Etsy Inc. (NASDAQ: ETSY) reported its first-quarter 2025 financial results, revealing a mixed performance that both surprised and disappointed investors.
The company’s revenue of $651.2 million exceeded analyst expectations of $642 million, marking a slight increase of 1% year-over-year.
However, this positive revenue performance was overshadowed by a significant earnings per share (EPS) miss, with a GAAP loss of $0.49 per share compared to the anticipated $0.47 profit.
Despite the EPS shortfall, Etsy’s adjusted EBITDA of $171.1 million surpassed expectations of $164.2 million, reflecting a margin of 26.3%. This solid EBITDA performance was driven by effective expense management and a higher take rate, which increased to 23.3% from 21.6% in the previous year.
The company’s services revenue also showed resilience, growing by 7.7% year-over-year, primarily due to strong growth in on-site ads revenue at both Etsy and Depop.
The market reaction to Etsy’s earnings was initially positive, with the stock rising in pre-market trading. However, this optimism was tempered by the EPS miss and broader economic concerns. The stock ultimately closed at $46.13, reflecting a cautious investor response.
Etsy’s market capitalization stands at $4.94 billion, and while the company faces challenges in consumer discretionary spending, its strategic initiatives, including AI-driven personalization and the divestment of non-core assets like Reverb, aim to enhance long-term growth prospects.
CEO Josh Silverman highlighted the company’s efforts to build deeper connections with buyers and sellers, leveraging AI to create a more engaging app experience.
Despite a decline in gross merchandise sales (GMS) by 6.5% to $2.8 billion, Etsy remains focused on navigating macroeconomic volatility while driving innovation in its core marketplace.
The company’s guidance for the second quarter suggests a similar or slightly better year-on-year decline in GMS, reflecting ongoing caution in the face of economic uncertainty.