Etsy (ETSY) reported earnings after the bell this afternoon that beat Wall Street’s expectations, but forward growth guidance was a big dissapointment causing the stock to fall 10% after hours.

Just like many other COVID beneficiaries, Etsy’s growth will struggle to match up against an absolutely monstrous 2020.

Investors will likely continue to look elsewhere for growth with interest rates on the rise and the company trading at a 50% premium to all other apparel retailers.

The Results

Basic earnings per share for the quarter came in at $1.14, beating profitability expectations by over 30%.

Revenue for the quarter came in at roughly $550 million, compared to Wall Street average estimate of $530 million.

As to be expected Net Sales increased a whopping 141.5% compared to the same period in 2020.

Operating profit (EBIT) was reported at $150.6 million, slightly surpassing analyst estimates of $144.

Operating profit margin for the quarter came in slightly worse than expected at 27%.

Reported EBITDA for the quarter was $171.5 million, slightly missing the average analyst estimate of $176 million.

EBITDA margins also missed analyst expectation by about 2%, coming in at 31% for the quarter.

More specific to the company’s business model, Etsy reported 16.3 million newly acquired and reactivated customers and a 205% YoY growth rate in its “Habitual Buyers”.

The company defines a Habitual Buyer as an individual with 6 or more purchase days and $200 or more spent in a trailing 12-month period. Investors may have dismissed this statistic given the amount of American fiscal stimulus checks sent to households in the 12-month period ending March 31st.

According to today’s press release, Habitual Buyers account for 40% of the Etsy Marketplace.

In regard to Etsy’s online marketplace, which is responsible for roughly 75% of its revenue, the company reported a 67% YoY growth rate in its Active Sellers presence, and a 89.9% YoY growth rate in its Active Buyer presence.

From the perspective of relative valuation, the company trades at 11.8 times its estimated revenue for fiscal year 2021; a moderate 13% discount in relation to its peer group.

In comparison, Etsy trades at a staggering 61.6 price/earnings.

This is a premium of 91% in relation to its peer group if you exclude the non-profitable companies.

Etsy’s peer group is rather vast as stated in the company’s previously field 10-K.

The company notes its business model consists of a unique blend of highly customizable products sold on its online marketplace, as well as SaaS oriented products tailored to small-medium sized business.

Some of the competitors noted in the regulatory filing include eBay, Alibaba, Amazon, Shopify, Big Commerce Holdings, and Walmart.

The company did give guidance for Q2 2021, in which management expects Gross Merchandise Sales (GMS) to rise 5-15% on a YoY basis, and for overall revenue to rise 15-25% on a YoY basis.

The stock was down big after hours due to revenue estimates for this year coming in well below what analysts were expecting.

Etsy’s President and CEO notes that “the company expects Q2 2021 GMS to decelerate along with the rest of e-commerce as we lap the tremendous 2020 growth rates”.

In the last year, the company’s share price has appreciated a monstrous 153% and is still up 7% year to date.

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