Etsy Stock Rose 13.0% after Strong Third-Quarter Results



Etsy’s third-quarter results

Online retailer Etsy (ETSY) reported its third-quarter results on November 6. The company reported revenues of $150.4 million, which beat the estimate of $149.9 million and rose 41.4% YoY (year-over-year). The revenue growth was driven by increased seller fees, search and discovery changes, and enhanced trust and reliability for buyers and sellers. After the results, Etsy stock rose 13.0% in after-market trading.

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Given the success of strategic endeavors and the hike in seller fees, management has raised the guidance for 2018. The company projects the revenues to be 35%–36% compared to the previous forecast of 33%–35%. The gross merchandise sales are estimated to grow 19%–20% compared to the earlier forecast of 18%–20%. Etsy also announced a $200 million stock repurchase authorization.

On the other hand, Etsy’s adjusted EPS for the quarter was $0.15, which was lower than $0.21 reported in the third quarter of 2017. An unfavorable year-over-year comparison due to the tax benefit related to an employee stock benefit dented the bottom line. However, the adjusted EPS for the third quarter was better than analysts’ expectation of $0.07.

Quarterly details

In the third quarter, Etsy’s gross merchandise volume rose 20.4% YoY to $922.5 million. Active sellers increased 8.0%, while the number of active buyers rose 17.2%.

By segment, Etsy’s Marketplace revenues and Services revenues rose 42.6% and 36.5%, respectively. The Services revenues benefited from higher revenues from Promoted Listings. The Marketplace revenues were mainly driven by higher seller fees.

The adjusted EBITDA was $34.0 million—considerably higher YoY from $22.8 million due to operational efficiency. For 2018, the adjusted EBITDA margin is projected to be 22%–23% compared to the previous forecast of 21%–23%.

Driven by higher revenues, Etsy reported income from operations of $97.1 million for the first nine months of 2018—compared to income from operations of $32.3 million for the same period in 2017.


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