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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.
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.
Image: Bigstock
Etsy (ETSY) Q2 Earnings Beat Estimates, Revenues Rise Y/Y
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.
Etsy, Inc. Price, Consensus and EPS Surprise
Etsy, Inc. price-consensus-eps-surprise-chart | Etsy, Inc. Quote
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%.