Q3 2024 1stdibs.Com Inc Earnings Call
Unknown Executive, Thomas Etergino, Kevin LaBuz
Unknown Executive, Thomas Etergino, Kevin LaBuz
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Good morning, ladies and gentlemen. This is your operator speaking. Today's conference call will begin momentarily. You will be placed back on music hold until then. Thank you for your patience.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Thank you for standing by. My name is John and I'll be your conference operator for today. At this time, I would like to welcome everyone to the FirstDeeps.com Inc.
Speaker Change: Third Quarter 2024 Earnings Conference Call. All lines have been placed in mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.
Speaker Change: I would now like to turn the call over to Kevin LaBuz, Head of Investor Relations and Corporate Development. Please go ahead. Kevin LaBuz I would now like to turn the call over to Kevin LaBuz, Head of Investor Relations and Corporate Development.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Good morning and welcome to First dibs earnings call for the quarter ended September 30th, 2024.
I'm Kevin LaBuz, Head of Investor Relations and Corporate Development.
Speaker Change: Joining me today are Chief Executive Officer David Rosenblatt and Chief Financial Officer Tom Etergino.
David Rosenblatt: David will provide an update on our business, including our strategy and growth opportunities.
David Rosenblatt: and Tom will review our third quarter financial results and fourth quarter outlook.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: This call will be available via webcast on our investor relations website at investors.firstdibs.com.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Before we begin.
Please keep in mind that our remarks include forward-looking statements.
Speaker Change: Including, but not limited to, statements regarding guidance and future financial performance
Market demand.
Growth Prospects.
Business plans
Strategic Initiatives
Business and economic trends, including e-commerce growth rates.
International Opportunities, and Competitive Position.
Speaker Change: Our actual results may differ materially from those expressed or implied in these forward-looking statements as a result of risk and uncertainties, including those described in our SEC filings.
Speaker Change: 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.
Speaker Change: Additionally, during the call, we will present GAAP and non-GAAP financial measures.
Speaker Change: A reconciliation of GAAP to non-GAAP measures is included in the state's earnings press release.
Speaker Change: which you can find on our Investor Relations website, along with the replay of this call.
Speaker Change: Lastly, please note that all growth comparisons are on a year-over-year basis, unless otherwise noted.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: I'll now turn the call over to our CEO, David Rosenblatt. David.
David Rosenblatt: Thanks, Kevin. Good morning, and thank you for joining us today.
David Rosenblatt: Third quarter results reflect continued improvements across our key focus areas.
David Rosenblatt: For the second consecutive quarter, we achieved year-over-year revenue growth, accelerating order growth, and sequential active buyer growth. We achieved this progress despite prolonged softness in the luxury housing market, which is experiencing the largest slump since the mid-1990s.
David Rosenblatt: Despite continued conversion gains and accelerating order growth, GMV contracted due to weaker-than-expected average order values, which we see as temporary. We anticipate returning to GMV growth in the fourth quarter, driven by further conversion gains and moderating AOV headwinds.
David Rosenblatt: Our adjusted EBITDA margins came in toward the low end of guidance. Relative to the second quarter, margin compression primarily reflects seasonally lower revenue as operating expenses remain flat sequentially.
David Rosenblatt: In the fourth quarter, we anticipate some additional margin compression due to seasonal increases in performance marketing. While margins will be down year over year, we are focused on improving efficiency and positioning the business for sustainable growth.
David Rosenblatt: Given the muted demand environment, we are focused on lowering the growth threshold required to achieve operating leverage. Our Preliminary 2025 plan targets generating operating leverage at mid-single-digit revenue growth.
Unknown Executive, Thomas Etergino, Kevin LaBuz
David Rosenblatt: Reviewing the third quarter, increasing conversion remains our operational priority and highest leverage activity.
David Rosenblatt: We maintain momentum here. Conversion rates have grown over the past year, and growth accelerated again in the third quarter. Encouragingly, these gains are broad-based, with new and returning buyers both seeing double-digit improvements.
David Rosenblatt: Additionally, returning buyer conversion hit another record high. Conversion wins fueled order growth, which increased to 7%.
