Etsy 4th Quarter Results

-Etsy up 12% after hours due to blow out earnings, 129% revenue growth for Q4 (vs 70%-90% Guidance) and strong Guidance of 115%-125% revenue growth in Q1. Net was up income up 375%!

Highlights:

Total revenue was $617.4 million, up 128.7% year-over-year, driven by growth in both Marketplace and Services revenue.

• Consolidated take rate (i.e., revenue divided by GMS) was 17.1%, up 80 basis points year-over-year, driven by Etsy Ads, Offsite Ads, and the expansion of Etsy Payments platform.

• Gross profit was $466.6 million, up 160.4% year-over-year, and gross margin was 75.6%, up 920 basis points compared with 66.4% in the fourth quarter of 2019. The increase in gross margin was primarily driven by our shift to Offsite Ads, which drives revenue growth without an equal offset in cost of revenue.

• Total operating expenses were $305.2 million, up 98.0% year-over-year. The increase in operating expenses was driven primarily by growth of our investments in marketing and, to a lesser extent, product development.

• Net income for the fourth quarter of 2020 was $148.5 million, up 374.7% year-over-year, with diluted earnings per share of $1.08.

• Non-GAAP Adjusted EBITDA was $192.0 million. Non-GAAP Adjusted EBITDA margin (i.e., non-GAAP Adjusted
EBITDA divided by revenue) was 31.1%, up 1,090 basis points year-over-year. Adjusted EBITDA performance was driven primarily by revenue growth and increased efficiencies in our operating structure.

• Cash and cash equivalents, short- and long-term investments were $1.7 billion as of December 31, 2020. Under Etsy’s stock repurchase program, during the quarter Etsy repurchased an aggregate of approximately $77.5 million, or618,841 shares, of its common stock. Etsy’s Board of Directors has approved an additional stock repurchase program that will enable the Company to repurchase up to $250 million of its common stock.

• For the full year of 2020 Etsy acquired 61 million new and reactivated buyers, and saw nearly 160% growth in our habitual buyers

Financial Guidance and Outlook

Given the continued uncertainty of future macroeconomic conditions as a result of the ongoing COVID-19 pandemic, Etsy will currently not issue guidance for the full year 2021, and will continue providing guidance on a quarterly basis until otherwise stated. Below is Etsy’s guidance for consolidated GMS, revenue and Adjusted EBITDA for the first quarter of 2021.

Q1 2021 Guidance

February 25, 2021

GMS ~$2.9B - $3.1B
GMS growth 115% - 125%
Revenue ~$513M - $536M
Revenue growth 125% - 135%
Adjusted EBITDA $168M - $178M
Adjusted EBITDA margin* ~32% - 34%

Press Release:

https://s22.q4cdn.com/941741262/files/doc_financials/2020/q4…

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I agree with FoolishJeff. This was a blowout!

Here’s an update of my numbers on Buyers and Sellers, which I first gave here (with one error I’ve now corrected below): https://discussion.fool.com/etsy-buyers-and-sellers-34675560.asp…


Active Buyers (in millions)
        Mar    Jun    Sep    Dec
2018   34.7   35.8   37.1   39.4
2019   41.0   42.7   44.8   46.4
2020   47.7   60.3   69.6   81.9

Active Buyers (Sequential)
        Mar    Jun    Sep    Dec
2019    4%     4%     5%     4%
2020    3%    26%    15%    18%

Active Sellers (in millions)
        Mar    Jun    Sep    Dec
2018   1.97   1.98   2.04   2.12
2019   2.23   2.33   2.59   2.70   
2020   2.81   3.14   3.68   4.37

Active Sellers (Sequential)
        Mar    Jun    Sep    Dec
2019    5%     4%    11%     4%
2020    4%    12%    17%    19%

Bear

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Some other exciting highlights that I liked:

  1. Etsy is now the #4 e-commerce site in the USA w/ roughly 223 Million visits a month. This is only behind Amazon, e-bay, and Walmart. As Josh noted in the conference call, brand awareness is on the rise big time! This helps accelerate the flywheel affect and bodes will for the take rate in the future.

https://disfold.com/top-e-commerce-sites-us/

  1. 50% of people that bought masks in the 3rd quarter came back in the 4th quarter and bought something else! Masks now make up only about 4% of GMV so the growth is truly astounding and much more than just a mask story.

  2. Very strong international growth - 41% of GMS is now International, an increase of 152% YoY. Etsy is now top 5 in the UK as well and Germany is Etsy’s 2nd largest international geography.

  3. Etsy is becoming a cultural buzzword - Elon Musk recently tweeted about the company and the Bernie Sanders Mittens from the inauguration sold like crazy. 1.7M videos uploaded in Q4 vs 211K in Q2.

  4. Strong growth in Homewares & Home Furnishings - up 118%, many higher price point items in this category bodes well for revenue.

Earnings Presentation:

https://s22.q4cdn.com/941741262/files/doc_financials/2020/q4…

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A few additional from the earnings call presentation:

  • Etsy outpaced total e-commerce growth by more than 2.5x in Q4

  • Etsy is now 4th most popular e-commerce site in U.S by monthly visits

  • Active buyers up 77% YoY and Habitual buyers up 157% YoY

  • Active sellers up 64% YoY, GMS per seller up 22% YoY

  • Average revenue per employee nearly doubled YoY, from 800,000 to 1.45 M

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