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Etsy Reports First Quarter 2016 Financial Results

Etsy grew sales 18% in the first quarter and grew its own revenue 40% – indicating sellers are paying proportionately more to Etsy for sales than they had in the past. PayPal integration with Direct Checkout has much to do with it. Etsy quantified it in the following breakdown:

  • Marketplace revenue grew 18.5%, primarily due to growth in transaction fee revenue and, to a lesser extent, growth in listing fee revenue.
  • Seller Services revenue grew 59.6% year-over-year and was driven primarily by revenue growth in Direct Checkout, which continued to benefit from the integration of PayPal.
  • Seller Services revenue also benefited from “robust growth” in revenue from Promoted Listings and Shipping Labels.

Etsy processed $629.9 million in Gross Merchandise Sales in the first quarter, up 18.4% year over year, or 19.1% on a currency-neutral basis. It grew total revenue 39.8% year-over-year to $81.8 million.

And Etsy reported net income of $1.2 million, up from a $36 million loss in the first quarter of 2015. “Gross profit grew faster than revenue in the first quarter because of the leverage we achieved in technology infrastructure and employee-related costs and because of the gift card revenue, which carries a high incremental margin,” Etsy explained.

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Gross margin was 65.9% compared to 64.6% in the first quarter of 2015.

“Our financial results in the first quarter were driven by our strong execution,” said Etsy CEO Chad Dickerson.

Some key metrics:

Etsy had 1.6 million active sellers in Q1 – that’s up 12%.

Etsy had 25 million active buyers – that’s up 20%.

Percent International GMS was 30.3%.

Percent mobile visits was approximately 63% compared with approximately 59% in the first quarter of 2015.

Percent mobile GMS was slightly more than 47% compared with approximately 43% in the first quarter of 2015.

Impact of the Strong Dollar 
Etsy said weaker local currencies in key international markets continued to have an indirect impact on international buyer behavior and GMS growth by dampening the demand for U.S. dollar-denominated goods.

Etsy saw a continued year-over-year decline of GMS between international buyers and U.S. sellers, which was down approximately 11% year-over-year in the first quarter. In contrast, excluding its French marketplace ALM, GMS from international buyers making purchases from sellers in their own country grew approximately 56% year-over-year during the first quarter of 2016.

Also of note: Etsy expects to accelerate its pace of hiring and marketing spend in the second quarter compared with the first quarter of 2016, and as planned, it expects to complete construction and move into its new Brooklyn headquarters in the second quarter of 2016.

In an earning call with Wall Street analysts on Tuesday, Etsy CEO Chad Dickerson was asked if its new Pattern store-hosting service supported ecommerce via social networking such as Buyable Pins and Buy buttons on Twitter and Facebook.

The CEO said Etsy does see opportunities over the long term to help sellers sell in other venues, but “we have no immediate plans in the areas that you just described.”

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Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. Send news tips to ina@ecommercebytes.com.


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