DIBS - Earnings call transcript Q4 2024

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Operator

Good morning, and thank you for standing by. My name is Kelvin and I will be your conference operator today. At this time, I would like to welcome everyone to the 1stdibs Fourth Quarter 2024 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Kevin LaBuz, Head of Investor Relations and Corporate Development. ahead. go Please

Kevin LaBuz

welcome and and LaBuz, Earnings for Call of Good ended to December quarter Development. Corporate year Relations Kevin XX, the Investor morning, and Xstdibs XXXX. Head I'm

and Etergino. Officer, today me and Officer, quarter an our business, are fourth on Executive strategy opportunities, results David Joining will David and review provide will our first growth Chief Chief Rosenblatt Financial our quarter including outlook. update Tom and financial Tom

Relations available This investors.Xstdibs.com. webcast via website call Investor at our be will on

Before to, opportunities we and position. in business business keep and competitive performance, mind that statements including, prospects, our forward-looking international initiatives, begin, please guidance economic financial remarks trends, but statements future growth strategic include not and including demand, limited e-commerce market plans, rates, regarding growth

expressed Any may in obligation call on that risks by of any and this to to results differ implied and assumptions disclaim statements required a in those update the today described forward-looking on are filings. those as and based from materially our result we or as except actual SEC them, law. statements extent uncertainties, of our forward-looking beliefs these make Our we including

of GAAP is release, call, the of during will Additionally, Relations along A non-GAAP Investor can website, find non-GAAP you this included with which replay to present we measures. financial reconciliation in the today's press call. GAAP measures and earnings on our

year-over-year on the please David unless Lastly, David? call CEO, growth our a noted. basis, to Rosenblatt. I all are comparisons now over note otherwise will turn that

David Rosenblatt

guidance, our share. gained made We to XXXX since you am in highest share we GMV for progress market Thanks, joining achieved Kevin. growth our us pleased thank quarter. Good the exceeded fourth I morning, the and and today.

conversion. operating expenses, In XXXX lineup on and off our rationalized maintained actions XXXX, paid in focus our we XXXX. These product and reduced

pace in fourth following decline fastest X XXXX, While was the in growing X% the GMV we full with quarter, GMV in exited XX% year a the flat year years.

growth. as and profit For product orders, driving conversion doubled reallocating Throughout are active projects what while and velocity year rates. Tighter we return working was focus whole, a conversion, gains. buyers, revenue projects, from higher return to to accelerated higher lower XXXX, these on down gross the back inflected all resources fueling

Revenue the market. to Realtors, of weakness XX-year in continued key growth home occurred driver the XXXX. According of low neared against demand, sales, Association backdrop our furniture U.S. a of in National a

addition, the downturn markets In home credit furniture furnishings broader This syndicated and that contracted. structural. showed not cyclical, card premium data online is

luxury market real goods a the will and that that in and continue we eventually luxury compelling for home estate large rebound, expect market. see We and opportunity to

our in the enhance investing our As position. strengthen such, buyers value success. the and are competitive to sellers we Doing drivers and that selectively of so bring we long-term will

there realizing step likely on profitability to there recognize but trajectory be and way pleased path Returning of strong hundreds thousands We growth after few won't difficult to buyers, toward long go hundreds vision. that free is a in delivering of and be to We and revenue the to linear, positive business serving flow. important aspire our long-term a generating of an in are build while we years. is GMV billions revenue cash millions active a a

an declined a margins company. expenses best efficiency remaining marketing. path as on On vigilant annual also by operating basis, for thresholds We the consecutive second EBITDA and we profitability XXXX performance on and adjusted made public our on progress in delivered strict expenses year, to our maintaining

leverage and revenue potential. demonstrating Relative to by million our adjusted due and $X.X $X.X reductions flow-through, high operating to EBITDA XXXX, increased by million increased incremental expense

XXXX depends sustaining maintaining on now our revenue operating profitability and growth After and XXXX, resetting to leverage. expenses in path

Approximately revenue operating operating leverage XX% and GMV and unlock hold scale to expenses and headcount us our flat growth. plan at our are allows revenue to XXXX workforce. model of headcount for proportionate our is in mid-single-digit asset-light Our without related increases

