Now that Etsy is a publicly traded company, it must file quarterly earnings reports with the SEC. On Tuesday, the company revealed Gross Merchandise Sales were $531.9 million, up 28.2% compared with the first quarter of 2014.
The growth was driven by 25.8% year-over-year growth in active sellers (1.4 million) and 36.5% year-over-year growth in active buyers (20.8 million).
But Etsy also earned more from seller fees. “Seller Services revenue grew 72.3% year-over-year, primarily due to growth in revenue from Promoted Listings, which continued to benefit from the re-launch of the product at the end of the third quarter of 2014. Seller Services revenue also benefited from growth in revenue from Direct Checkout and Shipping Labels.”
Total marketplace revenue grew 27.1%, primarily due to growth in transaction fee revenue and, to a lesser extent, growth of listing fee revenue, Etsy said.
Total revenue was $58.5 million, up 44.4% year-over-year.
As with other online marketplaces, the strong dollar had a negative impact in the first quarter of 2015. Etsy said, “Percent international GMS was flat at 30.5% compared with the first quarter of 2014. We believe weaker local currencies in key international markets led to lower demand for U.S. dollar-denominated goods, impacting both overall GMS growth rates and percent international GMS.”
However, it went on to say, “We remain focused on increasing the international contribution to overall GMS and believe it can grow, over time, to represent 50%.”
A Net Loss for the Quarter
Gross profit for the first quarter was $37.8 million, but Etsy experienced a net loss for the first quarter of $36.6 million, compared with a $0.5 million net loss in the first quarter of 2014.
“Etsy’s net loss increased as a result of non-cash, non-operating expenses related to the updated global corporate structure that we implemented on January 1, 2015. These expenses include a non-cash $10.5 million increase to Etsy’s tax provision, which brings Etsy’s total tax provision to $10.7 million. These expenses also include a non-cash currency exchange loss of $20.9 million largely due to intercompany debt incurred related to the structure. Etsy’s revised corporate structure was implemented to more closely align with its global operations and future expansion plans outside the U.S.”
In discussing its outlook for the second quarter (April, May, June), Etsy said foreign exchange rates could continue to impact buyer behavior outside the U.S. “Second, we expect to increase the pace of hiring in the second quarter compared with both the first quarter of 2015 and second quarter of 2014. Third, we plan to spend more on marketing in absolute dollars in the second quarter compared with both the first quarter of 2015 and the second quarter of 2014.”
It also reminded investors that second quarter results would include some one-time expenses, “such as Etsy’s $300,000 cash contribution to Etsy.org described in the Etsy prospectus filed on April 16, 2015 and approximately $300,000 in IPO expenses not deductible from Etsy’s IPO proceeds.”