1stdibs Navigates Mixed Earnings in Q1 2025: Growth Amid Macroeconomic Crosswinds

In a quarter marked by cautious optimism, 1stdibs.Com, Inc. (ODDS) reported its Q1 2025 earnings, revealing a complex interplay of modest gains, operational hurdles, and strategic bets. While the luxury online marketplace saw incremental progress in user engagement and market share, macroeconomic headwinds and profitability pressures underscored the fragility of its recovery. Let’s dissect the numbers and assess the path forward.

Revenue: A Miss Amid Marginal Gains

1stdibs’ net revenue rose 2% year-over-year (YoY) to $22.5 million, narrowly missing analysts’ $23.28 million forecast. Gross Merchandise Value (GMV) grew 3% to $94.7 million, driven by a 4% increase in average order value (AOV) to $2,600. However, this progress was tempered by a 5% decline in orders under $1,000—a worrying sign for the platform’s ability to attract lower-budget buyers.

The company’s guidance for Q2 paints an even bleaker picture: GMV is projected to fall as low as $85 million, while net revenue could drop 5% YoY. These downgrades reflect lingering softness in discretionary spending, particularly in luxury home goods, where trade policy shifts and housing market declines are taking their toll.

Profitability: Widening Losses, But Margins Hold Steady

Net losses widened to $4.8 million in Q1 2025 from $3.3 million a year earlier, with an EPS of -14 cents—significantly worse than the -8 cents expected. Adjusted EBITDA, however, showed a marginal improvement, narrowing to an 8% loss ($1.7 million) versus 8.1% in Q1 2024. Yet, Q2 guidance anticipates a deterioration to a 10%–14% margin loss, driven by higher transaction loss provisions (now 4% of GMV, up from 2% in 2024) and rising technology costs.

The company’s focus on cost discipline—sales and marketing expenses fell 1% YoY—contrasts with a 18% jump in tech spending, reflecting investments in machine learning (ML) tools and platform enhancements. These trade-offs highlight the tension between short-term profitability and long-term competitiveness.

User Growth: A Bright Spot Amid Uncertainty

One silver lining is the consistent rise in active buyers, which grew 7% YoY to 65,000—the fourth consecutive quarter of sequential growth. This expansion, fueled by improved conversion rates and platform usability, suggests 1stdibs is solidifying its position as a go-to destination for luxury home decor buyers.

Listings also rose 5% YoY to 1.8 million, despite a 23% YoY drop in unique sellers to 5,900. Management attributed the seller decline to “subscription pricing optimizations,” noting that churn affected less than 50 basis points of GMV. With plans to stabilize seller numbers in Q2, the company aims to capitalize on its role as sellers’ primary sales channel—a position that now surpasses their physical showrooms.

Strategic Levers: ML, Transparency, and Cash Reserves

1stdibs is doubling down on technology to build trust and efficiency. Its ML pricing models, now fully deployed across all verticals, have achieved 95% adoption for items under $9,000, enhancing buyer confidence. Shipping enhancements, such as real-time parcel quotes, have improved pre-quote coverage to nearly 100%, reducing cart abandonment.

With $101 million in cash and investments, the company maintains a fortress balance sheet. Share buybacks—$1.8 million in Q1 alone—signal confidence in undervaluation. At a post-earnings price of $2.70, the stock trades at just 2.8x its 2023 revenue, far below peers like Wayfair (W) or Etsy (ETSY).

Risks and the Road Ahead

The company’s path remains fraught with macroeconomic and competitive risks. A 4% provision for transaction losses—a two-percentage-point increase from last year—highlights heightened uncertainty in buyer-seller dynamics. Meanwhile, the housing market’s slump and trade policy volatility could further dampen demand for luxury home goods.

Conclusion: A Compelling, but Fragile, Value Play

1stdibs’ Q1 results reveal a company navigating a precarious balance: incremental growth in users and market share, yet struggling with profitability and macro pressures. The stock’s post-earnings rise—despite missing forecasts—suggests investors are betting on its long-term potential. Key positives include:

• Cash Reserves: $101M in liquidity provides a buffer for market volatility.
• User Momentum: Active buyers grew 7% YoY, with conversion rates near 2023 highs.
• Strategic Tech Investments: ML pricing and shipping tools aim to reduce friction and improve retention.

However, risks loom large. A 10%–14% adjusted EBITDA margin loss in Q2, coupled with a projected drop in GMV, underscores the fragility of its recovery. Should macro conditions worsen—or competitors like Chairish or 1stDibs’s own pricing strategy backfire—the company could face further headwinds.

For investors, the decision hinges on whether 1stdibs can convert its user growth into sustainable profit. With a strong cash position and a valuation near decade lows, the stock offers asymmetric upside if the company executes its tech roadmap and macro conditions stabilize. But for now, this is a high-risk, high-reward bet on a luxury market still waiting for a rebound.

In sum, 1stdibs’ Q1 results are a mixed bag—but one that hints at a company fighting to reclaim its place in a niche, yet volatile, segment of the luxury goods market. The next few quarters will test whether its strategic bets can outweigh the economic odds stacked against it.