1stdibs.com Q4 2022 Earnings Call Transcript

Quartr
Provided by Quartr
March 1, 2023

Key Takeaways

  • FirstDibs exceeded Q4 guidance, delivering GMV of $103.9 million and improving adjusted EBITDA margin to a 19% loss from 25% year-over-year.
  • For Q1, the company expects GMV of $93–100 million (down 21–15% YoY) and adjusted EBITDA margin loss of 29–24%, citing continued conversion headwinds and macro uncertainty.
  • Registered users rose over 25% to 5.5 million, seller accounts grew 50% to 7,300, and listings jumped 19% to 1.5 million, with auctions now over 5% of orders and strong traffic gains in France and Germany.
  • Average order value declined as orders under $1,000 increased to 47%, and conversion rates—especially among new buyers—remained soft amid shifting consumer spending.
  • Management reduced headcount by 15%, sold non-core assets like Design Manager for $14.8 million, and reprioritized capital toward high-return areas, bolstering efficiency and margin.
AI Generated. May Contain Errors.
Earnings Conference Call
1stdibs.com Q4 2022
00:00 / 00:00

There are 7 speakers on the call.

Operator

Good day, and thank you for standing by, and welcome to the FirstDib.com, Inc. 4th Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Also be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to your speaker, Kevin Laboss, Head of Investor Relations and Corporate Development. Please go ahead.

Speaker 1

Good morning, and welcome to First Stibb's earnings call for the quarter year ended December 31, 2022. I'm Kevin Labuzz, Head of Investor Relations and Corporate Development. Joining me today are Chief Executive Officer, David Rosenblatt and Chief Financial Officer, Tom Ettorgino. David will provide an update on our business, including our strategy and growth opportunities, and Tom will review our Q4 financial results and Q1 outlook. This call will be available via webcast on our Investor Relations website at investors.

Speaker 1

1stdibs.com. 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 plans, strategic initiatives, evaluation of alternatives, Business and economic trends dynamics, including e commerce 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.

Speaker 1

A reconciliation of GAAP to non GAAP measures is included in today's earnings press 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?

Speaker 2

Thanks, Kevin. Good morning and thank you for joining us today. Although 2022 was challenging, it was also a year of foundational progress. It began with pandemic related e commerce tailwinds and record high GMV in the Q1. Since then, these tailwinds have become headwinds as consumer behavior shifted from online to offline and spending shifted from goods to services.

Speaker 2

Additionally, macro factors like inflation and the slowing housing market as well as industry specific issues Like IDFA created a more challenging operating environment. Nevertheless, we ended the year with strong registration growth, Healthy traffic growth in spite of lower paid marketing spend, record high supply acquisition and near record low seller churn. In contrast, AOV and conversion, particularly for new buyers, remain headwinds to GMV growth. Like 2022, we expect 2023 to be a challenging year. However, all cycles eventually reverse.

Speaker 2

Our goal is to be leaner and have more growth drivers when demand rebounds. You can't control the hand you're dealt. What you can do, must do is make the most of the hand you've got. As conditions changed, we demonstrated our ability and willingness to cut costs and reallocate capital. For example, over the year, we reduced headcount by 15%, cut the number of open roles down to a handful of essential positions and increased efficiency thresholds for performance marketing.

Speaker 2

Additionally, we sold Design Manager for $14,800,000 streamlining our business and strengthening our balance sheet. Furthermore, when we realized that our NFT platform was not performing to expectations due to the crypto downturn, We discontinued the business and reallocated headcount to areas with potential for higher returns. In contrast, We continue to selectively invest in areas gaining traction like auctions and international expansion. Our goal is to stem GMV declines and reaccelerate GMV growth. The path forward requires improving conversion, particularly for new buyers.

Speaker 2

In 2023, We plan for the majority of our product and engineering employees to work on conversion related projects. Our conversion efforts are divided into 2 groups, enhancing the core buyer and seller experience and our strategic initiatives. Buyer and seller enhancements are a series of incremental improvements. For example, mobile web optimizations. We believe we have a clear understanding of high impact areas and are focusing our efforts there.

