Etsy has announced a restructuring plan which includes laying off 11% of their workforce (approximately 225 employes), in a move that will bring headcount back down to early 2022 levels.
On December 12, 2023, the board of directors of Etsy, Inc. (“Etsy”) approved a restructuring plan designed to increase Etsy’s operational efficiencies, reduce operating costs, and better align Etsy’s workforce and cost structure with current business needs, top strategic priorities and key growth opportunities (collectively, the “Restructuring Plan”).
The Restructuring Plan includes an approximately 11% reduction of the Etsy marketplace workforce, which is approximately 225 employees, inclusive of the management changes described below. Following the Restructuring Plan, headcount for the core Etsy marketplace team is estimated to be approximately 1,770 people, similar to the headcount level early in 2022.
The Restructuring Plan is expected to deliver meaningful operational efficiencies and cost savings and/or cost avoidance, particularly related to compensation and benefits.
In connection with the Restructuring Plan, Etsy estimates that it will incur approximately $25 million to $30 million in charges, largely made up of cash expenditures, consisting of severance payments, employee benefits, and related costs.
Etsy expects that the charges will be incurred primarily in the fourth quarter of 2023 and that the execution of the Restructuring Plan will be substantially complete by the end of the first quarter of 2024.
The 8-K filing with the SEC also revealed that Chief Marketing Officer Ryan Scott will be stepping down as part of the restructuring plan effective December 31 but will continue in an advisory role until June 30, 2024.
Scott will be replaced by Raina Moskowitz, formerly Chief Operating Officer, who will assume the title of Chief Operating and Marketing Officer.
Etsy's payment and fulfilment functions will be moved to the Product organization under CPO Nick Daniel.
In connection with the Restructuring Plan, Etsy announced the departure of Ryan Scott, Chief Marketing Officer, effective December 31, 2023. To assist in the transition, Mr. Scott has agreed to continue in an advisory role, which may extend through June 30, 2024.
Raina Moskowitz, formerly Chief Operating Officer, will assume the title of Chief Operating and Marketing Officer, responsible for driving global growth by expanding brand consideration and deepening customer trust and loyalty. Under her expanded role, Ms. Moskowitz will lead Etsy’s marketing, international markets, trust & safety, member support, strategy & operations, and impact teams...
...Also in connection with the Restructuring Plan, Etsy will move its Payments and Fulfillment functions from Ms. Moskowitz’s organization to the Product organization, under the leadership of Chief Product Officer Nick Daniel.
CEO Josh Silverman addressed employees on a livestream before releasing a public statement saying a challenging macro and competitive environment along with flat GMS made it apparent "a leaner, more agile team would enable us to properly focus on our key growth priorities, move bold and fast, and maintain a sustainable cost structure."
While the Etsy marketplace is still more than double the size it was in 2019, we need to acknowledge and adjust for today’s realities. We are operating in a very challenging macro and competitive environment, and GMS has remained essentially flat since 2021.
This means we are not bringing our sellers more sales, which is the single most important thing we can do for them. At the same time, employee expenses have grown, even as we have introduced significant cost-cutting measures and adjusted or paused hiring plans. This is ultimately not a sustainable trajectory and we must change it.
As we head into 2024, we have identified our “Vital Few” projects and initiatives that we believe will reignite growth for our sellers and drive buyer consideration and loyalty through a focus on quality, value, and reliability. I have great confidence in these plans, but we need the right structure and resources in place to successfully execute on them.
Following extensive discussions and analysis with senior leaders, it was apparent that a leaner, more agile team would enable us to properly focus on our key growth priorities, move bold and fast, and maintain a sustainable cost structure.
Parting ways with some of our colleagues was absolutely not an option we wanted to pursue; however, we have a responsibility to our entire community, especially the nearly 7M sellers who count on us everyday – and we must make the hard decisions that allow us to continue serving them.
