Online marketplace Etsy (ETSY 3.63%) continues to demonstrate strong growth for investors. After a significant sequential acceleration in the company's year-over-year revenue growth rate in Q3, the company's top-line growth accelerated yet again in Q4. With the fourth quarter taking place during the important holiday period, the results highlight strong execution during the company's seasonally important quarter.
Here's a closer look at the company's fourth-quarter performance, including some of management's comments on the business's achievements.
Image source: Etsy.
Etsy's fourth-quarter results: The raw numbers
|
Metric |
Q4 2018 |
Q4 2017 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$200 million |
$136.3 million |
46.8% |
|
Net income |
$41.3 million |
$44.8 million |
(7.8%) |
|
Earnings per share |
$0.32 |
$0.36 |
(11.1%) |
Data source: Etsy fourth-quarter earnings release. Table by author.
What happened with Etsy this quarter?
- Etsy's revenue increased 46.8%, an acceleration from 41.3% growth in Q3 and 30.2% growth in Q2.
- Earnings per share declined 11.1%.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 47.5% year over year to $51.4 million.
- Gross merchandise sales (GMS) volume increased 22.3% year over year to $1.25 billion -- an acceleration from 20.4% GMS growth in Q3.
- Active buyers increased 18.2% year over year.
- Active sellers were up 9.4% year over year.
- Etsy's services revenue (revenue from services for sellers such as promoted listings, shipping labels, and Etsy Plus) increased 41.7% year over year.
- Etsy repurchased $45 million worth of its own shares during the quarter.
What management had to say
Etsy CEO Josh Silverman said in the company's fourth-quarter earnings release that the quarter represented a strong finish to "an excellent year." He pointed out the company's robust full-year merchandise sales growth, its currency-adjusted full-year year-over-year revenue growth rate of 36.8%, and the company's improved profitability.
"We kept our focus on improving search and discovery, building trust in the marketplace, expanding our marketing channels, and investing in services that fuel our sellers' success," Silverman explained.
"Our strong financial performance in the fourth quarter and full year of 2018 reflect the successful execution of our product, engineering, and marketing efforts during the period," added Etsy CFO Rachel Glaser.
Check out the latest earnings call transcript for Etsy.
Looking forward
In 2019, Etsy expects more strong growth, albeit at a decelerated rate. A deceleration makes sense, as the company will be up against comparisons in the second half of 2018 that benefited from a price hike for the fees Etsy charges sellers on each transaction.
Etsy guided for 2019 GMS growth in the range of 17 to 20%. For its full-year revenue, management expects growth between 29% and 32%.
Importantly, Etsy expects further improvements in profitability. Management guided for its adjusted EBITDA in 2019 to be between $181 million and $197 million, up from $140 million in 2018 and $80 million in 2017.
