Etsy Shares Up 13%, Company Announced Sustained Customer Growth

American e-commerce company focused on handmade or vintage items and craft supplies Etsy Inc (NASDAQ: ETSY) has reported sustained customer growth in its third quarter. As announced by the company, the Q3 also brought in a bogus revenue as consumers refused to taper their buying momentum after the massive pandemic-fueled boom.

Etsy reported revenue of $532.4 million in the third quarter, up 17.9% from the $451.4 million reported in the year-ago period. Earnings Per Share (EPS) came in at 62 cents, beating the estimates of 54 cents by Refinitiv analysts. The company’s positive performance is fueled by various factors, some of which include the incorporation of new brands.

“Last year, Etsy dramatically outperformed e-commerce industry benchmarks, and now, in 2021, we’re lapping that performance with flying colors, reinforcing the significant market share gains we have made,” said Josh Silverman, Etsy, Inc. CEO. “Our excellent third-quarter results further reflect that we’re moving the needle on frequency and that many of the millions of buyers who found or re-found Etsy during the pandemic are sticking with us, and performing even better than historical cohorts. We are also making great progress integrating our newest brands, Depop and Elo7, aligning their investment priorities, as well as Reverb’s, to those areas where we see opportunity for significant value creation.”

Etsy shares closed Thursday’s session up 13.21% to $271.27. The performance of the stock has earned goodwill from analysts with Stifel strategists revising their price call for the firm from $230 to $265. Stifel also raised estimates for Etsy’s fourth quarter and upcoming fiscal year.

“As we emerge from the pandemic, Etsy continues to grow new buyers at a healthy rate, retain many of the buyers acquired during the pandemic, and is seeing improvement in purchase frequency indicating many of the initiatives are proving sustainable,” Stifel analysts wrote.

Etsy Customer Growth: Product of Marketplace Foresight

The growth in the customer base of the Etsy platform was also fueled in part by the company’s foresight to add a new product suite that made it relevant following the massive pandemic buy-ups. The firm said it has increased its investment in products and marketing as well as in activities that will enhance user experiences. These are notably some of the pointers that impressed consumers as they scout marketplaces to make their shopping.

“Our strong third quarter revenue of $532 million reflects continued consumer demand and increased purchase frequency on the Etsy marketplace,” said Rachel Glaser, Etsy, Inc. Chief Financial Officer. “We have continued to invest in both product and marketing to drive awareness and increase conversion. The strength of these investments is evident in our third quarter adjusted EBITDA margin of 33%, particularly notable given the integration of our newer marketplaces into our consolidated income statement this quarter.”

Etsy has given modest expectations for its fiscal fourth quarter, and despite this modesty, it still looks to boost its revenue by 10% YoY to a range of $660 million and $690 million.