1stdibs.com (DIBS) 6 Aug 24 2024 Q2 Earnings call transcript

In the second quarter of 2024, 1stDibs, the leading online marketplace for luxury and vintage items, showcased a resilient performance despite the broader online furniture and premium furnishings markets experiencing a contraction. The company reported a return to growth, marking a significant turning point for the business after eight challenging quarters.

Strategic Initiatives Pay Off

David Rosenblatt, CEO of 1stDibs, expressed optimism about the company's future prospects, attributing the recent success to strategic initiatives aimed at streamlining operations, reengineering costs, and narrowing the focus to high return on investment opportunities. These actions, according to Rosenblatt, have resulted in cost reductions that have not compromised growth. The company also reported a sequential increase in the number of active buyers and improving conversion rates for both new and returning buyers, demonstrating the effectiveness of these strategic moves.

Improved Conversion Rates and Orders

A key highlight of the quarter was the return to growth in orders, which increased by 5% year-over-year, driven by continued conversion improvements and increased performance marketing investments. This growth is particularly noteworthy given the challenging market conditions, indicating the company's ability to outperform despite macroeconomic headwinds.

Infrastructure and Supply Chain Enhancements

The company's engineering team made significant strides in upgrading its routing infrastructure, resulting in improved site speed and reduced error rates. This enhancement is expected to translate into higher organic traffic, conversion improvements, and more orders in the future. On the supply side, 1stDibs ended the quarter with over 1.8 million listings, up 6%, showcasing consistent listing growth.

Financial Performance and Guidance

Financially, 1stDibs reported a return to revenue growth, with net revenue up 6% to $22.2 million. The company's adjusted EBITDA margin also improved significantly, reflecting the benefits of cost reductions and revenue growth. Looking ahead, the company forecasts a third quarter with projected GMV of $84 million to $91 million and adjusted EBITDA margin loss of minus 15% to minus 10%, reflecting typical seasonal softness and temporary average order value headwinds.

Macroeconomic Impact and Outlook

CEO David Rosenblatt expressed confidence in the company's roadmap, particularly as the luxury home sales market begins to recover. The company's focus on conversion rate improvements, order growth, and strategic initiatives positions it well for long-term success. Despite ongoing macroeconomic challenges, 1stDibs remains optimistic about its trajectory, with a commitment to driving further improvements and ultimately achieving sustained growth and profitability.

In summary, 1stDibs' second quarter earnings call revealed a company that has navigated challenging market conditions with resilience, showcasing strategic initiatives that have resulted in a return to growth. With a focus on improving conversion rates, enhancing infrastructure, and maintaining a stable, scalable infrastructure, 1stDibs is well-positioned for future success.