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Etsy shares experienced an increase in premarket trading on Wednesday after the company revealed higher-than-anticipated revenue for the first quarter.
Here’s a summary of the company’s performance:
- Revenue: $651.2 million compared to the $643 million projected by LSEG
- Earnings per share: $1.03 adjusted versus 49 cents predicted by LSEG
The e-commerce firm reported a net loss of $52.1 million, translating to a loss of 49 cents per share. This was due to Etsy incurring a $101.7 million impairment charge from the sale of Reverb. Earlier this month, Etsy announced its decision to sell the musical instrument marketplace acquired in 2019 to concentrate on its primary marketplace and the secondhand platform, Depop, purchased in 2021.
Etsy is known for its online marketplace that brings together buyers and sellers of primarily handmade goods. Like many retailers, the company is navigating the effects of President Donald Trump’s extensive tariffs, although CEO Josh Silverman stated in February that the company is “vastly less” reliant on Chinese products, which faced levies of 145%.
Etsy CFO Lanny Baker noted on Wednesday that the company is “remaining agile amid uncertainty” regarding tariff announcements and “the changing condition of consumer confidence in our key markets.”
The company has also formed a “small operational task force” to deal with tariffs, providing guidance to buyers and sellers on shipping timelines and other relevant information. Earlier this month, Etsy began featuring products from domestic sellers on its platform to help shoppers avoid the extra costs tied to Trump’s tariffs.
Gross merchandise sales, a critical metric indicating the total sales volume on the platform, dropped 6.5% year over year to $2.79 billion, aligning with consensus estimates from FactSet.
For the second quarter, Etsy expects GMS to decrease at a rate similar to or “potentially slightly better than” the 6.5% rate observed this quarter.
The number of active sellers on the platform declined by 11.3% year over year to nearly 8.1 million, marking a fourth consecutive quarter of reductions. Similarly, active buyers also saw a drop for the second straight quarter to 94.8 million. These figures encompass sellers and buyers from the main Etsy site, Depop, and Reverb.
Etsy is striving to enhance its reputation as a go-to spot for unique gifts and products as it faces stiff competition from the e-commerce leader, Amazon, as well as newer Chinese online retailers like Temu, Shein, and TikTok Shop.
One-day stock chart for Etsy.
