Etsy Gives Lackluster Forecast Suggesting Growth Hard to Sustain
(Bloomberg) -- Etsy Inc., the online marketplace for crafts and vintage items, projected revenue that fell short of analysts’ estimates for the holiday period, signaling it may be a struggle to maintain the company’s pandemic-fueled growth.
Sales will be $660 million to $690 million in the fourth quarter, the Brooklyn, New York-based company said Wednesday in a statement. Analysts, on average, estimated $691.7 million, according to data compiled by Bloomberg.
Etsy’s sales more than doubled in 2020 as consumers turned to online shopping sites during the pandemic. Seeking to keep and expand that customer base, the company made a pair of acquisitions in July: Gen-Z thrift app Depop for $1.6 billion and Elo7, a Brazilian-based marketplace, for $217 million. Depop, based in London, is the 10th-most visited shopping site among Gen Z consumers in the U.S., Etsy said at the time of the deal. Depop and Elo7 will run as independent brands along with Reverb, the company’s online music marketplace.
Third-quarter revenue increased 18% to $532 million, topping analysts’ average estimate of $519 million. The marketplace, which specializes in one-of-a-kind and second-hand goods, appeared to be hurt less than traditional retail companies by shortages and other issues in the global supply chain.
Etsy’s adjusted earnings before interest, taxes, depreciation and amortization were $174.2 million, compared with analysts’ average estimate of $129.8 million. Net income was $89.9 million, or 62 cents a share, compared with $91.8 million, or 70 cents, a year earlier.
Gross merchandise sales, the value of goods sold on the company’s marketplaces, increased 18% to $3.1 billion, compared with the average estimate of $2.97 billion. Etsy reported that active sellers rose to 7.46 million while active buyers jumped to about 96 million. Analysts projected 5.7 million sellers and 91.8 million buyers.
While the forecast fell short of analysts’ expectations, Chief Executive Officer Josh Silverman expressed optimism that the company’s positive performance in the third quarter would continue.
The results “further reflect that we’re moving the needle on frequency, and that many of the millions of buyers who found, or re-found Etsy during the pandemic are sticking with us, and performing even better than historical cohorts,” he said.
Shares fell about 1% in extended trading after closing at $239.62 in New York. The stock has jumped 35% this year.
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