Moving GMV revenue to funnel adjusted guidance. We quarterly a exceeded and high conversion consecutive margins EBITDA perspective, quarter. the high GMV all of the Quarterly grew results. X%. finished end on note up fifth for From with the a rates year

highest order Traffic priority conversion from declines our moderated a and remains average a value headwind operational to inflected tailwind. Increasing activity. and leverage

our product here to heightened returning both momentum and velocity. conversion new driven being pace These are see improving buyers. continue gains great for of rates We with by

increasing primary efforts, record. and of quarters, during the sequentially we A/B double our triple several we during ran with quarter. was hitting quarter tests number digits Consistent of new the had notable focus the grew The year-over-year, a conversion previous and development digits product wins

pricing machine tailored more launched following learning-based we we furniture on a is precise for category model stronger, for out jewelry, second This to third quarter. which rolled the providing maximize the First, from conversion. ML recommendations have pricing in recommendations

communicating our and gaining products, effectively to We these be gains. adoption expect for progress conversion for on prices pricing will of seller determining that continued them prerequisites buyers continued market

believe implement also X ability a priorities. us relative these We pricing-related gives that share unique to market our

significantly and Second, meaningfully matters. conversion higher a second Today, experience checkout and the relationship checkout There's resulting speed. end we our completion back conversion. strong re-architected between faster, rates. decreasing speed is improving of increase checkout to checkout Every in

conversion are and development digits contributor conversion. of has the an and growing our a the a entrepreneurial adoption function months. pace features the engagement XXXX. more Third, to that culture recommendations, testing, our become seller of product a result over of in significant XX of increasing double we increased was past accelerated at prominence to This enhancements The recommendations. which is of seller This volume sell-through increase aimed increased the of helped and

quarter approximately XX%. sellers, with X,XXX unique down Turning to ended supply. We the

was by approximately quarter, X,XXX upgraded late last a essential As to our plan. monthly we retirement the in of X,XXX program churn sellers due change, to mentioned elevated November. over affected this unique subscription Of the seller

basis the over and XX points XX the GMV total, less than months accounted In trailing of under churn for listings. of cohort basis XX points

pricing been steady subscription see to X%. listings, has quarter unique optimizations, due with Although million to continue X.X growth we count over listings ended the and up seller volatile

XXXX to in first the listings and churn of half Looking ahead, growth. normalize expect we continued

XXXX. Turning to

While that improve the us, self-help share. home this, uncertain. believe the pace timing are of to behind increase to market the recovery create and initiatives cycle we In of and light looking win down furnishings own remain through we for now is revenue, of luxury luck our and GMV margins worst

to focuses value cement on both the Our online creating leading road design. our sides map luxury of in position marketplace for

building means and For buyers, trust. this reducing friction

For sales. value add historically we can transparency. opaque sellers, tools a market, more providing insights drive to this lot In of means delivering by and a

work road is map X by our themes. in Building completed anchored XXXX, on foundational

The is growth. organic accelerating first traffic

that performance, drive approximately here and is Given our Projects acquisition. XX% improving size site organic, traffic the should improving and of structure program. of site include refining buyer our effectiveness marketing our improvements e-mail efficient

competitive second The pricing. is

often and as priced. and The trust shipping impacting learning-driven high, models ensuring a are accuracy with of conversion. and of use perceived pricing Work expanding expanding the quote costs improving objective is the streams categories, across too shipping prices shipping that page views buyer being product of listings display number and include accurately machine transparently Our quotes. here are the all

to that that data compared items We our rates from don't. higher internal with quotes those know conversion have shipping

prevalence conversion. and those increasing So of quotes shipping the of accuracy quotes the should boost

item. optimize for our buy and of to make and the sellers it especially personalization manage and include perfect buyer funnel. better performance enhancing shoppers to incentives, optimizing mobile and to to We their optimize The third conversion design various empowering and surfaces, find the continuing easier improving Projects discovery, is our web listings. want

faster Last, resolution, higher we through designed satisfaction of rates. support case focused like service and and expanded level initiatives These live chat are repeat proactive on elevating issues. communication efforts provide are greater on with common drive conversion customer the to we

Executing accelerate on the XXXX, build we XXXX foundation solidifying in share, We road growth, improve all capture strengthening our aim and market luxury our success. on position margins made map progress while for to scalable in our online design. long-term leading will

Turning to capital allocation.

