear sales, and outlet and exclusive music gear is seeing double-digit year-over-year growth. In August, Reverb partnered with Fender, one of the world's leading guitar manufacturers, to launch Fender Certified Pre-Owned on Reverb, helping musicians access affordable pre-owned music gear directly from a trusted brand. Reverb continued to focus on operational efficiencies to drive profitability and value-added services for its community. In closing, I'm extremely proud of the progress we've made so far this year to make Etsy even more differentiated. Our right to win is more important than ever as we work to restart our long-term growth flywheel by shifting our energy towards cohesive, engaging experiences. While the rest of the world is obsessed with discounts and promotions, we're obsessed with making our customer experience even better, with making Etsy even more Etsy. In doing so, we make good on our promise to keep commerce human. While the tide is out right now for discretionary products, we're hard at work ensuring our boat is large and strong, ready to sail even further and faster as the tide comes in. Thanks, Josh, and thank you for joining our call. My commentary today will cover consolidated financial results, key drivers of performance, and Etsy marketplace standalone results where appropriate. As a reminder, we divested Elo7 on 10th August, 2023, so please take that into consideration when you compare year-over-year consolidated results. Etsy's third quarter 2024 consolidated GMS was $2.9 billion, down approximately 4.1% year-over-year with a 30 basis points FX tailwind. Etsy marketplace GMS was down 6% year-over-year. Strong Depop performance contributed a nice benefit to consolidated GMS as they delivered excellent top-line growth in the U.S. and also performed well in Australia. Third quarter consolidated revenue increased by 4.1% year-over-year to $662 million, and adjusted EBITDA was $184 million, representing a very healthy 27.7% margin, down 90 basis points year-over-year and ahead of our guidance. We gained leverage year-over-year on employee costs and cost of revenue, which was offset by a higher level of consolidated marketing spend this quarter. Note that Elo7's divestiture resulted in a small headwind to GMS and revenue growth in the quarter, but was modestly accretive to our consolidated adjusted EBITDA margin. Digging into the consolidated revenue growth, marketplace revenue increased 3.3% year-over-year, primarily driven by Payments fee revenue. We continue to drive Etsy Payments expansion with penetration of our payments platform now at about 99% of Etsy marketplace GMS, compared to 93% in the corresponding prior year period. Our new seller setup fee and Offsite Ads fees also contributed to marketplace revenue expansion. In addition, an increase in GMS and resulting transaction fee revenue for the Depop marketplace was a tailwind to our consolidated performance. The growth in consolidated services revenue was even faster at 6%. For the core Etsy marketplace, ads revenue performance accelerated on a year-over-year and sequential basis. The result of significant strides made in optimizing how we bid on behalf of our sellers, which resulted in better balancing seller ad value across seller segments, all while maintaining consistent seller ROAS. We also incorporated more features and multimodal embeddings into our ranking models, capturing listing image representations, which led to an improvement in ads conversion rates. All in all, as you can see in the chart on the right, our consolidated Q3 2024 take rate improved to 22.7%, above our guidance of approximately 22% and 180 basis points above the 20.9% reported in the same period last year. This strong year-over-year performance is a great demonstration of how we have been able to drive value for our sellers and improve buyer experiences while also delivering more revenue and a higher take rate for Etsy in a truly win-win manner. We are proud that Etsy has been able to invest with discipline in bold initiatives, Josh described, while also managing our spend during a challenging macro and economic time for our core Etsy marketplace. For example, we continue to drive leverage within consolidated product development spend, which decreased approximately 6% year-over-year to $107 million during the third quarter, primarily due to decreased employee compensation expense connected with our 2023 workforce reductions. You can see from the chart on the right that revenue per headcount for the Etsy marketplace continues to grow on a year-over-year basis and remains well above many of our peers, even those of significantly larger size and scale. Third quarter, consolidated marketing spend increased 22% year-over-year to $197 million. In addition to increases in Etsy marketplace performance marketing spend, Depop had a large step up in its spend versus last year in support of its U.S. fee change announcement. As we highlighted on our last call, we also expanded mid-funnel and newer performance channels, particularly within paid social, which increased meaningfully, as you can see from the chart in the lower right portion of this slide. We have been increasing our paid social spend throughout the year as