DIBS

Good morning, everyone. Thank you for joining us, and welcome to the 1stDibs Q1 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. I would now like to hand the call over to Kevin LaBuz, Head of Investor Relations and Corporate Development. Kevin, please go ahead.

Good morning. Welcome to the 1stDibs earnings call for the quarter ended March 31st, 2026. I'm Kevin LaBuz, Head of Investor Relations and Corporate Development. Joining me today are Chief Executive Officer, David Rosenblatt, and Chief Financial Officer, Tom Etergino. David will provide an update on our business, including our strategy and growth opportunities, and Tom will review our Q1 financial results and Q2 outlook. This call will be available via webcast on our investor relations website at investors.1stdibs.com. Before we begin, please keep in mind that our remarks include forward-looking statements, including, but not limited to, statements regarding guidance and future financial performance, market demand, growth prospects, business plans, strategic initiatives, business and economic trends, and competitive position.

Our actual results may differ materially from those expressed or implied in these forward-looking statements as a result of risks and uncertainties, including those described in our SEC filings. Any forward-looking statements that we make on this call are based on our beliefs and assumptions as of today, and we disclaim any obligation to update them except to the extent required by law. Additionally, during the call, we will present GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which you can find on our investor relations website along with the replay of this call. Lastly, please note that all growth comparisons are made on a year-over-year basis, unless otherwise noted. I will now turn the call over to our CEO, David Rosenblatt. David?

Thanks, Kevin. Good morning, everyone. A quarter ago, we shared our expectations for our performance in 2026: disciplined execution, durable profitability, and steady roadmap progress. The 1st quarter delivered on all three. Our top-line results reflect the deliberate sales and marketing reductions we enacted late last year, and our bottom-line results reflect the structural cost work we have been executing since 2022. We are on track across revenue, costs, and product development, and our 2026 financial framework remains unchanged. The demand environment remains challenging. The U.S. housing market continues to hover near a 30-year low, weighing on consumer appetite for luxury home goods. While the near-term backdrop is soft, the long-term opportunity is significant. For example, there are approximately 5 million U.S. households worth at least $5 million, and our active buyer base of approximately 58,300 represents a fraction of that addressable market.

Our goal, however, is to generate growth irrespective of the timing of a market recovery. Once conditions normalize, we will be in a strong position to accelerate growth. Turning to the financials, our performance reflects both market conditions and the decisions we made last year to optimize our cost structure. GMV and revenue were $89.7 million and $22.4 million, down 5% and 1% respectively, which is a result not only of market conditions, but also of our decision to reduce performance marketing spending by nearly 50% in the Q4 of 2025. Adjusted EBITDA of $600,000 above the midpoint of guidance is proof that our financial model is now capable of generating adjusted EBITDA profitability even in a challenging external environment.

We have fundamentally re-engineered our business, lowering expenses and headcount since late 2022 to ensure future revenue recovery flows disproportionately to the bottom line. With that context, let me walk you through the quarter's performance. Funnel trends remained consistent. Traffic declines, driven primarily by our pullback in performance marketing and substantial sales and marketing headcount reductions, were partially offset by our 10th consecutive quarter of conversion growth and higher average order values. This conversion growth is the direct result of sustained product investment, and it gives us confidence that our roadmap is working. Underpinning these results is a deliberate shift in how we are allocating resources. While total operating expenses declined 11%, technology development spending grew 10%, a reflection of our conviction that product and engineering is our highest ROI investment. The returns are compounding.

AI-assisted development now accounts for over 50% of our new code, up from approximately 30% last quarter, enabling our team to ship faster than ever. Our 2026 roadmap is where those resources are being deployed. Organized around 4 pillars, discovery, pricing, shipping, and service, it is designed to remove friction, modernize the platform, and drive our anticipated return to GMV growth by the Q4. Before walking through our roadmap progress, it is worth stepping back to explain how we think about product development. Our roadmap is not organized around market conditions or macro assumptions. It is organized around solving specific customer problems. The barriers that prevent a design enthusiast from finding the perfect item, trusting its price, receiving it seamlessly, and getting help when they need it exist regardless of where the housing market is or what consumer sentiment looks like.

Solving them makes 1stDibs a better marketplace in any environment. At the heart of our roadmap is a transformation in how buyers find and engage with our marketplace. Our goal is to make 1stDibs a daily destination for design enthusiasts by meeting the buyer where she is and by removing the barriers to discovery. Today, finding the right item still requires too much expertise, the right terminology, the right category knowledge, and the right search keyword string. Our discovery roadmap is designed to change that, and the Q1 was a period of foundational progress in that regard. We begin by investing in content and community. In February, we launched 1stDibs Tastemakers, our brand ambassador program built around authentic voices from within and around our community. Early results are promising, with measurable increases in reach and engagement on Instagram.

We also debuted Objects of Desire, a podcast hosted by our editorial director, Anthony Barzilay Freund, and interior designer, Noz Nozawa, which explores the emotional and cultural stories behind the objects people love. These initiatives are designed to build the daily engagement and brand affinity that drives organic traffic and buyer acquisition over time. Once buyers arrive in our environment, we are making it easier for them to navigate our catalog. Using AI, we significantly enrich the metadata underpinning our inventory, giving our search engine more signal to work with. The results were immediate. Our search success rate improved by nearly 4%, and the number of null results decreased by over 25%, meaning more buyers are finding items to engage with on every visit. We also redesigned our search bar experience, resulting in higher search activity. These improvements are the foundation for what comes next.

Over the course of 2026, we are building toward AI-powered semantic and natural language search, the ability for a buyer to describe what they want in plain language and receive tailored results in return. A buyer shouldn't need to know the difference between a Chesterfield and a Knoll sofa to find the perfect piece. They should be able to tell us what they want in the manner they naturally think about it and trust that 1stDibs will understand. We are building that capability progressively throughout the year, and in the Q2, we plan to launch visual search, allowing buyers to upload an image and find similar items in our catalog. On personalization, the Q1 marks an important shift. We moved our homepage from an editorial-first to a recommendation-first experience.

