Etsy rises on revenue beat, app momentum offsets profit miss

With minimal exposure to tariffs and a value-driven product mix, Etsy (NASDAQ:ETSY) beat second quarter sales expectations, pushing shares higher ahead of Wednesday’s open.

“We’re seeing early success in our efforts to build a more browsable shopping experience, particularly on our App, amplified by more personalized marketing and emergent AI technologies. We believe this is creating a significant runway for growth, as well as an opportunity to generate sustainable value for our stakeholders by capitalizing on what makes Etsy special,” said CEO Josh Silverman.

As a result of a non-cash foreign exchange loss, the online marketplace earned a profit of $0.25 per share, down 39% from a year earlier and $0.24 below expectations. Revenue of $672.7M, however, exceeded estimates by $25M, and was largely a result of on-site ads and payments for Depop and Etsy (NASDAQ:ETSY).

Gross merchandise sales (GMS) were down 4.8% to $2.8B and down 2.6% excluding the Reverb division, which Etsy (NASDAQ:ETSY) sold to Creator Partners and Servco in June. Last year, GMS sales fell just 2.1% but were down a much steeper 6.5% in the preceding quarter. Additionally, GMS on the Etsy App increased both sequentially and year-over-year, representing approximately 45% of total marketplace GMS.

Active buyers were down 4.6% to 87.3M but reactivated 2.8% more buyers year-over-year. During the quarter, ETSY acquired 4.8M new buyers.

For the current quarter, ETSY expects GMS of $2.6B to $2.7B, with a take rate of ~24.5%. Adjusted EBITDA margin is expected to be approximately 25%.