Q4 2023 1stdibs.Com Inc Earnings Call

February 28, 2024

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Operator: 1Stdibs.com Good day, and thank you for standing by. Welcome to the 1Stdibs Q4 2023 earnings conference call. At this time, all participants are in a listen-only mode.

Yeah.

Good day, and thank you for standing by and welcome to the first Dibs Q4 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session. Please press star one on your telephone and wait.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kevin LaBuz, Head of Investor Relations and Corporate Development. Good morning, and welcome to 1Stibs' earnings call for the quarter and year ended December 31st, 2020. I'm Kevin LaBuz, Head of Investor Relations and Corporate Development. Joining me today are Chief Executive Officer David Rosenblatt and Chief Financial Officer Thomas Etergino. David will provide an update on our business, including our strategy and growth opportunities, and Tom will review our fourth quarter financial results and first quarter outlook. This call will be available via webcast on our investor relations website at investors.1stdibs.com.

For your name to be announced to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Kevin The Buzz head of Investor Relations and corporate development.

Good morning, and welcome to first Dibs earnings call for the quarter and year ended December 31st 2023.

I'm, Kevin Lavage head of Investor Relations and corporate development.

Joining me today are Chief Executive Officer, David Rosenblatt, and Chief Financial Officer, Tom better Gino.

David will provide an update on our business, including our strategy and growth opportunities.

Tom will review, our fourth quarter financial results and first quarter outlook.

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

Before we begin please keep in mind that our remarks include forward looking statements.

Kevin James LaBuz: Before we begin, please keep in mind that our remarks contain forward-looking statements, including, but not limited to, statements regarding guidance and future financial performance. Market Demand. Growth Prospects. Business plan. Strategic Initiatives, Business and economic trends, including e-commerce growth rates and our potential responses to them. International Opportunities and Competitive Positions. Our actual results may differ materially from those expressed or implied in these forward-looking statements as a result of risk and uncertainty, including those described in our SCC file.

Routing, but not limited to statements regarding guidance and future financial performance.

Market demand growth.

Growth prospects.

Business plans and strategic initiatives.

And economic trends, including e-commerce growth rates at our potential responses to them.

International opportunities and competitive position.

Our actual results may differ materially from those expressed or implied in these forward looking statements as a result of risks and uncertainties.

Including those described in our SEC filings.

Kevin James LaBuz: Any forward-looking statements that we make on this call are based on our beliefs and assumptions as of today, and we disclaim any obligation to update them, except to the extent required by law. Additionally, during the call, we will present GAAP and non-GAAP financial measures. A reconciliation of GAAP-to-non-GAAP measures is included in today's earnings report, which you can find on our Investor Relations website, along with the replay of this call Lastly, please note that all growth comparisons are on a year-over-year basis unless otherwise noted. I'll now turn the call over to our CEO, David Rosenblatt. [inaudible] Thanks, Kevin.

Any forward looking statements that we make on this call are based on our beliefs and assumptions as of today and we disclaim any obligation to update them, except to the extent required by law.

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

Lastly, please note that all growth comparisons are on a year over year basis, unless otherwise noted.

I'll now turn the call over to our CEO, David Rosenblatt David.

Thanks, Kevin Good morning, and thank you for joining us today.

David S. Rosenblatt: Good morning, and thank you for joining us today. Throughout 2023, we laid the groundwork for future success. While there is no denying that high-end furniture demand has been under pressure for the past two years, we have used this period to reorganize our business. We have undertaken rigorous efforts to optimize our operations, reengineer our cost structure, and focus our efforts on a narrower set of priorities, laying a strong foundation for future growth and profit. Encouragingly, we are starting to see tangible results.

Throughout 2023, we laid the groundwork for future success, while there is no denying that high end furniture demand has been under pressure for the past two years, we have used this period to reorganize our business.

We have undertaken a rigorous efforts to optimize our operations reengineer, our cost structure and focus our efforts on a narrower set of priorities laying a strong foundation for future growth and profitability.

Encouragingly, we are starting to see tangible results for example in the fourth quarter conversion rates increased for the first time since late 2021.

David S. Rosenblatt: For example, in the fourth quarter, conversion rates increased for the first time since late 2021. In many respects, 2023 was a continuation of the efforts we started in the second half of 2022 to recalibrate our expenses, reprioritize our roadmap, reduce our cash burn, and accelerate our path to profitability. While category demand remains subdued, and GMV growth is far from where we would like it to be, we have made meaningful progress on all of these. First, by reorganizing our operations teams and finding other efficient ways, we expanded gross margins from the high 60s to the low 70s.

In many respects 2023 was a continuation of the efforts we started in the second half of 2022 to recalibrate, our expenses Reprioritise, our roadmap reduced our cash burn and accelerate our path to profitability.

While category demand remains subdued and GMB growth is far from where we would like it to be we have made meaningful progress on all of these fronts.

First by reorganizing our operations teams and finding other efficiencies we expanded gross margins from the high <unk> to the low seventies, notably this happened on lower revenue.

David S. Rosenblatt: Notably, this happened on lower revenue. Second, we took decisive action to align our expenses with demand and reorganize our business. For example, we reduced headcount, increased performance marketing efficiency thresholds, and downsized our New York City real estate footprint. As a result of these and other actions, year-end headcount was down over 20%, and fourth quarter operating expenses were down 19%.

Second we took decisive action to align our expenses with demand and reorganized our business. For example, we reduced head count increased performance marketing efficiency thresholds and downsized, our New York City real estate footprint.

As a result of these and other actions year end head count was down over 20% and fourth quarter operating expenses were down 19%.

The benefit of this lower cost structure are showing up in our P&L.

David S. Rosenblatt: The benefit of this lower cost structure is showing up in our P&L. Adjusted EBITDA margins in the second half of 2023 were negative 8.4%, compared to negative 21.7% in the second half of 2021. In dollar terms, adjusted EBITDA improved to negative $3.5 million in the second half of 2023 from negative $9.9 million in the second half. This improvement occurred at a time when revenue declined approximately 9%. A point worth stressing is that the majority of our operating expenses, about two-thirds, are headcount related. From our new cost base, we expect to be able to add meaningful GMV and revenue without proportionate increases in headcount. Said another way, the changes we made over the past two years increase our operating leverage potential.

Adjusted EBITDA margins in the second half of 2023 were negative eight 4% compared to negative 21, 7% in the second half of 2022.

In dollar terms adjusted EBITDA improved to negative $3 $5 million in the second half of 2023 from negative $9 $9 million in the second half of 2022.

This improvement occurred at a time when revenue declined approximately 9%.

A point worth stressing is that the majority of our operating expenses about two thirds are head count related from our new cost base, we expect to be able to add meaningful <unk> and revenue without proportionate increases in head count.

Said another way the changes we made over the past two years increased our operating leverage potential.

David S. Rosenblatt: We expect this to be on full display when revenue grows. Third, we refined and refocused our product roadmap, having fewer resources necessitated a narrower aperture and shifting resources away from areas where returns were further afield, like auctions and international expansion, to areas where payoffs are expected to be more immediate, like checkout and seller experience. The underlying logic is that the highest return investments we can make are on platform-wide products.

We expect this to be unfold display when revenue growth resumes.

Third, we refined and refocused our product roadmap, having fewer resources necessitated a narrower aperture and shifting resources away from areas, where returns were further a field like auctions and international expansion to areas, where payoffs are expected to be more <unk>.

<unk> like checkout and seller experience.

The underlying logic is that the highest return investments we can make our on platform wide product changes.

David S. Rosenblatt: Today we are focused on the handful of areas that we believe represent our highest ROI opportunity, which I will detail below. We also revamped our A-B testing infrastructure and accelerated our testing velocity. 1Stdibs has always been experimental and data-oriented, but we are moving faster today.

Today, we are focused on the handful of areas that we believe represent our highest ROI opportunities, which I will detail below.

We also revamped our a b testing infrastructure and accelerated our testing velocity.

<unk> has always been experimental and data oriented, but we are moving faster today, while it is still early there have been some encouraging developments in this regard.

David S. Rosenblatt: While it is still early, there have been some encouraging developments in this regard. We are releasing a high number of new features into the market, and we believe this is contributing to conversion improvement. In the fourth quarter, conversion rates increased year over year for the first time since the third quarter of 2020. Fourth, based on the strength of our balance sheet, confidence in our prospects, the value of our strategic assets, and the disconnect between market prices and our assessment of intrinsic value. We initiated a $20 million share repurchase program.

We are releasing a high number of new features into the market and we believe this is contributing the conversion improvements.

In the fourth quarter conversion rates increased year over year for the first time since the third quarter of 2021.

Fourth based on the strength of our balance sheet confidence in our prospects the value of our strategic assets and the disconnect between market prices and our assessment of intrinsic value.

We initiated a $20 million share repurchase program.

David S. Rosenblatt: Since inception in mid-August, we have opportunistically repurchased $3.5 million, or approximately 820,000 shares. While much has changed in our business throughout the past two years, our financial goals have not. Over time, our objective is to deliver sustainable revenue growth, expand the market, become profitable, and ultimately grow free cash flow per share. Moving to the fourth quarter, we deliver GMV at the midpoint of guidance and revenue and adjusted EBITDA at the high end. Similar to the third quarter, traffic and average order value were headwinds to GMC, partially offset by the conversion rate, particularly from returning buyers. As I noted above, after seeing client moderate for five consecutive quarters.

Since inception in mid August we have opportunistically repurchased $3 5 million or approximately 820000 shares.

While much has changed in our business throughout the past two years, our financial goals have not.

Over time, our objective is to deliver sustainable revenue growth expand margins become profitable and ultimately grow free cash flow per share.

Moving to the fourth quarter, we delivered GMP at the midpoint of guidance on revenue and adjusted EBITDA at the high end similar to the third quarter traffic and average order value were headwinds to GMP, partially offset by conversion rate improvements, particularly from returning buyers.