For recognized users, the platform now surfaces personalized items based on their behavior and preferences from the moment they arrive, a step toward making 1stDibs a daily habit. We also deepened our work on favorites, driving an increase in the percentage of users who favorited an item sequentially, building the behavioral data that will help power personalization over time. Our progress in discovery highlights our belief that AI is a catalyst for our marketplace. While our moat remains firmly built on high-trust relationships and a physical catalog of one-of-a-kind items, AI is the tool that makes those items discoverable to a broader audience. Discovery brings buyers to the listing. Pricing gives them the confidence to buy it. Buyer trust is the foundation of every transaction on 1stDibs. Our pricing roadmap is designed to reinforce that trust by ensuring that every listing is priced transparently, competitively, and consistently.

In the Q1, we made progress on price parity, our initiative to ensure that items on 1stDibs are priced consistently across sales channels. By expanding to two additional resale platforms and by deepening our reach on existing ones, we increased the price parity coverage for listings by 44%. Early data suggests that items priced at parity with other sites convert at higher rates than those that are not, validating our thesis that pricing transparency directly drives buyer trust and confidence. In the Q2, we will invest in the offer and product detail page experience to help buyers and sellers reach agreement faster, reducing friction at one of the most critical moments in the transaction. We will also more prominently surface our price match guarantee and the pricing of comparable historical transactions, giving buyers greater confidence and context at the point of purchase.

Together, these initiatives are building a pricing environment where buyers can act with conviction. Once a buyer trusts the price, the next question is simple: What will it cost to get it delivered? Our vision for shipping is straightforward: reduce costs, increase transparency, and eliminate the uncertainty that causes buyers to abandon a purchase. Cost competitiveness and transparency at checkout are conversion drivers, and we made progress on both. During the quarter, we integrated USPS into our shipping infrastructure, giving buyers access to a broader range of carrier options at meaningfully lower parcel rates. Approximately 30%-50% cheaper for packages under 20 lbs. In the Q2, we plan to launch an ML-powered quoting tool that will deliver more competitive real-time pricing on our largest items, categories where shipping costs have traditionally been opaque and expensive.

Also on deck for the Q2 is a significant upgrade to our shipment tracking capabilities. Today, approximately 25% of orders lack real-time tracking, a source of buyer uncertainty that we are committed to eliminating. By expanding our tracking infrastructure from 10 to over 70 supported carriers, we will increase tracking coverage, ensuring that buyers can follow their purchase from seller to doorstep. Together, these initiatives are the building blocks of our multi-year vision, a shipping program that is cost-competitive, fully transparent, and anchored by all-in pricing so that every buyer knows the total cost of their purchase before they commit. Competitive pricing and seamless shipping earn a transaction. Exceptional service earns a relationship. Elevating the level of service we provide to both buyers and sellers is the fourth pillar of our roadmap.

On the seller side, we are rolling out improved listing tools that leverage AI to make it easier and faster to bring inventory to market. These tools reduce friction from generating optimized item titles to streamlining the image upload process, ultimately building toward a more robust AI-assisted listing experience. Early adoption has been encouraging, and we expect these tools to deepen seller engagement and improve listing quality over time. We are also building an AI-powered client service chatbot for buyers and sellers set to launch in the Q2. Our expectation is that this will allow us to provide faster, more responsive service at scale. The cumulative impact of these roadmap investments is reflected in a simple data point. For the second consecutive year, our annual seller sentiment survey confirmed that 1stDibs is the primary sales channel for our sellers, surpassing their own showrooms.

What was a meaningful shift last year is now a confirmed trend. Our sellers are not simply listing on 1stDibs, they are depending on us. That is a powerful foundation as we continue to invest in tools and technology designed to deepen that relationship and drive their success. A quarter ago, we laid out our 2026 financial framework, positive full-year adjusted EBITDA, positive free cash flow, a third consecutive year of revenue growth, and a return to GMV growth by the Q4. One quarter in, we are on track against all four. Our conviction in the durability of our marketplace has never been stronger. Curation, scarcity, and human expertise are the foundation of 1stDibs, and in an era of AI-generated content, these qualities are becoming more valuable, not less. Thank you for your continued support.

I'll now turn it over to Tom to review our Q1 financial results and Q2 outlook.

Thanks, David. Q1 results were in line with our expectations across the board. For the 2nd consecutive quarter, we generated positive adjusted EBITDA, validating the structural changes we made to our cost base and confirming that our 2026 plan is developing as anticipated. Let me walk you through the numbers. GMV was $89.7 million, down 5% above the midpoint of guidance. The underlying dynamics played out largely as we expected. Traffic declined across paid and organic channels, a direct and expected consequence of the sales and marketing reductions we enacted in late 2025, as well as the soft demand environment. Order volume declined 12% as a result. However, our product investments continued to partially offset these headwinds, with conversion growing for the 10th consecutive quarter.

Average order value reached approximately $2,750, up 7%, and median order value reached approximately $1,400, up 12%, both reflecting a continued mix shift towards higher value transactions, especially from trade. Together, these factors led to GMV down 5%, consistent with the Q4. We entered the quarter with approximately 75% of traffic from organic sources, a continued reflection of the enduring strength of the 1stDibs brand. Trade was a bright spot, growing year-over-year, driven by meaningful AOV expansion while consumer GMV declined. On a vertical basis, vintage and antique furniture grew year-over-year while all other categories declined. We ended the quarter with approximately 58,300 active buyers, down 10%, reflecting the deliberate reduction in sales and marketing spend enacted in late 2025.

Unique sell account grew modestly on a sequential basis. We expect to return to growth for the full year as the impact of our 2024 and 2025 pricing actions continues to normalize. Listings grew 2% to nearly 1.9 million. Health of our supply base is further supported by our annual seller sentiment survey, which confirmed for the second consecutive year that 1stDibs is the primary sales channel for our sellers, underscoring the platform's growing importance to their businesses. Turning to the income statement, net revenue was $22.4 million, down 1%. Transaction revenue, which is tied directly to GMV, was approximately 74% of total revenue, with subscriptions making up most of the remainder.

