Online marketplace Etsy beats revenue estimates on steady demand

This Tuesday, Jan. 6, 2015 file photo shows an Etsy mobile credit card reader, in New York. (AP / Mark Lennihan)

April 29 (Reuters) - Online marketplace Etsy beat Wall Street expectations for first-quarter revenue on Wednesday supported by growth in gross merchandise sales as more active buyers joined the platform and shoppers spent more on each purchase.

Consumer spending has been under pressure amid persistent inflation concerns, partly triggered by strict tariff policies. Yet, Etsy managed to draw customers by offering lower-priced goods, aided by the relatively low listing fees it charges sellers.

“Buying on Etsy has continued to hold up pretty well across all income cohorts,” Chief Financial Officer Lanny Baker told Reuters.

The company continues to remain largely insulated from direct tariff pressures, as about 90 per cent of sellers on Etsy’s marketplace source their supplies domestically.

Gross merchandise sales — a key sales metric — on the Etsy marketplace rose 5.5 per cent year-on-year to US$2.5 billion during the quarter. GMS per buyer increased 2 per cent.

Etsy’s marketplace, accessible across most Middle Eastern countries, including the UAE, Saudi Arabia and Israel, has not seen any material impact on operations or demand from the ongoing prolonged regional conflict, Baker said, citing the platform’s ability to quickly replace sellers and reroute supply.

Traffic driven by AI tools on the marketplace is growing rapidly but still accounts for a low single-digit share of overall business, Baker said, limiting its near-term impact on revenue.

The company plans to continue investing steadily in AI amid intense competition from ecommerce giants such as Amazon.com AMZN.O.

It reported first-quarter revenue of US$631 million from the core Etsy marketplace, compared with analysts’ average estimate of US$620.9 million, according to data compiled by LSEG.

The company, which sold its Gen Z-focused fashion resale platform Depop to eBay EBAY.O for nearly US$1.2 billion in February, forecast second-quarter GMS in the range of US$2.48 billion to US$2.53 billion.

Reporting by Krisha Bhatt in Bengaluru; Editing by Shilpi Majumdar