As I noted above after seeing declines moderate for five consecutive quarters conversion rates returned to growth for the first time since the third quarter of 2021.

Lastly, supply remained healthy with listings up 12%.

As we look towards 2024, our focus is on reinvigorating growth, while maintaining our leaner cost structure.

Our roadmap centers on three themes personalized and frictionless buying competitive inventory pricing and scalability in order retention, which I will briefly preview.

David S. Rosenblatt: Conversion rates returned to growth for the first time since the third quarter of 2020. Lastly, supply remained healthy, with listings up 12%. As we look towards 2024, our focus is on reinvigorating growth while maintaining our leaner cost structure. Our roadmap centers on three themes: personalized and frictionless body.

All of these ultimately rollout to driving conversion and operating leverage.

The first dibs marketplace is home to over $1 7 million of the world's most beautiful items.

Personalized and frictionless buying means making it easier for shoppers to find the perfect piece.

This spans improving item discovery to making it easier to complete a purchase by reducing checkout friction after finding that special item.

David S. Rosenblatt: Competitive Inventory Pricing, which I will briefly preface, All of these ultimately roll up to driving conversion and operations. The 1Stdibs Marketplace is home to over 1.7 million of the world's most beautiful items. Personalized and frictionless buying means making it easier for shoppers to find the perfect item. This spans improving item discovery to making it easier to complete a purchase by reducing checkout friction after finding that special item. Optimizing our make-offer flow is an example of a project in this workstream that we are focused on in the first half of the year. Purchases on 1Stdibs are highly considered. Many involve back and forth communications or negotiations between buyer and seller.

Optimizing our make offer flow is an example of a project in this work stream that we're focused on in the first half of the year.

Purchases on first dibs or highly considered many involves back and forth communications, where negotiations between buyer and seller in fact over 40% of orders originate as buyer initiated negotiations as such optimizing the make offer process has the potential to lift convert.

<unk> and order volumes.

Competitive inventory pricing is our second theme. The objective here is ensuring that listings are transparently and competitively priced to do this we are giving sellers more insights and tools to list their items at the market clearing price.

For example, we will soon be launching a test of our listings optimization score and seller recommendation page.

David S. Rosenblatt: In fact, over 40% of orders originate as buyer-initiated negotiations. As such, optimizing the make-offer process has the potential to lift conversion and order volume. Competitive Inventory Pricing is our second objective. The objective here is to ensure that listings are transparently and competitively priced. To do this, we are giving sellers more insights and tools to list their items at the market clearing price. For example, we will soon be launching a test of our listing optimization score and seller recommendation. This provides sellers with data-driven recommendations aimed at improving sell-through. For example, depending on item attributes and the performance of similar listings, we might recommend that the seller reduce the product price, move the item from marketplace to auction, or add more.

This provides sellers with data driven recommendations aimed at improving sell through and conversion.

For example, depending on item attributes and the performance of similar listings, we might recommend that the seller reduce the product price move the item from marketplace to auction or add more images.

Success here looks like sellers adopting our recommendations ultimately driving more conversion.

Lastly, scalability in order retention is about streamlining processes to improve efficiency.

Focused projects here include optimizing our operational teams and enhancing the performance of our tech platform.

Success here is growing our <unk> and revenue well in excess of our cost.

During the fourth quarter, we started rolling out our first dibs parcel rates and labels. This suite of tools give sellers complete control to select the best shipping methods for their business with our seamless integration of calculated shipping rates competitively priced shipping labels and automated tracking.

David S. Rosenblatt: Success here looks like sellers adopting our recommendations, ultimately driving more accounts. Lastly, scalability and order retention are about streamlining processes to improve. Focus projects here include optimizing our operation and Enhancing the Performance of Our Tech Platform. Success here means growing our GMV and revenue well in excess of our cost. During the fourth quarter, we started rolling out our 1Stibs parcel rates and labels. This suite of tools gives sellers complete control to select the best shipping methods for their business, with our seamless integration of Calculated, Competitively Priced Shipping Labels and Automated Tracking for Parcel Shipping, which account for approximately 70% of our shipping.

For parcel shipments, which account for approximately 70% of our shipping volume.

In addition to giving sellers more control once fully implemented we expect these tools to reduce the load on our operations teams.

Lastly, turning to supply we were pleased with double digit listings growth despite the soft demand environment.

And this quarter, we revised our approach to seller acquisition and monetization.

Lesson from our central seller test was that subscription paying sellers had higher engagement for example, the central sellers accounted for about half of our sellers, but only approximately 10% of listings.

As a result, we instituted a new pricing structure, whereby all newly acquired sellers will pay a monthly subscription fee, while allowing existing central sellers, who meet inventory posting minimums to continue with the subscription free plan.

We will continue to monitor this and adapt our pricing in acquisition and accordingly.

We also updated our commission tiers for high value orders is.

David S. Rosenblatt: In addition to giving sellers more control, once fully implemented, we expect these tools to reduce the load on our operations. Lastly, turning to supply, we were pleased with double-digit listings growth despite the soft demand environment. In this quarter, we will revise our approach to seller acquisition and monetization. A lesson from our Essential Seller Test was that subscription-paying sellers had higher needs.

As a consequence of these changes we would expect to see some volatility in seller account through mid 2024. However, during this period, we expect to see continued listings growth.

In closing despite the challenges we have faced over the past two years I am proud to say that we have remained resilient and have not shied away from difficult decisions as conditions changed. We responded we have taken actions to reduce our cost structure lower our cash burn channel hour.

Focus on the highest ROI projects and Opportunistically return capital to shareholders.

David S. Rosenblatt: For example, essential sellers accounted for about half of our sellers, but only approximately 10% of listeners. As a result, we instituted a new pricing structure whereby all newly acquired sellers will pay a monthly subscription, while allowing existing essential sellers who meet inventory posting requirements to continue with this subscription-free. We will continue to monitor this and adapt our pricing and acquisition accordingly. We have also updated our commission peers for high-value organizations as a consequence of these changes.

While we continue to navigate through market softness I am encouraged by the progress we have made the steps we have taken to reduce costs and sharpen our focus are beginning to yield results.

As evidenced by our progress towards breakeven and improving conversion rates.

As we move forward, we remain committed to adapting to market dynamics, maintaining cost discipline re accelerating growth and doing so in a capital efficient manner.

Thank you for your continued support.

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

Thanks, David.

Over the past two years, we have taken significant action to streamline our business and reengineer our cost structure in the fourth quarter. The benefits of this work were on full display with head count and operating expenses down materially and adjusted EBITDA margins improving meaningfully.

David S. Rosenblatt: We would expect to see some volatility in the seller count through mid 2020. However, during this period, we expect to see continued listing growth. In closing, despite the challenges we have faced over the past two years, I am proud to say that we have remained resilient and have not shied away from difficulties.

We've made significant strides towards improving our financial health and positioning ourselves for future success.

As we've mentioned before given the operating margin leveraging our two sided marketplace business model, we expect revenue growth to be in the primary driver of margin expansion from here as such we are focusing our existing resources on re accelerating growth in a capital efficient manner.

David S. Rosenblatt: As conditions change, we respond. We have taken actions to reduce our cost structure and lower our cash burn. Channel Our Focus on the Highest ROI Project and opportunistically return capital to shareholders. While we continue to navigate through market softness, I am encouraged by the progress we have made. Steps we have taken to reduce costs and sharpen our focus are beginning to yield results, as evidenced by our progress towards breakeven and improving conversion. As we move forward, we remain committed to adapting the market dynamic, reaccelerating growth, and doing so in a capital-efficient manner. Thank you for your continued support. I will now turn it over to Tom to review our fourth quarter financial results and first quarter outlook. Thanks, David.

Turning to fourth quarter results, we delivered <unk> at the midpoint of guidance and revenue and adjusted EBITDA margins at the high end.

<unk> was $86 $4 million down 17% due to soft demand for luxury home goods and high end discretionary items.

During the quarter traffic was the primary driver of order softness consistent with the third quarter trends, both paid and non paid traffic were down year over year.

Traffic declines were partially offset by conversion improvements as David mentioned conversion rates returned to positive growth for the first time since the third quarter of 2021.

This was driven by growth in returning buyer conversion and moderating declines in new buyer conversion.

Since mid 2023, we have ramped our a b testing velocity and launch more product enhancements into production. We believe this is helping conversion.

Thomas J. Etergino: Over the past two years, we have taken significant action to streamline our business and re-engineer our cost structure. In the fourth quarter, the benefits of this work were on full display, with headcount and operating expenses down materially, and adjusted EBITDA margins improving meaningfully. We have made significant strides towards improving our financial health and positioning ourselves for future success. As we've mentioned before, given the operating margin leverage in our two-sided marketplace business model, we expect revenue growth to be the primary driver of margin expansion from here on. As such, we are focusing our existing resources on re-accelerating growth in a capital-efficient manner. Turning to the fourth quarter results, we delivered GMV at the midpoint of guidance, and revenue and adjusted EBITDA margins at the high end. GMV was $86.4 million, down 17% due to soft demand for luxury home goods and high-end discretionary items. During the quarter, traffic was the primary driver of order softness consistent with the third quarter. Both paid and non-paid traffic was down year over year.

Average order values were another headwind cgmp growth average order value of approximately $2530 was down 7%.

Contrast, our median order value of approximately $1150 was flat.

The latter metric is less sensitive to fluctuations in high value orders.

Taking deeper.

<unk> under $1000 accounted for 47% of total orders in the quarter.

That year over year. However, we did see orders over $100000 account for approximately 3% of GMP towards the low end of its historical range of 3% to 5%.

