Is the marketplace pandemic boost over – Etsy Q3 Guidance

Is the marketplace pandemic boost - Etsy Q3 Guidance

Etsy’s share price dropped from around $220 to around $174.50 in after hours trading following their latest quarterly earnings, not because they turned in a cracking 2nd quarter performance but because their 3rd quarter guidance was weaker than hoped for by investors. This asks the question as to whether the marketplace pandemic boost is coming to an end?

The marketplace pandemic boost saw all marketplaces turn in stellar results, but as shops reopen and the world attempts to get back to normal the growth that’s been seen over the past 15 months might be coming to an end. It’s not that marketplaces are seeing negative growth, they’re just not seeing the massive overnight gains that came when the pandemic first hit.

It’s important to realise that the marketplace pandemic boost positively impacted all marketplaces and similarly all marketplaces are now likely to see their growth predictions more muted than over the past year. This isn’t something that only affects Etsy. We’ve been tracking visits to marketplaces for almost two years now, so watch out for our latest report next week. In May we noted regarding Etsy “Whilst we’re not seeing this explosive growth this year, it’s worth noting that in 2020 we watched them grow from about 200M monthly visits to 400M… and they have retained that level of traffic following a Christmas peak of 500M.”

Etsy Q2 highlights

  • The Etsy marketplace added approx. 11.9 million new and reactivated buyers and GMS per active buyer grew a record 22% (on a trailing twelve month basis).
  • Excluding facemasks, which were an important driver of the prior year period, Q2 GMS for the Etsy marketplace increased 31%.
  • Also of note, in Q2 Etsy announced two strategic acquisitions, both completed in July. Fashion resale marketplace Depop and Elo7 – the ‘Etsy of Brazil’ – further extend Etsy’s total available market opportunities.

“Etsy’s second quarter 2021 performance is quite remarkable when viewed in context of how dramatically the world changed during the year-ago period. It is deeply gratifying to me and our entire team that we are able to report strong year-over-year growth, with GMS and revenue up approximately 13% and 23% respectively. In fact, excluding facemasks, which were an important driver of the prior year period, second quarter GMS for the Etsy marketplace increased 31%. We’re demonstrating just how many purchase occasions Etsy sellers can meet in truly delightful ways, attracting millions of new buyers and engaging our customers more than ever before. We’re seeing measurable results from deepened investments in our ‘Right to Win’ strategy, which provides a clear roadmap for product and marketing investments to make it easier to shop on Etsy, build top of mind awareness, and solidify buyer trust.”
– Josh Silverman, CEO, Etsy

Etsy issued the following guidance for Q3:

  • Consolidated GMS growth of ~12.5% ($2.9 to $3 billion)
  • Consolidated revenue growth of ~13.5% ($500 to $525 million)
  • Adjusted EBITDA margins of ~$25% (includes Depop and Elo7)
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