Etsy Shares Are Surging After Results Crush Expectations

Ticker Symbol: ETSY

Shares of online marketplace Etsy were last trading up 8% this morning after the company produced second quarter financial results that were well ahead of Wall Street consensus forecasts. The company offers handmade and vintage items, art, and supplies, and connects millions of buyers and sellers worldwide. Shares in the firm have struggled this year, down 56%, despite producing solid results as a pull-back in the entire e-commerce sector has hit companies such as eBay, Chewy, Wayfair, and Amazon.

Etsy reported second-quarter adjusted earnings per share of 51¢ against an estimate of 35¢ expected by analysts. Revenue also far surpassed expectations, coming in at $585.1 million, up 11% year over year, and ahead of the $558 million forecasted. Gross merchandise value declined slightly year over year but was still ahead of estimates, totaling $3.03 billion for the three-month period. Marketplace revenue was up to $439.5 million, 11% higher than the same period in 2021, while services revenue was up 9.1% to $145.6 million.

The take rate, or percentage of a sale that Etsy takes from sellers to use its platform, increased to 19.3% from 17.4% in the year-ago period and 18.5% estimated by analysts. Mobile sales as a percentage of GMV increased to 66% versus 63% last year and 65% forecasted. The company reported there are 7.4 million sellers using Etsy’s various platforms as of June 30^th, up 41% year over year. Active buyers across platforms totaled 93.95 million, slightly missing estimates for 95 million.

The above results do paint a clear picture that while Etsy has been able to better monetize its e-commerce platform, user growth and total gross merchandise value trading on its platforms, have not shown the same level of expansion. The company has been able to boost margins by controlling costs and charging sellers a higher percentage of their sales. Etsy reported adjusted earnings before interest, taxes, depreciation, and amortization for the quarter of $162.7 million, ahead of the estimated $139 million. The EBITDA margin for the quarter was 28%.

For the third quarter of fiscal 2022, management said it expects revenue to be between $540 million and $575 million, short of the average analyst forecast of $572 million. It also sees gross merchandise value dropping to between $2.8 billion and $3 billion, again missing expectations for $3.1 billion. Despite this slow-down in value transacted on the platform, investors may be encouraged because of the company’s strong second-quarter outperformance in the face of a challenging macroeconomic environment.

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