1stdibs.com Q1 2026 Earnings Call Transcript

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Provided by Quartr
May 8, 2026

Key Takeaways

  • Positive Sentiment: 1stDibs reported positive adjusted EBITDA for the second consecutive quarter (~$600k), generated $8.0M of free cash flow in Q1, and ended the quarter with $85.3M in cash after ~$9.1M of share repurchases.
  • Negative Sentiment: Top-line activity remained soft: GMV was $89.7M (down 5%) and net revenue $22.4M (down 1%), with active buyers falling ~10% as a result of deliberate sales and performance marketing reductions and a weak U.S. housing backdrop.
  • Positive Sentiment: Management is reallocating spend toward product and engineering (Tech spend +10%; AI-assisted development now >50% of new code) and reported immediate gains in discovery metrics (search success +4%, null results -25%) with visual search launching in Q2 and natural-language search planned later in 2026.
  • Positive Sentiment: Operational levers to boost conversion and margins include pricing and shipping initiatives — price-parity coverage rose 44%, take rates increased ~120 bps, USPS integration cut small-parcel rates ~30–50%, and tracking support will expand from ~10 to 70+ carriers.
AI Generated. May Contain Errors.
Earnings Conference Call
1stdibs.com Q1 2026
00:00 / 00:00

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Operator

Good morning, everyone. Thank you for joining us, and welcome to the 1stDibs Q1 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. I would now like to hand the call over to Kevin LaBuz, Head of Investor Relations and Corporate Development. Kevin, please go ahead.

Kevin LaBuz
Kevin LaBuz
Head of Investor Relations and Corporate Development at 1stDibs

Good morning. Welcome to the 1stDibs earnings call for the quarter ended March 31st, 2026. 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 Q1 financial results and Q2 outlook. This call will be available via webcast on our investor relations website at investors.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, business and economic trends, and competitive position.

Kevin LaBuz
Kevin LaBuz
Head of Investor Relations and Corporate Development at 1stDibs

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 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 made on a year-over-year basis, unless otherwise noted. I will now turn the call over to our CEO, David Rosenblatt. David?

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

Thanks, Kevin. Good morning, everyone. A quarter ago, we shared our expectations for our performance in 2026: disciplined execution, durable profitability, and steady roadmap progress. The 1st quarter delivered on all three. Our top-line results reflect the deliberate sales and marketing reductions we enacted late last year, and our bottom-line results reflect the structural cost work we have been executing since 2022. We are on track across revenue, costs, and product development, and our 2026 financial framework remains unchanged. The demand environment remains challenging. The U.S. housing market continues to hover near a 30-year low, weighing on consumer appetite for luxury home goods. While the near-term backdrop is soft, the long-term opportunity is significant. For example, there are approximately 5 million U.S. households worth at least $5 million, and our active buyer base of approximately 58,300 represents a fraction of that addressable market.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

Our goal, however, is to generate growth irrespective of the timing of a market recovery. Once conditions normalize, we will be in a strong position to accelerate growth. Turning to the financials, our performance reflects both market conditions and the decisions we made last year to optimize our cost structure. GMV and revenue were $89.7 million and $22.4 million, down 5% and 1% respectively, which is a result not only of market conditions, but also of our decision to reduce performance marketing spending by nearly 50% in the Q4 of 2025. Adjusted EBITDA of $600,000 above the midpoint of guidance is proof that our financial model is now capable of generating adjusted EBITDA profitability even in a challenging external environment.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

We have fundamentally re-engineered our business, lowering expenses and headcount since late 2022 to ensure future revenue recovery flows disproportionately to the bottom line. With that context, let me walk you through the quarter's performance. Funnel trends remained consistent. Traffic declines, driven primarily by our pullback in performance marketing and substantial sales and marketing headcount reductions, were partially offset by our 10th consecutive quarter of conversion growth and higher average order values. This conversion growth is the direct result of sustained product investment, and it gives us confidence that our roadmap is working. Underpinning these results is a deliberate shift in how we are allocating resources. While total operating expenses declined 11%, technology development spending grew 10%, a reflection of our conviction that product and engineering is our highest ROI investment. The returns are compounding.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