We also saw fewer orders in the 20000 to $100000 range, while the fourth quarter is our seasonally weak quarter for <unk> due to gifting. We believe these trends signify lingering consumer hesitancy around discretionary categories and big ticket purchases.

Consumer and trade JMP both grew at similar rates, we continue to hear feedback from the trade that is consistent with previous quarters that is what clients are pulling back slightly due to economic uncertainty and rising costs designers are still actively working on projects and building out the pipeline.

Turning into verticals <unk>, a new on custom furniture was the top performers. This was a change in trends in recent quarters, we're at home categories underperformed.

Thomas J. Etergino: Traffic declines were partially offset by conversion improvements. As David mentioned, conversion rates returned to positive growth for the first time since the third quarter of 2021. This was driven by growth and returning buyer conversion and moderating declines in new buyer conversion. Since mid-2023, we have ramped up our A-B testing velocity and launched more product enhancements into production. We believe this is helping converge. Average order values were another headwind to GMB growth. The average order value of approximately $2,530 was down 7%. In contrast, our median order value of approximately $1,150 was flat. The latter metric is less sensitive to fluctuations in high value orders.

We ended the quarter with approximately 6700 active buyers down 10%.

We expect this metric to me remains choppy near term as we manage through a period of soft demand.

On the supply side of the marketplace, we closed the quarter with over 9200 seller accounts up 25%. Additionally, there are now over $1 7 million listings on our marketplace up 12%.

Looking forward, we will report our unique seller number in the fourth quarter. We had approximately 7800 unique sellers up from approximately 5600 a year ago.

This differs from seller counts, which counts are unique seller multiple times if that seller has sales in multiple verticals. For example, if a seller sells into verticals. They will count as two seller accounts, but only one unique seller.

Historically the difference between seller accounts and unique sellers is approximately 1500 per quarter. This change has no impact on listing count.

Thomas J. Etergino: Orders under $1,000 accounted for 47% of total orders in the quarter, flat year over year. However, we did see orders over $100,000 account for approximately 3% of GMV, towards the low end of its historical range of 3 to 5%. We also saw fewer orders in the $20,000 to $100,000 range. While the fourth quarter is our seasonally weak quarter for AOV due to gifting, we believe these trends signify lingering consumer hesitancy around discretionary categories and big-ticket purchases. Consumer and trade GMV both grew at similar rates.

Turning to the P&L net.

Net revenue was $20 $9 million down, 9%, but up 1% sequentially.

Transaction value, which is tied directly to GMP was roughly 70% of revenue with subscriptions, making up most of the remainder.

Take rates improved modestly due to the combination of several factors, including growing GMP contribution from our central sellers, which carry a higher commission rate a higher proportion of orders below our $25000 Commission break and a revised commission break structure that went into effect during the quarter.

Going a bit deeper monetization during the quarter, we refreshed our commission tiers and pause the essential solid program, which carried no monthly subscription currently all new sellers will be required to pay a monthly subscription fee.

Thomas J. Etergino: We continue to hear feedback from the trade that is consistent with previous quarters. That is, while clients are pulling back slightly due to economic uncertainty and rising costs, designers are still actively working on projects and building out the pipeline. Turning in your particle.

We expect these two changes should have a modest positive impact on take rates looking forward.

Gross profit was $15 million down 8%.

Thomas J. Etergino: Vintage and antique and new and custom furniture were the top performers. This was a change in trend from recent quarters when at-home categories underperformed. We ended the quarter with approximately 60,700 active buyers, down 10%. We expect this metric to remain choppy near term as we manage through a period of soft demand. On the supply side of the marketplace, we closed the quarter with over 9,200 seller accounts, up 25%. Additionally, there are now over 1.7 million listings on the marketplace, up 12%. Looking forward, we will report a unique seller number. In the fourth quarter, we had approximately 7,800 unique sellers, up from approximately 5,600 a year ago. This differs from seller counts, which count a unique seller multiple times if that seller has sales in multiple verticals. For example, if a seller sells in two verticals, they will count as two seller counts, but only one unique seller. Historically, the difference between seller accounts and unique sellers is approximately 1,500 per quarter. Therefore, this change has no impact on listing counts.

Gross profit margins were 71% up approximately one percentage point, primarily driven by lower operations head count related expenses I wish you health of our restructuring initiatives and lower shipping expenses.

Sales and marketing expenses were $8 $6 million down, 19% driven by lower performance marketing spend and lower headcount related expenses as a result of our restructuring initiatives.

Sales and marketing as a percentage of revenue was 41% down from 46% a year ago.

Technology development expenses were $4 4 million down 22% driven by lower head count related expenses, a result of our restructuring initiatives.

As a percentage of revenue technology development was 21% down from 25%.

General and administrative expenses were $6 $3 million down, 10%, driven primarily by savings from reducing our New York City real estate footprint.

As a percentage of revenue general and administrative expenses were 30% flat year over year.

Lastly, provision for transaction losses were $800000, 4% of revenue down from 7%, primarily driven by a decrease in damage claims as a result of lower GMB as well as new policies implemented in partnership with our carriers in summary, total operating expenses were $20 1 million.

Down, 19%, reflecting the benefits of restructuring.

Thomas J. Etergino: Turning to the P&L, net revenue was $20.9 million, down 9%, but up 1% sequentially. Transaction revenue, which is tied directly to GMB, was roughly 70% of revenue, with subscriptions making up most of the remainder. Take rates improved modestly due to the combination of several factors, including growing GMV contribution from essential sellers, which carry a higher commission rate, a higher proportion of orders below our $25,000 commission break, and a revised commission break structure that went into effect during the quarter. Going a bit deeper on monetization, during the quarter, we refreshed our commission tiers and paused the Essential Seller Program, which carried no monthly subscription. Currently, all new sellers will be required to pay a monthly subscription fee.

Adjusted EBITDA loss was $1 $7 million compared to a loss of $4 $5 million last year adjusted.

Adjusted EBITDA margin was a loss of 8% versus a loss of 19% last year due to savings from restructuring, partially offset by lower revenue.

These results reflect the actions we have taken since mid 2022, which you reengineer our cost base.

Point worth stressing is that these adjusted EBITDA margin improvements happened in the context of declining revenue.

Moving to the balance sheet, we ended the quarter with a strong cash cash equivalents and short term investment position of $139 3 million. Additionally.

Additionally, interest income increased to approximately $1 $7 million up from approximately $860000 a year ago.

During the fourth quarter, we repurchased $2 $1 million of shares under our $20 million Board authorized repurchase program since inception in August 2023, we have repurchased $3 $5 million of shares.

Turning to the outlook our guidance reflects quarter to date results and our forecast for the remainder of the period, we forecast first quarter GMP of 83 million to $90 million down 14% to 7% net.

Thomas J. Etergino: I expect these two changes should have a modest positive impact on take rates looking forward. Gross profit was $15 million, down 8%. Gross profit margins were 71%, up approximately 1 percentage point, primarily driven by lower operating headcount related expenses as a result of our restructuring initiatives and lower shipping expenses. Sales and marketing expenses were $8.6 million, down 19%, driven by lower performance marketing spend and lower headcount related expenses as a result of our restructuring initiatives. Sales and marketing as a percentage of revenue was 41%, down from 46% a year ago. Technology development expenses were $4.4 million, down 22%, driven by lower headcount-related expenses, a result of our restructuring initiative. As a percentage of revenue, technology development was 21% down from 25%. General administrative expenses were $6.3 million, down 10%, driven primarily by savings from reducing our New York City real estate footprint. As a percentage of revenue, general administrative expenses were 30% flat year over year.

Net revenue of $20 6 million to $21 9 million.

Down, 7% to 1% and adjusted EBIT margin loss of minus 13% to minus 8%.

Our GMP guidance reflects continued macro headwinds, including shifting consumer behavior ongoing economic and geopolitical uncertainty and softness in the luxury housing market.

Year over year declines in traffic and <unk>, partially offset by conversion improvements with <unk> being the primary headwind and quarter to date order volumes that are down low single digits year over year.

Our revenue guidance reflects modest take rate expansion.

Number of factors, including updated commission tiers, a higher mix of orders under our commission break and instituting a minimum monthly subscription fee for new sellers.

Lastly, adjusted EBITDA margin guidance reflects gross margins in the range of 71% to 73%.

On a sequential basis, we expect operating expenses to increase modestly due to increased paid media spend and increased head count costs due to filling roles that were planned for in 2023.

Thomas J. Etergino: Lastly, provision for transaction losses was $800,000, 4% of revenue, down from 7%, primarily driven by a decrease in damage claims as a result of lower GMV, as well as new policies implemented in partnership with our carriers. In summary, total operating expenses were $20.1 million, down 19%, reflecting the benefits of restructuring. Adjusted EBITDA loss was $1.7 million compared to a loss of $4.5 million last year.

Annual Merit cycle and increased health care premiums. However from a margin perspective, we expect these increases to be offset by sequential revenue growth and lastly.

While we're not providing annual guidance. It is worth noting that our annual merit cycle goes into effect on March one so the full impact of higher salaries will be felt in the second quarter.

We exited 2023 with a leaner cost structure and a more nimble organization. Our P&L is showing the benefits of the actions we have taken over the past two years with head count and operating expenses is down roughly 20% and adjusted EBITDA margins up over 11 percentage points with our reengineer, our cost structure and streamlined operations, we are well positioned.

Thomas J. Etergino: Adjusted EBITDA margin was a loss of 8% versus a loss of 19% last year due to savings from restructuring, partially offset by lower revenue. These results reflect the actions we have taken since mid-2022 to reengineer our cost base. The point worth stressing is that these adjusted EBITDA margin improvements happened in the context of declining revenue. Moving to the balance sheet, we ended the quarter with a strong cash, cash equivalents, and short-term investments position of $139.3 million. Additionally, interest income increased to approximately $1.7 million, up from approximately $860,000 a year ago.

