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What changed in 1stdibs.com, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of 1stdibs.com, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+424 added−371 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-03)

Top changes in 1stdibs.com, Inc.'s 2023 10-K

424 paragraphs added · 371 removed · 310 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

77 edited+12 added−29 removed55 unchanged
Biggest changeOur Environmental, Social, and Governance (“ESG”) Efforts Our business creates a positive environmental and economic impact, balancing the needs of our buyers, sellers, partners, employees, investors and the environment. We are committed to extending the lifecycle of luxury goods by promoting their recirculation. As of December 31, 2022, approximately 64% of the listings on our marketplace are secondary.
Biggest changeWe are committed to extending the lifecycle of luxury goods by promoting their recirculation. As of December 31, 2023, approximately 64% of the listings on our marketplace are secondary. Buying an item on our marketplace offsets the need to manufacture a new item, which creates a positive economic impact for all parties.
This data allows sellers to offer more relevant products and optimize their pricing strategies, which enables them to efficiently scale their businesses. We provide sellers with a comprehensive suite of seller tools, education, and analytics, 3 including reporting, tracking, and inside perspectives on pricing based on the historical sales of similar items.
This data allows sellers to offer more relevant products and optimize their pricing strategies, which enables them to efficiently scale their businesses. We provide sellers with a comprehensive suite of seller tools, education, and analytics, including reporting, tracking, and inside perspectives on pricing based on the historical sales of similar items.
Sellers also benefit from our proprietary algorithms and targeting technologies to connect with both consumers and Trade Buyers. • Listing & Pricing: We empower sellers with tools useful for them to control item pricing and item visibility on our online marketplace. Sellers can leverage our proprietary classification methodologies and structured data to create listings tailored to their inventory.
Sellers also benefit from our proprietary algorithms and targeting technologies to connect with both consumers and Trade Buyers. • Listing & Pricing: We empower sellers with tools useful for them to control item pricing and item visibility on our online marketplace. Sellers can leverage our proprietary classification methodologies and structured data to 3 create listings tailored to their inventory.
We seek to protect our proprietary information, in part, by entering into confidentiality and proprietary rights agreements with our employees and independent contractors. Our employees are also subject to invention assignment agreements. See “Risk Factors—Risks Relating to Intellectual Property.” Website Access to Company’s Reports Our website address is www.1stdibs.com.
We seek to protect our proprietary information, in part, by entering into confidentiality and proprietary rights agreements with our employees and independent contractors. Our employees are also subject to invention assignment agreements. See “Risk Factors—Risks Relating to Intellectual Property.” 8 Website Access to Company’s Reports Our website address is www.1stdibs.com.
We have developed policies and procedures designed to manage data security risks, including employment of technical security defenses and continual monitoring of servers and systems. Further, as part of our efforts to protect sensitive information, we rely on a variety of security measures, including encryption and authentication technology licensed from third parties.
We have developed policies and procedures designed to manage data security risks, including employment of technical security defenses and continual monitoring of servers and systems. Further, as part of our efforts to protect sensitive information, we rely on a variety of security measures, 7 including encryption and authentication technology licensed from third parties.
The uniqueness, diversity, and high quality of the products on our online marketplace, together with an active marketing effort, have produced a large, global, and growing base of design-loving buyers. Our user-friendly interface, dedicated specialist support, and 1stDibs Promise enable a trusted purchase experience.
The uniqueness, diversity, and high quality of the products on our online marketplace, together with an active marketing effort, have produced a large global base of design-loving buyers. Our user-friendly interface, dedicated specialist support, and 1stDibs Promise enable a trusted purchase experience.
We provide buyers with design inspiration through our expertly merchandised collections and our online editorial publication Introspective . • Quality of Experience: Unlike conventional offline alternatives, we offer our buyers convenient 24/7 access to approximately 1.5 million luxury design products.
We provide buyers with design inspiration through our expertly merchandised collections and our online editorial publication Introspective . • Quality of Experience: Unlike conventional offline alternatives, we offer our buyers convenient 24/7 access to approximately 1.7 million luxury design products.
We maximize search engine optimization to help buyers find items and connect with our sellers, allowing them to purchase products tailored to their tastes and preferences with ease.