Take rates increased approximately 120 basis points, reflecting our 2025 pricing actions, Sponsored Listings growth, and a favorable prior year comparison due to high-value transactions. Gross profit was $16.7 million, up 2%. Gross profit margins were approximately 74%, up 2 percentage points year-over-year and at the high end of our target range, driven by a decrease in hosting and software costs as a percentage of revenue. Turning to operating expenses, total OpEx declined 11%, the direct continuation of the multi-year cost reset we began in 2022. Within that, the story is one of deliberate reallocation. Sales and marketing expenses were $6.3 million, down 31%. This reduction was a result of the strategic realignment implemented in 2025, which fundamentally reset our marketing organization and rationalized our performance marketing spend.

We made a decision to prioritize unit economics over volume, and these numbers reflect that decision. Sales and marketing as a percentage of revenue was 28%, down from 40% a year ago. Technology development expenses were $6.2 million, up 10%, reflecting the impact of our annual merit cycle in March and higher headcount-related costs as we rebalanced our talent towards high-impact product and engineering roles. As a percentage of revenue, technology development was 28%, up from 25% a year ago. We are systematically reallocating resources away from sales and marketing and towards product and engineering. Within our flat headcount framework, we are onboarding the final planned roles in support of our 2026 roadmap and expect this talent rebalancing to conclude by the end of the Q2, leaving us with a leaner team with more concentrated on platform innovation.

General administrative expenses were $6.8 million, down 2%. As a percentage of revenue, general administrative expenses were 30% versus 31% a year ago. Lastly, provision for transaction losses were approximately $700,000, 3% of revenue, down from 4% a year ago and at the midpoint of our historical range of 2%-4%. As I mentioned previously, total operating expenses were $20 million, down 11%. Total operating expenses also reflect approximately $500,000 in severance charges, predominantly in sales and marketing, as we refined our organizational structure to most effectively support our 2026 priorities. Our commitment to expense discipline remains unchanged. Adjusted EBITDA was approximately $600,000, representing a margin of approximately 2.5%. The last two quarters have been Adjusted EBITDA positive, both delivering against a challenging demand backdrop.

This is the direct result of this cost structure we rebuilt starting in 2022. It underpins our confidence in positive full-year adjusted EBITDA. The Q1 was an encouraging start against our full-year free cash flow commitment. We generate $8,000,000, a positive early indicator that our 2026 target is within reach. We also generate $1.1 million of cash flow from operations. Cash, cash equivalents, and short-term investments ended the quarter at $85.3 million, down $9.8 million sequentially, primarily reflecting $9.1 million in share repurchases. During the quarter, we repurchased approximately 1.7 million shares, leaving approximately $1 million of remaining authorization at quarter end. Since inception, we have repurchased approximately 9 million shares for approximately $44.4 million. Turning to the outlook.

Our guidance reflects quarter-to-date results and our forecast for the remainder of the period. We forecast Q2 GMV between $86 million and $91 million, or down 4% to up 1%. Net revenue of $21.6 million to $22.6 million, or down 2% to up 2%, and adjusted EBITDA margin between -2% and +2%. Our GMV guidance reflects a deliberate strategic trade-off, the intentional impact of our sales and marketing reductions as we prioritize a structurally higher margin profile over short-term volume. Quality-driven performance. While traffic remains a headwind, we expect continued growth in conversion and AOV and sequential improvement in our year-over-year growth rate helped by progress on our product roadmap.

Our revenue guidance reflects the continued growth in Sponsored Listings, as well as a modest contribution from our first sponsored event, an initiative we are beginning to test in the Q2 as part of our advertising program. Our adjusted EBITDA margin guidance reflects structural efficiency, realized gains from operating expenses following our September realignment. Strategic reinvestment, a sequential increase in personnel expenses driven by the annual merit increases effective in March and targeted hiring in product and engineering as part of our strategic realignment and gross margin expansion. We continue to expect gross margins of 72%-74%. While we are not providing full year guidance at this time, we are confirming our 2026 financial framework. We expect to deliver a third consecutive year of revenue growth, reflecting the resilience of our marketplace.

We anticipate a return to positive year-over-year GMV growth by the Q4, driven by the compounding impact of our product roadmap. We expect gross margins of 72%-74%, up from 71%-73% in 2025. We expect revenue take rates of 25%-26%, up from 24%-25% in 2025. We remain focused on high quality, efficient growth with a full year 2026 outlook of positive adjusted EBITDA and positive free cash flow. Underpinning this plan is the assumption that macroeconomic conditions, particularly those impacting the housing market and consumer discretionary spending, remain stable. Our 2026 financial framework is unchanged, and the Q1 gives us confidence that we are on the right path. Gross margins came in at the high end of our target range. Adjusted EBITDA was positive for the second consecutive quarter.

We generated free cash flow and our product roadmap is advancing on schedule. Our plan is working. We appreciate your continued support and look forward to updating you on our progress in the coming quarters. Thank you. I will now turn the call over to the operator to take your questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We do ask that you pick up your handset when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. Now please stand by while we compile the Q&A roster. Your first question comes from the line of Bobby Brooks with Northland Capital Markets. Your line is open. Please go ahead.

Good morning to you. Thank you for taking my question. First, I wanted to ask, last quarter, you know, we discussed a handful of kind of internal levers you could pull to really reignite growth, and I think it would be helpful for investors to hear that discussion as well. Can you talk about those levers and maybe those levers are being pulled today? If not, maybe the timeline of them being pulled.

Sure. Of course, and good morning. I think you're referring to our product roadmap. Our roadmap is organized around four of the highest potential areas that we believe we have in the business, and those are discovery, pricing, shipping, and service, covering the full purchase funnel. In Q1 we made progress in each of them. Just calling out a couple of the big ones, I would say the highest impact wins in the quarter were around discovery, shipping, and service. Maybe just a couple of quick examples. In search, we implemented AI-driven metadata improvements, which drove a 4% higher search success rate and importantly reduced null search results by more than 25%. Reducing null search results is especially important in the long tail marketplace like ours.

