NEW YORK - Etsy, Inc. (NASDAQ: NASDAQ:ETSY) reported its second-quarter earnings, revealing a slight decline in profit despite surpassing revenue expectations. The company's EPS for the quarter was $0.41, falling short of the analyst estimate of $0.45.
However, revenue exceeded forecasts, coming in at $647.81 million against the consensus estimate of $629.32 million. Following the earnings release, Etsy's stock saw a modest drop of 1.7%, indicating investor concerns primarily centered around the company's profit shortfall.
The e-commerce platform, known for its unique and handcrafted goods, saw its revenue increase by 3.0% compared to the second quarter of the previous year. This growth was attributed to a rise in Marketplace revenue, driven by payments revenue and transaction fee revenue from Offsite Ads. Despite the revenue uptick, consolidated net income declined by $8.9 million YoY, with a net income margin of 8.2%.
Oppenheimer analysts cut their ETSY rating to Perform from Outperform after the report and removed the $75 price target.
"While company reported 2Q results ahead of guidance on higher take-rate, weaker 3Q guidance and removal of FY GMS outlook suggest no near-term visibility," analysts said.
"Longer term, we see the opportunity to leverage LLMs to improve search and discovery, but this will take time and investment, competing with margin focus. Eventually, ETSY should benefit from a cyclical recovery in its key categories, but this is out of mgmt.'s control."
Etsy's CEO, Josh Silverman, highlighted the company's strategic focus on gifting, which saw a 4.1% increase in GMS (Gross Merchandise Sales) YoY, representing 27% of total GMS. He also emphasized investments in various growth areas, including a new Loyalty Program and app expansion. The company's active buyer count rose marginally to 91.5 million, with 12 million new and reactivated buyers added during the quarter.
The company's CFO, Rachel Glaser, noted that the second quarter adjusted EBITDA was around 28%, exceeding their guidance and showing a 130 basis point improvement from the previous year. This was achieved through leverage gained on employee costs and cost of revenue, although partially offset by increased marketing investments.
Despite the mixed financial results, Etsy's management remains focused on reigniting marketplace 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 stock repurchase program. Etsy repurchased approximately $150 million, or 2.4 million shares, of its common stock during the quarter.
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