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Etsy, Inc. (ETSY - Free Report) reported first-quarter 2023 earnings of 53 cents per share, beating the Zacks Consensus Estimate by 10.4%. The bottom-line figure reflects a year-over-year decline of 11.7%.
Revenues advanced 10.6% year over year to $640.88 million. The figure beat the Zacks Consensus Estimate of $623.19 million.
Top-line growth was driven by accelerating services and marketplace revenues.
Top Line in Detail
Marketplace revenues were $467.52 million (72.9% of the total revenues), up 9.3% from the year-ago quarter’s level, driven by the solid momentum across buyers. ETSY acquired 7 million new buyers, which was a major positive. The total number of active buyers on Etsy’s marketplace stood at 89.9 million, which was up 1% year over year. The active buyer base experienced year-over-year growth for the first time since fourth-quarter 2021.
Services revenues were $173.36 million (27.1% of the total revenues), up 14.4% on a year-over-year basis.
Etsy’s active buyer base increased by 0.4% from the prior-year quarter’s figure to 95.53 million. The active seller base stood at 7.94 million, up 3.8% year over year.
ETSY witnessed solid momentum in buyer reactivation. Reactivated buyers were 6 million, up 21% year over year.
Gross merchandise sales (GMS) of $3.1 billion were down 4.6% on a reported basis and 2.6% on a currency-neutral basis from the prior-year quarter. The Etsy marketplace’s GMS was $2.7 billion, down 4.7% and 2.6% on a reported basis and a currency-neutral basis, respectively, from the year-ago quarter’s figure. A shift in consumer preferences from goods to services and weakness in large product categories like home, living and craft supplies, were concerns.
GMS Ex-U.S. domestic for the Etsy marketplace rose 3% from the prior-year quarter’s figure on a currency-neutral basis and accounted for 46% of the total GMS.
Operating Details
In first-quarter 2023, the gross margin was 69.5%, which contracted 60 basis points (bps) year over year.
Total operating expenses were $367.2 million, up 14.1% from the prior-year quarter. As a percentage of revenues, the figure expanded 180 bps year over year to 57.3%.
Consequently, ETSY reported operating margin of 12.2%, which contracted 240 bps year over year.
Balance Sheet & Cash Flows
As of Mar 31, 2023, cash and cash equivalents totaled $786.8 million, which decreased from $921.3 million as of Dec 31, 2022.
Short-term investments were $252.7 million, up from $250.4 million in the previous quarter.
Long-term debt stood at $2.28 billion at the end of the first quarter compared with $2.279 billion at the end of the prior quarter.
In first-quarter 2023, the company generated $55.6 million in cash from operations.
Guidance
For second-quarter 2023, Etsy anticipates total revenues between $590 million and $640 million. The Zacks Consensus Estimate for the same is pegged at $625.01 million.
Agilent Technologies is set to report second-quarter fiscal 2023 results on May 23. The Zacks Consensus Estimate for A’s earnings is pegged at $1.27 per share, implying growth of 12.4% from the year-ago quarter’s reported figure. A has lost 11.6% in the year-to-date period.
DigitalOcean is scheduled to release first-quarter 2023 results on May 9. The Zacks Consensus Estimate for DOCN’s earnings is pegged at 29 cents per share, suggesting a jump from 7 cents per share reported in the prior-year quarter. DOCN has gained 25.5% in the year-to-date period.
Paycor HCM is scheduled to report third-quarter fiscal 2023 results on May 10. The Zacks Consensus Estimate for PYCR’s earnings is pegged at 15 cents per share, suggesting an increase of 36.4% from the prior-year quarter’s reported figure. PYCR has gained 26% in the year-to-date period.
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ETSY's Q1 Earnings Beat Estimates, Revenues Increase Y/Y
Etsy, Inc. (ETSY - Free Report) reported first-quarter 2023 earnings of 53 cents per share, beating the Zacks Consensus Estimate by 10.4%. The bottom-line figure reflects a year-over-year decline of 11.7%.
