Etsy Posts First Quarterly Profit Since Going Public

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Etsy reported a quarterly profit for the first time since its April 2015 initial public offering, as growth in users and revenue remained strong.  The Brooklyn, N.Y., company, which runs an online marketplace for handmade and vintage goods, said first-quarter revenue rose 40% to $81.8 million, outpacing fourth-quarter growth of 35%.  Analysts polled by Thomson Reuters had projected $75 million.  Shares rose 12% to $9.41 in after-hours trading, though they are still sharply below the company's IPO price of $16.  Marketing costs, a factor in Etsy's losses in recent years, rose 30% to $15.8 million. "We began to gain leverage in our marketing expenses, which grew more slowly than revenue," the company said.  Etsy makes money charging fees to sellers of such items as jewelry, housewares and T-shirts for use of its online platform. It is facing fresh competition from Amazon.com, which in October launched a section called Handmade and directly recruited Etsy sellers. The Pattern by Etsy service launched last month allows merchants to create customized websites.  As Etsy has expanded beyond solo crafters, some sellers have complained about issues such as an increase in mass-produced items on the site. Etsy has implemented "responsible manufacturing" initiatives while affirming its commitment to principles such as authorship and transparency.  For the quarter ended March 31, Etsy earned $1.2 million, or a penny a share, compared with a loss of $36.6 million, or 84 cents a share, a year earlier. Analysts had expected a loss of 2 cents a share.  Active sellers increased 12% to 1.6 million, while the number of active buyers rose 20% to 25 million. Mobile-visit percentage increased to 63% from 59%.  Gross merchandise sales rose 18% to $629.9 million.  Etsy reiterated its February revenue projections of annual revenue growth of 20% to 25% during the next three years with 2016 results at the high end of that range.

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