Online marketplace operator Etsy delivered a stronger top line during the second quarter with higher revenue and an improvement in gross merchandise sales (GMS).

The company’s revenue rose 3.8 per cent to $672.7 million in the quarter ended June 30, driven primarily by the performance of on-site ads and payments for the Depop and Etsy marketplaces.

GMS was down 4.8 per cent to $2.8 billion, marking an improvement compared to the 6.5 per cent decline in the first quarter.

Excluding Reverb, the online marketplace for musical equipment that was sold on June 2, GMS was down 2.6 per cent to $2.7 billion.

At Etsy, GMS fell 5.4 per cent to $2.4 billion, as a softer start to the quarter due to the shift in Easter timing was later followed by more favorable trends.

Depop continued to see strong growth with GMS up 35.3 per cent to $249.6 million, led by a 54 per cent increase in the US.

On the bottom line, net income dropped 45 per cent to $28.8 million and adjusted EBITDA fell 5.8 per cent to $169 million.

“We are encouraged by our second quarter performance, which reflects tangible progress in our key investment areas,” said Etsy CEO Josh Silverman. “These efforts are designed to strengthen customer relationships on the Etsy marketplace, deepen buyer engagement, and reignite GMS growth.”

The company expects GMS to be in the range of $2.6 billion to $2.7 billion in the third quarter.

According to Reuters, Etsy shares were up 3 per cent in premarket trading on Wednesday after the company beat Wall Street expectations for second-quarter revenue. The firm remains largely insulated from direct tariff pressures as 90 per cent of its sellers source supplies domestically.