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Etsy, Inc. (ETSY - Free Report) reported second-quarter 2023 earnings of 83 cents per share, beating the Zacks Consensus Estimate of 41 cents. The bottom-line figure reflects a year-over-year increase of 62.7%.
Revenues advanced 7.5% year over year to $628.88 million. The figure beat the Zacks Consensus Estimate of $621.87 million.
Top-line growth was driven by accelerating services and marketplace revenues.
Strong momentum across reactivated buyers remained a positive.
Marketplace revenues were $452.96 million (72% of the total revenues), up 3.1% from the year-ago quarter’s level, driven by the solid momentum across buyers. ETSY acquired 6 million new buyers, which was a major positive. The total number of active buyers on Etsy’s marketplace stood at 91 million, which was up 3% year over year.
Services revenues were $175.92 million (28% of the total revenues), up 20.8% on a year-over-year basis. Etsy ads acted as a key driver of revenue growth.
Quarterly Specifics
Etsy’s active buyer base increased by 2.5% from the prior-year quarter’s figure to 96.25 million which came ahead of the consensus mark of 95.5 million.
The active seller base stood at 8.31 million, up 12.3% year over year. The figure topped the consensus mark of 8.27 million. Increased investments to provide tools and insights for sellers had a positive effect on seller base growth.
ETSY witnessed solid momentum in buyer reactivation. Reactivated buyers were 5.9 million, up 20.4% year over year.
Gross merchandise sales (GMS) of $3.01 billion were down 0.6% on a reported basis and 0.4% on a currency-neutral basis from the prior-year quarter. The reported figure surpassed the Zacks Consensus Estimate of $2.99 billion.
The Etsy marketplace’s GMS was $2.6 billion, down 0.7% and 0.4% on a reported basis and a currency-neutral basis, respectively, from the year-ago quarter’s figure.
GMS Ex-U.S. domestic for the Etsy marketplace rose 5% from the prior-year quarter’s figure on a currency-neutral basis and accounted for 47% of the total GMS.
Operating Details
In second-quarter 2023, the gross margin was 70%, which contracted 70 basis points (bps) year over year.
Total operating expenses were $442.61 million, up 29.7% from the prior-year quarter. As a percentage of revenues, the figure expanded to 70.4% from 58.3% in the year-ago quarter.
Consequently, ETSY reported an operating loss of $2.4 million compared with an operating income of $72.6 million reported in the prior-year quarter.
Balance Sheet & Cash Flows
As of Jun 30, 2023, cash and cash equivalents totaled $841.51 million, which increased from $786.8 million as of Mar 31, 2023.
Short-term investments were $235.3 million, down from $252.7 million in the previous quarter.
Long-term debt stood at $2.28 billion at the end of the second quarter which remained flat when compared with the figure at the end of the prior quarter.
In second-quarter 2023, the company generated $136.27 million in cash from operations, up from $55.6 million in the previous quarter.
Guidance
For third-quarter 2023, Etsy anticipates total revenues between $610 million and $645 million. The Zacks Consensus Estimate for the same is pegged at $636.33 million.
GMS is expected to be $2.95-$3.10 billion.
The adjusted EBITDA margin is expected to be between 27% and 28%.
CACI is set to report its fourth-quarter fiscal 2023 results on Aug 9. The Zacks Consensus Estimate for CACI’s earnings is pegged at $4.85 per share, implying growth of 6.83% from the year-ago quarter’s reported figure.
BILL Holdings is set to report its fourth-quarter fiscal 2023 results on Aug 17. The Zacks Consensus Estimate for BILL’s earnings is pegged at 41 cents per share.
Super Micro Computer is scheduled to release its fourth-quarter fiscal 2023 results on Aug 8. The Zacks Consensus Estimate for SMCI’s earnings is pegged at $2.94 per share, suggesting an increase of 12.21% from the year-ago quarter’s reported figure.
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ETSY's Q2 Earnings Beat Estimates, Revenues Increase Y/Y
Etsy, Inc. (ETSY - Free Report) reported second-quarter 2023 earnings of 83 cents per share, beating the Zacks Consensus Estimate of 41 cents. The bottom-line figure reflects a year-over-year increase of 62.7%.
