Author Pam Duthie explains Etsy's Q1 2021 Financial Report

Etsy’s First Quarter 2021 Report: Are Etsy Sales Down?

Etsy’s First Quarter 2021 Report: Are Etsy Sales Down?

Author Pam Duthie explains Etsy's Q1 2021 Financial Report

Reading time: 8 minutes

Are Etsy sales down? Well, let’s find out! I’m Pam Duthie, Etsy U instructor and veteran Etsy seller. Etsy has just released their 2021 First Quarter earnings presentation. We’ll look it over together, shall we?

Were Etsy sales actually slow in the first quarter? (Plenty seem to think so.) Or if they were just a bit slower than Christmas (that is, 2020 Fourth Quarter)? Let’s find out what Etsy has to say about what they’ve been doing. We’ll be looking at the presentation Etsy posted publicly about their First Quarter (Jan 01 – Mar 31, 2021). It’s dated May 5, 2021. I’ll give you a link to it here at the end.

Etsy had a “very strong start for 2021”

The first slide with figures is this one:

Etsy 1Q 2021 Earnings Presentation PDF showing figures for Q1 21 GMS, Revenue, and Adj EBITDA margin
All graphics and data from Etsy 1Q 2021 Earnings Presentation

“Focused execution plus continued macro tailwinds led to a very strong start for 2021.” Let’s begin with the first group of figures, along with a bit of translating. Q1 21 GMS means First Quarter, 2021. GMS (Gross Mean Sales): the grand total of all sale transactions reported in a period, without any deductions. So, Etsy’s 3.1 billion Gross Mean Sales were 128% up Y/Y – that’s Year on Year, or compared with this same period one year ago.

I did expect numbers to be up. Because in Jan-Mar 2020, the pandemic was only just beginning to impact online sales. It wasn’t until in the second quarter of last year, Apr-June, that the tsunami of online purchasing soared. And that pandemic surge carried through First Quarter 2021. So we were expecting Etsy to still to be up a good bit.

Good revenue! Up even more: 141% Y/Y. 551 million in revenue. These are unimaginable figures. 184 million for adjusted EBITDA. That stands for Earnings Before Interest, Taxes, Depreciation, and Amortization – let’s not get bogged down here. Essentially this figure is a measure of a company’s current operating profitability. It’s around 33 percent of the margin.

Etsy buyers? More than ever!

The next slide talks about the buyers on Etsy:

Etsy 1Q 2021 Earnings Presentation PDF slide showing figures for Q1 21 related to Etsy buyers
All graphics and data from Etsy 1Q 2021 Earnings Presentation

“Continued strength in our buyer segments has built a strong foundation for future growth.” Eight million Habitual Buyers. Etsy defines Habitual Buyers as those who spend $200 or more on Etsy and have bought from it on six individual days in the previous 12 months. Those rose 205% Y/Y: fantastic! (By the way: the small print there underneath says that these figures exclude Reverb buyers. Fine; our focus is on Etsy buyers.)

Over on the right of the chart, Etsy offers a couple other figures broken down by “Buyer Segments.” New and Reactivated Buyers never shopped on Etsy before, together with those who haven’t in the prior 12 months. In Q1 2021, this group totaled 16 million, up 113% Y/Y. Next, we see figures for Active Buyers. These have purchased at least once in the past 12 months. 90 million Active Buyers, up 91%. And finally, Etsy tells us it’s had 160 million Total Buyers. That’s a tally of customers it’s had since its start in June 2005.

These numbers are really good, I’d say: this is a good growth of buyers. Now, seller count has increased too, but buyers have increased more. And yes, some sellers are getting a bigger piece of the pie, but that’s just how commerce works.

We’re going to skip ahead a bit next. There is so much material in Etsy’s report, we could easily do two posts about it. The data related to sales in this one, and another on Etsy’s direction it’s taking in 2021. Let me know if you’d like to see a post here about that. Meanwhile, we’ll move on to the 18th slide.

So: are Etsy sales down in 2021?

Here’s what Etsy has to say: “We had a very strong first quarter.” Below, Etsy revisits the first numbers it showed us. Remember, these are related to gross sales, revenue, and profitability. This time, they drill down to show how those big figures break down.

Etsy 1Q 2021 Earnings Presentation PDF slide showing figures for Q1 21 with GMS, Revenue, and EBITDA Margin, each figure broken down into quarters
All graphics and data from Etsy 1Q 2021 Earnings Presentation

Let’s take these in turn left to right. First, GMS (Gross Mean Sales). Five dark blue bars: one for each quarter of 2020 and one for Q1 of 2021. So: are Etsy sales down? Has the first quarter of 2021 been quiet compared to the first quarter of 2020? Well, no. Etsy recorded a 132% increase in sales compared with the same quarter last year.

Note that as a rule on Etsy, the first quarter is always the lowest of the year. And as Etsy sellers, to us this annual drop seems more extreme than it actually is. Why? Because it follows the highest quarter of every year. (The holiday shopping period.)

