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Shares of American e-commerce company Etsy Inc (NASDAQ: ETSY) tanked by 13.69% on Thursday, August 3, soon after the company reported better-than-expected numbers for the second quarter ending June. Well, the Etsy stock price tanked due to the company’s weak guidance for Q3 revenue as well as gross-merchandise sales. For Q2, Etsy reported earnings at 45 cents per share against the expected 43 cents per share. Also, the revenue for the company stood at $629 million against the expected $619 million.
On Wednesday, Etsy announced that it predicts third-quarter revenue to be in the range of $610 million to $645 million. This estimate falls below the analyst consensus of $632 million according to Refinitiv. The projected GMS, which measures the total value of goods sold over a specific period, is expected to be between $2.95 billion and $3.1 billion. However, at the midpoint, it is slightly below the Refinitiv analysts’ survey expectation of $3.04 billion.
Despite an otherwise strong performance in the second quarter, the company’s weak guidance for the future was the main focus. The company exceeded expectations in both revenue and profits for the quarter. The GMS (total value of goods sold) amounted to $3 billion, surpassing the expected $2.98 billion. Additionally, services revenue, which includes things like advertising, played a significant role in boosting sales during the quarter, growing by approximately 21% compared to the previous year.
CEO Josh Silverman acknowledged that the overall economic conditions are still difficult. Etsy, an online marketplace famous for its handmade and artisan products, experienced significant growth in sales during the pandemic as many people turned to online shopping. In 2020, the company’s revenue tripled, largely due to the high demand for face masks. Explaining these shifts, Silverman said:
“Over the last few years, Etsy has gone from a period where we grew tremendously with so many tailwinds at our back, to a period of stiff headwinds and uncertain macroeconomic conditions. Consumers continue to make very tough choices on where and how to spend their money, and we’re fighting hard to help our sellers get their share.”
Amid the ongoing AI craze in Silicon Valley, Etsy is working on similar developments to leverage the power of AI. During the investor call, Silverman mentioned that Etsy has a “small but mighty” team of AI and machine learning experts. They are actively working on implementing these technologies across various customer interactions, including tools for sellers and shopping recommendations. He added:
“We wouldn’t want to do anything that makes the site look homogenous or boring, though. So, we’re going to be very careful about that. And more listings don’t necessarily translate into more sales for Etsy. So if it’s useful for sellers, we’ll lean in.”
Etsy CFO Rachel Glaser is bullish about the elimination of student loan payments in the fall. He said that these factors could help stretch the consumer wallets and weight on the company’s GMS in the third quarter.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Etsy and its peers like Shopify have had to kickstart their restrategizing agenda.
Retail merchants selling on several online marketplaces including American e-commerce marketplace Etsy Inc (NASDAQ: ETSY) are reportedly seeing delays in their payments owing to their dependence on distraught Silicon Valley Bank (SVB). As a marketplace that operates round the clock, proceeds of sales from Etsy and other firms including Shopify Inc (NYSE: SHOP) have been delayed significantly.
The aftermath of the impact of the collapse of Silicon Valley Bank is just becoming more glaring and many retail marketplaces have had to ask their merchants to submit other payment information in order to promptly process their payments. According to Etsy, just about 0.5% of the active merchants registered on its platform are affected by the force stop in SVB.
This 0.5% of employees account for a total of 2,700 merchants that are experiencing the difficulty. The company already confirmed that it is taking proactive measures to begin disbursing funds to its impacted merchants.
“We are working to pay these sellers today, and we’ve already started processing payments via another payment partner this morning,” an Etsy spokesperson said.
According to the assurances granted by the joint statement issued by the US Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC), all depositors’ funds will be paid out as early as the start of business on Monday. According to Etsy, the payment it is processing has no connection whatsoever to that coming from the government.