we test and learn, but it is not yet fully matured and optimized. This investment is well aligned with our overall push into discovery and inspiration, solving for our buyers' more generalized needs, such as the recent addition of a new baby in your family, rather than helping you find a specific personalized Onesie. Paid social is having a positive impact on our buyer reactivation, which is beneficial since a reactivated buyer spends 40% more with us in the next 12 months than a new buyer. Consolidated brand spend increased 21% year-over-year, also connected to Depop's higher level of spend. As previewed on our last call, Q3 brand spend also includes the creative costs we incurred for our Etsy seller-focused campaign. Moving to Etsy marketplace GMS performance and related metrics, we had a year-over-year decline in our top categories, and GMS was down in our U.S. domestic-only trade route as well as non-U.S. trade routes. We did see some modest growth in our international non-domestic trade route as well as U.S. imports. Digging into this performance, there are 3 primary factors at play. First, overall macro conditions, which influence consumers' budgets, continue to weigh on the wallet share we are able to win. As you can see from this chart, the percentage of U.S. personal consumption going to discretionary spend continues to decline versus the COVID peaks. Second, there were a few discrete mindshare events during the quarter, which we believe created additional headwinds for our business. These included general elections in the U.K. and France, a host of major sporting events, including European football, the highly popular Olympics, events tied to U.S. politics and the general election, and Hurricane Helene at the end of September. And third, as Josh described, we've really focused on shoring up the core Etsy marketplace, leaning into item quality and making sure we have a great cohesive experience, especially in the app. These are pretty large shifts in how we run the company, and they're putting some pressure on in-session conversion and creating some modest headwinds to GMS. That said, we are pleased to have been able to drive some pockets of GMS strength in the quarter. Our focus on making Etsy the destination for gifting again resulted in sitewide GMS growth, albeit not as strong as experienced in the second quarter, which featured very important calendar-driven holiday gifting occasions such as Mother's Day and Father's Day. To help fill in such gaps, we will continue to focus on driving more evergreen gift purchases such as for birthdays and anniversaries. We've also seen personalized and customized items continuing to outpace sitewide performance up 4% year-over-year, reinforcing one way that our brand can resonate with buyers. And in the U.S., back-to-school merchandise GMS grew 5% year-over-year. We have continued to see resilience in our Etsy marketplace active buyer count, which was approximately 91.2 million, ticking down only slightly on a year-over-year basis. We reactivated over 6 million lapse buyers in the quarter, up close to 6% year-over-year. We added over 5 million new buyers in the quarter, down around 13% year-over-year. Habitual buyers decreased by about 5% year-over-year. However, our retention rate of habitual buyers was slightly better on a year-over-year basis. Habitual buyers remain a very healthy 43% of our GMS. Lastly, GMS per active buyer was down 3.4% in the quarter to $123. In keeping with trends we have been seeing for quite a while, the year-over-year decline in GMS per active buyer is predominantly due to buyers visiting us a bit less frequently and spending less per purchase day. I want to take a moment to talk about the Etsy seller community. Our heart goes out to those in regions hard hit by recent hurricanes. As is our normal course, we have adjusted their billing schedules, offered disaster grants to sellers in need, extended Star Seller status as relevant, and proactively provided guidance around managing or taking a break from their businesses. Our hope is that these steps provide impacted sellers with the flexibility they need to focus on their health and safety. As you may have noticed in our press release, the active seller count for the Etsy marketplace was 6.2 million, down 8.5% versus the prior year and down sequentially. We have long asserted that when we lose a seller, we rarely lose a sale given the large amount of substitution available. In fact, we believe that the decline in our active seller count is actually a helpful byproduct of our focus on quality and stepped-up enforcement actions, including our new seller setup fee and other actions we are taking to ensure that the right sellers, those with the skill and will to succeed on Etsy, can win. To that point, we're very pleased to see a year-over-year increase in the percentage of sellers who made a sale during the third quarter, a metric which has been moving in the right direction this year. And we also see strong pockets of seller growth, such as in Ukraine and other emerging markets. As of September 30th, we had $1.2 billion in cash, cash equivalents, and short and long-term investments. During the third quarter, we repurchased a total of $156 