Unknown Executive, Thomas Etergino, Kevin LaBuz
David Rosenblatt: Continuing with funnel dynamics, traffic headwinds were stable versus the second quarter, but AOV was softer than anticipated, depressing GMV. Tom will provide more detail later on, but based on quarter-to-day trends, we believe this dynamic will moderate in the fourth quarter.
David Rosenblatt: , , , , , , , , , , , , , ,
David Rosenblatt: Order growth and active buyer trends are accelerating at a time when the luxury housing market and high-end furniture sales remain soft. According to the National Association of Realtors, U.S. existing home sales are on track for their worst year since 1995 for the second year in a row.
David Rosenblatt: This is a cyclical issue, not a structural one. Although calling the timing of a recovery is difficult, demand for luxury homes and high-end furnishings will eventually rebound. When it does, we stand to benefit from our ongoing operational improvements and lower cost structure.
David Rosenblatt: However, we strongly believe in creating our own luck and are not waiting around for the market to recover. We demonstrated this in 2022 and 2023 by reducing operating expenses and narrowing our focus.
David Rosenblatt: We are demonstrating this today by accelerating our pace of product velocity and reallocating resources from lower return projects to higher return projects.
Unknown Executive, Thomas Etergino, Kevin LaBuz
David Rosenblatt: Regarding product velocity, the number of A-B tests we ran during the quarter grew double digits sequentially and triple digits year-over-year, hitting a new record.
David Rosenblatt: Increasing conversion was the primary focus of our tests and we had several notable wins. One was integrating urgency metrics into our mobile app product detail page, boosting the rate at which buyers placed orders.
David Rosenblatt: Another was incorporating pricing guidance into our make-offer flow, increasing the number of offers that converted into orders.
David Rosenblatt: Given the highly considered nature of our listings, many orders involve negotiations between buyer and seller.
David Rosenblatt: Because over 40% of orders originate as buyer-initiated negotiations, optimizing this process is a target-rich opportunity and will be an area of continued experimentation.
David Rosenblatt: Lastly, we launched our first machine learning based pricing model for furniture, providing stronger, more precise recommendations tailored to maximize conversion.
David Rosenblatt: Competitive inventory pricing is one of three focus areas on our product roadmap. To achieve this, we have a multi-pronged approach, ranging from enforcing price parity policies to incorporating machine learning based pricing recommendations.
David Rosenblatt: Despite recent gains, there is significant headroom to increase conversion, grow orders, and expand our active buyer base.
David Rosenblatt: For example, active buyers and new buyer conversion remain approximately 10% and 30% below their peaks.
David Rosenblatt: Given our long runway of opportunities, we expect to meaningfully outperform historical levels over time.
David Rosenblatt: Auctions is another area where we are not sitting still. After a thorough review, we decided to discontinue the feature in late September for two reasons.
David Rosenblatt: First, auctions was intended to induce sellers to price more competitively.
David Rosenblatt: We now have a roadmap that we believe will accomplish this more effectively and applies to all listings rather than only those in auction.
David Rosenblatt: Second, we determined that the resources allocated to the feature were not commensurate with its financial contribution and that they would be better deployed elsewhere.
David Rosenblatt: Approximately 10% of engineering time was spent working on auctions related projects, but it generated roughly 2% of GMV and 5% of orders.
David Rosenblatt: This move reduces complexity, making it faster to build new features, simpler to run tests, and easier to maintain existing features.
Unknown Speaker 0
David Rosenblatt: Supply is another area where we challenged assumptions and took action. After reviewing the initiative, we decided to retire the Essential Seller Program on November 1st.
David Rosenblatt: Launched in January 2022, the offering provided a subscription-free pricing option. This was a great tool for seller acquisition, but the bulk of these sellers did not engage deeply with the platform.
David Rosenblatt: Compared to subscription paying sellers, essential seller engagement was materially lower on a number of fronts, including listings, sales, and logins.
Unknown Executive, Thomas Etergino, Kevin LaBuz
David Rosenblatt: From our data, we know that engagement is a precursor to seller success. For instance, more listings correlates with more sales. As a result, in late 2023, we've shifted our seller acquisition strategy and monetization approach to concentrate on fewer but more highly engaged sellers.
David Rosenblatt: Retiring the Essential Seller Program is another step in this direction.
