Dive Brief:

• Online artisan marketplace Etsy on Tuesday reported its first quarterly profit since going public a year ago. Q1 total revenue was $81.8 million, increasing 39.8% year-over-year and up 35% from Q4, driven by growth in both its marketplace and seller services revenue. That handily beat estimates from Thomson Reuters analysts of $75 million. 

• Etsy's Q1 marketplace revenue grew 18.5%, thanks largely to transaction fee revenue increases and, to a lesser extent, growth in listing fee revenue, according to a press release. Seller services revenue grew 59.6% year-over-year, driven primarily by revenue growth in direct checkout, which continued to benefit from the integration of PayPal, the company said.

• Etsy earned $1.2 million in the quarter, or a penny per share, compared to a loss of $36.6 million or 84 cents per share year over year, beating analyst expectations of a loss of 2 cents per share. The number of active sellers on the site increased 12% to 1.6 million, and the number of active buyers rose 20% to 25 million. Gross merchandise sales rose 18% to $629.9 million.

Dive Insight:

Etsy once enjoyed near-universal love from artisans and customers worldwide, with the air of an old-fashioned guild that also enjoyed all the advantages of 21st century technology. Now it's also a publicly traded company with investors to please, and it suffered some growing pains in its first year since its IPO.

As Etsy has grown and made changes to appease Wall Street, the company has alienated some of its biggest fans, who have complained that there are now too many mass-produced items for sale there, in addition to outright counterfeit goods. Etsy has made moves to mitigate those problems—for example, instituting methods for sellers to manufacture goods that aren’t necessarily made by hand but still fall within the sort of small-scale manufacturing that fits with the site's ethos. 

Etsy's Q1 2016 results suggest the changes are having a positive impact. The company credited its partnership with PayPal for smoothing transactions, and said further growth will depend in part on new products and seller tools including Pattern by Etsy, which helps sellers develop their own websites; Shop Home, which makes sellers' Etsy landing pages easier to customize and more mobile-friendly; and Shop Videos, which allows sellers to upload videos.

"Our financial results in the first quarter were driven by our strong execution," Etsy CEO Chad Dickerson said in a statement. "The second quarter is also off to an exciting start with the launch of our newest high-impact seller service, Pattern by Etsy, and a host of other products and seller tools that we believe will build long-term value for our community. We are as committed as ever to our vision of reimagining commerce and are looking forward to a productive year.”