Etsy, Inc. (NASDAQ:ETSY) reported third-quarter results that topped Wall Street expectations, but the stock fell nearly 5% on Wednesday as declines in both active buyers and sellers overshadowed the upbeat earnings figures.
The online marketplace posted adjusted earnings of $0.63 per share, well above the consensus forecast of $0.52, while revenue climbed to $678 million, surpassing the $655.87 million expected by analysts. Excluding the recently divested Reverb business, revenue grew 6.1% year over year.
Consolidated Gross Merchandise Sales (GMS) totaled $2.72 billion, an increase of 0.9% year over year when excluding Reverb. Within that, Etsy’s core marketplace GMS slipped 2.4%, but Depop’s GMS jumped 39.4%, continuing its strong growth trajectory. The company’s take rate — the percentage of transaction value it retains as revenue — rose to 24.9%, up 220 basis points from a year earlier, helped by robust performance in its on-site advertising business.
“Etsy’s third quarter consolidated results surpassed expectations across all three of our key financial metrics — and GMS for Etsy and Depop combined returned to year-over-year growth,” said Josh Silverman, Etsy’s CEO.
For the fourth quarter, the company expects GMS between $3.5 billion and $3.65 billion, with an adjusted EBITDA margin around 24%, slightly below the 25.4% recorded in Q3. The take rate is forecast to remain near 24.5%.
Etsy’s main marketplace showed modest improvement, with GMS comparisons improving by roughly 300 basis points sequentially. However, active buyers fell 5% year over year to 86.6 million, and active sellers declined 10.9% to 5.5 million, reflecting the impact of the seller setup fee introduced in April.
Meanwhile, Depop continued to be a bright spot for Etsy, with U.S. GMS up 59% year over year, active sellers rising 40.8% to 3 million, and active buyers climbing 38.8% to 6.6 million.