Etsy Posts Q1 Profit, Results Top Estimates; Stock Surges

(RTTNews) - Etsy Inc. (ETSY), which operates a marketplace to make, sell, and buy goods online and offline worldwide, reported that net income for the first quarter of 2016 was $1.19 million or $0.01 per share, compared with a loss of $36.59 million or $0.84 per share in the first quarter of 2015. Analysts polled by Thomson Reuters expected the company to report a loss of $0.02 per share for the quarter. Analysts' estimates typically exclude special items.

Etsy's net income in the first quarter of 2016 was driven by a foreign exchange gain and its income tax provision. It recorded $8.1 million of foreign exchange gain in the first quarter of 2016 largely made up of a non-cash currency gain. It also recorded a $13.6 million tax provision in the first quarter of 2016 primarily driven by non-cash charges.

ETSY closes Tuesday's regular trading at $8.40, down $0.11 or 1.29 percent. However, in the after-hours, the shares gained $1.08 or 12.86 percent.

"Our financial results in the first quarter were driven by our strong execution....The second quarter is also off to an exciting start with the launch of our newest high-impact seller service, Pattern by Etsy, and a host of other products and seller tools that we believe will build long-term value for our community. We are as committed as ever to our vision of reimagining commerce and are looking forward to a productive year," said Chad Dickerson, Etsy, Inc. CEO and Chair.

Total revenue for the quarter was $81.8 million, up 39.8% year-over-year, driven by growth in both Marketplace and Seller Services revenue. Wall Street expected revenues of $75.15 million for the quarter.

Marketplace revenue grew 18.5%, primarily due to growth in transaction fee revenue and, to a lesser extent, growth in listing fee revenue.

Seller Services revenue grew 59.6% year-over-year and was driven primarily by revenue growth in Direct Checkout, which continued to benefit from the integration of PayPal. Seller Services revenue also benefited from robust growth in revenue from Promoted Listings and Shipping Labels. All three of its Seller Services continued to grow faster than Marketplace revenue in the first quarter.

The company also recognized $1.7 million of gift card funds from its third-party service provider in Other revenue during the first quarter, reflecting a portion of accumulated unused gift cards.

Etsy reiterated its revenue projections of annual revenue growth of 20% to 25% during the next three years with 2016 results at the high end of that range.