Investing.com -- Etsy Inc. (NASDAQ: ETSY) reported first-quarter revenue that exceeded revenue expectations, driven by improving marketplace fundamentals as the company posted its first year-over-year growth in gross merchandise sales in over two years.

The e-commerce platform generated revenue of $631.3 million for the quarter, beating the analyst consensus of $621.1 million by 1.6%. However, adjusted earnings per share of $0.60 came in slightly below the $0.61 estimate. Etsy marketplace revenue climbed 7.6% YoY to reach the reported total, while gross merchandise sales for the Etsy marketplace grew 5.5% YoY to $2.5 billion, marking a significant improvement from the 0.5% decline in the fourth quarter of 2025.

Shares rose 6.3% following the results, reflecting investor optimism about the revenue performance and improving marketplace trends. The company reported adjusted EBITDA of $185 million with a 29.3% margin.

"We are beginning to see early improvements in customer behavior that reflect progress against our strategy," the company stated, noting that active buyers grew sequentially for the first time in two years and delivered YoY growth in new buyers, active sellers, and GMS per buyer.

For the second quarter of 2026, Etsy issued guidance for GMS of $2.48 billion to $2.53 billion, representing 3-5% YoY growth for the Etsy marketplace. The midpoint of $2.505 billion suggests continued momentum. The company expects a take rate of approximately 25.7% and adjusted EBITDA margin of 27-29%.

For the full year 2026, Etsy now anticipates GMS growth in the low single-digit range for the Etsy marketplace, an improvement from prior commentary. The company maintained its full-year adjusted EBITDA margin outlook of 28-30%.

The results exclude Depop, which Etsy agreed to sell to eBay for $1.2 billion in February, with closing expected by the end of the third quarter of 2026.