David Rosenblatt: Although unique seller count has been volatile due to policy changes, we continue to see steady listings growth and ended the quarter with over 1.8 million listings, up 7%. Healthy listings growth should continue in the fourth quarter.
David Rosenblatt: We ended the quarter with nearly 7,000 unique sellers, down 13%. As anticipated, seller churn remains elevated as we manage out low-performing sellers.
David Rosenblatt: Consistent with previous quarters, the majority of churn was initiated by us due to low engagement or performance.
David Rosenblatt: In total, the CHIRN cohort accounted for less than 20 basis points of GMV over the trailing 12 months and under 40 basis points of total listings.
David Rosenblatt: Churn will be temporarily elevated in the fourth quarter as we retire our essential seller program.
David Rosenblatt: This change requires existing essential sellers to upgrade to a monthly subscription plan to remain on the marketplace.
David Rosenblatt: Approximately 2,200 unique sellers are affected. We expect the change to modestly increase revenue while reducing operational complexity and we will provide an update on our fourth quarter call.
David Rosenblatt: Because our path to profitability will be driven by operating leverage, we are focused on ensuring that resources are best deployed to accelerate and sustain growth. Discontinuing auctions and winding down the essential seller program are two examples of this.
David Rosenblatt: We are also not sitting still with capital allocation. After completing a $25 million share repurchase program in June, we instituted a new $10 million repurchase program in August.
David Rosenblatt: We believe that this will be very accretive in the long run, given that we are buying back shares at a discount to our assessment of intrinsic value.
David Rosenblatt: The size of our opportunity, our operational progress, and the fact that we are well positioned to capitalize on a market recovery.
David Rosenblatt: We are not waiting for external conditions to improve. We are creating opportunities through deliberate action, be it cost reductions, resource allocation, or share repurchases.
David Rosenblatt: By focusing on what matters most, we have made progress across key metrics.
David Rosenblatt: Although it can be hard to measure progress in a market that is contracting, we feel that positive momentum in conversion, order growth, active buyers, and revenue, as well as our continued focus on costs, are building a solid foundation to drive results when the market rebounds.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Thank you for your continued support. I will now turn it over to Tom to review our third quarter financial results and fourth quarter outlook.
Thanks, David.
GMV was $84.6 million, down 5%.
Speaker Change: On a sequential basis, GMB growth rates decelerated approximately 7 percentage points. This was driven by lower than anticipated AOV, partially offset by accelerated order growth.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Average order value of approximately $2,500 was down 11%. In contrast, median order value of approximately $1,200 was down 3%. The latter is less impacted by fluctuations in high-value orders.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Two variables drove AOV down. First, we left a record quarter for orders over $100,000. Last year, these orders accounted for over 8% of GMV, compared to our historical average of 3-5%.
Speaker Change: Second, high value orders were roughly 2% of GMV this quarter, slightly below typical ranges.
Speaker Change: While third quarter guidance contemplated the first dynamic, it did not anticipate the second.
Speaker Change: This combination resulted in a stronger-than-expected average order value headwind weighing on GMB growth.
Speaker Change: If the third quarter AOB was consistent with July, then GMB growth would have been 4 percentage points higher.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: We have not seen any change in inventory makeup, on-site engagement, or seller discounts.
Speaker Change: This, combined with stable median order value trends, leads us to believe that both the AOB strength last year and the AOB softness this year are outliers.
Speaker Change: Additionally, relative to the third quarter, AOV trends improved in October, both on an absolute dollar and year-over-year basis.
Speaker Change: In contrast to the AOV dynamic, which we view as temporary, we see a long runway for conversion gains. Conversion rates have now increased year-over-year for four straight quarters.
Speaker Change: In the third quarter, conversion rates increased double digits for both new and returning buyers. Additionally, returning buyer conversion hit a new record.
Speaker Change: We are confident in our roadmap and see ample headroom to increase conversion over time.
Speaker Change: Traffic headwinds were stable sequentially with performance marketing optimizations and higher performance marketing investment offsetting softer organic traffic.
Speaker Change: We ended the quarter with approximately 70% of traffic from organic sources and 30% from paid.
