Updated Aug 10 at 5:01pm ET.
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CEO Kruti Patel Goyal shared that the company is now applying artificial intelligence in three specific areas. The goal is to make the site more personal for each shopper, make items easier to find through better search, and test new tools that let customers shop using natural conversation.
For a marketplace with millions of unique, unbranded items, search is the biggest hurdle to making a sale. If these AI tools can better match buyers with the specific handcrafted goods they want, it could help the company return to the steady sales growth it has been chasing for the last two years.
The company brought in 670 million dollars in revenue last quarter, which was slightly better than what analysts expected. However, it reported a loss of 36 cents per share, falling well short of the 75-cent profit that was anticipated. This gap was likely driven by costs related to its recent restructuring and the sale of secondary businesses.
Management is signaling confidence by authorizing 2 billion dollars for a buyback, which is when a company uses its own cash to buy its shares to increase their value. With the sale of the Depop platform now finished, the company is focusing entirely on its main marketplace. If it can keep buyers coming back without those extra businesses, the leaner structure should eventually lead to higher profits.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Management is cutting about 220 positions as part of a plan to simplify the organization. The goal is to improve coordination and make decisions faster as the company shifts its full attention back to the core Etsy platform.
While layoffs are difficult, these cuts are intended to lower costs and make the business more efficient. For long-term owners, the key is whether a smaller team can still drive the product improvements needed to grow the number of active buyers on the site.
Source: WSJ
The company has officially closed the sale of Depop to eBay for approximately 1.4 billion dollars in cash. This move is part of a broader strategy to sell off secondary brands and focus entirely on the main Etsy marketplace.
This deal provides a significant amount of cash that can be used to fund the new 2 billion dollar share buyback program. By narrowing its focus, management is betting that it can grow faster by putting all its resources into its most profitable platform rather than managing multiple smaller sites.
Source: 8-K filing
Truist Financial raised its price target for the stock to $90. This suggests the firm sees about 10 percent upside from the current price. The move reflects confidence in the company's ability to stabilize its user base as it moves past the sale of its secondary businesses.
Source: Truist Financial
Analysts raised their price targets for Etsy following better-than-expected second quarter earnings. About half of the 45 analysts rate the stock a buy, and the average target of $82 is roughly in line with the current price.
The company has a habit of clearing the bars set for it, beating earnings estimates in seven of the last eight quarters even as revenue growth has stayed mostly flat.
| Expectation | |
|---|---|
| EPS | $1.27 |
| Revenue | $666M |