Speaker 2

Similarly, We're confident in our roadmap for auctions and international expansion. Although these are multi year projects, we're happy with our progress to date. Turning to the Q4, we delivered GMV revenue and EBITDA margins at or above the high end of guidance. We exit the 4th quarter with a leaner cost structure with over 1,500,000 listings, up 19%, provided by nearly 7,300 sellers, up over 50%. With auctions continuing to account for over 5% of orders and with strong traffic order and GMV growth in France and Germany.

Speaker 2

As we experienced throughout 2022, solid traffic growth was offset by conversion softness, particularly for new buyers. Organic traffic mix improved 3.50 basis points, accounting for almost 75 This mix shift was driven by continued strength in SEO, coupled with higher efficiency targets on performance marketing. Registration growth was also brisk. We ended the year with over 5,500,000 registered users, up over 25%. We see continued registration growth as a positive leading indicator.

Speaker 2

Order growth rates improved sequentially, but were more than offset by declining average order value. 2 factors are at play here. First, the percentage of orders under $1,000 increased to 47% of the total in the 4th quarter, up from 44% in the 3rd quarter and 43% a year ago. This is partially due to the success of auctions, which has a lower AOV and a shift in non auction orders to lower price listings, which we believe reflects increased consumer caution amid macroeconomic uncertainty. While lower AOV weighs on near term GMV growth, In the long run, it expands our potential audience of addressable buyers.

Speaker 2

Indeed, one of the strategic rationales for auctions was creating a lower priced on ramp to 1st dibs. We are seeing this play out. Over 50% of bidders in the 4th quarter Had never purchased from First Dibs before. Moving to operations, we remain focused on improving conversion, Realizing efficiencies, growing supply, scaling auctions and expanding internationally. Improving conversion, particularly for new buyers, is our largest lever to reaccelerate GMV growth.

Speaker 2

There are no silver bullets here. Conversion is a ground game requiring incremental gains that compound over time. We had a number of wins in the 4th quarter. 1st, based on a successful test, in early December, we launched a new sort order methodology for search and browse pages, leveraging on-site activity and predictive data modeling. The objective is to improve conversion by boosting items with a high probability of sale.

Speaker 2

During the test, which ran in November, Users who saw the updated Sword order had increased engagements, including an uplift to saves and orders. 2nd, because jewelry is lightweight and easy to ship, we launched seller funded free shipping on jewelry listings in October. 3rd, to increase discovery, we incorporated collaborative filtering on our product pages, recommending items based on similarities in user behavior. This drove an uplift in click through rates. In 2023, pricing will be an increased area of focus.

Speaker 2

We have multiple pricing related projects in flight and on the roadmap. Our objectives are to give buyers more pricing context, highlight value in exceptional deals, and provide sellers with data based guidance when creating listings. For example, one ongoing project is giving buyers pricing context based on past sales data for similar items. Collecting this data is giving us new capabilities Like our Design Values collection, which launched in early February and highlights competitively priced items from across the marketplace. Historically, collections have been effective pathways for buyers to discover the performance supply.

Speaker 2

We plan to launch additional evergreen shopping experiences and more pricing related tools and features throughout the year. Although demand softened in 2022, supply fundamentals remain strong, spurred by our new seller pricing test, which launched in January and includes a subscription free tier with higher commissions. Seller acquisition was robust throughout the year. In the Q4, we signed over 700 new sellers, ending December with nearly 7,300 seller accounts, up over 50%. Additionally, listings grew 19% to over 1,500,000 items.

Speaker 2

Supply growth drives traffic, deepens search results and increases our ability to make a match between buyers and sellers. Our goal for 2023 is making sure that this influx of new sellers is successful on first dibs, in part by growing their listing volumes and launching new data driven seller tools. Relative to 2022, We'd expect to see slower growth in seller accounts, but continued healthy listings growth in 2023. Moving on, strategic initiatives continue gaining traction. Whereas auctions order volume was down modestly Quarter over quarter, bidders and bids grew double digits.

Speaker 2

Although it's too early to know auction seasonality, We believe that 4th quarter orders might have shifted towards fixed price and negotiations, which are more conducive to gifting. Auctions AOV remained below $1,000 and declined sequentially. This more accessible price point is engaging and activating new buyers. For example, over 50% of bidders in the 4th quarter had never purchased from First Dibs before. We've learned a number of valuable auction lessons over the past year.

