Yahoo Finance 1stdibs.com Inc (DIBS) (Q1 2024) Earnings Call Transcript Highlights: Navigating Through Market ...
GMV (Gross Merchandise Volume): $91.7 million, down 6% year-over-year, sequential growth of 6%.
Revenue: $22.1 million, down 1% year-over-year.
Adjusted EBITDA Margin: High end of guidance, improved substantially year-over-year.
Net Income: Adjusted EBITDA loss of $1.8 million, improved from a loss of $5.2 million in the previous year.
Gross Profit: $16 million, up 7% year-over-year; Gross margin increased to 72%.
Operating Expenses: Total $21.3 million, down 15% year-over-year.
Active Buyers: Approximately 60,700, down 9% year-over-year, flat sequentially.
Unique Sellers: Over 7,600, up 6% year-over-year.
Listings: Over 1.7 million, up 9% year-over-year.
Cash Position: $134 million in cash, cash equivalents, and short-term investments.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
1stdibs.com Inc (NASDAQ:DIBS) reported GMV and revenue above the high end of guidance, with adjusted EBITDA margins also at the high end of guidance.
The company has seen seven consecutive quarters of conversion improvement, demonstrating effective strategies in increasing conversion rates for both new and returning buyers.
Operational efficiencies have led to a leaner cost structure, contributing to substantial improvements in adjusted EBITDA margins.
1stdibs.com Inc (NASDAQ:DIBS) has successfully implemented logistics optimizations, such as negotiating lower shipping rates and expanding European freight coverage, which have positively impacted conversion rates.
The company has a strong cash position with $134 million in cash, cash equivalents, and short-term investments, providing substantial financial stability.
Negative Points
Despite improvements, GMV was down 6% year-over-year, indicating ongoing challenges in the luxury home goods and high-end discretionary items market.
Traffic and average order value were identified as headwinds to GMV growth, with organic traffic growth remaining down year-over-year.
The company experienced a modest decline in the number of unique sellers due to higher churn, related to recent policy changes.
Net revenue decreased by 1% year-over-year, reflecting the challenges in fully offsetting the declines in GMV.
While there has been progress in restructuring and cost reduction, the company still reported an adjusted EBITDA loss of $1.8 million, indicating ongoing profitability challenges.
Q & A Highlights
Q: Can you discuss the impact of the A/B tests that have been conducted, and how they relate to the improvements in site conversions and GMV, particularly in the context of the luxury housing market? A: David Rosenblatt, CEO, explained that the luxury housing market saw a marginal increase, which combined with a two-year focus on conversion improvements, contributed to the positive trends. He highlighted that conversion rates have improved for seven consecutive quarters, with the last two quarters showing positive growth. The company has a robust pipeline that supports continued improvement, evidenced by the sequential reduction in GMV decline rates.
Q: Given the substantial cash reserves, how is the company planning to manage costs and drive profitability in the near term? A: Thomas Etergino, CFO, stated that the company has made significant progress in improving its financial foundation but has not yet achieved its long-term profitability goals. Over the past two years, they have reduced expenses by over $28 million annually. He emphasized the importance of maintaining expense discipline and focusing on scalability to ensure that revenue growth does not proportionately increase expenses. The company plans to remain responsive to demand without altering its current cost structure significantly.
Q: How has the company's approach to managing operating expenses evolved, and what impact has this had on financial performance? A: Thomas Etergino highlighted that the company has successfully reduced operating expenses by focusing on headcount reductions, rationalizing real estate footprint, and increasing efficiency in marketing spend. These changes have allowed the company to improve its adjusted EBITDA margin significantly, even with lower GMV and revenue bases compared to previous periods.
Q: Can you provide insights into the company's strategy for inventory management and seller engagement? A: David Rosenblatt mentioned that the company ended the quarter with over 1.7 million listings, reflecting a 9% increase. They have implemented new pricing structures and inventory minimum requirements, which led to an increase in churn among sellers with lower engagement. However, this has had a minimal impact on GMV and total listings, indicating a healthier and more engaged seller base.
Q: What are the key areas of focus for the company in 2024 to drive growth and improve the buyer experience? A: The CEO outlined that the company's 2024 focus is on enhancing personalized and frictionless buying experiences, competitive inventory pricing, and scalability. Specific initiatives include increasing checkout speed, optimizing guest checkout experiences, negotiating lower shipping rates, and streamlining payment options to reduce buyer friction and increase order volumes.
Q: How does the company view its financial outlook for the second quarter and the remainder of the year? A: Thomas Etergino provided guidance for the second quarter, projecting GMV between $85 million to $92 million and net revenue between $21 million to $22.3 million. He expects adjusted EBITDA margin losses to improve, reflecting continued discipline in managing operating expenses and leveraging the structural changes made over the past two years. The company remains focused on returning to order growth and revenue growth, supported by ongoing improvements in conversion rates.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
