Etsy, Inc. (ETSY - Free Report) delivered second-quarter 2022 earnings of 51 cents per share, which surpassed the Zacks Consensus Estimate by 45.7%. The bottom line was down 25% from the year-ago quarter.
Revenues advanced 10.6% year over year to $585.1 million. Notably, the figure beat the Zacks Consensus Estimate of $561.5 million.
Top-line growth was driven by accelerating services and marketplace revenues.
A solid momentum across buyers and sellers contributed well.
Top Line in Detail
Marketplace revenues were $439.5 million (75.1% of the total revenues), up 11.1% from the year-ago quarter. This was driven by the solid momentum across buyers. Notably, it acquired 6 million new buyers, which was a major positive.
Services revenues were $145.6 million (24.9% of the total revenues), which rose 9.1% on a year-over-year basis.
Quarterly Specifics
Etsy’s active buyer base grew 3.8% from the prior-year quarter to 93.9 million. The active seller base stood at 7.4 million, up 41.5% year over year.
The company witnessed solid momentum in buyer reactivation. Reactivated buyers were 4.9 million, up 25.6% year over year.
However, the number of habitual and repeat buyers declined 1.3% and 2.2% year over year to 7.8 million and 35.5 million, respectively.
Notably, GMS of the company was $3.03 billion, which fell 0.4% year over year. The Etsy marketplace’s GMS was $2.6 billion, down 6% from the prior-year quarter. Normalization to the pre-pandemic levels due to reopening, sluggish consumer discretionary spending, geo-political tensions and foreign exchange woes remained headwinds.
Marketplace GMS per active buyer was $136.1 in the reported quarter, which rose 5.9% year over year.
Non-U.S. GMS for the Etsy marketplace rose 3% from the prior-year quarter on a currency-neutral basis and accounted for 44% of the total GMS.
Operating Details
In second-quarter 2022, the gross margin was 70.7%, which contracted 110 basis points (bps) year over year.
Total operating expenses were $341.2 million, reflecting a year-over-year increase of 17.3%. As a percentage of revenues, the figure expanded 340 bps from the year-ago quarter to 58.3% in the reported quarter.
The operating margin was 12.4%, contracting 440 bps year over year.
Balance Sheet & Cash Flows
As of Jun 30, 2022, cash and cash equivalents totaled $758.9 million, which increased from $756.2 million as of Mar 31, 2022. Short-term investments were $247.8 million, up from $225.9 million in the previous quarter.
Long-term debt stood at $2.277 billion at the end of the second quarter compared with $2.276 billion at the end of the previous quarter.
The company generated $125.8 million in cash from operations in the reported quarter, up from $59.5 million in the prior quarter.
Guidance
For third-quarter 2022, Etsy anticipates total revenues between $540 million and $575 million. The Zacks Consensus Estimate for the same is pegged at $574.1 million.
GMS is expected to be $2.8-$3 billion.
The adjusted EBITDA margin is expected to be 26%.
Zacks Rank & Stocks to Consider
Etsy currently carries a Zacks Rank #4 (Sell).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Aspen Technology (AZPN - Free Report) , Keysight Technologies (KEYS - Free Report) and Asure Software (ASUR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Aspen technology has returned 18.9% in the year-to-date period. The long-term earnings growth rate for AZPN is currently projected at 16.3%.
Keysight Technologies has lost 26.8% in the year-to-date period. KEYS’ long-term earnings growth rate is currently projected at 9.1%.
Asure Software has lost 27.2% in the year-to-date period. The long-term earnings growth rate for ASUR is currently projected at 14%.
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Etsy, Inc. (ETSY - Free Report) delivered second-quarter 2022 earnings of 51 cents per share, which surpassed the Zacks Consensus Estimate by 45.7%. The bottom line was down 25% from the year-ago quarter.
Revenues advanced 10.6% year over year to $585.1 million. Notably, the figure beat the Zacks Consensus Estimate of $561.5 million.
Top-line growth was driven by accelerating services and marketplace revenues.
A solid momentum across buyers and sellers contributed well.
Top Line in Detail
Marketplace revenues were $439.5 million (75.1% of the total revenues), up 11.1% from the year-ago quarter. This was driven by the solid momentum across buyers. Notably, it acquired 6 million new buyers, which was a major positive.
Services revenues were $145.6 million (24.9% of the total revenues), which rose 9.1% on a year-over-year basis.
Quarterly Specifics
Etsy’s active buyer base grew 3.8% from the prior-year quarter to 93.9 million. The active seller base stood at 7.4 million, up 41.5% year over year.
The company witnessed solid momentum in buyer reactivation. Reactivated buyers were 4.9 million, up 25.6% year over year.
However, the number of habitual and repeat buyers declined 1.3% and 2.2% year over year to 7.8 million and 35.5 million, respectively.
Notably, GMS of the company was $3.03 billion, which fell 0.4% year over year. The Etsy marketplace’s GMS was $2.6 billion, down 6% from the prior-year quarter. Normalization to the pre-pandemic levels due to reopening, sluggish consumer discretionary spending, geo-political tensions and foreign exchange woes remained headwinds.
Marketplace GMS per active buyer was $136.1 in the reported quarter, which rose 5.9% year over year.
Non-U.S. GMS for the Etsy marketplace rose 3% from the prior-year quarter on a currency-neutral basis and accounted for 44% of the total GMS.
Operating Details
In second-quarter 2022, the gross margin was 70.7%, which contracted 110 basis points (bps) year over year.
Total operating expenses were $341.2 million, reflecting a year-over-year increase of 17.3%. As a percentage of revenues, the figure expanded 340 bps from the year-ago quarter to 58.3% in the reported quarter.
The operating margin was 12.4%, contracting 440 bps year over year.
Balance Sheet & Cash Flows
As of Jun 30, 2022, cash and cash equivalents totaled $758.9 million, which increased from $756.2 million as of Mar 31, 2022. Short-term investments were $247.8 million, up from $225.9 million in the previous quarter.
Long-term debt stood at $2.277 billion at the end of the second quarter compared with $2.276 billion at the end of the previous quarter.
The company generated $125.8 million in cash from operations in the reported quarter, up from $59.5 million in the prior quarter.
Guidance
For third-quarter 2022, Etsy anticipates total revenues between $540 million and $575 million. The Zacks Consensus Estimate for the same is pegged at $574.1 million.
GMS is expected to be $2.8-$3 billion.
The adjusted EBITDA margin is expected to be 26%.
Zacks Rank & Stocks to Consider
Etsy currently carries a Zacks Rank #4 (Sell).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Aspen Technology (AZPN - Free Report) , Keysight Technologies (KEYS - Free Report) and Asure Software (ASUR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Aspen technology has returned 18.9% in the year-to-date period. The long-term earnings growth rate for AZPN is currently projected at 16.3%.
Keysight Technologies has lost 26.8% in the year-to-date period. KEYS’ long-term earnings growth rate is currently projected at 9.1%.
Asure Software has lost 27.2% in the year-to-date period. The long-term earnings growth rate for ASUR is currently projected at 14%.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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