Silverman revealed in addition to Ryan Scott's departure, Chief Human Resources Officer, Kim Seymour, will be stepping down as well, to be replaced by current VP Global People and Talent Strategy Toni Thompson.
Key updates to our Executive Team
As we reviewed our structure and priorities across the company, I also looked at my ET to identify any areas where we could drive greater efficiency. First, there was a meaningful opportunity to bring our core products and services together by moving the Payments and Fulfillment functions to Nick Daniel in the Product Org.
Additionally, after nearly 5 years of building a world-class marketing team and making Etsy top-of-mind for our customers, Ryan Scott will be departing Etsy, and we will consolidate our Marketing Org under Raina Moskowitz’s leadership. In her expanded role as Etsy’s Chief Operating and Marketing Officer, Raina will work to drive growth globally by expanding brand consideration and deepening customer trust and loyalty...
...As we move forward as a leaner organization, nurturing our talent will remain a top priority. Kim Seymour has placed a strong focus on creating growth opportunities across Etsy, including within her own team. With that in mind, Kim will hand over the reins to her successor, Toni Thompson, Etsy’s current VP of Global People and Talent Strategy, as she becomes Etsy's new Chief Human Resources Officer...
...These changes will take effect on January 1, 2024, and you’ll hear more details about these new Org structures tomorrow.
Silverman was also quick to get out ahead of any would-be criticism for announcing layoffs less than two weeks before Christmas, assuring employees that while their last working day may be today, they will remain on the Etsy payroll until at least January 2, 2024.
Once we knew we needed to make workforce reductions, we wanted to communicate our decision with you as soon as possible. However, that puts us in the unfortunate position of sharing this news amid the winter holidays.
While generally the last working day for departing Admin is today (or in accordance with local laws and procedures), all impacted Admin will remain on Etsy payroll until at least January 2, 2024 (or will be paid in lieu where local regulations make this payroll extension infeasible).
We hope this extra financial support provides some peace of mind during the holidays as they process this change and prepare to explore their next step.
Most departing employees will also receive the following severance and support, though of course the executives who are stepping down will have much more generous severance packages.
- Severance: 16 weeks of base pay, plus 1 week for each full year of service.
- Bonus: To acknowledge their efforts throughout this calendar year, departing employees will receive bonus payments for 2023.
- Healthcare: 12 months of COBRA coverage in the US (effective Feb 1, 2024) or a cash equivalent in non-US markets, including 12 months of Lyra Mental Health support.
- Time off: Accrued, unused PTO will be paid out. Those on or eligible for Sabbaticals (5+ years tenure) and approved leaves (including Parental) will be paid out for this time.
- Job support: 3 months of career service support through an external partner, including job lead connections, skill-based learning classes, professional coaching, resume and LinkedIn branding support, and more.
- Laptops: Departing Admin will be able to keep their laptops for personal use following their departure.
- Immigration Support: Our HR immigration specialist will be working directly with impacted individuals whose immigration status is connected with their employment.
Per Etsy's 8-K filing, Mr. Scott will receive the following severance benefits:
On December 12, 2023, Mr. Scott and Etsy entered into a letter agreement (the “Letter Agreement”) governing the terms of his remaining service to Etsy and his
The Letter Agreement provides for the following compensation and benefits as an inducement for Mr. Scott’s continued services during the transition
- continuation of current base salary of $460,000 during the transition period and, as a severance benefit, for a period of twelve months after the date employment ends (“Separation Date”), consistent with the terms of the Etsy Executive Severance Plan
- reimbursement of his COBRA premiums for up to twelve months following the Separation Date; and
- subject to the terms of the Executive Severance Plan, a pro rata cash bonus award for 2024, if applicable.
PSU awards outstanding as of the Separation Date will vest in accordance with their terms for a Qualifying Termination.
The terms of Ms. Seymour's severance were not disclosed.
Etsy's stock price has dropped over 8% following the announcement.