Etsy (ETSY) to Report Q3 Earnings: What's in the Cards?

Etsy, Inc. ETSY is scheduled to report third-quarter 2020 results on Oct 28.

For the third quarter, the company anticipates total revenues of $366-$426 million, suggesting growth of 85-115% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for the same is pegged at $418.72 million, indicating an improvement of 111.5% from the prior-year quarter’s reported number.

Further, the Zacks Consensus Estimate for earnings stands at 59 cents, suggesting growth of 391.7% from the year-ago reported figure.

The company surpassed the Zacks Consensus Estimate in two of the trailing four quarters, matched once and missed in the other. It has a trailing four-quarter earnings surprise of 20.3%, on average.

Etsy, Inc. Price and EPS Surprise


Etsy, Inc. Price and EPS Surprise

Etsy, Inc. price-eps-surprise | Etsy, Inc. Quote

Factors at Play

Impacts of the company’s continued focus toward the proper execution of its key growth initiatives— search and discovery, customer liability, marketing, seller tools and services— is anticipated to get reflected in the third-quarter results.

Further, strengthening ecosystem on Etsy’s Marketplace platform for both sellers and buyers is likely to have expanded its addressable market size in the to-be-reported quarter. Furthermore, its growing focus toward the expansion in the U.S. marketplace has been a positive.

Additionally, recommendations available on the company’s listing and landing pages, which reflect purchasing patterns, taste and preferences of buyers, are expected to have aided the conversion rate in the to-be-reported quarter.

Further, Etsy’s strong efforts toward enhancing product offerings in order to deliver enhanced customer experience are expected to have contributed to the third-quarter top line.

Also, the company’s improving mobile app is expected to have aided it in gaining traction across customers in the third quarter.

Moreover, impacts of Etsy’s increasing investments, seller shipping promotions, performance marketing budget and strengthening customer services are anticipated to get reflected in the third-quarter results.

The company’s free shipping program, which has been gaining traction in the market, is anticipated to have bolstered the customer base inthe quarter under review.

Additionally, growing momentum across the Reverb marketplace is anticipated to have contributed well.

Furthermore, solid momentum across the Etsy ad program is likely to get reflected in the third-quarter results.

Additionally, solid momentum across optional services on both Etsy and Reverb marketplaces are expected to have continued accelerating the company’s services revenues in the quarter under review.

However, accelerating costs related to the shift to Offsite Ads and increasing marketing expenses are likely to have weighed on the third-quarter performance of the company.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Etsy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Etsy has an Earnings ESP of -0.50% and a Zacks Rank #3.

Other Stocks to Consider

Here are some other stocks you may consider, as our proven model shows that these too have the right combination of elements to post an earnings beat this quarter.

MercadoLibre, Inc. MELI has an Earnings ESP of +258.97% and it currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Paycom Software, Inc. PAYC has an Earnings ESP of +7.97% and a Zacks Rank #2.

Paylocity Holding Corporation PCTY has an Earnings ESP of +7.56% and a Zacks Rank of 2 at present.

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