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What to Expect from Etsy’s Q3 Earnings Report

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Etsy (ETSY) is set to release its third-quarter 2023 earnings on November 1. With analysts and investors eagerly awaiting the results, let’s take a closer look at what to expect from the upcoming report.

Anticipated Revenue and Earnings

Etsy forecasts total revenues between $610 million and $645 million for the third quarter of 2023. The current Zacks Consensus Estimate stands at $630.68 million, representing a 6.1% improvement from the previous year’s quarter. However, the expected earnings of 50 cents per share suggest a 13.8% decline compared to the prior-year quarter’s actuals.

Etsy has a mixed track record when it comes to beating earnings expectations. While it has exceeded the Zacks Consensus Estimate in three out of the last four quarters, the earnings surprise has averaged 40.88%.

Factors to Consider

Etsy’s Q3 results are expected to benefit from strong momentum among buyers and sellers. The company’s investments in seller growth suites, including personalized insights and pricing assistance through the Make an Offer program, have likely contributed to its success. Active sellers are expected to grow by 13.2% to reach 8.4 million, while active buyers are anticipated to grow by 2.6% to 96.6 million.

Etsy ads, improved services, and the success of Etsy payments and seller transaction fees are also factors that likely fueled Marketplace and Services revenues during the quarter. Furthermore, Etsy’s purchase protection services have aimed to reduce issue resolution time and enhance the overall service experience for buyers.

However, there are some potential challenges ahead. Sluggish consumer discretionary spending among lower-income households, as well as weakness in larger product categories like home & living, may have impacted Etsy’s performance. Additionally, increasing costs related to the shift to Offsite Ads and higher marketing expenses could have put some pressure on the company’s profitability.

Earnings Forecast

Based on our modeling, Etsy is expected to beat earnings expectations this quarter. The combination of a positive Earnings ESP (Earnings Expected Surprise Prediction) and its current Zacks Rank of 3 increases the likelihood of an earnings beat. Etsy has an Earnings ESP of +4.04%, indicating a higher probability of surpassing estimates.

Other Companies to Watch

If you’re interested in the same space, there are a few other companies worth considering. GoDaddy (GDDY) is anticipated to release its Q3 2023 results on November 2, with an estimated 71 cents per share in earnings, suggesting growth of 12.7%. BILL Holdings (BILL) is set to report its first-quarter fiscal 2024 results on the same day, with estimated earnings of 50 cents per share. Fastly (FSLY) will also release its Q3 2023 results on November 1, with an estimated loss of 7 cents per share, albeit showing growth compared to the previous year’s figures.

Conclusion

Etsy’s Q3 earnings report has the potential to either meet, exceed, or fall short of expectations. Factors like strong buyer and seller momentum, improvement in services, and effective pricing strategies could contribute to a positive outcome. However, it’s important to keep an eye on challenges such as weakened consumer spending and rising costs. Investors eager to stay ahead in the market will be closely monitoring Etsy’s performance during this critical quarter.

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