Investors interested in Retail-Wholesale stocks should always be looking to find the best-performing companies in the group. Has 1stdibs.com (DIBS) been one of those stocks this year? A quick glance at the company's year-to-date performance in comparison to the rest of the Retail-Wholesale sector should help us answer this question.1stdibs.com is a member of our Retail-Wholesale group, which includes 218 different companies and currently sits at #11 in the Zacks Sector Rank. The Zacks Sector Rank gauges the ...

The Retail-Wholesale group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. 1stdibs.com (DIBS) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out.1stdibs.com is a member of the Retail-Wholesale sector. This group includes 219 individual stocks and currently holds a Zacks Sector R ...

Financial Data and Key Metrics Changes - Gross margins expanded from the high 60s to the low 70s despite lower revenue [5] - Adjusted EBITDA margins improved to negative 8.4% in the second half of 2023 from negative 21.7% in the same period of 2022 [5] - Total operating expenses decreased by 19% to $20.1 million, reflecting the benefits of restructuring [24] - Adjusted EBITDA loss was $1.7 million compared to a loss of $4.5 million last year [24] Business Line Data and Key Metrics Changes - GMV for the fourth quarter was $86.4 million, down 17% due to soft demand for luxury home goods [39] - Average order value decreased by 7% to approximately $2,530, while median order value remained flat at approximately $1,150 [22] - Listings increased by 12%, with over 1.7 million listings on the marketplace [40] Market Data and Key Metrics Changes - Active buyers decreased by 10% to approximately 60,700 [40] - Unique sellers increased to approximately 7,800, up from 5,600 a year ago [23] - Traffic declines were observed in both paid and non-paid segments year-over-year [39] Company Strategy and Development Direction - The company is focusing on three themes: personalized buying, competitive inventory pricing, and scalability [6] - A new pricing structure was implemented requiring all new sellers to pay a monthly subscription fee, which is expected to increase engagement [45] - The company aims to optimize the make offer process to enhance conversion and order volumes [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing economic uncertainty and its impact on consumer behavior, particularly in discretionary spending [42] - There are signs of stabilization in GMV, with expectations for sequential growth in the first quarter of 2024 [50] - The company remains committed to adapting to market dynamics while maintaining cost discipline [8] Other Important Information - The company initiated a $20 million share repurchase program, repurchasing $3.5 million worth of shares since its inception [18] - Technology development expenses decreased by 22% to $4.4 million, driven by lower headcount-related expenses [11] - Interest income increased to approximately $1.7 million, up from $860,000 a year ago [24] Q&A Session Summary Question: Insights on the new pricing structure for sellers - Management noted that new sellers are required to pay a minimum of $99 a month, which is expected to increase engagement and posting activity [45] Question: Highlights of successful new features from AB testing - Management reported a 300% year-over-year increase in the number of tests launched, contributing to conversion growth [47] Question: Signals indicating demand recovery in 2024 - Management expressed optimism about demand stabilization, with sequential GMV expected to remain flat for three consecutive quarters [50] Question: Regional performance differences in demand - Management indicated no significant differences in performance across regions, focusing on conversion improvements [56]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 333-256188 1stdibs.com, Inc (Exact name of registrant as specified in its charter) Delaware 94-3389618 (State or other ...

1:DIBS Investor Presentation 2023 Q4 Disclaimer This presentation should not be relied upon for the purpose of evaluating the performance of the Company or for any other purpose, and neither the Company nor any of its affiliates, directors, officers, partners, employees, agents or advisers nor any other person, shall be liable for any direct, indirect or consequential liability, loss or damages suffered by any person as a result of this presentation or their reliance on any statement, estimate, target, proj ...

1stdibs.com (DIBS) came out with a quarterly loss of $0.07 per share versus the Zacks Consensus Estimate of a loss of $0.10. This compares to loss of $0.18 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 30%. A quarter ago, it was expected that this upscale online retailer would post a loss of $0.18 per share when it actually produced a loss of $0.08, delivering a surprise of 55.56%.Over the last four quarters, the company has ...

Exhibit 99.1 1stDibs Reports Fourth Quarter and Full Year 2023 Financial Results New York, NY — February 28, 2024 — 1stdibs.com, Inc. (NASDAQ: DIBS), a leading online marketplace for luxury design products ("1stDibs" or the "Company"), today reported financial results for its fourth quarter and year ended December 31, 2023. Fourth Quarter 2023 Financial Highlights Full Year 2023 Financial Highlights "Throughout 2023, we laid the groundwork for future success," said David Rosenblatt, 1stDibs Chief Executive ...

RICHMOND, Va.--(BUSINESS WIRE)--Journey Health & Lifestyle Brands (“Journey”, or the “Company”), a Virginia-based developer, manufacturer and distributor of direct-to-consumer (DTC) premium, branded products for seniors, today announced the appointment of Adam Karp as Chief Executive Officer, and as a member of Journey’s Board of Directors. Most recently, Adam co-founded and served as the CEO of Lively Hearing, Inc. (“Lively”), a direct-to-consumer hearing aid business that was acquired by GN Hearing in 202 ...

NEW YORK, Feb. 07, 2024 (GLOBE NEWSWIRE) -- 1stdibs.com, Inc. (NASDAQ:DIBS), a leading marketplace for extraordinary design, plans to release its fourth quarter and year end 2023 financial results on Wednesday, February 28, 2024 in a press release before the market opens. The press release can be accessed at the 1stDibs Investor Relations website (investors.1stdibs.com). 1stDibs will also host an earnings webcast to discuss those results at 8:00 a.m. Eastern Time on the same day, which will be accessible vi ...

