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Etsy raises guidance on strong Q2 results

Etsy on Tuesday reported its fourth consecutive quarter of increased gross merchandise sales [GMS], prompting the online marketplace to raise its guidance for the year.

The company reported US$901.7 million in GMS in Q2 2018, a 20.4 per cent increase over Q2 2017 and a 19.3 per cent increase over Q1 of this year. This was up from the 17.6 per cent increase seen in Q1 over the previous quarter.

The continued acceleration of GMS drove Etsy to US$132.4 million in revenue in the quarter, a 30.2 per cent increase compared with Q2 2017, and led the marketplace to revise its guidance for GMS and revenue growth in the year.

The marketplace now expects its 2018 GMS to be 18-20 per cent higher than in 2017, up from the 16-19 per cent guidance it provided in June, and revenue to be 33-35 per cent higher than in 2017, up from the 32-34 per cent guidance it provided in June.

EBITDA margin guidance remains unchanged at 21-23 per cent, which results in slightly higher adjusted EBITDA of around US$124 million to US$136 million.

After restructuring and streamlining its cost structure in the second quarter last year, Etsy’s operating expenses were down 4.5 per cent year-on-year to US$74.2 million. Gross profit was up 31.8 per cent year-on-year to US$87 million.

The marketplace had nearly 2 million active sellers and 35.8 million active buyers as of June 30. More than half of sales occurred on mobile, and roughly one third were international.

Etsy raised its seller transaction fee for the first time in the history of the company during Q3 to 5 per cent inclusive of the cost of shipping. This is expected to impact revenue going forward.

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