Etsy's (NASDAQ:ETSY) momentum since its former CEO stepped down and was replaced by board member Josh Silverman this time last year continued in the company's first quarter of 2018. With its fourth consecutive quarter of accelerating revenue growth, and swinging from a loss in the year-ago quarter to a profit in the first quarter of 2018, Etsy's efforts are clearly paying off.

Here's a close look at Etsy's latest quarterly results. 

Etsy website displayed on a laptop

Image source: Etsy.

Etsy's first-quarter results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Growth


$120.9 million

$96.9 million


Net income

$13.0 million



Earnings per share




Data source: Etsy first-quarter earnings release. Table by author.

What happened with Etsy this quarter?

  • Etsy's 24.8% year-over-year boost in revenue was an acceleration from the 23.6% revenue growth in its fourth quarter of 2017. 
  • Similarly, GMS increased 19.8% year over -- above its 17.8% growth in Q4.
  • Key to Etsy's strong growth was the company's services business, whose revenue rose 35% year over year, from $24.1 million in the year-ago quarter to $32.6 million in the first quarter of 2018.
  • Marketplace revenue climbed from $70.6 million to $88.0 million, or 24.7%.
  • Etsy's higher profitability was helped by the company's wider gross profit margin, which expanded from 64.2% in the first quarter of 2017 to 65.8% in the first quarter of 2018.
  • But the biggest driver for profitability was Etsy's outsize growth in revenue compared to operating expenses. Though revenue jumped 24.8% year over year, operating expenses increased just 2.3%.

What management had to say

Pointing out how its 2.3% year-over-year increase in operating expenses during the first quarter of 2018 pales in comparison the 36.4% growth in operating expenses Etsy recorded the year-ago quarter, management said "the year-over-year deceleration in operating expense growth reflects the impact of our recent actions to streamline our cost structure offset by increased spend in digital marketing and professional services."

Also, mobile continued to help drive results for the company. GMS from mobile devices rising to 54% of GMS, up from 51% of GMS in the year-ago quarter and 52% in the fourth quarter of 2017. The surge in mobile GMS was driven by "increased mobile traffic, in line with industry trends, and, to a lesser extent, continued improvements in our mobile offerings for Etsy buyers," management said.

Etsy CFO Rachel Glaser called the period "another strong quarter."

Looking forward

CEO Josh Silverman was optimistic about Etsy's outlook, noting that the company is "well positioned to capitalize on the many opportunities ahead."

Reflecting management's optimism and the company's continued momentum, Etsy raised its guidance for GMS, revenue, and its adjusted EBITDA (earnings before interest taxes, depreciation, and amortization) margin. Management now expects full-year revenue to rise 16% to 18% year over year. Previously, GMS growth had been forecast to land between 14% and 16%. For revenue, management now expects year-over-year growth between 22% and 24% -- up from previous guidance for 21% to 23% growth and an acceleration from last year's year-over-year revenue growth of 20.9%. Reflecting the company's ability to effectively manage costs as revenue rises, Etsy is now guiding for an adjusted EBITDA margin between 21% and 23%, above a previous outlook for 20% to 22%.

Among the key factors Etsy expects to impact its strong 2018 GMS and revenue growth are continued visit growth, conversion rate growth, services revenue growth, and momentum in its international markets.

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