Etsy went ahead and DIYed its Q2 2017 earnings report this afternoon and fortunately things turned out fairly well for the company. Etsy announced revenue of $101.69 million with earnings per share of 10 cents. The finance gods prognosticated revenue of $101.14 million and a loss of $0.01 per share, making this quarter a slight beat for the company.
Etsy stock has been up in recent weeks as investors express confidence in the company’s new CEO Josh Silverman. Up from about $11, Etsy stock has improved to nearly $14 a share in the three months since Silverman, formerly CEO of Skype and Evite, took the reins.
Even if only ceremonial, today was a sort of reality check for the company. Appointments don’t change sales numbers, they merely signal expectations. And, realistically, the company has only had a quarter under new leadership, but the quick turnaround narrative survives another day with today’s healthy numbers.
The company notes that it has identified about $20 million in 2017 expense reductions, which it anticipates will result in $35 million in annualized cost savings. In real-world terms, this means the company is saving money by laying off people and optimizing engineering spending. We’ve known since June that the company planned to cut its headcount by 15 percent, or about 230 jobs, so this updated guidance makes a lot of sense.
Etsy has taken heat in recent months for its excessive engineering spending that has mostly failed to deliver an exceptional product. Much of this criticism has been pointed at the company’s outdated search features, and payment processing issues last summer didn’t help things.
Growth in transaction fee revenue helped keep things afloat this quarter as revenue grew 19.1 percent year-over-year. Solid gains in conversion rates for both mobile and desktop users also provided some breathing room this go around for Etsy.
In the immediate moments after the report dropped, Etsy stock popped up about 6 percent (83 cents) to $14.42 (1:40pm PST).
Silverman made it clear during his presentation on Etsy’s earning call that he sees the company as one that sells “special” goods rather than just handmade goods. The distinction is a bit cliche, but it shows Silverman is aware of long-term concerns about the size of Etsy’s total addressable market.
The goal from here on out is to double down on what works and chop away what doesn’t. Throughout the rest of the year, Etsy’s executive team will be looking to boost shopping from existing and new buyers by increasing visits and the site’s overall conversion rate. To this avail Etsy has been rolling out new features to drive engagement, like a recently viewed reel of products — yes they just added that.
Seller services is also set to be a priority going forward. This is the unit responsible for Etsy Payments, a core component of the 25 percent growth the company saw in that category.
We updated this post with details from Etsy’s earnings call.