Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Etsy Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income	493,507)	349,246)	95,894)	77,491)	81,800)
Stock-based compensation expense	139,910)	65,114)	44,395)	38,231)	26,559)
Depreciation and amortization expense	74,267)	58,189)	48,031)	26,742)	27,197)
Provision for expected credit losses	16,031)	15,033)	10,963)	4,124)	2,497)
Foreign exchange (gain) loss	(14,071)	7,349)	(5,708)	5,997)	(29,105)
Amortization of debt issuance costs	3,719)	2,751)	2,006)	1,191)	463)
Non-cash interest expense	578)	36,086)	19,108)	10,968)	3,117)
Interest (income) expense on marketable securities	3,154)	2,729)	(4,182)	(2,887)	426)
Asset impairment charges	—)	—)	—)	—)	3,162)
Deferred provision (benefit) for income taxes	(88,952)	2,202)	(15,248)	(22,414)	(47,972)
Loss on extinguishment of debt	—)	16,855)	—)	—)	—)
Other non-cash (income) expense, net	(475)	(795)	1,667)	136)	520)
Accounts receivable	(19,256)	(22,540)	(12,656)	17,215)	(8,826)
Funds receivable and seller accounts	(83,941)	(90,141)	(23,177)	23,436)	(13,477)
Prepaid expenses and other current assets	(44,186)	(16,963)	(14,156)	(4,785)	(4,429)
Other assets	(25,159)	4,816)	4,045)	43)	(28)
Accounts payable	(14,169)	14,550)	(953)	13,364)	2,837)
Accrued and other current liabilities	84,789)	146,634)	37,410)	23,079)	3,207)
Funds payable and amounts due to sellers	83,941)	90,141)	23,177)	(23,436)	13,477)
Deferred revenue	1,441)	3,312)	191)	1,331)	434)
Other liabilities	40,423)	(5,612)	(3,887)	9,099)	5,561)
Changes in operating assets and liabilities, net of acquisitions	23,883)	124,197)	9,994)	59,346)	(1,244)
Adjustments to reconcile net income to net cash provided by operating activities	158,044)	329,710)	111,026)	121,434)	(14,380)
Net cash provided by operating activities	651,551)	678,956)	206,920)	198,925)	67,420)
Acquisition of businesses, net of cash acquired	(1,699,974)	—)	(270,409)	—)	—)
Cash paid for asset acquisition and intangible assets	(1,937)	(880)	(1,963)	(35,494)	—)
Purchases of property and equipment	(11,248)	(1,445)	(7,528)	(1,019)	(3,948)
Development of internal-use software	(16,922)	(5,665)	(7,750)	(19,537)	(9,208)
Purchases of marketable securities	(418,518)	(499,237)	(661,821)	(514,286)	(62,348)
Sales and maturities of marketable securities	590,630)	495,848)	461,098)	284,943)	137,340)
Net cash (used in) provided by investing activities	(1,557,969)	(11,379)	(488,373)	(285,393)	61,836)
Payment of tax obligations on vested equity awards	(118,167)	(47,716)	(32,547)	(24,065)	(6,417)
Repurchase of stock	(302,774)	(268,653)	(176,985)	(134,647)	(10,301)
Proceeds from exercise of stock options	22,706)	25,319)	9,791)	18,253)	33,838)
Proceeds from issuance of convertible senior notes	1,000,000)	650,000)	650,000)	345,000)	—)
Payment of debt issuance costs	(13,300)	(10,531)	(11,904)	(9,962)	—)
Purchase of capped calls	(85,000)	(74,685)	(76,180)	(34,224)	—)
Settlement of convertible senior notes	(43,900)	(137,168)	—)	—)	—)
Payments on finance lease obligations	(8,864)	(9,211)	(10,833)	(6,057)	(7,798)
Payments on facility financing obligation	—)	—)	—)	(10,164)	(5,883)
Other financing, net	2,048)	(8,073)	8,265)	(128)	—)
Net cash provided by financing activities	452,749)	119,282)	359,607)	144,006)	3,439)
Effect of exchange rate changes on cash	(10,234)	13,947)	(1,846)	(5,995)	1,155)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(463,903)	800,806)	76,308)	51,543)	133,850)
Cash, cash equivalents, and restricted cash at beginning of period	1,249,440)	448,634)	372,326)	320,783)	181,592)
Cash, cash equivalents, and restricted cash at end of period	785,537)	1,249,440)	448,634)	372,326)	315,442)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The financial data exhibits several notable trends and shifts over the five-year period ending December 31, 2021.

