What Management Said

Read the full Q4 2025 transcript ↗

David will provide an update on our business, including our strategy and growth opportunities, and Tom will review our fourth quarter financial results and first quarter outlook. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which you can find at our investor relation website, along with a replay of this call. Lastly, please note that all growth comparisons are made on a year-over-year basis unless otherwise noted. Looking ahead, our 2026 financial plan focuses on capitalizing on these gains while delivering sustained Adjusted EBITDA profitability.

In 2026, we expect to deliver a third consecutive year of positive year-over-year revenue growth, alongside positive Adjusted EBITDA and free cash flow. While we are not providing full-year GMV guidance, we anticipate a return to year-over-year GMV growth by the fourth quarter, driven by the compounding impact of our product roadmap. In the fourth quarter, GMV was $90.2 million, at the low end of our guidance range. This performance marks a major inflection point, our first quarter of Adjusted EBITDA profitability as a public company.

In the second half of 2025, we made a conscious trade-off to moderate near-term GMV growth in exchange for a significantly improved Adjusted EBITDA profile. This shift in the positive Adjusted EBITDA is definitive proof that we do what we say. In our initial 2025 outlook, we targeted generating leverage at mid-single-digit revenue growth. By leaning into AI-assisted development, which now accounts for approximately 30% of our new code, we delivered our ninth consecutive quarter of conversion growth.

What went well
  • Achieved the first quarter of positive adjusted EBITDA as a public company, with Q4 adjusted EBITDA of $1.3 million and a 6% margin, above the high end of guidance and an approximately 1,300 basis point year-over-year expansion.
  • Exited 2025 as an adjusted EBITDA-positive company, exceeding internal operating leverage targets despite a housing market at a 30-year low.
  • Delivered the ninth consecutive quarter of conversion growth and strong AOV expansion, with GMV outperforming order volume by 400 basis points as the company captured higher-intent, higher-value demand.
  • Reduced annual operating expenses by 18% (nearly $18 million) since 2022 and lowered headcount more than 30% from peak, while lifting gross margins from 69% to 73% and adjusted EBITDA margins by roughly 1,900 basis points over that period.
  • Take rates increased approximately 140 basis points year-over-year and over 80% of traffic came from organic sources, up 8 percentage points; AI-assisted development reached approximately 30% of new code.
What went wrong
  • Q4 GMV was $90.2 million, down 5% and at the low end of the guidance range, as traffic headwinds increased across both organic and paid channels from the deliberate marketing pullback.
  • Order volumes declined 9% due to aggressively tightened ROI thresholds that intentionally pruned lower-intent traffic.
  • Active buyers fell 5% to approximately 60,700 and unique sellers declined 4% to approximately 5,700 as the seller base normalized following pricing adjustments.
  • Both trade and consumer GMV declined at similar rates, with most verticals down (jewelry most resilient at down just 1%) amid persistent macro headwinds.

Guidance Changes

MetricPeriodCurrent guidance
Revenue growthFY 2026Third consecutive year of positive year-over-year revenue growth, alongside positive adjusted EBITDA and free cash flow
GMV growthFY 2026Not providing full-year GMV guidance; anticipate a return to year-over-year GMV growth by Q4 2026
Talent rebalancingQ2 2026Reallocation toward product and engineering set to conclude in the second quarter

Performance Breakdown

MetricYoYNote
Net revenue Up 1% to $23 million Take rates up ~140 basis points from October pricing increases and sponsored listings growth, offsetting the 5% GMV decline.
Gross profit Up 3% to $16.9 million (~74% margin, up 1 point) Higher take rates and improved margin profile.
Sales and marketing expense Down 44% to $5.9 million The strategic realignment that reset the marketing organization and rationalized performance marketing spend.
Technology development expense Up 9% to $6 million Higher headcount-related costs as talent rebalanced toward product and engineering roles.
General administrative expense Up 5% to $7 million Primarily a one-time sales tax-related item.
Total operating expenses Down 18% to $19.2 million The September strategic realignment and previous cost-saving measures.
Adjusted EBITDA $1.3 million versus a $1.6 million loss (6% margin, ~1,300 bp expansion) Structurally lower cost base and a lowered break-even threshold.
GMV Down 5% to $90.2 million Deliberate marketing pullback raising traffic headwinds; order volume down 9%, partially offset by conversion growth and AOV expansion.
On-platform AOV Up 5% to nearly $2,600 Returning buyers spending more per order and a higher mix of orders from repeat customers.
Median order value Up 4% to approximately $1,250 Higher-value transaction mix.
Active buyers Down 5% to approximately 60,700 Reduced sales and marketing spend.
Provision for transaction losses Down to ~$400,000, 2% of revenue from 4% At the low end of the historical 2%-4% range.

