(Reuters) - Etsy ( ETSY ) beat Wall Street expectations for second-quarter revenue and gross merchandise sales on Wednesday, helped by steady demand for personalized gifts at its online marketplace.

WHY IT'S IMPORTANT

Aggressive investments in marketing and advertising have helped attract more customers to Etsy's ( ETSY ) platform, while occasions such as Mother's Day and Father's Day as well as graduation ceremonies boosted gift sales.

The company reported a 4.1% year-over-year rise in its gifting gross merchandise sales.

The number of Etsy's ( ETSY ) active buyers rose 0.4% to 96.6 million in the quarter ended June 30, while the number of active sellers rose 5.9% to 8.8 million.

CONTEXT

Although special occasions supported Etsy's ( ETSY ) gifting business, steep costs of living are squeezing household budgets, making consumers more picky while shopping for non-essential items such as vintage handicrafts, furniture, apparel, and luxury items like jewelry.

KEY QUOTE

"Etsy ( ETSY ) will remain challenged to meaningfully grow its seller base as well as active buyers who purchase frequently given consumers' shift towards lower-cost alternatives and new retail players like Temu and TikTok Shop," said Sky Canaves, analyst from eMarketer.

MARKET REACTION

Shares of the company were marginally up in volatile trading after the bell.

BY THE NUMBERS

For the quarter, the company posted consolidated gross merchandise sales - a key metric to measure sales - of $2.95 billion, compared with analysts' average estimate of $2.81 billion, according to LSEG data.

Its quarterly revenue of $647.8 million beat expectations of $629.6 million. The company earned 41 cents per share, below estimates of 45 cents.

Etsy's ( ETSY ) net income for the quarter was $53 million, compared with $61.9 million a year ago. Analysts on average expected $59.9 million.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Devika Syamnath)