Speaker Change: Returning to GMB, consumer GMB and trade GMB declined at similar rates.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: We ended the quarter with approximately 62,500 active buyers down 1% year over year, but up 2% sequentially.
This is our second straight quarter of sequential growth.
Speaker Change: Because active buyers are trailing 12-month metric, it is a lagging indicator. Encouragingly, order growth is a leading indicator of future active buyer growth.
Speaker Change: Based on quarter-to-date trends, we expect continued order growth in the fourth quarter, which is supportive of further active buyer improvements.
Speaker Change: On the supply side of the marketplace, we experienced steady listings growth, closing the quarter with over 1.8 million listings, up 7%.
Speaker Change: We ended the quarter with nearly 7,000 unique sellers down 13 percent.
Speaker Change: The decline in the number of unique sellers was due to higher-than-usual churn. The majority of it was initiated by us, related to policy changes in late 2023. This churn had a de minimis impact on GMB and listings.
Speaker Change: We anticipate elevated churn in the fourth quarter due to sunsetting the Essential Seller Program. However, we do not expect this to have a meaningful impact on GMV revenue or listings.
Additionally, churn should normalize in the first half of 2025.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Turning to the P&L, net revenue was $21.2 million, up 3%, marking the second consecutive quarter of year-over-year growth.
Speaker Change: Transaction revenue, which is tied directly to GMB, is approximately 75% of total revenue, with subscriptions making up most of the remainder.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Take rates improved modestly due to a combination of several factors, including a higher proportion of orders below our $25,000 commission break.
Speaker Change: Growing GMB contribution from low subscription sellers, which carry a higher commission rate and a revised commission break structure that went into effect late in the 4th quarter of 2023.
Gross profit was $15 million, down 1%.
Speaker Change: Sales and marketing expenses were $9.1 million, up 9%, driven by increased performance marketing investment enabled by new optimizations and improved attribution and headcount related expenses due to our annual merit increases awarded in March.
Speaker Change: Sales and marketing as a percentage of revenue was 44% up from 41% a year ago.
Speaker Change: Technology development expenses were 5.5 million dollars up 21% driven by higher headcount related costs through our annual merit increases awarded in March and some selective hiring.
Speaker Change: As a percentage of revenue, technology development was 26%, up from 22%.
Speaker Change: General administrative expenses were $6.9 million, up 1%, with higher headcount-related expenses due to our annual merit increases awarded in March and higher professional service fees being offset by lower rent expense attributable to the sublease of our former headquarters at 51 Astor Place.
Speaker Change: As a percentage of revenue, general administrative expenses were 32% down from 33%.
Speaker Change: Lastly, provision for transaction losses were approximately $950,000, 4% of revenue, up from 3%, primarily driven by an increase in bad debt expense.
Speaker Change: Total operating expenses were $22.4 million, up 10% year-over-year, but flat sequentially.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Adjusted EBITDA loss was $3 million compared to a loss of $1.8 million last year. Adjusted EBITDA margin was a loss of 14% versus a loss of 9% last year due primarily to higher technology development and sales and marketing expenses.
Speaker Change: Given our June 2023 cost reductions, we are lapping our low watermark for operating expenses this quarter. Looking forward, we remain focused on lowering the revenue growth thresholds required to achieve operating leverage.
Speaker Change: Moving on to the balance sheet, we ended the quarter with a strong cash, cash equivalents, and short-term investments position of $109 million.
Speaker Change: In August, we initiate a new $10 million share repurchase program.
Speaker Change: During the quarter, we repurchased approximately $900,000 worth of shares. Since launching our first share repurchase program in August 2023, we've repurchased approximately 5.1 million shares for a total of $26.1 million.
Speaker Change: Turning to the outlook, our guidance reflects quarter-date results and forecasts for the remainder of the period.
Speaker Change: We forecast fourth quarter GMV of $86 million to $93 million, flat to up 8%.
Speaker Change: Net revenue of $21.4 million to $22.7 million, up 2% to up 8%.
and adjusted EBITDA margin loss of 17% to 13%.
Speaker Change: Our GMB guidance reflects continued conversion wins and order growth, and moderating AOB headwinds.
Speaker Change: From a macro perspective, our outlook also assumes a continuation of the soft demand environment we have seen throughout 2024 due to prolonged softness in the luxury housing and high-end discretionary markets.
