Etsy to receive Elo7, Brazil-primarily based marketplace for exceptional, handmade goods

BROOKLYN, N.Y., June 28, 2021 /PRNewswire/ — Etsy, Inc. (NASDAQ: ETSY), which operates two-sided online marketplaces that join tens of millions of passionate and imaginative purchasers and sellers close to the planet, has signed a definitive arrangement to obtain Elo7, a privately held marketplace for exceptional, handmade products, ranked as a top rated 10 ecommerce site in Brazil. Etsy will receive the business for US$217 million in funds, topic to specific changes for Elo7’s doing the job cash, transaction expenditures, funds and indebtedness, and reduced by the benefit of specific fairness awards of Etsy to be granted to Elo7 staff in link with the transaction. Pursuing the closing of the transaction, Elo7 will proceed to be headquartered in Sāo Paulo, Brazil and operate as a standalone market operate by its existing leadership staff.

Thought of a chief in ‘custom and built-to-order’ goods in Brazil with powerful community manufacturer recognition, the Elo7 market connects close to 1.9 million lively prospective buyers with approximately 56,000 energetic sellers and presently has approximately 8 million goods for sale, the bulk of which are designed to buy. Elo7’s marketplace contains merchandise from more than 40 retail groups, with extra than 50% of gross items income (GMS) from “exclusive event and lifestyle instant” types these kinds of as wedding ceremony, child, residence decor, and kid’s events.

Josh Silverman, Etsy, Inc. CEO, commented, “Elo7 is the ‘Etsy of Brazil,’ with a reason and company design equivalent to our personal. Pursuing our recent agreement to purchase Depop, we are psyched to convey a further unique marketplace into the Etsy spouse and children. This transaction will set up a foothold for us in Latin The united states, an underpenetrated ecommerce area the place Etsy at the moment does not have a significant buyer base. We search forward to welcoming Elo7’s talented leadership workforce and workforce to the Etsy household.”

Persuasive Strategic Rationale

Etsy Market M&A Criteria

Elo7 is an Ideal Fit

Aligns with Etsy’s mission, strategy and values

Elo7 shares Etsy’s mission to ‘Keep Commerce
Human’ with a two-sided marketplace strategy
targeted on resourceful microentrepreneurs.

Expands Etsy’s TAM in a massive and quickly-increasing
sector, classification or geography

Elo7 is expected to provide Etsy with a nearby brand name
in the quick increasing Latin American sector, wherever
ecommerce penetration is <10% and Brazil is the
largest ecommerce market. The Latin American
ecommerce market is projected to reach
approximately $29 billion in 2021, with a 26%
CAGR forecasted through 2024.

Market leadership, with authentic, organic brand

Elo7 is the ‘Etsy of Brazil’ known for handmade,
non commoditized items. We believe Elo7 has
ample room to grow and differentiate itself versus
established ecommerce players.

Shares Etsy’s two-sided marketplace business

Elo7 is a peer-to-peer marketplace with a capital-
light business model and anticipated gross margin
profile similar to Etsy’s.

Well positioned to benefit from Etsy’s expertise to
accelerate growth and value creation

Elo7 is an early stage business that we believe
can leverage Etsy’s proven value creation
roadmap to drive further growth and profitability.

Carlos Curioni, Elo7’s CEO said, “Etsy has always been an inspiration and a reference for us, and we’re excited to continue our growth journey as part of Etsy – a company whose mission and culture so closely match our own. We’re looking forward to leveraging Etsy’s product and marketing expertise to help the Elo7 marketplace, community and team achieve our full potential in Brazil.”

Rachel Glaser, Etsy, Inc. CFO, added, “We’re excited to announce this purchase of Elo7 following our recent announcement of the Depop transaction – two exciting businesses that meet Etsy’s very high bar for use of capital. In addition to job one, which is continuing to drive growth in our core marketplace, we will now focus on integrating Depop and Elo7 into the Etsy family. Reverb, Depop and Elo7 will each continue to be run by their talented and empowered management teams, and we’ll connect key functions across the brands in a way designed to accelerate value creation and make the whole worth more than the sum of its parts.”