Speaker 2

These lessons inform our 2023 roadmap. First is the importance of optimizing pricing. In the first half of twenty twenty three, we'll be rolling out refined pricing recommendations based on internal supply and sell through data. The second lesson is that some pockets of supply are more performant than others. For example, landscape paintings, cocktail rings under $1500 and abstract prints all perform well.

Speaker 2

Accordingly, we just launched the seller feature highlighting which of their listings are most likely to do well at auction. Last is the importance of balancing supply, demand and sell through. As we look to bring on more performance supply in 2023, We are also implementing new demand generation tools, including broadening how we leverage email, push and SMS. International expansion is progressing well. Our initial focus is driving traffic.

Speaker 2

Similar to the Q3, sessions from German and French IP addresses grew over 3 75%, albeit off a small base. Furthermore, SEO traffic grew over 2 20% in both markets. Orders from German and French IPs grew over 60%. As traffic grows, our opportunity grows with it. In the 4th quarter, These two markets accounted for 10% of total sessions compared to under 3% of total orders.

Speaker 2

We continue to improve our international shopping experience. For example, we've seen that European customers convert at a rate about 80% higher for European listings versus U. S. Listings. As such, our international product team further localized our French, German and UK homepages during the Q4.

Speaker 2

We are increasing the prevalence of local supply in search results and on the homepage. Additionally, we added VAT support so that European buyers now see all in pricing. In addition to further refinements of our French and German sites in 2023, we are also localizing seller tools for Italian sellers. Italian supply is highly sought after, so we expect this project to unlock new valuable listings when it is completed in the second quarter. We are starting to see the impact of these projects acting in concert.

Speaker 2

A recent transaction encapsulates our strategy and tactics in action. In early November, we sold a beautiful Joaquin Tonaro chair for over $100,000 To a new buyer in Germany on our localized marketplace from a new seller in Portugal onboarded as part of our new seller pricing test. This order illustrates many of our priorities in action. First, it shows that our strong brand and world class supply has broad appeal. Customers turn to us for our unique listings and trust us for their most meaningful purchases.

Speaker 2

Luxury is a global business And the 1st dibs brand is resonating in more markets. 2nd, it shows that supply growth drives demand. Our goal is to aggregate the world's most beautiful items regardless of where they're located, while maintaining high curatorial standards. Because we're a marketplace of 1 of a kind items, breadth matters. Growing supply improves marketplace liquidity and creates new opportunities to transact.

Speaker 2

If this Portuguese seller hadn't joined, this transaction would not have happened. Despite a challenging 2022, orders like this give us confidence in our roadmap. We enter 2023 facing conversion headwinds, But continued traffic, registration and supply growth give us confidence that we remain as relevant as ever to our buyers and sellers. I'll now turn it over to Tom to review our 4th quarter financial results and 1st quarter outlook.

Speaker 3

Thanks, David. We delivered 4th quarter GMV revenue and adjusted EBITDA margins at or above the high end of our guidance. Adjusted EBITDA margins improved sequentially for the consecutive second quarter, helped by cost reductions in the second half of the year. GMV was $103,900,000 down 11%. Similar to the 1st 3 quarters of the year, traffic growth remained strong, while Conversion remained a headwind, particularly for new buyers.

Speaker 3

Both trade and consumer GMV declined. Consistent with recent quarters, trade growth outpaced consumer. On a sequential basis, consumer GMV increased, while trade GMV fell. While all verticals decreased, jewelry showed the best relative performance with lower AOV offsetting 6% order growth. The jewelry vertical accounted for 25% of GMV, a record, up from 22% a year ago.

Speaker 3

Similar to recent quarters, vintage and antique furniture accounted for under 50% of GMV and roughly 60% of our first time orders came from other categories, Jewelry, New and Custom Furniture, Art and Fashion. Average order value declined in the 4th quarter. As David mentioned, two dynamics are driving this change. First, we're seeing a higher mix of orders under $1,000 These orders accounted for 47% of the total in the 4th quarter, up from 44% sequentially and 43% a year ago. 2nd, this shift is impacted by the growth of auctions, which have a lower AOB, but this trend holds true even when excluding auctions.

Speaker 3

Our median order value, which is insulated from fluctuations in high value orders, has declined on a monthly sequential basis since June. We believe this reflects a more cautious consumer amid macroeconomic uncertainty. While average order value and median order value declined, Order growth rates improved modestly relative to the 3rd quarter. We ended the quarter with approximately 67,600 active buyers, down 7% year over year and 1% sequentially. We expect this metric to remain choppy near term as we managed through a period of softer demand and a difficult first quarter comp.

