Etsy (ETSY) Q4 Earnings & Revenues Beat Estimates, Rise Y/Y

Etsy, Inc. ETSY delivered fourth-quarter 2021 earnings of $1.11 per share, which surpassed the Zacks Consensus Estimate by 46.1%. However, the bottom line was up 2.8% from the year-ago quarter.

Revenues advanced 16.2% year over year to $717.14 million. Notably, the figure beat the Zacks Consensus Estimate of $686.3 million.

Year-over-year revenue growth was driven by accelerating Marketplace and Services revenues. Solid momentum across both buyers and sellers contributed well. Strengthening gross merchandise sales (“GMS”) were other tailwinds. The strong performance of the company during the holiday season was another positive.

Notably, Etsy experienced 8% growth on a year-over-year basis in GMS per buyer on Black Friday. It further witnessed 2,000 orders per minute on Cyber Monday.

Etsy, Inc. Price, Consensus and EPS Surprise

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

Top Line in Detail

Marketplace revenues were $541.22 million (75.5% of total revenues), up 14.3% from the year-ago quarter. This was driven by solid momentum across buyers. The company reactivated 6.8 million buyers, who did not make any purchases in a year or more, in the reported quarter. Further, it acquired 10 million buyers, which was noteworthy. Strong traction across habitual buyers, whose number grew 26% from the year-ago quarter, contributed well.

Services revenues were $175.9 million (24.5% of total revenues), which rose 22.3% on a year-over-year basis.

Quarter in Detail

Etsy’s active buyer base grew 17.6% from the prior-year quarter to 96.3 million. The active seller base stood at 7.5 million, up 72.3% year over year.

Notably, GMS of the company was $4.2 billion, which rose 16.5% year over year.

The Etsy marketplace’s GMS was at $3.8 billion, up 11.8% from the prior-year quarter. Further, Marketplace GMS per active buyer on a trailing 12-month basis was $136 in the reported quarter, which rose 16% year over year.

Further, non-U.S. GMS for the Etsy marketplace rose 20% from the prior-year quarter and accounted for 44% of the total GMS.

However, GMS from paid channels, which accounted for 19% of the total GMS, contracted 200 basis points (bps) year over year.

Operating Details

In fourth-quarter 2021, the gross margin was 70.9%, which contracted 470 bps year over year.

Total operating expenses were $365.9 million, reflecting a year-over-year increase of 19.9%. However, the figure, as a percentage of revenues, expanded 162 bps from the year-ago quarter to 51% in the reported quarter.

The operating margin was 19.8%, contracting 500 bps from the year-ago quarter.

Balance Sheet & Cash Flows

As of Dec 31, 2021, cash and cash equivalents totaled $780.2 million, which increased from $619.4 million as of Sep 30, 2021. Short-term investments were $204.4 million, up from $197.4 million in the previous quarter.

Long-term debt stood at $2.275 billion at the end of the fourth quarter compared with $2.274 billion at the end of the previous quarter.

The company generated $290.5 million in cash from operations in the reported quarter, up from $90.9 million in the prior quarter.

Guidance

For first-quarter 2022, Etsy anticipates total revenues between $565 million and $590 million. The Zacks Consensus Estimate for the same is pegged at $616.9 million.

GMS is expected to be $3.2-$3.4 billion.

Acquisitions of Depop and Elo7 are expected to contribute well to revenues and GMS growth in the first quarter.

The adjusted EBITDA margin is expected to be 26%.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader technology sector are Allied Motion Technologies AMOT, Broadcom AVGO and inTest INTT. While Allied Motion currently sports a Zacks Rank #1 (Strong Buy), Broadcom and inTest carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allied Motion is slated to report fourth-quarter 2021 results on Mar 9. It has gained 6.5% over a year. The long-term earnings growth rate for AMOT is currently projected at 10%.

Broadcom is scheduled to release first-quarter fiscal 2022 results on Mar 3. It has gained 23.4% over a year. The long-term earnings growth rate for AVGO is currently projected at 14.5%.

inTest is slated to report fourth-quarter 2021 results on Mar 4. It has gained 21.8% over a year. The long-term earnings growth rate for INTT is currently projected at 10%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.