Snapshot
1stdibs.com, Inc. reported $22M of revenue in Q1 2026, up -0.7% year over year, with diluted EPS of $-0.06 and an operating margin of -14.8%.
- Revenue
- $22M
- YoY growth
- +-0.7%
- Diluted EPS
- $-0.06
- Operating margin
- -14.8%
What management said
- •Welcome to the 1stDibs earnings call for the quarter ended March 31st, 2026.
- •David will provide an update on our business, including our strategy and growth opportunities, and Tom will review our first quarter financial results and second 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 made on a year-over-year basis, unless otherwise noted.
- •We are on track across revenue, costs, and product development, and our 2026 financial framework remains unchanged.
- •Our goal, however, is to generate growth irrespective of the timing of a market recovery.
- •Once conditions normalize, we will be in a strong position to accelerate growth.
- •Adjusted EBITDA of $600,000 above the midpoint of guidance is proof that our financial model is now capable of generating adjusted EBITDA profitability even in a challenging external environment.
- •We have fundamentally re-engineered our business, lowering expenses and headcount since late 2022 to ensure future revenue recovery flows disproportionately to the bottom line.
- •Traffic declines, driven primarily by our pullback in performance marketing and substantial sales and marketing headcount reductions, were partially offset by our 10th consecutive quarter of conversion growth and higher average order values.
- •This conversion growth is the direct result of sustained product investment, and it gives us confidence that our roadmap is working.
- •While total operating expenses declined 11%, technology development spending grew 10%, a reflection of our conviction that product and engineering is our highest ROI investment.
What went well
- •Delivered on disciplined execution, durable profitability, and steady roadmap progress, with the 2026 financial framework unchanged and results in line with expectations across the board.
- •Generated positive adjusted EBITDA of approximately $600,000 (about a 2.5% margin), above the midpoint of guidance and the second consecutive quarter of positive adjusted EBITDA.
- •Posted the 10th consecutive quarter of conversion growth and higher average order values, partially offsetting traffic declines.
- •Generated $800,000 of free cash flow and $1.1 million of cash flow from operations, an encouraging early step toward the full-year free cash flow commitment.
- •Drove early product wins: AI-driven metadata improvements lifted search success rate nearly 4% and cut null results over 25%, USPS integration reduced parcel rates 30%-50% on packages under 20 lbs, and price parity coverage expanded 44%.
What went wrong
- •GMV was $89.7 million, down 5%, and net revenue was down 1%, reflecting deliberate sales and marketing reductions and a soft demand environment.
- •Order volume declined 12% as traffic fell across both paid and organic channels following the late-2025 performance marketing pullback.
- •Active buyers fell 10% to approximately 58,300, reflecting the deliberate reduction in sales and marketing spend.
- •Consumer GMV declined and all verticals except vintage and antique furniture declined year-over-year amid a U.S. housing market near a 30-year low.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| GMV | Q2 2026 | — | $86 million-$91 million, down 4% to up 1% | |
| Net revenue | Q2 2026 | — | $21.6 million-$22.6 million, down 2% to up 2% | |
| Adjusted EBITDA margin | Q2 2026 | — | between -2% and +2% | |
| GMV growth | FY 2026 | Return to year-over-year GMV growth by Q4 2026 | Reaffirmed return to year-over-year GMV growth by Q4 2026, not dependent on a market recovery | |
| Talent rebalancing | Q2 2026 | Set to conclude in Q2 | Onboarding final planned roles; rebalancing expected to conclude by end of Q2 2026 |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Net revenue | Down 1% to $22.4 million | GMV down 5%, partially offset by take rates up ~120 basis points from 2025 pricing actions and sponsored listings growth. |
| Gross profit | Up 2% to $16.7 million (~74% margin, up 2 points) | A decrease in hosting and software costs as a percentage of revenue, at the high end of the target range. |
| Sales and marketing expense | Down 31% to $6.3 million | The 2025 strategic realignment that reset the marketing organization and rationalized performance marketing spend. |
| Technology development expense | Up 10% to $6.2 million | The March annual merit cycle and higher headcount-related costs as talent rebalanced toward product and engineering. |
| General administrative expense | Down 2% to $6.8 million | — |
| Total operating expenses | Down 11% to $20 million | Continuation of the multi-year cost reset begun in 2022; included approximately $500,000 of severance charges, predominantly in sales and marketing. |
