Etsy grew Gross Merchandise Sales (GMS) 21.7% in the third quarter year-over-year to $568.8 million driven by growth in active buyers and sellers. The company reported a net loss of $6.9 million compared with a $6.3 million net loss in the third quarter (Q3) of 2014.
In a post-earnings conference call with Wall Street analysts on Tuesday, Etsy CEO Chad Dickerson answered a question about the competition it faces from Amazon’s new Handmade marketplace and discussed holiday marketing broadly.
When an analyst asked him about Amazon Handmade, Dickerson said Etsy knows its sellers extremely well after working with them for 10 years and believes Etsy is the best platform for them to be creative entrepreneurs and build businesses on their own terms.
“Half of our sellers sell on multiple venues and Etsy’s the primary source of income for those sellers who sell on multiple venues,” he said. “Based on what we’re seeing and conversations with our sellers, we have no reason to believe that any competitors are having an impact on our seller business right now.”
He also said that mobile was Etsy’s most strategic initiative, and reported that 44% of GMS comes from a mobile device. He also noted that 30,000 shops had used its new Shop Update social sharing tool since it launched last month.
Total revenue for the third quarter was $65.7 million, up 37.9% year-over-year, driven by growth in both Marketplace and Seller Services revenue.
- Marketplace revenue grew 19.7%, primarily due to growth in transaction fee revenue and, to a lesser extent, growth in listing fee revenue.
- Seller Services revenue grew 66.7% 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, which both grew faster than GMS in the third quarter.
Etsy noted the impact of foreign currency exchange rates on goods sold in non-US dollars – and said they dampen the demand for U.S. dollar-denominated goods from buyers outside of the United States.
Etsy saw a 19.4% year-over-year growth in active sellers to over 1.5 million, and a 24.9% year-over-year growth in active buyers to 22.6 million.
During the earnings call, Dickerson called the new Etsy ASAP same-day delivery option “very much a test,” and he encouraged analysts on the call to try it – “we deliver to Wall Street,” he said.
When one analyst asked about Etsy Manufacturing, Etsy CFO Kristina Salen warned analysts not to think of it as a 2016 perspective – “it’s important to note this is a slow rollout, we’re still working out the business model.” She reminded them of its Wholesale initiative launched last year, “which we’re still fine tuning.”
Regarding Etsy Manufacturing, she said, “For us, it’s just the beginning, it’s just the first inning.”
Dickerson said Etsy was being very selective in who it allows into the program, revealing that up to this point, 600 manufacturers had applied.
Dickerson said in Etsy’s statement on Tuesday, “We are looking forward to a great holiday season and are continuing to innovate and build new products and services on our platform that empower Etsy’s creative entrepreneurs to succeed on their own terms. Our commitment to reimagining commerce, our understanding of the needs of artisans and our dedication to our vibrant community will continue to differentiate the Etsy marketplace from all others.”
In addition, Etsy stated, “from an overall business perspective, we’re excited about our competitive position as we head into the fourth quarter – our biggest quarter of the year – and the holiday season. We have launched a holiday campaign that we believe is our strongest holiday effort to date.”