Etsy (ETSY 7.38%), the online marketplace for everything made from home-creators, had high top-line growth in the first quarter of 2020, with a 34.7% increase in revenue. Gross merchandise sales (GSM) increased 32.6% year over year. Earnings, however, were not in line with expectations, coming in at $0.10.
Gross profits increased 24.8% year over year, but gross margin was down 500 basis points to 63.9%. Operating expenses increased 41.4%, mostly due to employee-related expenses. Net income decreased 60.3% year over year to $12.5 million, with a loss of $9.3 million, or $0.08 per share, due to foreign exchange.
"The COVID-19 pandemic has been a test of our team, our marketplaces, our brand, and the underlying strength of our business," said CEO Josh Silverman.
After what Silverman called a "volatile March," demand increased in April, specifically for face masks that comply with government guidelines. Etsy sold 12 million masks in April, which accounted for 17% of GMS. The Etsy marketplace saw 100% growth in April, fueled by mask sales but expanding into the full marketplace, and Silverman praised the company's ability to make adjustments in operations to meet that demand. "While there was no playbook for this situation, we moved with agility, focus, and purpose to support the Etsy global community and live up to our mission," Silverman said.
The company is expecting an increase between 80% and 100% in GMS in the second quarter, and a 70% to 90% increase in revenue.
Etsy stock is up 77% year to date.