Speaker 3

On the supply side of the marketplace, We closed the quarter with nearly 7,300 seller accounts, up over 50%. Additionally, there are now over 1,500,000 listings on the marketplace, up 19%. Listing growth rates were consistent throughout 2022. Turning to operations, in 2022, we demonstrated ability and willingness to cut costs and we will continue to focus on driving efficiency in 2023. Looking back at the year, we took a number of actions to align expenses to lower demand.

Speaker 3

These include reducing headcount, Limiting hiring to critical roles, drastically reducing the number of open positions, lowering performance marketing spend by increasing efficiency targets and rationalizing non headcount costs. The cost savings actions that have been underway since the Q2 are manifesting in the income statement. For example, relative to a year ago, headcount is down approximately 15% due to our September reductions, coupled with actively managing backfills and reduced hiring. On a sequential basis, operating expenses declined 2% and EBITDA margins improved over 400 basis points. Compared to last year, GMV declined by approximately $13,000,000 and revenue declined by $4,000,000 Despite this, Adjusted EBITDA improved by $2,300,000 year over year due in part to expense management, including our September headcount reductions.

Speaker 3

Turning to the P and L, net revenue was $23,000,000 down 15%. Revenue decreased 12% in line with GMV when adjusted for the sale of Design Manager. Transaction revenue, which is tied directly to GMV, was approximately 70% of revenue, with subscriptions making up the bulk of the remainder. Gross profit was $16,200,000 down 3%. Gross profit margins were 71%, up from 62% a year ago.

Speaker 3

As a reminder, we are lapping elevated Shipping charges, which negatively impacted gross profit margin in the year ago period. Sales and marketing expenses were $10,600,000 down 10%, driven by lower performance marketing spend and lower headcount. Consistent with the 2nd and third quarters to align expenses with demand, We pulled back on performance marketing and increased our efficiency thresholds. Sales and marketing as a percentage of revenue was 46%, up from 44% a year ago. Technology development expenses were $5,700,000 down 2%, driven by lower headcount and lower translation costs.

Speaker 3

As a percentage of revenue, Technology Development was 25%, up from 22%. General and administrative expenses were $7,000,000 up 15%, driven by higher stock based compensation. As a percentage of revenue, General and administrative expenses were 30%, up from 23%. Lastly, provision for transaction losses were $1,500,000 7% of revenue, up from 5%. This was driven primarily by increased shipping accommodations.

Speaker 3

Adjusted EBITDA was a loss of $4,500,000 compared to a loss of $6,700,000 last year. Adjusted EBITDA margin was a loss of 19% versus a loss 25% last year. This year over year change was driven by lower shipping expenses as well as lower salaries and benefits due to our September headcount reduction and lower performance marketing spend. Moving on to the balance sheet, we ended the quarter with a strong cash and cash equivalents position of $153,200,000 Turning to the outlook. Our guidance reflects our quarter to date results and our forecast for the remainder of the period.

Speaker 3

We forecast 1st quarter GMV of $93,000,000 to $100,000,000 down 21% to 15%. Net revenue of $21,400,000 to $22,500,000 down 20% to 15% and adjusted EBITDA margin loss of 29% to 24%, primarily driven by lower revenue resulting in negative operating leverage. Our GMV guidance reflects a number of converging factors, including shifting consumer behavior, ongoing economic uncertainty, conversion headwinds, Declining average order value and we're lapping our record GMV quarter. As we move throughout 2023, comps will ease. However, the macroeconomic environment remains challenging and volatile.

Speaker 3

Turning to adjusted EBITDA margins, guidance reflects The fact that lower revenue is driving the substantial majority of the sequential decrease in EBITDA margins and that the savings from our driven by higher health insurance premiums and our annual merit cycle in March. In closing, although 2022 was a challenging year for our business, We made foundational progress on key priorities like auctions, international expansion, supply growth and increased efficiency. We look to build on these in 2023. Thank you for your time. I'll now turn the call over to the operator to take your questions.

Operator

Thank you. One moment for our first question. And it comes from the line of Curtis Nagle with Bank of America. Please go ahead.

