Etsy's Q1 2023 financial report exceeded expectations, and active buyers resumed year-on-year growth

It is learned that on May 4, Etsy released its first quarter 2023 financial report, showing that many performance indicators achieved unexpected growth, and became one of the best performing stocks in the S&P 500 index in after-hours trading. This is mainly due to the improvement of the platform and the increase in buyer participation.

According to the financial report, Etsy's first-quarter revenue increased from $579.3 million in the same period last year to $640.9 million, a year-on-year increase of 10.6%, exceeding the market expectation of $620.9 million. In the first quarter, Etsy's revenue as a percentage of total merchandise sales exceeded 20% for the second time in history.

Revenue growth was aided by an increase in Etsy marketplace transaction fees that took effect on April 11, 2022, when Etsy transaction fees increased from 5% to 6.5%.

Etsy's net profit in the first quarter was $74.5 million, down 13.4% from $86.1 million in the same period last year. The comprehensive net profit margin (net income divided by revenue) was approximately 12%, and the diluted net income per share was $0.53.

According to the financial report, Etsy's gross merchandise volume (GMV) in the first quarter was US$3.1 billion, a year-on-year decrease of 4.6%. This indicator includes the total sales of Etsy itself and its platforms such as the fashion resale market Depop, the musical instrument market Reverb, and the Brazilian handmade products market Elo7.

Looking at the Etsy platform alone, its GMV in the first quarter was US$2.7 billion, down 4.7% from the same period last year.

This was mainly due to a decline in consumer discretionary spending, especially for lower-income buyers, with sales of some higher-priced categories taking a hit, such as home and living goods and handicrafts.

It is worth noting that the number of active buyers on the Etsy market increased by 1% year-on-year to 89.9 million, the first year-on-year increase in this indicator since the fourth quarter of 2021. The Etsy platform added 7 million buyers in the first quarter, with 21% more repeat buyers than the same period last year, and maintained a higher level of active buyers than before the epidemic on a 12-month basis.

The growth in active buyers shows that the platform's improved policies are taking effect. It is reported that Etsy has taken measures to re-engage buyers through personalization investments, including exploring generative artificial intelligence to provide more relevant search results.

Additionally, the number of active sellers on Etsy grew 3.8% year-over-year to 7.9 million in the first quarter.

Looking ahead, Etsy expects second-quarter GMS to be between $2.85 billion and $3.10 billion, revenue to be between $590 million and $640 million, and adjusted EBITDA margin to be approximately 26%, all in line with analyst expectations.

Etsy ended the first quarter with $1.1 billion in cash and cash equivalents and short-term and long-term investments. Under Etsy's stock repurchase program, during the first quarter of 2023, Etsy repurchased a total of approximately $148 million of common stock, or 1,205,151 shares of common stock. On March 1, the capped redemption instrument associated with the 2018 Convertible Notes was settled for 1,194,006 shares of Etsy common stock, which were redeemed upon receipt.

Editor✎ Ashley/

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