Etsy credited continued demand for categories like home goods, clothing, jewelry and accessories. Etsy’s expanding ads program was also “a key driver of revenue growth,” according to the company.
“The Etsy marketplace’s strong holiday performance and accelerating year-over-three-year GMS in the fourth quarter enabled us to end the year on a high note,” said Rachel Glaser, Etsy’s chief financial officer, in the earnings release. “We are now nearly three times the size we were pre-pandemic, and we’ve been careful about how we have grown our cost basis to catch up with the size of the business — visible in our sustained profitable growth and strong free cash flow.”
The fourth-quarter results are also upbeat compared to Etsy’s slowing growth last year, which the company attributed to price-conscious consumers. However, active shoppers and sellers did decrease slightly from the previous quarter — with the number of merchants dropping from 7.52 million to 7.47 million.
On the earnings conference call, Etsy CEO Josh Silverman said that buyers have doubled since 2019, with male shoppers growing by 124% since 2019. For 2023, Silverman said the company’s multi-year “Right to Win” strategy will be centered around acquiring more international buyers and deepening engagement with existing ones
Despite cracks in Americans’ consumption, as major retailers like Walmart and Home Depot warned this week, analysts remain bullish on Etsy’s growth prospects.
According to Bank of America analyst Curtis Nagle, Etsy’s positive gains can be attributed to a surge in shopping activity during the fourth quarter of which coincided with the holiday shopping season. “We raise our Etsy Q422 estimates on strong web traffic trends. Our estimates are above the Street and guidance,” he said.
This past holiday season was contentious for Etsy, as it was the first one following the company implementing transaction fee hikes for sellers. But the marketplace’s recent end-of-year performance among shoppers on the site remained unscathed.
According to a post-holidays report by Bloomberg Second Measure, Etsy’s U.S. sales in November and December of 2022 “were around the same level as the holiday period in 2021.”
On the other hand, Etsy’s 2022 holiday sales did increase by 7% compared to 2020 and 133% compared to 2019, showing consistent annual gains. The report also noted the growing visits to Etsy’s international subsidiaries, Depop, Elo7 and Reverb. For example, according to Bloomberg Second Measure, in the fourth quarter Depop’s average quarterly transactions grew 49% year-over-year. For the full year 2022, Depop generated $552 million in gross merchandise sales.
The results come just days after short seller Citron Research released a report criticizing the company for allowing counterfeit products to be sold on its platform, which caused Etsy stock to tumble last week.