Etsy Inc (ETSY) Q3 2024 Earnings Call Highlights: Navigating Growth Amidst Challenges

GuruFocus News
3 min read

In This Article:

  • Consolidated GMS: $2.9 billion, down 4.1% year-over-year.

  • Revenue: $662 million, up 4.1% year-over-year.

  • Adjusted EBITDA Margin: Approximately 28%.

  • Active Buyers: Approximately 91 million.

  • Take Rate: Improved to 22.7%, up 180 basis points from the previous year.

  • Active Seller Count: 6.2 million, down 8.5% year-over-year.

  • Cash and Investments: $1.2 billion as of September 30.

  • Free Cash Flow: Approximately $204 million for the quarter.

  • Stock Repurchase: $156 million repurchased in the third quarter, with $260 million remaining under the current program.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Etsy Inc (NASDAQ:ETSY) reported a 4.1% increase in revenue to $662 million, benefiting from continued take rate expansion.

  • The company maintained a healthy adjusted EBITDA margin of approximately 28%, despite macroeconomic challenges.

  • Etsy Inc (NASDAQ:ETSY) has made significant improvements in customer experience, including enhancing search algorithms and launching a loyalty program.

  • The company has seen a 33% reduction in repetitive search impressions, improving the diversity of search results.

  • Depop, part of Etsy Inc (NASDAQ:ETSY)'s House of Brands, showed strong performance with over 30% year-over-year GMS growth, particularly in the US market.

Negative Points

  • Consolidated GMS was down approximately 4.1% year-over-year, with Etsy marketplace GMS down 6%.

  • The company faced macroeconomic headwinds and mind share events, impacting overall performance.

  • Active seller count decreased by 8.5% year-over-year, reflecting challenges in maintaining seller engagement.

  • GMS per active buyer declined by 3.4% in the quarter, indicating reduced buyer spending frequency.

  • Etsy Inc (NASDAQ:ETSY) anticipates a decline in consolidated GMS in the low to mid-single-digit percentage range for the fourth quarter, reflecting ongoing consumer pressure.

Q & A Highlights

Q: Could you speak to the leverage you're driving in product development and how you prioritize investments to accelerate GMS growth? A: Joshua Silverman, CEO, explained that Etsy uses a top-down and bottom-up approach to prioritize customer experiences that will translate into more lifetime value and GMS. They focus on foundational investments like the Q score in search, which pairs customers with products they love, setting up for future growth. They are also hiring more app engineers and machine learning experts to drive growth.

Q: Can you provide any color on what you're seeing in the business quarter-to-date and the implications for the fourth quarter GMS guide? A: Joshua Silverman, CEO, noted that the holiday season is shorter and later this year, with November and December being crucial. The U.S. election could impact early November shopping. The physical Etsy gift card launch is included in the guide, with potential long-term upside as gift cards currently represent less than 1% of GMS.

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