Etsy (ETSY) Tops Q1 Views

Etsy (NASDAQ: ETSY) reported Q1 EPS of 0.01, 3 cents better than analyst estimate of ($0.02). Revenue for the quarter came in at $81.85 million versus the consensus estimate of $75.15 million.

Non-GAAP Adjusted EBITDA for the first quarter was $14.8 million and grew 121.1% year-over-year. Non-GAAP Adjusted EBITDA margin was 18.0%, up 660 bps year-over-year. Non-GAAP Adjusted EBITDA performance was impacted by leverage in employee related costs, the previously mentioned high incremental margin gift card revenue and leverage in marketing spend. In the second quarter, we expect to accelerate the pace of hiring and do not expect to realize a significant gift card revenue benefit; both of these factors will impact our Adjusted EBITDA performance.

GMS was $629.9 million, up 18.4% compared with the first quarter of 2015. On a currency-neutral basis (excluding the direct impact of currency translation on GMS from goods that are not listed in U.S. dollars) GMS growth in the first quarter of 2016 would have been 19.1% or approximately 0.7 percentage points higher than the as-reported 18.4% growth. We believe that weaker local currencies in key international markets continued to have an indirect impact on international buyer behavior and GMS growth by dampening the demand for U.S. dollar-denominated goods. As we begin to anniversary the major gains of the U.S. dollar against global currencies it is increasingly difficult to estimate the indirect impact of currency exchange rates on international buyer behavior and GMS growth. We believe, however, that the continued year-over-year decline of GMS between international buyers and U.S. sellers, which was down approximately 11% year-over-year in the first quarter, is indicative of the ongoing impact of currency valuation. In contrast, excluding our French marketplace ALM, GMS from international buyers making purchases from sellers in their own country grew approximately 56% year-over-year during the first quarter of 2016.

Financial Guidance

Etsy is reiterating the 2016 and 3-year guidance previously provided as well as the key drivers of expected performance during these time periods. They continue to believe that over the next three years they can deliver solid revenue growth and achieve leverage in their cost structure to expand margins:

For earnings history and earnings-related data on Etsy (ETSY) click here.

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