Etsy (NASDAQ:ETSY) is on a roll. After the online marketplace posted accelerating revenue growth in both its second and third quarter, growth accelerated yet again in its fourth quarter of 2017. In fact, Etsy saw its growth rates for total revenue, markets revenue, seller services revenue, and gross merchandise sales (GMS) all accelerate during Q4.

The results put the spotlight on Etsy's excellent performance since the company appointed board member Josh Silverman to the CEO position in the first half of 2017. Here's a look at the strong fourth-quarter results.

Etsy website displayed on a laptop

Image source: Etsy.

Etsy results: The raw numbers


Q4 2017

Q4 2016

Growth (YOY)


$136.3 million

$110.2 million


Net income

$44.8 million

($21.4 million)


Adjusted EPS*




Data source: Etsy fourth-quarter earnings release. Etsy's fourth-quarter earnings per share is adjusted to exclude a tax benefit from the U.S. Tax Cuts and Jobs Act of 2017.

What happened with Etsy this quarter?

Etsy demonstrated strength across its business in its fourth quarter.

  • GMS rose 17.8% year over year, crossing $1 billion for the first time. This was a meaningful acceleration from Etsy's GMS growth of 13.2% in Q3.
  • Marketplace revenue, which accounted for about 40% of total revenue, increased 15.6% year over year -- an acceleration from 11.2% growth in Q3.
  • Seller services revenue, which accounted for about 60% of revenue, climbed 33.3% year over year -- up from 30.6% growth in Q3.
  • Etsy achieved a record adjusted EBITDA margin of 25.6%, up 11.7 percentage points year over year and up from 21.4% in Q3.

What management had to say

Pointing out the alignment in Etsy's business with the success of its sellers, Etsy CEO Josh Silverman reminded investors that its good fourth quarter "helped our sellers achieve a meaningful acceleration in sales growth during an important holiday season." This performance reflected strong growth across all of Etsy's core markets, Silverman said.

Silverman also pointed to the company's "more engaging experience for buyers" as a catalyst for GMS growth during the quarter. The company took significant action going into the holiday season to make the holiday shopping experience easier, launching coordinated holiday sales across the platform, tools for sellers to offer free shipping on specific items, gift-wrapping options, and more.

Looking forward

Management is optimistic about this year.

"With accelerating top-line growth and expanding Adjusted EBITDA margin, we are entering 2018 with positive momentum," said Etsy CFO Rachel Glaser. "We are well positioned for a strong 2018, and our revenue and adjusted EBITDA guidance demonstrate that we believe we can sustain and build upon our 2017 progress."

For 2018, management said it expected revenue to rise 21% to 23% year over year -- higher than the 20.9% year-over-year revenue growth Etsy recorded in 2017. For GMS, management forecast 14% to 16% growth, compared with 14.5% growth in 2017. Finally, management expects its full-year adjusted EBITDA margin to be between 20% and 22%.

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