1stdibs.com, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021, compared with the same periods in 2020. 1stDibs operates an online marketplace for vintage, antique and contemporary luxury design products, alongside software and advertising services.
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Net revenue | $25.6 million | $21.0 million | $75.8 million | $58.0 million |
| Gross profit / margin | $18.1 million / 70.6% | $14.7 million / 69.9% | $53.9 million / 71.2% | $38.7 million / 66.8% |
| Operating loss | $(6.9) million | $(1.8) million | $(14.0) million | $(11.5) million |
| Net loss | $(6.6) million | $(1.4) million | $(12.9) million | $(10.9) million |
| Adjusted EBITDA (non-GAAP) | $(5.4) million | $(0.5) million | $(9.8) million | $(5.7) million |
| Net cash used in operating activities | Not presented by quarter | $(5.5) million | $(5.6) million |
Q3 net loss per share was $(0.17), versus $(0.47); nine-month net loss per share was $(0.90), versus $(2.01). The 2020 per-share figures included preferred-stock accretion; all preferred shares converted to common stock at the June 2021 IPO.
As of September 30, 2021, cash and cash equivalents were $167.1 million; cash, cash equivalents and restricted cash totaled $170.4 million. Current assets were $178.5 million and current liabilities $27.8 million. The balance sheet reports no debt balance. Accumulated deficit was $260.4 million. The company generated $119.6 million in financing cash flow during the first nine months, principally from its IPO.
Changes versus the prior comparable periods
- Revenue increased 22% in Q3 and 31% for the first nine months. Management attributed most of the increase to marketplace transaction fees and GMV growth.
- Q3 GMV was $109.2 million, up from $87.2 million; nine-month GMV was $330.3 million, up from $236.6 million. Orders rose to 37,355 in Q3 from 32,257 and to 117,658 for nine months from 88,793. Trailing-12-month active buyers were 71,783, compared with 53,057.
- Gross margin improved in both comparisons, supported by revenue growth and lower internal-use software amortization as a share of revenue. However, Q3 operating expenses rose 52% to $25.0 million, led by sales and marketing and general and administrative costs; the operating loss widened.
- Nine-month sales and marketing expense increased 37%, including higher performance marketing and buyer promotions. General and administrative expense increased 67%, primarily from public-company costs, including insurance, personnel and professional services.
Outlook, risks and notable items
- Outlook: The filing provides no specific quarterly or annual financial guidance. Management expects operating losses and negative operating cash flow could continue as the company invests in growth, but believes existing cash will fund operations and capital expenditures for at least the next 12 months. Longer-term funding needs may require borrowing or additional equity.
- IPO: The June 2021 offering raised $123.0 million net of underwriting discounts and commissions, before offering costs. Preferred stock converted into 19.2 million common shares. The company reported $5.5 million of deferred offering costs reclassified against IPO proceeds.
- Growth and execution: Management cited increased online luxury purchasing during COVID-19 but said whether this trend persists is uncertain. Risks include discretionary consumer demand, competition, seller and buyer retention, marketing efficiency, shipping disruption, product authenticity and transaction losses.
- NFT initiative: The company launched an NFT platform in August 2021 using Ethereum. The filing highlights uncertain market acceptance and evolving legal, regulatory, tax, cybersecurity and intellectual-property risks; it does not provide NFT financial performance.
- Regulatory and legal matters: The risk discussion says the company submitted an initial voluntary self-disclosure to OFAC concerning potential past sanctions violations. The company also reported ordinary-course claims and contingencies, but said it knew of no pending legal proceedings likely to have a material effect. It reported $2.2 million of sales and use tax contingencies on the balance sheet.
- Other: Management reported effective disclosure controls at reasonable assurance, with no material change in internal control over financial reporting during the quarter. The company expects material right-of-use assets and lease liabilities when it adopts lease accounting in 2022.
Investor verification priorities
- Track whether GMV and revenue growth convert into improving operating leverage, given the wider Q3 operating loss and sharply higher Adjusted EBITDA loss.
- Assess cash burn and runway against management’s 12-month sufficiency statement, including ongoing marketing, technology and public-company costs.
- Review buyer acquisition and retention economics, including promotional spending, active-buyer trends, order growth and transaction-loss provisions.
- Monitor developments related to the OFAC voluntary disclosure, sales-tax contingencies and the legal and regulatory exposure of the NFT platform.
- Check the company’s progress in sustaining product authenticity, seller service and shipping performance, and confirm the impact of the upcoming lease-accounting adoption.