Group 1 - Etsy's shares have declined by over 22% in the past year, indicating a significant downturn for the company [1] - The company previously thrived during the e-commerce surge, capitalizing on market opportunities [1]

Core Viewpoint - Investors are increasingly focusing on stock buybacks as a more tax-efficient way to enhance returns compared to dividends, with Etsy Inc. recently approving a $1 billion stock buyback program, indicating confidence in the stock's undervaluation [2][11]. Group 1: Stock Performance and Valuation - Etsy's stock is currently trading at $53.41, which is 59% of its 52-week high of $89.58, suggesting significant bearish momentum [2]. - Truist Financial has set a price target of $70 for Etsy, indicating a potential upside of 32% from current levels [3]. - Analysts forecast earnings per share (EPS) growth for Etsy, projecting an increase to $0.54 over the next 12 months, a 20% rise from the current quarterly EPS of $0.45 [4]. Group 2: Institutional Interest - ICICI Prudential Asset Management has increased its holdings in Etsy by 7.8%, raising its net position to $8.4 million, reflecting bullish sentiment among institutional investors [5]. Group 3: Financial Metrics - Etsy's price-to-earnings (P/E) ratio stands at 27.3, which is a 40% premium compared to the business services sector average of 19.5 [6]. - The company reported a net income of $173.3 million, down 23% from $224.3 million year-over-year, but operating cash flows improved to $437.5 million, a 6.6% increase from $410.4 million [9][10]. Group 4: Market Activity - Following the recent election, Etsy experienced a trading volume of 4.3 million shares, surpassing its average of 3.7 million, indicating increased market interest [11].

Etsy (ETSY) shares jumped 7.19% to close at $51.44 on Thursday following the announcement of third-quarter 2024 results.Revenues advanced 4.1% year over year to $662.4 million. The figure beat the Zacks Consensus Estimate by 1.31%. Top-line growth was driven by accelerating Marketplace revenues.However, third-quarter 2024 earnings of 45 cents per share missed the Zacks Consensus Estimate by 16.67%. The bottom-line figure reflects a year-over-year decrease of 29.7%.Find the latest EPS estimates and surprises ...

