What happened

Shares of Etsy (NASDAQ:ETSY) gained 27.1% in November, according to data provided by S&P Global Market Intelligence. The company recorded another quarter of strong sales and earnings growth, helping to send its stock to a new lifetime high last month. 

ETSY Chart

ETSY data by YCharts

Etsy reported third-quarter earnings after market close on Nov. 6, delivering sales and earnings that came in ahead of the market's expectations. The business delivered earnings per share of $0.15 on revenue of $150.3 million, beating the average analyst estimate's call for earnings of $0.06 on sales of $149.8 million.

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So what

Etsy has been posting strong growth powered by an increase in sales conducted across its platform and pricing increases for its services. Third-quarter sales grew 41.3% compared to the prior-year period, and gross merchandise sales (GMS) conducted through the platform rose 20.4%. Net income for the period actually fell 22.9% year over year to $19.9 million, but this decline was primarily due to the tax impact from debt securities offered by the company, and adjusted EBITDA for the period was up 49.5% year over year to reach $34 million. Strong performance in the quarter prompted the company to raise its full-year revenue, GMS, and adjusted EBITDA targets. 

Now what

Etsy's midpoint target projects full-year gross merchandise sales to come in at $3.85 billion, representing growth of 19.5% -- up from its previous midpoint growth target of 19%. Its midpoint revenue growth target was raised from 34% to 35.5%, with sales now expected to come in at roughly $3.85 billion. Midpoint expectations for adjusted EBITDA were raised to $135 million, up from the previous midpoint target of $130 million. Shares trade at roughly 69 times the year's expected earnings and 11 times expected sales.

Etsy has been successfully expanding its user base and increasing per-user engagement and has a range of initiatives underway to keep that momentum alive. The company is looking at ways to increase personalization and customization on its e-commerce platform and for goods sold through it, expand awareness through marketing campaigns, find more efficient ways to handle shipping, and improve its search engine to provide a better experience for both sellers and buyers.  

Keith Noonan 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.