Speaker Change: Adjusted EBITDA margin guidance reflects gross margins towards the low end of our recent 71 to 73 percent range. A sequential increase in operating expenses driven by a seasonal increase in performance marketing.
Speaker Change: Excluding this increase in performance marketing, we expect operating expenses to be approximately flat sequentially.
Speaker Change: Our results reflect both the realities of a challenging market and the progress we are making through disciplined execution. Despite AOB headwinds, we delivered solid progress across key areas, including active buyers, conversion gains, and order growth. These developments show that our strategy is working.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: As we phase out auction and the essential seller program, we are concentrating resources on the highest impact projects and strengthening our foundation to benefit from an eventual market rebound.
Speaker Change: While challenges remain for luxury housing and high-end discretionary, we are gaining market share and are optimistic about our trajectory.
Speaker Change: We appreciate your continued support and look forward to updating you on our progress in the coming quarters. Thank you. I will now turn the call over to the operator to take your questions.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again.
Speaker Change: Our first question comes from the line of Nick Jones with Citizens JMP. Please go ahead.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Great, thanks for taking the questions.
Speaker Change: Could you get a reminder as we speak to the AOV headwinds and how we should be thinking kind of a timeline to when those will abate or stabilize? And then I have a second question that's kind of bigger picture.
Speaker Change: Hey, Nick, this is Tom. I'll take that one. Yeah, sure. So, you know, our AOV headwinds that we experienced in Q3 really were twofold, right? First, last year,
Speaker Change: We're so this year we were lapping a record quarter for orders over $100,000 from Q3 of 2023, where it represented about 8% of our GMV.
Speaker Change: Typically, that number is about 3 to 5% of our GMB.
Speaker Change: Additionally, in Q3 of this year, orders over $100,000 represented about 2% of GMB. So they underperformed our normal historic averages. So the combined result of those two things really was the result of what caused our headwinds.
Speaker Change: and what was up from, you know, from our August and September numbers. So we see that in Q4, we're going to start to see more normalized average order values.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Yeah, that's helpful. And then.
Speaker Change: You know, some of the reasons for real estate exposed companies that have kind of reported this quarter and kind of the I think their consensus around next year is kind of more muted volumes will be up a little bit couple hundred.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Thought that some of the policy may end up being inflationary, which would potentially impact rates. I guess just curious. Is that is that informing maybe?
Speaker Change: While you're revisiting what it takes to drive leverage or just any thoughts on kind of the longer term picture To kind of a more normalized environment given the correlation electric housing. Thank you
Unknown Executive, Thomas Etergino, Kevin LaBuz
Hey Nick, it's David.
Speaker Change: Thank you for the question. Look, we're not macroeconomic forecasters. So what we try to do, though, is index our performance.
Speaker Change: , , , , , , , , , , , , , ,
Luxury Furnishing
Speaker Change: And we were actually pretty happy with our performance versus market in the last quarter. I mean, I think the B of A data said that luxury furnishings then was down 8%.
Speaker Change: And, you know, compared to that, obviously, orders grew 7%, which was a sequential increase from 5% last quarter. Revenue was up 3%, and active buyers grew for the second quarter in a row on a sequential basis.
Speaker Change: And as Tom said, we think the AOV trend will normalize in the fourth quarter. So, looking beyond that, I mean, again, I'm not, you know, our goal is to try to grow faster than the market and take share and, you know, what the, what our performance says in Q3 is.
Speaker Change: By the metrics that we look at, that happened and, you know, we think the sort of drivers that are causing that won't change next year. And if we get some kind of market recovery, that's a plus, but we're not anticipating one.
Got it. Thank you both.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Our next question comes from the line of Mark Mahaney with Evercore. Please go ahead.
Two questions, please. I think, David, you talked about.
Speaker Change: Cutting back on or reducing or removing auctions format, can you just talk about how material you think that is, could be to the business, how material has it been? And then secondly, I think you gave some color commentary on next year, revenue growth being mid single digit percent.
