Etsy Soars After Posting Profit, Showing Progress on Growthby and
Stock jumps as much as 19% in extended trading after results
Brooklyn-based firm reports first profit as a public company
Etsy Inc. jumped as much as 19 percent in extended trading after posting its first quarterly profit since becoming a public company and making progress on crucial growth metrics.
The Brooklyn, New York-based company posted revenue of $81.8 million in the first quarter, according to a statement Tuesday, compared with the average analyst estimate of $75.2 million. Profit was 1 cent a share, beating the average analyst estimate for a loss of 3 cents a share.
Etsy, known for unique and sometimes quirky items like graduation cake toppers and small batch organic coffee scrubs, has faced investor and analyst scrutiny as growth slows in gross merchandise sales and the number of active seller and buyers. Chief Executive Officer Chad Dickerson has been focused on adding more mobile sales as well offering paid services to sellers.
The strong U.S. dollar relative to world currencies has hurt the growth of sales on Etsy, but the company saw the first signs that international purchases from U.S. merchants are stabilizing, Chief Financial Officer Kristina Salen said on a conference call. That improvement is continuing into April, removing some of the uncertainty hanging over the company’s sales growth.
“We’re seeing another sequential improvement in the month of April, which is a continuation of a positive trend, the first signs of a positive trend,” Salen said.
Total gross merchandise sales growth is still slipping. The key metric grew 18 percent to $629.9 million in the quarter from a year earlier, while it grew 21 percent year-to-year in the fourth quarter of 2015. Salen said gross merchandise sales growth will stabilize in the next three years and the company will look to other services to increase revenue.
Etsy is making progress rolling out those new services, Dickerson said. In April, it unveiled Pattern, which lets merchants build their own websites that stand apart from Etsy’s marketplace. Pattern at a cost of $15 a month offers payment processing, custom domain names and analytics to help merchants track sales, similar to custom website services offered by Shopify Inc. or Bigcommerce Inc.