Etsy marketplace sees 22% sales growth in Q3

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Etsy have released their Q3 earnings and if you are an Etsy marketplace seller then from your perspective it’s a cracking set of results. Consolidated GMS reached $1.2 billion (up over 30% y-o-y) and excluding Reverb, the music marketplace Etsy recently acquired, standalone’s GMS and revenue grew 22% and 28%, respectively.

Etsy’s community expanded to 44.8 million active buyers, shopping from 2.6 million active sellers around the world.

Etsy also made advances on a number of their new initiatives including:

    Making free shipping a core part of the Etsy marketplace shopping experience

  • “At the end of the quarter, over 60% of Etsy’s 63 million items were eligible for free shipping to the U.S. — that’s up from less than a quarter of items in July. Notably, nearly three quarters of U.S. listing views featured items eligible to ship free.”

    Rolling out a new marketing platform, Etsy Ads

  • “We successfully migrated sellers from our previous ad products (Promoted Listings + Google Shopping) to a new, unified platform that optimizes a single daily budget across channels. We’re now focused on helping sellers to grow their ad budgets with positive returns.”

    Operating with their newest addition, Reverb

  • “Reverb – a leading online marketplace for buying and selling new, used, and vintage musical instruments – joined Etsy’s ranks in August. We think this is a great, mission-aligned, early-stage business with significant competitive advantages and a similar business model to Etsy.”

“During the third quarter we launched several transformative initiatives to serve as the building blocks for long-term, sustainable growth. The core Etsy marketplace continued to perform well, with third quarter GMS and revenue growth of approximately 22% and 28% respectively. Through innovative solutions such as Etsy Ads and our new free shipping initiative, we are continuing to improve the core marketplace for buyers, while enhancing value for sellers and helping them grow. We are just beginning to see the impact of these initiatives, which we believe further our competitive advantages and will have a more meaningful contribution to our results in 2020 and beyond.”
– Josh Silverman, Chief Executive Officer, Etsy

The results weren’t met well by investors however, despite raising guidance for both GMS (merchant sales) and Revenue (Etsy profits), in part due to taking into account the boost in sales from their acquisition of Reverb, Etsy lowered guidance for EBITDA (earnings before interest, tax, depreciation and amortization) from 22-24% to 22-23%.

Earnings were 12 cents per share on revenue of $197.9 million but investors were expecting 12 cents on revenue of $193.5 million, demonstrating lowering of profits percentage. Etsy shares dropped in after hours trading following the earnings release.

Etsy Updated Guidance

2019 Guidance
1st August 2019

2019 Revised Guidance
30th October 2019

GMS Year-Over-Year Growth 20-22%
~$4.7B – $4.8B
~$4.9B – $5.0B
Revenue Year-Over-Year Growth 32-34%
~$797M – $809M
~$809M – $815M
Adjusted EBITDA Margin 22-24%
~$177M – $193M
~$179M – $187M


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