1stdibs.com, Inc.

Good day, and thank you for standing by. Welcome to the FirstDibs.com Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would like to hand the conference over to your speaker today, Kevin LaBuzz, Head of Investor Relations. Please go ahead.

Good evening, and welcome to First Dib's earnings call for the quarter ended September 30th, 2021. I'm Kevin LaBuzz, Head of Investor Relations. Joining me today are CEO David Rosenblatt and CFO Tu Nguyen. David will provide an update on our business, including our strategy and growth opportunities, and Tu will review our third quarter financial results and fourth quarter outlook. This call will be available via webcast on our investor relations website at investors.firstdibs.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, and business plans. Our actual results may differ materially. Forward-looking statements involve risk and uncertainties, which are 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. Additionally, during the call we'll present GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to 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. I'll now turn the call over to our CEO, David Rosenblatt.

Thanks, Kevin. Good evening, and thank you for joining us today. Before we begin, I'd like to take a moment to thank our wonderful sellers, buyers, and employees for making First Dibs a leading marketplace for the world's most beautiful designs. I'd also like to thank our investors for their support. In the third quarter, we made progress on our strategic priorities and delivered strong financial results. GMV grew 25% year-over-year and revenue 22%. Our two-year stacked GMV growth rate, which normalizes the impact of COVID, was 57%. We ended the quarter with nearly 72,000 active buyers, up 35% year-over-year. Designers remained busier than ever, and trade GMV hit a quarterly record. In addition, consumer GMV growth picked up in the back half of the quarter relative to what we saw exiting June, when consumer traffic growth moderated. The supply chain disruptions roiling many industries have not impacted us to date for a few key reasons. First, The majority of our listings are secondary market items and require no manufacturing. Second, Vintage and Antique Furniture, which represents half of our GMV, is by definition in stock and ready to ship. As an example, Vintage and Antique Furniture orders delivered in October 2021 have the same shipping speeds as orders fulfilled in October 2019. Third, our platform enables buyers to filter for local sellers and avoid shipping entirely. We've heard from trade buyers in particular that these attributes are helping us win market share. We see a large opportunity as luxury shopping shifts online. Our primary focus is on growing GMV and the liquidity of the First Dibs marketplace. As I mentioned last quarter, we have more growth initiatives in process and on the roadmap, than at any point in our history. Each one represents a potentially meaningful GMV opportunity. Growing our marketplace creates financial value via increasing returns to scale and improves customer value via an improved buyer and seller experience. For example, this morning we launched First Dibs Auctions, which provides a new way to discover and own the world's most beautiful things. This new purchase format leverages our existing supply and demand and adds a common luxury purchase format to our marketplace. We're kicking it off with a collection curated by the home goods designer Jonathan Adler and Simon Doonan, former creative ambassador at large for Barneys New York. Auctions are an efficient means of price discovery and, therefore, an effective way to sell one-of-a-kind items, whose value can be indeterminate. We've learned from our consumer research that one of the main reasons why people don't buy from First Dibs is that it's difficult for non-professionals to ascertain pricing for rare and unique items. Auctions addresses this concern. In addition to aiding price discovery, our approach to auctions includes consumer-friendly differentiators like not charging a buyer's premium, providing upfront shipping costs in many cases, and covering all purchases with the First Dibs Buyer Protection Program. We see several benefits to buyers, sellers, and First Dibs. Over time, we expect auctions will create urgency, increase sell-through, aid price discovery, generate new marketing hooks, and as a result, help convert more of our 3.5 million registered users into buyers. We enter the auction market with a key advantage. The buyer, the seller, and the item are already on the First Dibs marketplace. For our initial launch, we have thousands of listings spanning our marketplace, including Birkin bags, estate jewelry, iconic mid-century modern furniture, rare art prints, and many other items with starting bids under $1,000. Because this is a new feature, Our near-term focus is on raising awareness of the format among existing customers. Auctions is the second new growth initiative that we've launched as a public company. Our first was expanding the first DIBS marketplace in August to include an NFT, non-fungible token, vertical. Our goal was to prioritize speed to market and then to iterate and enhance the platform as we gather data and feedback. We accomplished our primary launch objectives, bringing a blockchain-native product to market quickly, securing differentiated and high-quality content from recognized crypto creators, holding six exhibitions, and building community by launching an NFT-dedicated presence on Discord and Twitter. Our top NFT sale was for 19 ETH, about $60,000 at the time, from the digital artist OgiWorlds. whereas most sales have been at the 1 to 2 ETH range, or roughly 4,500 to 9,000 at current rates. Additionally, we've adopted features from the NFT platform to other parts of our marketplace, like adding auto-playing video to our search and browse tab. We see the blockchain as a game-changing technology for our industry and believe that digital art will grow into a significant market. Our unique ability to sell rare and one-of-a-kind items online places NFTs squarely within our right to win. Our priority over the next several quarters is to continue enhancing our platform and building marketplace liquidity. NFTs are an example of a potentially large market that we entered with modest incremental investment. International expansion is another priority for us. We plan to have our initial local language product in market in the first half of 2022, but see building an international business as a multi-year process. Our initial international focus will be on Western Europe, where we see the largest opportunity. We'll be stepping up our localization investments in the fourth quarter and into 2022. Today, without local language sites, Nearly 40% of our sellers and 20% of our buyers are located outside the United States. We believe that launching localized products will improve conversion for non-U.S. buyers over time. It also allows us to invest in paid and organic marketing to grow local audiences. Turning to the third quarter, cross-functional investments in SEO continue to pay off. Average rank improved and SEO traffic growth accelerated from approximately 20% year-on-year in the second quarter to over 30% in the third. We had prioritized SEO investment in 2019, and this is now paying dividends. Progress in SEO is the sum of many incremental improvements. For example, this quarter we launched new creator pages, giving us the opportunity to improve rank, for queries like Hans Wegner. Looking ahead, we'll keep scaling our page and content creation while ensuring that our site health and speed is highly performant. Enhancing the buyer and seller experience is another focus for us, and we made progress here too this quarter. We refreshed our item sort order to emphasize items more likely to drive buyer engagement and are testing additional personalization features. In art, we launched filters for size and orientation, and in jewelry, we added the option for buyers to design and customize pieces. Additionally, we launched a mobile version of item upload, allowing our over 4,300 sellers to create and publish listings end-to-end from their phone. These are a few examples of the incremental enhancements that our product and engineering teams work on day in and day out. Continually improving the buyer and seller experience has earned us the trust of consumers and designers. This trust is our greatest asset. In the third quarter, we delivered solid GMV growth and made progress on our strategic initiatives in the face of lingering macro uncertainties. As we look forward, we're well positioned to benefit from the continued shift to digital and and the extensibility of our platform, which allows us to efficiently enter adjacent markets, launch new features, and unlock large GMV opportunities, like auctions and NFTs, with modest startup investments. In 2021, we've stepped up our cadence of bringing new products to market. As we look to the fourth quarter and beyond, I'm excited about our roadmap and our pace of execution. I'll now turn it over to Tu, who will discuss our third quarter financial results and outlook.