Snapshot
1stdibs.com, Inc. reported $22M of revenue in Q3 2025, up 3.7% year over year, with diluted EPS of $-0.10 and an operating margin of -21.3%.
- Revenue
- $22M
- YoY growth
- +3.7%
- Diluted EPS
- $-0.10
- Operating margin
- -21.3%
$22M
Revenue
+3.7%
YoY growth
$-0.10
Diluted EPS
-21.3%
Operating margin
01 Key takeaways
What management said
- •David will provide an update on our business, including our strategy and growth opportunities, and Tom will review our third-quarter financial results and fourth-quarter outlook.
- •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.
- •We now expect to generate positive adjusted EBITDA in the fourth quarter and for the full year 2026.
- •Reflecting this strong financial performance and our clear line of sight to free cash flow generation, our board has authorized a new $12 million share repurchase program.
- •Generating free cash flow creates an opportunity to return capital, particularly if we continue to trade at a discount to our assessment of intrinsic value.
- •The core of our third-quarter effort was to build a more efficient growth engine.
- •We believe that our growth potential is unlocked by investing in product and engineering.
- •In September, we executed a targeted reduction in overall headcount, not only to save costs but to reallocate capital, shifting headcount away from sales and marketing roles and into technology development.
- •We are now primed to modernize our marketing channels, shifting investment towards high-engagement formats like social video and personalized communications, driving growth via content and community.
- •We began a deep review of our highest leverage opportunities in four core business drivers: fueling new buyer growth, retaining and engaging existing buyers, improving monetization, and ensuring seller success.
- •We are currently developing our 2026 product roadmap and are excited to share more details during our fourth-quarter earnings call.
What went well
- •Delivered revenue and GMV at the high end of guidance, with GMV accelerating to up 5% from down 2% in Q2 on the combination of conversion growth and an AOV rebound.
- •Adjusted EBITDA margin improved to negative 1% (loss of approximately $240,000 versus a $3 million loss a year ago), a 13 percentage point year-over-year improvement and the best as a public company, well above the high end of guidance.
- •Realized roughly $7 million in annual savings via net headcount reduction, performance marketing efficiencies, and other cost cuts, structurally lowering the break-even point while growing product development capacity.
- •Eighth consecutive quarter of conversion growth, which accelerated during the period, and launched the first phase of automated price parity enforcement with nearly 90% of identified violations remedied by sellers.
- •Board authorized a new $12 million share repurchase program, reflecting a clear line of sight to positive adjusted EBITDA in Q4 and for full-year 2026; over 25% of new code now written by AI.
What went wrong
- •Traffic softened, driven by lower paid traffic as the company tightened efficiency thresholds and reduced performance marketing spending.
- •Unique sellers declined 17% year-over-year to approximately 5,800 as the seller base normalized following 2024 pricing actions.
- •Take rates declined approximately 40 basis points year-over-year due primarily to a mix shift in order value.
- •The deliberate reduction in performance marketing reduces paid traffic volume, trading lower near-term order volume for higher margins.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| GMV | Q4 2025 | — | $90 million-$96 million, down 5% to up 2% | |
| Net revenue | Q4 2025 | — | $22.3 million-$23.5 million, down 2% to up 3% | |
| Adjusted EBITDA margin | Q4 2025 | — | positive 2% to positive 5% | |
| Adjusted EBITDA (positive) | Q4 2025 and FY 2026 | — | Now expect positive adjusted EBITDA in Q4 and for full-year 2026, plus positive free cash flow for full-year 2026 |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Net revenue | Up 4% to $22 million | Transaction revenue tied to GMV (~75% of revenue) with GMV up 5%, partially offset by a roughly 40 basis point take-rate decline on order-value mix shift. |
| Gross profit | Up 9% to $16.3 million (74% margin, up 3 points) | Included a non-recurring insurance recovery related to a prior shipping matter contributing about 1 point; adjusted margin at the high end of the 71%-73% range. |
| Sales and marketing expense | Down 13% to $8 million (down 22% ex-severance) | Lower personnel costs and tightened performance marketing efficiency thresholds following the September strategic realignment. |
| Technology development expense | Up 8% to $5.9 million | Higher headcount-related costs from March annual merit increases and additional bonus awards in the quarter. |
| General administrative expense | Down 7% to $6.4 million | Primarily lower headcount-related costs. |
| Total operating expenses | Down 6% to $21 million (down 10% ex-severance) | Expense discipline and the September strategic realignment. |
| Adjusted EBITDA margin | Loss of 1% versus loss of 14% | Comprehensive efficiency effort and structurally lower operating expenses. |
| GMV | Up 5% | Conversion growth and an AOV rebound; year-ago period included lower-AOV auction orders, creating an easier comparable. |
| On-platform AOV | Up 10% to nearly $2,700 | Slight mix shift toward higher value orders and an easier comparable from prior-year auction orders. |
| Median order value | Up 10% to approximately $1,300 | Slight mix shift toward higher value orders. |
| Active buyers | Up 1% to approximately 63,200 | — |
| Art GMV | Up double digits | Art (low teens % of GMV) was the fastest-growing vertical; jewelry and vintage/antique furniture also grew. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Conversion growth streak | Seventh consecutive quarter of conversion growth | Eighth consecutive quarter, which accelerated during the period | |
| Profitability path | Continued focus on cost discipline and operating leverage | Breakthrough quarter for efficiency; adjusted EBITDA margin at negative 1%, now expecting positive adjusted EBITDA in Q4 and FY 2026 plus positive free cash flow in 2026 | |
| Price parity enforcement | ML-based pricing models rolled out across all verticals; began strengthening seller adherence to price parity policy | Launched first phase of automated enforcement; nearly 90% of identified violations remedied and parity items saw conversion increases | |
| Capital return | — | Board authorized a new $12 million share repurchase program given a clear line of sight to free cash flow | |
| Organizational realignment | — | September reduction shifting headcount from sales and marketing to technology; ~50% of headcount now in product/engineering; new CPO/CMO Bradford Shellhammer joined in August | |
| Non-endemic advertising | Beginning to explore opportunities | Successfully launched first non-endemic advertiser in late September; revenue opportunity still nascent | |
| AI in development | Embedding AI across the platform | Over 25% of all new code now written by AI; AI component being incorporated into every major roadmap initiative |
Q&A summary
Can you provide more color on the rationale and benefits you expect from the September strategic realignment, particularly the performance marketing changes, beyond the move to positive EBITDA?
It was the most recent stage of a three-year process to reach break-even, which in total has reduced the GMV break-even by almost $250 million across headcount, performance marketing, and vendor relationships. The realignment's goals were twofold: achieve adjusted EBITDA profitability in Q4 and maintain it while reaching positive free cash flow for full-year 2026; and reallocate headcount and non-headcount investment from sales and marketing to higher-ROI engineering and product development, with roughly 50% of headcount now in product/engineering.
On the October 1st price increase, can you give a sense of the magnitude and how the platform has performed since pushing it through?
It was a targeted combined subscription and, at certain price points, commission increase. The subscription portion affected only about 20% of sellers and amounted to roughly a 10% increase on those sellers. There was no meaningful increase in churn, attributed to the proportionality between value creation and the cost charged to sellers.