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Etsy Q3 Results Top Street, Lifts Outlook; Shares Up 13%

Shares of Etsy Inc. (ETSY) gained 13% in extended session on Tuesday after the online crafts website reported a third-quarter profit and revenues that topped Wall Street estimates. The company also lifted its full year revenue outlook.

Brooklyn, New York-based Etsy's third-quarter profit dropped to $19.9 million or $0.15 per share from $25.8 million or $0.21 per share last year. Etsy said its bottom line was impacted by the non-cash interest expense and amortization related to the company's convertible senior notes.

Revenues for the quarter surged 41.3% to $150.4 million from $106.4 million last year, driven largely by growth in both Marketplace and Services revenue.

Analysts polled by Thomson Reuters expected earnings of $0.07 per share and revenues of $149.89 million for the quarter.

Gross margin improved to 68.8% from 65.8% a year ago. Total operating expenses increased 35.3% to $84.7 million driven primarily by digital acquisition marketing focused on driving GMS growth.

"Etsy's growth accelerated again in Q3, on a currency neutral basis, and we achieved several key milestones," said CEO Josh Silverman. "We put our new pricing structure to work by increasing investments in marketing and product initiatives to fuel growth. We also completed a major step in our migration to the Cloud, a key foundational investment as we scale for future growth."

Further, Etsy's Board of Directors has approved a stock repurchase program that will enable the company to repurchase up to $200 million of its common stock.

Looking forward, Etsy now expects full-year 2018 revenues of $596 million to $600 million, up from prior outlook of $587 million to $596 million. Analysts currently expect revenues of $595.4 million.

ETSY closed Tuesday's trading at $40.43, down $1.70 or 4.04%, on the Nasdaq. The stock, however, gained $5.12 or 12.66% in the after-hours trade.

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