AI-assisted development now accounts for over 50% of our new code, up from approximately 30% last quarter, enabling our team to ship faster than ever. Our 2026 roadmap is where those resources are being deployed. Organized around 4 pillars, discovery, pricing, shipping, and service, it is designed to remove friction, modernize the platform, and drive our anticipated return to GMV growth by the Q4. Before walking through our roadmap progress, it is worth stepping back to explain how we think about product development. Our roadmap is not organized around market conditions or macro assumptions. It is organized around solving specific customer problems. The barriers that prevent a design enthusiast from finding the perfect item, trusting its price, receiving it seamlessly, and getting help when they need it exist regardless of where the housing market is or what consumer sentiment looks like.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

Solving them makes 1stDibs a better marketplace in any environment. At the heart of our roadmap is a transformation in how buyers find and engage with our marketplace. Our goal is to make 1stDibs a daily destination for design enthusiasts by meeting the buyer where she is and by removing the barriers to discovery. Today, finding the right item still requires too much expertise, the right terminology, the right category knowledge, and the right search keyword string. Our discovery roadmap is designed to change that, and the Q1 was a period of foundational progress in that regard. We begin by investing in content and community. In February, we launched 1stDibs Tastemakers, our brand ambassador program built around authentic voices from within and around our community. Early results are promising, with measurable increases in reach and engagement on Instagram.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

We also debuted Objects of Desire, a podcast hosted by our editorial director, Anthony Barzilay Freund, and interior designer, Noz Nozawa, which explores the emotional and cultural stories behind the objects people love. These initiatives are designed to build the daily engagement and brand affinity that drives organic traffic and buyer acquisition over time. Once buyers arrive in our environment, we are making it easier for them to navigate our catalog. Using AI, we significantly enrich the metadata underpinning our inventory, giving our search engine more signal to work with. The results were immediate. Our search success rate improved by nearly 4%, and the number of null results decreased by over 25%, meaning more buyers are finding items to engage with on every visit. We also redesigned our search bar experience, resulting in higher search activity. These improvements are the foundation for what comes next.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

Over the course of 2026, we are building toward AI-powered semantic and natural language search, the ability for a buyer to describe what they want in plain language and receive tailored results in return. A buyer shouldn't need to know the difference between a Chesterfield and a Knoll sofa to find the perfect piece. They should be able to tell us what they want in the manner they naturally think about it and trust that 1stDibs will understand. We are building that capability progressively throughout the year, and in the Q2, we plan to launch visual search, allowing buyers to upload an image and find similar items in our catalog. On personalization, the Q1 marks an important shift. We moved our homepage from an editorial-first to a recommendation-first experience.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

For recognized users, the platform now surfaces personalized items based on their behavior and preferences from the moment they arrive, a step toward making 1stDibs a daily habit. We also deepened our work on favorites, driving an increase in the percentage of users who favorited an item sequentially, building the behavioral data that will help power personalization over time. Our progress in discovery highlights our belief that AI is a catalyst for our marketplace. While our moat remains firmly built on high-trust relationships and a physical catalog of one-of-a-kind items, AI is the tool that makes those items discoverable to a broader audience. Discovery brings buyers to the listing. Pricing gives them the confidence to buy it. Buyer trust is the foundation of every transaction on 1stDibs. Our pricing roadmap is designed to reinforce that trust by ensuring that every listing is priced transparently, competitively, and consistently.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

In the Q1, we made progress on price parity, our initiative to ensure that items on 1stDibs are priced consistently across sales channels. By expanding to two additional resale platforms and by deepening our reach on existing ones, we increased the price parity coverage for listings by 44%. Early data suggests that items priced at parity with other sites convert at higher rates than those that are not, validating our thesis that pricing transparency directly drives buyer trust and confidence. In the Q2, we will invest in the offer and product detail page experience to help buyers and sellers reach agreement faster, reducing friction at one of the most critical moments in the transaction. We will also more prominently surface our price match guarantee and the pricing of comparable historical transactions, giving buyers greater confidence and context at the point of purchase.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

