Etsy didn’t have a good 2015, but it was still able to finish on the stronger side.
Today the company reported its fourth-quarter results, coming in at $87.9 million in revenue and a loss of 4 cents per share. Analysts were expecting a loss of 1 cent per share on revenue of $86.5 million. Another important number to track here was the company’s gross merchandise sales (GMS), which rose 21.3% to $741.5 million from $611.5 million in the fourth quarter last year.
Shares of Etsy were up as much as 13% in extended trading following the report. Still, it’s partially a recovery from the day where shares ended down around 7% before the company reported earnings.
Etsy at the end of the quarter had 1.6 million active sellers, up from 1.5 million active sellers in the previous quarter. So, while the company had 1.5 million active sellers for the past two quarters, it looks like there’s been a slight uptick in that. The company went from 22.6 million active buyers to 24 million quarter-over-quarter, and in the second quarter the company had 21.7 million active buyers.
It’s also a strong finish amid the fresh 2015 IPOs, which was one of the weakest years for the IPO market since 2009. Even with the strong showing, Etsy is still trading well below its IPO price — but it is certainly not alone.
The fourth quarter was an important one for Etsy — it had to show investors that it could post a strong holiday quarter and bring in new people who would buy gifts and other products on Etsy. It looks like investors were pleased by its ability to beat on revenue and bring in some new buyers and sellers. It also had to show that it could continue to bring those buyers and sellers in through despite its brand as an artisanal marketplace that is quite different from others like eBay.
Etsy is also continuing to navigate a shift to more mobile sales, with mobile visits accounting for 61% of the company’s overall visits, and 44% of gross merchandise sales coming from mobile devices.
This is all pretty good news for the company. In general, Etsy has not had a good year. Shortly after its IPO the stock hit around $30, but has since cratered to under $8. Today, obviously, didn’t help. To be sure, a lot of companies haven’t been having a good year due to a few things outside their control — like global economic issues and foreign exchange problems — but Etsy in particular is getting hit hard by investors.
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Now the question is whether Etsy can continue this momentum. The first quarter is generally a weaker one for companies like Etsy following a holiday shopping hangover. Etsy actually provided a 3-year outlook for the company, which had GMS growth between 13% and 17%, and revenue growth continuing at 20% to 25%.
All this, of course, is dependent on whether the company can still continue to convince new sellers and buyers to not only join Etsy, but continue coming back for the company’s unique goods that aren’t necessarily gifts or novelty items. We’ll have to see how that continues to evolve as juggernauts like Amazon are expanding and potentially offering better avenues for sales. Etsy is going to have to try to continue to pull in new sellers and buyers on the strength of its brand and overall marketplace.