Part I - Financial Information This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for 1stDibs.com, Inc., including the balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Metric | September 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Cash and cash equivalents | $32,442 | $153,209 | | Short-term investments | $110,552 | — | | Total current assets | $150,716 | $162,463 | | Total assets | $182,776 | $195,796 | | Total current liabilities | $26,961 | $26,050 | | Total liabilities | $46,463 | $47,774 | | Total stockholders' equity | $136,313 | $148,022 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net revenue | $20,663 | $22,729 | $63,762 | $73,892 | | Gross profit | $15,153 | $15,451 | $44,618 | $50,984 | | Loss from operations | $(5,233) | $(9,898) | $(25,851) | $(17,249) | | Total other income, net | $1,928 | $870 | $6,093 | $1,572 | | Net loss | $(3,305) | $(9,028) | $(19,758) | $(15,677) | | Net loss per share | $(0.08) | $(0.23) | $(0.50) | $(0.41) | [Condensed Consolidated Statements of Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Reports net loss and other comprehensive income/loss, reflecting total changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss | $(3,305) | $(9,028) | $(19,758) | $(15,677) | | Other comprehensive loss: | | Foreign currency translation adjustment | $(34) | $(103) | $9 | $(272) | | Unrealized losses on short-term investments | $(12) | — | $(132) | — | | Comprehensive loss | $(3,351) | $(9,131) | $(19,881) | $(15,949) | [Condensed Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Outlines changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | Balance as of Dec 31, 2022 | Issuance of common stock for exercise of stock options | Vested restricted stock units converted to common shares | Stock-based compensation | Repurchase of common stock | Other comprehensive loss | Net loss | Balance as of Sep 30, 2023 | | :-------------------- | :------------------------- | :----------------------------------------------------- | :------------------------------------------------------- | :----------------------- | :------------------------- | :----------------------- | :------- | :------------------------- | | Common Stock (Shares) | 39,260,193 | 19,978 | 1,106,204 | — | (334,959) | — | — | 40,051,416 | | Common Stock (Amount) | $393 | — | $10 | — | — | — | — | $403 | | Additional Paid-In Capital | $439,005 | $78 | $(10) | $9,471 | — | — | — | $448,544 | | Accumulated Deficit | $(291,020) | — | — | — | — | — | $(19,758) | $(310,778) | | Accumulated Other Comprehensive Loss | $(356) | — | — | — | — | $(123) | — | $(479) | | Treasury Stock | — | — | — | — | $(1,377) | — | — | $(1,377) | | Total Stockholders' Equity | $148,022 | $78 | — | $9,471 | $(1,377) | $(123) | $(19,758) | $136,313 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(11,475) | $(22,410) | | Net cash (used in) provided by investing activities | $(109,600) | $12,821 | | Net cash (used in) provided by financing activities | $(1,234) | $1,548 | | Effect of exchange rate changes on cash, cash equivalents, and restricted cash | $44 | $(689) | | Net decrease in cash, cash equivalents, and restricted cash | $(122,265) | $(8,730) | | Cash, cash equivalents, and restricted cash at end of the period | $35,778 | $162,829 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide essential context and detail for the condensed consolidated financial statements, covering the company's business description, accounting policies, significant financial events like restructuring charges and the sale of Design Manager, and detailed breakdowns of various balance sheet and income statement accounts, including equity, investments, and commitments [1. Basis of Presentation and Summary of Significant Accounting Policies](index=12&type=section&id=1.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) Describes the company's business, financial statement basis, and key accounting policies, including recent changes and events - 1stDibs.com, Inc. operates as a **leading online marketplace for luxury design products**, connecting design lovers with sellers of vintage, antique, and contemporary furniture, home décor, jewelry, watches, art, and fashion[28](index=28&type=chunk) - The company incurred approximately **$2.0 million in non-recurring restructuring charges** during the nine months ended September 30, 2023, primarily due to a **20% reduction in its global workforce**[34](index=34&type=chunk) Restructuring Charges Rollforward (in thousands) | (in thousands) | Restructuring Charges | | :------------- | :-------------------- | | Balance, December 31, 2022 | $— | | Restructuring charges | $2,004 | | Cash payments | $1,374 | | Balance, September 30, 2023 | $630 | - In August 2023, the Board authorized a Stock Repurchase Program of up to **$20.0 million**; by September 30, 2023, **$1.4 million** had been used to repurchase **334,959 shares**[45](index=45&type=chunk)[75](index=75&type=chunk) - The company adopted ASU 2016-13 (Credit Losses) effective January 1, 2023, with **no material impact** on its financial statements[48](index=48&type=chunk) [2. Fair Value of Financial Instruments](index=15&type=section&id=2.%20Fair%20Value%20of%20Financial%20Instruments) Details fair value measurements of financial instruments, categorized by valuation input levels Fair Value of Financial Instruments as of September 30, 2023 (in thousands) | (in thousands) | Level 1 | Level 2 | Level 3 | Total | | :------------- | :------ | :------ | :------ | :---- | | Cash equivalents: | | Money market fund | $6,875 | — | — | $6,875 | | U.S. Treasury securities | — | $995 | — | $995 | | Total cash equivalents | $6,875 | $995 | — | $7,870 | | Short-term investments: | | Commercial paper | — | $15,572 | — | $15,572 | | Corporate notes | — | $7,122 | — | $7,122 | | U.S. Treasury securities | — | $22,757 | — | $22,757 | | U.S. Government agency securities | — | $65,101 | — | $65,101 | | Total short-term investments | — | $110,552 | — | $110,552 | [3. Revenue Recognition](index=15&type=section&id=3.%20Revenue%20Recognition) Explains the company's policies for recognizing revenue from various service types Net Revenue by Service Type (in thousands) | (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Seller marketplace services | $20,467 | $22,504 | $63,239 | $71,597 | | Other services | $196 | $225 | $523 | $2,295 | | Total net revenue | $20,663 | $22,729 | $63,762 | $73,892 | - Seller marketplace services, primarily marketplace transactions, subscriptions, and listing fees, constitute the **majority of net revenue**. Other services include advertising revenue and, prior to its sale in June 2022, software services revenue from Design Manager[54](index=54&type=chunk) [4. Short-Term Investments](index=16&type=section&id=4.