E-commerce giant Etsy has reported a slight decline in performance during the second quarter ending June 30.

The company reported a 2.1 per cent decrease in consolidated gross merchandise sales (GMS), amounting to US$2.9 billion, and a 3.2 per cent drop in sales within its Etsy marketplace, totalling $2.5 billion.

Rachel Glaser, Etsy’s CFO, said the company is “carefully managing expenses” to deliver a profit. 

“We are investing in strategic growth areas, including gifting, quality initiatives, launching a new loyalty program, expanding our app, and more,” she continued. 

Glaser added that Q2 adjusted EBITDA was 28 per cent, ahead of the company’s guidance and up 130 basis points from last year. 

“We gained leverage year-over-year on employee costs and revenue costs. This was partially offset by a higher level of performance marketing investments to help fuel buyer growth and frequency,” said Glaser. 

The company highlighted some positive points, particularly the gifting GMS increasing by 4.1 per cent, which represents 27 per cent of total sales. The number of active buyers also grew slightly at 1 per cent to 91.5 million, with growth in international buyers. 

Revenue jumped by 3.0 per cent to $647.8 million, mainly due to higher marketplace revenue, especially from payments and transaction fees.

However, despite the increase, net income fell to $53 million, down by $8.9 million compared to the previous year, mostly due to a $7.2 million retroactive non-income tax expense. 

Etsy CEO Josh Silverman said while the current environment is challenging, the company is focused on growth and gaining market share. 

“Gifting is proving to be a winning theme – driving growth as a key source of differentiation for Etsy,” Silverman concluded. “We are making excellent progress with other bold moves and investments meant to raise consideration among buyers and help us stand apart more than ever.”

Etsy is a two-sided online marketplace that connects millions of arts and crafts buyers and sellers worldwide.