Esty Inc. tops analysts’ expectation in its second-quarter results

After the market closed on Wednesday, Etsy Inc. released its second-quarter financial results, reporting profitability that surpassed expectations, and saw gross merchandise sales in line with expectations on Wall Street.

Following the announcement, Etsy Inc.'s shares rose 9 percent in after-hours trading after finishing up 2.4 percent to $95.50 in regular trade.

The ecommerce company reported net income for the second quarter of $73.1 million, or 51 cents per share, down from net income for the same period in the same period a year ago of $98.3 million, or 68 cents per share. Following the acquisitions of Depop and Elo7, Etsy reported that the net income drop was mostly caused by an increase in employee compensation-related expenses, with the overall employee number rising by about 70percent year over year. The company was expected to post net income of $47 million and earnings of 32 cents per share by analysts according to FactSet.

Etsy reported gross merchandise sales of $3.01 billion, which were lower by 0.4 percent from $3.04 billion in the same time last year but in line with Wall Street's estimates. Sales increased from $528.9 million in the same quarter last year to $585.1 million this quarter. A $556 million sales forecast was offered by FactSet.

Etsy's online marketplace sales increased to $439.5 million from $395.5 million in the prior quarter, exceeding the $416 million FactSet consensus. Revenue from services increased to $145.6 million from $133.4 million in the same quarter last year. FactSet's analysts predicted services revenue of $143 million.

Etsy predicted gross product sales of $2.8 billion to $3 billion during the third quarter. FactSet's database of analysts had projected $3.08 billion. Etsy anticipates earning between $540 million and $575 million in the third quarter. According to FactSet, third-quarter sales is expected to be $568 million.

Notwithstanding challenging macroeconomic conditions, Etsy's second quarter revenue increased by almost 10 percent. The gain was ascribed by Etsy CFO Rachel Glaser to an uptick in service fees on the Etsy platform, the inclusion of Depop and Elo7 to the company's House of Brands portfolio, and the effectiveness of its Etsy Ads product.

In addition, Etsy added about 6 million new customers, which the business claimed was still a far higher pace than pre-pandemic levels.

According to a press release from Etsy CEO Josh Silverman, the company's second quarter results show that the company has retained the most of its recent gains and that it is able to generate solid bottom line success while also investing in significant projects.

“Our second-quarter results once again reflect that Etsy has maintained most of our pandemic gains, and that we are able to deliver strong bottom-line performance while simultaneously investing in key initiatives,” said Silverman, in a statement. “Despite facing headwinds caused by macroeconomic and geopolitical factors, we believe the improvements we’ve driven in customer experiences across the Etsy marketplace and our House of Brands, coupled with continued focus on our ‘Right to Win’ strategy, will enable us to unlock the enormous long-term opportunities we see ahead.”