million in stock under our $1 billion June 2023 board-authorized repurchase program, of which approximately $260 million remained available as of September 30th. Our capital-light business model allowed us to deliver strong free cash flow this quarter of approximately $204 million. We also continued to convert approximately 90% of Adjusted EBITDA to free cash flow on a trailing 12-month basis. Related, our net income was impacted by a non-cash foreign currency loss compared to a non-cash foreign currency gain in the prior year. In addition, earlier today, our board of directors approved a new stock repurchase program authorizing Etsy to repurchase up to an additional $1 billion of our common stock. We see significant value in our shares, and we and our board have confidence in the growth plans we have underway. Given that we have $1.2 billion in cash and generate such strong free cash flow, this new authorization will give us the flexibility to potentially go beyond our already high level of share repurchase. And it's worth noting that these repurchases do not come at the expense of important investments in our business. Turning to our outlook, our guidance is that 4th quarter consolidated GMS will decline in a low- to mid-single-digit% range on a year-over-year basis. We're confident that Etsy is the best we've ever been for holiday gifting, which gives us reason for optimism. We also know there is a lot of pressure on the consumer in our core markets, and they appear to be prioritizing deep discounts and value within tight budgets. Etsy will present gifting front and center, on-site and off, and we will be running cyber sales and highlighting our sellers' great value and highly differentiated product. With that said, our brand stands for special and unique rather than cheap and deals. One other unknown is how the U.S. general election may impact the consumer psyche or holiday spending trends. Q4 2024 consolidated take rate is currently estimated to be 22.3%, up versus the prior year result, but a slight step down from Q3 2024, with our normal sequential seasonal trend coming into play with higher levels of organic GMS in the 4th quarter relative to revenue we earned from Etsy Ads in the quarter. Consolidated adjusted EBITDA margin will be in the range of 28%-29 ahead of the Q3 2024 and prior year Q4 performance. The sequential improvement in Adjusted EBITDA can be attributed to seasonal volume and cost efficiencies, as well as Depop scaling back on performance and brand marketing spend after the higher-than-normal Q3 spend tied to the buyer fee campaign. For the full year, using the midpoint of this guidance, we will have withstood a host of stiff macro headwinds, with consolidated GMS down roughly in the low single digits, still driving very respectable growth in revenue, all as we created fair value and fair exchange for our sellers, made critical investments that we believe can reignite future growth, and delivered strong Adjusted EBITDA profitability, at least as good, if not better, than our commitment for the year. While we're not satisfied with the lack of GMS expansion, we take comfort that if this is what our business can deliver in an extremely challenging period, the future for Etsy will be bright indeed. Thank you all for your time today. I will now turn the call over to the operator to take your questions. Thank you, Rachel. At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you will hear your name called and receive a message on your screen asking you to be promoted to panelist. Please accept, wait a moment, and once you have been promoted, you may unmute your video and audio and ask your question. As a reminder, we are allowing analysts one question today. We will wait one moment to allow the queue to form. Our first question will come from Nick Jones from JMP Securities. Great. Thanks for taking the question. Could you speak to kind of the leverage you're driving in product development? I think you've pointed out in the past that you're able to do a lot with kind of a relatively lower headcount to other platforms. How do you kind of rank order what you want to invest in, particularly as you kind of eye accelerating GMS growth over time? And should we be thinking about a potential investment cycle at some point as you kind of get your arms around a lot of this new technology and potentially maybe a bigger lift to move the needle more? Thanks. Yeah, thanks, Nick. Great question. And we go through a process at the beginning of the year where we say, "What are the—" well, at the end of the year, we're going through it right now for next year. What are the customer experiences we really want to uplift that we think are going to translate into more lifetime value, more GMS, and more revenue? And then we have a top-down, bottoms-up approach to challenge the team with, "What are your best ideas?" And based on the quality of the ideas, we decide how many squads to dedicate to those tasks. As you know, Nick, the unit of work at Etsy is a squad. It's roughly 8- 10 people. And so those atomic units can operate really quickly. The velocity is usually really good. So we empower them to, "Hey, you've got to improve this customer experience by this much in those