1stdibs.com, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. 1stDibs operates an online marketplace for vintage, antique, and contemporary luxury design products. Figures below are in U.S. dollars; financial amounts are in millions unless otherwise noted.
Financial performance and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Net revenue | $22.7 | $25.6 | $73.9 | $75.8 |
| Gross profit / margin | $15.5 / 68.0% | $18.1 / 70.6% | $51.0 / 69.0% | $53.9 / 71.2% |
| Operating loss | $(9.9) | $(6.9) | $(17.2) | $(14.0) |
| Net loss | $(9.0) | $(6.6) | $(15.7) | $(12.9) |
| Adjusted EBITDA, non-GAAP | $(5.5) | $(5.4) | $(16.2) | $(9.8) |
Q3 GMV was $99.2 million, down 9% year over year; orders fell 6% to 35,235 and active buyers declined 5% to 68,011. Nine-month GMV was $321.5 million versus $330.3 million, and orders were 110,111 versus 117,658. Q3 basic and diluted net loss per share was $0.23, compared with $0.17; nine-month loss per share was $0.41 versus $0.90, with the prior-year comparison including preferred-stock accretion.
At September 30, cash and cash equivalents were $158.0 million; cash, cash equivalents, and restricted cash totaled $162.8 million. Current assets were $169.1 million and current liabilities $30.2 million. Operating cash use was $22.4 million for the nine months, compared with $5.5 million in the prior-year period. Investing activities provided $12.8 million, largely from the Design Manager sale; financing provided $1.5 million. The company reported $25.1 million of operating lease liabilities, including $2.7 million current, and no finance leases. Management said existing cash should fund operations and capital expenditures for at least 12 months, while noting longer-term needs could require borrowing or equity financing.
Material changes and unusual items
- Q3 revenue fell 11%, primarily because lower GMV reduced marketplace transaction fees; revenue also declined following the Design Manager sale. Nine-month revenue fell 3%.
- Q3 gross margin declined 2.6 percentage points. Nine-month cost of revenue rose 5%, including higher payroll and hosting costs, while technology development and general and administrative expenses increased 41% and 35%, respectively.
- In September, the company completed a restructuring involving approximately 10% of its workforce and recorded $0.6 million of severance and benefit costs. It expected no further restructuring charges; savings were not realized in Q3 because reductions took effect at month-end.
- On June 29, the company sold Design Manager for $14.8 million, received $14.6 million net cash proceeds (including $1.5 million held in escrow), and recorded a $9.7 million gain in the nine-month period.
- Stock-based compensation was $7.7 million for the nine months, up from $1.8 million. Adjusted EBITDA excludes stock compensation and other specified items and is a non-GAAP measure.
Outlook, risks, and contingencies
The filing provides no specific revenue or earnings guidance. Management expected operating losses and negative operating cash flows could continue as it invested in growth. It cited pandemic-related shifts in consumer behavior and shipping disruption, broader economic uncertainty affecting discretionary luxury spending, competition, and challenges attracting buyers and sellers. Other disclosed risks include marketplace authenticity and transaction losses, cybersecurity and privacy, international operations, and the regulatory and commercial uncertainty of its NFT platform.
The company disclosed an initial voluntary self-disclosure to OFAC concerning potential past sanctions violations; the filing does not quantify any possible exposure. It said routine legal matters were not expected to have a material adverse effect. Management assessed disclosure controls as effective at a reasonable-assurance level and reported no material changes in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether GMV, orders, and active buyers stabilize, and how marketplace revenue and take rate trend after the decline in activity.
- Whether the workforce reduction produces sustained cost savings and whether operating expenses and cash burn moderate.
- Cash runway against management’s stated 12-month assessment, including restricted cash and continuing lease commitments.
- The final outcome and any financial consequences of the OFAC self-disclosure, and the status of the $1.5 million sale escrow.
- How to interpret ongoing GAAP losses alongside Adjusted EBITDA, including the recurring scale of stock-based compensation.