We maximize Search Engine Optimization (“SEO”) to help buyers find items and connect with our sellers, allowing them to purchase products tailored to their tastes and preferences with ease.
Our website traffic also indicates strong international presence and opportunities for conversion, with approximately 38% of current traffic coming from outside the United States. In continuing to expand internationally, we plan to focus initially on organic search and later on performance-driven paid marketing and email campaigns. We may also expand internationally through acquisitions.
Our website traffic also indicates strong international presence and opportunities for conversion, with approximately 43% of current traffic coming from outside the United States. In continuing to expand internationally, we plan to focus initially on organic search and later on performance-driven paid marketing and email campaigns. We may also expand internationally through acquisitions.
While mobile app sessions only make up approximately 5% of total sessions during the year ended December 31, 2022, they accounted for approximately 16% of total order volume. • Personalization: We collect rich data around our users’ preferences, site engagement, item and seller attributes, buyers’ browsing patterns and purchase behaviors.
While mobile app sessions only make up approximately 5% of total sessions during the year ended December 31, 2023, they accounted for approximately 16% of total order volume. • Personalization: We collect rich data around our users’ preferences, site engagement, item and seller attributes, buyers’ browsing patterns and purchase behaviors.
We intend to continue to evaluate such diversification opportunities as part of our overall growth strategy. Our platform infrastructure is designed to scale with growth and diversification in mind. Expand Internationally During the year ended December 31, 2022, the vast majority of our buyers were located in the United States and other English-speaking countries.
We intend to continue to evaluate such diversification opportunities as part of our overall growth strategy. Our platform infrastructure is designed to scale with growth and diversification in mind. Expand Internationally During the year ended December 31, 2023, the vast majority of our buyers were located in the United States and other English-speaking countries.
Once in motion, the flywheel effect of this network enhances both seller and buyer quality, which we believe drives a competitive advantage. 1 We are driving consumer demand for luxury design products online by providing global access to a traditionally fragmented, local, and offline market.
Once in motion, the flywheel effect of this network enhances both seller and buyer quality, which we believe produces a competitive advantage. 1 We are driving consumer demand for luxury design products online by providing global access to a traditionally fragmented, local, and offline market.
We have created a pricing index, “1stDibs Insider,” which provides pricing guidance to our sellers based on historical pricing trends. By providing historical pricing data for similar items that have recently sold, we believe this help sellers price items more competitively. On our platform, sellers can set item pricing based on user type (Consumer vs.
We have created a pricing index, “1stDibs Insider,” which provides pricing guidance to our sellers based on historical pricing trends. By providing historical pricing data for similar items that have recently sold, we believe this helps sellers price items more competitively. On our platform, sellers can set item pricing based on user type (Consumer vs.
Three of our six directors, including each chairperson of our Audit, Compensation, and Nomination and Corporate Governance committees, are female or a member of the LGBTQ+ community. 6 We are committed to building a diverse team and an inclusive workplace that respects and meets the needs of our diverse community of sellers, creators, and customers.
In 2023, three of our six directors, including each chairperson of our Audit, Compensation, and Nomination and Corporate Governance committees, are female or a member of the LGBTQ+ community. 6 We are committed to building a diverse team and an inclusive workplace that respects and meets the needs of our diverse community of sellers, creators, and customers.
Additionally, buyers have the option to bid on items listed with 1stDibs Auctions. • Mobile: During the year ended December 31, 2022, the majority of user sessions came to our online marketplace via a mobile device, either by browsing our mobile site or by using our highly rated mobile app.
Additionally, buyers have the option to bid on items listed with 1stDibs Auctions. • Mobile: During the year ended December 31, 2023, the majority of user sessions came to our online marketplace via a mobile device, either by browsing our mobile site or by using our highly rated mobile app.
We believe in the importance of fostering a diverse, inclusive, and safe workplace; diversity is both a priority and strength of our company. We strive to continue to improve representation throughout the organization. Below is a breakdown of how our U.S.-based team self-identifies as of December 31, 2022.
We believe in the importance of fostering a diverse, inclusive, and safe workplace; diversity is both a priority and strength of our company. We strive to continue to improve representation throughout the organization. Below is a breakdown of how our U.S.-based team self-identifies as of December 31, 2023.