%20Short-Term%20Investments) Provides a breakdown of the company's short-term investment portfolio, including cost, gains/losses, and fair value Short-Term Investments as of September 30, 2023 (in thousands) | (in thousands) | Amortized Cost | Unrealized Gain | Unrealized Loss | Fair Value | | :------------- | :------------- | :-------------- | :-------------- | :--------- | | Commercial paper | $15,589 | — | $(17) | $15,572 | | Corporate notes | $7,134 | — | $(12) | $7,122 | | U.S. Treasury securities | $22,786 | — | $(29) | $22,757 | | U.S. Government agency securities | $65,175 | $10 | $(84) | $65,101 | | Total short-term investments | $110,684 | $10 | $(142) | $110,552 | - As of September 30, 2023, the company held **$110.55 million in short-term investments**, with **$99.00 million maturing in one year or less** and **$11.55 million maturing in greater than one year**[56](index=56&type=chunk) [5. Property and Equipment, net](index=16&type=section&id=5.%20Property%20and%20Equipment%2C%20net) Details the company's property and equipment, including internal-use software, leasehold improvements, and depreciation Property and Equipment, net (in thousands) | (in thousands) | September 30, 2023 | December 31, 2022 | | :------------- | :----------------- | :---------------- | | Internal-use software | $19,047 | $18,418 | | Leasehold improvements | $3,605 | $3,594 | | Furniture and fixtures | $1,131 | $1,114 | | Computer equipment and software | $898 | $851 | | Software in progress | $520 | $562 | | Total property and equipment, gross | $25,201 | $24,539 | | Less: Accumulated depreciation and amortization | $(21,918) | $(20,854) | | Total property and equipment, net | $3,283 | $3,685 | - Depreciation and amortization expense for property and equipment was **$0.4 million** for the three months and **$1.8 million** for the nine months ended September 30, 2023. This included **$0.5 million of accelerated amortization** for internal-use software due to discontinuing support for the NFT platform[57](index=57&type=chunk) [6. Accrued Expenses](index=17&type=section&id=6.%20Accrued%20Expenses) Provides a breakdown of various accrued liabilities, including shipping, salaries, taxes, and restructuring charges Accrued Expenses (in thousands) | (in thousands) | September 30, 2023 | December 31, 2022 | | :------------- | :----------------- | :---------------- | | Shipping | $3,213 | $3,597 | | Salaries & benefits | $3,267 | $1,862 | | Sales & use taxes payable | $1,159 | $1,378 | | Allowance for transaction losses | $1,200 | $1,327 | | Restructuring charges | $630 | — | | Payment processor fees | $525 | $970 | | Allowance for e-commerce returns | $392 | $438 | | Other | $937 | $1,189 | | Total accrued expenses | $11,323 | $10,761 | [7. Leases](index=17&type=section&id=7.%20Leases) Outlines the company's operating lease assets and liabilities, including headquarters and a new sublease agreement - As of September 30, 2023, the company had **$20.1 million in operating lease right-of-use assets** and **$22.4 million in total operating lease liabilities**, primarily for its New York City headquarters, with a weighted-average remaining lease term of **6.25 years**[63](index=63&type=chunk)[69](index=69&type=chunk) - In August 2023, the company entered into a sublease agreement for approximately **78% of its NYC office space**, expanding to **100% by January 15, 2024**, and ending December 31, 2029. Sublease income will commence in April 2024[65](index=65&type=chunk) - Subsequent to the balance sheet date, in November 2023, the company entered a new lease agreement for **13,671 square feet** for a new corporate headquarters in New York City, with a **five-year term** starting January 15, 2024[68](index=68&type=chunk) [8. Other Current Liabilities](index=18&type=section&id=8.%20Other%20Current%20Liabilities) Details other short-term financial obligations, including sales tax contingencies, buyer deposits, and deferred revenue Other Current Liabilities (in thousands) | (in thousands) | September 30, 2023 | December 31, 2022 | | :------------- | :----------------- | :---------------- | | Sales and use tax contingencies | $1,946 | $1,863 | | Buyer deposits | $392 | $318 | | Deferred revenue | $99 | $140 | | Other | $196 | $108 | | Total other current liabilities | $2,633 | $2,429 | [9. Equity](index=19&type=section&id=9.%20Equity) Provides information on the company's equity structure, including shares reserved for issuance and treasury stock activity Shares Reserved for Issuance | | September 30, 2023 | December 31, 2022 | | :-------------------------- | :----------------- | :---------------- | | Options to purchase common stock | 3,930,336 | 4,034,287 | | Restricted stock units outstanding | 4,116,974 | 2,807,981 | | Shares available for future grant under the 2021 Plan | 2,781,826 | 3,151,824 | | Shares available for future grant under the ESPP | 1,572,504 | 1,179,902 | | Total | 12,401,640 | 11,173,994 | - As of September 30, 2023, the company had **334,959 shares of treasury stock**, acquired at a cost of **$1.4 million** under the **$20.0 million Stock Repurchase Program** authorized in August 2023, with approximately **$18.6 million remaining** for future purchases[75](index=75&type=chunk) [10. Stock-based compensation](index=19&type=section&id=10.%20Stock-based%20compensation) Details stock incentive plans, activity for stock options and restricted stock units, and related compensation expense - The 2021 Stock Incentive Plan (2021 Plan) allows for various stock awards, with **2,781,826 shares available for future grants** as of September 30, 2023. The number of shares available for issuance under the 2021 Plan automatically increased by **1,963,010 shares** on January 1, 2023[81](index=81&type=chunk)[82](index=82&type=chunk) Stock Option Activity (since Dec 31, 2022) | | Number of Options | Weighted-Average Exercise Price | | :------------------------------------ | :---------------- | :------------------------------ | | Outstanding as of December 31, 2022 | 4,034,287 | $6.90 | | Exercised | (19,978) | $3.90 | | Cancelled/Forfeited | (83,973) | $6.38 | | Outstanding as of September 30, 2023 | 3,930,336 | $6.92 | | Options exercisable as of September 30, 2023 | 2,799,980 | $6.27 | Restricted Stock Units Activity | | Outstanding Restricted Stock Units | Weighted-Average Grant Date Fair Value | | :-------------------------- | :--------------------------------- | :------------------------------------- | | Outstanding as of December 31, 2022 | 2,807,981 | $7.85 | | Granted | 2,992,595 | $3.95 | | Vested | (1,106,204) | $6.54 | | Cancelled | (577,398) | $7.00 | | Outstanding as of September 30, 2023 | 4,116,974 | $5.49 | Stock-Based Compensation Expense (in thousands) | (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Cost of revenue | $75 | $149 | $312 | $402 | | Sales and marketing | $727 | $704 | $2,176 | $1,765 | | Technology development | $792 | $1,134 | $2,802 | $2,865 | | General and administrative | $1,388 | $1,167 | $4,050 | $2,630 | | Total stock-based compensation expense | $2,982 | $3,154 | $9,340 | $7,662 | [11. Income Taxes](index=22&type=section&id=11.