Financial Data and Key Metrics - Consolidated GMS was $2.9 billion, down 4.1% YoY, with Etsy marketplace GMS down 6% YoY [6] - Revenue grew 4.1% YoY to $662 million, driven by take rate expansion [6] - Adjusted EBITDA margin was 27.7%, down 90 basis points YoY but ahead of guidance [26] - Active buyers remained solid at approximately 91 million, with a slight YoY decline [7][40] - GMS per active buyer decreased by 3.4% YoY to $123, primarily due to reduced visit frequency and lower spending per purchase day [41] Business Line Performance - Etsy marketplace GMS declined 6% YoY, but active buyer levels remained stable at 91 million [7] - Depop delivered strong GMS growth, accelerating sequentially, with U.S. listing growth up 26 percentage points since fee changes [22] - Reverb saw double-digit YoY growth in used music gear sales, particularly in the U.S., and partnered with Fender for certified pre-owned gear [23] - Etsy's focus on gifting resulted in site-wide GMS growth, with personalized and customized items outperforming overall site performance by 4% YoY [39] Market Performance - U.S. domestic-only trade routes and non-U.S. trade routes saw GMS declines, while international non-domestic trade routes and U.S. imports showed modest growth [34] - Back-to-school merchandise GMS in the U.S. grew 5% YoY [40] - Depop's U.S. marketing campaign reached over 70 million people, strengthening its position in the U.S. resale market [22] Strategy and Industry Competition - Etsy is focusing on improving customer experience through app and search enhancements, including a 33% reduction in "rearview mirror impressions" on the app [11][12] - The company is leveraging GenAI to diversify search results, reducing repetitive listings by 40% [13][14] - Etsy is prioritizing quality in search results, leading to an increase in four and five-star buyer reviews and a decrease in refund requests [15] - The company introduced physical Etsy gift cards in over 20,000 U.S. stores, aiming to capture a larger share of the gifting market [21] Management Commentary on Operating Environment and Future Outlook - Management acknowledged macro headwinds, including declining discretionary spending and mind-share events like elections and natural disasters [35][36] - Etsy is focusing on long-term customer experience improvements rather than short-term metrics like conversion rate and GMS [19] - The company expects Q4 consolidated GMS to decline in the low to mid-single digits YoY, with a take rate of 22.3% and adjusted EBITDA margin between 28% and 29% [49][50] Other Key Information - Etsy repurchased $156 million in stock during Q3, with $260 million remaining under its $1 billion repurchase program [45] - The company approved an additional $1 billion stock repurchase program, reflecting confidence in its growth plans [47] - Etsy generated $204 million in free cash flow during Q3, with a 90% conversion rate of adjusted EBITDA to free cash flow over the trailing 12 months [46] Q&A Session Summary Question: Leverage in product development and potential investment cycle [54] - Etsy prioritizes customer experience improvements that drive lifetime value and GMS growth, with a focus on foundational investments like the Q-score in search [55][56] - The company is hiring more app engineers and machine learning specialists to enhance the app experience and drive future growth [58] Question: Business performance quarter-to-date and physical gift card launch [61] - The holiday season is expected to be shorter and later than usual, with significant shopping activity in mid-to-late November and December [62] - Physical gift cards are expected to drive incremental GMS over time, with initial marketing efforts focused on building awareness [63] Question: Key initiatives to enhance consumer experience [68] - Etsy is most excited about improving consideration through on-site experiences, leveraging GenAI to inspire new shopping missions [69][70] Question: Right margin level and investment intensity [73] - Etsy is focused on growing market cap through a balance of profitability and growth, with potential for increased hiring if foundational investments show results [74][75] - Depop's strong performance, with GMS growth exceeding 30% YoY, validates Etsy's portfolio strategy [77] Question: Holiday season expectations for gift mode [80] - Gifting GMS grew faster than overall marketplace GMS in Q3, with significant product improvements and marketing efforts to drive awareness [80][81] Question: Etsy Insider and seller reaction [83] - Etsy Insider is in early beta, with limited uptake to test the economics and value propositions of the loyalty program [84] - Buyers and sellers both expressed a preference for free shipping without negatively impacting seller margins [85] Question: Q-score impact and mobile app changes [87] - The Q-score in search has remained conversion and GMS neutral, with modest headwinds from mobile app changes driving incremental downloads [88] - The opportunity cost of focusing on foundational improvements rather than short-term GMS gains is seen as a necessary trade-off for long-term growth [89] Question: Category performance and buyback strategy [91] - Etsy is seeing pockets of growth in value-driven categories like demi-fine jewelry, while lower-priced items face more pressure [94] - The company has the flexibility to increase share repurchases beyond current levels, supported by strong free cash flow and a $1.2 billion cash balance [92][93] Question: Incremental drivers of take rate [95] - Take rate gains in 2024 were driven by payments coverage, Etsy ads improvements, and seller onboarding fees, with sustainable opportunities for further growth [96][97]

Etsy (ETSY) reported $662.41 million in revenue for the quarter ended September 2024, representing a yearover-year increase of 4.1%. EPS of $0.45 for the same period compares to $0.64 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $653.83 million, representing a surprise of +1.31%. The company delivered an EPS surprise of -16.67%, with the consensus EPS estimate being $0.54. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and ...

Etsy (ETSY) came out with quarterly earnings of $0.45 per share, missing the Zacks Consensus Estimate of $0.54 per share. This compares to earnings of $0.64 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -16.67%. A quarter ago, it was expected that this online crafts marketplace would post earnings of $0.46 per share when it actually produced earnings of $0.41, delivering a surprise of -10.87%.Over the last four quarters, the ...

