Etsy shares jumped more than 8% in after-hours trading on Wednesday after the company’s second-quarter earnings beat the top and bottom lines. It maintained the bulk of that advance in premarket trades early Thursday, ending regular trading up 2.4% at $95.50.
The online marketplace operator reported a second-quarter net income of $73.1 million, or 51 cents a share, compared with a net income of $98.3 million, or 68 cents a share, in the year-earlier quarter. Etsy said the net-income decline was primarily attributable to increased employee-compensation-related expenses, with total employee headcount growing approximately 70% on a year-over-year basis following the acquisitions of Depop and of Elo7. Analysts polled by FactSet expected Etsy to report a net income of $47 million and earnings of 32 cents a share.
“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 Etsy CEO Josh Silverman, in a statement. The Etsy marketplace added approximately 6 million new buyers, which the company said is still a meaningfully elevated rate compared to pre-pandemic levels.
Why it matters
The seller of handmade and vintage goods got a considerable lift during the pandemic, as shopping from home soared and demand for handmade face masks surged. In recent months, however, the company has faced the one-two punch of tough comps and slowing sales, which have dragged its stock down as much as 68% from highs reached late last year. Despite the positive Q2 results figures show that gross merchandise sales (GMS) -- or the total value of products sold on its marketplace, declined less than 1% to $3.03 billion, confirming that Etsy is dealing with the same challenges as other online retailers -- that shoppers aren't as active as they were last year.