Together, these initiatives are building a pricing environment where buyers can act with conviction. Once a buyer trusts the price, the next question is simple: What will it cost to get it delivered? Our vision for shipping is straightforward: reduce costs, increase transparency, and eliminate the uncertainty that causes buyers to abandon a purchase. Cost competitiveness and transparency at checkout are conversion drivers, and we made progress on both. During the quarter, we integrated USPS into our shipping infrastructure, giving buyers access to a broader range of carrier options at meaningfully lower parcel rates. Approximately 30%-50% cheaper for packages under 20 lbs. In the Q2, we plan to launch an ML-powered quoting tool that will deliver more competitive real-time pricing on our largest items, categories where shipping costs have traditionally been opaque and expensive.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

Also on deck for the Q2 is a significant upgrade to our shipment tracking capabilities. Today, approximately 25% of orders lack real-time tracking, a source of buyer uncertainty that we are committed to eliminating. By expanding our tracking infrastructure from 10 to over 70 supported carriers, we will increase tracking coverage, ensuring that buyers can follow their purchase from seller to doorstep. Together, these initiatives are the building blocks of our multi-year vision, a shipping program that is cost-competitive, fully transparent, and anchored by all-in pricing so that every buyer knows the total cost of their purchase before they commit. Competitive pricing and seamless shipping earn a transaction. Exceptional service earns a relationship. Elevating the level of service we provide to both buyers and sellers is the fourth pillar of our roadmap.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

On the seller side, we are rolling out improved listing tools that leverage AI to make it easier and faster to bring inventory to market. These tools reduce friction from generating optimized item titles to streamlining the image upload process, ultimately building toward a more robust AI-assisted listing experience. Early adoption has been encouraging, and we expect these tools to deepen seller engagement and improve listing quality over time. We are also building an AI-powered client service chatbot for buyers and sellers set to launch in the Q2. Our expectation is that this will allow us to provide faster, more responsive service at scale. The cumulative impact of these roadmap investments is reflected in a simple data point. For the second consecutive year, our annual seller sentiment survey confirmed that 1stDibs is the primary sales channel for our sellers, surpassing their own showrooms.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

What was a meaningful shift last year is now a confirmed trend. Our sellers are not simply listing on 1stDibs, they are depending on us. That is a powerful foundation as we continue to invest in tools and technology designed to deepen that relationship and drive their success. A quarter ago, we laid out our 2026 financial framework, positive full-year adjusted EBITDA, positive free cash flow, a third consecutive year of revenue growth, and a return to GMV growth by the Q4. One quarter in, we are on track against all four. Our conviction in the durability of our marketplace has never been stronger. Curation, scarcity, and human expertise are the foundation of 1stDibs, and in an era of AI-generated content, these qualities are becoming more valuable, not less. Thank you for your continued support.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

I'll now turn it over to Tom to review our Q1 financial results and Q2 outlook.

Tom Etergino
Tom Etergino
CFO at 1stDibs

Thanks, David. Q1 results were in line with our expectations across the board. For the 2nd consecutive quarter, we generated positive adjusted EBITDA, validating the structural changes we made to our cost base and confirming that our 2026 plan is developing as anticipated. Let me walk you through the numbers. GMV was $89.7 million, down 5% above the midpoint of guidance. The underlying dynamics played out largely as we expected. Traffic declined across paid and organic channels, a direct and expected consequence of the sales and marketing reductions we enacted in late 2025, as well as the soft demand environment. Order volume declined 12% as a result. However, our product investments continued to partially offset these headwinds, with conversion growing for the 10th consecutive quarter.

Tom Etergino
Tom Etergino
CFO at 1stDibs

Average order value reached approximately $2,750, up 7%, and median order value reached approximately $1,400, up 12%, both reflecting a continued mix shift towards higher value transactions, especially from trade. Together, these factors led to GMV down 5%, consistent with the Q4. We entered the quarter with approximately 75% of traffic from organic sources, a continued reflection of the enduring strength of the 1stDibs brand. Trade was a bright spot, growing year-over-year, driven by meaningful AOV expansion while consumer GMV declined. On a vertical basis, vintage and antique furniture grew year-over-year while all other categories declined. We ended the quarter with approximately 58,300 active buyers, down 10%, reflecting the deliberate reduction in sales and marketing spend enacted in late 2025.

