Etsy 2015 Annual Report Download - page 54

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General and administrative
$ 51,920
$ 68,939
$ 17,019
32.8%
Percentage of total revenue
26.5%
25.2%
General and administrative expenses increased $17.0 million, or 32.8%, to $68.9 million in the year ended December 31, 2015 compared to the year ended
December 31, 2014, primarily driven by an increase in employee-related expenses, the $3.5 million expense related to the one-time contribution of cash and
shares of our common stock to Etsy.org, and an increase in general office expense and maintenance and increased professional services.
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Other expense, net
$ (4,009)
$ (26,110)
$ (22,101)
NM
Percentage of total revenue
(2.0)%
(9.5)%
Other expense, net increased $22.1 million to $26.1 million in the year ended December 31, 2015 compared to the year ended December 31, 2014, primarily
as a result of a non-cash currency exchange loss of $21.8 million largely due to intercompany debt incurred between Etsy, Inc. and Etsy Ireland in connection
with our updated global corporate structure implemented on January 1, 2015. This intercompany debt is subject to continued future currency exchange risk.
The increase in other expense also reflects the mark-to-market loss related to convertible warrants of $3.1 million. As a result of the IPO, the convertible
warrants are now classified as equity instruments and do not require additional mark-to-market adjustments in future periods.
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Provision for income taxes
$ (4,983)
$ (26,069)
$ (21,086)
NM
Percentage of total revenue
(2.5)%
(9.5)%
Our income tax provision for the year ended December 31, 2015 was $26.1 million. The primary driver of the income tax provision was the $17.1 million
impact of our updated global corporate structure. The structure was implemented on January 1, 2015 to more closely align with our global operations and
future expansion plans outside of the United States and resulted in (1) the setup of a $66.0 million deferred tax liability on the taxable gain created in the
transaction and (2) a $19.7 million increase in the reserve for unrecognized tax benefits. During the year ended December 31, 2015, $13.2 million and $3.9
million were recorded to income tax expense associated with the recognition of the gain and the unrecognized tax benefits, respectively. Additional drivers
of the income tax provision include $7.7 million of tax benefit for our R&D tax credit, the disallowance of the benefit of losses in certain foreign
jurisdictions, the mix of income and losses in jurisdictions with a wide range of tax rates, the amount of non-deductible stock-based compensation expense,
non-deductible charitable contributions, and unrealized loss on our warrant liability.
Our income tax provision for the year ended December 31, 2014 was $5.0 million. During the year ended December 31, 2014, we determined that the
existence of a three-year cumulative loss in a foreign jurisdiction was sufficient negative evidence to warrant the establishment of a valuation allowance
against deferred tax assets in that jurisdiction. As a result, we recorded a valuation allowance against certain of our deferred tax assets $2.1 million as of
December 31, 2014. In addition, the provision
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