Etsy (ETSY) Q1 Earnings Beat Estimates, Revenues Rise Y/Y

·4 min read

Etsy, Inc. ETSY delivered first-quarter 2022 earnings of 60 cents per share, which surpassed the Zacks Consensus Estimate by 1.7%. Further, the bottom line was down 40% from the year-ago quarter.

Revenues advanced 5.2% year over year to $579.3 million. Notably, the figure beat the Zacks Consensus Estimate of $576 million.

Year-over-year revenue growth was primarily driven by accelerating services revenues.

Solid momentum across buyers and sellers contributed well. Strengthening gross merchandise sales (“GMS”) were other tailwinds.

Top Line in Detail

Marketplace revenues were $427.7 million (73.8% of total revenues), up 3.4% from the year-ago quarter. This was driven by solid momentum across buyers. Notably, it acquired 7 million buyers, which was a major positive.

Services revenues were $151.6 million (26.2% of total revenues), which rose 10.6% on a year-over-year basis.

Etsy, Inc. Price, Consensus and EPS Surprise

Etsy, Inc. Price, Consensus and EPS Surprise
Etsy, Inc. Price, Consensus and EPS Surprise

Etsy, Inc. price-consensus-eps-surprise-chart | Etsy, Inc. Quote

Quarter in Detail

Etsy’s active buyer base grew 4.9% from the prior-year quarter to 95.1 million. The active seller base stood at 7.7 million, up 62.8% year over year.

Notably, GMS of the company was $3.25 billion, which rose 3.5% year over year.

The Etsy marketplace’s GMS was at $2.8 billion, down 2% from the prior-year quarter. This was attributed to the normalization to the pre-pandemic levels. Also, sluggish consumer discretionary spending and re-openings were other negatives.

Marketplace GMS per active buyer on a trailing 12-month basis was $137 in the reported quarter, which rose 10% year over year.

Non-U.S. GMS for the Etsy marketplace rose 5% from the prior-year quarter and accounted for 45% of the total GMS.

Operating Details

In first-quarter 2022, the gross margin was 70.1%, which contracted 394 basis points (bps) year over year.

Total operating expenses were $321.9 million, reflecting a year-over-year increase of 25.2%. However, the figure, as a percentage of revenues, expanded 890 bps from the year-ago quarter to 55.6% in the reported quarter.

The operating margin was 14.6%, contracting from 27.3% in the year-ago quarter.

Balance Sheet & Cash Flows

As of Mar 31, 2022, cash and cash equivalents totaled $756.2 million, which decreased from $780.2 million as of Dec 31, 2021. Short-term investments were $225.9 million, up from $204.4 million in the previous quarter.

Long-term debt stood at $2.276 billion at the end of the first quarter compared with $2.275 billion at the end of the previous quarter.

The company generated $59.5 million in cash from operations in the reported quarter, down from $290.5 million in the prior quarter.

Guidance

For second-quarter 2022, Etsy anticipates total revenues between $540 million and $590 million. The Zacks Consensus Estimate for the same is pegged at $636.4 million.

GMS is expected to be $2.9-$3.2 billion.

The adjusted EBITDA margin is expected to be 25%.

Zacks Rank & Stocks to Consider

Etsy currently carries a Zacks Rank #3 (Hold).

Investors interested in the broader technology sector can consider better-ranked stocks like Jabil JBL, Jack Henry & Associates JKHY and Broadcom AVGO. While Jabil currently sports a Zacks Rank #1 (Strong Buy), Jack Henry & Associates and Broadcom carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Jabil has gained 5.5% over a year. The long-term earnings growth rate for JBL is currently projected at 12%.

Jack Henry & Associates has gained 16.9% over a year. The long-term earnings growth rate for JKHY is currently projected at 17%.

Broadcom has gained 20% over a year. The long-term earnings growth rate for AVGO is currently projected at 14.5%.


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