1stdibscom Inc

Previous wording

1stDibs began in 2000 with the vision of bringing the magic of the Paris flea market online by creating a listings site for top vintage and antique furniture sellers. Soon thereafter, we moved our headquarters to New York City and focused primarily on adding U.S.-based sellers to our site. The quality of our initial seller base enabled us to build a reputation in the design industry as a trusted source for unique luxury design products. In over two decades of operating history, we have strengthened our brand and deepened our seller relationships. We launched our e-commerce platform in 2013 and transitioned to a full e-commerce marketplace model in 2016. We provide our sellers, the vast majority of which are small businesses, access to a global community of buyers and a platform to facilitate e-commerce at scale. Our sellers use our platform to manage their inventory, build their digital marketing presence, and communicate and negotiate prices directly with buyers. We provide our buyers a trusted purchase experience with our user-friendly interface, dedicated specialist support, and 1stDibs Promise, our comprehensive buyer protection program. We operate an asset-light business model which allows us to scale in a capital efficient manner. While we enable shipping and fulfillment logistics, we do not take physical possession of the items sold on our online marketplace.

Current wording

1stDibs began in 2000 with the vision of bringing the magic of the Paris flea market online by creating a listings site for top vintage and antique furniture sellers. Soon thereafter, we moved our headquarters to New York City and focused primarily on adding U.S.-based sellers to our site. The quality of our initial seller base enabled us to build a reputation in the design industry as a trusted source for unique luxury design products. In over two decades of operating history, we have strengthened our brand and deepened our seller relationships. We launched our e-commerce platform in 2013 and transitioned to a full e-commerce marketplace model in 2016. Since inception we have expanded our offerings to other verticals such as home decor, jewelry, watches, art, and fashion. We provide our sellers, the vast majority of which are small businesses, access to a global community of buyers and a platform to facilitate e-commerce at scale. Our sellers use our platform to manage their inventory, build their digital marketing presence, and communicate and negotiate prices directly with buyers. We provide our buyers a trusted purchase experience with our user-friendly interface, dedicated specialist support, and 1stDibs Promise, our comprehensive buyer protection program. We operate an asset-light business model which allows us to scale in a capital efficient manner. While we enable shipping and fulfillment logistics, we do not take physical possession of the items sold on our online marketplace.

Previous wording

Our net revenue consists principally of seller marketplace services. Seller marketplace services primarily consist of marketplace transactions, subscriptions, and listing fees. Marketplace transaction fees are collected when sellers pay us commissions ranging from 5% to 50% of GMV and processing fees, which are 3% of the buyer’s total payment, net of expected refunds. If a seller accepts a return or refund of an on-platform purchase, the related commission and processing fees are refunded. Subscriptions provide access to our online marketplace, allowing sellers, who are our customers, to execute successful purchase transactions with buyers. We offer our sellers various subscription pricing tiers which allows them to choose the plan that best fits their business, with choices of a higher monthly subscription fee and lower commission rates or lower monthly subscription fee and higher commission rates. Additionally, some sellers have no monthly subscription fees and higher commission rates, however, we no longer offer this option to new sellers. Listing fee revenue is collected when sellers pay us for promoting certain products on their behalf and at their discretion through our online marketplace. Advertisements consist of impression-based ads displayed on our online marketplace on the seller’s behalf.

Current wording

Our net revenue consists principally of seller marketplace services. Seller marketplace services primarily consist of marketplace transactions, subscriptions, and listing fees. Marketplace transaction fees are collected when sellers pay us commissions ranging from 5% to 50% of GMV and processing fees, which are approximately 3% of the buyer’s total payment, net of expected refunds. If a seller accepts a return or refund of an on-platform purchase, the related commission and processing fees are refunded. Subscriptions provide access to our online marketplace, allowing sellers, who are our customers, to execute successful purchase transactions with buyers. We offer our sellers various subscription pricing tiers which allows them to choose the plan that best fits their business, with choices of a higher monthly subscription fee and lower commission rates or lower monthly subscription fee and higher commission rates. Additionally, some sellers have no monthly subscription fees and higher commission rates, however, we no longer offer this option to new sellers. Listing fee revenue is collected when sellers pay us for promoting certain products on their behalf and at their discretion through our online marketplace. Advertisements consist of impression-based ads displayed on our online marketplace on the seller’s behalf.

