Etsy Inc.'s (NASDAQ: ETSY) stock soared by 13.51% on Wednesday, driven by better-than-expected revenue and a significant share repurchase program, despite missing earnings estimates for the third quarter of 2024.
The online marketplace for handmade and vintage goods reported revenue of $662.4 million, a 4.1% year-over-year increase, surpassing analysts' expectations of $652.5 million. However, adjusted earnings per share (EPS) of $0.45 fell short of the consensus estimate of $0.55.
Etsy's gross merchandise sales (GMS), a key performance metric, declined by 4.1% year-over-year to $2.92 billion, reflecting macroeconomic headwinds and softer consumer demand for discretionary items. The company's net income also experienced pressure, decreasing by 34.7% year-over-year to $57.4 million due to rising operational expenses.
Despite the challenges, Etsy's Board of Directors approved a new $1 billion stock repurchase program, signaling confidence in the company's long-term prospects and commitment to returning value to shareholders.
To drive growth, Etsy has been investing in enhancing the buyer experience through initiatives like improved search algorithms, the launch of a loyalty program, and increased marketing spending across paid social channels. The company also highlighted progress in positioning itself as a go-to destination for gifting, with increased adoption of gifting features and a record-high unprompted association with gifting among U.S. buyers.
While Etsy anticipates a low to mid-single-digit percentage decline in consolidated GMS for the fourth quarter, reflecting ongoing consumer pressure, the company aims to maintain an adjusted EBITDA margin of around 28% to 29%. Analysts applauded Etsy's efforts to balance growth and profitability through strategic investments and operational efficiencies.
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