Now, typically the new year starts low. Then grows just a bit each quarter until the dramatic rise in the fourth quarter. This year though, we don’t see that in these dark blue bars. Instead, we see a dramatic rise from Q1 to Q2: an increase of 98.7%!

This is the anomaly that was Q2 and Q3 of 2020: the pandemic, and its impact on Etsy in particular. Thanks to masks. Specifically, the availability of handmade cloth masks on Etsy. Especially compared with other marketplaces. Over the first weekend of April 2020, buyers searched for face masks on Etsy an average of nine times per second. Etsy experienced the most dramatic growth in its history last year. Thanks in large part to masks. But also, thanks to how the pandemic impacted shopping. Where we shopped (online) and what we shopped for. Masks, yes, but so much else. Zoom backgrounds; homeschooling / distance learning supplies. And other things to keep kids occupied at home. Home office supplies. Care packages; self-care packages, self-gifts. All became more of a thing. Along with countless other items that saw a rise as people’s lives changed.

All of which leads to the next question.

Will Etsy sales drop after the pandemic?

Has Etsy died because pandemic shopping has begun to drop? Well, look again at these dark blue bars. We can see that Q1 2021 is way ahead of Q2 2020. And way ahead of Q3 2020. Up from a much higher baseline given that Etsy did so well during the pandemic.

So, I think not. Of course it was quieter than the previous quarter (holiday shopping). But we can clearly see here that there are still Etsy shoppers buying by the bucket load.

Let’s take a quick look at the rest of this chart. Revenue is in orange. Can you make out that fine black line just above the orange bar chart? Up 141%. And farthest right, the light blue bar chart? The indicator representing Etsy’s current operating profitability? That is up 33%, which is even a bit higher than 4th quarter!

Still unconvinced Etsy sales aren’t down?

I recommend you read through the source material (we’ll link it below). There is so much more there. Especially about how Etsy used all that money. Just a sample:

  • Building local marketplaces globally
  • Improving search performance
  • Advertising and marketing
  • Investing in new ways to drive purchase frequency
  • Infrastructure initiatives focused on increasing conversion rate

And one last slide. This one is a drilldown of the buyer segments that we glanced at earlier (our second slide). Again, each chart has a bar for each quarter in 2020 and a fifth bar for 2021’s first quarter.

Etsy 1Q 2021 Earnings Presentation PDF slide showing figures for Q1 21 related to Etsy Buyers by type and by quarter
All graphics and data from Etsy 1Q 2021 Earnings Presentation

If you can zoom in, see the fine lines that run through each chart? They show the year-on-year percent of growth. Overall, the only chart of the four to show a drop was in New Buyers. As we mentioned above, that segment soared back in 2020’s second quarter, thanks to masks. And then in the fourth quarter, Etsy saw another big jump in new buyers. Then in this past quarter Etsy gained another 9.6 million new buyers!

And the GMS, the spend, per active customer is also well above Etsy’s historical average. For this past quarter, up 20% Y/Y. (You can check out those figures in Etsy’s report.)

In 2018 people were spending an average of $98, and now that has really picked up. When the pandemic hit, Gross Mean Spend was just over $100. And now it’s $124. So there’s more people spending more money. Inflation is a factor of course. I’ve put my prices up more than that in same time period. Nevertheless, it’s good to know that people are happy to be parting with more money.

“More sellers .. with more growth and success on Etsy”

That’s a direct quote. Sellers are up 70% year-on-year. There are now 4.5 million active sellers on Etsy. Compare that to nearly 90 million active buyers. And consider that 36 million are repeat buyers. Clearly then, Etsy has more buyers than sellers. Always a good thing.

This next is the bit most people don’t believe, but this is the truth. The GMS (Gross Mean Spend) average per seller was $2,483 total for the past consecutive 12 months. In other words, most sellers aren’t making much money on Etsy.

This is how it works. A lot of new sellers don’t make many sales at first when they start out. They find this unexpected. So if in their first year they only make a couple hundred dollars, they quit. So Etsy gets a lot of “churn” of these sellers who were expecting more.

But if you hang on, then you can build and grow your Etsy sales, your shop, your business. Many of us are making significantly more than $2,483 annually. That’s how averages work.

There’s more in Etsy’s quarterly financial report to read. About Etsy’s cash flow. How much money they’ve got in the bank. They’re doing fine; yep, margins are wonderful. Some super interesting stuff there.

Hope you enjoyed this quick overview. Here’s a link to Etsy’s full report: Etsy 1Q 2021 Earnings Presentation. And if you’ve got any questions or want to talk about it, I’ll leave a link just below to my Etsy coaching YouTube channel. In fact, I have a video there that covers this topic in greater detail. Hope to see you around!

Photo of author Pam Duthie, Etsy Shop Owner and Etsy Coach

Pam Duthie

Etsy Seller and Etsy U Instructor

Pam Duthie Etsy Coach YouTube channel