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Etsy files for IPO, looks to raise $100 million

The company has seen revenue go up in recent years, but is also seeing higher losses

Financial trends and news by Steven Loeb
March 4, 2015
Short URL: http://vator.tv/n/3c65

Etsy, the peer-to-peer marketplace dedicated to selling handmade and vintage items, has been rumored to be going public since the beginning of the year.

And now its really happening, as the company filed its S-1 with the Securities and Exchange Commission on Wednesday.  The company revealed that it plans to raise up to $100 million in its initial public offering.

Though it has seen its revenue increase healthily over the last few years, Etsy is continuing a trend in the tech industry of companies willing to go public before they are profitable.

The company made $195.59 million in revenue in 2014, up from $125 million in 2013 and $75.6 million in 2012. The majority of that money, $108.7 million, comes from its marketplace, charging users to list goods and then a percentage of the profit when they are sold. Another $82.5 million comes from "seller services," which include features like direct checkout and shipping.

At the same time, though, Etsy has seen its losses mount up as well: going up to $15.2 million, up from $2.3 million in 2012. In 2013 its net loss went all the way down to just $796,000 before jumping back up in 2014.

The main drag on its revenue is coming from general and administrative costs, which were nearly $52 million in 2014. The company also spent $39.7 million on marketing and $36.7 on product development. 

Even more worrying for investors: Etsy says it may never actually be profitable.

"We may not achieve or maintain profitability in the future," the company wrote in its SEC filing. "We expect that our operating expenses will increase substantially as we hire additional employees, increase our marketing efforts, expand our operations and continue to invest in the development of our platform, including new services and features for our members. These efforts may be more costly than we expect and our revenue may not increase sufficiently to offset these additional expenses."

In all, Etsy 1.4 million active sellers and 19.8 million active buyers. Those sellers generated gross sales of $1.93 billion in 2014, of which 36.1% came from purchases made on mobile devices and 30.9% came from an Etsy seller or an Etsy buyer outside of the United States

Etsy was founded in June 2005 in Brooklyn, New York and has raised over $97 million in venture capital funding from investors that included Glynn Capital Management, Index Ventures, Union Square Ventures, Accel Partners, Hubert Burda Media and Acton Capital Partners.

The company will be listed on the Nasdaq under the symbol ETSY.

(Image source: etsy.com)


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