1stDibs.com, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. 1stDibs operates an online marketplace for vintage, antique, and contemporary luxury design products and related services.
Financial and operating performance
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Net revenue | $26.6 million | $25.5 million | Up 4% |
| Gross profit / margin | $18.9 million / 71.1% | $18.5 million / 72.5% | Margin down 1.4 percentage points |
| Operating loss | $6.7 million | $2.5 million | Loss increased |
| Net loss | $6.4 million | $2.2 million | Loss increased |
| Adjusted EBITDA (non-GAAP) | $(4.7) million | $(1.3) million | Loss increased |
| GMV | $117.5 million | $113.7 million | Up 3% |
| Orders | 39,392 | 41,928 | Down 6% |
| Active buyers | 71,311 | 64,731 | Up 10% |
Marketplace transaction fees drove most revenue; they represented 70% of revenue versus 72% a year earlier. Marketplace services revenue rose to $25.5 million from $24.7 million, while other services revenue increased to $1.1 million from $0.8 million.
Cash flow and liquidity: Operating cash flow was $(6.2) million, versus positive $6.1 million in Q1 2021. Investing cash use was $0.8 million; financing provided $0.2 million. Cash and cash equivalents were $161.4 million at March 31, 2022, down from $168.2 million at year-end 2021; cash, cash equivalents, and restricted cash totaled $164.7 million. Current assets were $169.2 million and current liabilities $33.1 million. Management said existing cash was expected to fund operations and capital expenditures for at least 12 months, while noting longer-term funding needs could require borrowing or equity issuance.
Debt and other balance-sheet items: The balance sheet does not report borrowings. Adoption of lease accounting added $23.9 million of operating lease assets and $26.5 million of lease liabilities at quarter-end. Accumulated deficit was $274.8 million.
Material changes and management commentary
- Revenue grew modestly, but gross margin declined as payroll and benefits in cost of revenue grew faster than revenue.
- Technology development expense rose 46% to $5.8 million, primarily from added headcount and consulting, including website localization for international expansion.
- General and administrative expense rose 45% to $6.4 million, including higher liability insurance, headcount, and stock-based compensation, largely related to operating as a public company.
- Provision for transaction losses increased 59% to $1.7 million, mainly reflecting a higher volume of transaction and shipping accommodations.
- Operating cash flow deteriorated by $12.4 million year over year, chiefly because seller payables decreased rather than providing the prior-year cash benefit, and because net loss increased.
Outlook, risks, and unusual items
- The filing provides no specific revenue or earnings guidance. Management expects operating losses and negative operating cash flows may continue as it invests in expansion.
- Management described COVID-19 effects as uncertain, including possible shifts in online luxury shopping, supply, and consumer demand. It also cited economic conditions, shipping disruption, competition, and international expansion as risks.
- The company tested seller pricing tiers in January 2022, including plans with different subscription and commission structures.
- The company adopted ASC 842 lease accounting on January 1, 2022; adoption had no material effect on the income statement. The quarter included $1.3 million of lease expense.
- The recently launched NFT platform and transactions using Ether carry legal, regulatory, cybersecurity, tax, and market-acceptance risks. The filing also notes a voluntary initial notification to OFAC concerning potential past sanctions violations; outcomes and potential exposure are not specified.
- The company reported ordinary-course claims and contingencies and said it did not believe pending proceedings were likely to have a material effect. It reported effective disclosure controls as of March 31, 2022 and no material control changes during the quarter.
Key facts for investors to verify
- Whether revenue and GMV growth can improve while orders declined and gross margin compressed.
- Whether higher technology, public-company, and transaction-loss expenses translate into growth or operating leverage.
- The pace of cash use relative to management’s stated 12-month liquidity outlook and potential longer-term financing needs.
- Progress and costs of international expansion, seller pricing tests, and the NFT platform, including any regulatory or sanctions developments.
- Potential dilution from equity awards: 2.5 million RSUs were outstanding at quarter-end, and stock-based compensation expense was $1.3 million for the quarter.