Previous wording

In certain transactions where our shipping services are elected by sellers, we enable shipping of items purchased from the seller to the buyer. The difference between the amount collected for shipping and the amount charged by the shipping carrier is included in cost of revenue in our consolidated statements of operations. We enable fulfillment and shipping, but do not take ownership of or manage inventory.

Current wording

In certain transactions where our shipping services are elected by sellers, we facilitate shipping of items purchased from the seller to the buyer. The difference between the amount collected for shipping and the amount charged by the shipping carrier is included in cost of revenue in our consolidated statements of operations. We facilitate fulfillment and shipping, but do not take ownership of or manage inventory.

Previous wording

Gross profit is net revenue less cost of revenue, and gross margin is gross profit as a percentage of net revenue. Gross profit has been, and will continue to be, affected by various factors, including leveraging economies of scale, the costs associated with hosting our platform, the level of amortization of our internal-use software, the fluctuations in shipping costs and our ability to pass these costs on to buyers, and the extent to which we expand our operations. We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors.

Current wording

Gross profit is net revenue less cost of revenue, and gross margin is gross profit as a percentage of net revenue. Gross profit has been, and will continue to be, affected by various factors, including leveraging economies of scale, the costs associated with hosting our platform, the level of amortization of our internal-use software, the fluctuations in shipping costs including our ability to pass these costs on to buyers, and the extent to which we expand our operations. We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors.

Previous wording

Net revenue was generally flat with $22.1 million for the three months ended March 31, 2024, as compared to $22.2 million for the three months ended March 31, 2023. While GMV declined 6%, net revenue only declined 1% due to various strategic initiatives we actioned to improve our take rates, including commission re-tiering.

Current wording

Net revenue was $22.2 million for the three months ended June 30, 2024, as compared to $20.9 million for the three months ended June 30, 2023. The increase of $1.3 million, or 6%, was primarily driven by an increase to GMV and various strategic initiatives we actioned to improve our take rates, including commission re-tiering.

Previous wording

Our marketplace transaction fees represent the majority of our net revenue and accounted for 74% and 72% of our net revenue for the three months ended March 31, 2024 and 2023, respectively. Subscription fees accounted for 22% and 24% of our net revenue for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Our marketplace transaction fees represent the majority of our net revenue and accounted for 75% and 71% of our net revenue for the three months ended June 30, 2024 and 2023, respectively. Subscription fees accounted for 21% and 24% of our net revenue for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

Gross profit was $16.0 million and gross margin was 72.5% for the three months ended March 31, 2024, as compared to gross profit of $14.9 million and gross margin of 67.1% for the three months ended March 31, 2023. The increase in gross profit and gross margin for the three months ended March 31, 2024 was primarily driven by our cost savings initiatives in the second half of 2023 which contributed to the cost of revenue decrease, as well as our initiatives to improve our take rates and net revenue, as outlined above.

Current wording

Gross profit was $15.9 million and gross margin was 71.7% for the three months ended June 30, 2024, as compared to gross profit of $14.6 million and gross margin of 69.8% for the three months ended June 30, 2023. The increase in gross profit and gross margin for the three months ended June 30, 2024 was primarily driven by our cost savings initiatives in the second half of 2023 which contributed to a decrease in our cost of revenue, as well as our initiatives to improve our take rates and net revenue, as outlined above.

Previous wording

Provision for transaction losses was $0.4 million for the three months ended March 31, 2024, as compared to $1.4 million for the three months ended March 31, 2023. The decrease of $1.0 million, or 70%, was primarily driven by a decrease in damage claims as a result of new policies implemented by us and in partnership with our carriers as well as the decrease in GMV.

Current wording

Provision for transaction losses was $0.8 million for the three months ended June 30, 2024, as compared to $0.9 million for the three months ended June 30, 2023. The decrease of $0.1 million, or 7%, was primarily driven by a decrease in damage claims as a result of new policies implemented by us and in partnership with our carriers.

Previous wording

Other income, net was $2.0 million for each of the three months ended March 31, 2024 and 2023 and primarily related to interest income on our cash, cash equivalents, and short-term investments.

Current wording

Other income, net was $2.1 million for each of the three months ended June 30, 2024 and 2023 and was primarily due to interest income on our cash, cash equivalents, and short-term investments.

