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Business Combinations | 12 Months Ended
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Dec. 31, 2023
Business Combination and Asset Acquisition [Abstract] |
Business Combinations | Note 5—Business Combinations The Company accounts for business combinations using the acquisition method of accounting. The purchase price is allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition. The fair value of customer relationships is estimated using a multi-period excess earnings valuation method, the fair value of trademarks is estimated using a relief from royalty valuation method, and the fair value of developed technology is estimated using a replacement cost method. Depop Acquisition On July 12, 2021, the Company acquired all of the issued share capital of Depop, an online global peer-to-peer fashion resale marketplace. At the time of acquisition, the Company believed Depop would extend its market opportunity in the high frequency apparel sector, specifically in the fast-growing resale space, and deepen the Company’s reach into the Gen Z consumer. The fair value of consideration transferred of $1.493 billion consisted of: (1) cash consideration paid of $1.489 billion, net of cash acquired and (2) non-cash consideration of $4.8 million representing the portion of the replacement equity awards issued in connection with the acquisition that was associated with services rendered through the date of the acquisition. The portion of the replacement equity awards associated with services rendered post-acquisition is recorded as post-combination expense on a straight-line basis over the remaining vesting period of the awards. Additionally, deferred consideration awards issued to certain Depop executives are also recorded as post-combination expense on a straight-line basis over the mandatory service period associated with the deferred consideration. Neither of these awards was included in the fair value of the consideration transferred. See Note 16—Stock-based Compensation for more information on these awards. At the time of acquisition, goodwill consisted largely of assembled workforce, expanded market opportunities, and value creation across the Company’s businesses. The resulting goodwill was not deductible for tax purposes. The Company finalized the valuation of assets acquired and liabilities assumed for the acquisition of Depop as of December 31, 2021. Depop Purchase Price Allocation The following table summarizes the allocation of the purchase price (at fair value), including measurement period adjustments, to the assets acquired and liabilities assumed of Depop as of July 12, 2021 (the date of acquisition) (in thousands):
|  |  |  |  | Final Purchase Price Allocation as Adjusted |  | Estimated Useful Life (in years)
Current assets |  |  |  |  | $ | 4,288 |  |  |
Property and equipment other |  |  |  |  | 1,299 |  |  | 2-5
Developed technology |  |  |  |  | 95,764 |  |  | 5
Trademark |  |  |  |  | 249,820 |  |  | 20
Customer relationships |  |  |  |  | 148,504 |  |  | 13
Goodwill |  |  |  |  | 1,118,855 |  |  | Indefinite
Current liabilities |  |  |  |  | (18,878) |  |  |
Non-current liabilities (1) |  |  |  |  | (27,957) |  |  |
Deferred tax liability, net |  |  |  |  | (78,872) |  |  |
Total purchase price |  |  |  |  | $ | 1,492,823 |  |  |
(1)Non-current liabilities are primarily related to non-income tax related contingency reserves. Elo7 Acquisition On July 2, 2021, the Company acquired all the outstanding shares of Elo7 (including Elo7, Ltd. and related subsidiaries entities), by means of a merger, an e-commerce marketplace in Brazil focused on unique, handmade items. At the time of acquisition, the Company saw significant potential in Brazil's e-commerce sector, which is still in early stages of development and fueled by one of the largest economies in the world. The Company believed having a well-known local brand would help Etsy to better capitalize on this opportunity. The fair value of consideration transferred of $212.1 million consisted of: (1) cash consideration paid of $211.3 million, net of cash acquired, and (2) non-cash consideration of $0.8 million representing the portion of the replacement equity awards issued in connection with the acquisition that was associated with services rendered through the date of the acquisition. The portion of the replacement equity awards associated with services rendered post-acquisition are recorded as post-combination expense on a straight-line basis over the remaining vesting period of the awards, and were therefore not included in the fair value of the consideration transferred. See Note 16—Stock-based Compensation for more information on these awards. At the time of acquisition, goodwill consisted largely of assembled workforce, expanded market opportunities, and value creation across the Company’s businesses. The resulting goodwill was not deductible for tax purposes. The Company finalized the valuation of assets acquired and liabilities assumed for the acquisition of Elo7 as of December 31, 2021. Elo7 Purchase Price Allocation The following table summarizes the allocation of the purchase price (at fair value), including measurement period adjustments, to the assets acquired and liabilities assumed of Elo7 as of July 2, 2021 (the date of acquisition) (in thousands):
|  |  |  |  | Final Purchase Price Allocation as Adjusted |  |  |  |  |  | Estimated Useful Life (in years)
Current assets |  |  |  |  | $ | 2,721 |  |  |  |  |  |  |
Developed technology |  |  |  |  | 12,084 |  |  |  |  |  |  | 5
Trademark |  |  |  |  | 22,187 |  |  |  |  |  |  | 15
Customer relationships |  |  |  |  | 44,374 |  |  |  |  |  |  | 15
Goodwill |  |  |  |  | 157,187 |  |  |  |  |  |  | Indefinite
Non-current assets |  |  |  |  | 2,412 |  |  |  |  |  |  |
Current liabilities |  |  |  |  | (3,406) |  |  |  |  |  |  |
Non-current liabilities |  |  |  |  | (2,691) |  |  |  |  |  |  |
Deferred tax liability, net |  |  |  |  | (22,727) |  |  |  |  |  |  |
Total purchase price |  |  |  |  | $ | 212,141 |  |  |  |  |  |  |
Revenue and Earnings Revenue and net loss were $36.7 million and $59.1 million, respectively, for Depop and Elo7, in the aggregate, from their respective dates of acquisition through December 31, 2021. Acquisition-related expenses are expensed as incurred and were recorded in general and administrative expenses. They were $1.2 million, $2.8 million, and $36.7 million for the years ended December 31, 2023, 2022, and 2021, respectively. The 2021 acquisition-related expenses primarily related to advisory, legal, valuation, and other professional fees. Unaudited Supplemental Pro Forma Information The following unaudited pro forma summary presents consolidated information of the Company, including Depop and Elo7, as if the business combinations had occurred on January 1, 2020 (in thousands):
| Year Ended December 31, |  |  |  |
| 2021 |  |  |  |
Revenue | $ | 2,373,592 |  |  |  |  |
Net income | 492,732 |  |  |  |  |
The pro forma financial information includes adjustments that are directly attributable to the business combinations and are factually supportable. The pro forma adjustments include incremental amortization of intangible and developed technology assets, and remove non-recurring transaction costs directly associated with the acquisitions, such as legal and other professional service fees, and the pro forma tax impact for such adjustments. Cost savings or operating synergies expected to result from the acquisitions are not included in the pro forma results. For the year ended December 31, 2021, the pro forma financial information excludes $60.1 million of non-recurring acquisition-related expenses related to the Depop and Elo7 acquisitions. These pro forma results are illustrative only and not indicative of the actual results of operations that would have been achieved nor are they indicative of future results of operations. Depop and Elo7 Asset Impairment Charges During the year ended December 31, 2023, the Company impaired property and equipment and finite-lived intangible assets of its Elo7 reporting unit in full. During the year ended December 31, 2022, the Company fully impaired goodwill related to the Depop and Elo7 acquisitions. See “Note 7—Goodwill and Intangible Assets” and “Note 10—Property and Equipment“ for further information. Sale of Elo7 The Company completed the sale of Elo7 in the third quarter of 2023. Refer to “Note 6—Sale of Business” for further details.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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