Speaker 4

Thanks very much for taking the question and good morning. I guess, the first one, just I guess, good to hear about the registration data going in the right direction. I guess, one, what's driving the incremental interest? I'm maybe assuming part of it at least is international and Auctions. And then, I guess just without being too obvious, what needs to happen to get that conversion up?

Speaker 4

Is it Is there continued supply? Is it the macro? What are the pieces there? And then I have a follow-up after that.

Speaker 2

Sure. So this is David. On traffic, the primary driver of our traffic growth is SEO, organic traffic. We put A real effort into it starting a couple of years ago and that it began to pay off about year, year and a half ago and continues to do so. On the flip side, the large majority of that traffic growth has been on mobile web.

Speaker 2

Mobile web for us, Like many digital companies, is the lowest converting of our channels. And so that's reflected in The declining conversion number. On conversion, just to kind of click one level deeper on that. The weakness is really concentrated On new buyer conversion, returning buyer conversion remains resilient. And so it's like I said, it's mostly on new buyer, driven primarily by this channel shift and I think also importantly the macros.

Speaker 2

In terms of what we're doing and what we need to do, The large majority of our resources are focused on in one way or another on improving conversion. It really falls into 2 buckets. There are a whole slew incremental improvements we're making to the core product, things like enhanced personalization on search results. We're using collaborative Filtering to do more personalization, we're focused on lowering both the actual and the perceived Prices of items, which is, I think, especially important in this environment. And then, of course, our strategic Areas of focus primarily auctions in international are also squarely focused on conversion.

Speaker 2

And so while conversion has Been negative and declined each of the last 4 quarters or so. We have seen an improvement in the so called second derivative over the last couple of quarters. And so we're encouraged. But that said, ultimately, We think the macros are probably the most important factor along with that shift in the sources of traffic.

Speaker 4

Okay. That makes sense. And then just Going quickly on the gross margin, so shipping now is not a headwind and that seems to be helping rate. Anything else that's impacting in terms of mix or just any other factors that we should think about for gross margin for 2023?

Speaker 3

Yes. Hi, this is Tom. I'll take that. So year over year, we saw an increase Actually in gross margin, driven primarily by the lapping of our elevated shipping related expenses from last year. So Our gross margins actually improved year over year, but it was largely due to that.

Speaker 3

It was also impacted favorably by September headcount reductions. So that's why you're seeing positive year over year trends on gross margins.

Speaker 4

Okay. Current rate fair for 2023 or how should we think about that?

Speaker 3

So we're not going to give guidance on margins or on full year guidance, What I can say is that, the view is, We're seeing a positive impact right now on EBITDA margins from the past two quarters, the steps that we've taken to align Costs to demand and we expect what you're seeing in Q1, which I will speak to directly is that The declines in revenue are what's really going to be driving much of the sequential decline quarter over quarter on our EBITDA margins. Secondarily, there are some we will continue to see the positive impact of our cost savings reductions that we undertook in Q3 and Q4 in particular, but some of that will be offset by higher employee related costs that we will see in Q1 and beyond. So things like healthcare costs have gone up, annual merit increases And like professional fees have increased to somewhat offset some of those cost savings that we enjoyed after Q3 and Q4's actions.

Speaker 4

Okay. Thanks very much.

Operator

Thank you. And one moment for our next question please. And it comes from the line of Trevor Young with Barclays. Please proceed.

Speaker 5

Great. Thanks. First one for David. We're hearing a lot these days around AI just kind of across our coverage universe. Any thoughts on whether there are opportunities in that field for dibs?

Speaker 5

Is it something that you're looking into, already working on it? I know you mentioned some of the efforts on the pricing front, which may have some advanced modeling in there with historical sales data and that sort of thing. And then second one on the strategic review with Allen and Co. I realize the absence of any commentary may mean there's no updates to share. But I'm just wondering if a potential or perhaps even a likely outcome of that would be just to kind of stay the current course rather than potential buy side or sell side transactions Even cash going back to shareholders?

Speaker 2

Yes. In terms of AI, so that is something that we think about Consciously and I think there are a couple of potential areas of application. One is to improve conversion via Kind of the application of AI to basically some of the stuff I talked about earlier, search results and the related, Putting the right product in front of the right buyer and that is something that is an active work stream. And then there are other interesting areas as well In the area of fraud, when compliance with our terms of service among both buyers and sellers Is another area where we're looking at applying AI. And then in terms of your second question, the Allen and Company process, As you know, until there's something to announce, we can't talk about it at all.