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Conversion growth streakEighth consecutive quarter of conversion growthNinth consecutive quarter of conversion growth—
Profitability inflectionExpected positive adjusted EBITDA in Q4; adjusted EBITDA margin at negative 1% in Q3Achieved first quarter of positive adjusted EBITDA as a public company ($1.3 million, 6% margin); exited 2025 adjusted EBITDA-positive—
AI as catalyst versus competitorTracking AI/chatbot impact on search; embedding AI across the platformViews AI as a catalyst not a competitor for high-trust, one-of-a-kind luxury; deploying AI-powered semantic and image search in the 2026 roadmap—
AI-assisted developmentOver 25% of new code AI-writtenApproximately 30% of new code now AI-assisted—
2026 product roadmapDeveloping the 2026 roadmap; details to come on the Q4 callRoadmap organized around four pillars: discovery, pricing, shipping, and service, including AI search, personalization, 1stDibs Tastemakers ambassador program, and expanded sponsored listings—
Price parityLaunched first phase of automated enforcementExpanding enforcement by incorporating an LLM to roughly double inventory coverage and surfacing comps data to buyers and sellers—
Contribution margin—Contribution margin improved from the 50%-55% level to the 60%-65% level, positioning future revenue gains to flow disproportionately to the bottom line—

Q&A Summary

What are the primary drivers to accelerate growth through 2026 and return to growth in a tough macro?
From September 2026 onward the company laps the nearly 50% reduction in performance marketing spend, and the increased product and engineering investment made last September yields a bigger, compounding roadmap, providing a clear path to year-over-year GMV growth by Q4 2026. For the full year, the company is committed to a third consecutive year of revenue growth alongside positive adjusted EBITDA and free cash flow, and management does not believe this depends on a broader market recovery.
Why don't you see AI as a disruption threat, and is it because of the complex tasks you handle between buyer and seller and unique product categories?
Management views 1stDibs as a beneficiary of AI from the top to the bottom of the income statement. Disintermediation is more a threat for commodity products, the opposite of 1stDibs' 2 million one-of-a-kind pieces; at its high price points, seller expertise and transaction integrity are the primary value. AI agents can aid discovery but cannot substitute for buyer trust, seller reputation, and the complex logistics and payment infrastructure required.
What are some of the most exciting initiatives as you return to consistent growth across GMV and revenue?
Four highest-impact roadmap areas: AI/semantic search to remove the need for exact-match queries; reengineering the shipping framework to standardize seller/1stDibs roles and reduce cost and complexity; pricing, including an LLM-based price parity expansion and broader comps data; and a first-ever community-based influencer network as a social strategy.
How much of inventory currently has price parity incorporated, and what are you scaling it to in 2026?
The specific figure is not shared for competitive reasons, but the LLM expansion should roughly double the product covered. More important behaviorally is the number of sellers impacted; once sellers understand 1stDibs can and intends to enforce price parity, they are less likely to violate it. Management framed it as creating a clean, well-lit, regulated marketplace that benefits buyers, sellers, and 1stDibs.
As 1stDibs returns to steady GMV growth, is it fair to expect margin expansion would accelerate in that scenario?
Yes. Gross margins have expanded to 73%-74% and contribution margin has risen from the 50%-55% level to the 60%-65% level, so as GMV and revenue expand, a large portion of the additional revenue is expected to flow to the bottom line due to the higher contribution margin built into the model.

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Q4 2025 call
Reported 2026-02-27 · figures from the 1stdibs.com, Inc. Q4 2025 earnings call.

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