By Dhirendra Tripathi
Investing.com – Etsy, Inc. (NASDAQ:ETSY) stock soared 17% in premarket trading Friday after the online marketplace for craft and vintage items easily surpassed sales and profit estimates in the fourth quarter.
Consolidated gross merchandise sales (GMS) were a record $4.2 billion, up over 16%. CEO Josh Silverman attributed this to the company’s business model that connects buyers and small and large sellers of unique and creative goods. GMS is the total value of goods and services sold on an online platform.
“During the holiday season, our sellers — most businesses of one and insulated from widespread supply shortages or complex fulfillment processes — brought the benefits of shopping small to scale,” he said in a statement.
In comparison, extended and complex supply chains have troubled large online platforms like Amazon (NASDAQ:AMZN), particularly last year.
Etsy marketplace acquired around 10 million new buyers in the fourth quarter, while reactivating 6.8 million. Habitual buyers grew 26%. It closed December at 90 million active buyers.
Several holiday records were set on Black Friday and Cyber Monday, the company said. GMS per active buyer thus rose 16% on a trailing 12 months basis. Higher spending on marketing drove buyer retention and frequency.
The company is now guiding for GMS of $3.3 billion at midpoint of its guidance range and revenue of $565 million-$590 million in the current quarter.
Etsy said it has optimized Reverb for online searches, resulting in significant increases in Google Search traffic. The company had acquired the musical instrument marketplace in September quarter of 2019.
Fourth quarter revenue rose over 16% to exceed $717 million. Net profit grew about 9% to around $162 million.