Etsy Inc. showed a small boost in its growth rate and kept its promise to investors by gaining more consumers and motivating them to spend more on its site for novelty items and small-batch goods.
The majority of Etsy’s revenue in the quarter comes from its sales of vendor services which stood at $106.4 million, according to the company statement Monday. This projection beat the average analyst estimate of $104.9 million, wherein shares rose a little over 1 percent in the extend trading after closing at $17.15 in New York, and have increased 46 percent this year.
Under Chief Executive Officer Josh Silverman’s leadership, Etsy reorganized its structure over the last half year, emphasizing projects that would attract more purchases for its sellers. Etsy focused its marketing strategy on targeting buyers for specific occasions and attracting existing buyers into coming back for additional purchases. This way, unique items will be valued and they will slowly build their consumer base respectively.
Analysts have expected on average 8 cents a share, however, the net income in the third quarter stood at $25.8 million, which translated to 21 cents a share, marking a second straight quarter of profits. Silverman appears to be making progress in terms of cost cutting.
Etsy’s Gross Merchandise Sales
Investors have been watching Etsy’s GMS closely to determine whether the company can create an expansion in its marketplace, in addition, compete for dollars with much bigger retail and e-commerce brands, which includes Amazon.com Inc.
The total value of goods that go through Etsy’s platforms, grew in the third quarter by 13 percent to $766.4 million. In terms of GMS, this shows a bigger increase than the previous period’s 12 percent and meeting the company’s expectation for August.
Chief Financial Officer Rachel Glaser stated in an interview that for the fourth quarter, an increase of about 13 percent in the GMS will happen. Fourth quarter growth has historically been the weakest, so a stable rate signals progress. According to Silverman, retailers who can offer faster, more reliable shipping and heavier discounts would cause the company to wind down during the holidays.
“We have a long list of insights that have come from our buyers and sellers on ways we can improve the product experience, and we’re acting with urgency to get those in the market,” he stated in an interview as they discussed their earnings.
These product improvements helped improve the GMS growth rate, although smaller and faster. This is supported along with spruced up marketing strategy built to encourage more frequent purchases.
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