1stdibs.com, Inc. Q4 FY2024 earnings call

Key Points

• Exceeded Q4 guidance, achieved highest GMV growth since 2021, and gained market share. Full year 2024 saw revenue, conversion, active buyers, orders, and gross profit inflect back to growth.
• Operating expenses declined for the second consecutive year, and adjusted EBITDA margins were the best as a public company. Relative to 2023, revenue increased by $3.6 million and adjusted EBITDA by $5.3 million.
• Q4: GMV up 9%, revenue and adjusted EBITDA margins exceeded guidance. Conversion rates grew for the fifth quarter, traffic declines moderated, and average order value turned positive.
• Product velocity: Number of A/B tests ran during the quarter grew double-digits sequentially and triple digits year-over-year. Launched machine learning-based pricing model for jewelry, re-architected checkout back end for speed, and increased prominence of seller recommendations.
• 2025 road map: Anchored by four themes - accelerating organic traffic growth, competitive pricing, optimizing conversion funnel, and elevating service.

In the fourth quarter, GMV was up 9%, with quarterly GMV, revenue, and adjusted EBITDA margins exceeding the high end of guidance. Net revenue was $22.8 million, up 9%, marking the third consecutive quarter of year-over-year expansion. Transaction revenue was approximately 75% of total revenue, with subscriptions making up the remainder. Vertical performance: Vintage & Antique furniture, the largest vertical, grew double digits, while new and custom furniture was down 1%. Conversion rates grew for the fifth consecutive quarter, with traffic declines moderating and average order value inflecting from a headwind to a tailwind. Approximately 70% of traffic was organic, and 30% was paid.

Q1 2025 Forecast

• GMV: $90 million to $96 million (down 2% to up 5%)
• Net revenue: $21.7 million to $22.8 million (down 2% to up 3%)
• Adjusted EBITDA margin: Loss of minus 12% to minus 8%
• 2025: Aims for GMV growth, operating leverage at mid-single digit revenue growth, and headcount flat.

• Market downturn in luxury home furnishings is cyclical and uncertain. - Seller churn was elevated due to retiring the essential seller program, though impact on GMV and listings was de minimis. - Macro environment changes could affect revenue growth.

Q: Good morning. Thanks for taking the questions. First, as we think about marketing strategy as you look to navigate depressed home transactions, particularly on the luxury side, what are key channels or investments you're making?

A: When thinking of marketing strategy, customer acquisition is key. We've seen success on Facebook, and continue to make incremental improvements in primary channels like Google. Q4 achieved higher volumes without relaxing return criteria.

Q: Agentic AI is a big focus. Can you talk about any efforts with Agentic AI or AI more broadly?

A: AI and ML are important. Built a team in late 2023. ML-based pricing models rolled out for jewelry after furniture in Q3. Also pointing ML at shipping pricing. Applications include personalization and customer service agents, with pricing being a key focus.

Q: Outside of the macro, what are the main levers to bring adjusted EBITDA closer to positive territory? And how are you balancing those measures with investments in growth?

A: Key to EBITDA positive is sustained revenue and GMV growth. We're disciplined on expenses and aim to deliver operating margin leverage at mid-single digit revenue growth in 2025.

Q: Just in terms of expecting churn normalization in the first half of 2025. Can you give an update there, the signals you're seeing, how that's progressing? And then on mid-single digit revenue growth.

A: Listings grew 5% in Q4, ending with over 1.8 million listings. Churn from retiring the essential seller program was elevated but the churn cohort had de minimis impact on GMV and listings. Mid-single digit revenue growth is related to operating leverage where our expense base is set to deliver operating margin leverage at that growth level.