Cash and Cash Equivalents - Cash and cash equivalents decreased from $914.3 million to $818.9 million as of September 30, 2024, compared to December 31, 2023[40] - Cash and cash equivalents at the end of the period were $818.939 million, compared to $741.958 million in 2023[57] - Cash and cash equivalents and short-term investments were $1.0 billion as of September 30, 2024[145] - Cash and cash equivalents and short-term investments totaled $1.0 billion as of September 30, 2024, with $107.0 million in long-term investments and access to a $400.0 million credit facility[182] Total Current Assets - Total current assets decreased from $1,570.4 million to $1,320.7 million as of September 30, 2024, compared to December 31, 2023[40] Accounts Receivable - Accounts receivable decreased from $24.7 million to $8.6 million as of September 30, 2024, compared to December 31, 2023[40] Funds Receivable and Seller Accounts - Funds receivable and seller accounts decreased from $265.4 million to $172.6 million as of September 30, 2024, compared to December 31, 2023[40] Total Liabilities - Total liabilities decreased from $3,229.1 million to $3,066.5 million as of September 30, 2024, compared to December 31, 2023[43] Long-Term Debt - Long-term debt remained relatively stable at $2,287.0 million as of September 30, 2024, compared to $2,283.8 million as of December 31, 2023[43] - The total carrying value of all Notes as of September 30, 2024, is $2,287,016 thousand with a fair value of $2,020,888 thousand[97] - The total principal amount of the Notes as of September 30, 2024, is $2,299,887 thousand with a net carrying value of $2,287,016 thousand[100] - The interest expense related to the Notes was $2.1 million for both the three months ended September 30, 2024, and September 30, 2023[106] Accumulated Deficit - Accumulated deficit increased from $(1,357.4) million to $(1,652.3) million as of September 30, 2024, compared to December 31, 2023[40] - Accumulated deficit as of September 30, 2024, increased to $1.65 billion from $1.55 billion as of June 30, 2024[50] Total Stockholders' Deficit - Total stockholders' deficit increased from $(543.7) million to $(624.3) million as of September 30, 2024, compared to December 31, 2023[40] Intangible Assets - Intangible assets decreased from $457.1 million to $443.9 million as of September 30, 2024, compared to December 31, 2023[40] - Asset impairment charges were $68.1 million in the nine months ended September 30, 2023, related to Elo7's intangible assets and property, with no charges in 2024[177] Deferred Tax Assets - Deferred tax assets increased from $137.8 million to $144.4 million as of September 30, 2024, compared to December 31, 2023[40] Revenue - Revenue for Q3 2024 increased to $662.41 million, up 4.1% from $636.30 million in Q3 2023[46] - Total revenue for the three and nine months ended September 30, 2024 was $662.4 million and $2.0 billion, respectively[144] - Total revenue for the nine months ended September 30, 2024 was $1.956 billion, compared to $1.906 billion in 2023[70] - Total revenue for Q3 2024 increased by 4.1% to $662.41 million, driven by a 3.3% increase in Marketplace revenue and a 6.2% increase in Services revenue[161] - Total revenue for the nine months ended September 30, 2024, increased by 2.6% to $1.956 billion, with Marketplace revenue up 2.3% and Services revenue up 3.4%[170] Net Income - Net income for Q3 2024 decreased to $57.37 million, down 34.7% from $87.85 million in Q3 2023[46] - Net income for the three and nine months ended September 30, 2024 was $57.4 million and $173.4 million, respectively[144] - Net income for the nine months ended September 30, 2024 was $173.375 million, compared to $224.302 million in the same period in 2023[57] Gross Profit - Gross profit for Q3 2024 rose to $476.77 million, up 6.6% from $447.48 million in Q3 2023[46] Marketing Expenses - Marketing expenses for Q3 2024 increased to $196.53 million, up 22.1% from $160.94 million in Q3 2023[46] - Marketing expenses increased by 22.1% in Q3 2024, with paid GMS accounting for 21% of overall GMS, up from 19% in Q3 2023[164] - Marketing expenses for the nine months ended September 30, 2024, increased by 14.7%, with paid GMS accounting for 21% of overall GMS, up from 20% in the same period in 2023[173] Comprehensive Income - Comprehensive income for Q3 2024 was $100.64 million, compared to $70.72 million in Q3 2023[48] - Other comprehensive income for Q3 2024 was $43.27 million, reversing a loss of $17.13 million in Q3 2023[50] Stock Repurchases - Stock repurchases in Q3 2024 totaled $156.99 million, reducing common shares by 2,744[50] - The company repurchased $464.314 million of stock during the nine months ended September 30, 2024, compared to $483.987 million in 2023[57] - The company approved a stock repurchase program authorizing up to $1 billion of its common stock, with $259.9 million remaining available for repurchase as of September 30, 2024[117] - The company approved a new stock repurchase program authorizing up to an additional $1 billion of its common stock on October 30, 2024[118] - The company repurchased 7,321 shares of common stock for a total value of $464.4 million at an average price of $63.42 per share during the nine months ended September 30, 2024[122] Stock-Based Compensation - Stock-based compensation for Q3 2024 was $74.84 million, contributing to additional paid-in capital[50] - The company granted 4,270 restricted stock units (RSUs) during the nine months ended September 30, 2024, with a total unrecognized compensation expense of $588.3 million related to unvested RSUs[126] Weighted-Average Diluted Shares Outstanding - Weighted-average diluted shares outstanding for Q3 2024 decreased to 130.75 million from 138.89 million in Q3 2023[46] Net Cash Provided by Operating Activities - Net cash provided by operating activities for the nine months ended September 30, 2024 was $437.510 million, compared to $410.408 million in 2023[57] - Net cash provided by operating activities was $437.5 million in the nine months ended September 30, 2024, driven by cash net income of $464.1 million[189] Marketplace Revenue - Marketplace revenue for the nine months ended September 30, 2024 was $1.413 billion, compared to $1.381 billion in 2023[70] Services Revenue - Services revenue for the nine months ended September 30, 2024 was $542.736 million, compared to $524.660 million in 2023[70] - Services revenue growth in Q3 2024 was driven by a 5.4% increase