Etsy (NASDAQ:ETSY) reported second-quarter revenue that exceeded forecasts, driven by gains from more personalized marketing and advancements in artificial intelligence technologies.
The company highlighted that strong results in on-site advertising and payment services for both Etsy and its fashion-focused platform, Depop, contributed to the revenue boost, according to a statement.
Revenue grew 3.8% year-over-year to $672.7 million, surpassing Bloomberg’s consensus estimate of $646.3 million. Etsy’s take rate—the portion of revenue the platform keeps from each transaction—stood at 24%, “driven by the expansion of Etsy Ads revenue from continued improvements to our bidding algorithms, as well as some benefit from payments,” the company explained.
Like many in retail, Etsy, known for products such as demi-fine jewelry and home décor, has faced challenges from escalating global trade tensions, which risk curbing consumer spending.
Nevertheless, Etsy has mostly insulated itself from tariff impacts due to the local sourcing of many products. However, increased tariffs on goods imported from the European Union, a key supplier region, could pose some challenges.
Against this backdrop, Etsy has ramped up investments in new growth areas, which has weighed on margins. Operating expenses rose 2.3% to $402.7 million for the quarter ending June 30, while the adjusted core income margin declined to 25.1% from 27.7% in the same period last year.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 5.8% to $169 million but still topped projections of $163.5 million.
Etsy shares jumped more than 7% in premarket trading in the U.S. on Wednesday.
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