Etsy, Inc’s House of Brands Portfolio

Following the close of the acquisition of Elo7 and the recently announced transaction with Depop, Etsy, Inc. will operate four highly differentiated, non-commoditized and loved ecommerce brands: Etsy, Reverb, Depop and Elo7. These businesses all share similar levers of growth to unlock value, including improving search and discovery, building human connections, and making selling and buying easier. The marketplaces will operate independently, while benefiting from shared expertise in product, marketing, technology, and customer support.

Other Transaction Details

In the near term, Elo7’s current run rate for GMS and revenue is expected to be neutral to Etsy’s top-line results and modestly dilutive to adjusted EBITDA margin. The transaction is currently expected to close during the third quarter of 2021, subject to satisfaction of customary closing conditions.

J.P. Morgan Securities LLC served as exclusive financial advisor to Etsy and Deloitte served as due diligence advisors. Fenwick & West LLP and Bronstein, Zilberberg, Chueiri & Potenza Advogados served as legal advisors to Etsy. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP and KLA Advogados served as legal advisors to Elo7.

*Sources and data:
Elo7 marketplace data is as of December 31, 2020 unless otherwise indicated.
Elo7 ranked #6 ecommerce site in Brazil: Conversion E-commerce Report in Brazil, April 2021. Study analyzes traffic of 217 largest sites in Brazil with a total of 15 categories, supported by third party data including SimilarWeb and SEMRush.
Brazil ecommerce size and forecast: Euromonitor, Wall Street research
LATAM ecommerce <10% of retail and forecasted to grow at 26% CAGR through 2025: Euromonitor, Wall Street research

About Etsy

Etsy, Inc. operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world. Our primary marketplace,, is the global destination for unique and creative goods. Buyers come to Etsy to be inspired and delighted by items that are crafted and curated by creative entrepreneurs. For sellers, we offer a range of tools and services that address key business needs. In addition, Etsy, Inc. owns Reverb, a leading global online marketplace dedicated to buying and selling new, used, and vintage musical instruments.

Etsy’s mission is to keep commerce human, and we’re committed to using the power of business to strengthen communities and empower people. Our company was founded in 2005 and is headquartered in Brooklyn, New York.

About Elo7

Elo7, with approximately 150 full time employees, was founded in 2008 with the mission of transforming people’s lives through a humanized buying and selling environment that connects and inspires, giving meaning to each transaction carried out. For sellers, Elo7 works to develop the best technologies and offer simple and practical solutions for managing their sales, and for buyers it is focused on delivering an outstanding shopping experience.

Investor Relations Contact:
Etsy, Deb Wasser, Vice President, Investor Relations and ESG Engagement: [email protected] 
Etsy, Gabe Ratcliff, Director, Investor Relations: [email protected]

Media Relations Contact:
Etsy, Kelly Clausen, Senior Director, Corporate Communications
[email protected]

Cautionary Statement Regarding Forward-Looking Statements

This press release (including statements quoted in this press release) contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include statements related to our potential addressable market, the potential benefits of the acquisition of Elo7, expected impact of the acquisition of Elo7 on Etsy’s future financial performance and the potential impact on Etsy’s consolidated financial results, the anticipated timing of the closing of the acquisition of Elo7, the anticipated impact of applying Etsy’s expertise to Elo7’s business and the potential of Elo7’s business.

Forward-looking statements include all statements that are not historical fact. Forward-looking statements involve substantial risks and uncertainties that may cause actual results to differ materially from those we expect. These risks and uncertainties include, among others, the possibility that the conditions to the closing of the acquisition of Elo7 may not be satisfied or waived or that other events may cause the acquisition to not be completed, the potential impact to the business of Elo7 or Elo7’s relationships with its marketplace community due to the announcement of the acquisition, Etsy’s ability to successfully integrate the acquisition and execute on its business plan and “house of brands”‘ operating model, and general economic conditions and political, regulatory, economic and social conditions in Brazil and Latin America, many of which are beyond Etsy’s control, and other risks and uncertainties that are more fully described in Etsy’s filings with the Securities and Exchange Commission, including in the section entitled “Risk Factors” in Etsy’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and subsequent reports that Etsy files with the Securities and Exchange Commission. In light of such risks, readers are cautioned not to place undue reliance on such forward-looking statements.

Forward-looking statements represent Etsy’s beliefs and assumptions only as of the date of this press release. Etsy disclaims any obligation to update forward-looking statements, except as required by law.

SOURCE Etsy, Inc.

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