By Granth Vanaik

(Reuters) – Etsy Inc on Wednesday beat market expectations for quarterly revenue, benefiting from demand for products such as personalized gifts offered on its e-commerce platform as well as higher transaction fees, sending the company’s shares up about 2% in extended trading.

Etsy – a marketplace for sellers of vintage or handcrafted goods – has maintained its popularity among cost-conscious shoppers after a pandemic-driven surge in growth when people bought cloth masks and craft supplies from the comfort of their homes.

Marketplace revenue increased over 9%, primarily driven by the increase in transaction fee or the charge that a business has to pay every time it processes a customer’s payment, from 5% to 6.5%.

Net revenues rose 10.6% to $640.9 million in the quarter ended March 31, compared with analysts estimate of $622.1 million, as per Refinitiv IBES data.

However, the company’s consolidated gross merchandise sales (GMS), a key industry metric, fell 4.6% to $3.1 billion in the reported quarter as it saw pressures on consumer spending particularly for lower household income buyers, coupled with year-over-year declines in some larger categories such as home and living, and craft supplies.

The categories that consumers are spending on aren’t necessarily found via Etsy, said Jessica Ramirez, an analyst with Jane Hali and Associates, adding “that’s where we still see some declines.”

The company forecast second-quarter revenue between $590 million and $640 million, while analysts expected $625.4 million.

Etsy’s first-quarter adjusted EBITDA, a measure of profitability, came in at $170.3 million, while analysts on average were expecting $166.6 million.

(Reporting by Granth Vanaik in Bengaluru; Editing by Shailesh Kuber)