Net Income: There is a strong upward trajectory in net income, rising from $81.8 million in 2017 to $493.5 million in 2021. This substantial growth indicates improving profitability and operational performance over the years.
Stock-based Compensation Expense: This expense increased significantly from approximately $26.6 million in 2017 to nearly $140 million in 2021, pointing to a potential rise in equity incentives granted to employees, which may affect cash flows notwithstanding being a non-cash expense.
Depreciation and Amortization: Depreciation and amortization expenses more than doubled from about $27.2 million in 2017 to around $74.3 million in 2021, reflecting increased investments in fixed assets or software capitalizations during this period.
Provision for Expected Credit Losses: The provision for expected credit losses increased steadily, peaking at approximately $16 million in 2021, more than a sixfold increase from 2017, which may imply growing credit risk or more conservative accounting estimates.
Foreign Exchange (Gain) Loss: Foreign exchange impacts displayed volatility, with gains and losses fluctuating each year. Notably, a loss of $29.1 million in 2017 reversed to a gain of $14.1 million in 2021, suggesting currency exposure management or market conditions changed over time.
Deferred Provision for Income Taxes: This line item exhibited considerable variability, shifting from a negative $47.9 million provision in 2017 to a more negative figure of $88.9 million in 2021. Such volatility reflects changes in tax positions or the interpretation of deferred tax assets and liabilities.
Changes in Operating Assets and Liabilities: The net changes in operating assets and liabilities varied greatly, with a substantial increase of $124.2 million in 2020 followed by a decline to $23.9 million in 2021, indicating fluctuating working capital movements affecting cash flows.
Net Cash Provided by Operating Activities: Operating cash flow grew impressively, especially between 2019 and 2020, where it more than tripled from approximately $207 million to nearly $679 million, before slightly tapering to $652 million in 2021. Such strength reflects robust operational cash generation.
Investing Activities: There was a stark shift in investing cash flows from a positive $61.8 million in 2017 to a significant negative $1.56 billion in 2021. Major acquisitions, including the outflow of roughly $1.7 billion in 2021, alongside substantial purchases of marketable securities, contributed to this negative trend.
Financing Activities: Financing cash flows were positive throughout, with large proceeds from convertible senior notes issuance, peaking at $1 billion in 2021. However, repurchases of stock also increased consistently, reaching approximately $303 million in 2021, indicating efforts to return capital to shareholders despite growing debt financing.
Cash Position: The cash and cash equivalents balance showed strong growth from $315 million at the end of 2017, peaking at $1.25 billion by the end of 2020, before declining to $786 million at the end of 2021. The net decrease in cash in 2021 correlates with the significant investing cash outflows.

Overall, the data depicts a company experiencing substantial growth in profitability and operational cash flow generation, coupled with increased investment and financing activities. The marked rise in stock-based compensation and acquisition spending suggests strategic expansion and talent-related costs. However, volatility in provisions, foreign exchange, and tax-related items underscores areas requiring ongoing monitoring. The strong financing activity in convertible notes issuance partially offsets significant cash outflows from investing activities, maintaining a robust albeit reduced cash position at the end of 2021 compared to the previous year.

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Etsy Inc. (NASDAQ:ETSY)

Cash Flow Statement