Tom Etergino
Tom Etergino
CFO at 1stDibs

Unique sell account grew modestly on a sequential basis. We expect to return to growth for the full year as the impact of our 2024 and 2025 pricing actions continues to normalize. Listings grew 2% to nearly 1.9 million. Health of our supply base is further supported by our annual seller sentiment survey, which confirmed for the second consecutive year that 1stDibs is the primary sales channel for our sellers, underscoring the platform's growing importance to their businesses. Turning to the income statement, net revenue was $22.4 million, down 1%. Transaction revenue, which is tied directly to GMV, was approximately 74% of total revenue, with subscriptions making up most of the remainder.

Tom Etergino
Tom Etergino
CFO at 1stDibs

Take rates increased approximately 120 basis points, reflecting our 2025 pricing actions, Sponsored Listings growth, and a favorable prior year comparison due to high-value transactions. Gross profit was $16.7 million, up 2%. Gross profit margins were approximately 74%, up 2 percentage points year-over-year and at the high end of our target range, driven by a decrease in hosting and software costs as a percentage of revenue. Turning to operating expenses, total OpEx declined 11%, the direct continuation of the multi-year cost reset we began in 2022. Within that, the story is one of deliberate reallocation. Sales and marketing expenses were $6.3 million, down 31%. This reduction was a result of the strategic realignment implemented in 2025, which fundamentally reset our marketing organization and rationalized our performance marketing spend.

Tom Etergino
Tom Etergino
CFO at 1stDibs

We made a decision to prioritize unit economics over volume, and these numbers reflect that decision. Sales and marketing as a percentage of revenue was 28%, down from 40% a year ago. Technology development expenses were $6.2 million, up 10%, reflecting the impact of our annual merit cycle in March and higher headcount-related costs as we rebalanced our talent towards high-impact product and engineering roles. As a percentage of revenue, technology development was 28%, up from 25% a year ago. We are systematically reallocating resources away from sales and marketing and towards product and engineering. Within our flat headcount framework, we are onboarding the final planned roles in support of our 2026 roadmap and expect this talent rebalancing to conclude by the end of the Q2, leaving us with a leaner team with more concentrated on platform innovation.

Tom Etergino
Tom Etergino
CFO at 1stDibs

General administrative expenses were $6.8 million, down 2%. As a percentage of revenue, general administrative expenses were 30% versus 31% a year ago. Lastly, provision for transaction losses were approximately $700,000, 3% of revenue, down from 4% a year ago and at the midpoint of our historical range of 2%-4%. As I mentioned previously, total operating expenses were $20 million, down 11%. Total operating expenses also reflect approximately $500,000 in severance charges, predominantly in sales and marketing, as we refined our organizational structure to most effectively support our 2026 priorities. Our commitment to expense discipline remains unchanged. Adjusted EBITDA was approximately $600,000, representing a margin of approximately 2.5%. The last two quarters have been Adjusted EBITDA positive, both delivering against a challenging demand backdrop.

Tom Etergino
Tom Etergino
CFO at 1stDibs

This is the direct result of this cost structure we rebuilt starting in 2022. It underpins our confidence in positive full-year adjusted EBITDA. The Q1 was an encouraging start against our full-year free cash flow commitment. We generate $8,000,000, a positive early indicator that our 2026 target is within reach. We also generate $1.1 million of cash flow from operations. Cash, cash equivalents, and short-term investments ended the quarter at $85.3 million, down $9.8 million sequentially, primarily reflecting $9.1 million in share repurchases. During the quarter, we repurchased approximately 1.7 million shares, leaving approximately $1 million of remaining authorization at quarter end. Since inception, we have repurchased approximately 9 million shares for approximately $44.4 million. Turning to the outlook.

Tom Etergino
Tom Etergino
CFO at 1stDibs

Our guidance reflects quarter-to-date results and our forecast for the remainder of the period. We forecast Q2 GMV between $86 million and $91 million, or down 4% to up 1%. Net revenue of $21.6 million to $22.6 million, or down 2% to up 2%, and adjusted EBITDA margin between -2% and +2%. Our GMV guidance reflects a deliberate strategic trade-off, the intentional impact of our sales and marketing reductions as we prioritize a structurally higher margin profile over short-term volume. Quality-driven performance. While traffic remains a headwind, we expect continued growth in conversion and AOV and sequential improvement in our year-over-year growth rate helped by progress on our product roadmap.

