Etsy Reveals a Q4 Earnings Beat Sending Shares Flying

Shares of Etsy were skyrocketing on Thursday after the online crafts marketplace revealed a fourth quarter earnings beat.

The company reported fourth-quarter results that topped estimates on the top and the bottom line.

Shares climbed as much as 18% in extended trading after already climbing 10% during regular trading.

For the fourth quarter, Etsy reported earnings per share of $1.11, compared to the 79 cents that was expected according to analysts surveyed by Refinitiv. Revenue at $717 million was also higher than the $685 million that was expected, per Refinitiv.

The company said it had 96.3 million active buyers on the platform as of the fourth quarter, a touch higher than analysts’ projected 95.6 million.

Revenue growth slowed to 16% year over year during the quarter. Etsy sales growth topped 100% in 2020, but have decelerated in recent quarters.
Unfortunately, Etsy gave weak guidance for the first quarter, blaming it on tough comparisons with the year-earlier period when the digital retailer had a pandemic-related boost in online orders.

The digital retailer said it expects first-quarter revenue to come in between $565 million and $590 million. Wall Street had expected revenue of $630 million. Gross merchandise sales (GMS) during the quarter are projected to be in the range of $3.2 billion to $3.4 billion, which is lower than consensus estimates of $3.5 billion.

Etsy CFO Rachel Glaser blamed the weak first-quarter GMS outlook on tough comparisons with the year-earlier period when the company saw a pandemic-related boost in orders, as well as an increase in spending tied to government stimulus.

Glaser said she believes Etsy, which operates an online marketplace known for handmade and personalized goods, will be able to keep expanding its business in a post-pandemic world.

“Even without the significant tail winds of stimulus checks and lockdowns, our first quarter 2022 guidance reflects our expectation that we will keep all of the gains made in 2021 — indicating our belief in the durability of the last two years’ growth,” Glaser said.

“Furthermore, assuming stable macroeconomic conditions, we currently expect lower GMS growth year over year in the first half of 2022 and higher GMS growth in the second half, given the more challenging comparisons in the first half.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.