ETSY (ETSY) risk factors, 2025 10-K

Other

1. 01Our quarterly operating results have and may continue to fluctuate, which can cause significant stock price fluctuations
2. 02These events may also impact our sellers’ ability to run their businesses on our marketplaces, which could negatively impact our business and financial performance
3. 03We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause our stock price to decline
4. 04The trustworthiness of our marketplaces and the connections within our communities are important to our success. If we are unable to retain our existing buyers and sellers and activate new ones, our financial performance could decline
5. 05Our business, financial performance, and growth depends on our ability to attract and retain active and engaged communities of buyers and sellers
6. 06We rely on our sellers to provide a fulfilling experience to our buyers
7. 07We track certain operational metrics with internal systems and tools or manual processes and do not independently verify such metrics. Certain of these metrics are subject to inherent challenges in measurement, and any real or perceived inaccuracies may adversely affect our business and reputation
8. 08could be expensive and time-consuming to correct. As we strive to reignite growth in our business, expand internationally, and gain greater public visibility, we may continue to face a higher risk of being targeted by cyber attacks
9. 09Our software is highly complex and may contain undetected errors
10. 10We rely on Google Cloud for a substantial portion of the computing, storage, data processing, networking, and other services for the Etsy Marketplace. A significant disruption of or interference with our use of Google Cloud would negatively impact our operations and seriously harm our business
11. 11Our business depends on third-party services and technology that we utilize to maintain and scale the technology underlying our platforms and our business operations
12. 12Our business depends on access to third-party services, platforms, and infrastructure that are critical to the successful operation of our business
13. 13Our payments systems have both operational and compliance risks, including in-house execution risk and dependency on third-party providers
14. 14Our payments systems are subject to a complex landscape of evolving laws, regulations, rules, and standards
15. 15The global scope of our business subjects us to risks associated with operations abroad
16. 16Our ability to recruit and retain a talented and broadly diverse group of employees and retain key employees is important to our success. Significant attrition or turnover could impact our ability to grow our business
17. 17work environment, it may adversely affect our ability to recruit and retain employees. If we continue to operate with a significant portion of our employees located outside of our offices, and we are unable to adapt to new hybrid work modes, it could negatively impact our company culture
18. 18We may be unable to adequately protect our intellectual property
19. 19We may experience fluctuations in our tax obligations and effective tax rate
20. 20The terms of our debt instruments may restrict our ability to pursue our business strategies
21. 21Our insurance may not cover or mitigate all the risks facing our business
22. 22Finally, while some sellers on our platforms may be insured for some or all of these risks, many small businesses do not carry any or sufficient insurance, and, even if a seller is insured, the insurance may not cover the relevant loss
23. 23We face intense competition and may not be able to compete effectively
24. 24We also compete for media placements, including with retailers competing for the attention of our buyers, and increased competition can impact the cost we pay for media placements, including in dynamic auctions
25. 25Our marketing efforts to help grow our business may not be effective
26. 26social, and operating system providers – have and may continue to impact the scope and effectiveness of marketing and advertising services generally, including those used on our platforms
27. 27Enforcement of our marketplace policies may negatively impact our brands, reputation, and/or our financial performance
28. 28If we are unable to successfully execute on our business strategy or if our strategy proves to be ineffective, our business, financial performance, and growth could be adversely affected
29. 29If we are not able to keep pace with technological changes and enhance our current offerings and develop new offerings to respond to the changing needs of sellers and buyers, our business, financial performance, and growth may be harmed
30. 30New offerings may not drive GMS or revenue growth, may require substantial investment and planning, and may bring us more directly into competition with companies that are better established or have greater resources than we do
31. 31Continuing to expand our operations outside of the United States is part of our strategy, and our business could be harmed if our expansion efforts do not succeed
32. 32We have incurred impairment charges for our goodwill and other long-lived tangible and intangible assets, and may incur further impairment charges in the future, which would negatively impact our operating results
33. 33We may engage in acquisitions, dispositions, or strategic partnerships which may divert management’s attention and/or prove to be unsuccessful
34. 34We are subject to risks related to our environmental, social, and governance activities and disclosures
35. 35We may need additional capital, which may not be available to us on acceptable terms or at all
36. 36We have a significant amount of debt and may incur additional debt in the future. We may not have sufficient cash flow from our business to pay our substantial debt when due
37. 37quarter ended December 31, 2024, holders of the Notes are not eligible to convert their Notes during the first quarter of 2025. See Part II, Item 8, “Notes to Consolidated Financial Statements—”Note 12—Debt” for more information on the Notes

Regulatory, Compliance, and Legal Risks

1. 38Failure to deal effectively with fraud or other illegal activity could harm our business
2. 39Our brands may be harmed if third parties or members of our communities use or attempt to use our marketplaces as part of their illegal or unethical business practices
3. 40We regularly receive and expect to continue receiving claims alleging that items listed by sellers on our marketplaces are counterfeit, infringing, unlawful, harmful, or otherwise violate our policies
4. 41We are regularly involved in litigation, arbitration, and regulatory matters that are expensive and time-consuming and that may require changes to our strategy, the features of our platforms, and/or how our business operates
5. 42Privacy, data protection, and information security regulations are complex and rapidly evolving areas that have and may adversely affect our and our sellers’ business
6. 43implement and maintain reasonable security procedures and practices) and impose significant obligations on controllers and processors of consumer and employee data
7. 44Our business and our sellers and buyers may be subject to evolving sales and other tax regimes in various jurisdictions, which may harm our business
8. 45Increased regulation of technology companies, even if focused on large, widely adopted platforms, may nevertheless impact smaller platforms and small businesses, including us and our sellers
9. 46We may be subject to intellectual property claims, which, even if meritless, could be extremely costly to defend, damage our brands, require us to pay significant damages, and limit our ability to use certain technologies in the future
10. 47We are subject to the terms of open source licenses because our platforms incorporate, and we contribute to, certain open source software, potentially impairing our ability to adequately protect our intellectual property
11. 48If we are unable to maintain effective internal controls over financial reporting, investors may lose confidence in the accuracy of our financial reports

Other Risks

1. 49The price of our common stock has been and will likely continue to be volatile, and declines in the price of common stock could subject us to litigation
2. 50Future sales and issuances of our common stock or rights to purchase common stock, including upon conversion of our convertible notes, could result in additional dilution to our stockholders and could cause the price of our common stock to decline
3. 51Our stock repurchases are discretionary and, even if effected, they may not achieve the desired objectives
4. 52Our business could be negatively affected as a result of actions of activist stockholders
5. 53Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, could limit attempts to make changes in our management and could depress the price of our common stock