Speaker Change: and I guess maybe this is a question for Tom. Is the cost structure such that mid-single-digit percent allows you to get to EBITDA break-even for the full year? Or how should we think about what that top line forecast suggests for the bottom line? Thank you.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: Sure. So the financial impact of auctions is relatively minimal. I think auctions accounted for 5 to 6 percent of orders.
Speaker Change: and 2% of revenue. And so, you know, again, remove, we think we'll, what we're going to do is remove auctions, what we have done is remove auctions, redeploy those resources and other initiatives.
Speaker Change: focused on pricing and we think well, you know, that's a that's a positive reallocation of capital. Otherwise, we wouldn't have done it.
Speaker Change: So I don't think the net effect will be negative. And I think it's important to know the reason why we're pulling back from it is because the original purpose
Speaker Change: of Introducing More Efficient and Market-Based Pricing on the Site is better served by other pricing strategies that we have that we feel very good about. And specifically, what we're doing is we're focused on using machine learning.
to produce price recommendations to both sellers and buyers.
Speaker Change: We've rolled out our first category recently, and we have plans to roll it out to the remaining ones.
Speaker Change: But we think, you know, unlike auctions, which, of course, only impact items in auction, you know, this machine learning-based approach to introducing more rational or market-based pricing impacts all items on the marketplace and therefore should have a much bigger impact on overall conversion and ultimately growth.
Speaker Change: and Mark. This is Tom. I'll take the second question. Um, let me clarify. Uh, we were not and do not give, uh, for, you know, forward looking guidance past one quarter. So we were not guiding towards any number for, uh, 2025. What, what we were stating, what I was talking about is.
Speaker Change: that, you know, we are reviewing the business, we're always identifying opportunities to improve our efficiency and drive operating leverage. And what we're right now focused on is lowering our revenue growth threshold required to generate further operating leverage. And we're looking at the mid single digits of revenue growth in order to start showing additional operating leverage. And that's what we were talking about for 2025.
Unknown Speaker
Unknown Executive, Thomas Etergino, Kevin LaBuz
Unknown Executive, Thomas Etergino, Kevin LaBuz
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: The next question comes from the line of Rolf Schackert, William Blair. Please go ahead.
Speaker Change: Good morning. Two questions if I could. I think you talked about accelerating order growth again in Q4. Just curious, is that a trend you saw, I guess, quarter to date that gives you sort of the confidence that that will continue?
Speaker Change: And then can you just remind me, going back to some of your prior comments about churn normalizing in the first half of 2025? And what are the factors that will help churn normalize? Thank you.
Speaker Change: Hey, Ralph. So on order growth, I think what we had said was that in Q3, we had sequentially
Accelerating order growth. I don't think we
Speaker Change: talked about anticipated order growth in Q4. Of course, at the midpoint of guidance in Q4, we do expect GMB to be back to kind of mid-single-digit growth.
Speaker Change: So I don't know if that was the number that that you're referring to, but regardless, no guidance on order growth for Q4, but we did see a sequential increase in order growth in Q3 in terms of seller turn. The background to that is.
Speaker Change: Roughly two years ago, we launched a program called Essential Seller, which offers sellers a zero subscription fee option. That resulted in a significant increase in the number of sellers.
Speaker Change: But what we learned is those sellers were much less engaged than subscription fee paying sellers.
Speaker Change: And so what we have been in the process of doing for the last couple of quarters, but which is reaching its culmination this quarter, is terminating that program and converting the remaining sellers into fee-paying, sub-fee-paying sellers.
And so that will be over this quarter.
Speaker Change: We don't think that that will impact, as you note and as we said in the script, a higher
Speaker Change: then average churn number for this quarter. However, in terms of the metrics that ultimately really matter, listings growth and GMB impact and so on, there's really no real impact. Listings grew 7% last quarter, we anticipate something similar this quarter. And both the, well, primarily the GMB, but also the listings.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Thanks for watching.
Okay, great. Thank you.
Unknown Executive, Thomas Etergino, Kevin LaBuz
Unknown Executive, Thomas Etergino, Kevin LaBuz
Speaker Change: As there are no further questions at this time, that concludes our Q&A session, as well as First dibs earnings conference call. Thank you all for attending today's session, and for your participation, you may now disconnect. Have a pleasant day, everyone.
Unknown Executive, Thomas Etergino, Kevin LaBuz