Good day, ladies and gentlemen and welcome to the Etsy Fourth Quarter and Full Year 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference, Jennifer Beugelmans, Vice President of Investor Relations. You may begin ma’am.

Thank you. And welcome to Etsy fourth quarter and full year 2015 earnings conference call. Joining me today are Chad Dickerson, CEO, and Kristina Salen, CFO. Before we get started, just a reminder that our remarks today include forward-looking statements relating to our financial performance and results of operations, business strategy, guidance, mission, product roadmap and potential future growth. Our actual results may be materially different. Forward-looking statements involve risks and uncertainties which are described in our press release today and in our 10-Q filed with the SEC on November 03, 2015. Any forward-looking statements that we make on this call are based on our beliefs and assumptions today and we don't have 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 press release which you can find on our Investor Relations Web site. A link to the replay of this call will also be available there and if you'd prefer to access the replay via phone, you can find that information in the press release as well. With that, I'll turn the call over to Chad. Chad?

Thanks, Jennifer, and good afternoon everyone. So I am excited to talk to you about the progress Etsy’s made in 2015, our plans for 2016 and our financial goals through 2018. In the fourth quarter, our GMS was more than $741 million and our revenue was nearly $88 million. For the full year GMS reached nearly $2.4 billion and revenue was more than $273 million. We believe our strong results reflect the vitality of Etsy’s community and our team’s strong execution. Throughout 2015, our community continued to grow and we ended this year with more than 24 million in active buyers and nearly 1.6 million in active sellers. In 2015 we continue to put the building blocks in place that we believe will set us up for sustainable long-term growth. Buyers on Etsy’s platform remain uniquely loyal to the brand. In 2015, 81% of our GMS came from repeat purchases made by new, retained, and reactivated buyers. This was up from 78% in 2014. Also in 2015, approximately 47% of our active buyers made two or more purchases in the previous 12 months, up slightly from 2014. We believe that these two data points shed important light on our long-term growth opportunity. First, we know that Etsy buyers are loyal and have continued to make repeat purchases over a long period of time. Second, with fewer than 50% of our active buyers making multiple purchases in a single year over the long-term we believe we’ve made or we have substantial opportunity to drive engagement which ultimately should lead to increased purchase frequency. Our community of sellers and buyers who are so important to our long-term success continue to show their loyalty to Etsy. Kristina will provide you with new 2012 seller and buyer cohort data that further demonstrate their commitment…

Thanks Chad and hello to everyone joining us today. Just to note, unless I say so, all comparisons I’ll be referencing here are on a year-over-year basis. Let’s start with GMS. During the fourth quarter of 2015, the Etsy marketplace generated $741.5 million in GMS up 21%. Growth in GMs was driven by growth in active sellers and active buyers. As Chad mentioned we had a very strong holiday season with GMS growth accelerating throughout the period. For the full year 2015 the Etsy market generated approximately $2.4 billion in GMS up nearly 24% year-over-year. At the end of the fourth quarter Etsy had 1.6 million active sellers up 15.5% and 24 million active buyers up 21%. Our community of sellers and buyers continues to grow at a healthy rate and we are releasing new cohort data that we believe demonstrates the stickiness of our platform. So let me take a minute to remind you of how our cohorts work, staring with our seller cohort. In our IPO perspectives we told you that if we had 100 active sellers in 2011, 32% of these sellers would still have been active in 2014 four years later. In addition we also told you that the average GMS for 2011’s active sellers was $4,299 five times higher in 2014 than in 2011. We are pleased to see that these trends have continued in our 2012 seller and buyer cohorts. We would also note that year five data for our 2011 cohort is consistent with year four trends and early data indicates that our 2013 cohorts are behaving similarly. The 2011 and 2012 data will be in our 10-K but let me walk you through the highlights for our 2012 cohorts. For the 2012 seller cohorts 32% of active sellers remained active four years…

Thank you. [Operator Instructions] Our first question comes from the line of Brian Nowak from Morgan Stanley. Your line is now open.