The pressures in the American banking sector have been a lot, and merchants appear to be bearing the brunt of it all. According to the Economic Times, Moshe Steinberg, a 3D Printer whose only earning comes from Etsy said he has received payment from the marketplace but has yet to clear it through his bank.
Staying afloat as a multinational business appears to be simple when things are working optimally, however, as things are not in the banking system, Etsy and its peers like Shopify have had to kickstart their restrategizing agenda.
According to Shopify’s CEO Tobi Lutke, the SVB collapse had relatively little impact on the company.
“We use SVB as one of 12 or so banks spread over mostly Canada and US,” Lutke said, adding “a small portion of our US operational fund flows is tied up in SVB but we are working around it and it should be business as usual.”
In order to minimize how much the books are messed up, Shopify has also stopped processing merchant’s payments billed for SVB. As the firm detailed on its website, new account details must be provided in order to receive payments, and these accounts must not have any affiliation with SVB.
Besides Etsy and Shopify, other key payment processors like Jack Dorsey’s Block Inc (NYSE: SQ) have had to implement similar strategies to avoid strains on operations.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
As Etsy managed to beat the Street estimates for Q4 2022 revenue, ETSY stock price surged by 6.46% in aftermarket hours. In Q1 2023, Etsy is expecting gross merchandise sales (GMS) anywhere in the range of $2.95 billion to $3.15 billion
On Wednesday, February 22, public-listed e-commerce firm Etsy Inc (NASDAQ: ETSY) reported the results for the fourth quarter (Q4) of 2022 and the entire full year.
During the last quarter, the company’s revenue was $807 million up by 12% year over year. With these numbers, Etsy managed to beat the street estimates of $750 million in revenue. However, the company’s earnings per share stood at 77 cents, a little lower than the market estimates of 80 cents.
In its press release, Etsy noted that its gross merchandise sale during the fourth quarter stood at $4 billion. This was down 4% year-over-year. But the company’s customer acquisition game was strong. During the fourth quarter, Etsy acquired a total of 9.5 million new customers. Although this is 60% up in comparison to Q4 2019, there was a drop in new customer acquisition when compared with the previous year.
For the entire year of 2022, Etsy reported a total revenue of $2.57 billion, up by 10.2% year-over-year. Also, the full year’s gross merchandise sale (GMS) stood at $13.32 billion, down by 1.3% year-over-year. By the end of the fourth quarter, Etsy had $1.2 billion in cash. Besides, the company also conducted a stock buyback purchasing 1.34 million shares at $150 million in the last quarter. Speaking on the development, Rachel Glaser, Etsy’s Chief Financial Officer said:
“The Etsy marketplace’s strong holiday performance and accelerating year-over-three-year GMS in the fourth quarter enabled us to end the year on a high note. We are now nearly three times the size we were pre-pandemic, and we’ve been careful about how we have grown our cost basis to catch up with the size of the business – visible in our sustained profitable growth and strong free cash flow.”
In its project guidance, Etsy said that it plans to clock a revenue anywhere between $600 million to $640 million during the first quarter of this year. The Street estimate is somewhere around $621 million.
In Q1 2023, Etsy is expecting gross merchandise sales (GMS) anywhere in the range of $2.95 billion to $3.15 billion. Etsy CEO Josh Silverman said that Etsy will continue to focus on growth investments while protecting its margins. He added:
“Etsy’s ‘Right to Win’ strategy remains robust and relevant, and we have deep conviction in our ability to compete by strategically differentiating our value proposition, focusing on our sellers’ unique items, best-in-class search and discovery, human connections and a trusted brand. This year we’ll be focused on welcoming new buyers to the joy of Etsy. We believe that put us in a position of relative strength; and it’s our goal to do that again in 2023.”
With Etsy (NASDAQ: ETSY) announcing its results after trading hours, the ETSY stock price jumped by 6.46% in the aftermarket hours to $136. With the broader market recovery in 2023, the ETSY stock is already up by 13% year-to-date.
Other business news can be found here.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.