Etsy shares fall despite Q3 earnings beat as active buyers and sellers decline

Investing.com -- Etsy, Inc. (NASDAQ: ETSY) reported third-quarter earnings that exceeded analyst expectations, but shares fell 4.8% following the report on Wednesday.

The e-commerce marketplace operator posted adjusted earnings of $0.63 per share, beating the analyst estimate of $0.52. Revenue reached $678 million, surpassing the consensus estimate of $655.87 million and representing a 6.1% increase YoY when excluding the recently divested Reverb business.

Etsy’s consolidated Gross Merchandise Sales (GMS) reached $2.72 billion, up 0.9% YoY excluding Reverb, with the Etsy marketplace GMS declining 2.4% while Depop’s GMS surged 39.4%. The company’s take rate improved to 24.9%, up 220 basis points YoY, primarily driven by strong performance in on-site advertising.

"Etsy’s third quarter consolidated results surpassed expectations across all three of our key financial metrics — and GMS for Etsy and Depop combined returned to year-over-year growth," said Josh Silverman, Etsy’s CEO.

For the fourth quarter, Etsy projects GMS between $3.5 billion and $3.65 billion, with an Adjusted EBITDA margin of approximately 24%, down from the 25.4% reported in Q3. The company expects its take rate to be around 24.5%.

The Etsy marketplace showed signs of improvement with GMS comparisons improving approximately 300 basis points sequentially. However, active buyers declined 5% YoY to 86.6 million, while active sellers decreased 10.9% to 5.5 million, reflecting the impact of the seller set-up fee implemented in April.

Depop continued its strong performance with U.S. GMS growing 59% YoY, while active sellers increased 40.8% to 3 million and active buyers rose 38.8% to 6.6 million.

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