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Etsy (ETSY) Up 2.4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Etsy (ETSY - Free Report) . Shares have added about 2.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Etsy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Etsy's Q4 Earnings & Revenues Beat Estimates
Etsy delivered fourth-quarter 2020 earnings of $1.08 per share, which surpassed the Zacks Consensus Estimate by 80%. Further, the figure significantly jumped from 25 cents in the year-ago quarter. Also, the bottom line rose 54.3% from the prior quarter.
Revenues advanced 128.7% year over year and 36.7% sequentially to $617.4 million. The figure also outpaced the Zacks Consensus Estimate of $517.4 million.
Top-line growth was driven by accelerating Marketplace and Services revenues. Moreover, solid momentum across both buyers and sellers contributed well. Additionally, strengthening gross merchandise sales (“GMS”) were tailwinds.
Further, the coronavirus pandemic-induced e-commerce boom continued to act as a major tailwind for the company. Moreover, solid holiday performance drove the results. The company witnessed strong momentum from Thanksgiving through Cyber Monday.
Furthermore, benefits from the Reverb acquisition contributed well to the company’s fourth-quarter results.
Additionally, efficient product and marketing initiatives, and improving non-mask sales remained positives. Also, the expanding footprint of Etsy Payments, and solid momentum across Etsy Ads and Offsite Ads were other positives.
The company remains optimistic about its investments across marketing channels. Further, advancing search algorithms, robust Etsy Ads and integration with Etsy Payments remain positives.
Top Line in Detail
Marketplace revenues were $473.6million (76.7% of total revenues), which went up 149.7% from the year-ago quarter. This was driven by strong momentum across buyers. The company witnessed 13 million new buyers and 7 million reactivated buyers on its Marketplace platform in the reported quarter. Further, strong traction across habitual and repeat buyers, which grew 157% and 97%, respectively, contributed well.
Services revenues were $143.8 million (23.3% of total revenues), which surged 79% on a year-over-year basis. Solid momentum across sellers, owing to the robust Etsy Ads program, which contributed to 74% year-over-year growth in the on-site advertising revenues in the fourth quarter, remained a major positive.
Quarter in Detail
Etsy’s active buyer base grew 76.7% from the prior-year quarter to 81.9 million. The active seller base stood at 4.4 million, which was up 61.7% year over year.
Notably, GMS of the company was $3.6 billion, which surged 117.7% year over year. Strong holiday sales contributed well. GMS from Thanksgiving through Cyber Monday increased 135% from the year-ago quarter.
Further, non-mask GMS grew 118% year over year in the reported quarter.
Additionally, strong GMS from paid channels, which accounted for 21% of total GMS, expanding 400 basis points (bps) year over year, remained major positive.
Operating Details
In fourth-quarter 2020, gross margin was 75.6%, which expanded 920 bps year over year, owing to the shift to Offsite Ads.
Further, total operating expenses were $305.2 million, reflecting an increase of 98% year over year due to increasing marketing expenses. However, the figure as a percentage of revenues contracted 770 bps to 49.4% in the year-ago quarter.
Per the company, operating margin was 26.1%, expanding significantly from 9.3% in the year-ago quarter.
Balance Sheet
As of Dec 31, 2020, cash and cash equivalents totaled $1.2 billion, which improved from $1.1 billion as of Sep 30, 2020. Short-term investments were $425.1 million, up from $379.6 million in the previous quarter.
Long-term debt stood at $1.06 billion at the end of the fourth quarter, up from $1.05 billion at the end of the previous quarter.
Notably, the company repurchased $77.5 million worth shares in the fourth quarter.
Guidance
For first-quarter 2021, the company anticipates total revenues between $513 million and $536 million, suggesting year-over-year growth of 125-135%.
Further, GMS is expected within the range of $2.9 billion to $3.1 billion, indicating growth of 115-125% from the year-ago quarter.
Adjusted EBITDA margin is expected to be 32% to 34%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 97.38% due to these changes.