We're gonna keep on charging on search because we do view it as potentially one of our highest leverage areas. We've got a visual search release lined up for Q2, and then after that, our first natural language search release targeted for Q3. Another example would be shipping, which obviously is a big source of friction, particularly in, you know, given that furniture is the majority of our GMV. In the quarter, we integrated USPS into our shipping infrastructure, which had the impact of reducing parcel rates on packages under 20 lbs by 30%-50%. We feel like in each of the four tracks, and we're in a good place and we're making progress, but we also feel like it's early in that regard and that there's a lot more opportunity ahead of us than there is behind us.

As with all product roadmaps, we also expect the impact of these improvements to compound over time.

That's super helpful. Thank you very much. Maybe shifting gears to more sticking with the AI search, I think that's interesting of the well, maybe just explain, like what is a 4% search success rate like improvement? Like, what does that look like when someone is using the website? Like the 25% null search rate down, does that just simply mean if someone's searching something like there's 25% less of the time someone searches for something, nothing comes back? Could you just help clarify?

I mean, you know, you can imagine starting with a null search success rate. I mean, you can imagine the impact on a buyer of searching for something and getting 0 results, right? That manifests itself in, you know, at worst, a bounce, right? You leave the experience, and at best, you know, a much more, a much higher friction discovery process. Then, you know, the opposite is true as well, right? I mean, when you find what you're looking for, you're that much more likely to proceed to the next step in the funnel. Again, you know, we've got 1.9 million items. Almost all of them are one of a kind, which means that, you know, we drive a disproportionate amount of activity around search.

That's why I say it's a super high leverage kind of entry point and part of the discovery experience. I think probably a little more so in our business than in a less long tail oriented marketplace or retail experience.

That's super helpful. Thank you.

Your next question comes from the line of Ralph Schackart with William Blair. Your line is open. Please go ahead.

Good morning, thanks for taking the question. First question. Just on GMV growth that you noted, that should return by the Q4. Can you just remind us, do you need a change in the macro conditions, or can you deliver that growth in the current market environment? David, you've listed a lot of, you know, great product improvements and some new innovations, and mentioned obviously that they build on each other. Any way you could isolate, you know, maybe a couple that you think are having the biggest near-term impact and then maybe on a longer-term basis, some of those products that you are really excited about that could, you know, drive, longer and more sustained growth? Thank you.

Sure. Hey, Ralph. In terms of GMV growth, we do remain confident in a return to growth by Q4, and we do not think that is dependent on a market recovery. Two reasons, really. One is, in Q4, we'll begin lapping a full quarter's worth of the over 40% reduction in sales and marketing spend that we initiated in late 2025. Until then, obviously that remains a headwind on GMV growth. Although that said, we're already seeing a trajectory shift, I think. Second is, you know, we do have strong conviction in our product roadmap. Product roadmaps for us, as is the case with, you know, almost all consumer internet companies, compound over time.

You know, as I mentioned in my answer to Bobby's question, we're seeing early success there, and we do expect that to compound over time. Just to come back to the point I just made, I think it is worth pointing out that at the midpoint of Q2 guidance, we do expect GMV growth rates to improve sequentially from the -5% in Q1 to -2% again at the midpoint in Q2. From there, we do see a clear and straightforward path to a return to year-over-year growth by Q4 this year. In terms of the product roadmap, I mean, we do, you know, we think pretty hard about where we allocate our capital and our scarce human resources.

Those four areas that I highlighted, discovery, price, service, and shipping, we do think are the highest impact areas. You know, all of them are important. I mean, again, I think, you know, as we look at the experience of other marketplaces, certainly, in the case of one-of-a-kind marketplaces, search is extraordinarily important. If you don't find what you're looking to buy, then, you know, there's no reason to come back. You're certainly, you know, less likely for a visit to consummate in an order. Logistics, you know, again, I don't think we're reinventing the wheel here. Logistics is extraordinarily important on the other side of the funnel, and we were super pleased that we were able to reduce costs by as much as we were for parcel.

You know, we've got a lot ahead of us in terms of logistics. Tracking is something where, you know, we're not at table stakes yet in terms of meeting baseline consumer expectations, I think, for e-commerce experiences. We will be there. You know, we're gonna use ML quite heavily to increase our pre-quote coverage on freight. There are lots of levers within shipping, lots of levers within search. I mentioned semantic search and natural language search, which is on the come. Pricing is an area we've talked about in the past. In Q1, we were able to expand our price parity coverage by 44%, and we have some other improvements planned for the consumer experience there.

Lastly, service, we feel like there's an opportunity to substantially increase both our service levels and the efficiency with which we deliver those. Again, you know, I would just close by saying we're super happy with our progress in Q1, but we have an ambitious slate in front of us and much more to come than we've already achieved, which is part of the reason why I'm very optimistic about Q4.

Okay. Thank you, David.

We have reached the end of the Q&A session, and this concludes today's call. Thank you for attending. You may now disconnect.

Ladies and gentlemen, thank you for joining us, and welcome to the 1stdibs.Com, Inc. Q4 2025 earnings call. After today's prepared remarks, we will host a question and answer session. If you have dialed into today's call and would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. I will now hand the call over to Kevin LaBuz, Head of Investor Relations and Corporate Development. Kevin, please go ahead.

Good morning, and welcome to the 1stdibs.Com, Inc. earnings call for the quarter and year ended December 31, 2025. I am Kevin LaBuz, Head of Investor Relations and Corporate Development. Joining me today are Chief Executive Officer David Rosenblatt and Chief Financial Officer Thomas Etergino. David will provide an update on our business, including our strategy and growth opportunities, and Thomas will review our fourth quarter financial results and first quarter outlook. This call will be available via webcast on our investor relations website at investors.firstdibs.com. Before we begin, please keep in mind that our remarks include forward-looking statements, including, but not limited to, statements regarding guidance and future financial performance, market demand, growth prospects, business plans, strategic initiatives, business and economic trends, and competitive position. Our actual results may differ materially from those expressed or implied in these forward-looking statements as a result of risks and uncertainties, including those described in our SEC filings. Any forward-looking statements that we make on this call are based on our beliefs and assumptions as of today, and we disclaim any obligation to update them, except to the extent required by law. Additionally, during the call, we will present GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which you can find at our investor relations website, along with a replay of this call. Lastly, please note that all growth comparisons are made on a year-over-year basis unless otherwise noted. I will now turn the call over to our CEO, David Rosenblatt. David?

