Etsy (NASDAQ:ETSY) Q4: Beats On Revenue, Stock Soars

Adam Hejl /
2023/02/22 4:08 pm EST

Online marketplace Etsy (NASDAQ: ETSY) beat analyst expectations in Q4 FY2022 quarter, with revenue up 12.6% year on year to $807.2 million. The company expects that next quarter's revenue would be around $620 million, which is the midpoint of the guidance range. That was roughly in-line with analyst expectations. Etsy made a GAAP profit of $109.5 million, down on its profit of $161.6 million, in the same quarter last year.

Is now the time to buy Etsy? Access our full analysis of the earnings results here, it's free.

Etsy (ETSY) Q4 FY2022 Highlights:

  • Revenue: $807.2 million vs analyst estimates of $752.1 million (7.33% beat)
  • EPS: $0.77 vs analyst expectations of $0.80 (4.31% miss)
  • Revenue guidance for Q1 2023 is $620 million at the midpoint, roughly in line with what analysts were expecting
  • Free cash flow of $286.3 million, up 40.4% from previous quarter
  • Gross Margin (GAAP): 72%, up from 70.9% same quarter last year
  • Active Buyers: 95.1 million, up 4.98 million year on year

"We are extremely proud of our team's ability to dramatically improve the Etsy customer experience over the course of 2022," said Josh Silverman,

Founded by a struggling amateur furniture maker Robert Kalin and his two friends, Etsy (NASDAQ: ETSY) is one of the world’s largest online marketplaces, focusing on handmade or vintage items.

Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission paying sellers, generating flywheel scale effects which feed back into further customer acquisition.

Sales Growth

Etsy's revenue growth over the last three years has been exceptional, averaging 55.6% annually. Unfortunately, the pandemic had a negative impact on Etsy's revenue growth.

Etsy Total Revenue

This quarter, Etsy beat analyst estimates but reported an mediocre 12.6% year on year revenue growth.

Guidance for the next quarter indicates Etsy is expecting revenue to grow 7.03% year on year to $620 million, improving on the 5.2% year-over-year increase in revenue the company had recorded in the same quarter last year.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Usage Growth

As a online marketplace, Etsy generates revenue growth both by growing the number of buyers using the platform and how much each of those buyers spends.

Over the last two years the number of Etsy's active buyers, a key usage metric for the company, grew 24.7% annually to 95.1 million users. This is a fast growth for a consumer internet company.

Etsy Active Buyers

In Q4 the company added 4.98 million active buyers, translating to a 5.52% growth year on year.

Key Takeaways from Etsy's Q4 Results

Sporting a market capitalization of $15.7 billion, more than $1.17 billion in cash and with positive free cash flow over the last twelve months, we're confident that Etsy has the resources it needs to pursue a high growth business strategy.

We liked to see that Etsy beat analysts’ GMS (gross merchandise sales), take rate, revenue, and EBITDA expectations this quarter. That feature of these results really stood out as a positive. On the other hand, revenue growth is overall a bit slower these days. Zooming out, we think this was a strong quarter, showing the company is staying on target. The company is up 7.38% on the results and currently trades at $138.03 per share.

Should you invest in Etsy right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.