Last year, Etsy (ETSY 4.56%) announced a multi-year strategy to lay the foundation for long-term growth. On a basic level, this called for improving the experience for sellers with better marketing and investing in technology. Those efforts seem to be bearing fruit, as evident in the latest earnings results.
For the fourth quarter, revenue increased by 35% to $269.9 million, beating analysts' estimates of $264.9 million. Excluding the acquisition of Reverb, revenue grew 28% year over year. Net income declined 24% year over year, but earnings of $0.25 blew past analysts' estimates of $0.16.
Etsy is finding ways to generate more value
Etsy's performance was driven by several factors. Management made optimizations to the purchase process to encourage buyers to complete a transaction with high-priced items in their shopping cart. Other factors contributing to the strong quarter were free shipping for orders over $35 and repeat purchases.
On the seller side, Etsy Ads drove positive returns for sellers, which contributed to revenue growth. Etsy also completed its migration over to the cloud, which allowed the company to take advantage of machine learning to improve the shopping experience.
Speaking to the value of these initiatives, CFO Rachel Glaser said, "These valuable strategic investments will enable Etsy to drive further growth and scale our business in 2020 and beyond."
Etsy's strong quarter is in stark contrast to rival eBay, which continued to struggle during the holiday quarter. Etsy anticipates another year of robust growth, with guidance calling for revenue to be up 27% to 30% this year.