Thanks, Kevin. Good morning, everyone. 2025 was the year of accountability and focused execution. The hard work and operational rigor we applied across the organization throughout the year culminated in a landmark result. We exited 2025 as an adjusted EBITDA positive company. Looking ahead, our 2026 financial plan focuses on capitalizing on these gains while delivering sustained adjusted EBITDA profitability. In 2026, we expect to deliver a third consecutive year of positive year-over-year revenue growth alongside positive adjusted EBITDA and free cash flow. While we are not providing full-year GMV guidance, we anticipate a return to year-over-year GMV growth by the fourth quarter driven by the compounding impact of our product roadmap. Our confidence in this trajectory is rooted in the defensibility of the 1stdibs.Com, Inc. model. Even in an era of AI-driven content and commerce, we believe the high-trust, high-complexity world of one-of-a-kind luxury thrives on curation, scarcity, and the human expertise of our dealers. By leveraging AI to enhance discovery while maintaining the strength of our vetted seller network, the trust of our buyers, and our complex transactional infrastructure, we see AI not as a competitor, but as a catalyst that will help unlock the full potential of our unique catalog. In the fourth quarter, GMV was $90,200,000, at the low end of our guidance range. However, adjusted EBITDA finished above the high end of our range. This performance marks a major inflection point, our first quarter of adjusted EBITDA profitability as a public company. It is important to be clear: in 2025, we made a conscious trade-off to moderate near-term GMV growth in exchange for a significantly improved adjusted EBITDA profile. This shift to positive adjusted EBITDA is definitive proof that we do what we say. Reaching this milestone is the direct result of three specific commitments we made to you at the start of the year. First, organizational discipline. We exceeded our goal to hold headcount flat while rebalancing our talent base toward product and engineering. Second, operating leverage. In our initial 2025 outlook, we targeted generating leverage at mid-single-digit revenue growth. Despite a housing market at a 30-year low, our expense management allowed us to exceed our own leverage targets, proving that our asset-light model is now capable of delivering positive adjusted EBITDA even in a low-growth environment. Third, product velocity. By leaning into AI-assisted development, which now accounts for approximately 30% of our new code, we delivered our ninth consecutive quarter of conversion growth. With a profitable foundation now in place, we are turning our energy toward driving growth in 2026 while maintaining our rigorous expense discipline. Having continued to expand our market share in 2025, we enter 2026 from a position of strength. Our roadmap is designed to remove friction and modernize the platform across four pillars: discovery, pricing, shipping, and service. First, discovery. Our 2026 roadmap centers on transforming 1stdibs.Com, Inc. into a daily habit for design enthusiasts through a reimagined buyer experience. This plan includes deploying AI-powered semantic and image search to fundamentally change how buyers interact with our catalog. While many potential buyers have a deep appreciation for design, they often lack a collector’s specialized nomenclature. We are bridging this gap. Instead of needing an exact match, for example, “Hermès Birkin 25 bubblegum pink silver hardware,” a buyer can use natural language such as asking for “a Valentine’s Day gift for my wife.” While that query traditionally would have yielded limited results, our new AI-driven engine will understand the intent behind the request and surface rich, curated matches across categories, from jewelry to fine art. We are effectively removing the expert requirement from our search bar, making 1stdibs.Com, Inc. more intuitive for a broader audience. We are also initiating a major evolution of our personalization engine, centered on a reimagined home page and feeds that deliver curated recommendations across key buyer touchpoints. By synthesizing brand, maker, and price propensity data, we are creating a bespoke experience that anticipates intent, surfacing the right inventory at the right moment of inspiration, whether on our platform or through personalized emails. To amplify this work, we are launching 1stdibs.Com, Inc. Tastemakers, our first ever ambassador program and influencer network. This initiative anchors our transition toward a community-first content strategy. By partnering with a scaled network of authentic voices, from prominent collectors and designers to our own sellers, we are creating the emotional connections that drive daily engagement and fuel discovery. This program allows us to move at the speed of the zeitgeist. We have already seen the potential of this approach in early testing. This was the blueprint for our real-time response to Taylor Swift’s engagement. Within hours, we mapped the global interest in her vintage watch and unique Old Mine diamond ring to similar pieces in our inventory. By matching what the world is talking about with our one-of-a-kind supply, we are making 1stdibs.Com, Inc. more accessible and culturally resonant. Additionally, we are significantly expanding our sponsored listings program, which serves as a high-margin lever driving revenue growth. We believe there is headroom to scale coverage and increase ad density while maintaining our premium aesthetic. By providing sellers with more sophisticated tools to reach buyers, we are creating a more dynamic ecosystem while driving revenue growth that is independent of GMV fluctuations. In addition to expanding sponsored listings, we are exploring nascent advertising opportunities with external brand partners both online and offline. Second is pricing. We are focusing our efforts on helping buyers and sellers reach a shared understanding of value. Our goal is to foster faster consensus by providing both sides of the transaction with the data required for confident decision-making. Central to this effort is a fundamental investment in our negotiation and offer flows, our highest intent signal. We see significant opportunity to optimize the Make Offer experience, which is often the primary path to purchase for our highest value items. Our 2026 roadmap focuses on demystifying the negotiation process through better product marketing and more intuitive UI, ensuring that both parties can reach a deal with less friction. By streamlining these interactions, we are increasing marketplace liquidity and creating a more accessible and dynamic platform. Complementing this work is an initiative centered on price contextualization. Because our catalog is defined by rare, one-of-a-kind items, buyers often lack a clear benchmark for value. To address this, we are introducing historical price comps and market data directly into the buyer journey. By making this information more visible, we are providing the transparency required to validate an item’s value. Underpinning these initiatives is our expanded enforcement of price parity. In the fourth quarter, we made strides in increasing the volume of listings covered by our parity solutions, ensuring that our buyers find the most competitive prices on 1stdibs.Com, Inc. Looking ahead, we will incorporate AI to further automate and expand this coverage across our catalog. By leveraging technology to scale these protections and promoting our price match guarantee, we are ensuring that 1stdibs.Com, Inc. remains the definitive destination for value in luxury design. Third is shipping. We recognize that our current shipping program is too complex and costly, lacking the modern features such as flexibility, precise tracking, and reliable on-time delivery that our buyers expect. A primary source of friction is the lack of clarity around roles and responsibilities between 1stdibs.Com, Inc., our sellers, and our buyers. This ambiguity can add hidden cost to the transaction. To solve this, we are revamping our shipping experience to provide a clear, standardized framework for every participant in the value chain. We expect this move will allow us to streamline operations and lower shipping prices for buyers. This newfound efficiency will enable our move toward all-in price. By presenting a single, transparent, fully landed cost earlier in the funnel, we will remove the primary hurdle to conversion. We are also leveraging our historical data to develop dynamic shipping rates, providing instant and more competitive quotes globally. This is about eliminating sticker shock and elevating our shipping experience to match the premium nature of our inventory. Fourth is service. In 2026, we are evolving our service model through technology. Our plan involves integrating AI support to resolve routine inquiries. By offloading these high-volume, basic tasks, we can reallocate our client services team to prioritize more nuanced, high-value resolutions and increase our service levels. This shift ensures that our human expertise is focused where it has the most value, supporting our most loyal buyers and driving repeat purchases. We are also working to introduce an AI item upload assistant for our sellers. This tool will streamline the listing process and ensure that the most exceptional inventory hits our marketplace faster and with higher quality metadata, allowing us to scale our operations through technology rather than headcount. In summary, the story of 1stdibs.Com, Inc. right now is one of focused transformation. Reaching positive adjusted EBITDA this quarter was the culmination of a multiyear journey that began in 2022. We have spent four years reengineering our cost structure and refining our marketplace, and we have emerged with a financial foundation that allows us to focus entirely on driving GMV and revenue growth. As we look toward 2026, we are often asked about the risk of AI disintermediation. We believe that our position is uniquely protected. Our moat is built on a high-trust relationship and a physical collection of one-of-a-kind items—elements that cannot be replicated by an algorithm. We are leaning into AI to help our buyers discover the extraordinary rather than replacing the essential human expertise of our dealers. With a compelling roadmap in place, we are positioned for a GMV growth inflection point by 2026. We enter this next chapter as a more efficient, more resilient, and more ambitious company than at any time in our history. To discuss how this discipline is reflected in our fourth quarter performance and our expectations for the year ahead, I will now turn the call over to Thomas Etergino.

