Etsy Inc. said its loss widened on write-downs related to changes in its corporate structure and other one-time items that masked continued revenue growth at the online marketplace for crafts and vintage items.
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Shares fell 14% to $18.14 in recent after-hours trading as the company's revenue fell short of expectations. Through Tuesday's close, the stock had risen 31% from its initial public offering price of $16 last month. On its first day of trading in April, the stock surged as high as $35.74 before closing at $31.
Etsy was founded in Brooklyn in 2005, and it makes money by charging fees to sellers that use its platform. It doesn't produce anything itself. The company has incurred net losses in the past three years, even as revenue has increased sharply.
Overall, for its first quarter that ended March 31, Etsy reported a loss of $36.6 million, or 84 cents a share, compared with a year-earlier loss of $463,000, or a penny a share. Revenue jumped 44% to $58.5 million.
Analysts polled by Thomson Reuters expected per-share profit of three cents and revenue of $59 million.
As for the second quarter, Etsy said results could be affected by current foreign-exchange rates, an expected rise in the company's pace of hiring and its plans to spend more on marketing. However, the company didn't provide specific guidance in its earnings news release.
Gross merchandise sales—which include items such as shipping fees and net refunds—climbed 28% in the first quarter amid growth in the number of active sellers and buyers.
The number of active sellers rose to 1.4 million from 1.1 million a year earlier. As defined by Etsy, an active seller has been charged fees in the past 12 months for items such as transactions, listings and direct checkout.
The number of active buyers—or those that have made at least one purchase in the past 12 months—increased to 20.8 million from 15.3 million a year earlier.
Gross margin rose to 64.6% from 62%. Total operating expenses surged 73%, driven mostly by higher marketing and overhead costs.
(By Tess Stynes)