Shares of Etsy (NASDAQ:ETSY) climbed 30.4% in February, according to data provided by S&P Global Market Intelligence, after the online retailer delivered fourth-quarter results that came in much better than expected. The quarter was driven by strength across all of the company's key metrics and provided evidence that the business is maturing nicely from its arts and crafts roots.
Etsy reported fourth-quarter earnings of 32 cents per share -- easily beating consensus expectations for 21 cents per share -- on revenue of $200 million, which was up 47% from a year prior and $5 million better than expectations. The results were driven by a 22.3% year-over-year increase in gross merchandise sales volume, a price hike last summer that has not cost the business sellers, and a 41.7% year-over-year gain in seller services revenue.
Active buyers grew by 18.2% year over year in the fourth quarter, while active sellers were up 9.4%. The company said it has had success in its efforts to market the business to a wider audience, including running its first-ever national television campaign.
Etsy officials are optimistic the growth can continue into 2019, forecasting full-year revenue to grow by 29% to 32% versus 2018, and EBITDA of between $181 million and $197 million, up from $140 million in 2018.
For years, skeptics have asked if Etsy was vulnerable to an attack by a larger, more diversified online retailer, and indeed Amazon.com has tried to elbow in on Etsy's turf in recent years with its Amazon Handmade product. But it appears that Etsy's first-mover advantage and its focus on catering to the specific needs of small retailers have given it an edge.
This one-time niche business seems to have hit a size where the network effect should drive ever more business in its direction. Etsy looks like a survivor.