It sounds like that the holiday trends of pretty strong, GMS is accelerating, just a curious, why guide to a GMS slowdown, it seems that the trends are so strong I think the comps actually are getting a little bit easier throughout 2016. So just being curious for that. And then as we think about the sources of leverage in the model over the three year period, can you just talk about R&D versus sales and marketing and sources of leverage? Thanks.

Sure, Brian, thanks for your question. When we think about GMS growth, we think -- it's important to remember some of the factors that impacted GMS in 2015 and how we're thinking about those factors as we move in to 2016. Most importantly is to consider and the impacts of currency and our guidance assumes that currency remain stable compared to December 2015 average levels. While we can calculate that direct translation pretty clearly, it's really difficult to estimate its impact on international buyer behaviour. So, our GMS estimate does not incorporate -- our guidance is not incorporate significant rebound in international buyer behaviour. On the question with regards of leverage, you were specifically asking about marketing leverage. I think, when we look at our three year basis, we expect operating leverage in each of our three key expense line items, product development, marketing and G&A and as I mentioned with regard to 2016 guidance specifically, we expect leverage and marketing expense, we actually expect it to go down on the year-over-year basis, and as a percent of revenue, while still growing however, just not as fast as revenue. But as I mentioned we expect operating expenses as -- in total as a percent of revenue to increase and that's really due as I mentioned to our new headquarter which we're moving into in 2016 and Sarbanes-Oxley compliance most of those expenses Brian will follow into the G&A category.

And our next question comes from the line of Blake Harper from Topeka Capital. Your line is now open.

I wanted to ask you about the promoted listing with only 16% of your [indiscernible] was using them, but you did called them out as having driving higher strength. I wanted to see if you can talk more about that, is it a specific segmentation with different searches or better targeting and maybe what you see as the potential there as far as the number of your sellers that would use them and what the potential for that category to be

Thanks for your question. So, promoted listings 16.7% of our active sellers in 2015, used the service, that was down roughly 100 basis points versus last year. And as I mentioned that was expected and that was despite really robust growth impacted listing year. This is a remainder to our investors, about the changes that we implemented in promoted listings, at the end of 2014 moving into 2015, we moved from static pricing model, meaning everything was quite sustained in promoted listing to a bided model, meaning that prices reflected demand. The way that we've railed that promoted listings product is that it’s ROI positive to the seller, so it prevent the seller from bidding at extremely high prices to simply drive traffic that doesn't convert into growth sales for that seller, but it did increase pricing in certain categories as a keyword that ultimately priced out some sellers. As I mentioned in my remarks, our goal is over the longer term to focus on creating advertising services that target a broader spectrum of our sellers, but as it stands today when you think about promoted listings and you think about the hundreds of millions of search page views that occurred on Etsy on an annual basis, our promoted listings product which put the top three relevant products in the search at the top of the page, drive a significant amount of volume. So they're really for our sellers who can handle that level of volume, however we have a lot of sellers who are interested in advertising services, in fact it's our number one requested service and we think there's a lot we can do over time in the long term to add to our advertising services product. Thanks for your question Blake.

[Operator Instructions] And our next question comes from the line of Darren Aftahi from Roth, your line is now open.

First on your long term guidance I know you said you have an unannounced new seller services for '16. What is your GMS and revenue growth assumptions, I assume in terms of the number of seller services you're offering sort of exiting that period, and then number two Kristina if my math is correct, is that G&A swing you said is non-recurring is that roughly about $4 million?

To answer your first question Darren, with regard to our guidance as we said, our guidance assumes very modest impact from both new product and seller service. So it's very modest in the guidance that we've provided. With regard to your second question I'm not prepared to quantify it, but there'll be more detail about the G&A swing in our 10-K.

[Operator Instructions] And I'm not showing any further questions I would now like to turn the call back to management for any further remarks.

Just wanted to thank everyone for tuning into the call today and thanks for your question.

Ladies and gentlemen thank you for participating in today's conference, this concludes the program you may now all disconnect. Everyone have a great day.