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1stdibs.com, Inc. (DIBS)·Q3 2025 Earnings Summary

Executive Summary

  • 1stDibs delivered a cleaner, margin-focused Q3: net revenue $22.0M (+4% y/y), gross margin 74.3% (+330 bps y/y), and Adjusted EBITDA margin improved to (1.1)%, the best since listing, driven by cost realignment and tighter performance marketing .
  • Results modestly beat consensus: revenue $22.0M vs $21.5M consensus and EPS ($0.10) vs ($0.13) consensus; Street now needs to reflect a faster path to profitability as management guides to positive Adjusted EBITDA in Q4 and FY26* .
  • Q4 outlook implies sustained discipline: GMV $90–96M, revenue $22.3–23.5M, and Adjusted EBITDA margin +2% to +5% (vs negative in Q3), aided by subscription pricing actions effective Oct 1 and lower paid traffic spend .
  • A $12M share repurchase authorization underscores confidence and adds near‑term support while the company leans into product/AI and price parity enforcement to drive conversion and trust .

What Went Well and What Went Wrong

  • What Went Well

    • Structural margin step-up: Adjusted EBITDA margin improved to (1.1)% from (14.1)% y/y; operating expenses were down 6% y/y (down ~10% ex-severance) as 1stDibs reallocated spend from sales/marketing to product/engineering .
    • Conversion and AOV improvements: 8th consecutive quarter of conversion growth; on-platform AOV ($2,700) and median order value ($1,300) both up ~10% y/y; GMV accelerated to +5% y/y from (2)% in Q2 .
    • Trust and pricing innovations: ML-based pricing across verticals and price parity enforcement (90% violations remedied) lifted conversion on updated items; ~25% of new code now written by AI to accelerate product velocity .

  • What Went Wrong

    • Traffic softness: Paid traffic reduced by stricter efficiency thresholds; >75% traffic now organic (+3ppt y/y), but lower paid traffic is a near‑term headwind to order volume .
    • Take rate compression: Take rate declined ~40 bps y/y on mix shift toward higher value orders, partially offsetting GMV gains .
    • One-time boost to gross margin: Reported GM of 74% included ~100 bps non-recurring insurance recovery; adjusted gross margins were at the high end of the 71–73% range .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($M)$21.190 $22.545 $22.135 $21.972
GAAP Diluted EPS($0.15) ($0.14) ($0.12) ($0.10)
Gross Margin %71.0% 72.4% 71.8% 74.3%
Adjusted EBITDA ($M)($2.983) ($1.748) ($1.752) ($0.243)
Adjusted EBITDA Margin %(14.1)% (7.8)% (7.9)% (1.1)%

Vs consensus (Q3 2025):

  • Revenue: Actual $21.972M vs $21.509M consensus (beat)* .
  • EPS: Actual ($0.10) vs ($0.13) consensus (beat)* .
    Values retrieved from S&P Global.*

KPIs and Marketplace Health

KPIQ1 2025Q2 2025Q3 2025Q3 2025 y/y
GMV ($M)$94.7 $89.9 $89.1 +5%
Number of Orders (K)~35 ~33 ~32 (4)%
Active Buyers (K)~65 ~64 ~63 +1%

Selected Mix/Other

  • Transaction revenue ~75% of total; subscriptions most of the remainder .
  • Take rate down ~40 bps y/y on mix shift to higher-value orders .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GMVQ3 2025 (from Q2 guide)$83–$89M N/AN/A
Net RevenueQ3 2025 (from Q2 guide)$21.0–$22.1M N/AN/A
Adjusted EBITDA MarginQ3 2025 (from Q2 guide)(12)% – (8)% N/AN/A
GMVQ4 2025N/A$90–$96M New
Net RevenueQ4 2025N/A$22.3–$23.5M New
Adjusted EBITDA MarginQ4 2025N/A+2% – +5% New

Notes:

  • Management expects positive Adjusted EBITDA in Q4 and for FY2026 .
  • No explicit guidance given for OpEx, OI&E, tax, or dividends.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
AI / Product VelocityRolled out ML pricing across all verticals; improved SEO; ongoing A/B testing Expanded ML pricing adoption; building AI across functions; traffic 70%+ organic ~25% of new code written by AI; parity enforcement tech; AI embedded in roadmap Strengthening
Pricing & Trust1stdibs estimate on PDPs boosted conversion; parcel shipping self‑service Refining ML recs; adoption up; reduced price negotiations Automated price parity enforcement with 90% remediation; conversion lift on updated items Strengthening
Marketing EfficiencyTight expense control; headcount discipline Opex down 4% y/y; paid traffic softened; >70% organic Raised efficiency thresholds; reduced paid traffic; >75% organic More efficient, lower paid
Macro/HousingSoft housing and luxury demand; conversion moderated in April Modest GMV decline; tariffs noted; jewelry strength GMV reaccelerated to +5%; mix shift to higher value orders Stabilizing with mix tailwinds
Seller Base / SupplyListings +5% y/y; sellers ~5.9K, churn from pricing changes Listings ~1.9M (+3%); sellers ~5.9K, churn de minimis impact Listings ~1.9M (+1%); sellers ~5.8K; churn headwind largely behind Stabilized, quality focus
AdvertisingSponsored listings overhaul; non‑endemic ads early —First non‑endemic advertiser launched; nascent revenue path Early traction
Capital ReturnsOngoing buyback program Cash $94.3M New $12M repurchase authorization 11/4/25 Incremental support

Management Commentary

  • “We successfully completed a major strategic realignment…our best Adjusted EBITDA margin as a public company…well positioned for profitability and market share gains even in a challenging environment.” – CEO David Rosenblatt .
  • “Adjusted EBITDA well above guidance…on track to achieve positive Adjusted EBITDA in the fourth quarter and for the full-year 2026…Board authorized a $12 million share repurchase program.” – CFO Tom Etergino .
  • “We launched…automated enforcement…ensures items…are priced at or below their price on competing sites…nearly 90% of identified violations have been remedied by sellers.” – CEO .
  • “Operating expenses were down 6% year over year and down 10% when excluding severance costs…Sales and marketing…36% of revenue, down from 44% a year ago.” – CFO .
  • “Within engineering, we estimate that over 25% of all new code is being written by AI, accelerating our development process.” – CEO .

Q&A Highlights

  • Strategic realignment rationale: Multi-year effort reduced GMV breakeven by almost $250M; reallocated headcount from sales/marketing to product/engineering; goal is sustained profitability and positive FCF for FY26 .
  • Seller pricing changes: Oct 1 targeted subscription increase (~10% on ~20% of sellers) and certain commission increases; no meaningful increase in churn observed .
  • Guidance tone: Accepting lower traffic and orders in exchange for higher margins/unit economics; Q4 revenue aided by full-quarter subscription pricing benefit .

Estimates Context

  • Q3 2025 actuals vs consensus: revenue $21.972M vs $21.509M (beat), EPS ($0.10) vs ($0.13) (beat)* .
  • Q4 2025 set-up: guidance revenue $22.3–$23.5M vs Street $22.866M*; EPS Street ($0.05); management guiding to positive Adjusted EBITDA margin (+2% to +5%), indicating a profitability inflection ahead of prior expectations .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Profitability pivot underway: Structural cost reset and marketing discipline delivered the best public-company Adjusted EBITDA margin; Q4 guide implies turning positive .
  • Near-term revenue quality over volume: Reduced paid traffic and tighter thresholds will likely suppress order growth but improve unit economics and margins .
  • Trust and monetization levers: Price parity enforcement and ML pricing are lifting conversion; subscription pricing/commission changes add recurring revenue tailwinds without incremental churn to date .
  • Mix matters: Take rate compressed ~40 bps y/y on higher-value order mix; watch mix shifts and any impact from macro-sensitive high-ticket categories .
  • Capital return supports shares: New $12M buyback provides downside support as free cash flow inflects over the next 4–6 quarters .
  • Watch Q4 execution: Gross margin at high end of the 71–73% range and positive EBITDA will be key print metrics; note Q3 benefited ~100 bps from an insurance recovery .
  • Medium-term thesis: Product/AI velocity and marketplace trust can drive share gains in a soft macro, with an asset-light model enabling margin expansion as growth resumes .

Appendix: Additional Items

  • Balance sheet: Cash, cash equivalents and short‑term investments totaled $93.4M as of 9/30/25 .
  • Share repurchase: $12M authorization on 11/4/25, replacing prior program; timing/volume at company discretion .
  • Definitions and reconciliations: Non‑GAAP Adjusted EBITDA reconciliations provided in press release and 8‑K exhibits .

S&P Global estimates disclaimer: All figures marked with an asterisk (*) are values retrieved from S&P Global.