To realize significant operating leverage when revenue growth resumes. Thank.

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

Thank you as a reminder, desk a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

One moment for questions.

Our first question comes from Ralph <unk> with William Blair You May proceed.

Hi, good morning, Thanks for taking the question.

Just on the new pricing structure.

I think you've talked about all new seller has been a monthly subscription fee.

Maybe just kind of give some more perspective, what you are hearing from the new sellers coming on and maybe some of the sellers that are opting out of this have you seen them return under the new program with the first question a follow up.

Thomas J. Etergino: During the fourth quarter, we repurchased $2.1 million of shares under our $20 million Board Authorized Repurchase Program. Since inception in August 2023, we have repurchased $3.5 million of shares. Turning to the outlook, our guidance reflects quarter-to-date results and our forecast for the remainder of the period. We forecast first quarter GMV of $83 million to $90 million, down 14% to 7%.

Yes, its David here I think the context on this is in early 'twenty. Two we started testing a subscription plan.

<unk> sellers had the option of a zero dollar higher commission rate plan and what we found is that the the zero subscription fee sellers ended up posting a lot less than those who pay the subscription so on that basis. We just continue that plan in the fourth quarter, all new sellers as you pointed out are signing up.

Thomas J. Etergino: Net revenue of $20.6 million to $21.9 million, down 7% to 1%, and an adjusted EBITDA margin loss of minus 13% to minus 8%. RGMB guidance reflects continued macro headwinds, including shifting consumer behavior, ongoing economic and geopolitical uncertainty, and softness in the luxury housing market. Year-over-year declines in traffic and AOB, partially offset by conversion improvements, with AOB being the primary headwind, and quarter-to-date order volumes that are down low single digits year-over-year. Our revenue guidance reflects modest take rate expansion due to a number of factors, including updated commission tiers, a higher mix of orders under our commission break, and instituting a minimum monthly subscription fee for new sellers. Lastly, Adjusted EBITDA Margin Guidance reflects gross margins in the range of 71 to 73 percent, and on a sequential basis, we expect operating expenses to increase modestly due to increased paid media spend and increased headcount costs due to filling roles that were planned for in 2023, our annual merit cycle, and increased health care premiums. However, from a margin perspective, we expect these increases to be offset by sequential revenue growth And lastly, while we are not providing annual guidance, it is worth noting that our annual merit cycle goes into effect on March 1st, so the full impact of higher salaries will be felt in the second quarter.

Under a minimum of $99 a month plan, however, existing sellers already on the central seller plan zero subsidy plan do you have the option at renewal.

<unk>.

Continuing with that subject to hitting posting minimums.

I think the sort of main learning that we got out of all of that is that paying a sub fee increases engagement.

So I think it will end up being a win win will get more engagement and sub fees will be healthier.

Great and then just a follow up here.

Talked about AB testing, increasing and accelerating testing philosophy velocity overall.

I think it sort of highlighted a number of new features maybe sort of I don't know.

Highlight the top one or two new features youre seeing success with it and then just a bolt on just confirm I think I heard.

Gross margins for Q1, and 71% 73% range just wanted to confirm those two items. Thank you.

Sure. So on the first question, Yes, we are pleased with this new AB testing methodologies, we put the number of tests you put on the market in the fourth quarter was up something like 300% year over year. So it allows us to get a lot more stuff in the market.

Only those features that passed the instrumentality task gratulate into general availability and we do think that those.

That coupled with a pullback on the least efficient tiers of paid spend.

Are the two primary drivers of our conversion growth, which is the first time, we've seen that in over two years.

Tom do you want to talk about gross margin, yes, so youre.

Youre correct the guidance for Q1 is 71% to 73%.

Again Q4 was 71%.

And we're expecting somewhere between.

In that range that we gave him by the way just I realize I didn't answer one part of your question. The primary area of focus in Q3 Q4 was in checkout.

Thomas J. Etergino: We exited 2023 with a leaner cost structure and a more nimble organization. Our P&L is showing the benefits of the actions we have taken over the past two years, with headcount and operating expenses down roughly 20%, and adjusted EBITDA margins up over 11% With our reengineered cost structure and streamlined operations, we are well positioned to realize significant operating leverage when revenue growth resumes. Thank you for your time.

But we have a multi step checkout prior order path and so that's just one of several kind of targeted rich areas for conversion growth.

Alright, great. Thank you.

Thank you.

One moment for questions.

Our next question comes from Mark Mahaney with Evercore ISI you May proceed.

Hey, this is Luke on for Mark.

Looking into 2024, what are some of the signals that would show that demand is starting to come back and then will you turn back to focusing on things like auctions on international growth when the macro improves thanks.

Operator: I will now turn the call over to the operator to take your questions. Thank you. As a reminder, to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again.

Sure. So look I mean, we're very encouraged actually by what we're seeing in terms of demand I think most encouraging is that on a dollar basis at the midpoint of our Q1 <unk> guidance Q1 would be the third quarter in a row of flat sequential GMB. So obviously if that if you extrapolate that.

Operator: One moment for questions. Our first question comes from Ralph Schackart with William Blair. You may proceed. Good morning.

That has a meaningful impact on changing the historical trajectory of our GMB growth.

Ralph Edward Schackart: Thanks for taking the question. I guess just on the new pricing structure, where I think you talked about all new sellers being on a monthly subscription fee, maybe just kind of give some more perspective on what you're hearing from the new sellers coming on, and maybe some of the sellers that are opting out of this, you know, have you seen them return under the new program? That'd be the first question I'd follow up on. Yeah, it's David here.

Quarter to date also in the first quarter. Another encouraging data point order volumes are down low single digits and thats compared to of course, the double digit decrease in order volume for both the full year 2003, and the last quarter in Q4.

So I think again on that basis, I don't know if I'm going to sit here and call a bottom, but I mean, it does feel like things are moving in the right direction.

Got it thank you auction of international.

David S. Rosenblatt: I think, you know, the context on this is that in early 22, we started testing a subscription plan under which sellers had the option of a $0 higher commission rate plan. And what we found is that the zero subscription fee sellers ended up posting a lot less than those who paid for a subscription. So on that basis, we discontinued that plan in the fourth quarter; all new sellers, as you pointed out, are signing up under a minimum of a $99 a month plan. However, existing sellers already on the central seller plan, the zero sub fee plan, do have the option at renewal of continuing with that, subject to hitting posting minimums.

As part of our re org and cost reduction effort in mid year of last year, we pulled dedicated resources on auction international in favor of allocating them on the basis of a platform wide ROI.

So things like checkout, which I mentioned that affect all users rather than only those an auction or a kind of international order past that.

Said, both are doing well I mean, we remain committed to both both are a strategically important auctions for example in the first or sorry in the fourth quarter.

On an order volume basis, which is the metric we optimize to grew 7%, which is about 17 percentage points faster than the overall order growth in the marketplace.

International grew up in the four localized markets that we've prioritized grew both order volume and traffic.

Traffic and CMV by double digits. So while we don't have dedicated resources on those two initiatives. They are priorities. They do benefit from all the other stuff that we do.

And we are seeing positive traction.

Ralph Edward Schackart: You talked about A-B testing, increasing and accelerating testing velocity overall, and I think you sort of highlighted a number of new features. Maybe, sort of, I don't know, highlight the top one or two new features you're seeing success with. And then, just to bolt on, just confirm, I think I heard gross margins for Q1 were in the 71 to 73% range. I just want to confirm those two items.

Thank you.

Okay.

Thank you and as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced one moment for questions.

Our next question comes from Nick Jones with citizens JMP you May proceed.

Hey, Good morning, guys. This is Tim on for Nick just two quick ones, if we could hear.

Just wondering if you could talk a little bit in terms of like a high level of what youre seeing kind of in terms of I know you mentioned.

David S. Rosenblatt: Thank you. Sure. So on the first question, yeah, we are pleased with this new A-B testing methodology. We put, you know, the number of tests we put in the market in the fourth quarter was up something like 300% year over year. So it allows us to get a lot more stuff in the market. And only those features that pass the incrementality test graduate into general availability.

Demand has been improving a little bit can you just talk about kind of on a regional basis.

Hearing from a lot of companies out there that things over in Europe are not quite as strong as here in the U S.

Wondering if you could kind of break that kind of out for us in terms of just.

High level, just kind of a regional stuff and then just one follow up I forgot.

Yes, I mean, we havent seen significant difference between the regions, but it's also the case that we're so focused on conversion and we have a low enough base that it may be that the improvements, we're making to the product.

David S. Rosenblatt: And, you know, we do think that those, coupled with a pullback on the least efficient tiers of paid spend, are the two primary drivers of our conversion growth, which is, you know, it's the first time we've seen that in over two years. Tom, do you want to talk about gross margin? Yeah, so you're correct.

Watching out regional differences I really don't know, but I mean, I think the kind of summary, there is we don't see any clear discernible difference.

Either on the buyer or the seller side among the regions.

Okay.

Okay I appreciate that and then just double clicking on conversion real quick.

Thomas J. Etergino: The guidance for Q1 is 71 to 73%. Again, Q4 was 71%. And yeah, we're expecting somewhere between that range that we gave.

News to see that conversion is improving here.

Back to positive.

Talk a little bit about <unk>.

Traffic mix in terms of how you guys have been trending.

For direct traffic versus like indirect and patriotic. Thanks.

So we think about it mostly in terms of paid versus organic organic traffic is declining and it's been under pressure.

David S. Rosenblatt: And by the way, I realized I didn't answer one part of your question. The primary area of focus in Q3, Q4 was in checkout. But, you know, we have a multi-step checkout or order path. And so that's just one of several kinds of target rich areas for conversion growth. All right, great.

We feel like we're indexing pretty well to all of the home.

Traffic data points that we have so we don't feel like it's it's a market share issue, we feel like it's more of a macro issue.

