Etsy Stock Rises, as Users and Sellers Grow
Sales rose 47% to $200 million
ETSY 4.13% Etsy Inc.’s push to draw more customers will include prodding sellers to reduce shipping fees or eliminate them altogether.
The focus on shipping—which company officials hope will translate into higher gross merchandise sales, or the total value of items sold through Etsy’s marketplace—will be a key topic at the company’s annual shareholder meeting next week.
“We know that buyers prefer free shipping and that sellers win when they offer it in most cases,” Chief Executive Josh Silverman said Monday during an earnings call.
While company officials haven’t set targets for 2019, on Monday they said that roughly one-third of items listed on the online marketplace during the holidays were available to ship free in the U.S.
Fewer than 20% of listings in the previous quarter were eligible for free shipping, Mr. Silverman said in November, when the company reported third-quarter results.
“And our research suggests that buyers perceive about half of the items in our marketplace as having high shipping prices,” Mr. Silverman said at the time. “This not only impacts conversion rates on those items, but also damages the brand perception of Etsy overall. We are determined to fix this.”
On Monday, as Etsy reported stronger-than-expected sales and profit in the holiday quarter, company officials also highlighted that nearly 80% of items that “were available to ship domestically at competitive prices.”
After closing at a record high $59.01 Monday, Etsy shares gained an additional 5.9% in extended trading.
The Brooklyn, N.Y.,-based company said gross merchandise sales rose 22% to $1.25 billion, marking the strongest growth rate for the quarter since the company went public in 2015.
Active buyers rose 18% to 39.4 million, while active sellers rose 9% to 2.1 million.
Etsy, which last year raised transaction fees for sellers, has pointed to the faster growth in the value of goods purchased through its marketplace as a key indicator that buyers are coming back more often.
On Monday, Chief Financial Officer Rachel Glaser said the number of buyers who spent at least $200 and made purchases on at least six days in the previous 12 months rose nearly 22% to two million.
Overall, Etsy reported a fourth-quarter profit of $41.3 million, or 32 cents a share, compared with a profit of $44.8 million, or 36 cents a share, a year earlier. The year-ago results included a $26.5 million benefit largely tied the U.S. tax overhaul.
Sales rose 47% to $200 million.
Etsy expects sales this year to reach $779 million to $797 million and the value of goods transacted on its site to reach $4.6 billion to $4.7 billion. Analysts surveyed by FactSet projected $776.2 million in 2019 revenue and gross merchandise sales to reach $4.55 billion.
Write to Maria Armental at maria.armental@wsj.com
Appeared in the February 26, 2019, print edition as 'Etsy Posts Increases in Profit, Sales And Forecasts Continuing Growth.'