%20Income%20Taxes) Discusses the company's income tax provision, valuation allowance, and impact of net losses on tax expense - The income tax provision was **immaterial** for the three and nine months ended September 30, 2023 and 2022, due to **net losses incurred**. The company maintains a **full valuation allowance** against its net deferred tax assets[94](index=94&type=chunk) [12. Net Loss Per Share](index=22&type=section&id=12.%20Net%20Loss%20Per%20Share) Presents basic and diluted net loss per share calculations, including the impact of potentially dilutive securities Net Loss Per Share (Basic and Diluted) | (in thousands, except share and per share amounts) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss | $(3,305) | $(9,028) | $(19,758) | $(15,677) | | Weighted average common shares outstanding | 39,962,932 | 38,668,231 | 39,647,716 | 38,291,977 | | Net loss per share—basic and diluted | $(0.08) | $(0.23) | $(0.50) | $(0.41) | - Potentially dilutive securities (stock options and restricted stock units) were excluded from diluted EPS calculations as their inclusion would have been **anti-dilutive**[95](index=95&type=chunk) [13. Commitments and Contingencies](index=22&type=section&id=13.%20Commitments%20and%20Contingencies) Outlines contractual obligations and discusses legal proceedings and their potential financial impact Contractual Obligations as of September 30, 2023 (in thousands) | Fiscal Year Ending December 31, | Lease Obligations | Other Obligations | Total Obligations | | :------------------------------ | :---------------- | :---------------- | :---------------- | | 2023 (remaining) | $1,020 | $372 | $1,392 | | 2024 | $4,114 | $1,291 | $5,405 | | 2025 | $4,292 | $506 | $4,798 | | 2026 | $4,292 | $33 | $4,325 | | 2027 | $4,292 | — | $4,292 | | Thereafter | $8,583 | — | $8,583 | | Total | $26,593 | $2,202 | $28,795 | - The company is involved in routine legal proceedings but does not believe current matters will have a **material adverse effect** on its business, financial condition, or results of operations[99](index=99&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, highlighting key operating and financial metrics, a detailed comparison of results for the three and nine months ended September 30, 2023 and 2022, and an analysis of liquidity and capital resources. It also includes a reconciliation of non-GAAP financial measures [Company Overview](index=24&type=section&id=Company%20Overview) Provides a brief description of 1stDibs' business model as a leading online marketplace for luxury design products - 1stDibs is a **leading online marketplace** connecting design enthusiasts with sellers of luxury design products, including vintage, antique, and contemporary furniture, home décor, jewelry, watches, art, and fashion[103](index=103&type=chunk) - The company operates an **asset-light business model**, facilitating shipping and fulfillment logistics without taking physical possession of items, and provides a trusted purchase experience through a vetted seller base and buyer protection program[104](index=104&type=chunk) [Key Operating and Financial Metrics](index=24&type=section&id=Key%20Operating%20and%20Financial%20Metrics) Presents key performance indicators like GMV, orders, active buyers, and Adjusted EBITDA, reflecting marketplace activity Key Operating and Financial Metrics (in thousands, except for Number of Orders and Active Buyers) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | GMV | $88,983 | $99,213 | $275,905 | $321,514 | | Number of Orders | 31,202 | 35,235 | 98,988 | 110,111 | | Active Buyers | 63,227 | 68,011 | 63,227 | 68,011 | | Adjusted EBITDA | $(1,802) | $(5,456) | $(11,635) | $(16,195) | - GMV decreased by **10.3%** for the three months and **14.2%** for the nine months ended September 30, 2023, compared to the same periods in 2022, indicating a **decline in total economic activity** on the marketplace[107](index=107&type=chunk) - Active Buyers decreased by **7.0%** for the three and nine months ended September 30, 2023, compared to the same periods in 2022, reflecting a **reduction in the buyer base**[107](index=107&type=chunk) - Adjusted EBITDA improved significantly, reducing losses by **67.0%** for the three months and **28.1%** for the nine months ended September 30, 2023, compared to the same periods in 2022[107](index=107&type=chunk) [Components of Results of Operations](index=25&type=section&id=Components%20of%20Results%20of%20Operations) Explains primary drivers of net revenue, cost of revenue, and operating expenses, detailing their composition and impact - Net revenue primarily comprises seller marketplace services (marketplace transactions, subscriptions, listing fees) and other services (advertising). Marketplace transaction fees, ranging from **5% to 50% commissions plus 3% processing fees**, are the largest component[112](index=112&type=chunk) - Cost of revenue includes payment processor fees, hosting, payroll for operations personnel, consulting, and amortization of capitalized internal-use software. It also accounts for the difference between collected and charged shipping amounts[114](index=114&type=chunk)[115](index=115&type=chunk) - Operating expenses are categorized into Sales and Marketing (including advertising and promotional discounts), Technology Development (engineering and product development), General and Administrative (finance, legal, HR, lease expense), and Provision for Transaction Losses (buyer protection program and bad debt)[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, comparing net revenue, gross profit, and operating expenses across periods Consolidated Results of Operations (in thousands) | (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net revenue | $20,663 | $22,729 | $63,762 | $73,892 | | Cost of revenue | $5,510 | $7,278 | $19,144 | $22,908 | | Gross profit | $15,153 | $15,451 | $44,618 | $50,984 | | Sales and marketing | $8,411 | $11,072 | $28,007 | $34,139 | | Technology development | $4,515 | $6,363 | $17,199 | $18,711 | | General and administrative | $6,772 | $6,731 | $22,323 | $20,635 | | Provision for transaction losses | $688 | $1,183 | $2,940 | $4,432 | | Loss from operations | $(5,233) | $(9,898) | $(25,851) | $(17,249) | | Total other income, net | $1,928 | $870 | $6,093 | $1,572 | | Net loss | $(3,305) | $(9,028) | $(19,758) | $(15,677) | Consolidated Results of Operations as a Percentage of Net Revenue | | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net revenue | 100 % | 100 % | 100 % | 100 % | | Cost of revenue | 27 % | 32 % | 30 % | 31 % | | Gross profit | 73 % | 68 % | 70 % | 69 % | | Sales and marketing | 41 % | 49 % | 44 % | 46 % | | Technology development | 22 % | 28 % | 27 % | 25 % | | General and administrative | 33 % | 30 % | 35 % | 28 % | | Provision for transaction losses | 3 % | 5 % | 5 % | 6 % | | Loss