Company Overview
Etsy, Inc. operates as a digital platform connecting buyers and sellers within the United States, United Kingdom, and international markets through its primary Etsy marketplace and the Depop segment. The company functions within the Consumer Cyclical sector and the Internet Retail industry, positioning itself as an intermediary that facilitates commerce for artisans and various consumer goods. Etsy, Inc. currently holds a market capitalization of $5.41B and generated total revenue of $2.88B over the trailing twelve months while employing a workforce of 2375 individuals. These valuation and revenue figures indicate that the company maintains a significant presence in the online retail landscape, reflecting a substantial asset base and operational scale relative to its peer group in the internet retail space.
Financial Health
The company reported revenue of $2.88B, net income of $162.98M, and EBITDA of $418.86M for the trailing twelve months, illustrating a clear disparity between gross sales and bottom-line profitability. The gap between the $2.88B revenue and the $162.98M net income reveals a cost structure where operating expenses, including cost of goods sold and administrative costs, consume approximately 94.3% of total revenue before reaching the final profit line. Free cash flow stands at $517.30M, which demonstrates strong cash generation capabilities and provides the company with significant financial flexibility to fund operations, reduce debt, or pursue strategic initiatives without immediate reliance on external capital markets. Gross margin is reported at 71.6%, indicating high profitability on each unit sold before accounting for selling and administrative expenses, while the operating margin sits at 14.7% and the profit margin at 5.7%, showing the extent to which operational costs and taxes erode gross profits. On the balance sheet, the company holds $1.62B in cash against $3.12B in debt, resulting in a debt-to-equity ratio that is listed as N/A due to the negative price to book ratio of -4.84. Despite the negative book value metric, the current ratio of 1.44 indicates that the company possesses 1.44 dollars in current assets for every dollar of current liabilities, suggesting a healthy short-term liquidity position to meet its immediate obligations. Return on Assets is calculated at 8.8%, which measures how efficiently the company utilizes its asset base to generate earnings, whereas Return on Equity is listed as N/A due to the negative equity position derived from the negative price to book ratio.
Valuation Assessment
The trailing twelve-month P/E ratio is 39.40, while the forward P/E is significantly lower at 9.25, implying that the market expects a substantial improvement in earnings growth or a re-rating of the stock to justify the high current multiple. The price to book ratio is negative at -4.84, which indicates that the market values the company below its book value, a metric often seen in growth-oriented or turnaround situations where future earnings potential outweighs current asset book values. Alternative valuation metrics such as the price to sales ratio of 1.87 and the EV/EBITDA of 16.15 suggest that the company is trading at a premium relative to its sales but at a moderate multiple relative to its cash earnings before interest, taxes, depreciation, and amortization. Over the past year, the stock has traded between a 52-week low of $40.05 and a 52-week high of $76.52, providing a historical range for investors to gauge current price levels against recent volatility extremes. The beta of 1.78 indicates that the stock price is expected to be 78% more volatile than the broader market, suggesting higher risk and potential for larger price swings during periods of market turbulence.
Growth & Income
Revenue growth is recorded at 3.5% year over year, while earnings growth is -7.1%, indicating that earnings are currently declining relative to revenue expansion, which implies that the company is facing margin compression or one-time costs affecting profitability. Etsy, Inc. does not pay a dividend, as evidenced by a dividend yield of N/A and a payout ratio of 0.0%, meaning the company reinvests all of its available earnings back into the business rather than distributing cash to shareholders. The overall growth and income profile reflects a company prioritizing organic expansion and market share consolidation over current income distribution, resulting in a net income figure that is lower than the EBITDA due to significant operating expenses.