times." You're right that we are seeing some leverage in product development this year based on the reduction in force that we did last year. We've always believed we've never been a growth-at-all-cost company. We've always believed that scarcity breeds focus, and that focus is a great thing. We also care a lot about the productivity of the team and measuring the productivity of the team. This year, as you know, we've decided through the course of the year to invest in some more foundational experiences that we think are really critical to setting up ourselves for growth in the years to come that are not as focused on getting to grinding out incremental GMS in the quarter. Some examples are adding a Q-score to Search. That's a really foundational thing that we think is going to drive tremendous improvements in the marketplace and leading to a lot more GMS growth in the future as sellers know what they can do to earn a higher spot in Search, and we do a better job pairing customers not just with products they buy, with products they love. So we think that's a really foundational investment, but it took months and months of work from multiple squads to be able to do that and have it be GMS-neutral. In normal times or in other times, we've really, getting to neutral has not been the goal. Everything has been about incremental. I think on this, a lot of the foundational work we've done this year, and I think we've made a lot of progress on that, we're well positioned next year to have more of the work from our existing squads be additive. The other thing I will say is we are doing some incremental hiring. We continue to be very cautious about that, but for example, making the app the premier experience on Etsy, we decided we don't have enough app engineers. So we are hiring more app engineers. The other place we're seeing tremendous value, and I think there's so much more value creation for us is machine learning. And so we have opened up more reqs to hire some more people in machine learning. So we're always working to strike the right balance. We've always been disciplined about our investments, but we'll continue to lean in where we think it's going to drive real growth. Just add, being disciplined about investments means trying to make sure we're optimized in terms of a cost of a full-time employee. So we've talked about before that we have development centers that are outside of the U.S. where the cost per FTE is not the same rate that we're paying in the U.S. And we try to load balance, not only open up the aperture where we can get the talent in places like Mexico City and in Dublin in addition to the United States, but also the talent markets have different compensation levels there. So we get to lower the effective cost per FTE. At the same time, we're always looking at what's the right market price for the level of talent that we need. And we do that assessment every single year, and we make adjustments as needed, up or down, to be able to make sure that we're paying competitively. Great. Thanks. Thanks, Nick. Operator. Our next question will come from Anna Andreeva from Piper. Please go ahead. Great. Thanks so much, and great to see you guys. Good to hear about the progress in Search and profitability. A couple from us, just curious, any color that you can share what you're seeing in the business quarter to date and what's implied at the low end versus the high end of the GMS guide for the 4th quarter? If I'm not mistaken, last year, October started off tougher, but then the business improved in November and December. But then you have the Gift Mode that's incremental, which should be helpful. And then just as a follow-up, could you elaborate on the physical Etsy Gift Card launch this quarter? Just sounds pretty interesting. Curious how you plan to be marketing that and if any of that upside implied in the guide. Thank you. Gift Card. Well, we're not going to give quarter to date. How's October gone so far? But I will say that the holiday season this year is later than normal and shorter than normal. So we think November and December, and particularly mid to late November and December, are going to loom particularly large in the quarter. It's always the case that they do, but probably even more so in this quarter. Obviously, we have an election going on in the United States that's an incredibly distracting mind share event where lots of people aren't necessarily thinking about shopping in the early part of November. So we'll see how that goes. Of course, we consider that in the guide, but it's hard to know exactly how that will affect things. We certainly do consider, though, that we have an election coming up and that we have a shorter Christmas. In terms of the gift card, it is baked into the guide. I think it's, over time, going to be really exciting for Etsy. We are marketing it through a third party that has deep relationships with the retailers. But building awareness and mind share for retailers, I do think takes time. So we think that, as we said, gift cards for us are maybe 1% of GMS, maybe even a little bit less. And for many of our peers, it's 2 or 3 percentage points. So we think there could be real upside. I doubt it happens all at once. I