1stdibs.com, Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. Good morning, and welcome to the 1stDibs earnings call for the quarter ended June 30th, 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, Thomas Etergino. David will provide an update on our business, including our strategy and growth opportunities, and Tom will review our second quarter financial results and third quarter 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 risk 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.

Our second quarter results confirm that we are on track to sustainable top-line growth and positive adjusted EBITDA. GMV of $96 million, up 7%, came in above the high end of our guidance range and was our strongest growth since the fourth quarter of 2024. Despite ongoing headwinds from our sales and marketing reductions, we believe that we gained market share in the second quarter based on credit card panel data we track. Driving that result is a product that is measurably better than it was a year ago. Conversion grew for the 11th consecutive quarter, average order values expanded, and the number of sessions stabilized sequentially. The improvements we have been making in our platform in discovery, pricing, shipping, and service are showing up in the numbers.

Based on Q2's performance, we now expect GMV to grow year-over-year for 2026 as a whole. We also continue to expect that GMV will grow in Q4. The demand environment remains challenging. The U.S. housing market continues to hover near a 30-year low, and the spring selling season ended on a weak note. High-end furniture demand, based on the credit card data we track, continues to decline year-over-year and has not shown material improvement. Our 2026 GMV growth expectation does not depend on a macro recovery. Q2 is evidence of that. When conditions do normalize, as they eventually will, we are well positioned to benefit. Turning to the financials, the second quarter demonstrated that our re-engineered cost structure is working as intended.

GMV of $96 million and revenue of $23.3 million both came in above the high end of guidance and did so despite substantial sales and marketing reductions. Adjusted EBITDA margin of approximately 6% came in well above the high end of guidance, an improvement of over 13 percentage points versus a year ago. From 2022 through 2025, we re-engineered the business to be able to convert revenue recovery into outsized margin expansion. This dynamic was on full display in Q2, and our confidence in positive full-year adjusted EBITDA remains. With that context, let me walk you through the drivers of the quarter's performance. The funnel told an encouraging story on all three dimensions. Traffic declines moderated relative to the first quarter, and in absolute terms, sessions were flat sequentially, an encouraging sign. Conversion grew for the 11th consecutive quarter, a streak that reflects compounding product improvements.

Average order value expanded as well, supported in part by two high-value art sales in the quarter, totaling over $2 million. That speaks to something important. The trust that buyers place in 1stDibs to facilitate transactions at the high end of the market is a genuine strategic asset, and it is reflected in our AOV trends over the past year. Together, these three dynamics, moderating traffic declines, expanding order values, and continued conversion growth, drove a return to GMV growth. All three give us confidence that our 2026 roadmap is working. That roadmap is organized around four pillars: discovery, pricing, shipping, and service. Each designed to solve specific customer problems that exist independent of the macro environment. AI-assisted development now accounts for over 70% of our new code, up from over 50% last quarter, enabling our team to ship faster than ever.

Let me walk you through our progress in the second quarter. Discovery is where we are making the most visible progress, and search is at the center of it. Our goal is to make 1stDibs searchable in the way that buyers naturally think, rather than the way design experts talk. A buyer who spots a cocoon pendant in a hotel lobby shouldn't need to know what it's called to find something similar on our marketplace. Our catalog is full of one-of-a-kind items that can be difficult to describe. Yet many buyers can recognize exactly what they want when they see it. They simply lack the design vocabulary to search for it. In June, we launched image search on mobile web and desktop, allowing buyers to upload a photo and find visually similar items across our catalog of nearly 1.9 million listings.

More broadly, we continued our progression towards semantic and natural language search. This is not a single feature launch, but a year-long build toward a search experience that understands buyer intent rather than just keywords. To date, we have made real progress by enriching our catalog with AI-powered metadata and by beginning to test semantic hybrid search. On personalization, we are building something meaningfully different from what existed a year ago. Historically, our recommendations worked by surfacing items similar to what a user had viewed, favorited, or searched. Today, we are developing genuine user-level understanding, matching each buyer's affinities and behaviors to inventory they may never have found on their own. The early data is compelling. Personalized homepage recommendations, which launched in Q2, generated our highest-ever click-through rate on a homepage recommendation module.

The homepage itself is now evolving to reflect this shift, moving from an editorialized destination to a personalized feed, with improvements rolling out over the coming quarters. Favorites is also a critical enabler of this strategy. In Q2, we overhauled the favorites experience to make saving, browsing, and organizing items easier, and we are driving broader adoption across the platform. This matters because favorites provide powerful personalization signals. The more buyers engage with them, the more precisely we can tailor their experience. Since last quarter, our favorite rate has improved, a trend which has continued in Q3. Notably, favorites usage is one of our strongest predictors of repeat purchase on 1stDibs, creating a positive feedback loop between engagement and customer lifetime value. Our Tastemakers Ambassador program completed its pilot in the second quarter with tangible results.

Our Instagram following topped 1 million, our Reels production doubled year-over-year, and total video view time on Instagram tripled versus the first quarter. This content is doing double duty, building organic reach and brand affinity while simultaneously improving the efficiency of our paid media program. By incorporating Tastemaker video into our creative mix, we expanded reach and reduced the cost per ad impression, making new buyer acquisition more efficient even as we maintain spending discipline. We plan to scale the Tastemaker program significantly in the second half of 2026. Once a buyer finds what they are looking for, the next question is simple: Can they trust the price? That is what our pricing roadmap is designed to answer. In the second quarter, we doubled our price parity coverage using AI to identify and flag items priced inconsistently across competitor sites. Initial results validate the approach.

Items corrected for price parity are showing an increase in sell-through rates. This sends an important signal to buyers that they don't need to cross-reference pricing on 1stDibs. Price parity is one of many elements of consumer trust in our platform. Based on our progress this quarter, we are expanding our pricing pillar into a broader trust initiative, one that addresses the full range of signals buyers rely on when deciding whether to transact on 1stDibs, including authenticity, seller quality, and platform integrity. Pricing gives buyers confidence in the value of an item, trust that gives them confidence in the platform itself. Given how central trust is to our brand and to buyer confidence, we believe that expanding this work will drive conversion. More to come on this evolution in the third quarter. Even a buyer who trusts the price can be stopped by shipping uncertainty.