Etsy, Inc. ETSY reported second-quarter 2024 earnings of 41 cents per share, missing the Zacks Consensus Estimate by 10.9%. The bottom-line figure reflects a year-over-year decrease of 8.9%.
Revenues advanced 3% year over year to $647.81 million. The figure beat the Zacks Consensus Estimate by 2.3%.
Top-line growth was driven by accelerating Marketplace revenues.
Strong momentum across active sellers and reactivated buyers remained positive.
Etsy, Inc. Price, Consensus and EPS Surprise
Etsy, Inc. price-consensus-eps-surprise-chart | Etsy, Inc. Quote
Top Line in Detail
Marketplace revenues were $470.38 million (72.6% of the total revenues), up 3.8% from the year-ago quarter’s level. The growth was primarily driven by strengthening payments and transaction fee revenue from Offsite Ads. Also, ETSY acquired 5.6 million new buyers, which was a major positive. The total number of active buyers on Etsy’s marketplace stood at 91.5 million, which increased 1% year over year.
Services revenues were $177.43 million (27.4% of the total revenues), up 0.9% on a year-over-year basis.
Quarterly Specifics
Etsy’s active buyer base increased 0.4% from the prior-year quarter’s figure to 96.6 million, which missed the consensus mark of 97.2 million.
The active seller base stood at 8.8 million, up 5.9% year over year. The figure missed the consensus mark of 9.6 million. Increasing investments to support sellers with a targeted marketing campaign to promote the availability of a seller financing program offered via a third-party partner had a positive effect on seller base growth.
ETSY witnessed solid momentum in buyer reactivation. Reactivated buyers were 6.4 million, up 8.5% year over year.
Gross merchandise sales (GMS) of $2.95 billion were down 2.1% on a reported basis and 1.9% on a currency-neutral basis from the prior-year quarter. The reported figure beat the Zacks Consensus Estimate of $2.92 billion.
The Etsy marketplace’s GMS was $2.5 billion, down 3.2% on a reported basis from the year-ago quarter’s figure.
Operating Details
In the second quarter of 2024, the gross margin was 71.6%, which expanded 160 basis points year over year.
Total operating expenses were $393.55 million, down 11.1% from the prior-year quarter. As a percentage of revenues, the figure contracted to 60.8% from 70.4% in the year-ago quarter.
Consequently, ETSY reported an operating income of $70.2 million compared with an operating loss of $2.4 million reported in the prior-year quarter.
Balance Sheet
As of Jun 30, 2024, cash and cash equivalents totaled $759.21 million, which decreased from $788.84 million as of Mar 31, 2024.
Short-term investments were $240.68 million, down from $254.88 million in the previous quarter.
Long-term debt stood at $2.29 billion at the end of the second quarter, up from $2.28 billion at the end of the prior quarter.
Guidance
For the third quarter of 2024, Etsy anticipates the take rate to be similar to the actual second quarter 2024 figure of 22%.
GMS is expected to decline in the low single-digit range on a year-over-year basis.
The adjusted EBITDA margin is expected to be 27%.
Zacks Rank & Stocks to Consider
Etsy currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Badger Meter BMI, Arista Networks ANET, and Apple AAPL. Badger Meter sports a Zacks Rank #1 (Strong Buy) at present, while Arista Networks and Apple carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Badger Meter shares have gained 32.7% in the year-to-date period. The long-term earnings growth rate for BMI is currently projected at 17.92%.
Arista Networks shares have gained 41.5% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 16.07%.
Apple shares have gained 16.4% in the year-to-date period. The long-term earnings growth rate for AAPL is currently projected at 12.71%.
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Etsy, Inc. (ETSY) : Free Stock Analysis Report
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