Speaker 2

But what I can confirm is that it's an active process. And As soon as we have something if we have something to announce, we will. And in the meantime, we're looking at all options, including uses of capital and And the sort of driver of that, of course, is what we believe to be the disconnect between Our current market value and asset value of the company.

Speaker 5

Great. Thanks, David.

Operator

Thank you. One moment for our next question please. And it comes from the line of Mark Mahoney with Evercore ISI. Please proceed.

Speaker 5

Okay, thanks. Hey, I just want to ask about Auctions. And David, I just want to ask about from a customer perspective, what kind of traction you're seeing? What the level of interest is both From sellers on the platform and from buyers and does it look like the appetite is growing for where are there obvious wins, where there's just Dramatic interest in it, they're just waiting for you or where are the places where you're having to push the product out and sellers or buyers are somewhat reluctant to embrace it. Just talk about just from a customer perspective what the interest level is and how it's changed in auctions?

Speaker 5

Thank you.

Speaker 2

So just as a reminder, the primary strategic goal of auctions on the demand side in particular is to increase new buyer conversion rates. Again, as I mentioned in the script and in the answer to the first question, returning buyer conversion rates have been relatively healthy New buyer conversion rates have been very soft. The primary reason for softness in new buyer conversion rates It has to do with some version of price for the most part and auctions of course are the most efficient vehicle for addressing that. What we saw in the Q4, we did see softness in terms of overall GMV growth. That said, In terms of consumer behavior, what you asked about Mark, what we saw actually was somewhat parallel to the marketplace as a whole in the sense that Top of funnel metrics were strong.

Speaker 2

Engagement metrics like the number of bidders and the number of bids Grew double digits sequentially Q4 over Q3. And it is delivering on the strategic goal. So Again, we see activation rates of new buyers 2 to 3 times higher than those of the marketplace. And importantly, what we've seen is that consumers that are activated Your auctions are roughly 35% more likely to make a repeat purchase versus consumers who activate through the marketplace. I think, again, as we said for a couple of quarters, the biggest opportunities to unlock growth are 1, awareness on the demand side.

Speaker 2

We've been in the business for 20 plus years or we were in the business for 20 plus years without having an auction platform. So it takes a lot to undo that. And then secondly, on the supply side, it's getting sellers to And kind of educating them to price effectively for auctions. And I would say on that, there's an embrace and a willingness to Support the auction format itself. So just getting sellers to list items in auction has not been a particular challenge, Due in part to the efforts of the folks we have on our team who manage those relationships.

Speaker 2

What I think again we need to do a better job on is Educating our sellers to price as effectively as possible. And again, the reason for that is in auctions, as we all You start low on the theory that the price will go up. The way our non auction marketplace works is the opposite. Sellers tend to start high Because the large majority of confirmed orders are negotiated. So they price expecting that to come down, which is the opposite of the behavior that's required for a healthy auction marketplace.

Speaker 2

So it's a work in progress, and but that is our primary goal.

Speaker 5

Thank you, David.

Operator

Thank you. And one moment for our next question please. And it comes from the line of Nick Jones with JMP Securities, please proceed.

Speaker 6

Great. Thanks for taking the questions. I guess just kind of going back to AOV levels that are I guess Coming down and that broadens the number of people on the demand side who may be engaged with the platform. I mean, what level do you guys see AOV shaking out Over time, I mean, should that be kind of in perpetual pressure from here as we think about our models?

Speaker 2

What we're seeing, 1st of all, we have seen a worsening of AOV each of the last four quarters. And interestingly, if you look at our performance in Q4, order volume was down 5% year over year. So the balance Was AOV, which gives you kind of a directional sense of the impact on our GMV performance. And again, we've seen that trend continue Soften. On the other hand, we've actually seen the number of orders at the very high end over $100,000 Or rather the GMV from orders over $100,000 increasing.

Speaker 2

So that grew 10% in the quarter. So we are seeing this barbell effect. Overall, the percentage of orders in the marketplace that are $1,000 and below increased from I think it was 44% to 47% In the Q4, so again, that sort of gives you a sense of the dynamic in the business. Where does it bottom out? I don't know.

