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Etsy reported better than expected third-quarter earnings after the market Wednesday. Revenues came in over $400 million with the marketplace platform expected to have sustained momentum during the coronavirus lockdown with orders and customer relationships becoming more developed.

ETSY

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Etsy Inc NASDAQ: ETSY Report Earnings After Close Wednesday

$0.70 EPS Beat $0.57 EPS Forecast And $451.5 Beat $412.70 Mil Revenue Forecast

Earnings

Etsy’s third-quarter earnings reported on Wednesday showed a net income of $91.8 million, or 70 cents a share, compared with $14.8 million, or 12 cents a share, in the year-ago period. Revenue more than doubled to $451.5 million from $197.9 million in the year-ago quarter. Analysts surveyed by FactSet had forecast earnings of 57 cents a share on revenue of $412.7million. That compares with 75 cents in the previous quarter .

In second-quarter 2020, Marketplace revenues were $332.03 million (77.4% of total revenues), which went up 145.6% from the year-ago quarter. Etsy since the Covid lockdown has seen broad-based strength across categories. Investors will be looking for this to contunue as the market has been eager for their retailers to turn Covid-related gains (customers) into long-term drivers.

Etsy scheduled a conference call for 5 p.m. Eastern time Wednesday.

The concern for investors is rising revenues but falling margins and profits in what some have called a 'captive market' for many during the Covid-19 lockdown. T

 

Etsy Inc NASDAQ: ETSY

Market Reaction: After hours $137.50▼ 2.14 (- 1.53%)

Highlights

"Consumer shopping habits have been greatly influenced by the events of 2020, and Etsy truly stands for something different,” said Etsy Chief Executive Josh Silverman in a statement.'

  • 14.8 million new and reactivated buyers in the third quarter. In a sign of our pandemic times,
  • Face-mask sales constituted 11% of Etsy’s gross merchandise sales
  • GMS excluding mask sales was $2.2 billion, up 93% from the year-ago period.
  • Of the 138 million all time buyers on the Etsy marketplace, approximately 50% have now purchased at least once in the last year, with approximately 69 million active buyers in the third quarter.
  • Etsy marketplace saw an influx of 14.8 million new buyers and reactivated buyers during the third quarter - the latter being those who haven't purchased in a year or more.
  • The majority of Etsy's GMS is driven by existing buyers, and we have experienced a significant change in buyer cohorts in terms of the frequency with which they shop and the amount they are spending on Etsy.
  • In terms of third quarter 2020 GMS per buyer, when using data for our 2018 buyer cohort as a proxy for how our historical cohorts have performed, existing buyers have increased their GMS per buyer by more than 50% in the third quarter of 2020 when compared to the third quarter of 2019, even when excluding face mask purchases.
  • In the third quarter, the Etsy marketplace delivered 9.6 million new buyers and 5.2 million reactivated buyers who have not purchased in a year or more.
  • Habitual buyers, buyers with 6 or more purchase days and over $200 in spend in the trailing 12-months, grew 104%, outpacing overall active buyer growth, and repeat buyers, buyers with 2 or more purchase days in the trailing 12-months, grew 70% in the third quarter.
  • GMS from paid channels was 19% of overall GMS in the third quarter of 2020, expanding 500 basis points compared to the third quarter of 2019.

Outlook

"We are making significant investments today that reflect our strong conviction that Etsy has considerable opportunities for further growth - and that investments in technology, marketing, product, and people will yield both near and long-term benefits," continued Mr. Silverman. "We're focused on driving seller growth and bringing joy to buyers this holiday season. So far, October GMS growth trends for both Etsy and Reverb have been similar to what we experienced in September. Looking further out, 2021 is extremely hard to predict and we will be lapping enormous 2020 growth. We are confident that investing in Etsy's 'Right to Win' strategy will enable us to capitalize on our large market opportunity and unique position in e-commerce."

Etsy's Marketplace platform

The Etsy marketplace platform anables product and inventory management, processing of orders and payments, and building customer relationships that are provided to the merchants. Etsyis able to deliver an enhanced shopping experience with the help of a personalized search experience. The software integrates with Etsy Payment to facilitate seamless online payment transaction for orders and free shipment services. These features have become very popular during the Coronavirus stay at home businesses and consumer market change.

Source: Etsy

From The TradersCommunity Research Desk

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