bet that's something that builds over a little bit of time. And I just want to quickly remind you about the accounting for that because we don't get to recognize a revenue from a gift card until the gift card is redeemed. So in some cases, people will get the gift card and redeem immediately. In some cases, it sits in the desk drawer somewhere, and it takes time, and then we're recognizing the breakage over some period of time. So it's not a straight sales of gift card to hit the P&L directly. The other thing I'll say about gift cards is that what we do find is people who redeem a gift card tend to buy more than the value of the gift card. We think that's a great opportunity to bring new people to Etsy. We think it's a great opportunity to also gain more frequency. We also have started testing refund to credit. And on the rare occasion, someone's not happy and they get a refund. Sometimes they're happy to get a refund to credit. And that actually drives a lot of incremental purchase behavior too. So I think there's gift cards and generally stored value is a really interesting place for Etsy to be investing in the years to come. I just want to add one more point to the shorter shopping season. We do have our Gift Teaser in our Gift Mode. So I think that really helps a lot where you can actually buy something and still get it to people on time for Christmas because they'll get the Gift Teaser even if they're not getting the gift. So we're excited about that. Great. Next question. Thanks, Anna. Our next question comes from Scott Devitt from Wedbush. Please go ahead. Hey, everyone. Hope you're doing well. I had just one question. I think part of the growth in the business recovering seems to be related to just the categories at which Etsy sellers do well in. And so that will take care of itself over time. And then you have these initiatives that you're pushing that when that does happen can be more stimulative than maybe they are right now. And you talk a bit about gifting Search and shipping, loyalty, and app. If you were to look at those 5 categories, if those are the 5 areas where you're kind of investing to enhance consumer experience in different ways, what would be the 1 or 2 that really stand out that you think could move the needle? One I'm most excited. Normally, don't pick amongst your kids and hedge, but honestly, the thing I'm most excited about is consideration, and the way I'm most excited to build consideration is on the site in the experience itself. I think we have the opportunity to show people a lot more to inspire new shopping missions in addition to fulfilling the shopping mission that they're already on. I think that the advances we're seeing in GenAI are really, really helpful. For example, it is very common for someone to type in wedding cake topper, or cake topper would be a very common search term on Etsy, cake topper, and GenAI suddenly can understand, "Aha, cake topper is related to wedding. This person is probably in the process of planning a wedding. That's an interesting context for us to know. And here's 5 other popular things that people planning weddings would also want." And so freeing up screen real estate to not just show people cake toppers, but say, "By the way, did you realize that we also can do table settings, tablescapes, stationery, bridesmaids' gifts?" And GenAI is even good at, "If you're at the stage of the wedding where you're buying the cake topper, what are the other things at that stage of wedding planning that are particularly relevant?" And I think that the opportunity to just spark new shopping missions in addition to the existing missions that you're on, I think, is a huge opportunity. It is requiring us to refactor our use of screen real estate so that we can make the real estate available to do that. And so, for example, this holiday season, on the app, we said that on the homepage, we've got a third more screen real estate leaning into discovery and away from what we call Pick Up the Thread or recommendations based on the thing you most recently did. It took a lot of work to figure out how to consolidate that Pick Up the Thread without a meaningful loss of conversion. It took a fair amount of iteration to get to flat. But now that we've freed up that screen real estate, I'm really excited about how we can learn to use it to drive a lot more shopping missions. And over time, we've talked for a long time about consideration and having people think of us for more things. The place to really make that work is on the site. And I think we've done a lot of foundational work this year that I'm really excited about. Thanks, Scott. Great. Next one. Our next question will come from Nikhil Devnani from Bernstein. Please go ahead. Hey, guys. Thanks for taking the question. Josh, it's encouraging to hear the incremental hiring plans. When you step back, big picture, how do you think about the right margin level for Etsy here? Is there room to be more aggressive, even if it means trading off a bit of margin? I feel like we've seen you lean into Depop, and it seems like it's working quite well even in this macro backdrop. Not that you need to deploy the exact same playbook on seller fees there, but I'm just wondering if that