Etsy stock jumped in after-hours trading after the online marketplace reported its first quarterly profit since going public in April 2015 as users and revenue grew.
Revenue increased 40% to $81.8 million in the first quarter, primarily reflecting a gain of nearly 60% in services provided to users who sell merchandise through Etsy’s website. The company earned $1.2 million, or a penny a share, compared with a loss of $36.6 million, or 84 cents a share, a year earlier.
Analysts had expected a loss of 2 cents a share and revenue of $75 million. Shares rose 18% to $9.90 in after-hours trading Tuesday, though they were still sharply below Etsy’s initial public offering price of $16.
“Our financial results in the first quarter were driven by our strong execution,” Etsy CEO Chad Dickerson said in a news release. “We supported 1.6 million active sellers and 25 million active buyers, who together generated nearly $630 million in [gross merchandise sales].”
Gross merchandise sales (GMS) was up 18%, which, according to eCommerce Bytes, indicates that sellers are paying proportionately more to Etsy for sales than they had in the past. Active sellers increased 12% while the number of active buyers rose 20%.
As The Economist reports, Etsy’s stock price has plummeted in large part because the company has not grown fast enough to satisfy investors. The growth of GMS, revenue, buyers, and sellers slowed last year. Etsy spent 30% more on marketing in the first quarter to lure new buyers.
CEO Dickerson said the second quarter has already been boosted by the launch of the Pattern by Etsy service, which allows merchants to create customized websites, and “a host of other products and seller tools that we believe will build long-term value for our community.”