1stdibs.com (NASDAQ:DIBS) reported second-quarter results that exceeded its guidance range, with gross merchandise value (GMV) returning to year-over-year growth despite continued weakness in the luxury home-furnishings market and lower sales and marketing spending.
GMV rose 7% to $96 million in the quarter ended June 30, while revenue increased 5% to $23.3 million. Adjusted EBITDA was $1.3 million, representing an approximately 6% margin, compared with a year-earlier margin that was more than 13 percentage points lower, according to Chief Executive Officer David Rosenblatt.
Funnel Metrics Improve Despite Market Pressures
Management said the company’s performance was supported by moderating traffic declines, higher conversion and larger order values. Conversion increased for the 11th consecutive quarter, while sessions were flat sequentially. Approximately 75% of traffic came from organic sources at quarter-end, CFO Tom Etergino said.
Average order value increased 10% year over year to about $2,850, while median order value also rose 10% to approximately $1,500. Rosenblatt said two high-value art sales totaling more than $2 million contributed in part to average-order-value growth, but Etergino said the matching increase in median order value indicated that growth was broad-based.
Order volume declined year over year, though orders increased sequentially. Consumer and trade GMV each grew year over year, while growth improved across categories compared with the first quarter, including vintage and antique furniture, art and fashion.
The company ended the quarter with approximately 57,700 active buyers, down 10% from a year earlier, reflecting the deliberate reduction in marketing spending implemented in late 2025. Unique sellers were steady sequentially at roughly 5,700, while listings increased 1% year over year to nearly 1.9 million.
Rosenblatt said credit-card panel data tracked by the company showed luxury home furnishings spending declined by mid-single digits during the second quarter. He also pointed to a U.S. housing market that remains near a 30-year low. Still, management said its revised full-year GMV outlook does not depend on a macroeconomic recovery.
Product Roadmap Centers on Discovery, Trust, Shipping and Service
The company’s product strategy is organized around discovery, trust, shipping and service. Rosenblatt said AI-assisted development accounted for more than 70% of new code during the quarter, up from more than 50% in the first quarter.
In discovery, the company launched image search in June on mobile web and desktop, enabling users to upload a photo and find visually similar products from its catalog. It also continued work on semantic and natural-language search, including AI-powered catalog metadata and tests of semantic hybrid search.
Personalized homepage recommendations introduced during the quarter generated the company’s highest click-through rate for a homepage recommendation module, Rosenblatt said. The company also overhauled its favorites experience, which it views as a source of signals for product personalization and repeat-purchase behavior.
On pricing and trust, 1stDibs doubled its price-parity coverage using AI to identify listings priced inconsistently on competitor sites. Management said items corrected for price parity have shown increased sell-through rates. The company plans to broaden the initiative beyond pricing to include authenticity, seller quality and platform integrity.
Shipping initiatives included machine-learning-powered freight quotes, which increased freight pre-quote coverage from about 50% to 75% of listings and brought overall pre-quote coverage to nearly 90%. The company also reduced rates in certain parcel-shipping categories by up to 8% and added a third-party logistics integration intended to expand carrier tracking coverage.
Meanwhile, the company launched an AI-powered customer-service chatbot pilot for buyers and sellers. Rosenblatt said the tool was resolving a meaningful share of inquiries without human intervention, allowing service personnel to focus on more complex interactions.
Costs Fall as Technology Investment Continues
Gross profit increased 8% to $17.2 million, and gross margin rose 210 basis points to 73.9%. Total operating expenses declined 11% to $19.3 million, while sales and marketing expense fell 34% to $5.4 million.
The lower marketing expense reflected a late-2025 strategic realignment, rationalized performance-marketing spending and lower headcount-related expenses following a first-quarter reorganization, Etergino said. Sales and marketing represented 23% of revenue, down from 37% a year earlier.
Technology development expense increased 7% to $6.3 million as the company continued to shift resources toward product and engineering. General and administrative expense rose 1% to $6.7 million.
Revenue included about $270,000 in non-endemic advertising revenue tied to sponsorships for the company’s 1stDibs 50 event. Rosenblatt said Miele, House of Rohl and Ceraq participated as paid sponsors, and the company plans to hold one additional sponsored event in 2026.
Outlook Calls for Continued GMV Growth
For the third quarter, 1stDibs forecast GMV of $89 million to $94 million, ranging from flat to 6% growth year over year. It expects revenue of $22 million to $22.9 million, ranging from flat to 4% growth, and adjusted EBITDA margin between negative 1% and positive 2%.
The company said the third quarter is seasonally its softest period and represents its toughest year-over-year GMV comparison of 2026. It expects continued conversion and average-order-value gains, even as traffic remains a headwind.
For the full year, management raised its GMV outlook and now expects year-over-year GMV growth for 2026, as well as year-over-year GMV growth in the fourth quarter. It continues to expect a third consecutive year of revenue growth, gross margin of 72% to 74%, and positive adjusted EBITDA for the year.
The company reduced its expected revenue take-rate range to approximately 24% to 25%, from a prior range of 25% to 26%, due to a greater mix of higher-value orders that carry lower blended commission rates.
1stDibs ended the quarter with $67.7 million in cash equivalents and short-term investments, down $17.6 million sequentially. The decline included $11.1 million in share repurchases and a $5.9 million accounting reclassification related to payment processor agreements. The company said it is no longer likely to report positive free cash flow in 2026 because of that reclassification, though management said the underlying business was generating cash ahead of its prior expectations.
About 1stdibs.com (NASDAQ:DIBS)
1stDibs.com is an online marketplace specializing in high-end furniture, fine art, jewelry, watches, fashion and decor. The platform curates offerings from independent dealers, galleries and luxury brands, enabling vetted sellers to reach discerning buyers around the world. Headquartered in New York with an additional office in Paris, 1stDibs has built a reputation for quality and authenticity through rigorous seller screening and detailed item vetting.
Launched in 2001 by founder Michael Bruno, the company has grown into a leading destination for both private collectors and interior design professionals.
