1stdibs.com, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. 1stDibs operates an online marketplace for vintage, antique, and contemporary design products and related categories. Figures below are unaudited; dollar amounts are in millions unless stated otherwise.
Key financial and operating metrics
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Net revenue | $20.9 | $24.6 | $43.1 | $51.2 |
| Gross profit / margin | $14.6 / 69.8% | $16.6 / 67.6% | $29.5 / 68.4% | $35.5 / 69.5% |
| Operating loss | $(10.4) | $(0.6) | $(20.6) | $(7.4) |
| Net loss | $(8.3) | $(0.3) | $(16.5) | $(6.6) |
| Adjusted EBITDA, non-GAAP | $(4.6) | $(6.1) | $(9.8) | $(10.7) |
| GMV | $89.9 | $104.8 | $186.9 | $222.3 |
| Orders | 32,401 | 35,484 | 67,786 | 74,876 |
| Active buyers | 64,984 | 69,273 | 64,984 | 69,273 |
- Q2 revenue fell 15% year over year; first-half revenue fell 16%. Marketplace transaction fees declined with GMV, while the June 2022 sale of Design Manager reduced software-services revenue.
- Q2 gross margin improved by 2.2 percentage points, but first-half gross margin declined by 1.1 points. Adjusted EBITDA losses narrowed in both comparisons, while GAAP net losses widened; prior-year results included a $9.7 million gain on the Design Manager sale.
- Q2 operating expenses were $25.0 million, including $2.0 million of non-recurring restructuring charges. First-half stock-based compensation expense was $6.4 million, up from $4.5 million.
Cash, liquidity, and obligations
- At June 30, cash and cash equivalents were $45.4 million and short-term investments were $100.5 million; together, $145.9 million. Restricted cash was another $3.3 million. The company reported no material credit losses on its available-for-sale investments.
- Operating cash use was $9.3 million in the first half, versus $18.3 million a year earlier. Investing cash use was $100.3 million, primarily reflecting $110.4 million of short-term investment purchases; this largely represents a shift in cash allocation rather than operating expenditure.
- No borrowings are reported. Operating lease liabilities totaled $23.1 million, and non-cancelable contractual commitments were $30.5 million, primarily leases and software/support obligations.
- Accumulated deficit was $307.5 million. Management expects operating losses and negative operating cash flows to continue, but believes available cash, cash equivalents, and short-term investments can fund operations and capital expenditures for at least 12 months.
Outlook, management commentary, and risks
- In June, the company announced a workforce reduction of approximately 20% globally. It accrued $2.0 million of severance and benefits, unpaid as of June 30, and expected payments over the following 12 months. Management estimated annualized salary-and-benefit savings of approximately $9.0 million beginning in Q3 2023; the estimate excludes possible pay increases for remaining staff or new hires.
- No specific revenue or earnings guidance is provided in the filing. Management cites macroeconomic pressures—including housing and capital-market volatility, higher interest rates, inflation, geopolitical developments, and changing consumer behavior—as factors it believes have weighed on GMV and revenue, though their effects are difficult to isolate.
- In August 2023, after quarter-end, the board authorized a stock repurchase program of up to $20.0 million, with no time limit. Management says available liquidity is expected to cover potential repurchases as well as operating needs for at least 12 months.
- The company ceased further investment in its NFT platform in February 2023; previously minted NFTs remained available for sale. First-half results included $0.5 million of accelerated software amortization related to discontinuing NFT-platform support.
- The filing identifies a voluntary self-disclosure to OFAC concerning potential past sanctions violations. Outcomes and potential consequences are uncertain. The company also cites ongoing risks from discretionary consumer demand, seller and buyer retention, product authenticity, competition, cybersecurity, regulation, and continued operating losses.
- Management reported effective disclosure controls as of June 30, 2023 and no material change in internal control over financial reporting during the quarter. It does not believe ordinary-course legal matters are likely to have a material adverse effect.
Important facts for investors to verify
- Whether GMV, orders, and active buyers stabilize or continue to decline, and how those trends translate into marketplace revenue.
- Whether the workforce reduction delivers the estimated $9.0 million annualized savings from Q3 onward, including the timing of cash severance payments.
- Cash burn and runway, distinguishing operating cash use from investment purchases; also assess the composition, maturities, and liquidity of the investment portfolio.
- Any developments in the OFAC self-disclosure, and the potential financial or operational consequences.
- The execution and actual scale of repurchases under the $20.0 million authorization, alongside ongoing losses, lease obligations, and equity dilution from stock-based compensation.