Tom Etergino
Tom Etergino
CFO at 1stDibs

Our revenue guidance reflects the continued growth in Sponsored Listings, as well as a modest contribution from our first sponsored event, an initiative we are beginning to test in the Q2 as part of our advertising program. Our adjusted EBITDA margin guidance reflects structural efficiency, realized gains from operating expenses following our September realignment. Strategic reinvestment, a sequential increase in personnel expenses driven by the annual merit increases effective in March and targeted hiring in product and engineering as part of our strategic realignment and gross margin expansion. We continue to expect gross margins of 72%-74%. While we are not providing full year guidance at this time, we are confirming our 2026 financial framework. We expect to deliver a third consecutive year of revenue growth, reflecting the resilience of our marketplace.

Tom Etergino
Tom Etergino
CFO at 1stDibs

We anticipate a return to positive year-over-year GMV growth by the Q4, driven by the compounding impact of our product roadmap. We expect gross margins of 72%-74%, up from 71%-73% in 2025. We expect revenue take rates of 25%-26%, up from 24%-25% in 2025. We remain focused on high quality, efficient growth with a full year 2026 outlook of positive adjusted EBITDA and positive free cash flow. Underpinning this plan is the assumption that macroeconomic conditions, particularly those impacting the housing market and consumer discretionary spending, remain stable. Our 2026 financial framework is unchanged, and the Q1 gives us confidence that we are on the right path. Gross margins came in at the high end of our target range. Adjusted EBITDA was positive for the second consecutive quarter.

Tom Etergino
Tom Etergino
CFO at 1stDibs

We generated free cash flow and our product roadmap is advancing on schedule. Our plan is working. 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.

Operator

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We do ask that you pick up your handset when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. Now please stand by while we compile the Q&A roster. Your first question comes from the line of Bobby Brooks with Northland Capital Markets. Your line is open. Please go ahead.

Bobby Brooks
Bobby Brooks
Analyst at Northland Capital Markets

Good morning to you. Thank you for taking my question. First, I wanted to ask, last quarter, you know, we discussed a handful of kind of internal levers you could pull to really reignite growth, and I think it would be helpful for investors to hear that discussion as well. Can you talk about those levers and maybe those levers are being pulled today? If not, maybe the timeline of them being pulled.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

Sure. Of course, and good morning. I think you're referring to our product roadmap. Our roadmap is organized around four of the highest potential areas that we believe we have in the business, and those are discovery, pricing, shipping, and service, covering the full purchase funnel. In Q1 we made progress in each of them. Just calling out a couple of the big ones, I would say the highest impact wins in the quarter were around discovery, shipping, and service. Maybe just a couple of quick examples. In search, we implemented AI-driven metadata improvements, which drove a 4% higher search success rate and importantly reduced null search results by more than 25%. Reducing null search results is especially important in the long tail marketplace like ours.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

We're gonna keep on charging on search because we do view it as potentially one of our highest leverage areas. We've got a visual search release lined up for Q2, and then after that, our first natural language search release targeted for Q3. Another example would be shipping, which obviously is a big source of friction, particularly in, you know, given that furniture is the majority of our GMV. In the quarter, we integrated USPS into our shipping infrastructure, which had the impact of reducing parcel rates on packages under 20 lbs by 30%-50%. We feel like in each of the four tracks, and we're in a good place and we're making progress, but we also feel like it's early in that regard and that there's a lot more opportunity ahead of us than there is behind us.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

As with all product roadmaps, we also expect the impact of these improvements to compound over time.

Bobby Brooks
Bobby Brooks
Analyst at Northland Capital Markets

That's super helpful. Thank you very much. Maybe shifting gears to more sticking with the AI search, I think that's interesting of the well, maybe just explain, like what is a 4% search success rate like improvement? Like, what does that look like when someone is using the website? Like the 25% null search rate down, does that just simply mean if someone's searching something like there's 25% less of the time someone searches for something, nothing comes back? Could you just help clarify?

