Following its highest-ever revenue year in 2023, Etsy Inc. revenue growth inched forward in its fiscal Q1 ended March 31, 2024, but its gross merchandise sales (GMS) shrank year over year.

CEO Josh Silverman said in a statement that although the online marketplace’s Q1 performance was in line with its guidance, “the challenging environment for consumer discretionary product” continues to hinder Etsy’s growth.

Etsy is No. 20 in Digital Commerce 360’s Global Online Marketplaces Database, ranking the 100 largest such marketplaces by third-party gross merchandise value (GMV). Its musical instrument marketplace Reverb is No. 42 and used-clothing marketplace Depop is No. 51.

Etsy revenue starts year with a positive Q1

Year over year, consolidated Etsy revenue grew 0.8%. That’s up to $646.0 million in 2024 from $640.9 million in 2023. Etsy credits that increase to growth in payments revenue, transaction fee revenue from off-site ads, and Etsy ads.

Meanwhile, consolidated Etsy GMS decreased 3.7% year over year to $3 billion. GMS from the Etsy marketplace — in other words, not including that from Reverb and Depop — decreased 5.3% year over year in Q1, to $2.6 billion.

Active buyers increased by 1.9% in the quarter to 91.6 million. U.S.-based active buyer numbers have grown three quarters in a row, Etsy said. Moreover, Etsy said it reactivated 6.3 million buyers and acquired 5.7 million new buyers. However, GMS per active buyer — a measurement of how much a customer spent in the trailing 12 months — declined 3.5% in Q1 to $125. Just 45% of active buyers use Etsy’s app, Silverman said in a May 1 earnings call with investors.

“Gift Mode is by far the most unique and varied subset of inventory we’ve ever curated and shown on Etsy,” Silverman said. “Organized around a set of gift ideas and not just items in order to help you feel like you’re shopping for a person and not a thing.”

Etsy’s site-wide gifting GMS grew in the low single digits year over year, Silverman said, “significantly outpacing our site-wide performance and data we’re tracking for select U.S. online gifting-focused peers, who all saw year-over-year declines.”

Silverman added that Etsy increased its Gift Mode conversion by more than 200% year over year in Q1. He did not share specifics.

How is Etsy using generative AI and machine learning?

“All too often, when you visit Etsy, your search is cluttered, showing you too many items that feel very similar,” Silverman said.

As a result, he said, consumers might not be clear which products are handmade by the sellers themselves, which are designed by the seller but produced with a production partner, or which are personalized and customized by the seller. Silverman said large language models (LLMs) and generative AI provide an opportunity for Etsy to better understand what shoppers are looking for and show them more relevant products. Generative AI will help Etsy organize its listings “into cleaner aisles,” he said.

Also as a result, Etsy has used its advances in machine learning to remove 115% more listings year over year in Q1 for violating its handmade policy.

Machine learning has also helped Etsy reduce its estimated USPS transit times by more than a day. This nearly tripled the percentage of eligible orders for which the marketplace can show an estimated delivery time of seven days or less, Silverman said.

Etsy earnings

For its fiscal Q1 ended March 31, Etsy Inc. reported:

• Gross merchandise sales (GMS) decreased 3.7% year over year to $3 billion.
• Etsy revenue in Q1 grew 0.8%. That’s up to $646.0 million in 2024 from $640.9 million in 2023.
• Active buyers increased by 1.9% year over year in the quarter to 91.6 million.

Check back for more earnings reports. Here’s last quarter’s Etsy report.

Do you rank in our database?

Submit your data with this quick survey and we’ll see where you fit in our next ranking update.

Sign up

Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News. Follow us on LinkedIn, Twitter, Facebook and YouTube. Be the first to know when Digital Commerce 360 publishes news content.