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Etsy Q3 Earnings Miss Estimates, Stock Gains on Revenue Beat
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Etsy (ETSY - Free Report) shares jumped 7.19% to close at $51.44 on Thursday following the announcement of third-quarter 2024 results.
Revenues advanced 4.1% year over year to $662.4 million. The figure beat the Zacks Consensus Estimate by 1.31%. Top-line growth was driven by accelerating Marketplace revenues.
However, third-quarter 2024 earnings of 45 cents per share missed the Zacks Consensus Estimate by 16.67%. The bottom-line figure reflects a year-over-year decrease of 29.7%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Etsy announced a stock repurchase program worth $1 billion. In the third-quarter 2024, Etsy repurchased an aggregate of approximately $156 million, or 2.7 million shares, of its common stock.
ETSY shares have underperformed the Zacks Retail and Wholesale sector year to date. While ETSY shares have lost 40.8%, the broader sector has returned 19.4%.
Marketplace revenues were $476.1 million (71.9% of the total revenues), up 3.3% from the year-ago quarter’s level. The growth was driven by payment fee revenues. A new seller setup fee and offsite ad fees also contributed to marketplace revenue expansion.
ETSY acquired 5.3 million new buyers, which was a major positive. The total number of active buyers on Etsy’s marketplace stood at 91.2 million, which increased 0.4% year over year.
Services revenues were $186.3 million (28.1% of the total revenues), up 6.2% on a year-over-year basis.
ETSY’s Active User Base Increases Y/Y
Etsy’s active buyer base increased 0.7% from the prior-year quarter’s figure to 96.7 million, which missed the consensus mark of 97.2 million.
The active seller base stood at 8.5 million, down 3.2% year over year. The figure missed the consensus mark of 9.7 million.
ETSY witnessed solid momentum in buyer reactivation. Reactivated buyers were 6.4 million, up 5.6% year over year.
Gross merchandise sales (GMS) of $2.92 billion were down 4.1% on a reported basis and 4.4% on a currency-neutral basis from the prior-year quarter. The reported figure missed the Zacks Consensus Estimate of $2.97 billion.
The Etsy marketplace’s Gross Merchandise Sales (GMS) was $2.5 billion, down 6% on a reported basis from the year-ago quarter’s figure and 6.3% on a currency-neutral basis.
ETSY’s Operating Expenses Rise Y/Y
In the third quarter of 2024, total operating expenses were $389.95 million, up 8.6% from the prior-year quarter. As a percentage of revenues, the figure expanded to 58.9% from 56.4% in the year-ago quarter.
Marketing expenses increased 22.1% year over year to $196.5 million. As a percentage of sales, marketing expenses increased 440 basis points (bps) year over year to 29.7%.
Product development expenses decreased 5.9% year over year to $107.3 million. As a percentage of sales, product development expenses decreased 170 bps year over year to 16.2%.
General and administrative (G&A) expenses increased 2.5% year over year to $86.2 million. As a percentage of sales, G&A expenses decreased by 20 bps to 13%.
Consequently, ETSY reported an operating income of $86.8 million compared with an operating income of $88.6 million reported in the prior-year quarter.
ETSY’s Balance Sheet Shows Improvement
As of Sept. 30, 2024, cash and cash equivalents totaled $818.94 million, which increased from $759.21 million as of June 30, 2024.
Short-term investments were $226.02 million, down from $240.68 million in the previous quarter.
Long-term debt stood at $2.29 billion at the end of the third quarter, unchanged from the figure reported at the end of the prior quarter.
ETSY’s Q4 Guidance Unimpressive
For the fourth quarter of 2024, Etsy anticipates the take rate to be 22.3%.
GMS is expected to decline in a low to mid-single-digit percentage range on a year-over-year basis.
The adjusted EBITDA margin is expected to be 28-29%.
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Etsy Q3 Earnings Miss Estimates, Stock Gains on Revenue Beat
Etsy (ETSY - Free Report) shares jumped 7.19% to close at $51.44 on Thursday following the announcement of third-quarter 2024 results.
Revenues advanced 4.1% year over year to $662.4 million. The figure beat the Zacks Consensus Estimate by 1.31%. Top-line growth was driven by accelerating Marketplace revenues.
