Why Etsy’s Q1 Beat Was Not Nearly Good Enough

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When Etsy Inc. (NASDAQ: ETSY) released its first-quarter financial results after the markets closed on Wednesday, the e-commerce company said that it had $0.24 in earnings per share (EPS) and $169.3 million in revenue. Consensus estimates had called for $0.14 in EPS and $170.06 million. In the same period of last year, Etsy said it had EPS of $0.10 on $120.91 million in revenue.

During the latest quarter, Gross merchandise sales (GMS) increased 18.9% year over year to $1.02 billion. GMS per active buyer on a trailing 12-month basis was up nearly 2% and has generated growth of nearly 2% or higher for the past three consecutive quarters.

International GMS was 38% of overall GMS, and they increased 33% year-over-year on a currency-neutral basis, Etsy’s highest international GMS growth since the beginning of 2015.

Active buyers grew 18.3% year over year, despite a reduction in marketing spend across certain channels. At the same time, active sellers grew 13.0%.

Looking ahead to the 2019 full year, revenues are expected to be in the range of $785 million to $797 million and GMS between $4.6 billion and $4.8 billion. The consensus estimates are $0.68 in EPS and $792.42 million in revenue for the year.

Josh Silverman, Etsy CEO, commented:

We are pleased to report another quarter of strong growth. We began the year with a fresh slate of product initiatives and our teams’ development velocity surged to an all-time high, delivering healthy GMS growth during the quarter. We are focused on unlocking Etsy’s long-term growth opportunity by bolstering best-in-class search and discovery, leveraging human connections, building a trusted brand, and showcasing our vast collection of unique items.

Shares of Etsy were last seen down almost 11% at $60.66, in a 52-week range of $28.60 to $73.35. The consensus price target is $74.00

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