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

I mean, you know, you can imagine starting with a null search success rate. I mean, you can imagine the impact on a buyer of searching for something and getting 0 results, right? That manifests itself in, you know, at worst, a bounce, right? You leave the experience, and at best, you know, a much more, a much higher friction discovery process. Then, you know, the opposite is true as well, right? I mean, when you find what you're looking for, you're that much more likely to proceed to the next step in the funnel. Again, you know, we've got 1.9 million items. Almost all of them are one of a kind, which means that, you know, we drive a disproportionate amount of activity around search.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

That's why I say it's a super high leverage kind of entry point and part of the discovery experience. I think probably a little more so in our business than in a less long tail oriented marketplace or retail experience.

Bobby Brooks
Bobby Brooks
Analyst at Northland Capital Markets

That's super helpful. Thank you.

Operator

Your next question comes from the line of Ralph Schackart with William Blair. Your line is open. Please go ahead.

Ralph Schackart
Ralph Schackart
Analyst at William Blair

Good morning, thanks for taking the question. First question. Just on GMV growth that you noted, that should return by the Q4. Can you just remind us, do you need a change in the macro conditions, or can you deliver that growth in the current market environment? David, you've listed a lot of, you know, great product improvements and some new innovations, and mentioned obviously that they build on each other. Any way you could isolate, you know, maybe a couple that you think are having the biggest near-term impact and then maybe on a longer-term basis, some of those products that you are really excited about that could, you know, drive, longer and more sustained growth? Thank you.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

Sure. Hey, Ralph. In terms of GMV growth, we do remain confident in a return to growth by Q4, and we do not think that is dependent on a market recovery. Two reasons, really. One is, in Q4, we'll begin lapping a full quarter's worth of the over 40% reduction in sales and marketing spend that we initiated in late 2025. Until then, obviously that remains a headwind on GMV growth. Although that said, we're already seeing a trajectory shift, I think. Second is, you know, we do have strong conviction in our product roadmap. Product roadmaps for us, as is the case with, you know, almost all consumer internet companies, compound over time.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

You know, as I mentioned in my answer to Bobby's question, we're seeing early success there, and we do expect that to compound over time. Just to come back to the point I just made, I think it is worth pointing out that at the midpoint of Q2 guidance, we do expect GMV growth rates to improve sequentially from the -5% in Q1 to -2% again at the midpoint in Q2. From there, we do see a clear and straightforward path to a return to year-over-year growth by Q4 this year. In terms of the product roadmap, I mean, we do, you know, we think pretty hard about where we allocate our capital and our scarce human resources.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

Those four areas that I highlighted, discovery, price, service, and shipping, we do think are the highest impact areas. You know, all of them are important. I mean, again, I think, you know, as we look at the experience of other marketplaces, certainly, in the case of one-of-a-kind marketplaces, search is extraordinarily important. If you don't find what you're looking to buy, then, you know, there's no reason to come back. You're certainly, you know, less likely for a visit to consummate in an order. Logistics, you know, again, I don't think we're reinventing the wheel here. Logistics is extraordinarily important on the other side of the funnel, and we were super pleased that we were able to reduce costs by as much as we were for parcel.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

You know, we've got a lot ahead of us in terms of logistics. Tracking is something where, you know, we're not at table stakes yet in terms of meeting baseline consumer expectations, I think, for e-commerce experiences. We will be there. You know, we're gonna use ML quite heavily to increase our pre-quote coverage on freight. There are lots of levers within shipping, lots of levers within search. I mentioned semantic search and natural language search, which is on the come. Pricing is an area we've talked about in the past. In Q1, we were able to expand our price parity coverage by 44%, and we have some other improvements planned for the consumer experience there.

David Rosenblatt
David Rosenblatt
CEO at 1stDibs

Lastly, service, we feel like there's an opportunity to substantially increase both our service levels and the efficiency with which we deliver those. Again, you know, I would just close by saying we're super happy with our progress in Q1, but we have an ambitious slate in front of us and much more to come than we've already achieved, which is part of the reason why I'm very optimistic about Q4.

Ralph Schackart
Ralph Schackart
Analyst at William Blair

Okay. Thank you, David.

Operator

We have reached the end of the Q&A session, and this concludes today's call. Thank you for attending. You may now disconnect.

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