Etsy shares soar after fourth-quarter earnings beat

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Josh Silverman, CEO of Etsy.
Adam Jeffery | CNBC

Shares of Etsy climbed as much as 16% in extended trading Thursday after the company reported better-than-expected results for the fourth quarter. Shares had already climbed 10% during regular trading, as stocks staged a late-day rally after plunging early in the day on news of Russia’s invasion of Ukraine.

Here’s how the company did:

  • Earnings: $1.11 vs. 79 cents expected, according to analysts surveyed by Refinitiv
  • Revenue: $717 million vs. $685 million expected.

Etsy said it had 96.3 million active buyers on the platform as of the fourth quarter, which was a touch higher than analysts’ projected 95.6 million.

Revenue growth slowed to 16% year-over-year during the quarter. Etsy sales growth topped 100% in 2020, but have decelerated in recent quarters.

Etsy said it expects first-quarter revenue to come in between $565 million and $590 million, while Wall Street projected revenue of $630 million. Gross merchandise sales during the quarter are projected to be in the range of $3.2 billion to $3.4 billion, which is lower than consensus estimates of $3.5 billion. but investors appeared to be unfazed by the middling expectations, focusing instead on the big beats in Q4.

Etsy CFO Rachel Glaser blamed the weak first-quarter GMS outlook on tough comparisons to the year-ago period, when it saw a pandemic-related boost in orders, as well as an increase in spending tied to government stimulus.

E-commerce companies like Etsy, Shopify, eBay and Wayfair all experienced a lift their in revenues during the coronavirus pandemic. Amid lockdowns, many consumers curbed trips to the store to avoid spreading the virus and turned to online retailers for essential and non-essential purchases.

Glaser said she believes Etsy, which operates an online marketplace known for handmade and personalized goods, will be able to keep growing its business in a post-pandemic world.

“Even without the significant tailwinds of stimulus checks and lockdowns, our first quarter 2022 guidance reflects our expectation that we will keep all of the gains made in 2021 — indicating our belief in the durability of the last two years’ growth,” Glaser said. “Furthermore, assuming stable macroeconomic conditions, we currently expect lower GMS growth year over year in the first half of 2022 and higher GMS growth in the second half, given the more challenging comparisons in the first half.”

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