VGM Scores
At this time, Etsy has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Etsy has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Etsy (ETSY) Up 2.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Etsy (ETSY - Free Report) . Shares have added about 2.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Etsy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Etsy's Q4 Earnings & Revenues Beat Estimates
Etsy delivered fourth-quarter 2020 earnings of $1.08 per share, which surpassed the Zacks Consensus Estimate by 80%. Further, the figure significantly jumped from 25 cents in the year-ago quarter. Also, the bottom line rose 54.3% from the prior quarter.
Revenues advanced 128.7% year over year and 36.7% sequentially to $617.4 million. The figure also outpaced the Zacks Consensus Estimate of $517.4 million.
Top-line growth was driven by accelerating Marketplace and Services revenues. Moreover, solid momentum across both buyers and sellers contributed well. Additionally, strengthening gross merchandise sales (“GMS”) were tailwinds.
Further, the coronavirus pandemic-induced e-commerce boom continued to act as a major tailwind for the company. Moreover, solid holiday performance drove the results. The company witnessed strong momentum from Thanksgiving through Cyber Monday.
Furthermore, benefits from the Reverb acquisition contributed well to the company’s fourth-quarter results.
Additionally, efficient product and marketing initiatives, and improving non-mask sales remained positives. Also, the expanding footprint of Etsy Payments, and solid momentum across Etsy Ads and Offsite Ads were other positives.
The company remains optimistic about its investments across marketing channels. Further, advancing search algorithms, robust Etsy Ads and integration with Etsy Payments remain positives.
Top Line in Detail
Marketplace revenues were $473.6million (76.7% of total revenues), which went up 149.7% from the year-ago quarter. This was driven by strong momentum across buyers. The company witnessed 13 million new buyers and 7 million reactivated buyers on its Marketplace platform in the reported quarter. Further, strong traction across habitual and repeat buyers, which grew 157% and 97%, respectively, contributed well.
Services revenues were $143.8 million (23.3% of total revenues), which surged 79% on a year-over-year basis. Solid momentum across sellers, owing to the robust Etsy Ads program, which contributed to 74% year-over-year growth in the on-site advertising revenues in the fourth quarter, remained a major positive.
Quarter in Detail
Etsy’s active buyer base grew 76.7% from the prior-year quarter to 81.9 million. The active seller base stood at 4.4 million, which was up 61.7% year over year.
Notably, GMS of the company was $3.6 billion, which surged 117.7% year over year. Strong holiday sales contributed well. GMS from Thanksgiving through Cyber Monday increased 135% from the year-ago quarter.
Further, non-mask GMS grew 118% year over year in the reported quarter.
Additionally, strong GMS from paid channels, which accounted for 21% of total GMS, expanding 400 basis points (bps) year over year, remained major positive.
Operating Details
In fourth-quarter 2020, gross margin was 75.6%, which expanded 920 bps year over year, owing to the shift to Offsite Ads.
Further, total operating expenses were $305.2 million, reflecting an increase of 98% year over year due to increasing marketing expenses. However, the figure as a percentage of revenues contracted 770 bps to 49.4% in the year-ago quarter.
Per the company, operating margin was 26.1%, expanding significantly from 9.3% in the year-ago quarter.
Balance Sheet
As of Dec 31, 2020, cash and cash equivalents totaled $1.2 billion, which improved from $1.1 billion as of Sep 30, 2020. Short-term investments were $425.1 million, up from $379.6 million in the previous quarter.
Long-term debt stood at $1.06 billion at the end of the fourth quarter, up from $1.05 billion at the end of the previous quarter.
Notably, the company repurchased $77.5 million worth shares in the fourth quarter.
Guidance
For first-quarter 2021, the company anticipates total revenues between $513 million and $536 million, suggesting year-over-year growth of 125-135%.
Further, GMS is expected within the range of $2.9 billion to $3.1 billion, indicating growth of 115-125% from the year-ago quarter.
Adjusted EBITDA margin is expected to be 32% to 34%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 97.38% due to these changes.
VGM Scores
At this time, Etsy has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Etsy has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.