In terms of organic versus paid.

Ralph Edward Schackart: Thank you. [inaudible] One moment for questions. Our next question comes from Mark Mahaney with Evercore ISI. You may proceed. Hey, this is Luke on behalf of Mark.

We're actually quite happy with some of the advancements we've made in terms of both our methodology and kind of spend targeting and so on and we've been able to increase spend.

Mark Stephen F. Mahaney: Looking into 2024, what are some of the signals that would show that demand is starting to come back? And then will you turn back to focusing on things like auctions and international growth when the macro improves? Sure.

Versus while still maintaining kind of remaining faithful to our ROI cost per new thresholds.

Helpful. Thank you so much.

Thank you. This concludes the conference call. Thank you for your participation you may now disconnect.

David S. Rosenblatt: So, look, I mean, we're very encouraged, actually, by what we're seeing in terms of demand. But, what's most encouraging is that, on a dollar basis, at the midpoint of our Q1 GMV guidance, Q1 would be the third quarter in a row of flat sequential GMV. So, you know, obviously, if you extrapolate that out, that has a meaningful impact on changing the historical trajectory of our GMV growth. Quarter to date, also in the first quarter, another encouraging data point, order volumes are down low single digits, and that's compared to, of course, the double digit decrease in order volume for both the full year of 23 and the last quarter of Q4. You know, so on that basis, I don't know if I'm going to sit here and call it a day. But I mean, it does feel like things are moving in the right direction. I got it.

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David S. Rosenblatt: Thank you. Auction International. So, you know, as part of our reorg and cost reduction effort mid-year last year, we pulled dedicated resources from Auction International in favor of allocating them on the basis of platform-wide ROI. So things like checkout, which I mentioned, that affect all users rather than only those in auction or kind of international order paths. That said, both are doing well.

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David S. Rosenblatt: I mean, we remain committed to both because both are strategically important. Auctions, for example, in the fourth quarter, you know, on an order volume basis, which is the metric we optimized to, grew 7%, which is about, what, 17 percentage points faster than the overall order growth in the marketplace. International, you know, grew in the four localized markets that we prioritized, grew both order volume and GM, or sorry, traffic and GMV by double digits. So while we don't have dedicated resources for those two initiatives, they are priorities. They do benefit from all the other stuff that we do.

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David S. Rosenblatt: And, you know, we are seeing positive traction. Thank you. Thank you.

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Operator: And as a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. One moment for questions. Our next question comes from Nick Jones with Citizens JMP. You may proceed. Hey, morning, guys. This is Tim on for Nick.

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Nicholas Freeman Jones: Just two quick ones, if we could just get this straight. Just wondering if you could talk a little bit on terms of like a high level, 1Stdibs.com [inaudible] Yeah, I mean, we haven't seen significant differences between the regions. But it's also the case that, you know, we're so focused on conversion that it, and we have a low enough base that it may be that the improvements we're making to the product, you know, we're sort of washing out the regional differences. I really don't know. But I think the kind of summary there is that we don't see any clear discernible difference, either on the buyer or the seller side, among the regions. I appreciate that. And just double-click on conversion real quick.

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David S. Rosenblatt: Great news to see that conversion is improving here. Can you talk a little bit about traffic mix in terms of how you guys have been trying to, 1Stdibs.com Yeah, so we think about it mostly in terms of paid versus organic, you know, organic traffic is declining, and it's been under pressure. You know, we feel like we're indexing pretty well to all the home kind of traffic data points that we have.

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David S. Rosenblatt: So we don't feel like it's a market share issue; we feel like it's more of a macro issue. You know, in terms of organic versus paid, we're actually quite happy with some of the advancements we've made in terms of both our methodology and kind of spend targeting and so on. And we've been able to increase spend, you know, versus while still maintaining, you know, kind of remaining faithful to our ROI cost per new threshold. Thank you.

Okay.

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Operator: This concludes the conference call. Thank you for your participation. You may now disconnect.

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Kevin James LaBuz: Thomas Etergino, Luke Meindl, Kevin LaBuz, Steven McDermott, Unknown Executive, Luke Meindl, 1Stdibs.com, Good morning and welcome to 1Stibs' earnings call for the quarter and year ended December 31st, 2022. I'm Kevin LaBuz, Head of Investor Relations and Corporate Development. Joining me today are Chief Executive Officer David Rosenblatt and Chief Financial Officer Tom Etergino. David will provide an update on our business, including our strategy and growth opportunities, and Tom will review our fourth quarter financial results and first quarter outlook. This call will be available via webcast on our Investor Relations website at investors.1stdibs.com.

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Kevin James LaBuz: Before we begin, please keep in mind that our remarks include forward-looking statements, including, but not limited to, statements regarding guidance and future financial performance. Market Demand. Growth Prospects. Business plan. Strategic Initiatives, Business and economic trends, including e-commerce growth rates and our potential responses to them. International Opportunities and Competitive Positions. Our actual results may differ materially from those expressed or implied in these forward-looking statements as a result of risk and uncertainty, including those described in our SEC filing. Any forward-looking statements that we make on this call are based on our beliefs and assumptions as of today, and we disclaim any obligation to update them, except to the extent required by law. Additionally, during the call, we will present GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings report, which you can find on our Investor Relations website, along with the replay of this call.

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David S. Rosenblatt: Lastly, please note that all growth comparisons are on a year-over-year basis unless otherwise noted. I'll now turn the call over to our CEO, David Rosenblatt. [inaudible] Thanks, Kevin. Good morning, and thank you for joining us today.

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David S. Rosenblatt: Throughout 2023, we laid the groundwork for future success. While there is no denying that high-end furniture demand has been under pressure for the past two years, we have used this period to reorganize our business. We have undertaken rigorous efforts to optimize our operations, re-engineer our cost structure, and focus our efforts on a narrower set of priorities, laying a strong foundation for future growth and profit. Encouragingly, we are starting to see tangible results.

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David S. Rosenblatt: For example, in the fourth quarter, conversion rates increased for the first time since late 2021. In many respects, 2023 was a continuation of the efforts we started in the second half of 2022 to recalibrate our expense, reprioritize our roadmap, reduce our cash burn, and accelerate our path to profitability. While category demand remains subdued, and GMB growth is far from where we would like it to be, we have made meaningful progress on all of these.

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David S. Rosenblatt: First, by reorganizing our operations teams and finding other efficient processes, we expanded gross margins from the high 60s to the low 70s. Notably, this happened on lower revenue. Second, we took decisive action to align our expenses with demand and reorganize our business. For example, we reduced headcount, increased performance marketing efficiency thresholds, and downsized our New York City real estate footprint. As a result of these and other actions, year-end headcount was down over 20%, and fourth-quarter operating expenses were down 19%.

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Good day and thank you for standing by welcome to the first Dibs Q4 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session. Please press star one on your telephone and wait for your name to be announced to it.

Draw. Your question. Please press Star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Kevin Lavage head of Investor Relations and corporate development.

Good morning, and welcome to first Dibs earnings call for the quarter and year ended December 31st 2023.

I am Kevin <unk> head of Investor Relations and corporate development.

Joining me today are Chief Executive Officer, David Rosenblatt, and Chief Financial Officer, Tom <unk>.

David will provide an update on our business, including our strategy and growth opportunity.

And Tom will review, our fourth quarter financial results and first quarter outlook.

This call will be available via webcast on our Investor Relations website at investors Dot first dibs dot com.

Before we begin please keep in mind that our remarks include forward looking statements, including but not limited to.

David S. Rosenblatt: We expect this to be on full display when revenue grows. Third, we refined and refocused our product roadmap. Having fewer resources necessitated a narrower aperture and shifting resources away from areas where returns were further afield, like auctions and international expansion, to areas where payoffs are expected to be more immediate, like checkout and seller experience. The underlying logic is that the highest return investments we can make are on platform-wide products. Today, we are focused on the handful of areas that we believe represent our highest ROI opportunities, which I will detail below. We have also revamped our A-B testing infrastructure and accelerated our testing velocity. 1Stdibs has always been experimental and data-oriented, but we are moving faster today.

Statements regarding guidance and future financial performance.

Demand growth prospects.

Business plans and strategic initiatives.

And economic trends, including ecommerce growth rates and our potential responses to them.

International opportunities and competitive position.

Our actual results may differ materially from those expressed or implied in these forward looking statements as a result of risks and uncertainties, including those described in our SEC filings.

Any forward looking statements that we make on this call are based on our beliefs and assumptions as of today and we disclaim any obligation to update them, except to the extent required by law.

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

Lastly, please note that all growth comparisons are on a year over year basis, unless otherwise noted.

I'll now turn the call over to our CEO, David Rosenblatt David.

Thanks, Kevin Good morning, and thank you for joining us today.

David S. Rosenblatt: Since inception in mid-August, we have opportunistically repurchased $3.5 million, or approximately 820,000 shares. While much has changed in our business throughout the past two years, our financial goals have not. Over time, our objective is to deliver sustainable revenue growth, expand the market, become profitable, and ultimately grow free cash flow per share. Moving to the fourth quarter, we deliver GMV at the midpoint of guidance and revenue and adjusted EBITDA at the highest. Similar to the third quarter, traffic and Average Order Value were headwinds to GMC, partially offset by conversion rates, particularly from returning buyers. As I noted above, after seeing client moderate for five consecutive quarters.

Encouragingly, we are starting to see tangible results for example in the fourth quarter conversion rates increased for the first time since late 2021.

In many respects 2023 was a continuation of the efforts we started in the second half of 2022 to recalibrate, our expenses Reprioritise, our roadmap reduce our cash burn and accelerate our path to profitability.

While category demand remains subdued and GMB growth is far from where we would like it to be we have made meaningful progress on all of these fronts.

First by reorganizing our operations teams and finding other efficiencies we expanded gross margins from the high <unk> to the low seventies, notably this happened on lower revenue.

