1stdibs.com NASDAQ: DIBS CEO David Rosenblatt outlined the luxury marketplace’s strategy for returning to growth while sustaining adjusted EBITDA profitability, emphasizing product improvements, artificial intelligence tools and a relatively low reliance on paid advertising.
Rosenblatt described 1stDibs as a curated online marketplace for one-of-a-kind luxury products, including furniture, jewelry, art and fashion. The company has operated for more than 25 years and reported an average order value of about $2,850, roughly six times that of other marketplaces commonly considered luxury platforms, according to Rosenblatt.
Since becoming an e-commerce platform, the company has sold more than $3.3 billion of merchandise to more than 1.2 million customers, he said. Its marketplace includes about 6,000 vetted professional sellers and approximately $10 billion in listed inventory value, compared with annual gross merchandise value of roughly $365 million.
Marketplace model and customer base
Rosenblatt said 1stDibs operates an asset-light model and owns no inventory. Sellers fulfill purchases, while the company offers shipping programs intended to provide buyers and sellers with better economics and service levels.
The company generates revenue through seller subscription fees, commissions and a smaller advertising component. Its combined take rate is about 25%, Rosenblatt said. He added that the marketplace’s combined fraud and return rate is less than 5% across orders, which he contrasted with a rate in the “roughly 30% zip code” for luxury fashion marketplaces.
About 70% of demand comes from consumers, whom Rosenblatt characterized as generally higher-net-worth, older and predominantly female. The remaining 30% comes from professional buyers, particularly interior designers, who tend to purchase repeatedly and place higher-value orders.
The business began in 2000 as a listings platform centered on antique and vintage furniture sellers in Paris and later New York. For its first decade, transactions were completed off-platform through calls or emails with sellers. After raising venture funding in 2011, the company focused on building a fully transactional marketplace, expanding internationally and moving beyond vintage furniture into adjacent categories.
Today, about 50% of GMV comes from the company’s original category of secondary-market luxury design, Rosenblatt said. The rest comes from both new and secondary-market products across furniture, jewelry, art and fashion.
Profitability and growth outlook
Rosenblatt said the company went public in June 2021, near what he described as the peak of the real estate market. GMV subsequently declined for several years, and the company was adjusted EBITDA negative for much of that period.
1stDibs reached adjusted EBITDA breakeven in the fourth quarter of last year, he said. At the midpoint of its current-quarter guidance, it would mark a fourth consecutive quarter at adjusted EBITDA breakeven.
In the second quarter, the company reported $96 million in GMV, more than $23 million in revenue and $1.3 million in EBITDA, Rosenblatt said. GMV grew 7% in the quarter, while adjusted EBITDA margin was 6%.
Management had expected to return to GMV growth in the fourth quarter but achieved growth two quarters earlier, in the second quarter, Rosenblatt said. The company expects growth again in the third quarter at the midpoint of guidance, despite comparisons against a period following a substantial reduction in paid advertising.
In the fourth quarter of last year, 1stDibs cut paid advertising by 50%, contributing to GMV declines in that quarter and the first quarter, according to Rosenblatt. The company’s largest paid-advertising channel is Google, followed by Meta platforms, including Instagram. He said the company measures advertising on a lifetime-value basis and does not spend below its targeted return threshold.
Product and AI initiatives
Rosenblatt said the company is seeking to drive most growth through product improvements rather than extensive advertising. About half of its employees work in product and engineering, he said.
The product roadmap, led by Chief Product and Marketing Officer Bradford Shellhammer, is focused on discovery, pricing and trust, shipping, and customer service. Management is working to make it easier for buyers to search a marketplace with about 2 million items, including through search and personalization features.
The company recently introduced a machine-learning personalization algorithm for its homepage and began rolling it out to email marketing, Rosenblatt said. It is also using machine learning to monitor seller compliance with price-parity policies and to expand its ability to quote shipping prices before checkout.
- Shipping pre-quote coverage has increased from roughly 60% to 65% of marketplace items to 95%, Rosenblatt said.
- AI tools are being used to automate lower-level customer-service inquiries, allowing staff to focus on more complex, high-value transactions.
- The company is building an influencer network called 1stDibs Tastemakers to expand awareness beyond its historical customer base.
Rosenblatt said more than half of sales involve negotiation or exchanges between buyers and sellers, an element that requires the company to make the process more approachable for consumers accustomed to conventional e-commerce checkout experiences.
While the company sees potential benefits from an eventual recovery in real estate markets, Rosenblatt said it is not relying on that recovery to support current growth plans. He characterized the real estate weakness as cyclical rather than secular and said a recovery, whenever it occurs, could provide an additional tailwind to top-line growth.
About 1stdibs.com (NASDAQ:DIBS)
1stDibs.com is an online marketplace specializing in high-end furniture, fine art, jewelry, watches, fashion and decor. The platform curates offerings from independent dealers, galleries and luxury brands, enabling vetted sellers to reach discerning buyers around the world. Headquartered in New York with an additional office in Paris, 1stDibs has built a reputation for quality and authenticity through rigorous seller screening and detailed item vetting.
Launched in 2001 by founder Michael Bruno, the company has grown into a leading destination for both private collectors and interior design professionals.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Continue following MarketBeat
Add MarketBeat as your preferred source on Google to see our latest stories in your feed.
Before you consider 1stdibs.com, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and 1stdibs.com wasn't on the list.
While 1stdibs.com currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
With the proliferation of data centers and electric vehicles, the electric grid will only get more strained. Download this report to learn how energy stocks can play a role in your portfolio as the global demand for energy continues to grow.
Get This Free Report