Revenues advanced 10.6% year over year to $640.88 million. The figure beat the Zacks Consensus Estimate of $623.19 million.
Top-line growth was driven by accelerating services and marketplace revenues.
Top Line in Detail
Marketplace revenues were $467.52 million (72.9% of the total revenues), up 9.3% from the year-ago quarter’s level, driven by the solid momentum across buyers. ETSY acquired 7 million new buyers, which was a major positive. The total number of active buyers on Etsy’s marketplace stood at 89.9 million, which was up 1% year over year. The active buyer base experienced year-over-year growth for the first time since fourth-quarter 2021.
Services revenues were $173.36 million (27.1% of the total revenues), up 14.4% on a year-over-year basis.
Etsy, Inc. Price, Consensus and EPS Surprise
Etsy, Inc. price-consensus-eps-surprise-chart | Etsy, Inc. Quote
Quarterly Specifics
Etsy’s active buyer base increased by 0.4% from the prior-year quarter’s figure to 95.53 million. The active seller base stood at 7.94 million, up 3.8% year over year.
ETSY witnessed solid momentum in buyer reactivation. Reactivated buyers were 6 million, up 21% year over year.
Gross merchandise sales (GMS) of $3.1 billion were down 4.6% on a reported basis and 2.6% on a currency-neutral basis from the prior-year quarter. The Etsy marketplace’s GMS was $2.7 billion, down 4.7% and 2.6% on a reported basis and a currency-neutral basis, respectively, from the year-ago quarter’s figure. A shift in consumer preferences from goods to services and weakness in large product categories like home, living and craft supplies, were concerns.
GMS Ex-U.S. domestic for the Etsy marketplace rose 3% from the prior-year quarter’s figure on a currency-neutral basis and accounted for 46% of the total GMS.
Operating Details
In first-quarter 2023, the gross margin was 69.5%, which contracted 60 basis points (bps) year over year.
Total operating expenses were $367.2 million, up 14.1% from the prior-year quarter. As a percentage of revenues, the figure expanded 180 bps year over year to 57.3%.
Consequently, ETSY reported operating margin of 12.2%, which contracted 240 bps year over year.
Balance Sheet & Cash Flows
As of Mar 31, 2023, cash and cash equivalents totaled $786.8 million, which decreased from $921.3 million as of Dec 31, 2022.
Short-term investments were $252.7 million, up from $250.4 million in the previous quarter.
Long-term debt stood at $2.28 billion at the end of the first quarter compared with $2.279 billion at the end of the prior quarter.
In first-quarter 2023, the company generated $55.6 million in cash from operations.
Guidance
For second-quarter 2023, Etsy anticipates total revenues between $590 million and $640 million. The Zacks Consensus Estimate for the same is pegged at $625.01 million.
GMS is expected to be $2.85-$3.10 billion.
The adjusted EBITDA margin is expected to be 26%.
Zacks Rank & Stocks to Consider
Etsy currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader technoogy sector can consider some better-ranked stocks like Agilent Technologies (A - Free Report) , DigitalOcean (DOCN - Free Report) and Paycor HCM (PYCR - 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.
Agilent Technologies is set to report second-quarter fiscal 2023 results on May 23. The Zacks Consensus Estimate for A’s earnings is pegged at $1.27 per share, implying growth of 12.4% from the year-ago quarter’s reported figure. A has lost 11.6% in the year-to-date period.
DigitalOcean is scheduled to release first-quarter 2023 results on May 9. The Zacks Consensus Estimate for DOCN’s earnings is pegged at 29 cents per share, suggesting a jump from 7 cents per share reported in the prior-year quarter. DOCN has gained 25.5% in the year-to-date period.
Paycor HCM is scheduled to report third-quarter fiscal 2023 results on May 10. The Zacks Consensus Estimate for PYCR’s earnings is pegged at 15 cents per share, suggesting an increase of 36.4% from the prior-year quarter’s reported figure. PYCR has gained 26% in the year-to-date period.