As a result of these and other actions year end head count was down over 20% and fourth quarter operating expenses were down 19%.

David S. Rosenblatt: Competitive Inventory Pricing, and Scalability and Order, which I will briefly preview. All of these ultimately roll up to driving conversion and operations. The 1Stdibs Marketplace is home to over 1.7 million of the world's most beautiful items.

The benefit of this lower cost structure are showing up in our P&L.

Adjusted EBITDA margins in the second half of 2023 were negative eight 4% compared to negative 21, 7% in the second half of 2022.

In dollar terms adjusted EBITDA improved to negative $3 $5 million in the second half of 2023 from negative $9 $9 million in the second half of 2022.

David S. Rosenblatt: Personalized and frictionless buying means making it easier for shoppers to find the perfect item. This spans improving item discovery to making it easier to complete a purchase by reducing checkout friction after finding that special item. Optimizing our make-offer flow is an example of a project in this workstream that we are focused on in the first half of the year. Purchases on 1Stdibs are highly considered. Many involve back-and-forth communications or negotiations between buyer and seller.

This improvement occurred at a time when revenue declined approximately 9%.

David S. Rosenblatt: In fact, over 40% of orders originate as buyer-initiated negotiations. As such, optimizing the make-offer process has the potential to lift conversion and order volume. Competitive Inventory Pricing is our second objective. The objective here is to ensure that listings are transparently and competitively priced. To do this, we are giving sellers more insights and tools to list their items at the market clearing price. For example, we will soon be launching a test of our Listings Optimization Score and Seller Recommendation Pitch. This provides sellers with data-driven recommendations aimed at improving sell-through. For example, depending on item attributes and the performance of similar listings, we might recommend that the seller reduce the product price, move the item from marketplace to auction, or add more.

Said another way the changes we made over the past two years increase our operating leverage potential.

We expect this to be on full display when revenue growth resumes.

Third, we refined and refocused our product roadmap, having fewer resources necessitated a narrower aperture and shifting resources away from areas, where returns were further afield like auctions and international expansion to areas, where payoffs are expected to be more <unk>.

Media like checkout and seller experience.

The underlying logic is that the highest return investments we can make our on platform wide product changes.

Today, we are focused on the handful of areas that we believe represent our highest ROI opportunities, which I will detail below.

We also revamped our a b testing infrastructure and accelerated our testing velocity.

<unk> has always been experimental and data oriented, but we are moving faster today, while it is still early there have been some encouraging developments in this regard.

David S. Rosenblatt: Success here looks like sellers adopting our recommendations, ultimately driving more acquisition. Lastly, scalability and order retention are about streamlining processes to improve. Focused projects here include optimizing our operation and Enhancing the Performance of Our Tech Platform. Success here means growing our GMV and revenue well in excess of our cost. During the fourth quarter, we started rolling out our 1Stibs parcel rates and labels. This suite of tools gives sellers complete control to select the best shipping methods for their business, with our seamless integration of calculated shipping costs.

We are releasing a high number of new features into the market and we believe this is contributing the conversion improvements.

In the fourth quarter conversion rates increased year over year for the first time since the third quarter of 2021.

Fourth based on the strength of our balance sheet confidence in our prospects the value of our strategic assets and the disconnect between market prices and our assessment of intrinsic value.

We initiated a $20 million share repurchase program.

Since inception in mid August we have opportunistically repurchased $3 5 million or approximately 820000 shares.

David S. Rosenblatt: Competitively priced shipping labels and automated tracking for parcel shipping, which account for approximately 70% of our shipping. In addition to giving sellers more control, once fully implemented, we expect these tools to reduce the load on our operations. Lastly, turning to supply, we were pleased with double-digit listings growth despite the soft demand environment. In this quarter, we revised our approach to seller acquisition and monetization. A lesson from our Essential Seller Test was that subscription-paying sellers had higher needs.

While much has changed in our business throughout the past two years, our financial goals have not.

Over time, our objective is to deliver sustainable revenue growth expand margins become profitable and ultimately grow free cash flow per share.

Moving to the fourth quarter, we delivered <unk> at the midpoint of guidance on revenue and adjusted EBITDA at the high end similar to the third quarter traffic and average order value were headwinds to GMP, partially offset by conversion rate improvements, particularly from returning buyers.

As I noted above after seeing declines moderate for five consecutive quarters conversion rates returned to growth for the first time since the third quarter of 2021.

David S. Rosenblatt: For example, the central sellers accounted for about half of our sellers, but only approximately 10% of list sellers. As a result, we instituted a new pricing structure whereby all newly acquired sellers will pay a monthly subscription, while allowing existing essential sellers who meet inventory posting requirements to continue with this subscription-free. We will continue to monitor this and adapt our pricing and acquisition accordingly. We have also updated our commission peers for high-value organizations as a consequence of these changes.

Lastly, supply remained healthy with listings up 12%.

As we look towards 2024, our focus is on reinvigorating growth, while maintaining our leaner cost structure.

Our roadmap centers on three themes personalized and frictionless buying competitive inventory pricing and scalability in order retention, which I will briefly preview.

All of these ultimately roll up to driving conversion and operating leverage.

The first dibs marketplace is home to over $1 7 million of the world's most beautiful items.

Personalized and frictionless buying means making it easier for shoppers to find the perfect piece.

This spans improving item discovery to making it easier to complete a purchase by reducing checkout friction after finding that special item.

Optimizing our make offer flow is an example of a project in this work stream that we're focused on in the first half of the year.

David S. Rosenblatt: As conditions change, we respond. We have taken actions to reduce our cost structure, lower our cash burn, Channel Our Focus on the Highest ROI Project, and opportunistically return capital to shareholders while we continue to navigate through market software. I am encouraged by the progress we have made.

Purchases on first dibs or highly considered many involves back and forth communications. We're in negotiations between buyer and seller in fact over 40% of orders originate as buyer initiated negotiations as such optimizing the make offer process has the potential to lift convert.

David S. Rosenblatt: Steps we have taken to reduce costs and sharpen our focus are beginning to yield results, as evidenced by our progress towards breakeven and improving conversion. As we move forward, we remain committed to adopting the market dynamic, maintaining cost-reaccelerating growth and doing so in a capital-efficient manner. Thank you for your continued support. I will now turn it over to Tom to review our fourth quarter financial results and first quarter outlook. Thanks, David.

<unk> and order volumes.

For example, we will soon be launching a test of our listings optimization score and seller recommendation page.

This provides sellers with data driven recommendations aimed at improving sell through and conversion.

Success here looks like sellers adopting our recommendations ultimately driving more conversion.

Lastly, scalability in order retention is about streamlining processes to improve efficiency.

Focused projects here include optimizing our operational teams and enhancing the performance of our tech platform.

Success here is growing our <unk> and revenue well in excess of our cost.

Thomas J. Etergino: Turning to fourth-quarter results, we delivered GMV at the midpoint of guidance and revenue and adjusted EBITDA margins at the high end. GMV was $86.4 million, down 17% due to soft demand for luxury home goods and high-end discretionary items. During the quarter, traffic was the primary driver of order softness consistent with the third quarter. Both paid and non-paid traffic were down year over year.

Per parcel shipments, which account for approximately 70% of our shipping volume.

In addition to giving sellers more control once fully implemented we expect these tools to reduce the load on our operations teams.

Lastly, turning to supply we were pleased with double digit listings growth despite the soft demand environment.

Thomas J. Etergino: Traffic declines were partially offset by conversion improvements. As David mentioned, conversion rates returned to positive growth for the first time since the third quarter of 2021. This was driven by growth in returning buyer conversion and moderating declines in new buyer conversion. Since mid-2023, we have ramped up our A-B testing velocity and launched more product enhancements into production. We believe this is helping Converge. However, average order values were another headwind to GMB growth. The average order value of approximately $2,530 was down 7%. In contrast, our median order value of approximately $1,150 was flat. The latter metric is less sensitive to fluctuations in high value orders.

And this quarter, we revised our approach to seller acquisition that modernization.

We will continue to monitor this and adapt our pricing in acquisition accordingly.

We also updated our commission tiers for high value orders is.

As a consequence of these changes we would expect to see some volatility in seller account through mid 2024. However, during this period, we expect to see continued listings growth.

In closing despite the challenges we have faced over the past two years I am proud to say that we have remained resilient and have not shied away from difficult decisions as conditions.

Thomas J. Etergino: Orders under $1,000 accounted for 47% of total orders in the quarter, flat year over year. However, we did see orders over $100,000 account for approximately 3% of GMV, towards the low end of its historical range of 3% to 5%. We also saw fewer orders in the $20,000 to $100,000 range. While the fourth quarter is our seasonally weak quarter for AOV due to gifting, we believe these trends signify lingering consumer hesitancy around discretionary categories and big-ticket purchases. Consumer and trade GMB both grew at similar rates.

<unk> changed we responded.

We have taken actions to reduce our cost structure lower our cash burn channel our focus on the highest ROI projects and Opportunistically return capital to shareholders.

While we continue to navigate through market softness I am encouraged by the progress we have made the steps we have taken to reduce costs and sharpen our focus are beginning to yield results.

As evidenced by our progress towards breakeven and improving conversion rates.

As we move forward, we remain committed to adapting to market dynamics, maintaining cost discipline re accelerating growth and doing so in a capital efficient manner.

Thank you for your continued support.

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

Thanks, David over the past two years, we have taken significant action to streamline our business and reengineer our cost structure in the fourth quarter. The benefits of this work were on full display with head count and operating expenses down materially and adjusted EBITDA margins improving meaningfully.

