Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- 1stdibs.com Inc (DIBS, Financial) delivered GMV and revenue at the high end of guidance and adjusted EBITDA margins above the high end.
- The company reported a return to growth after eight challenging quarters, marking a significant turning point for the business.
- There was a sequential increase in the number of active buyers for the first time since late 2021, with improving conversion for both new and returning buyers.
- The company achieved record high returning buyer conversion rates and double-digit growth in new buyer conversion.
- 1stdibs.com Inc (DIBS) completed a $25.2 million share repurchase program, which is expected to be accretive in the long run.
Negative Points
- The luxury home furnishings industry is still contracting, and the broader online furniture and premium furnishings markets are facing soft demand.
- Average order value and traffic remained headwinds to GMV growth, consistent with recent quarters.
- The number of unique sellers decreased by 5% due to higher churn, primarily initiated by the company.
- The company anticipates temporary intensification of average order value headwinds in the third quarter due to lapping one-time factors from 2023.
- Despite improvements, the company still reported an adjusted EBITDA loss of $1.6 million, although this was an improvement from the previous year.
Q & A Highlights
Q: Could you provide additional color on what went into the 3Q guide, particularly given such a solid 2Q you just had?
A: David Rosenblatt, CEO: We were happy with the second quarter and our prognosis for the third quarter. The GMV guidance reflects comping a quarter last year with an unusually high cluster of high average order value orders. Typically, 3% to 5% of our orders are $100,000 plus, but last year it was roughly 8%. We don't expect that to continue past the third quarter. Outside of that, at the midpoint of guidance, we're still projecting growth in orders, active buyers, and revenue.
Q: Active buyers stabilized a bit in 2Q and grew sequentially. Is that a trend we can expect to continue going forward, or should we expect some choppiness near term?
A: Tom Etergino, CFO: Active buyers grew sequentially by 1%, which is a trailing 12-month metric and a lagging indicator. Order growth, a leading indicator of active buyer growth, was 5% year over year. We expect continued order growth in the third quarter, which should convert into active buyer growth.
Q: You mentioned last call that demand metrics were recovering across the board. Is that still the case, and what are your expectations for the back half of this year, particularly given the increased likelihood of rate cuts?
A: Tom Etergino, CFO: Our core market for luxury furnishings was down mid to high single digits, but we were up 5% on an order basis and also on a GMV basis, indicating we are outperforming a weak market. If interest rates go down, it should be a positive driver for us, stimulating more activity in the real estate market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
