What happened 

Shares of Etsy (ETSY -0.48%) climbed 11.5% on Friday after the online marketplace for handcrafted goods delivered strong fourth-quarter results. 

So what

Etsy's revenue soared 128.7% year over year to $617.4 million. Consumers and merchants are flocking to the e-commerce site. Active buyers surged 76.7%, while active sellers jumped 61.7%. That fueled a 118% increase in Etsy's gross merchandise sales -- essentially, the total amount of revenue earned by sellers -- to $3.3 billion.

"2020 was an inflection point in history for e-commerce and for Etsy, with millions of buyers choosing us for their everyday needs," CEO Josh Silverman said in a press release.

A rising digital bar chart.

Investors cheered Etsy's strong fourth-quarter growth metrics. Image source: Getty Images.

Better still, Etsy is becoming far more profitable as it scales its revenue base. Its gross profit leaped 160.4% to $466.6 million, as its gross margin improved to 75.6%, up from 66.4% in the year-ago quarter. Etsy's net income, in turn, rocketed 374.7% to $148.5 million.

Now what 

For the first quarter of 2021, Etsy expects revenue of $513 million to $536 million, which would represent year-over-year growth of 125% to 135%.

Looking further ahead, Silverman sees vast expansion potential. "We are just getting started executing on our long-term growth strategy, focused on highly differentiated and defensible competitive advantages within a $1.7 trillion market opportunity," Silverman said.