Thanks, David. Good morning, everyone. Our fourth quarter results marked a landmark inflection point for 1stdibs.Com, Inc., our first quarter of positive adjusted EBITDA as a public company. This achievement validates the strategic realignment we executed in September and proves that our asset-light marketplace is capable of delivering adjusted EBITDA profitability even in a constrained environment. A multiyear transformation is clear. We began reengineering our cost structure in 2022, accelerated that focus through 2023, and demonstrated early operating leverage in 2024. Today, we are exiting 2025 with fourth quarter adjusted EBITDA of $1,300,000 and a 6% margin, a 1,300 basis point expansion over the prior year. We have not only delivered on our commitment to reach adjusted EBITDA profitability, we have established a leaner, more resilient baseline for our future. This outcome is a direct result of the accountability David mentioned. Our 2025 plan centered on expanding operating leverage, and we have executed against that goal. We are exiting the year with a strong balance sheet and a business model optimized to generate positive adjusted EBITDA and free cash flow. To appreciate this inflection point, it is helpful to look at P&L transformation since 2022. Over the last four years, we have reduced annual operating expenses by 18%, or nearly $18,000,000, excluding one-time gains from the sale of Design, and lowered headcount by more than 30% from our peak. In a business with high operating leverage, the 7% revenue decline we experienced over this four-year period would typically lead to margin compression. At 1stdibs.Com, Inc., we have achieved a positive divergence. Comparing 2022 to 2025, gross margins have climbed from 69% to 73% and adjusted EBITDA margins improved by approximately 1,900 basis points. Significantly expanding margins during a period of revenue contraction is a significant operational feat, and we enter 2026 with the most efficient financial profile in our history. Turning to our fourth quarter funnel performance, GMV was $90,200,000, down 5%. While traffic headwinds increased across organic and paid channels, this was a direct result of our deliberate shift in marketing strategy. Starting in the third quarter, we aggressively tightened ROI thresholds, intentionally pruning lower-intent traffic to prioritize unit economics. This discipline resulted in order volumes declining 9%. However, this was partially offset by our ninth consecutive quarter of conversion rate growth and strong average order value expansion. The fact that GMV outperformed order volume by 400 basis points demonstrates that we are successfully capturing high-intent demand and higher-value transactions even with a significantly leaner marketing budget. Specifically, on-platform AOV reached nearly $2,600, up 5%, while median order value rose 4% to approximately $1,250. This performance was fueled first and foremost by returning buyers spending more per order than they did a year ago, along with a higher overall mix of orders from these repeat customers. We ended the quarter with over 80% of traffic from organic sources, up eight percentage points year over year. This organic strength is a critical competitive advantage, reflecting the enduring power of the 1stdibs.Com, Inc. brand. We saw a balanced performance across our buyer segments this quarter as both trade and consumer GMV declined at similar rates. Vertical performance varied by category. Jewelry showed the most resilience, with GMV down just 1%. Active buyers totaled approximately 60,700 at quarter end, down 5%. Regarding supply, we ended the quarter with approximately 5,700 unique sellers, down 4% as our seller base continues to normalize following our fourth quarter pricing adjustments. Importantly, while seller count consolidated, we saw listings grow 3% to nearly 1,900,000. Moving on to the income statement. Net revenue was $23,000,000, up 1%. Transaction revenue, which is tied directly to GMV, was approximately 73% of total revenue, with subscriptions making up most of the remainder. Take rates increased approximately 140 basis points year over year, driven by October’s pricing increases and continued growth in sponsored listings. Gross profit was $16,900,000, up 3%. Gross profit margins were approximately 74%, up one percentage point year over year. Sales and marketing expenses were $5,900,000, down 44%. This significant decrease is a direct result of the 2025 strategic realignment implemented in September, which reset our marketing organization and rationalized our performance marketing. Sales and marketing as a percentage of revenue was 26%, down from 46% a year ago. Technology development expenses were $6,000,000, up 9%, reflecting higher headcount-related costs as we rebalance our talent towards high-impact product and engineering roles. Within our flat headcount framework, we are reallocating resources to expand our product and engineering capacity, a transition set to conclude in the second quarter. We view this as our highest ROI lever, enabling us to deliver on our 2026 roadmap and deliver long-term conversion gains while maintaining a disciplined cost base. As a percentage of revenue, technology development was 26%, up from 24% a year ago. General and administrative