Etsy (ETSY) Reports Loss in Third Quarter, Beats on Revenues
Etsy, Inc. ETSY incurred a third-quarter 2022 loss of $7.62 per share. ETSY had delivered earnings of 62 cents per share in the year-ago quarter. The bottom line included an $(8.20) impact of impairment charge associated with the goodwill of Depop and Elo7.
Excluding this impact, the bottom line for the reported quarter stands at 58 cents per share, surpassing the Zacks Consensus Estimate by 56.8%.
Revenues advanced 11.7% year over year to $594.5 million. The figure beat the Zacks Consensus Estimate of $560.2 million.
Top-line growth was driven by accelerating services and marketplace revenues.
Etsy, Inc. Price, Consensus and EPS Surprise
Etsy, Inc. price-consensus-eps-surprise-chart | Etsy, Inc. Quote
Top Line in Detail
Marketplace revenues were $443.5 million (74.6% of the total revenues), up 12.1% from the year-ago quarter’s level. This was driven by the solid momentum across buyers. ETSY acquired 6 million new buyers, which was a major positive.
Services revenues were $150.9 million (25.4% of the total revenues), up 10.3% on a year-over-year basis.
Quarterly Specifics
Etsy’s active buyer base decreased 1.9% from the prior-year quarter’s figure to 94.1 million. The active seller base stood at 7.4 million, down 0.9% year over year.
ETSY witnessed solid momentum in buyer reactivation. Reactivated buyers were 5.1 million, up 24.4% year over year.
GMS of ETSY was $3 billion, down 3.3% year over year. The Etsy marketplace’s GMS was $2.6 billion, down 3.8% from the prior-year quarter’s figure.
Non-U.S. GMS for the Etsy marketplace rose 9% from the prior-year quarter’s figure on a currency-neutral basis and accounted for 44% of the total GMS.
Operating Details
In third-quarter 2022, the gross margin was 70.7%, which contracted 40 basis points (bps) year over year.
Total operating expenses were $1.4 billion, reflecting a jump from $295.03 million.
Consequently, ETSY reported a loss of $954.8 million from operations in the reported quarter against an income of $83.7 million generated in the year-ago quarter.
Balance Sheet
As of Sep 30, 2022, cash and cash equivalents totaled $789.9 million, which increased from $758.9 million as of Jun 30, 2022.
Short-term investments were $251.2 million, up from $247.8 million in the previous quarter.
Long-term debt stood at $2.278 billion at the end of the third quarter compared with $2.277 billion at the end of the previous quarter.
Guidance
For fourth-quarter 2022, Etsy anticipates total revenues between $700 million and $780 million. The Zacks Consensus Estimate for the same is pegged at $743.7 million.
GMS is expected to be $3.6-$4 billion.
The adjusted EBITDA margin is expected to be 27%.
Zacks Rank & Stocks to Consider
Etsy currently carries a Zacks Rank #4 (Sell).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like US Foods USFD, The Trade Desk TTD and Tencent Music Entertainment Group TME, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
US Foods is set to report third-quarter 2022 results on Nov 10. The Zacks Consensus Estimate for USFD’s earnings is pegged at 59 cents per share, suggesting an increase of 22.9% from the prior-year period’s reported figure. USFD has lost 15% in the year-to-date period. Its long-term earnings growth rate is currently projected at 20%.
The Trade Desk is scheduled to release third-quarter 2022 results on Nov 9. The Zacks Consensus Estimate for TTD’s earnings is pegged at 24 cents per share, suggesting an increase of 33.3% from the prior-year quarter’s reported figure. TTD has lost 42% in the year-to-date period. TTD’s long-term earnings growth rate is currently projected at 24%.
Tencent Music is scheduled to release third-quarter 2022 results on Nov 15. The Zacks Consensus Estimate for TME’s earnings is pegged at 11 cents per share, suggesting a 22.2% increase from the prior-year quarter’s reported figure. TME has lost 45.2% in the year-to-date period. TME’s long-term earnings growth rate is currently projected at 17.9%.
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