from operations | (26)% | (44)% | (41)% | (23)% | | Total other income, net | 10 % | 4 % | 10 % | 2 % | | Net loss | (16)% | (40)% | (31)% | (21)% | [Comparison of the Three Months Ended September 30, 2023 and 2022](index=28&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20September%2030%2C%202023%20and%202022) Compares financial performance for the three-month periods, highlighting changes in revenue, costs, and profitability - Net revenue decreased by **$2.1 million (9%)** to **$20.7 million**, primarily due to a **$2.0 million decrease in seller marketplace services revenue** driven by lower GMV, impacted by macroeconomic factors[121](index=121&type=chunk) - Cost of revenue decreased by **$1.8 million (24%)** to **$5.5 million**, mainly due to a **$0.6 million decrease in salaries and benefits** from workforce reduction, **$0.5 million in more efficient shipping**, and **$0.3 million in lower credit card processing fees**[123](index=123&type=chunk) - Gross profit decreased by **$0.3 million** to **$15.2 million**, but gross margin improved to **73.3%** from **68.0%** due to cost of revenue decreasing faster than net revenue[124](index=124&type=chunk) - Sales and marketing expenses decreased by **$2.7 million (24%)** to **$8.4 million**, driven by a **$1.2 million reduction in salaries and benefits** and a **$1.3 million decrease in discretionary marketing**[125](index=125&type=chunk) - Technology development expenses decreased by **$1.8 million (29%)** to **$4.5 million**, primarily due to a **$1.5 million reduction in salaries and benefits** and a **$0.3 million decrease in stock-based compensation**[126](index=126&type=chunk)[127](index=127&type=chunk) - Provision for transaction losses decreased by **$0.5 million (42%)** to **$0.7 million**, mainly due to fewer damage claims and new carrier policies[128](index=128&type=chunk) - Other income, net increased by **$1.1 million (122%)** to **$1.9 million**, driven by higher interest income from investment strategies[129](index=129&type=chunk) [Comparison of the Nine Months Ended September 30, 2023 and 2022](index=29&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20September%2030%2C%202023%20and%202022) Compares financial performance for the nine-month periods, detailing changes in revenue, costs, and profitability drivers - Net revenue decreased by **$10.1 million (14%)** to **$63.8 million**, primarily due to an **$8.4 million decrease in seller marketplace services** from lower GMV and a **$1.4 million decrease in software services** due to the Design Manager sale[130](index=130&type=chunk) - Cost of revenue decreased by **$3.8 million (16%)** to **$19.1 million**, driven by **$1.3 million lower credit card processing fees**, **$1.1 million in reduced salaries and benefits**, and **$1.0 million in more efficient shipping expenses**[132](index=132&type=chunk) - Gross profit decreased by **$6.4 million** to **$44.6 million**, but gross margin improved to **70.0%** from **69.0%** due to cost of revenue decreasing faster than net revenue[133](index=133&type=chunk) - Sales and marketing expenses decreased by **$6.1 million (18%)** to **$28.0 million**, mainly from a **$5.2 million reduction in discretionary marketing** and **$0.6 million in lower salaries and benefits**[134](index=134&type=chunk) - Technology development expenses decreased by **$1.5 million (8%)** to **$17.2 million**, primarily due to a **$0.7 million reduction in salaries and benefits** and a **$0.6 million decrease in consulting costs**[135](index=135&type=chunk) - General and administrative expenses increased by **$1.7 million (8%)** to **$22.3 million**, driven by a **$1.4 million increase in stock-based compensation** and **$0.8 million in salaries and benefits**, partially offset by lower vendor rates[136](index=136&type=chunk) - Provision for transaction losses decreased by **$1.5 million (34%)** to **$2.9 million**, due to fewer damage claims and new carrier policies[137](index=137&type=chunk) - Other income, net increased by **$4.5 million (288%)** to **$6.1 million**, primarily due to higher interest income from investment strategies[138](index=138&type=chunk) [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) Defines and reconciles non-GAAP financial measures, such as Adjusted EBITDA, used by management to evaluate performance - Adjusted EBITDA is a key non-GAAP measure used by management to assess operating performance and leverage, excluding depreciation and amortization, stock-based compensation, other income, income taxes, gain on sale of business, and strategic alternative expenses[111](index=111&type=chunk)[139](index=139&type=chunk)[143](index=143&type=chunk) Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss | $(3,305) | $(9,028) | $(19,758) | $(15,677) | | Depreciation and amortization | $449 | $708 | $1,815 | $2,189 | | Stock-based compensation expense | $2,982 | $3,154 | $9,340 | $7,662 | | Other income, net | $(1,928) | $(870) | $(6,093) | $(1,572) | | Provision for income taxes | — | — | — | — | | Gain on sale of Design Manager | — | — | — | $(9,684) | | Strategic alternative expenses | — | $580 | $3,061 | $887 | | Adjusted EBITDA | $(1,802) | $(5,456) | $(11,635) | $(16,195) | [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet financial obligations, detailing cash position, investment, and financing activities - As of September 30, 2023, the company had **$143.0 million in cash, cash equivalents, and short-term investments**, with an accumulated deficit of **$310.8 million**[144](index=144&type=chunk) - Net cash used in operating activities was **$11.5 million** for the nine months ended September 30, 2023, an **improvement from $22.4 million used** in the same period of 2022[151](index=151&type=chunk) - The company believes existing cash, cash equivalents, and short-term investments will be **sufficient to fund operations and capital expenditures for at least the next 12 months**, despite expected continued operating losses[145](index=145&type=chunk) - Net cash used in investing activities was **$109.6 million** for the nine months ended September 30, 2023, primarily due to **$166.5 million in purchases of short-term investments**, partially offset by **$58.2 million in maturities**[152](index=152&type=chunk) - Net cash used in financing activities was **$1.2 million** for the nine months ended September 30, 2023, driven by **$1.3 million in common stock repurchases** under the Stock Repurchase Program[153](index=153&type=chunk) [Contractual Obligations](index=33&type=section&id=Contractual%20Obligations) Summarizes the company's long-term commitments, primarily related to operating lease agreements - As of September 30, 2023, there were **no material changes in contractual obligations** compared to the Form 10-K, with total commitments of **$28.8 million**, primarily related to operating lease agreements[154](index=154&type=chunk)[96](index=96&type=chunk) [Recent