Etsy Meets Expectations In Q3, Stock Drops 8% After Hours

Following trading today, Etsy reported its Q3 financial performance, including revenue of $66 million, and earnings loss per share of $0.06. The Street expected Etsy to lose $0.06 per share, off revenue of around $66.17 million. So that’s a “met expectations.” The company reported 1.5 million active sellers and 22.6 million active buyers.

The company was up 3.18 percent today, trading at just over $11 at market close. When the company went public this year, it sat pretty at a mean $30 per share. That has trailed off considerably as shares of Etsy are down around an alarming 8% in after-hours trading.

Last quarter was no peach for Etsy, with my colleague Alex Wilhelm summing up the run into Q3 quite nicely:

In short, gross sales are in trouble, spend is going up, and revenue growth will slacken. That’s to be polite; not what you want to hear from the company you own.

Here was their full warning from last quarter, which was…rough:

We’d like to highlight a few factors that we believe will impact Etsy’s third quarter 2015 results. First, as we conveyed in the first quarter of 2015, if currency exchange rates remain at current levels, currency translation will continue to negatively affect GMS growth for goods that are not listed in U.S. dollars and will also continue to dampen the demand for U.S. dollar-denominated goods from buyers outside of the U.S. Second, similar to the first and second quarters, we plan to spend more on marketing in absolute dollars in the third quarter compared with both the second quarter of 2015 and the third quarter of 2014. Third, also similar to the second quarter, we expect to increase the pace of hiring in the third quarter compared with both the second quarter of 2015 and the third quarter of 2014. Finally, we would like to remind investors that by the end of the third quarter 2015, we will anniversary the re-launch of Promoted Listings, which has been the biggest driver of Seller Services year-over-year revenue growth this year. As we approach this anniversary, we expect the revenue growth rate from this service to decelerate.

Here’s what Etsy’s CEO Chad Dickerson had to say on the Q3 earnings report:

During the third quarter the growth in the Etsy Economy continued, and we generated more than $1.6 billion in GMS year-to-date and supported more than 1.5 million active sellers and 22.6 million active buyers. We are looking forward to a great holiday season and are continuing to innovate and build new products and services on our platform that empower Etsy’s creative entrepreneurs to succeed on their own terms. Our commitment to reimagining commerce, our understanding of the needs of artisans and our dedication to our vibrant community will continue to differentiate the Etsy marketplace from all others.

Yes, yes. It’s holiday season. Just in the nick of time for Etsy and most importantly its 1.5M active sellers who keep the company going. Etsy wants everyone to know that it’s the most important, and profitable, quarter of the year for them: “We have launched a holiday campaign that we believe is our strongest holiday effort to date.”

Commercials? Radio spots? We’ll find out.


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