Speaker 2

I mean, I think the what I can tell you though is that declining AOV from our point of view is not a bad thing for the reason you said. Market size is somewhat inversely proportionate to AOV. And if we can bring AOV down without compromising on The quality of the products that we're selling, then that long run should be a good thing. But Where or how exactly those two dynamics play out relative to each other over the next couple of quarters is hard to tell other than To say that we expect a continuation of the current situation, which is a decline in AOV.

Speaker 6

Got it. And then on just kind of localization in some of the international markets, it sounds like there's some great engagement trends. I mean, Kind of do your efforts there to localize potentially kind of outweigh macro pressures in the given geographies? Is that the right way to kind of think about it Near to medium term? Thanks.

Speaker 2

Yes, exactly. We're really happy actually with our efforts in international. Just as an example, in the 4th quarter, organic traffic was up over 200% in both France and Traffic was up over 200% in both France and Germany and GMV from French and German domains increased over 60% year over year. So clearly, to your point, kind of outweighing the macros in the rest of the business. So we're really happy with that and we want to continue to put more wood behind it.

Speaker 2

I think sort of in the interest of managing our capital responsibly because Launching new markets and in particular putting paid behind those markets is capital or can be capital intensive. Our primary focus is on kind of finishing out the playbook for new market launches in France and Germany And then expanding that in the later part of this year to other markets, we are also currently localizing seller tools in Italy specifically Because Italy is a great source of supply, Italian sellers for the most part don't have the fluency with English that non Italian European sellers have. And so we hope that that will unlock more supply. But to the original question in terms of demand, we're happy with where we are. The goal is to finish out that playbook and then yes over time Spandered in new markets.

Speaker 6

Great. Thanks for taking the questions.

Operator

Thank you. One moment for our next question please. And it comes from the line of Ralph Schackart with William Blair. Please proceed.

Speaker 5

Good morning. Thanks for taking the question. 2, if I could, please. Just on sellers, I think you said growing about 50% and listings growth around 19%. You obviously want to make sure that they're coming on board and having successful experience.

Speaker 5

Given the sort of tough macro, how do you balance Adding supply growth with the macro headwinds to make sure that they are having a successful onboarding experience. And then just As a follow-up on OpEx, you obviously made some good strides in OpEx savings in 2022. But if the macro persists as we sit here today And going forward, maybe talk about your willingness or your levers to perhaps find further OpEx savings? Thank you.

Speaker 2

Sure. So I'll take the first question and turn it over to Tom for the second one. There's another statistic by the way just to add to the 2 that you mentioned on supply growth that we're Pleased with, which is our retention rate, which was at an all time high in the 4th quarter as well. And I think that really does speak to your question. Look, in general, relative to other marketplaces, we have a kind of lower velocity And lower sell through rate, right?

Speaker 2

This is a long sales cycle market. So sellers don't join with the expectation That they're going to sell a lot immediately. It's really a process of adding supply. And what we've seen over the many years we've In this business is that the more supply that's added by sellers, the more they sell. So our primary focus right now, Especially with sellers who joined under our pricing test is to encourage them to sell to list more.

Speaker 2

Currently to date, they have not listed at the same rate as our pre existing sellers. However, we're making a lot of concentrated efforts in that area And we have seen improvements over the last couple of months. So we need to continue to do that. And if we're able to do that, The sellers will sell more.

Speaker 3

On the OpEx side, this is Tom. So as you mentioned, right, in 2022, we did take a

Speaker 2

lot of

Speaker 3

actions in rightsizing our cost structure for demand. We reduced the number of open walls. We limited our hiring to critical positions. We Increased our efficiency targets on our performance marketing spend and we also had The difficult decision of reducing headcount in Q3 and we are starting to see the impact of that in our results in Q4 as you can see. To your point, right now, we continue to be committed To kind of rationalizing our cost base to demand, and we're going to continue to take actions if the demand It does not rebound.

Speaker 3

But as I sit here today, we're comfortable with our 2023 plan. If we veer off of that plan, We will take corrective actions.

Speaker 5

Okay, great. Thank you.

Operator

Thank you. And with that, ladies and gentlemen, I will conclude the Q and A session and today's conference. Thank you all for participating and you may now disconnect. Good day.

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