Accounting Pronouncements](index=33&type=section&id=Recent%20Accounting%20Pronouncements) Refers to detailed information on recently issued accounting standards and their potential impact on financial statements - Refer to Note 1, 'Basis of Presentation and Summary of Significant Accounting Policies,' for a description of recently issued accounting pronouncements and their potential impact[155](index=155&type=chunk) [Emerging Growth Company](index=33&type=section&id=Emerging%20Growth%20Company) Discusses the company's status as an 'emerging growth company' and its election for extended accounting transition periods - The company is an 'emerging growth company' under the JOBS Act, electing to use the extended transition period for new or revised accounting standards, which may result in financial statements not being comparable to other public companies[156](index=156&type=chunk) [Critical Accounting Policies and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) States no significant changes to critical accounting policies and estimates since the last annual report - There have been **no significant changes** to the company's critical accounting policies and estimates as disclosed in its Form 10-K[159](index=159&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to market risks, including interest rate sensitivity, foreign currency fluctuations, credit risk, and inflation risk, and discusses their potential impact on financial condition and results of operations [Interest Rate Sensitivity](index=34&type=section&id=Interest%20Rate%20Sensitivity) Assesses potential impact of hypothetical interest rate changes on cash, cash equivalents, and short-term investments - As of September 30, 2023, with **$143.0 million in cash, cash equivalents, and short-term investments**, a hypothetical **100 basis point change in interest rates** could result in an approximate **$0.7 million change** in these balances[161](index=161&type=chunk) [Foreign Currency Risk](index=34&type=section&id=Foreign%20Currency%20Risk) Discusses exposure to foreign currency fluctuations, particularly for revenues denominated in Euros and British pounds - The company's revenue is primarily in U.S. dollars, Euros, and British pounds. An adverse **10% change in current exchange rates** is not expected to result in more than a **$2.2 million decrease in revenue** for the nine months ended September 30, 2023[163](index=163&type=chunk) [Credit Risk](index=34&type=section&id=Credit%20Risk) Addresses credit risk on accounts receivable, mitigated by upfront payments and a diverse customer base - The company is exposed to credit risk on accounts receivable, mitigated by upfront payments and a diverse customer base. No single customer accounted for **more than 10% of net revenue** for the three and nine months ended September 30, 2023 and 2022[164](index=164&type=chunk) [Inflation Risk](index=34&type=section&id=Inflation%20Risk) Examines potential impact of inflation and market volatility on GMV, net revenue, and ability to offset rising costs - Inflation, along with capital and housing market volatility, has **negatively impacted GMV and net revenue**. The company may not be able to offset higher costs through revenue increases if inflationary pressures continue[165](index=165&type=chunk)[166](index=166&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of the effectiveness of the company's disclosure controls and procedures, concluding they were effective as of September 30, 2023, and confirms no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=35&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Reports management's conclusion on the effectiveness of the company's disclosure controls and procedures - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective at the reasonable assurance level** as of September 30, 2023[167](index=167&type=chunk) [Changes in Internal Control over Financial Reporting](index=35&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Confirms no material changes in internal control over financial reporting during the reporting period - There were **no changes in internal control over financial reporting** during the three months ended September 30, 2023, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[169](index=169&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=35&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) Acknowledges that all control systems have inherent limitations, providing only reasonable, not absolute, assurance - Management acknowledges that any control system, despite being well-designed and operated, provides only **reasonable, not absolute, assurance** due to inherent limitations such as faulty judgments, simple errors, circumvention by individuals, or management override[170](index=170&type=chunk) Part II - Other Information This section provides additional information not covered in financial statements, including legal proceedings and risk factors [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company is involved in routine legal proceedings incidental to its business but does not anticipate any material adverse effect on its business, financial condition, or results of operations from current matters - The company is subject to various claims and contingencies in the ordinary course of business, including litigation related to regulation, business transactions, and employee matters[99](index=99&type=chunk)[171](index=171&type=chunk) - Management believes that the resolution of current legal matters will not have a **material adverse effect** on the company's business, financial condition, or results of operations[99](index=99&type=chunk)[171](index=171&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This comprehensive section details the significant risks and uncertainties that could materially and adversely affect the company's business, financial condition, results of operations, and stock price. These risks are categorized into several areas, including business and industry-specific challenges, privacy and cybersecurity concerns, regulatory and litigation risks, intellectual property issues, operational risks as a public company, tax and accounting matters, and risks related to common stock [Risks Related to Our Business and Industry](index=36&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) Highlights risks inherent to the company's operations and the luxury design market, including operating losses, growth challenges, and macroeconomic sensitivities - The company has a history of operating losses, with net losses of **$19.8 million** and **$15.7 million** for the nine months ended September 30, 2023 and 2022, respectively, and an accumulated deficit of **$310.8 million** as of September 30, 2023[173](index=173&type=chunk) - Quarterly and annual results of operations have fluctuated and may continue to do so due to factors like net revenue from luxury design