Our efforts are focused on establishing business norms that promote Diversity, Equity, Inclusion, and Belonging (“DEIB”) both within the company and across the broader design community. During the year ended December 31, 2022, our internal approach included educational, recruiting, and corporate social responsibility programs.
Our efforts are focused on establishing business norms that promote Diversity, Equity, Inclusion, and Belonging (“DEIB”) both within the company and across the broader design community. During the year ended December 31, 2023, our internal approach included educational, recruiting, and corporate social responsibility programs.
We believe our growing collection of approximately 1.5 million luxury design products is unmatched and makes us the premier destination for design lovers and enthusiasts. Luxury design products tend to retain value over time as a result of their scarcity and durability.
We believe our growing collection of approximately 1.7 million luxury design products is unmatched and makes us the premier destination for design lovers and enthusiasts. Luxury design products tend to retain value over time as a result of their scarcity and durability.
We list luxury design products from numerous sellers located throughout the United States and from over 85 countries, and the items we list from our sellers may contain materials that are subject to regulation by international, federal, state, and local governments and other regulatory authorities.
We list luxury design products from numerous sellers located throughout the United States and from over 90 countries, and the items we list from our sellers may contain materials that are subject to regulation by international, federal, state, and local governments and other regulatory authorities.
Disclosure Information In compliance with disclosure obligations under Regulation FD, 1stDibs announces material information to the public through a variety of means, including filings with the SEC, press releases, public conference calls, and webcasts, as well as the investor relations website. 10
Disclosure Information In compliance with disclosure obligations under Regulation FD, 1stDibs announces material information to the public through a variety of means, including filings with the SEC, press releases, public conference calls, and webcasts, as well as the investor relations website. 9
The percentage of Active Buyers who make more than one purchase in any given year has been generally consistent from year to year and comprised of approximately 30% of total Active Buyers in each of the years ended December 31, 2022 and 2021.
The percentage of Active Buyers who make more than one purchase in any given year has been generally consistent from year to year and comprised approximately 30% of total Active Buyers in each of the years ended December 31, 2023 and 2022.
Through our Trade 1st program, we offer these Trade Buyers, who comprise a subset of our buyers, additional benefits such as trade-only personalized support, exclusive trade pricing, and buyer incentives. Our Trade 1st program is a buyer-only program and members do not pay any fees to participate in this program.
Through our Trade 1st program, we offer these Trade Buyers, who comprise a subset of our buyers, additional benefits such as trade-only personalized support, exclusive trade pricing, and buyer incentives for which members do not pay any fees to participate in this program.
Highly experienced interior designers, whom we refer to as Trade Buyers, are frequent, repeat purchasers on our online marketplace and accounted for 32% and 29% of our on-platform GMV in the years ended December 31, 2022 and 2021, respectively.
Highly experienced interior designers, whom we refer to as Trade Buyers, are frequent, repeat purchasers on our online marketplace and accounted for 31% and 32% of our on-platform GMV in the years ended December 31, 2023 and 2022, respectively.
During the year ended December 31, 2022, we had approximately 68,000 Active Buyers, compared to approximately 72,000 in the year ended December 31, 2021. We define Active Buyers as buyers who have made at least one purchase through our online marketplace during the 12 months ended on the last day of the period presented, net of cancellations.
During the year ended December 31, 2023, we had approximately 61,000 Active Buyers, compared to approximately 68,000 in the year ended December 31, 2022. We define Active Buyers as buyers who have made at least one purchase through our online marketplace during the 12 months ended on the last day of the period presented, net of cancellations.
The ability for buyers to interact and negotiate prices directly with sellers increases both on-platform conversion and buyer retention rate.
We believe, the ability for buyers to interact and negotiate prices directly with sellers increases both on-platform conversion and buyer retention rate.
We aggregate supply from a large number of globally distributed sellers, offering buyers an online destination to access a variety of luxury products across the globe. As of December 31, 2022 and December 31, 2021, we had approximately 41% and 40% of our listings located outside the United States, respectively.
We aggregate supply from a large number of globally distributed sellers, offering buyers an online destination to access a variety of luxury products across the globe. As of December 31, 2023 and December 31, 2022, we had approximately 44% and 41% of our listings located outside the United States, respectively.