expenses were $7,000,000, up 5%, due primarily to a one-time sales tax-related item. As a percentage of revenue, general and administrative expenses were 30%, up from 29% a year ago. Lastly, provision for transaction losses was approximately $400,000, 2% of revenue, down from 4% a year ago and at the low end of our historical 2% to 4% range. Total operating expenses were $19,200,000, an 18% decrease. This significant reduction is the direct result of the strategic realignment we completed in September and our previous cost-saving measures. We promised to fundamentally lower our cost base, and this quarter’s results prove that we have executed on that commitment. More importantly, this discipline has fundamentally improved our potential for operating leverage. We have lowered our breakeven threshold, allowing us to reach positive adjusted EBITDA despite the persistent macro headwinds in the luxury home category. Our ability to significantly reduce operating expenses while continuing to gain market share in 2025 demonstrates that we are not just running a leaner company, we are running a more productive one. This quarter represents a pivotal inflection point in our financial trajectory. Adjusted EBITDA was $1,300,000, a significant turnaround from a $1,600,000 loss in the prior year. This resulted in an adjusted EBITDA margin of 6%, representing an approximately 1,300 basis point expansion over last year. This is a direct outcome of the structural discipline we have embedded across the organization, allowing for any future top-line recovery to flow disproportionately to the bottom line. Moving on to the balance sheet. We ended the quarter with a strong cash, cash equivalents, and short-term investments position of $95,000,000, up from $93,400,000 sequentially. We maintain a robust cash position, and our future focus is on free cash flow generation. During the quarter, we repurchased approximately $1,600,000 of shares, with $10,400,000 remaining under our current $12,000,000 authorization as of December 31. Our continued execution of this program reflects our confidence in our long-term growth trajectory and our commitment to delivering value to our shareholders. Turning to the outlook, our guidance reflects quarter-to-date results and our forecast for the remainder of the period. We forecast first quarter GMV between $86,500,000 to $91,500,000, representing a year-over-year decline of 9% to 3%, net revenue of $22,100,000 to $23,100,000, or down 2% to up 2%, and adjusted EBITDA margin between breakeven and positive 4%. Our GMV guidance is driven by two primary factors: a deliberate strategic trade-off—the intentional impact of our sales and marketing reductions as we prioritize a structurally higher margin profile over short-term volume; quality-driven performance—while traffic remains a headwind, we expect continued growth in conversion and AOV. Our revenue guidance reflects the continued growth in sponsored listings and benefits of the seller subscription price increase, which took effect on October 1. Our adjusted EBITDA margin guidance reflects structural efficiency—realized gains from operating expenses following our September realignment; strategic reinvestment—a sequential increase in personnel expenses driven by the partial-quarter impact of annual merit increases effective in March and targeted hiring in product and engineering as part of our strategic realignment; gross margin expansion—we expect gross margins of 72% to 74%, an increase from our recent 71% to 73% range. While we are not providing full-year guidance at this time, our 2026 framework is centered on durable, profitable growth. We expect to deliver a third consecutive year of revenue growth, reflecting the resilience of our marketplace. We anticipate a return to positive year-over-year GMV growth by the fourth quarter, driven by the compounding impact of our product roadmap. We expect gross margins of 72% to 74%, up from 71% to 73% in 2025. We expect revenue take rates of 25% to 26%, up from 24% to 25% in 2025. We remain focused on high-quality, efficient growth, with a full-year 2026 outlook of positive adjusted EBITDA and positive free cash flow. Underpinning this plan is the assumption that macroeconomic conditions, particularly those impacting the housing market and consumer discretionary spending, remain stable. In closing, reaching this adjusted EBITDA inflection point is a landmark moment for 1stdibs.Com, Inc. This result marks the culmination of a four-year journey of rigorous expense management and strategic focus. We promised to reengineer our cost structure, remain disciplined on headcount, and prioritize technical velocity, and we have delivered. We enter 2026 with a leaner, more resilient, and more profitable foundation than at any time in our history. We appreciate your continued support and look forward to updating you on our progress in the coming quarters. Thank you. I will now turn the call over to the operator to take your questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, press star 1 on your telephone keypad. To withdraw your question, press star 1 again. Please stand by now while we compile the Q&A roster. Your first question comes from the line of Ralph Schackart with William Blair. Your line is open. Please go ahead.

