Etsy Q1 earnings: net income down as GMS falls 3.7%, CEO calls economic climate tough

Etsy, Inc. (NASDAQ: ETSY), a leader in two-sided online marketplaces that connect creative buyers and sellers globally, disclosed its financial results for the first quarter ended March 31, 2024, post the US market hours on Wednesday.

The company reported a marginal revenue increase in the first quarter of 2024, with consolidated revenue reaching $646.0 million, marking a 0.8% rise compared to the same period in 2023.

Despite the increase in revenue, Etsy experienced a downturn in profitability.

Consolidated net income for the quarter was $63.0 million, a decrease of $11.5 million year-over-year. The net income margin — net income as a percentage of revenue — stood at approximately 9.8%.

Etsy’s gross merchandise sales fall 3.7%

The quarter witnessed a 3.7% decline in consolidated gross merchandise sales (GMS), which stood at $3.0 billion, further exacerbated by a 4.1% decrease on a currency-neutral basis.

Specific challenges included reduced spending on discretionary items and minor impacts from the divestiture of Elo7, a prior year business sale.

In contrast, Etsy’s marketplace GMS recorded $2.6 billion, down 5.3% from the previous year, with a slightly larger dip of 5.6% when adjusted for currency impacts.

CEO remains positive

Despite the outcomes aligning with the company’s guidance, Etsy’s CEO, Josh Silverman, indicated that the current economic climate continues to dampen growth in the marketplace.

Our first quarter performance was challenged by a tough environment for consumer discretionary products.

However, he remains positive about the improvements made to customer experiences which are expected to boost buyer engagement and frequency over time.

Etsy’s active buyers jump 1.9% to 91.6 million

Etsy also reported a 1.9% increase in active buyers, totalling 91.6 million, with stable growth in U.S. buyers and significant increases internationally.

The company reactivated 6.3 million buyers, a 5.9% rise from the previous year, and welcomed 5.7 million new buyers.

While the average spend per active buyer dipped slightly to $125, trends suggest a stabilizing pattern.

Etsy’s focus remains on enhancing the user experience and leveraging its unique market position to navigate through the competitive e-commerce landscape and reignite growth.

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