| Adjusted EBITDA | Approximately $600,000 (~2.5% margin) | The rebuilt cost structure delivering profitability against a challenging demand backdrop. |
| GMV | Down 5% to $89.7 million | Nearly 50% performance marketing reduction in Q4 2025 plus soft demand; order volume down 12%, offset partly by conversion growth and higher AOV. |
| Average order value | Up 7% to approximately $2,750 | Continued mix shift toward higher value transactions, especially from trade. |
| Median order value | Up 12% to approximately $1,400 | Continued mix shift toward higher value transactions. |
| Active buyers | Down 10% to approximately 58,300 | Deliberate reduction in sales and marketing spend enacted in late 2025. |
| Listings | Up 2% to nearly 1.9 million | — |
| Take rates | Up approximately 120 basis points | 2025 pricing actions, sponsored listings growth, and a favorable prior-year comparison from high-value transactions. |
| Provision for transaction losses | ~$700,000, 3% of revenue, down from 4% | At the midpoint of the historical 2%-4% range. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Conversion growth streak | Ninth consecutive quarter of conversion growth | 10th consecutive quarter of conversion growth | |
| AI-assisted development | Approximately 30% of new code AI-assisted | Over 50% of new code now AI-assisted, enabling faster shipping | |
| Discovery and AI search | Planned AI-powered semantic and image search in the 2026 roadmap | AI metadata improvements lifted search success ~4% and cut null results 25%+; redesigned search bar; visual search planned for Q2 and natural language search for Q3 | |
| Content and community | Planned 1stDibs Tastemakers ambassador program and influencer network | Launched 1stDibs Tastemakers in February with measurable Instagram reach and engagement gains; debuted the Objects of Desire podcast | |
| Personalization | Initiating a reimagined homepage and feeds | Moved the homepage from editorial-first to recommendation-first for recognized users and deepened favorites work | |
| Shipping | Planned to reengineer the shipping framework to standardize roles and reduce cost | Integrated USPS into shipping infrastructure, cutting parcel rates 30%-50% on packages under 20 lbs; plans to use ML to increase pre-quote freight coverage | |
| Price parity | Planned LLM-based expansion to roughly double coverage | Expanded price parity coverage by 44% in Q1, with further consumer-experience improvements planned | |
| Capital return | $12 million repurchase program authorized | Repurchased ~1.7 million shares for $9.1 million in Q1, leaving ~$1 million of authorization; ~9 million shares repurchased for ~$44.4 million since inception |
Q&A summary
Can you talk about the internal levers to reignite growth and whether they are being pulled today, or the timeline for pulling them?
The levers are the product roadmap's four highest-potential areas: discovery, pricing, shipping, and service, covering the full purchase funnel. Q1 made progress in each, with the highest-impact wins in discovery, shipping, and service: AI metadata improvements drove a 4% higher search success rate and cut null results over 25%, and USPS integration reduced parcel rates 30%-50% on packages under 20 lbs. Visual search is lined up for Q2 and natural language search for Q3; management feels it is early with more opportunity ahead than behind, and expects improvements to compound.
What does a 4% search success rate improvement and a 25% reduction in null search results actually look like for a user?
A null search result means a buyer gets zero results, which at worst causes a bounce and at best a higher-friction discovery process; reducing it means more buyers find items, making them more likely to proceed in the funnel. With 1.9 million almost entirely one-of-a-kind items, search drives a disproportionate share of activity, making it an especially high-leverage entry point versus a less long-tail marketplace.
On GMV growth returning by Q4, do you need a change in macro conditions, and which products have the biggest near-term and longer-term impact?
Management remains confident in a Q4 return to growth not dependent on a market recovery, for two reasons: lapping the over 40% reduction in late-2025 sales and marketing spend beginning in Q4, and strong conviction in a compounding product roadmap. At the Q2 guidance midpoint, GMV growth is expected to improve sequentially from -5% in Q1 to -2%, with a path to year-over-year growth by Q4. Across the four roadmap areas, search (semantic and natural language) and logistics/shipping (including ML-driven freight pre-quote coverage and tracking improvements) are highlighted as highest-impact, alongside pricing (price parity expanded 44% in Q1) and service.