experience is the right inspiration to rethink the margin structure for Etsy and the level of investment intensity for Etsy if it means the trade-off is a better growth profile and a bigger pool of profit dollars down the road? Thank you. Yeah. Yeah. We're trying to grow the market cap of the business and thinking about what is going to grow the market cap of the business. And obviously, we care about profitability and free cash flow, but we care a lot about growth. And this year, we've been investing in a fair number of foundational things that I really believe have been incredibly powerful to position us for future growth. I would like to see those things start to translate into the growth we expect to see. As we see proof of that, leaning more than it may well be that leaning more into hiring could make sense. You know us. We are very data-driven, and we like to see proof of ROI, at least green shoots, and then invest behind that. I think we're taking a very prudent approach. We do have a team that is capable of investing in a fair number of things at the same time, but we think a good number, not too many, not too few. We are going to continue to try to strike the right balance here. A few quarters ago, people were worried that maybe we were investing too much. Now, people are worried that maybe we're not investing enough, and so maybe we're just the right place. Maybe we're Goldilocks. Yeah. There was another question within the quiz question, which was about Depop and how we think about that and the seller fees there, and if that had any relevance. Yeah. I mean, I would like to just do a shout-out for Depop. I mean, if you look at our guide baked within that, is Depop growing more than 30% year-over-year? GMS at Depop growing more than 30% year-over-year. I will say the U.S. within that for Depop growing substantially faster than 30% year-over-year. I think it's really exciting what's going on there, and I think it's a testament to the leadership that that team has been providing. I think it is also some validation of the portfolio strategy we've invested in. It's been more popular at some times than others with our investors. But gaining exposure to resale, apparel resale, which we've always thought is a great sector, we're seeing some benefits from that now. And lastly, what we see in the environment right now is it's just exceptionally promotionally driven. And Depop is an opportunity to buy brand-name clothing at a relatively deep discount because you're buying them secondhand from someone else. And those kinds of products are the products that we think are really winning in this market where people are so focused on promotions and discounting. So we're really pleased with the work that team is doing and the performance of Depop. And I think it plays into the portfolio that is the Etsy House of Brands. Okay. Great. Next question. Our next question will come from Maria Rips with Canaccord. Please go ahead. Great. Thanks so much for taking my questions. As you approach your first holiday season with Gift Mode, what are your expectations for the offering? And how are you measuring success here? Is it in terms of GMS, in terms of percent of GMS, in terms of number of active buyers? And can you maybe expand a little bit more on what you're doing on the marketing front to drive awareness of this offering? Sure. We are measuring it based on absolute GMS. We're pleased that in the third quarter, gifting GMS grew substantially faster than the overall marketplace as it did also in the second quarter. We think that's some validation that the investments we've been making are showing real benefit. We've launched some great product features that we think set us up to have the best gifting experience this year. The Gift Finder has many times more, 3X more gift ideas, 5,000 different gift ideas. The adoption of wish lists and the Gift Teaser are great, by the way. At a time when the shopping season is shorter, the Gift Teaser is a great thing for people who are giving gifts more last minute to still have the teaser arrive on time. So we think the investments we're making are great. And you will hear us talk in all of our marketing channels a lot about gifting in the 4th quarter. We have a great above-the-line campaign that launches in just a couple of days that really is focused on seeing someone and your gift being an expression of really seeing that person in a way that we think is super cool and we think you're going to like. Maria, there's one part of your question I just want to clarify. You mentioned active buyers in gift mode, and I think we've talked about that a little bit in the past. We don't track in gift mode if you're a buyer in gift mode. We're just tracking gifting GMS because you can start out in gift mode and then you can actually buy a gift somewhere else on the site. So I just wanted to clarify that. Yeah. Our best measure for tracking it is if they select this as a gift for somebody else. So engaging with the gift mode is just a part of the funnel, which leads them to other items that they can do and purchase. Exactly. Okay. Cool. Next question. Our next question will come from Naved Khan with B. Riley Securities. Please go ahead. Hey, it's Ryan on