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Etsy (ETSY) Q3 Earnings to Gain From Marketplace Strength

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Etsy, Inc. (ETSY - Free Report) is slated to report third-quarter 2020 results on Oct 28.

The company’s Marketplace platform, which allows merchants to list and sell their unique and creative products belonging to categories like homewares and home furnishings, jewelry and personal accessories, apparel, craft supplies, paper and party supplies, and beauty and personal care, is likely to have aided its third-quarter performance.

Moreover, this platform, which has emerged as the cash cow of the company, is expected to have sustained its momentum during the coronavirus-hit third quarter on the back of facilities such as product and inventory management, processing of orders and payments, and building customer relationships that are provided to the merchants.

In second-quarter 2020, Marketplace revenues were $332.03 million (77.4% of total revenues), which went up 145.6% from the year-ago quarter.This was driven by strong momentum across buyers.

We expect the trend to have continued in the to-be-reported quarter on the back of Etsy’s deepening focus on the enhancement of the Marketplace platform.

For the third quarter, the Zacks Consensus Estimate for Marketplace revenues is projected at $304 million, indicating an improvement of 115.6% from the year-ago quarter’s reported figure.

Click here to know how the company’s overall third-quarter performance is likely to be.

Etsy, Inc. Revenue (TTM)

 

Etsy, Inc. Revenue (TTM)

Etsy, Inc. revenue-ttm | Etsy, Inc. Quote

Factors at Play

Etsy’s initiative to deliver an enhanced shopping experience with the help of a personalized search experience is likely to have aided the performance of the Marketplace platform during the to-be-reported quarter.

Moreover, strengthening search capabilities and upgraded context-specific search ranking algorithms are anticipated to have continued aiding the platform’s momentum across buyers, which, in turn, is likely to have bolstered growth in the active buyer base of the company.

Additionally, expanding global footprints and solid organic traffic base expansion efforts are expected to have remained tailwinds in the quarter under review.

Further, the company’s efforts to deliver a connected experience across all devices and to enable seamless human interaction are likely to have bolstered customer engagement on the platform during the third quarter.

Also, integration with Etsy Payment to facilitate seamless online payment transaction for orders and free shipment services are expected to have strengthened buyers base on the Marketplace platform in the to-be-reported quarter.

All these are expected to have contributed well to Etsy’s top-line growth in the third quarter.

Zacks Rank & Key Picks

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Qorvo (QRVO - Free Report) , CDW Corporation (CDW - Free Report) and Avnet (AVT - Free Report) . All three stocks flaunt a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate of Avnet, CDW and Qorvo is pegged at 17.88%, 13.1% and 12.35%, respectively.

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