US online marketplace Etsy beat market expectations for quarterly revenue on Wednesday, boosted by a strong demand for personalised gifts and higher transaction fees.
Net revenue increased 10.6% to $640.9 million in the quarter ended March 31, up from the industry estimates of $622.1 million. This came at a net income of 53 cents per share while the average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of 48 cents per share.
Marketplace revenue jumped over 9% in the reported quarter, driven by the transaction fees increase from 5% to 6.5%.
The CEO of Etsy, Josh Silverman, had previously defended the decision to increase transaction fees, saying it is still “super affordable”, despite seller protests.
“We’ve kicked off an exciting pipeline of product development and marketing initiatives to drive improved customers experiences and engagement in 2023,” Silverman said. “We believe that Etsy can be more relevant, more often, to many more millions of buyers around the world.”
Etsy grew active buyers by 1% to 89.9 million, marking the first increase of the metric since the fourth quarter of 2021.
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The firm said it acquired 7 million new buyers and reactivated 21% more buyers than in the same period last year.
“While we remain cautious on the broader macroeconomic climate, we are pleased to see positive trends in our first-quarter 2023 buyer data, particularly the return to year-over-year growth in the Etsy marketplace’s active buyer base,” Rachel Glaser, chief financial officer, said in a statement.
At the same time, the consolidated gross merchandise sales (GMS) plunged 4.6% to $3.1 billion due to “pressure on consumer discretionary spending particularly for lower household income buyers” and year-over-year declines in bigger categories like home and living, as well as craft supplies.
At the core Etsy marketplace, GMS in Q1 was $2.7 billion, down 4.7% from a year earlier.
For the current quarter ending in June, Etsy said it forecasts revenue of $590 million to $640 million, while analysts expected $625.4 million.