products, ability to attract/retain sellers and buyers, operating expenses, and macroeconomic conditions[174](index=174&type=chunk)[175](index=175&type=chunk) - The company's historical growth may not be indicative of future growth, with net revenue decreasing to **$63.8 million** for the nine months ended September 30, 2023, from **$73.9 million** in the prior year, indicating potential deceleration[178](index=178&type=chunk) - Failure to generate a sufficient volume of luxury design product listings or to accurately vet the authenticity of items could **harm the business, brand, and reputation**[179](index=179&type=chunk)[180](index=180&type=chunk) - The company faces risks from claims that listed items are counterfeit, infringing, hazardous, or illegal, or from liability for fraudulent activities of sellers, which could **damage its brand and reputation**[181](index=181&type=chunk)[185](index=185&type=chunk) - Growth depends on attracting and maintaining an **active community of sellers and buyers**, and failure to do so, or if buyers have negative experiences, could harm the business[186](index=186&type=chunk)[190](index=190&type=chunk) - The company operates in an evolving industry, and its future success depends on adapting to changing preferences, scaling operations, and competing effectively against a broad range of traditional and online vendors[192](index=192&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk) - The business is susceptible to macroeconomic conditions and consumer discretionary spending, with demand for luxury design products potentially declining during economic uncertainty or due to changing consumer preferences[202](index=202&type=chunk)[204](index=204&type=chunk) - Ineffective marketing efforts, reliance on third parties for traffic, and issues with mobile solutions could **hinder business growth and market share**[210](index=210&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) - Expansion through acquisitions, such as the past acquisition and subsequent sale of Design Manager, may **divert management attention and prove unsuccessful**[219](index=219&type=chunk)[221](index=221&type=chunk) - Failure to manage growth effectively, attract and retain key personnel, or realize benefits from cost-reduction initiatives (like subleasing office space) could **adversely impact financial results**[222](index=222&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk) - Further international expansion, while strategic, subjects the company to increased risks such as regulatory compliance, managing diverse operations, and foreign exchange fluctuations[227](index=227&type=chunk)[230](index=230&type=chunk) - The company faces risks from fraudulent transactions, dependence on third-party payment processors, and geopolitical instability (e.g., Russia-Ukraine, Israel-Hamas conflicts) which could **disrupt operations and impact financial results**[232](index=232&type=chunk)[233](index=233&type=chunk)[239](index=239&type=chunk) - The COVID-19 pandemic has impacted business through remote work challenges, potential supply chain disruptions, and reduced demand for luxury goods, with ongoing unpredictable effects[240](index=240&type=chunk)[241](index=241&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - The NFT platform, launched in August 2021 and with further investment ceased in February 2023, exposes the company to legal, regulatory, and other risks due to the nascent and evolving nature of cryptocurrencies and NFTs[245](index=245&type=chunk) - Insufficient insurance coverage or exposure to banking institution failures could **adversely affect the company's liquidity and financial condition**[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) [Risks Related to Privacy, Cybersecurity, and Infrastructure](index=50&type=section&id=Risks%20Related%20to%20Privacy%2C%20Cybersecurity%2C%20and%20Infrastructure) Addresses risks concerning data privacy, cybersecurity breaches, platform reliability, and internet access, which could impact reputation and operations - Disclosure of sensitive information about sellers and buyers, or cyber-attacks on the company or its third-party providers, could lead to **curtailed use of the marketplace, liability, and reputational damage**[249](index=249&type=chunk)[251](index=251&type=chunk)[254](index=254&type=chunk) - The company's use and processing of personal information is subject to evolving privacy and data protection laws (e.g., CCPA, CPRA, GDPR), with non-compliance potentially leading to **enforcement actions, litigation, and significant costs**[257](index=257&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk) - Ineffective mobile solutions or significant disruptions in service from third-party hosts could **harm the platform's usability, growth prospects, and reputation**[216](index=216&type=chunk)[264](index=264&type=chunk)[266](index=266&type=chunk) - Dependence on continued and unimpeded access to the Internet and mobile networks means changes in net neutrality rules or discriminatory practices by service providers could **adversely affect the business**[267](index=267&type=chunk)[268](index=268&type=chunk) - Climate change risks, including extreme weather events, may increasingly impact the business, sellers, and buyers, potentially disrupting operations and transactions[269](index=269&type=chunk) [Risks Related to Regulatory Matters and Litigation](index=53&type=section&id=Risks%20Related%20to%20Regulatory%20Matters%20and%20Litigation) Covers risks from complex and evolving laws, including online commerce, product safety, export controls, anti-corruption, and data protection, potentially leading to compliance costs and penalties - The company is subject to a large number of evolving U.S. and non-U.S. laws and regulations concerning online commerce, privacy, and consumer protection, with compliance being costly and requiring business practice changes[270](index=270&type=chunk)[271](index=271&type=chunk)[274](index=274&type=chunk) - Failure to comply with laws related to the sale of antique and vintage items, including product safety and licensing, could result in **fines, penalties, or governmental enforcement actions**[275](index=275&type=chunk)[276](index=276&type=chunk)[277](index=277&type=chunk) - The company is subject to governmental export and import controls and anti-corruption laws (e.g., U.S. FCPA, U.K. Bribery Act), with potential violations leading to **civil/criminal penalties, reputational harm, and loss of market access**[279](index=279&type=chunk)[280](index=280&type=chunk)[283](index=283&type=chunk) - Increased focus on ESG matters could raise costs, harm reputation, and affect relationships with employees and investors if commitments are not met or standards become more onerous[284](index=284&type=chunk) - Expanding and evolving data protection regulations, such as GDPR and CCPA/CPRA, create complex compliance obligations, potential