However, third-quarter 2024 earnings of 45 cents per share missed the Zacks Consensus Estimate by 16.67%. The bottom-line figure reflects a year-over-year decrease of 29.7%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Etsy announced a stock repurchase program worth $1 billion. In the third-quarter 2024, Etsy repurchased an aggregate of approximately $156 million, or 2.7 million shares, of its common stock.
ETSY shares have underperformed the Zacks Retail and Wholesale sector year to date. While ETSY shares have lost 40.8%, the broader sector has returned 19.4%.
Etsy, Inc. Price, Consensus and EPS Surprise
Etsy, Inc. price-consensus-eps-surprise-chart | Etsy, Inc. Quote
ETSY’s Top Line Grows Y/Y
Marketplace revenues were $476.1 million (71.9% of the total revenues), up 3.3% from the year-ago quarter’s level. The growth was driven by payment fee revenues. A new seller setup fee and offsite ad fees also contributed to marketplace revenue expansion.
ETSY acquired 5.3 million new buyers, which was a major positive. The total number of active buyers on Etsy’s marketplace stood at 91.2 million, which increased 0.4% year over year.
Services revenues were $186.3 million (28.1% of the total revenues), up 6.2% on a year-over-year basis.
ETSY’s Active User Base Increases Y/Y
Etsy’s active buyer base increased 0.7% from the prior-year quarter’s figure to 96.7 million, which missed the consensus mark of 97.2 million.
The active seller base stood at 8.5 million, down 3.2% year over year. The figure missed the consensus mark of 9.7 million.
ETSY witnessed solid momentum in buyer reactivation. Reactivated buyers were 6.4 million, up 5.6% year over year.
Gross merchandise sales (GMS) of $2.92 billion were down 4.1% on a reported basis and 4.4% on a currency-neutral basis from the prior-year quarter. The reported figure missed the Zacks Consensus Estimate of $2.97 billion.
The Etsy marketplace’s Gross Merchandise Sales (GMS) was $2.5 billion, down 6% on a reported basis from the year-ago quarter’s figure and 6.3% on a currency-neutral basis.
ETSY’s Operating Expenses Rise Y/Y
In the third quarter of 2024, total operating expenses were $389.95 million, up 8.6% from the prior-year quarter. As a percentage of revenues, the figure expanded to 58.9% from 56.4% in the year-ago quarter.
Marketing expenses increased 22.1% year over year to $196.5 million. As a percentage of sales, marketing expenses increased 440 basis points (bps) year over year to 29.7%.
Product development expenses decreased 5.9% year over year to $107.3 million. As a percentage of sales, product development expenses decreased 170 bps year over year to 16.2%.
General and administrative (G&A) expenses increased 2.5% year over year to $86.2 million. As a percentage of sales, G&A expenses decreased by 20 bps to 13%.
Consequently, ETSY reported an operating income of $86.8 million compared with an operating income of $88.6 million reported in the prior-year quarter.
ETSY’s Balance Sheet Shows Improvement
As of Sept. 30, 2024, cash and cash equivalents totaled $818.94 million, which increased from $759.21 million as of June 30, 2024.
Short-term investments were $226.02 million, down from $240.68 million in the previous quarter.
Long-term debt stood at $2.29 billion at the end of the third quarter, unchanged from the figure reported at the end of the prior quarter.
ETSY’s Q4 Guidance Unimpressive
For the fourth quarter of 2024, Etsy anticipates the take rate to be 22.3%.
GMS is expected to decline in a low to mid-single-digit percentage range on a year-over-year basis.
The adjusted EBITDA margin is expected to be 28-29%.
ETSY’s Zacks Rank & Stocks to Consider
Etsy currently carries a Zacks Rank #3 (Hold).
CyberArk Software (CYBR - Free Report) , DXC Technology (DXC - Free Report) and EPAM Systems (EPAM - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CyberArk Software’s shares have appreciated 26.2% year to date. CYBR is set to report its third-quarter 2024 results on Nov. 13.
DXC Technology shares have depreciated 13.1% year to date. DXC is set to report its third-quarter fiscal 2024 results on Nov. 7.
EPAM Systems shares have decreased 36.5% year to date. EPAM is set to report its third-quarter 2024 results on Nov. 7.