confidence intrinsic market to disconnect and active of business value remained with assessment we the share in our Given our continued rising repurchases. compared the our price, between

$XX.X long including operational be given size we that on shares to are approximately fact of million the positioned approximately well and repurchased progress our this million opportunity, the our X.X that accretive believe We run capitalize X.X In will XXXX, the the quarter. in shares for we very a in recovery. fourth million, market

navigating leadership We After exited strength. renewed a years, share gains a position strategic few we've reflect our challenging market our actions XXXX improvements margin strategy. These validate of taken. and the momentum, our from and milestones market

sustaining build your to intend momentum share and we XXXX, this support. growth, you for towards profitability. expanding Thank by driving on continued In market

I quarter outlook. financial will over fourth to Tom review it turn and quarter first results to now our

Thomas Etergino

conversion of value $XX.X in vigilance stark a funnel million, pace margins our share contract, exceeded average X%, GMV David. is range, adjusted we've Thanks, in EBITDA driven the expenses. contrast seen improving the our up and end guidance market to performance revenue by rebound in which order gains. to high fastest on signifying continued end continue years. markets, and was GMV dynamics, This X

of X% GMV improvements $X,XXX accounted under the driven driven continued approximately to XX% for order these up shift over declines $X,XXX. approximately accelerated XX% value fourth was was quarter, down just X%. conversion slight a and traffic points. growth basis, values. compares was total orders sequential by a approximately in a $X,XXX This order moderating rebound from rates the total, by percentage On quarter. of order was XX third value mix This orders Average median ago. of This and in approximately away In declines, average up higher-than-anticipated year from

buyer [ buyers other verticals. to value to average no deliver under the to able There's price $X $XXX ranging points at and across transact marketplace which trust digital our qualified scale, ] has from We're over seller our at at multiple million. order

with of offset from paid. Return declines traffic paid ended We and sources XX% XX% from moderated improvements organic organic partially being to to traffic the slower by approximately with quarter traffic funnel growth. trends, traffic

have moderated versus increased quarters. now but quarter rates for the Conversion remained straight year-over-year X gains third Conversion healthy.

to over and are see confident our time. road We in increase conversion ample headroom map

GMV Vintage custom year-over-year new the X% X% furniture, and Antique buyers, XX,XXX our & with increased digits. grew. vertical, trade-in X%. except up both GMV We which and consumer approximately verticals, GMV, to active sequentially. all largest double GMV quarter furniture, grew Encouragingly, Returning down ended for was for and

third an consecutive the of growth is of second active year-over-year This basis. quarter sequential and the on XXXX the buyer absolute quarter quarter since of growth first

marketplace, On ended ending listings, experienced quarter the We the supply of down up steady sellers, unique X,XXX XX%. approximately over X.X with the with the million growth, listings we X%. side quarter

Of As had anticipated, by de subscription X,XXX in to minimis program our November. seller a churn plan. was a approximately the impact to unique change, retiring on elevated essential over listings. sellers GMV churn monthly upgraded X,XXX this due affected seller Seller and

in expect churn normalize of XXXX. the to half We first

million, total up up Gross of stable profit consecutive million, were XX%, quarter making growth marking our $XX.X revenue, X remainder. up rate was Turning GMV, fastest tied point. the is margins revenue the X%, the were X XX% rates most to expansion of and which Take P&L. years. was approximately Net subscriptions in directly percentage of approximately XX%. year-over-year. was year-over-year $XX.X third up with revenue, Transaction Gross profit to

Sales headcount-related up marketing and was severance and from to a marketing ago. were up a merit XX%, driven increases annual expenses expenses, XX%, revenue by year as performance awarded of Sales and our million, expenses in seasonal marketing March. due increases XX% $XX.X percentage in

selective learning up hiring, development machine increases headcount-related higher to Technology $X.X merit expenses our driven awarded some annual million, costs by due March in including team. our XX%, and were