Previous wording

Sales and marketing expense was $9.2 million for the three months ended March 31, 2024, as compared to $9.8 million for the three months ended March 31, 2023. The decrease of $0.6 million, or 6% was primarily driven by a $0.7 million decrease in salaries and benefits resulting from decreases in headcount, primarily related to our reduction in workforce in June 2023.

Current wording

Cost of revenue was $12.4 million for the six months ended June 30, 2024, as compared to $13.6 million for the six months ended June 30, 2023. The decrease of $1.3 million, or 9%, was primarily driven by a $0.7 million decrease in salaries and benefits resulting from decreases in headcount from the prior period, primarily related to our reduction in workforce in June 2023, and a $0.4 million decrease in depreciation expense.

Previous wording

General and administrative expense was $7.0 million for the three months ended March 31, 2024, as compared to $8.1 million for the three months ended March 31, 2023. The decrease of $1.1 million, or 13%, was primarily driven by a decrease of $0.8 million in professional fees due to expense incurred in the three months ended March 31, 2023 related to strategic alternative expenses, $0.7 million in sublease income related to our sublease for our old corporate headquarters signed in August 2023, and a decrease of $0.5 million related to lower rates negotiated with vendors, including lower liability insurance expense. These decreases were partially offset by a $0.3 million increase in salaries and benefits and a $0.3 million increase in stock-based compensation expense, primarily due to our annual compensation increases and equity grants which occur each March and included additional bonus awards during the three months ended March 31, 2024.

Current wording

General and administrative expense was $13.9 million for the six months ended June 30, 2024, as compared to $15.6 million for the six months ended June 30, 2023. The decrease of $1.7 million, or 11%, was primarily driven by a $1.4 million decrease in lease expense, net, primarily due to sublease income related to our sublease for our old corporate headquarters signed in August 2023, a $1.0 million decrease related to lower rates negotiated with vendors, including lower liability insurance expense, and a $0.9 million decrease in professional fees due to expenses incurred in the six months ended June 30, 2023 related to strategic alternative expenses. These decreases were partially offset by a $0.8 million increase in stock-based compensation expense and a $0.8 million increase in salaries and benefits, primarily due to our annual compensation increases and equity grants which occur annually in March.

Previous wording

•The exclusion of strategic alternative expenses in connection with capital return strategies, buy- and sell-side mergers, acquisitions and partnerships, sale of a business or subsidiary, business optimization costs related to revisions of operational objectives and priorities, cost saving initiatives related to restructuring charges and integration costs, in all cases outside the ordinary course.

Current wording

•The exclusion of strategic alternative expenses in connection with capital return strategies, buy- and sell-side mergers, acquisitions and partnerships which include integration costs, sale of a business or subsidiary, business optimization costs related to revisions of operational objectives and priorities which include restructuring charges, in all cases outside the ordinary course.

Previous wording

We define Adjusted EBITDA as our net loss, excluding: (1) depreciation and amortization; (2) stock-based compensation expense; (3) other income, net; and (4) strategic alternative expenses. The following table provides a reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA:

Current wording

We define Adjusted EBITDA as our net loss, excluding: (1) depreciation and amortization; (2) stock-based compensation expense; (3) other income, net; (4) provision for income taxes; and (5) strategic alternative expenses. The following table provides a reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA:

Previous wording

As of March 31, 2024, we had cash, cash equivalents and short-term investments of $134.2 million and an accumulated deficit of $317.0 million. Net cash used in operating activities was $3.1 million in the three months ended March 31, 2024. We expect operating losses and negative cash flows from operations to continue in the foreseeable future as we continue to strategically invest in growth activities. Our principal use of cash is to fund our operations including platform development to support our strategic initiatives and anticipated share repurchases under the Stock Repurchase Program.

Current wording

As of June 30, 2024, we had cash, cash equivalents and short-term investments of $110.6 million and an accumulated deficit of $321.5 million. Net cash used in operating activities was $5.7 million during the six months ended June 30, 2024. We expect operating losses and negative cash flows from operations to continue in the foreseeable future as we continue to strategically invest in growth activities. Our principal use of cash is to fund our operations including platform development to support our strategic initiatives.