Thomas J. Etergino: Vintage and antique and new and custom furniture were the top performers. This was a change in trend from recent quarters when at-home categories underperformed. We ended the quarter with approximately 60,700 active buyers, down 10%. [inaudible] On the supply side of the marketplace, we closed the quota with over 9,200 seller accounts, up 25%. Additionally, there are now over 1.7 million listings on the marketplace, up 12%. Looking forward, we will report a unique seller number. In the fourth quarter, we had approximately 7,800 unique sellers, up from approximately 5,600 a year ago. This differs from the seller count, which counts a unique seller multiple times if that seller has sales in multiple verticals. For example, if a seller sells in two verticals, they will count as two seller counts, but only one unique seller.

<unk> made significant strides towards improving our financial health and positioning ourselves for future success.

As we've mentioned before given the operating margin leveraging our two sided marketplace business model, we expect revenue growth to be the primary driver of margin expansion from here as such we are focusing our existing resources on re accelerating growth in a capital efficient manner.

Turning to fourth quarter results, we delivered <unk> at the midpoint of guidance and revenue and adjusted EBITDA margins at the high end.

JMP was $86 $4 million down 17% due to soft demand for luxury home goods and high end discretionary items.

During the quarter traffic was the primary driver of order softness consistent with the third quarter trends, both paid and non paid traffic were down year over year traffic declines were partially offset by conversion improvements as David mentioned conversion rates returned to positive growth for the first time since the third quarter of 2021.

This was driven by growth in returning buyer conversion and moderating declines in new buyer conversion.

Thomas J. Etergino: Historically, the difference between seller counts and unique sellers is approximately 1,500 per quarter. This change has no impact on the number of listings. Turning to the P&L, net revenue was $20.9 million, down 9% but up 1% sequentially. Transaction revenue, which is tied directly to GMB, was roughly 70% of revenue, with subscriptions making up most of the remainder. Take rates improved modestly due to the combination of several factors, including growing GMV contribution from essential sellers, which carry a higher commission rate, a higher proportion of orders below our $25,000 commission break, and a revised commission break structure that went into effect during the quarter. Going a bit deeper on monetization, during the quarter, we refreshed our commission tiers and paused the Essential Seller Program, which carried no monthly subscriptions. Currently, all new sellers will be required to pay a multi-subscription fee.

Since mid 2023, we have ramped our a b testing velocity and launch more product enhancements into production. We believe this is helping conversion.

Average order values were another headwind cgmp growth average order value of approximately $2530 was down 7%. In contrast, our median order value of approximately $1150 was flat.

The latter metric is less sensitive to fluctuations in high value orders.

Taking deeper.

Orders under $1000 accounted for 47% of total orders in the quarter.

That year over year. However, we did see orders over $100000 account for approximately 3% of GMP towards the low end of its historical range of 3% to 5%.

Consumer and trade JMP both grew at similar rates, we continue to hear feedback from the trade that is consistent with previous quarters that is where clients are pulling back slightly due to economic uncertainty and rising cost desires are still actively working on projects and building out the pipeline.

Turning on your verticals <unk>, a new custom furniture were the top performers. This was a change in trends of recent quarters, we're at home categories underperformed.

We ended the quarter with approximately 60700 active buyers down 10%.

We expect this metric to me you mean choppy near term as we manage through a period of soft demand.

On the supply side of the marketplace, we closed the quarter with over 9200 seller accounts up 25%. Additionally, there are now over $1 7 million listings on our marketplace up 12%.

Looking forward, we will report our unique seller number in the fourth quarter. We had approximately 7800 unique sellers up from approximately 5600 a year ago.

Historically the difference between seller accounts and unique sellers is approximately 1500 per quarter. This change has no impact on listing count.

Turning to the P&L net.

Net revenue was $20 9 million down, 9%, but up 1% sequentially.

<unk>, which is tied directly to GMB was roughly 70% of revenue with subscriptions, making up most of the remainder.

Take rates improve modestly due to the combination of several factors, including growing GMP contribution from our central sellers, which carry a higher commission rate a higher proportion of orders below our $25000 Commission break and revised commission break structure that went into effect during the quarter.

Going a bit deeper monetization during the quarter, we refreshed our commission tiers and pause essential solid program, which carried no monthly subscription currently all new sellers will be required to pay a monthly subscription fee we.

We expect these two changes should have a modest positive impact on take rates looking forward.

Gross profit was $15 million down 8%.

Gross profit margins were 71% up approximately one percentage point, primarily driven by lower operations head count related expenses, obviously health of our restructuring initiatives and lower shipping expenses.

Thomas J. Etergino: These results reflect the actions we have taken since mid-2022 to re-engineer our cost base. The point worth stressing is that these adjusted EBITDA margin improvements happened in the context of declining revenue. Moving to the balance sheet, we ended the quarter with a strong cash, cash equivalents, and short-term investments position of $139.3 million. Additionally, interest income increased to approximately $1.7 million, up from approximately $860,000 a year ago. During the fourth quarter, we repurchased $2.1 million of shares under our $20 million Board Authorized Repurchase Program.

Sales and marketing expenses were $8 $6 million down, 19% driven by lower performance marketing spend and lower headcount related expenses as a result of our restructuring initiatives.

Sales and marketing as a percentage of revenue was 41% down from 46% a year ago.

Technology development expenses were $4 4 million down 22% driven by lower head count related expenses, a result of our restructuring initiatives.

As a percentage of revenue technology development was 21% down from 25%.

General and administrative expenses were $6 $3 million down, 10%, driven primarily by savings from reducing our New York City real estate footprint.

Thomas J. Etergino: Since inception in August 2023, we have repurchased $3.5 million of shares. Turning to the outlook, our guidance reflects our quarter-to-date results and our forecast for the remainder of the period. We forecast first quarter GMV of $83 million to $90 million, down 14% to 7%. Net revenue of $20.6 million to $21.9 million, down 7% to 1%, and adjusted EBITDA margin loss of minus 13% to minus 8%.

As a percentage of revenue general and administrative expenses were 30% flat year over year.

Down, 19%, reflecting the benefits of restructuring.

Adjusted EBITDA loss was $1 $7 million compared to a loss of $4 $5 million last year adjusted.

Adjusted EBITDA margin was a loss of 8% versus a loss of 19% last year due to savings from restructuring, partially offset by lower revenue.

Thomas J. Etergino: Our GMB guidance reflects continued macro headwinds, including shifting consumer behavior, ongoing economic and geopolitical uncertainty, and softness in the luxury housing market. Year-over-year declines in traffic and AOB, partially offset by conversion improvements, with AOB being the primary headwind, and quarter-to-date order volumes that are down low single digits year-over-year. Our revenue guidance reflects modest take rate expansion due to a number of factors, including updated commission tiers, a higher mix of orders under our commission break, and instituting a minimum monthly subscription fee for new sellers. Lastly, adjusted EBITDA margin guidance reflects gross margins in the range of 71 to 73 percent, and on a sequential basis, we expect operating expenses to increase modestly due to increased paid media spend and increased headcount costs However, from a margin perspective, we expect these increases to be offset by sequential revenue growth. While we are not providing annual guidance, it is worth noting that our annual merit cycle goes into effect on March 1st.

These results reflect the actions we have taken since mid 2022 to reengineer our cost base.

Point worth stressing is that these adjusted EBITA margin improvements happened in the context of declining revenue.

Moving to the balance sheet, we ended the quarter with a strong cash cash equivalents and short term investment position of $139 3 million. Additionally.

Additionally, interest income increased to approximately $1 $7 million up from approximately $860000 a year ago.

Turning to the outlook our guidance reflects quarter to date results and our forecast for the remainder of the period, we forecast first quarter GMP of 83 million to $90 million down 14% to 7% net.

Net revenue of $20 6 million to $21 9 million down 7% to 1% and adjusted EBIT margin loss of minus 13% to minus 8%.

Our GMP guidance reflects continued macro headwinds, including shifting consumer behavior ongoing economic and geopolitical uncertainty and softness in the luxury housing market.

Thomas J. Etergino: So the full impact of higher salaries will be felt in the second quarter. We exited 2023 with a leaner cost structure and a more nimble organization. Our P&L is showing the benefits of the actions we have taken over the past two years, with headcount and operating expenses down roughly 20%, and adjusted EBITDA margins up over 11% With our reengineered cost structure and streamlined operations, we are well positioned to realize significant operating leverage when revenue growth resumes. Thank you for your time.

Our revenue guidance reflects modest take rate expansion.

Number of factors, including updated commission tiers, a higher mix of orders under our commission break and instituting a minimum monthly subscription fee for new sellers.

Lastly, adjusted EBITDA margin guidance reflects gross margins in the range of 71% to 73%.

On a sequential basis, we expect operating expenses to increase modestly due to increased paid media spend and increased head count costs due to filling roles that were planned for in 2023.

Annual Merit cycle and increased health care premiums. However from a margin perspective, we expect these increases to be offset by sequential revenue growth and lastly.

While we're not providing annual guidance. It is worth noting that our annual merit cycle goes into effect on March one so the full impact of higher salaries will be felt in the second quarter.

Operator: One moment for questions. Our first question comes from Ralph Schackart with William Blair. You may proceed. Good morning.

We exited 2023 with a leaner cost structure and a more nimble organization. Our P&L is showing the benefits of the actions we have taken over the past two years with head count and operating expenses is down roughly 20% and adjusted EBITDA margins up over 11 percentage points with our reengineering our cost structure and streamlined operations, we are well positioned.

To realize significant operating leverage when revenue growth resumes. Thank.

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

Thank you as a reminder, desk a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

One moment for questions.

Our first question comes from Ralph <unk> with William Blair You May proceed.

Hi, good morning, Thanks for taking the question I guess just on the new pricing structure, where I think you've talked about all new seller, it's been a monthly subscription fee maybe.

Maybe just kind of give some more perspective, what you're hearing from the new sellers coming on and maybe some of the sellers that are opting out of this have you seen them return under the new program with the first question a follow up.

