NEW YORK – Etsy, Inc. (NASDAQ: NASDAQ:) reported its second-quarter earnings, showing a slight decline in earnings despite beating revenue expectations. The company’s earnings per share for the quarter were $0.41, below analyst estimates of $0.45.
However, revenue exceeded expectations, coming in at $647.81 million, versus the consensus estimate of $629.32 million. Following the earnings release, Etsy’s shares fell modestly by 1.7%, suggesting that investor concerns were largely about the company’s earnings shortfall.
The e-commerce platform, known for its unique and handmade goods, saw its sales increase by 3.0% compared to the second quarter of the previous year. This growth was attributed to an increase in Marketplace revenue, driven by payment revenue and transaction fees from Offsite Ads. Despite the increase in sales, consolidated net income decreased by $8.9 million year-over-year, with a net profit margin of 8.2%.
Oppenheimer analysts lowered their ETSY rating from Perform to Outperform and removed the $75 price target following the report.
“While the company reported second-quarter results ahead of expectations for higher take rates, weaker third-quarter expectations and the loss of GMS’s full-year guidance indicate a lack of near-term visibility “, said analysts.
“Longer term, we see the opportunity to leverage LLMs to improve search and discovery, but this will take time and investment and compete with margin focus. Ultimately, ETSY should benefit from a cyclical recovery in its key categories, but this is beyond the management of the market.
Etsy’s CEO, Josh Silverman, highlighted the company’s strategic focus on gift giving, which increased gross merchandise sales (GMS) 4.1% year over year, representing 27% of total GMS. He also emphasized investments in several growth areas, including a new loyalty program and app expansion. The company’s number of active buyers increased marginally to 91.5 million, with 12 million new and reactivated buyers added during the quarter.
The company’s CFO, Rachel Glaser, noted that adjusted EBITDA in the second quarter was approximately 28%, which exceeded expectations and showed a 130 basis point improvement over the prior year. This was achieved through leverage on staff costs and turnover costs, although this was partly offset by higher marketing investments.
Despite the mixed financial results, Etsy’s management remains focused on reigniting market growth and capturing greater market share.
The company’s financial position remains strong, with $1.1 billion in cash and cash equivalents and investments, and a continued share repurchase program. Etsy repurchased approximately $150 million, or 2.4 million shares, of common stock during the quarter.
This article was produced with the support of AI and reviewed by an editor. For more information see our General Terms and Conditions.