in on-site advertising revenue and a 20.5% increase in shipping label revenue[162] - Services revenue growth for the nine months ended September 30, 2024, was driven by a 2.7% increase in on-site advertising revenue and a 15.2% increase in shipping label revenue[171] Effective Income Tax Rate - The company's effective income tax rate for the nine months ended September 30, 2024 was 25.4%, higher than the U.S. statutory rate of 21% due to tax deficiencies from stock-based compensation and state income taxes[75] - Income tax provision increased to $59.1 million in 2024, compared to a $40.7 million benefit in 2023, driven by tax deficiencies from stock-based compensation and state/local taxes[179] Unrecognized Tax Benefits - The unrecognized tax benefits increased by $3.6 million, from $51.7 million as of December 31, 2023, to $55.3 million as of September 30, 2024[78] - The total unrecognized tax benefits that could favorably affect the effective tax rate is $52.7 million as of September 30, 2024[78] - The company estimates that $15.8 million of gross unrecognized tax benefits could potentially be reduced in the next 12 months[78] Impairment Charges - The company recorded an impairment charge of $7.9 million for property and equipment and $60.2 million for finite-lived intangible assets related to the Elo7 reporting unit[83] - The company recognized a net loss of $2.6 million on the sale of Elo7, including a $7.5 million loss from the reclassification of accumulated other comprehensive loss[87] Investments - The company's cash equivalents, short-term investments, and long-term investments primarily consist of available-for-sale debt securities, with fair value classified within Level 1 or Level 2[88] - The company's long-term investments include loan receivables measured on an amortized cost basis and third-party managed funds measured on the NAV basis[89] - The fair value of the company's investments as of September 30, 2024, was $417.8 million, with $99.3 million in cash and cash equivalents, $226.0 million in short-term investments, and $92.5 million in long-term investments[91] - The fair value of U.S. Government securities as of September 30, 2024, is $11,578 thousand with an unrealized holding loss of $16 thousand[94] - The total fair value of available-for-sale debt securities as of September 30, 2024, is $41,879 thousand with a gross unrealized loss of $7 thousand[94] - The total fair value of available-for-sale debt securities as of December 31, 2023, is $153,750 thousand with a gross unrealized loss of $264 thousand[94] - The Company's investments, excluding the Impact Investment Fund, have maturities no longer than 37 months, with an average maturity of 12 months or less[95] Credit Facility - The company entered into a $400.0 million senior secured revolving credit facility with a maturity date of March 2028, including a $60.0 million letter of credit sublimit and a $20.0 million swingline loan sublimit[110] - Borrowings under the 2023 Credit Agreement bear interest at a base rate plus a margin ranging from 0.50% to 1.25%, or an adjusted Term SOFR rate plus a margin ranging from 1.50% to 2.25%[112] - The company had no outstanding borrowings under the 2023 Credit Agreement and was in compliance with all financial covenants as of September 30, 2024[114] Workforce Reductions - The company incurred approximately $26.6 million in charges related to workforce reductions, primarily consisting of severance and employee-related benefits[130] - The company reduced its workforce by an additional 18% during the third quarter of 2024 to align with key strategic initiatives[131] - The company's liability for severance and employee-related benefits associated with restructuring and other exit costs was $3.6 million as of September 30, 2024[132] Etsy Marketplace Metrics - Etsy marketplace connected 8.5 million active sellers and 96.7 million active buyers globally as of September 30, 2024[143] - GMS for the three and nine months ended September 30, 2024 was $2.9 billion and $8.9 billion, respectively, with 46% and 45% coming from ex-U.S. transactions[143] - Etsy marketplace GMS decreased by 4.1% year-over-year to $2.5 billion in the three months ended September 30, 2024[147] - Active buyers on the Etsy marketplace declined by 0.4% year-over-year to 91.2 million as of September 30, 2024[150] - New buyer GMS declined by 12% year-over-year in the three months ended September 30, 2024[152] - GMS ex-U.S. domestic as a percentage of total GMS was 46% and 45% for the three and nine months ended September 30, 2024, respectively[159] - Currency-neutral GMS decline for Q3 2024 was 4.4% quarter-to-date and 3.5% year-to-date, with FX impacts of 0.3% and 0.2% respectively[160] Etsy Payments Platform - Etsy Payments platform processed 99% of Etsy marketplace GMS in Q3 2024, up from 93% in Q3 2023, contributing to an 8.3% increase in payments revenue[161] Cost of Revenue - Cost of revenue decreased by 1.7% in Q3 2024, primarily due to reduced refund costs and workforce reductions in 2023[163] Product Development Expenses - Product development expenses decreased by 5.9% in Q3 2024, primarily due to reduced employee compensation-related expenses[165] General and Administrative Expenses - General and administrative expenses increased to $271.2 million, up 8.2% YoY, primarily due to retroactive non-income tax expenses related to digital services tax legislation in Canada[176] Other Income - Other income, net decreased by 61.8% to $7.4 million, driven by noncash losses from exchange rate changes and lower interest and dividend income[178] Adjusted EBITDA - Adjusted EBITDA for the three and nine months ended September 30, 2024 was $183.6 million and $530.9 million, respectively[144] - Adjusted EBITDA for the nine months ended September 30, 2024, was $530.9 million, with an Adjusted EBITDA margin of 27.1%[181] Net Cash Used in Investing Activities - Net cash used in investing activities was $36.8 million in the nine months ended September 30, 2024, primarily due to $33.0 million in capital expenditures[192] Net Cash Used in Financing Activities - Net cash used in financing activities was $504.8 million in the nine months ended September 30, 2024, mainly due to $464.3 million in stock repurchases[194] Liquidity and Capital Resources - The company believes its existing cash, investments, and cash flows from operations will be sufficient to meet operating cash needs for at least the next 12 months[186]