for Navid. Thanks for taking the question. So I wanted to ask on Etsy Insider and the seller reaction to Etsy Insider and then also initial takeaways, maybe seasonal versus monthly subscription numbers or anything that you can kind of give clarity on. So thanks. But we're very early in. In fact, I think we're in spring training. We're not in the first inning. We're in spring training yet. We are in the earliest of early days. It's, I think, been live for 6 weeks in a beta that by design was only a limited population of people have been invited to. So we're really trying to learn what happens when shipping price goes away, what's the propensity to want to subscribe to a loyalty program, what are the kinds of value props that make people want to subscribe, what do the economics of that look like. So we are intentionally limiting the population and the uptake so we can have a sandbox, if you will, to play with that. And so we're pleased with how it's launched. I think it's pretty beautiful, pretty well-presented. And the sellers are mostly concerned that we don't cause their economics to get worse. So when we did our seller research and our buyer research, they both said, "We'd love free shipping as long as it doesn't mean that sellers have to have lower margins." So for the buyers, interestingly, and this is one of the wonderful things about Etsy that I think is so different than anywhere else. When we said to buyers, "Do you want free shipping on it? Or what do you want out of a loyalty program?" They said, "I want free shipping. That's the thing I want. But I don't want the sellers to have to pay for it." And that's cool. I don't think people are thinking that on eBay or Amazon or other marketplaces. I think it speaks to the real connection between the buyer and the seller. And the care of the buyer and the seller. So the seller reaction, I think, has been generally positive. And I think it's early days. This is something when we look at loyalty programs that have succeeded; it typically takes a while to work through and figure it out. And they evolve quite a bit from start to the point that they really get scaled. That's what I would expect for us as well. Thank you. Next question. Our next question will come from Robert Coolbrith with Evercore ISI. Please go ahead. Hi. Good afternoon. Thanks for taking our questions. Josh, I think you just confirmed it earlier, but wanted to check if the Q-score has remained conversion and GMS neutral as you've scaled that up. And then in a similar vein, any additional color on the scale of the GMS headwind from the changes in mobile app and web? Would you expect that to be a consistent headwind into Q4, or do you perhaps refocus a bit on conversion versus downloads and longer-term consideration in Q4? Thank you. Yeah, so we were able to get the Q-score when we launched it in search to be roughly neutral to conversion rate. We have been putting more friction in the mobile web experience to drive people to app. I said in the prerecorded portion that, for example, an interstitial on the signed-out listing page is driving, we think, an incremental 3 million annualized downloads. There's obviously some cost to conversion rate, but it's not that high. We think it's very appropriate and ROI positive to do that. So I think the headwinds from the changes that we've made are actually quite modest. The bigger cost, candidly, is opportunity cost. Had we decided to keep running the business the way we have in prior years and just grind out GMS wins, we probably could have had several percentage points less decline in GMS this year. But towards what end? I don't think that that would have set the business up in the strongest possible way to differentiate itself and grow. I think the things we're doing to really lean into what makes Etsy different, what makes it special, to highlight the quality, the uniqueness of Etsy, to show more diversity, to spark, to create screen real estate, to spark more new missions instead of just leading into the mission you arrived already knowing. I think the investments we're making in that are a great investment to set us up better for growth in future quarters. So I think it is that opportunity cost that is the bigger piece of the cost we've felt this year. Great. All right. Next question. Our next question will come from Laura Champine from Loop. Please go ahead. Laura, are you on mute? Laura, your line is open. Feel free to unmute. Okay. We can return. We'll take our next question from Marvin Fong from BTIG. You be tough. All right. Please go ahead, Marvin. Well, thanks for taking my questions. Really appreciate it. Just 2 quick ones for me. So you gave the category numbers, which always appreciate that. I mean, I know you just gave us some full numbers here, but maybe there was, as I calculated, maybe some small marginal improvement in maybe the home category. But just as a broader question, are you seeing anything different among the different categories in terms of sort of the pressure on your business, or am I overreading into that? And then second question, just on the buyback, you guys are generating north of $700 -800 million in free cash flow. So kind of similar to the buyback. What's sort of the