Etsy (ETSY 12.62%) published its third-quarter results before the market opened today and announced a major leadership change along with the report. Josh Silverman will be stepping down from the CEO role, with current growth chief Kruti Goyal set to succeed him in the position.
Silverman will stay on as the executive chairman of the company's board of directors through 2026, but investors had a negative initial reaction to news of the leadership shakeup. There were also other bearish catalysts that helped send the stock tumbling 12.6% on the day despite some better-than-expected Q3 numbers.
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Etsy stock sinks following CEO news and weakening in some key metrics
Silverman became Etsy's CEO in 2017 and will now be stepping back from the role and handing the reins to Goyal at the end of the year. While the company's stock has surged more than 500% since Silverman became the company's chief executive, its share price is down approximately 78% from the high it reached in 2021 .
NYSE: ETSY
Key Data Points
Etsy posted earnings per share (EPS) of $0.63 on sales of $678 million in Q3, beating the average analyst estimate's call for a per-share profit of $0.53 on revenue of $655.3 million. Sales were up 2.4% year over year, and earnings per share came in 40% higher compared to the prior-year period. Despite top- and bottom-line beats in the quarter, there were some signs that efforts to reenergize the platform's growth could be stalling.
Gross merchandise sales (GMS) fell 6.5% year over year and still managed to exceed expectations, but active sellers on the platform declined 0.2% and active buyers fell 3.7%. Meanwhile, non-GAAP (generally accepted accounting principles) adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 6.5% year over year -- with most of the decline driven by restructuring costs.
For the current quarter, Etsy is guiding for GMS between $3.5 billion and $3.6 billion. For comparison, total GMS came in at $3.7 billion in last year's quarter, and Etsy marketplace GMS came in at $3.3 billion. On the heels of the instant-purchasing purchasing integration with OpenAI's ChatGPT platform announced at the end of September, investors were likely hoping for stronger GMS guidance.
What lies ahead
Looking ahead, incoming CEO Goyal said that the company is focusing on "showing up where shoppers find inspiration, matching them with items that feel tailor-made for them, working to deepen loyalty across our community, and amplifying what sets us apart, the creativity and authenticity of our sellers." Investors will be looking to see whether she can help reaccelerate growth at Etsy when she takes over as the business's leader at the beginning of next year.
