After earlier this year getting a new CEO and letting a lot of employees go, Etsy seems to have stabilized itself somewhat for the time being.
The most important news around Etsy’s quarterly earnings may be though that the marketplace for hand-made goods is up for sale. Bloomberg:
Black-and-White has also suggested that Etsy consider selling itself. After the hedge fund took its campaign public, TPG Capital and Dragoneer Investment Group disclosed that they control 8 percent of the company and have contacted Etsy to discuss “strategic alternatives.”
Bloomberg on Etsy’s earnings report:
The company posted net income of $11.7 million, or 10 cents a share, in the three months ended June 30, up from a loss of $7.3 million in the same period a year earlier. Analysts on average expected a loss of 4 cents a share. Second-quarter revenue rose 19 percent to $101.7 million, compared with the average analyst estimate of $101.3 million. Etsy also said growth in gross merchandise sales, the total value of goods that goes through its platforms, will be higher in the third quarter than the 12 percent increase in the second quarter. […]
Etsy said it expects $35 million in annualized savings as a result of the headcount reductions, reduced third-party expenses and programming costs.
Etsy now makes more than half of its revenues with services for merchants.
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.
That doesn’t sound promising. Yes, the TAM for hand-made goods is limited. But it’s not tiny. And owning this space is valuable. Owning such a niche as a marketplace in a way that makes you almost synonymous with it, can increase your revenue significantly because you increase your part of the pie and may even make the pie itself (the niche) bigger by making everything surrounding it work more seamlessly.
It has been a challenge for Etsy for a while now to stay committed to its market niche. It looks like this will remain the case.
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