Good morning. Thanks for taking the question. First question, just maybe touching on your comments about accelerating growth through 2026. David, maybe you could just walk through the primary drivers as you see it to continue to turn the business around and to return back to growth, and will it continue to be a tough macro for you? And then I have a follow-up.

Sure. Hey, Ralph. So I think first, from September 2026 onward, we will be lapping what were pretty substantial reductions—almost 50%—in performance marketing spend. And then secondly, at the same time last September that we cut sales and marketing overall, we also increased our product and engineering investment, which obviously will result in a much bigger roadmap. So as you think about moving through 2026, what we expect is that the compounding nature of that product roadmap will provide a pretty clear path to year-over-year GMV growth by the fourth quarter. It is really the combination of those two things, lapping our performance marketing cuts and then also receiving the benefit of higher product and engineering investment. I think it is also important to note that for the full year, we are committed to delivering what will be our third consecutive year of revenue growth alongside positive adjusted EBITDA and free cash flow, as we did in the fourth quarter. And the last thing I would say, you made a reference to the market. We do not believe that this is dependent on a broader market recovery. We feel like we have all the tools needed to accomplish this even without that.

Great. And just touching on AI, it has been a big focus, obviously, this earnings season for investors, and you talked about you see it not as a competitor, but as a catalyst to unlock a catalog. If you could double click on that a little bit, in terms of why you potentially see disruption—it is just because you handle a lot of complex tasks in between the buyer and the seller and unique product categories, I guess, would be part of the reason there. But if you could touch on that a little bit more, I would appreciate it.

Yeah. I think in general, the way we see AI relative to our performance is that we view ourselves as a beneficiary of AI, really from the top of the income statement to the bottom. In terms of disintermediation specifically, though, I think that is likely more of a threat for commodity products. But we are the exact opposite of that. We have 2,000,000 one-of-a-kind pieces of inventory, and particularly when those items transact at the high price that we sell at, seller expertise and the integrity of the transaction itself are the primary components of value that we provide. So AI agents certainly can help with discovery. They can help buyers find products. But they cannot substitute for the buyer trust, the seller reputation, and all of the relatively complex logistical and payment infrastructure that is required to transact at our price points and with our kind of inventory.

Great. Thank you.

Your next question comes from the line of Bobby Brooks with Northland. Your line is open. Please go ahead.

Hey. Good morning, team, and thank you for taking my question. As you think of returning to a consistent growth profile—I know this will be your third year of revenue growth—but across both GMV and revenue and maybe at a little bit higher clip, call it maybe high single digits, what are some of the most exciting initiatives that you are pursuing?

So, as I think you may be aware, we first of all have proven an ability to execute on our product roadmap and to drive conversion, which is the most important GMV lever as a result. We brought in a new head of product and marketing last August, and as part of that we recut our 2026 roadmap. So the 2026 plan is a combination of both evolutionary advancements relative to 2024 and 2025 and also new projects. I am super excited about each of them. Just to call out the four we expect to be highest impact, in no particular order: AI search is something that we are very optimistic about. Currently, searching on 1stdibs.Com, Inc. requires knowing the exact match of the products that one is interested in, which is a significant barrier for broader consumer demand, especially given the long-tail nature of the products that we sell. To address this in 2026, we are going to be introducing semantic search, which will make discovery much more intuitive and accessible to the average person. The second area that I am very excited about is shipping. Today, we have relatively unclear roles and distribution of responsibilities between sellers and 1stdibs.Com, Inc. That leads to higher costs, and also sometimes, just in terms of the operational workflow in getting an order converted, some confusion on the part of the buyer. We are reengineering our entire shipping framework to standardize those roles and responsibilities, which should have the impact of reducing complexity and also cost to the buyer. Pricing is number three. It is something we have talked about quite a bit in the past. We are not today always the lowest cost sales channel for a given item, and the second problem is that, again, given the long-tail nature of what we sell, it can be challenging for consumers to compare prices and evaluate and interpret them. To address this, as I think you are probably aware, we introduced a price parity enforcement mechanism last year. To expand this in 2026, we are going to be incorporating an LLM—it has not been AI-based to date—which will allow us to scale price parity across a much higher percentage of our inventory, which will eliminate the problem of individual items being listed at a higher price on 1stdibs.Com, Inc. than elsewhere. And then second, we are going to surface comps data much more broadly to both sellers and buyers to give them context. And then the fourth and last piece is, we are a little late to the party in developing a robust social strategy. Social has an especially important role to play for us, given our brand and the visual nature of the products we sell. To address this in 2026, we are in the process of implementing our first ever community-based approach, which really is just another way of saying we are launching an influencer network. It is something we have not done before, and we have high hopes for it.

Thank you very much. That is super helpful detail. For a follow-up on the pricing parity, definitely can see how helpful and beneficial that will be for the business. You mentioned incorporating the LLM to scale across a much higher percentage of inventory. I would be curious to hear how much of the inventory today listed has this price parity incorporated into it, and what are you looking to scale that to in 2026?

That is not data that we share primarily for competitive reasons. But it should roughly double the amount of product that is covered. It is actually, I think, from a behavioral point of view, more important to think about it in terms of number of sellers who are impacted rather than the percentage of items. Because once a seller understands that we have the ability and the intent to enforce this price parity feature of our contracts with them, they are less likely to be in transgression of that. And I think it is worth pointing out this is in the interest of both the buyer and the seller and 1stdibs.Com, Inc. Having a clean, well-lit, and regulated marketplace that is predictable and understandable to buyers ultimately has the effect of increasing confidence in us and our sellers on the part of the buyer, which benefits them. We do not think of this as a system of punishment, but more as a part of the process of creating, as I said, a clean, well-lit environment, which is to the benefit of all marketplace participants.

Got it. Appreciate it, David. And maybe one for Thomas. It has been really impressive, the margin expansion you have driven over the past few years, as you mentioned in the prepared remarks, despite some shrinking in the top line and GMV. As we think of 1stdibs.Com, Inc. returning to that steady growth rate on a GMV level, is it fair to think margin expansion would accelerate in that scenario?

Yeah, this is Thomas. I believe that what you have seen with our P&L, as you talked about, is that our gross margins have expanded from 73% to 74%. The contribution margin in particular has gone up from the 50% to 55% level to the 60% to 65% level. What I expect is that as you start to see GMV and revenue expansion, you will see a large portion of that additional revenue going to the bottom line because of the increase in contribution margin that we have put into the model at this point.

Very helpful. Exciting times. I will return to the queue.

There are no further questions at this time. This concludes today’s call. Thank you for attending. You may now disconnect.