• by Sarah Mahoney  @mahoney_sarah, August 4, 2023

Both Etsy and Wayfair released quarterly financial reports that show progress, even as consumers continue to cut back on nest-feathering.

For its second quarter, Brooklyn-based Etsy posted a slight dip in gross merchandise sales, which declined 0.6%, while revenue rose 7.5% to $628.9 million. Net income slipped to $61.9 million, down from $73.1 million in the year-ago quarter.

The number of active buyers rose 3% to hit 91 million, a record growth accelerated 3% year-over-year.

The company is also flexing into new territory, like a celebrity collaboration with John Legend. And it’s introduced a wedding registry. That's gone so well that Etsy is fast-tracking registries for babies and universal gifting.

But while it has seen encouraging trends for May, June, and July, Etsy released lukewarm guidance for the months ahead, disappointing investors.

Calling it a tough quarter, Sean Dunlop, an analyst who follows Etsy for Morningstar, see plenty of positives in the report. Those include important developments like continued growth in spending among new buyers on the platform, improvements in curation technology and the rollout of a new pricing tool.

"The artisanal marketplace has struggled to lap its commanding performance during the throes of COVID-19," he writes. But he is encouraged to see an uptick in active buyers and stabilization in Etsy's critical habitual buyer cohort. He predicts Etsy will return to above-market growth as economic pressures ease.

Over at Wayfair, second-quarter revenue slipped 3.4% to $3.2 billion, just 0.4% in the U.S., to $2.8 billion. And it lost just $46 million, compared to $378 million in the year-ago quarter.

Those numbers beat expectations, as the Boston-based company says its broad transformation efforts are beginning to show results. Significantly, earnings before income taxes -- a measure closely watched by investors -- moved into positive territory.

"This is how we ran the business for our first decade and how we'll continue to do so going forward," says Niraj Shah, chief executive officer and co-founder, in the announcement.

The number of active Wayfair customers fell 7.6% to 21.8 million. But revenue-per-active customers increased by 1.5%, and the number of orders placed by repeat customers grew by 6.4%.