As a was technology up percentage XX%, XX%. revenue, from of development

expenses up service higher fees. with annual X% and and merit to awarded higher headcount-related General our expenses were due March in million, professional $X.X administrative increases

down percentage year ago. from general of a were XX% revenue, administrative XX%, and As expenses a

transaction for year-over-year. were up of flat provision were $XX.X year-over-year. operating Total $XXX,XXX, losses Lastly, approximately million, revenue, expenses X% XX%

marketing Excluding year-over-year increases by expenses due and expenses basis, approximately operating charges, sequentially for seasonal onetime performance operating this spend. On to increased the have X been past severance X% XX% in quarters. flat

of Adjusted $X.X point margin was X loss of X%, year-over-year. to compared percentage a was year. last million loss EBITDA EBITDA million improvement a $X.X Adjusted a loss

threshold revenue required we forward, achieve operating remain leverage. focused to on the Looking lowering

expense our at deliver leverage is XXXX, mid-single-digit growth. revenue up In operating base set to

Additionally, we flat year-over-year. plan to keep headcount

Moving of on quarter the the to strong sheet. million. cash, with position a cash balance equivalents short-term investments ended $XXX We and

August December, share During worth X.X total shares. outstanding approximately of of quarter, the shares million million. a XXXX, $X.X first had we repurchased for approximately of program Since $X.X remaining. our approximately have the authorization we in of million At end $XX.X repurchased launching repurchase of million we

Turning to the outlook.

X%. to minus reflects $XX million, GMV up guidance million Net for and Our adjusted to revenue forecast million X% to margin the results forecast EBITDA of minus the XX% X% million, to and quarter-to-date period. loss X% our of of remainder up $XX.X $XX down first of We down to quarter $XX.X X%.

a reflects average high-end the our outlook continued XXXX saw environment perspective, guidance demand the softness and discretionary continuation GMV conversion value traffic XXXX in we and declines From Our order a macro growth. markets. soft due prolonged luxury gains, of assumes housing to to throughout

Additionally, year-over-year lapping which growth roughly leap into on XXX are drag a translates basis point we year, rates. a

Our of the transaction XX% costs premiums, fees, audit with line and historic margins losses and adjusted gross health headcount-related items increases of due on for to X% March SOX-related in in range, reflects provision EBITDA revenue, higher levels. to particularly in guidance of merit margin X-month service insurance and XX% annual increased professional approximately increased a

no we in environment. to assuming major expect While it year-over-year not XXXX, providing annual changes that worth noting macro in GMV the grow guidance, is

into on annualized so generating felt second quarter. revenue goes March X, at operating the higher cycle full headcount leverage salaries targets merit our XXXX and be the On an keeps annual flat. effect will mid-single-digit of in Our plan impact basis, growth

the to in growth conclusion, the this we're fourth share year, proud progress In made clear highlighted and strong we've market a gains. by return quarter of

the expenses we've discipline. to commitment straight for our demonstrating operating second year, Importantly, reduced financial

your this on maintaining forward capturing on focused our as We leverage the coming quarters. market the scales. we're and forward, continued progress operating to share driving appreciate Moving you balance, look updating business and in support growth, generating

your operator will questions. turn over Thank call to you. now to I the take the

Operator

[Operator Instructions]

of question comes Citizens. Nick of line the first from Jones Your

Nicholas Jones

investments about there folks marketing strategy kind to throughout of navigate, kind on to kind depressed of of home think this guess, hearing of of selection transactions, integrations shoppers about talk keep you they to build we about luxury kind kind channels are. focus you're the how of the this particularly as as kind or kind first, of of kind on meta show strategy kind you're to look are products guess, your marketing look as I what I making with earnings a you side, way we increasingly key of mid-funnel thinking and where year? Can cycle,

David Rosenblatt

acquisition. mean, think customer Yes. in terms of we it of strategy, think more of I marketing we when

cross-selling Of of and we so important course, efforts focused have most for customer But acquisition. and and on part is upselling the mean, marketing retention I on. us

threshold. volumes return we our to were were achieve that in we happy QX think I that relaxing able higher without criteria and

seen of we've on We've primary continued actually. success Google. that, Facebook to is a And which in incremental beyond improvements channels, make lot historically our the biggest of

Nicholas Jones

is seems And question. kind Great. dive just efforts from listings AI big platform, uniqueness focus. the AI any your second then Can the or maybe Agentic and to Agentic equipped the benefit listings broadly? kind touch on you AI. talk It breadth like have guys might Agentic of of well a given of about be a AI or you deeper with into more of

David Rosenblatt

Yes.

