What happened

Shares of online marketplace Etsy (NASDAQ:ETSY) are surging on Wednesday, rising as much as 25.5%. As of 11:00 a.m. EST, the stock was up 23%.

The stock's rise is likely because Etsy's revenue and earnings per share for its just-reported third-quarter period were both higher than expected. In addition, Etsy's decision to lift its outlook for full-year revenue is likely encouraging to investors.

A chart showing a stock price moving higher.

Image source: Getty Images.

So what

Etsy reported third-quarter revenue of $150.4 million. This was not only up 41.3% year over year, but it was an acceleration from 30.2% year-over-year growth in Q2. On average, analysts were expecting third-quarter revenue of $149.9 million. 

The company's earnings per share fell from $0.21 in the year-ago quarter to $0.15. This crushed an analyst consensus forecast for earnings per share of $0.07. 

"We put our new pricing structure to work by increasing investments in marketing and product initiatives to fuel growth," said Etsy CEO Josh Silverman in the company's third-quarter earnings release. 

Now what

Etsy raised its outlook for the full year, guiding for year-over-year [gross merchandise sales] and revenue growth of 19 to 20% and 35% to 36%, respectively. These forecasts are up from a previous outlook for 18% to 20% and 33% to 35% growth. 

Management now expects its full-year earnings before interest, taxes, depreciation, and amortization (EBITDA) to be between $132 and $138 million -- up from a previous forecast for $124 to $136 million.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Etsy. The Motley Fool has a disclosure policy.