appetite here to outrun the free cash flow generation and maybe lever up the balance sheet here? Obviously, you guys have called out that you think the stock is undervalued here. Just any thoughts on how you think about capital structure and deploying the buyback would be great? I'm going to take that last one first and then so we did say in the call that the board approved the additional $1 billion, and that does give us the flexibility to lean more into buying back even above the current levels, which we've been doing about 90% of our free cash flow return to shareholders. And we can do that. We have the luxury of being able to do that and continue to invest the way we want to in our organic investments. So we feel pleased about that. The balance sheet is levered up. We have 3 outstanding converts, and the first one coming due in the fall of 2026. So we want to be thinking about that. And we don't have to lever up right now to be able to be leaning more into share repurchase. We're doing pretty ample repurchasing, and we have the flexibility to go even beyond what we've been doing currently. It's a pretty great thing about this business that our capital requirements are so low. For many companies, EBITDA still does not translate into free cash flow. For us, it largely does. And so this is a business that generates a lot of free cash flow, has $1.2 billion on the balance sheet, which we think is more than we need. So it gives us the flexibility. And on the categories, candidly, not a lot interesting, if I'm being very direct. Not a lot interesting. The one insight, and I think I might have even talked about this in the last call, that we continue to see is where there are pockets of real value. So for example, in jewelry, we are growing in what we call democratizing jewelry. So think like an engagement ring that you're giving to your partner that might cost between one and $500. On Etsy, you can find real gold handmade by a goldsmith just for you at a price that's really compelling relative to what you may pay at the mall. And so we're winning in that. Jewelry under $20 is under more pressure. You've got to pay shipping on Etsy for something under $20 where you might be able to go to the mall and buy a $15 something without needing to pay that. So we are seeing pockets within every category. And value right now in this market is very important. Cool. I think we'll get one more in. Our next question comes from Shweta Khajuria from Wolfe Research. That's in, Shweta. Hey, Shweta. Hey, everyone. This is Brian Crasco on for Shweta. Sorry about that. I think we're all missing Shweta. Really nice to see the upside in the take rate, both in Q3 and the guide for Q4. Just was curious, if there's any incremental drivers beyond advertising that you called out in the letter, payments as well, anything we should consider on the seller side, either with the Quality Score or other initiatives, and how to think about this into 2025? Thank you for taking the question. Yeah. Thanks for the take rate question. What I'm really excited about is we made significant gains in take rate this year. If you look at it through the year, it's like 130 basis points of take rate. We did that without impacting our sellers' margins. I think there's often a view that somehow if Etsy's take rate goes up, it must come at the expense of sellers. That's not true. Certainly not this year. We saw payments coverage go up. That means instead of paying some other third-party payments provider, they're paying Etsy instead and having a better experience. Our buyers and sellers are both safer when it runs through Etsy Payments, and they're not paying more for that. Etsy Ads just got better. We're getting better and better at picking the right ad that a buyer is likely to buy. And so our sellers' ROAS stayed roughly consistent, but Etsy earned more take rate. That's a win-win for everyone because it allows Etsy to go back and invest more in the business without sellers' margins on average being negatively impacted. The seller onboarding fee is a small component of that as well. What we're seeing is that it's doing a good job stopping bad actors, and it's not stopping sellers that were likely to succeed. So the amount of sales from new sellers has not declined in any meaningful way as a result of that. So it feels like that's been a very healthy amount of friction to add to the marketplace. And then OSA is the other component of it. So we feel like the take rate gains we've made this year are healthy. We think they're sustainable. And we feel good about that. And we think there continues to be opportunity for a fair exchange of value and for Etsy to continue to get better at offering services that add value to our sellers, help them grow their business without coming at expense to their margin. And I'll just add real quickly that the payment schemes we made in 2024 will annualize that in 2025. So that because we didn't do them all on the first day of the year. And then OSA, just as a definition, is offsite ads. So when we spend more on our performance marketing, we are able to collect more OSA revenue. Great. We are at time. Operator, I think we're going to call it for the evening. Thank you. Thank you, everybody.