Etsy Inc. (ETSY) reported its third-quarter earnings after the closing bell on Wednesday, offering a mixed bag of results for investors. While the company missed analyst expectations on earnings, it managed to exceed revenue forecasts, indicating a resilient performance amidst challenging economic conditions.
The company reported quarterly earnings of 45 cents per share, falling short of the analyst consensus estimate of 55 cents. However, revenue for the quarter came in at $662.4 million, surpassing the analyst consensus estimate of $652.81 million and representing an increase from the $636.3 million recorded in the same period last year.
Etsy’s consolidated GMS (Gross Merchandise Sales) experienced a decline of 4.1% year-over-year, reaching $2.9 billion. This figure includes a slight headwind from the divestiture of Elo7. Etsy marketplace GMS, a key indicator of the platform’s performance, declined by 6.0% year-over-year to $2.5 billion. Despite the decline, Etsy noted an increase in the number of reactivated buyers, indicating a positive trend in engagement.
While the company faced challenges in its GMS performance, Etsy CEO Josh Silverman expressed optimism about the future. He highlighted significant investments in customer experience, including new features like Gifting, improved Quality standards, a loyalty program, and enhancements to the Etsy app. These initiatives are designed to enhance user engagement and drive long-term growth.
“Our third quarter consolidated results came in roughly as anticipated, with some incremental pressure on Etsy marketplace year-over-year GMS, healthy growth in revenue and continued strength in our adjusted EBITDA profitability,” Silverman stated in the earnings release. “We made excellent progress improving Etsy marketplace customer experiences — from Gifting, to Quality, a new loyalty program, investing in our app, and more — all of which we believe will drive engagement and frequency over time. While 2024 has been a challenging period for discretionary goods, we are investing with discipline and focus to make Etsy even more Etsy — which we believe will lift our boat when the tide comes back in again,” he added.
The positive outlook and focus on customer experience resonated with investors, as Etsy shares soared 11.79% in after-hours trading, reaching $53.65 at the time of publication. This strong stock performance demonstrates investor confidence in the company’s strategic direction and its potential to navigate the current economic headwinds.
