Etsy (NASDAQ: ETSY) shares soared 5.16% in pre-market trading on Wednesday, following the release of its impressive first-quarter 2025 financial results. The e-commerce platform specializing in handmade and vintage items significantly outperformed analysts' expectations, prompting a positive investor reaction.

For Q1 2025, Etsy reported revenue of $651.2 million, surpassing the IBES estimate of $642.7 million. The company's adjusted EBITDA came in at $171.1 million, also beating the expected $164.5 million. Etsy's consolidated Gross Merchandise Sales (GMS) for the quarter stood at $2,800 million, while the adjusted EBITDA margin reached an impressive 26.3%.

Looking ahead, Etsy provided a cautiously optimistic outlook for the second quarter. The company expects Q2 GMS to decline at a rate comparable to, or slightly better than, the year-over-year decline reported in Q1 2025. Additionally, Etsy projects an adjusted EBITDA margin of around 25% for Q2, indicating continued profitability despite challenging market conditions. This combination of strong Q1 results and a relatively positive Q2 forecast appears to have boosted investor confidence, driving the stock's pre-market rally.