1stdibs.com(US:DIBS)2024-11-08 15:02Financial Data and Key Metrics Changes - The company achieved GMV of $84.6 million, down 5% year-over-year, with a sequential deceleration of approximately 7 percentage points in GMV growth rates due to lower than anticipated average order value (AOV) [29][30] - Net revenue was $21.2 million, up 3%, marking the second consecutive quarter of year-over-year growth [37] - Adjusted EBITDA loss was $3 million, compared to a loss of $1.8 million last year, with an adjusted EBITDA margin loss of 14% versus a loss of 9% last year [41] Business Line Data and Key Metrics Changes - Average order value was approximately $2,500, down 11%, while median order value was approximately $1,200, down 3% [30] - Orders grew by 7%, with conversion rates increasing year-over-year for four consecutive quarters, indicating strong operational performance [10][33] - The company ended the quarter with over 1.8 million listings, up 7%, despite a decline in unique sellers by 13% [22][36] Market Data and Key Metrics Changes - Active buyers totaled approximately 62,500, down 1% year-over-year but up 2% sequentially, indicating a positive trend in order growth [35] - The luxury housing market remains soft, with U.S. existing home sales on track for their worst year since 1995 [12] - The company is experiencing a muted demand environment, which is expected to continue into the fourth quarter [45] Company Strategy and Development Direction - The company is focused on lowering the growth threshold required to achieve operating leverage, targeting mid-single-digit revenue growth for 2025 [9][61] - The decision to discontinue the Auctions feature was made to reallocate resources to more impactful initiatives, such as machine learning-based pricing strategies [19][58] - The company is concentrating on improving conversion rates and order growth while managing costs effectively to prepare for a market rebound [26][48] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by the luxury housing market but remains optimistic about the company's operational improvements and market share gains [13][48] - The company expects GMV growth to return in the fourth quarter, driven by conversion gains and moderating AOV headwinds [7][45] - Management does not anticipate a market recovery in the near term but is focused on executing its strategy to outperform the market [54] Other Important Information - The company initiated a new $10 million share repurchase program in August, following a $25 million program completed in June [25][43] - The Essential Seller Program was retired to focus on more engaged sellers, which is expected to normalize churn rates in the first half of 2025 [21][66] Q&A Session Summary Question: Can you discuss the AOV headwinds and the timeline for stabilization? - Management noted that AOV headwinds were due to a record quarter for high-value orders last year and that normalization is expected in Q4 [50] Question: What are the implications of the housing market on transaction volumes? - Management indicated that while they do not forecast macroeconomic trends, they aim to grow faster than the market and have seen positive performance relative to luxury furnishing spending [52][53] Question: What is the impact of discontinuing the Auctions feature? - Management stated that Auctions accounted for a minimal portion of orders and revenue, and resources will be better allocated to other pricing strategies [58][59] Question: How does the cost structure relate to achieving EBITDA break-even? - Management clarified that they do not provide forward-looking guidance beyond one quarter but are focused on improving efficiency to achieve operating leverage [61] Question: What factors will help normalize churn rates? - Management explained that the transition from the Essential Seller Program to fee-paying sellers will stabilize churn rates, with no significant impact on listings or GMV [66]