Our second quarter will prove to be a ‘breakthrough quarter’

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Etsy shares tumbled double digits last week on a mixed second-quarter report, but CEO Josh Silverman said Tuesday that the period marks a turning point for the ecommerce company.

“I think it was a great quarter,” he said in an interview with “Mad Money’s” Jim Cramer. “In fact, I think when people look back a few years from now, they’re going to describe this as a breakthrough quarter.”

The online marketplace’s gross merchandise sales grew 21% and revenue, which fell short of Wall Street’s estimates, improved by 37% year-over-year, according to FactSet. Shareholders made 14 cents per share. Silverman said the quarter was driven by its delivery process and marketing initiatives.

“In addition, we announced three bold new initiatives this quarter each of which I think set us up for really great growth for the future,” he said. “So we feel great about the second quarter.”

Etsy, which is a global marketplace for entrepreneurs to sell unique and creative products, launched its program in the U.S. to ship orders of $35 or more for free about a month ago to help mitigate shipping costs for sellers. With 2.3 million sellers, the company also launched the Etsy Ads platform to allow merchants to advertise products in search results on its website that has 43 million active buyers.

In addition to its focus on free delivery, Etsy has teamed up with sustainability consulting firm 3Degrees to offset carbon emissions in shipping. 3Degrees CEO Steve McDougal appeared alongside Silverman to explain how his shop collaborates with its clients to focus on emission reduction and promote clean energy practices.

“It starts with leadership of the companies that we work with that truly believe that climate change is something that they have to take urgent action on,” McDougal said. “It starts there, but they also recognize that within their stakeholders that they want to create a connection with values and that that just makes good business sense.”

Etsy is working to run their offices and computing infrastructure on 100% renewable electricity by 2020. Silverman said he learns that it costs less than 1 cent to offset carbon from shipping.

“When we discovered that, we said ‘gosh, we’re just going to pay for it at Etsy,’ and then in checkout we market that when you buy from Etsy you’re not impacting the environment,” he said. “The increase in conversion rate made this pay for itself. It literally pays for itself because customers buy more from Etsy because we can work with 3Degrees and offset the carbon.”

In its third quarter, analyst consensus expects Etsy to record nearly $193 million of revenue. The mark would represent more than 28% growth from the year prior.

Etsy’s shares climbed more than 2.6% Tuesday to close at $55.39. The stock has gained more than 16% in 2019.

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