Etsy’s shares have dropped seven per cent despite profits and sales rising during its second quarter as the ecommerce site failed to meet expectations.
Second-quarter sales grew 37 per cent to $181.1 million, missing analyst expectations of $183 million, while profits grew 43 per cent to $39.7 million coming just above estimates of $39.6 million.
Gross merchandise value also rose 21 per cent to $1.1 billion, while net income jumped from $3.3 million in 2018 to $18.2 million.
READ MORE: Etsy to buy Reverb for $275m
Etsy blamed a month-on-month drop 130 basis point in its gross margins on its “on-going migration to the cloud”.
“Our excellent second quarter growth in revenue and GMS reflects solid execution across our portfolio of product and marketing investments and the strength of our core marketplace,” Etsy’s chief executive Josh Silverman, who is credited with driving its turnaround over the last two years, said.
Last month Etsy announced plans to acquire specialist music gear ecommerce platform Reverb for $275 million, a deal expected to be completed in the final quarter of this year.
Reverb, the online marketplace launched in 2013, lists new, used and vintage music gear from over 380,000 active sellers globally.
Earlier that month the Etsy announced plans to make “free shipping the norm” for all US customers as it seeks to quash criticisms over high delivery prices.
Its chief financial officer Rachel Glaser added: “Our investments in product initiatives and full funnel marketing are having a positive impact on growth in both active buyers and sellers and continued sequential growth in our frequency metrics. We are successfully improving the experience for buyers on Etsy and helping our sellers build successful businesses.”