Why Is Etsy (ETSY) Up 5.6% Since Last Earnings Report?

Core Viewpoint - Etsy's third-quarter 2024 earnings report showed mixed results, with revenue growth but a significant earnings miss, raising questions about future performance and market expectations [2][4][13]. Financial Performance - Q3 2024 revenues increased by 4.1% year-over-year to $662.4 million, surpassing the Zacks Consensus Estimate by 1.31% [2] - Q3 2024 earnings per share were 45 cents, missing estimates by 16.67% and reflecting a 29.7% year-over-year decline [2] - Gross merchandise sales (GMS) totaled $2.92 billion, down 4.1% year-over-year, missing the consensus estimate of $2.97 billion [7] Revenue Breakdown - Marketplace revenues were $476.1 million, accounting for 71.9% of total revenues, up 3.3% year-over-year, driven by payment fee revenues and new seller setup fees [4] - Services revenues reached $186.3 million, representing 28.1% of total revenues, with a year-over-year increase of 6.2% [5] User Metrics - Active buyers increased by 0.7% year-over-year to 96.7 million, falling short of the consensus estimate of 97.2 million [6] - The active seller base decreased by 3.2% year-over-year to 8.5 million, also missing the consensus mark of 9.7 million [6] Operating Expenses - Total operating expenses rose by 8.6% year-over-year to $389.95 million, with marketing expenses increasing by 22.1% to $196.5 million [8] - Operating income was reported at $86.8 million, down from $88.6 million in the prior-year quarter [10] Balance Sheet - Cash and cash equivalents increased to $818.94 million as of September 30, 2024, up from $759.21 million at the end of the previous quarter [11] - Long-term debt remained unchanged at $2.29 billion [12] Future Guidance - For Q4 2024, Etsy expects a take rate of 22.3% and anticipates GMS to decline in a low to mid-single-digit percentage range year-over-year [13] - The adjusted EBITDA margin is projected to be between 28-29% [14] Market Sentiment - There has been an upward trend in estimates for Etsy, with the stock currently holding a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [15][17]