1stDibs Targets Profitable Growth With AI, Product Upgrades and Lower Ad Spend

1stDibs returned to growth while improving profitability: Second-quarter GMV rose 7% to $96 million, revenue exceeded $23 million and EBITDA reached $1.3 million. Management expects continued GMV growth and a fourth consecutive quarter of adjusted EBITDA breakeven at the current-quarter guidance midpoint. The company is prioritizing product-led growth over paid advertising. After cutting paid advertising by 50%, 1stDibs is investing in search, personalization, shipping estimates, customer service automation and seller compliance tools powered by artificial intelligence. 1stDibs operates an asset-light, curated luxury marketplace with about 6,000 vetted sellers and a roughly 25% take rate. Management is targeting growth from consumers, repeat professional buyers and new initiatives such as the 1stDibs Tastemakers influencer network, without relying on a real estate-market recovery.

1stdibs.com NASDAQ: DIBS CEO David Rosenblatt outlined the luxury marketplace’s strategy for returning to growth while sustaining adjusted EBITDA profitability, emphasizing product improvements, artificial intelligence tools and a relatively low reliance on paid advertising. Rosenblatt described 1stDibs as a curated online marketplace for one-of-a-kind luxury products, including furniture, jewelry, art and fashion. The company has operated for more than 25 years and reported an average order value of about $2,850, roughly six times that of other marketplaces commonly considered luxury platforms, according to Rosenblatt. Get 1stdibs.com alerts: Sign Up Since becoming an e-commerce platform, the company has sold more than $3.3 billion of merchandise to more than 1.2 million customers, he said. Its marketplace includes about 6,000 vetted professional sellers and approximately $10 billion in listed inventory value, compared with annual gross merchandise value of roughly $365 million.

Rosenblatt said 1stDibs operates an asset-light model and owns no inventory. Sellers fulfill purchases, while the company offers shipping programs intended to provide buyers and sellers with better economics and service levels. The company generates revenue through seller subscription fees, commissions and a smaller advertising component. Its combined take rate is about 25%, Rosenblatt said. He added that the marketplace’s combined fraud and return rate is less than 5% across orders, which he contrasted with a rate in the “roughly 30% zip code” for luxury fashion marketplaces. About 70% of demand comes from consumers, whom Rosenblatt characterized as generally higher-net-worth, older and predominantly female. The remaining 30% comes from professional buyers, particularly interior designers, who tend to purchase repeatedly and place higher-value orders. The business began in 2000 as a listings platform centered on antique and vintage furniture sellers in Paris and later New York. For its first decade, transactions were completed off-platform through calls or emails with sellers. After raising venture funding in 2011, the company focused on building a fully transactional marketplace, expanding internationally and moving beyond vintage furniture into adjacent categories. Today, about 50% of GMV comes from the company’s original category of secondary-market luxury design, Rosenblatt said. The rest comes from both new and secondary-market products across furniture, jewelry, art and fashion.

Rosenblatt said the company went public in June 2021, near what he described as the peak of the real estate market. GMV subsequently declined for several years, and the...