Yes, its David here I think the context on this is in early 'twenty. Two we started testing a subscription plan.

<unk> sellers had the option of a zero dollar higher commission rate plan.

And what we found is that the the zero subscription fee sellers ended up posting a lot less than those who pay to subscription so on that basis, we discontinue that plan in the fourth quarter, all new sellers as you pointed out are signing up under a minimum of $99 a month plan, however, existing sellers already.

The central seller plan zero subsidy plan do you have the option at renewal.

<unk>.

Continuing with that subject to hitting posting minimums.

David S. Rosenblatt: And, you know, I think the sort of main learning that we got out of all that is that paying a subscription fee increases engagement. And, you know, so I think it'll end up being a win-win, we'll get more engagement, and subscription fees will be healthier. Great, and then a follow-up here. You talked about A-B testing, increasing and accelerating testing velocity overall, and I think you sort of highlighted a number of new features. Maybe sort of, I don't know, highlight the top one or two new features you're seeing success with, and then just to bolt on, just confirm: I think I heard gross margins for Q1 in the 71 to 73% range. I just want to confirm those two items.

I think the sort of main learning that we got out of all that is that paying a sub fee increases engagement.

So I think it will end up being a win win will get more engagement and sub fees will be healthier.

Great and then just a follow up here.

Talked about AB testing, increasing and accelerating testing philosophy velocity overall.

I think it sort of highlighted a number of new features maybe sort of I don't know.

Highlight the top one or two new features youre seeing success with it and then just a bolt on just confirm I think I heard.

Gross margins for Q1, and the 71% to 73% range just wanted to confirm those two items. Thank you.

David S. Rosenblatt: Thank you. Sure, so on the first question, yeah, we are pleased with this new A-B testing methodology. We put, you know, the number of tests we put into market in the fourth quarter was up something like 300% year-over-year. So it allows us to get a lot more stuff into market. And only those features that pass the incrementality test graduate into general availability.

Sure. So on the first question, Yes, we are pleased with this new AB testing methodology, we put the number of tests you put on the market in the fourth quarter was up something like 300% year over year. So it allows us to get a lot more stuff in the market only those features that passed the incrementals of the task gratulate into general availability.

David S. Rosenblatt: And you know, we do think that that, coupled with a pullback on the least efficient tiers of paid spend, are the two primary drivers of our conversion growth, which is, you know, the first time we've seen that in over two years. Tom, do you want to talk about gross margin? Yeah, so you're correct. The guidance for Q1 is 71 to 73%. Again, Q4 was 71%. And yeah, we're expecting somewhere between, in that range that we gave.

And we do think that those that that that coupled with a pullback on the least efficient tiers of paid spend.

Are the two primary drivers of our conversion growth, which is the first time, we've seen that in over two years.

Tom do you want to talk about gross margin, yes, so youre.

You are correct the guidance for Q1 is 71% to 73%.

Again Q4 was 71%.

And we're expecting somewhere between.

In that range that we gave him by the way just I realize I didn't answer one part of your question. The primary area of focus in Q3 Q4 was in checkout.

Thomas J. Etergino: Yeah, and by the way, I realized I didn't answer one part of your question. The primary area of focus in Q3, Q4 was in checkout. But you know, we have a multi-step checkout or order path. And so that's just one of several kind of target-rich areas for conversion growth. All right, great.

But we have a multi step checkout prior order path and so that's just one of several kind of targeted rich areas for conversion growth.

Alright, great. Thank you.

David S. Rosenblatt: Thank you. Thank you. One moment for questions. Our next question comes from Mark Mahaney with Evercore ISI. You may proceed. Hey, this is Luke on behalf of Mark.

Thank you.

One moment for questions.

Our next question comes from Mark Mahaney with Evercore ISI you May proceed.

Hey, this is Luke on for Mark.

David S. Rosenblatt: Sure. So, look, I mean, we're very encouraged, actually, by what we're seeing in terms of demand. I think most encouraging is that on a dollar basis, at the midpoint of our Q1 GMV guidance, Q1 would be the third consecutive quarter of flat sequential GMV. So, you know, obviously, if you extrapolate that out, that has a meaningful impact on changing the historical trajectory of our GMV growth. Quarter to date, also in the first quarter, another encouraging data point, order volumes are down low single digits, and that's compared to, of course, the double digit decrease in order volume for both the full year of 23 and the last quarter of Q4. You know, so I think again, on that basis, I don't know if I'm going to sit here and call the bottom. But I mean, it does feel like things are moving in the right direction.

Sure. So look I mean, we're very encouraged actually by what we're seeing in terms of demand I think most encouraging is that on a dollar basis at the midpoint of our Q1 <unk> guidance Q1 would be the third for a quarter in a row of flat sequential <unk>. So obviously if that if you extrapolate that out.

The full impact on changing the historical trajectory of our GMB growth.

So I think again on that basis, I don't know if I'm going to sit here and call a bottom, but I mean, it does feel like things are moving in the right direction.

Got it thank you auction of international.

As part of our re org and cost reduction effort in mid year last year, we pulled dedicated resources on auction international in favor of allocating them on the basis of platform wide ROI.

So things like checkout, which I mentioned that affect all users rather than only those an auction or international order past that.

David S. Rosenblatt: That said, both are doing well. I mean, we remain committed to both. Both are strategically important.

That said both are doing well I mean, we remain committed to both both are a strategically important auctions for example in the first or sorry in the fourth quarter.

David S. Rosenblatt: Auctions, for example, in the first or, sorry, in the fourth quarter, you know, on an order volume basis, which is the metric we optimized to, grew 7%, which is about, what, 17 percentage points faster than the overall order growth in the marketplace. International, you know, grew in the four localized markets that we prioritized, grew both order volume and GM, or sorry, traffic, and GMV by double digits So while we don't have dedicated resources for those two initiatives, they are priorities. They do benefit from all the other stuff that we do.

On an order volume basis, which is the metric we optimize to grew 7%, which is about 17 percentage points faster than the overall order growth in the marketplace.

International grew up in the four localized markets there'll.

We prioritize grew both order volume and traffic.

Traffic and CMV by double digits. So while we don't have dedicated resources on those two initiatives. They are priorities. They do benefit from all the other stuff that we do.

David S. Rosenblatt: And, you know, we are seeing positive traction. Thank you. Thank you.

And we are seeing positive traction.

Yeah.

Thank you.

Okay.

Thank you and as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced one moment for questions.

David S. Rosenblatt: And as a reminder, to ask a question, please press star one on your telephone and wait for your name to be announced. One moment for questions. Our next question comes from Nick Jones with Citizens JMP. You may proceed. Hey, morning guys. This is Tim on for Nick.

Our next question comes from Nick Jones with citizens JMP you May proceed.

Hey, Good morning, guys. This is Tim on for Nick.

Two quick ones, if we could hear.

Just wondering if you could talk a little bit in terms of like a high level of what youre seeing kind of in terms of I know you mentioned.

Nicholas Freeman Jones: Just two quick ones if we could here. Just wondering if you could talk a little bit about terms at a high level, 1Stdibs.com. 1Stdibs.com. I was wondering if you could kind of break that kind of out for us. Yeah, I mean, we haven't seen significant differences between the regions. But it's also the case that, you know, we're so focused on conversion that it, and we have a low enough base that it may be that the improvements we're making to the product, you know, we're sort of washing out the regional differences. I really don't know. But I mean, I think the kind of summary there is that we don't see any clear discernible difference, either on the buyer or the seller side, among the regions. I appreciate that. And just double-click on conversion to do it real quick.

Demand has been improving a little bit can you just talk about kind of on a regional basis.

Hearing from a lot of companies out there that things over in Europe are not quite as strong as here in the U S.

Wondering if you could kind of break that kind of out for us in terms of just.

High level, just kind of regional stuff and then just one follow up I forgot it.

Yes, I mean, we haven't seen significant difference between the regions, but it's also the case that we're so focused on conversion that and we have a low enough base that it may be that the improvements, we're making to the product that we're sort of watching out regional differences I really don't know, but I mean, I think the kind of summary.

There is we don't see any clear discernible difference.

Either on the buyer or the seller side among the regions.

Okay.

Okay I appreciate that and then just double clicking on conversion real quick.

David S. Rosenblatt: Great news to see that conversion is improving here. Can you talk a little bit about traffic mix in terms of how you guys have been trying to improve it? Yeah, so we think about it mostly in terms of paid versus organic traffic. You know, organic traffic is declining, and it's been under pressure. You know, we feel like we're indexing pretty well to all the home kind of traffic data points that we have. So we don't feel like it's a market share issue; we feel like it's more of a macro issue. You know, in terms of organic versus paid, we're actually quite happy with some of the advanced investments we've made in terms of both our methodology and kind of spend targeting and so on. And we've been able to increase spend, you know, versus while still maintaining, you know, kind of remaining faithful to our ROI cost per new, 1Stdibs.com. Thank you. This concludes the conference call. Thank you for your participation. You may now disconnect.

News to see that conversion is improving here.

Back to positive.

You talk a little bit about <unk>.

Traffic mix in terms of how you guys have been trending.

For direct traffic versus like indirect and patriotic. Thanks.

Yes, so we think about it mostly in terms of paid versus organic organic traffic is declining and it's been under pressure.

We feel like we're indexing pretty well to all of the home.

Traffic data points that we have so we don't feel like it's it's a market share issue, we feel like it's more of a macro issue.

In terms of organic versus paid.

We're actually quite happy with some of the advancements we've made in terms of both our methodology and kind of spend targeting and so on and we've been able to increase spend.

Versus while still maintaining kind of remaining faithful to our ROI cost per new thresholds.

Helpful. Thank you so much.

Thank you. This concludes the conference call. Thank you for your participation you may now disconnect.

Q4 2023 1stdibs.Com Inc Earnings Call

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