Previous wording

Based on our current plans, we believe our existing cash, cash equivalents and short-term investments will be sufficient to fund our operations and capital expenditure requirements through at least the next 12 months. We expect to continue to incur substantial expenditures in the near term to support our ongoing activities. While management believes that our current cash, cash equivalents and short-term investments are sufficient to fund our operating expenses, capital expenditure requirements and any potential share repurchases under the Stock Repurchase Program for at least the next 12 months, we may need to borrow funds or raise additional equity to achieve our longer-term business objectives.

Current wording

Based on our current plans, we believe our existing cash, cash equivalents and short-term investments will be sufficient to fund our operations and capital expenditure requirements through at least the next 12 months. We expect to continue to incur substantial expenditures in the near term to support our ongoing activities. While management believes that our current cash, cash equivalents and short-term investments are sufficient to fund our operating expenses and capital expenditure requirements for at least the next 12 months, we may need to borrow funds or raise additional equity to achieve our longer-term business objectives.

Previous wording

In August 2023, the Board of Directors authorized a Stock Repurchase Program to repurchase up to an aggregate of $20.0 million of our common stock. During the three months ended March 31, 2024, 552,885 shares of our common stock have been purchased for a total cost of $2.9 million and approximately $13.6 million remains available for future purchases under the program.

Current wording

In August 2023, the Board of Directors authorized a Stock Repurchase Program to repurchase up to an aggregate of $20.0 million of our common stock. In June 2024, the Board authorized an increase to our Stock Repurchase Program to an aggregate authorized repurchase amount of $25.5 million. During the six months ended June 30, 2024, 4.1 million shares of our common stock were purchased for a total cost of $21.9 million. On June 10, 2024, we announced the completion of our Stock Repurchase Program.

Previous wording

Net cash used in operating activities was $3.1 million for the three months ended March 31, 2024, and was driven primarily by a $2.9 million change in accounts payable and accrued expenses due to timing of payments and invoices, including our annual bonuses which were paid in March 2024.

Current wording

Net cash used in operating activities was $5.7 million for the six months ended June 30, 2024, and was driven primarily by a $3.6 million change in accounts payable and accrued expenses due to timing of payments and invoices, including our annual bonuses which were paid in March 2024 and a $1.4 million change in operating lease liabilities due to the continued lease payments on our previous and current NYC headquarters, partially offset by our sublease income.

Previous wording

Net cash used in operating activities was $2.8 million for the three months ended March 31, 2023, and was driven primarily by net revenue decreasing at a faster pace than operating expenses partially offset by a $1.3 million change in prepaid expenses and other current assets due to the timing of payments of our annual contracts.

Current wording

Net cash used in operating activities was $9.3 million for the six months ended June 30, 2023, and was driven primarily by net revenue decreasing at a faster pace than operating expenses. Our changes in operating assets and liabilities were impacted by a negative change in operating lease liabilities of $1.4 million due to the continued lease payments on our previous NYC headquarters, partially offset by a positive change in accounts payable and accrued expenses of $1.3 million due to the timing of invoices and payments.

Previous wording

Net cash provided by investing activities was $1.4 million for the three months ended March 31, 2024, and was driven primarily by $31.6 million maturities of short-term investments partially offset by $29.5 million purchases of short-term investments.

Current wording

Net cash provided by investing activities was $15.3 million for the six months ended June 30, 2024, and was driven primarily by $67.8 million maturities and sales of short-term investments, partially offset by $51.5 million purchases of short-term investments.

Previous wording

Net cash used in investing activities was $62.8 million for the three months ended March 31, 2023, and was driven primarily by $62.4 million purchases of short-term investments.

Current wording

Net cash used in investing activities was $100.3 million for the six months ended June 30, 2023, and was driven primarily by $110.4 million purchases of short-term investments, partially offset by $11.0 million maturities of short-term investments.

Previous wording

Net cash used in financing activities was $2.0 million for the three months ended March 31, 2024, and was driven primarily by $2.7 million of purchases of our common stock as part of our Stock Repurchase Program partially offset by $0.7 million in proceeds from the exercise of stock options.

Current wording

Net cash used in financing activities was $23.1 million for the six months ended June 30, 2024, and was driven primarily by $21.9 million in purchases of our common stock as part of our Stock Repurchase Program and $2.0 million of payments for taxes related to net share settlements of stock-based compensation awards, partially offset by $0.8 million in proceeds from the exercise of stock options.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2023, was less than $0.1 million and related to proceeds from the exercise of stock options.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2023, was less than $0.1 million and related to proceeds from the exercise of stock options.