by The company said the number of active buyers on the platform grew sequentially for the first time in two years and that it also had year-over-year growth in new buyers and active sellers
BROOKLYN, N.Y. — Online marketplace Etsy’s recently released first-quarter report not only shows how the company performed financially, but also the opportunities it seeks to capitalize upon this year and beyond.
The company reported first-quarter revenue of $613.3 million, up 3.1% from $612.2 million last year. Its net income was $69.7 million, or 60 cents per share, compared with a loss of $52.1 million, or 49 cents per share, last year.
Its gross profit was $455.6 million, or 72.2% of revenue, compared with $444.4 million, or 72.6% of revenue, last year. Operating expenses were $335.8 million, or 53.2% of revenue, compared with $448.3 million, or 73.2% of expenses, a year earlier.
The company divides its revenues into two main areas, including marketplace revenues representing fees from buyers and sellers for transactions on its platform, and service revenue, which is described as revenue from services for sellers, including fees for advertising, payment processing and shipping labels, for example.
The company said that marketplace revenue represented the majority of its revenue at $432.8 million, up 1.1% on a continuing operations basis and 6.3% for the Etsy marketplace. Its services revenue was $198.5 million, up 7.9% year over year on a continuing operations basis and 10.5% for the Etsy marketplace.
It reported 86.6 million active buyers during the quarter, down 2.1% year over year and up .1% from the prior quarter and 34.6 million repeat buyers, down 3.2% year over year and down .1% from the prior quarter. It also reported 5 million new buyers, up 2.3% year over year, and 6.9 million reactivated buyers, up 6.6% from the first quarter of last year.
Active sellers totaled 5.6 million, up 3.3% year over year and up .1% from the prior quarter.
It also noted that as of the close of the quarter March 31, it held $1.6 billion in cash, cash equivalents and short- and long-term investments.
In addition, net cash provided by operating activities of continuing operations for the three months ended March 31 was $102.5 million. It also noted that it repurchased an aggregate of approximately $145 million in stock, which reduced the outstanding share count by approximately 2.7 million shares. As of March 31, it said it had $827.9 million remaining on its current board-authorized share repurchase programs.
The report noted that because of the pending sale of social shopping app Depop, this represents a discontinued operation in the results.
The company also said that growth in its GMS (gross merchandise sales) totaling $122 per active buyer was up 1.5% year over year and up 1.1% from the prior quarter. This was driven by higher spend per buyer, “with active buyers returning to modest sequential growth. … Purchase frequency remained modestly lower than prior-year levels, while average order value increased year-over-year.”
The platform continues to make gains from holiday and seasonal shopping events such as Valentine’s Day and Easter, with products such as cards, jewelry and toys, for example.
But furniture is a significant revenue generator as these are typically high-ticket items ranging from chairs and credenzas to desks, beds, consoles and kitchen islands, to name a few. Heirloom furniture brands also bring in high prices for used but collectible items also covering a broad array of merchandise.
In a letter to shareholders, recently named CEO Kruti Patel Goyal, who has been with the company 15 years in various rolls from vice president, international to CEO of Depop, said that the company’s path to long-term growth “is grounded in a focused plan: expanding how and where buyers discover us, connecting them with items that feel personal and relevant, and building relationships that go beyond transactions. This is how we’re working to turn the uniqueness and scale of our marketplace into a lasting advantage, in order to drive greater engagement and stronger frequency.”
“We are pleased that all key performance indicators are in-line with or ahead of the outlook provided for the quarter,” she added. “More importantly, we are beginning to see early improvements in customer behavior that reflect progress against our strategy: Active buyers grew sequentially for the first time in two years, though still down from the prior year, and we delivered year-over-year growth in new buyers, active sellers and GMS per buyer, alongside continued momentum in our mobile app.”
The app, she noted, is critical to its efforts to improve the customer experience.
“It is where our investments in personalization, machine learning and direct buyer relationships come together most effectively,” she said. “We’re seeing that translate into performance, with app GMS growth continuing to outpace non-app GMS growth and now representing 47% of total GMS. That gives us both validation and a clear path forward: As we continue improving personalization, optimizing owned marketing and growing adoption, we see meaningful opportunity to further increase app share and drive frequency over time.”
She also noted that the company is making “meaningful progress improving how we match buyers with the right inventory. Historically, our search systems have often prioritized what was most likely to convert in the moment — favoring popular items over those most relevant to an individual buyer. We are shifting toward a more personalized, relevance-driven approach with ML (machine learning) models that learn from both past behavior and real-time intent. In early tests, these improvements are driving increases in add-to-cart rates and conversion.”
Other areas where the company is seeking to make inroads with its customers include expanding the role of its personalized home feed recommendations and using AI-generated buyer profiles to help deepen its knowledge of its customer base and also deepen relationships with those same customers.
“Our highest-value buyers and sellers drive a disproportionate share of marketplace performance, making them a critical focus for driving growth,” Goyal said. “We are prioritizing activities that enable us to test, learn and build conviction around the most effective ways to deepen engagement for these customers.”
“As we move through the year, we’re investing where we see the greatest opportunity to drive change — particularly in Discovery — evolving our marketing to engage shoppers earlier in their journey and in more inspirational contexts. This includes curated, occasion-based experiences, such as recent activations around cultural moments that showcase Etsy’s differentiated, design-led inventory and help expand when and how buyers consider Etsy.”
