Etsy falls after warning on Q1 slowdown

Etsy (NASDAQ:ETSY) reported revenue increased 4.3% year-over-year to $842.3M, which was one of the lowest quarterly growth rates in the company's history, but still came in ahead of the consensus estimate of analysts. Consolidated gross merchandise sales were down 0.7% year-over-year to $3.6B vs. $3.97B consensus. The retailer noted that Etsy (ETSY) marketplace's GMS accelerated during the holiday season, with GMS during Cyber 5 (Thanksgiving through Cyber Monday) up 4% on a year-over-year basis. Headwinds to consolidated GMS during the quarter included a dynamic macroeconomic environment that impacted consumer discretionary product spending, Etsy marketplace category mix, and a highly promotional and competitive retail environment, as well as a small headwind from the divestiture of Elo7.

The retailer reported adjusted EBITDA $235.5M of vs. $227.9M consensus and an adjusted EBITDA margin rate of 28% of sales.

For the quarter, Etsy (ETSY) reported 9.04M active sellers vs. 8.86M consensus and 96.5M active buyers vs. 97.9M consensus. Etsy (ETSY) said that while GMS per active buyer on a trailing twelve month basis was down 4% year-over-year to $126 in the quarter, this metric declined only 1% from the prior quarter as trends continued to show signs of stabilization. The number of "habitual" buyers remained stable on a sequential basis at just over 7M.

Looking ahead, Etsy (ETSY) said GMS for the first quarter of 2024 is currently estimated to decline in the low-single-digit range on a year-over-year basis. The retailer's guidance was noted to reflect s slow start to the quarter, and the current expectation is that GMS for the core Etsy marketplace improves through the rest of the quarter as a result of planned product and marketing investments. If trends fail to improve as anticipated, the GMS slowdown could become a mid-single-digit decline.

Shares of Etsy (ETSY) fell 4.67% in the after-hours session on Wednesday after rising 1.66% during the regular session.