1stdibs.com, Inc.

Thank you for standing by and welcome to the First Dibs first quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star one on your touchstone phone. And to withdraw your question, please press star one again. It is my pleasure to introduce your host, Kevin LaBasse, Head of Investor Relations and Corporate Development. Sir, you may begin.

Good morning and welcome to First Dibs Earnings Call for the quarter ended March 31st, 2025. I'm Kevin LaBuzz, Head of Investor Relations and Corporate Development. Joining me today are Chief Executive Officer David Rosenblatt and Chief Financial Officer Tom Edergino. David will provide an update on our business, including our strategy and growth opportunities, and Tom will review the first quarter financial results and second 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, business plans, strategic initiatives, business and economic trends, including e-commerce growth rates, international opportunities, 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'll present both 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 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, and thank you for joining us today. The first quarter was marked by solid execution and steady market share gains. GMV and revenue exceeded the midpoint of guidance and adjusted EBITDA margins exceeded the high end. Our product-led growth strategy is delivering a better buyer and seller experience, driving outperformance against our end markets. While recent developments have made the landscape more dynamic and less predictable, our focus remains the same, executing on initiatives that are under our control to drive GMV and revenue, improve margins, and gain market share. The first quarter was another step in this direction. Evolving trade policies and their broader macroeconomic effects have created a tougher demand backdrop for luxury home discretionary spending, impacting results. We are relatively well positioned for the new tariff regime. In 2024, 50% of our GMV was from transactions between US sellers and US buyers, and roughly 30% of GMV was from EU or UK sellers to US buyers. In addition, U.S. buyer exposure to China, Canada, and Mexico is less than 1.5% of total GMV and supply exposure to other Asian markets is virtually nil. Additionally, we have a highly fragmented and diversified supply base with approximately 60% of our listings in the U.S. This means that there is often a local substitute on the marketplace for any imported product. Additionally, we don't manufacture or hold inventory. Because most of our listings are secondary, they are shielded from potential increases in raw material costs. However, we expect secondary effects to impact our business. These include a negative wealth effect and dampened appetite for discretionary purchases, in addition to protracted softness in the housing market. This macro uncertainty creates a wide range of potential outcomes. Turning to first quarter results, we kicked off 2025 by building on the progress of 2024 with tighter focus and accelerated product velocity driving ongoing conversion improvements while maintaining expense discipline. In addition, we continued to gain market share, grow GMV, and expand our active buyer base. This is happening against the backdrop of prolonged weakness in the housing market per the National Association of Realtors, and a protracted downturn in our end markets per syndicated credit card data. Increasing conversion remains our operational priority and highest leverage activity. The first quarter was the sixth consecutive period of year-over-year conversion rate growth. Once again, conversion improved for both new and returning buyers. Relative to fourth quarter growth rates, conversion gains moderated and traffic softened, weighing on order growth, which was flat. This was partially offset by growth in on-platform AOV, resulting in 3% GMB growth. Platform improvements are fueling growth and market share gains. Our product development engine is humming, and we're shipping enhancements faster than ever. For example, the number of A-B tests we ran during the quarter grew triple digits year over year, hitting a new record. Our 2025 roadmap is focused on creating value for both sides of the marketplace via four themes. These are accelerating organic traffic growth, competitive pricing, funnel optimization, and elevating the level of service we provide. Building on the progress we made in 2024, we aim to maintain growth and expense discipline while capturing additional market share. We made progress on multiple fronts during the first quarter. Let's start with organic traffic, where trends continue to move in the right direction. We returned to organic traffic growth in the first quarter, helped by improvements in SEO and direct traffic. These results reflect the impact of our work on site performance, removing low-value pages, boosting crawl efficiency, accelerating page load times, and refining SEO landing page content. In addition, we continue to optimize our email registration process, driving a higher registration rate without negatively impacting lower funnel metrics. Growing the number of registered users expands our email file, providing another direct organic touchpoint. Given that over 70% of our traffic is organic, improvements here should drive efficient buyer acquisition. We also maintained our momentum with competitive pricing, where our objective is ensuring that listing and shipping costs are priced in line with the market. On item pricing, in January, we fully launched our machine learning-based pricing model for art. In March, we started testing pricing recommendations for fashion, and this graduated into general availability in April, meaning that NL pricing models are currently live in all verticals. These models leverage our unique transactional database to provide pricing transparency in what is historically an opaque market. Our expectation is that this builds buyer trust and confidence. Additionally, we integrated pricing recommendations into the buyer experience, giving customers more context on pricing. In March, we increased the visibility of the first DIBS estimate. prominently displaying pricing recommendations to shoppers on product display pages. Testing showed that this led to higher conversion. This move ensures that buyers can quickly and easily access critical information, driving a more informed purchase decision and a better user experience. With ML-based pricing models fully launched, we are now focused on experimenting with the most impactful ways to surface these recommendations to buyers and improving our accuracy to spur seller adoption. We also made progress with shipping. In March, we rolled out parcel self-service to all sellers, giving them complete control to select the best shipping methods for their business with our seamless integration of calculated shipping rates, shipping labels, and automated tracking. This feature also enables buyers to obtain real-time best price shipping quotes, reduces operational complexity, and increases our parcel pre-quote coverage by 5% at points to nearly 100%. Building on the foundation laid over the past two years, we also made strides in reducing friction and streamlining the user experience. We want to make it easier for shoppers to find and buy the perfect item. From discovery through checkout, we saw improvements across the funnel during the first quarter. At the top of the funnel, we made product discovery more intuitive and efficient. These changes are helping users better navigate our categories and connect with relevant items faster, which in turn supports improved engagement and conversion. In the middle of the funnel, we amplify trust signals by more prominently displaying sellers standing on product display pages, clearly distinguishing our top tier sellers. The results suggested that reinforcing seller standing helps build buyer confidence and trust earlier in the purchase process. Indeed, Platinum Seller, our highest ranking, saw the most significant conversion uplift. At the bottom of the funnel, we simplified checkout design, resulting in a smoother user experience and higher checkout completion rates. These wins, and many others, contributed to our ongoing conversion improvements. our conversion rate in the first quarter was over 10% higher versus the first quarter of 2023. Turning to supply, as we navigate through this period of uncertainty, we are becoming more important to sellers. Our 2025 seller sentiment survey showed that First Dibs is now the primary sales channel for our sellers, surpassing their own showrooms for the first time. This marks a meaningful shift from the past four years, when showrooms consistently ranked first. It also reflects the progress we've made in deepening seller engagement and delivering value. Consistent with recent quarters, we saw steady listings growth and ended the quarter with over 1.8 million listings, up 5%. Unique seller count remains volatile due to subscription pricing optimizations. We ended the quarter with approximately 5,900 unique sellers, down 23% year-over-year, but flat sequentially. Similar to the past few quarters, churn was elevated due to the retirement of our essential seller program and pricing changes in the fourth quarter of 2024. In total, the churn cohort accounted for less than 50 basis points of GMV over the trailing 12 months and approximately 50 basis points of total listings. Looking ahead, we expect churn to normalize in the second quarter of 2025 and to see unique seller growth on a sequential basis in the second half of the year. Additionally, we expect continued listings growth through 2025. First quarter results demonstrate our ability to execute, even amid rising uncertainty. We delivered in-line or better performance, strengthened our market position, and made progress on our product roadmap. Thank you for your continued support. I will now turn it over to Tom to review our first quarter financial results and second quarter outlook.