Please ensure Javascript is enabled for purposes of website accessibility

Etsy Earnings Highlight Accelerating Growth

By Daniel Sparks - Updated Apr 14, 2019 at 3:33PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The online marketplace is on a roll.

Online marketplace Etsy (ETSY 6.21%) 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.

Etsy website displayed on a laptop.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Etsy, Inc. Stock Quote
Etsy, Inc.
ETSY
$83.62 (6.21%) $4.89

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
321%
 
S&P 500 Returns
111%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.