liabilities, and increased operational costs, especially for cross-border business[286](index=286&type=chunk)[287](index=287&type=chunk)[289](index=289&type=chunk)[291](index=291&type=chunk) [Risks Related to Intellectual Property](index=57&type=section&id=Risks%20Related%20to%20Intellectual%20Property) Discusses risks associated with protecting the company's intellectual property and potential infringement claims from third parties - Failure to successfully protect intellectual property (copyrights, trade secrets, trademarks, domain names) could **harm the business, competitive position, and brand recognition**, requiring significant resources for monitoring and enforcement[296](index=296&type=chunk)[297](index=297&type=chunk) - The company may be subject to costly intellectual property claims from third parties, potentially requiring significant damages, licensing fees, or development of alternative technologies, which could **divert management attention and harm the business**[298](index=298&type=chunk)[299](index=299&type=chunk) - The platform incorporates open source software, which carries risks of unanticipated license conditions, potential public release of proprietary code, and additional security vulnerabilities[300](index=300&type=chunk) [Risks Related to our Operations as a Public Company](index=58&type=section&id=Risks%20Related%20to%20our%20Operations%20as%20a%20Public%20Company) Outlines challenges and obligations of operating as a public company, including internal control effectiveness, reporting requirements, and compliance costs - Ineffective internal control over financial reporting or disclosure controls could lead to **inaccurate financial reporting, fraud, or untimely periodic reports**, causing loss of investor confidence and stock price decline[301](index=301&type=chunk)[302](index=302&type=chunk) - As an emerging growth company, the company benefits from reduced reporting and disclosure requirements, but this could make its common stock **less attractive to investors** and increase stock price volatility[303](index=303&type=chunk)[305](index=305&type=chunk) - The transition to a public company involves significant legal, accounting, and other expenses, requiring substantial management time and potentially **diverting attention from revenue-generating activities**[307](index=307&type=chunk)[308](index=308&type=chunk) - Failure to strengthen financial reporting systems and internal controls to meet Sarbanes-Oxley Act requirements could result in inability to report financial results timely and accurately or prevent fraud, leading to investigations or sanctions[309](index=309&type=chunk)[311](index=311&type=chunk) [Risks Related to Tax and Accounting Matters](index=60&type=section&id=Risks%20Related%20to%20Tax%20and%20Accounting%20Matters) Details risks associated with evolving tax laws, indirect taxes, cryptocurrency taxation, and accounting standards, which could impact financial results - The company could be required to pay or collect sales taxes in new jurisdictions, including for past sales, due to evolving laws (e.g., Wayfair decision) and remote work, increasing administrative burdens and potentially decreasing future sales[312](index=312&type=chunk) - The application of indirect taxes (sales, VAT, etc.) to online businesses is complex and evolving, with new legislation (e.g., EU VAT reforms) potentially increasing compliance costs and making the marketplace less attractive for sellers[313](index=313&type=chunk)[314](index=314&type=chunk) - Facilitating cryptocurrency transactions on the NFT platform exposes the company to risks under U.S. and foreign tax laws, including reporting obligations and potential adverse tax consequences due to limited guidance and evolving regulations[315](index=315&type=chunk) - Interpretation of existing tax laws by authorities, fluctuations in tax obligations and effective tax rates, and amendments to tax laws could **adversely affect the business and financial results**[316](index=316&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk) - The company's ability to use its net operating loss (NOL) carryforwards and other tax attributes may be limited by ownership changes under Sections 382 and 383 of the Internal Revenue Code[320](index=320&type=chunk) - Reported results of operations may be **adversely affected by changes in generally accepted accounting principles (GAAP)** or their interpretations, which could significantly impact financial reporting[321](index=321&type=chunk) [Risks Related to Our Common Stock](index=62&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) Addresses risks concerning the trading market for common stock, potential dilution, dividend policy, and corporate governance provisions - An active trading market for the common stock may not develop or be sustained, and the stock price could be **highly volatile** due to various factors, including operational metrics, economic conditions, and market speculation[322](index=322&type=chunk)[323](index=323&type=chunk) - Sales of a substantial number of shares in the public market, particularly by directors, executive officers, and significant stockholders, or the perception of such sales, could cause the **stock price to decline**[326](index=326&type=chunk)[328](index=328&type=chunk) - The share repurchase program may not be fully consummated or enhance long-term stockholder value, and could **increase stock price volatility while diminishing cash reserves**[329](index=329&type=chunk) - Future sales and issuances of common stock or rights to purchase common stock could result in **additional dilution to stockholders** and cause the stock price to decline[330](index=330&type=chunk) - The company does not intend to pay dividends on its common stock, limiting returns on investment to changes in stock value[333](index=333&type=chunk) - Directors, executive officers, and principal stockholders beneficially own a substantial percentage of the stock, allowing them to exert **significant control** over matters subject to stockholder approval[334](index=334&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could make an acquisition more difficult, limit attempts to replace management, and potentially **limit the market price of common stock**[335](index=335&type=chunk)[336](index=336&type=chunk) - Claims for indemnification by directors and officers may **reduce available funds** to satisfy third-party claims and deplete cash resources[337](index=337&type=chunk)[338](index=338&type=chunk) - Designation of the Court of Chancery of Delaware as the exclusive forum for certain actions and federal district courts for Securities Act claims could **limit stockholders' ability to choose a favorable judicial forum**[339](index=339&type=chunk)[340](index=340&type=chunk)[344](index=344&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities during the period and details the company's issuer purchases of equity se