Revenues advanced 7.5% year over year to $628.88 million. The figure beat the Zacks Consensus Estimate of $621.87 million.
Top-line growth was driven by accelerating services and marketplace revenues.
Strong momentum across reactivated buyers remained a positive.
Etsy, Inc. Price and EPS Surprise
Etsy, Inc. price-eps-surprise | Etsy, Inc. Quote
Top Line in Detail
Marketplace revenues were $452.96 million (72% of the total revenues), up 3.1% from the year-ago quarter’s level, driven by the solid momentum across buyers. ETSY acquired 6 million new buyers, which was a major positive. The total number of active buyers on Etsy’s marketplace stood at 91 million, which was up 3% year over year.
Services revenues were $175.92 million (28% of the total revenues), up 20.8% on a year-over-year basis. Etsy ads acted as a key driver of revenue growth.
Quarterly Specifics
Etsy’s active buyer base increased by 2.5% from the prior-year quarter’s figure to 96.25 million which came ahead of the consensus mark of 95.5 million.
The active seller base stood at 8.31 million, up 12.3% year over year. The figure topped the consensus mark of 8.27 million. Increased investments to provide tools and insights for sellers had a positive effect on seller base growth.
ETSY witnessed solid momentum in buyer reactivation. Reactivated buyers were 5.9 million, up 20.4% year over year.
Gross merchandise sales (GMS) of $3.01 billion were down 0.6% on a reported basis and 0.4% on a currency-neutral basis from the prior-year quarter. The reported figure surpassed the Zacks Consensus Estimate of $2.99 billion.
The Etsy marketplace’s GMS was $2.6 billion, down 0.7% and 0.4% on a reported basis and a currency-neutral basis, respectively, from the year-ago quarter’s figure.
GMS Ex-U.S. domestic for the Etsy marketplace rose 5% from the prior-year quarter’s figure on a currency-neutral basis and accounted for 47% of the total GMS.
Operating Details
In second-quarter 2023, the gross margin was 70%, which contracted 70 basis points (bps) year over year.
Total operating expenses were $442.61 million, up 29.7% from the prior-year quarter. As a percentage of revenues, the figure expanded to 70.4% from 58.3% in the year-ago quarter.
Consequently, ETSY reported an operating loss of $2.4 million compared with an operating income of $72.6 million reported in the prior-year quarter.
Balance Sheet & Cash Flows
As of Jun 30, 2023, cash and cash equivalents totaled $841.51 million, which increased from $786.8 million as of Mar 31, 2023.
Short-term investments were $235.3 million, down from $252.7 million in the previous quarter.
Long-term debt stood at $2.28 billion at the end of the second quarter which remained flat when compared with the figure at the end of the prior quarter.
In second-quarter 2023, the company generated $136.27 million in cash from operations, up from $55.6 million in the previous quarter.
Guidance
For third-quarter 2023, Etsy anticipates total revenues between $610 million and $645 million. The Zacks Consensus Estimate for the same is pegged at $636.33 million.
GMS is expected to be $2.95-$3.10 billion.
The adjusted EBITDA margin is expected to be between 27% and 28%.
Zacks Rank & Stocks to Consider
Etsy currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader technology sector can consider some better-ranked stocks like CACI International (CACI - Free Report) , BILL Holdings, Inc. (BILL - Free Report) , each carrying a Zacks Rank #2 (Buy) and Super Micro Computer (SMCI - Free Report) , sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CACI is set to report its fourth-quarter fiscal 2023 results on Aug 9. The Zacks Consensus Estimate for CACI’s earnings is pegged at $4.85 per share, implying growth of 6.83% from the year-ago quarter’s reported figure.
BILL Holdings is set to report its fourth-quarter fiscal 2023 results on Aug 17. The Zacks Consensus Estimate for BILL’s earnings is pegged at 41 cents per share.
Super Micro Computer is scheduled to release its fourth-quarter fiscal 2023 results on Aug 8. The Zacks Consensus Estimate for SMCI’s earnings is pegged at $2.94 per share, suggesting an increase of 12.21% from the year-ago quarter’s reported figure.