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Etsy, Inc. (ETSY - Free Report) is still on track with its turnaround to finish out its first profitable year as a public company. This Zacks Rank #1 (Strong Buy) recently beat the Zacks Consensus for the second straight quarter.

Etsy is the online market place where people make, sell and buy unique goods. Founded in 2005, it is headquartered in Brooklyn and went IPO in 2015.

A Big Third Quarter Earnings Beat

On Nov 6, Etsy reported third quarter results and beat the Zacks Consensus Estimate by 7 cents. Earnings were $0.12 compared to the consensus of just $0.05.

Revenue jumped 21.5% to $106.4 million driven by growth in both Markets and Seller Services. Markets rose 11.2% year-over-year due to growth in transaction fee revenue and, to a lesser extent, in listing fee revenue.

Seller Services revenue rose by 30.6% compared to the year ago quarter due to growth in Etsy Payments and Promoted Listings, and, to a lesser extent, Shipping Labels and Pattern.

Gross margin, however, fell 70 bps to 65.8% from 66.5% in the year ago quarter.

Gross Merchandise Sales (GMS) jumped 13.2% year-over-year, accelerating by 140 bps from the second quarter.

Active sellers rose 10.8% while active buyers increased 16.7% year-over-year.

Reiterated Full Year Guidance

Etsy's turnaround plan is proceeding. Following up this strong quarter, it reiterated full year guidance. GMS is expected to rise between 12-14% year-over-year. Revenue is expected in the range of 18-20%.

For the first three quarters of this year, GMS has averaged 13% while Revenue growth has been 19.6%.

Therefore, given the guidance, fourth quarter looks to be similar to the third quarter. The company said it was well positioned for the holiday season.

Further Upside?

Shares are up 43% year-to-date thanks to management changes, including a new CEO, and the turnaround plan.



Additionally, the company now looks to be on track for that first profitable year.

Earnings are expected to rise 459% to $0.25 in 2017 with 2018 expected to be $0.29, or another 15.8% growth.

Amazon (AMZN - Free Report) , however, recently launched its long awaited "Amazon Handmade" division. Will it be a competitor? Or is Etsy too well established?

But for investors looking for a growth name in this creative products space, Etsy is the name to keep on the short list.

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