particular, side impact on will the and the and think in cost ML, revenue So over us, we a AI time. have both it's and for focus an important that meaningful

built QX. the at of team a we end So

added over we've little -- -- So been bit XXXX. a QX sorry, of QX for

more So added we've for been a bit a than little year.

and I highest think, The to kind been projects initial have of related return pricing.

rest out complete of QX, in furniture model that sellers. out optimal for example, XXXX. In So we'll it rolled an category, we the rolled we jewelry QX, and pricing our our to to in to ML recommend

pointing also pricing. are ML We shipping at

that, source that and of is as I that's that have leverage, companies. competitive possible coverage high most as For And pre-quotes us, possible. as that's as a big of pricing than both bigger we think, e-commerce ensuring also

expect on in where the our similar agents the like service pricing. there are those and to customer is ML from that, companies, focused map, and are a think see pointing road on. personalization, lot beyond now I things those we are return right and biggest then other But of applications -- so all at And most we to where

Operator

Riddick Evercore. Your of of next Austin line from question the comes

Austin Riddick

are levers investments me. Outside bring territory? closer how adjusted EBITDA for A are what balancing quick the growth? you with the And those positive one macro, in to of measures to main

Thomas Etergino

I our growth. to to be take I'll Yes. This mean to key Tom. adjusted around really centered getting positive breakeven and is revenue going is EBITDA that.

We are very disciplined on expenses.

leverage we additional We revenue EBITDA and that growth. growth. GMV from operating will continue our remain But on expenses, What sustained breakeven, we our positive and XXXX aiming -- will at disciplined revenue is to expense revenue we are way. in come stay do -- margin deliver around our mid-single-digit to to base

to expenses line bottom XXXX. structuring we're in that our better once we revenue So produce mid-digit growth exceed

Operator

of from Schackart Your the Ralph of comes next Blair. question William line

Ralph Schackart

normalization script, of just a talked seeing, half of Just then maybe us the churn expecting there, you the the And about give progressing? that's in how you terms I follow-up. an signals in update first have Can in XXXX. you're --

David Rosenblatt

metric the listings, Sure. sellers. that the in churn. happy And up spike we ended We supply a important fourth which our is with was than on side most optimize quarter. there over the Ralph, to of with rather see We year-over-year. X% listings million in the progress X.X we were did number

change, majority offered think roughly plan. you program program essential the one that The which X from quarter. over the under to I is affected a of a As sellers sub Of X,XXX sub-fee that in came retiring the essential sellers. know, were the for X,XXX unique plan our fourth we seller upgraded by seller that monthly

we asked that the program. again, chose by retired a what did were and minimum people is of sub impacted upgrade out So pay to X,XXX paid monthly leave fee. to to And either we the it there to or that X,XXX

points willing it. fine going and meaning also the for course, pay GMV left to marketplace the into prior I to they're XX we neither churn successful. being not listings of less using If they're points And that correspondingly for than of not cohort the importantly, sellers accounted think than committed months, the sort to basis with that. XX over nor, of self-selected it, were of be basis But XX less

Looking year see forward, in this churn normalize to we and first expect also the of growth. to half continued listings sometime

Ralph Schackart

want just And I one then growth, times David. for is today, helpful, more That's showing A model? referenced I Great. the clarify, contemplating to revenue what you me. would is for leverage or just script sort think, XXXX. mid-single-digit that level the in few you're the in would Or the back you need XXXX? need you condition of that to that for optimal to return

David Rosenblatt

No.

we talking was year give but the don't to and for what of think on that we about give grow numbers this putting without that wanted GMV to were sort know, I believe I guidance confidence the year, we ability we have we full don't it. directional,

by I rate course, it's into important second GMV expense our continue was year, to see of look, with in point And that the digits a to note 'XX time, 'XX company. zoom for and growth growth. to XX% in pretty inflection is and expect rate, healthy important think, kind as out think, important prior mid-single revenue line GMV The XXXX. the also base last GMV of over that GMV -- leverage for growth operating flat, shrink of a And we market. the deliver to was, I year it's same an out At margin with recognize exit to set us a

referring clarifies So Hopefully, that what that may it. been to. have you're

Ralph Schackart

does. It

Operator

that this call. that disconnect thank conference at concludes and your and participating With gentlemen, that, you questions further for your ladies We please ask lines. no are There time. you

1stdibs.Com (DIBS) 28 Feb 252024 Q4 Earnings call transcript