Etsy's Board of Directors Approves a new $1B Stock Repurchase Program BROOKLYN, N.Y., Oct. 30, 2024 /PRNewswire/ -- Etsy, Inc. (NASDAQ: ETSY), which operates two-sided online marketplaces that connect millions of passionate and creative buyers and sellers around the world, today announced results for its third quarter ended September 30, 2024. "Our third quarter consolidated results came in roughly as anticipated, with some incremental pressure on Etsy marketplace yearover-year GMS, healthy growth in revenu ...

In its upcoming report, Etsy (ETSY) is predicted by Wall Street analysts to post quarterly earnings of $0.54 per share, reflecting a decline of 15.6% compared to the same period last year. Revenues are forecasted to be $654.43 million, representing a year-over-year increase of 2.9%. The consensus EPS estimate for the quarter has undergone a downward revision of 0.9% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their initial est ...

Core Viewpoint - Wall Street anticipates a year-over-year decline in Etsy's earnings despite an increase in revenues, with the upcoming earnings report being crucial for stock price movement [1] Group 1: Earnings Expectations - Etsy is expected to report quarterly earnings of $0.54 per share, reflecting a year-over-year decrease of 15.6% [2] - Revenue projections stand at $654.63 million, indicating a 2.9% increase from the previous year [2] Group 2: Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, suggesting stability in analyst expectations [3] - The Most Accurate Estimate for Etsy is lower than the Zacks Consensus Estimate, leading to an Earnings ESP of -7.79%, indicating a bearish outlook from analysts [6] Group 3: Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a favorable Zacks Rank [5] - Etsy currently holds a Zacks Rank of 3, making it challenging to predict a beat on the consensus EPS estimate [7] Group 4: Historical Performance - In the last reported quarter, Etsy was expected to post earnings of $0.46 per share but only achieved $0.41, resulting in a surprise of -10.87% [8] - Over the past four quarters, Etsy has only beaten consensus EPS estimates once [8] Group 5: Conclusion - An earnings beat or miss is not the sole determinant of stock price movement, as other factors can influence investor sentiment [9] - Etsy does not appear to be a compelling candidate for an earnings beat, and investors should consider additional factors before making decisions [9]