ETSY INCETSY
ETSY INC Goodwill & Intangibles Disclosure
Note 6—Goodwill and Intangible Assets
The following table summarizes the changes in the carrying amount of goodwill for the periods indicated (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Balance as of the beginning of the period | $ | 137,089 | $ | 138,377 | ||||
| Impairment charge | (101,703) | — | ||||||
| Foreign currency translation adjustments | 2,681 | (1,288) | ||||||
| Balance as of the end of the period | $ | 38,067 | $ | 137,089 | ||||
During the first quarter of 2025, circumstances changed for the Reverb reporting unit, making a sale of the business more likely than not. This triggered a quantitative impairment test of its goodwill, finite-lived intangible assets, and other long-lived assets as of March 31, 2025. The quantitative analysis indicated that the fair value of finite-lived intangible assets and other long-lived assets was sufficiently in excess of its carrying value. However, the carrying value of the Reverb reporting unit exceeded its fair value, resulting in a non-cash goodwill impairment charge of $101.7 million in the first quarter of 2025 to write off goodwill in full for the Reverb reporting unit. The fair value estimate for the reporting unit considered both income and market approaches, ultimately concluding that the estimated proceeds from the potential sale of the business unit was the most reliable indicator of fair value as of March 31, 2025. The Company sold Reverb in the second quarter of 2025. See “Note 5—Sale of Business” for additional information. The remaining goodwill balance is allocated to Etsy. No impairment charges were recorded within our Etsy reporting unit as part of our annual impairment test in the fourth quarter of 2025.
As of the annual impairment testing date in the fourth quarter of 2024, the Company completed a qualitative analysis for the Etsy and Reverb reporting units, which indicated no goodwill impairment.
As of the annual impairment testing date in the fourth quarter of 2023, the Company completed a qualitative analysis for the Etsy reporting unit, which indicated no impairment; and a quantitative analysis for the Reverb reporting unit, which concluded that the fair value of the reporting unit was sufficiently in excess of its carrying value. As such, no goodwill impairment was identified as of the annual impairment testing date in 2023.
At December 31, 2025 and 2024, the gross book value and accumulated amortization of intangible assets were as follows (in thousands):
| As of December 31, 2025 | ||||||||||||||
| Gross book value | Accumulated amortization | Net book value | Weighted-Average Remaining Life (in years) | |||||||||||
| Trademark (1) | $ | 242,228 | $ | (53,997) | $ | 188,231 | 15.5 | |||||||
| Customer relationships (1) | 143,991 | (49,381) | 94,610 | 8.5 | ||||||||||
| Referral agreement | 37,373 | (28,136) | 9,237 | 2.5 | ||||||||||
| Patent licenses | 9,617 | (4,343) | 5,274 | 8.2 | ||||||||||
| Intangible assets | $ | 433,209 | $ | (135,857) | $ | 297,352 | 12.8 | |||||||
| As of December 31, 2024 | ||||||||||||||
| Gross book value | Accumulated amortization | Net book value | Weighted-Average Remaining Life (in years) | |||||||||||
| Trademark (1) | $ | 305,065 | $ | (67,473) | $ | 237,592 | 15.1 | |||||||
| Customer relationships (1) | 227,645 | (69,190) | 158,455 | 9.6 | ||||||||||
| Referral agreement | 33,066 | (21,572) | 11,494 | 3.5 | ||||||||||
| Patent licenses | 9,617 | (3,260) | 6,357 | 8.6 | ||||||||||
| Intangible assets | $ | 575,393 | $ | (161,495) | $ | 413,898 | 12.5 | |||||||
(1) The decrease from 2024 to 2025 reflects the sale of Reverb.
Amortization expense of intangible assets for 2025, 2024, and 2023 was $31.0 million, $38.1 million, and $39.7 million, respectively.
During the second quarter of 2023, the Company concluded that the book value of the finite-lived intangible assets for the Elo7 reporting unit were fully impaired, and recorded an impairment charge of $60.2 million in Asset impairment charges in the Consolidated Statement of Operations, which primarily related to trademark and customer relationships. The impairment charge was the result of macroeconomic conditions at the time, challenges applying the Company’s technological, marketing, and operational expertise to help scale Elo7’s business, and the resultant headwinds to the business, which caused the Company to revise its business forecasts for Elo7 downwards. The Company prepared an updated fair value for the Elo7 reporting unit based on a quantitative assessment, which included estimates of future revenue, and the net available cash flows; as well as a determination that the Company would more likely than not use the Elo7 asset group for a period of less than twelve months. The Company completed the sale of Elo7 in the third quarter of 2023. Refer to “Note 5—Sale of Business” for further details. The Company did not recognize any intangible asset impairment losses in 2025 and 2024.
Based on amounts recorded at December 31, 2025, the Company estimates future amortization expense of intangible assets as follows (in thousands):
| 2026 | $ | 27,706 | |||
| 2027 | 27,639 | ||||
| 2028 | 25,509 | ||||
| 2029 | 23,767 | ||||
| 2030 | 23,759 | ||||
| Thereafter | 168,972 | ||||
| Total amortization expense | $ | 297,352 | |||
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.