We communicate with our buyers primarily through email, site, text, mobile push notifications, print catalogs, and organic social. We acquire new sellers through a combination of inbound applicants who primarily find us by word of mouth from other sellers, as well as focused lead sourcing from fairs, association, and industry groups.
We communicate with our buyers primarily through email, site, text, mobile push notifications, print catalogs, and organic social. We acquire new sellers through a combination of inbound applicants who primarily find us by word of mouth from other sellers, as well as focused lead sourcing.
According to Bain & Company, Gen-Y and Gen-Z, born during 1981-1995 and 1996-2015, respectively, are expected to account for 65-70% of luxury spend by 2025. Spending by Gen-Z and Gen-Alpha, born during 1996-2015 and kids born after 2016, respectively, will grow three times faster than previous generations, making up one third of purchases in the luxury goods market by 2030.
According to Bain & Company, Gen-Y, Gen-Z and, Gen-Alpha, born during 1981-1995, 1996-2015, and kids born after 2016, respectively, are expected to account for nearly 85% of luxury spend by 2030. Spending by Gen-Z and Gen-Alpha, will grow three times faster than previous generations, making up one third of purchases in the luxury goods market by 2030.
During each of the years ended December 31, 2022 and 2021, over 20% of our on-platform GMV was generated from orders with an item value above $15,000 and approximately 4% and 3% for orders with an item value of $100,000 or more for the years ended December 31, 2022 and 2021, respectively.
During each of the years ended December 31, 2023 and 2022, over 20% of our on-platform GMV was generated from orders with an item value above $15,000 and approximately 5% and 4% for orders with an item value of $100,000 or more for the years ended December 31, 2023 and 2022, respectively.
During the year ended December 31, 2022, we estimate that approximately 71% of new user sessions came from non-paid channels, including organic search, direct web, direct app, organic social, email, and referral compared to 68% during the year ended December 31, 2021.
During the year ended December 31, 2023, we estimate that approximately 76% of new user sessions came from non-paid channels, including organic search, direct web, direct app, organic social, email, and referral compared to 71% during the year ended December 31, 2022.
Combining our core market of high-quality design furniture and homewares, fine art, and watches and jewelry with the personal luxury goods market (excluding watches and jewelry), results in an estimated total addressable market size of $438 billion as of 2022.
Combining our core market of high-quality design furniture and homewares, fine art, and watches and jewelry with the personal luxury goods market (excluding watches and jewelry), results in an estimated total addressable market size of $481 billion as of 2023.
The personal luxury goods market, as defined by Bain & Company, excluding watches and jewelry, was estimated to total approximately $260 billion in 2022 and includes adjacent categories, such as footwear, leather goods, apparel, and beauty.
The personal luxury goods market, as defined by Bain & Company, excluding watches and jewelry, was estimated to total approximately $283 billion in 2023 and includes adjacent categories, such as footwear, leather goods, apparel, and beauty.
Our sellers use our platform to manage their inventory, build their digital marketing presence, and communicate and negotiate orders directly with buyers. We provide our buyers a trusted purchase experience with our user-friendly interface, dedicated specialist support, and 1stDibs Promise, our comprehensive buyer protection program.
Our sellers use our platform to manage their inventory, build their digital marketing presence, and communicate and negotiate prices directly with buyers. We provide our buyers a trusted purchase experience with our user-friendly interface, dedicated specialist support, and our 1stDibs Promise, our comprehensive buyer protection program outlined in-depth below.
Our Competitive Strengths Largest Selection of Unique Luxury Design Products We offer one of the largest online selection of luxury design products from leading sellers and makers of vintage, antique, and contemporary furniture, home décor, jewelry, watches, art, and fashion.
Our buyer services include: • Largest Selection of Unique Luxury Design Products: We offer one of the largest online selection of luxury design products from leading sellers and makers of vintage, antique, and contemporary furniture, home décor, jewelry, watches, art, and fashion.
The ability to offer a convenient, seamless transaction experience, including on-platform communications and a wide range of payment solutions, such as credit card, PayPal, ACH, wire, Apple Pay, and Klarna further drives buyer conversion.
The ability to offer a convenient, seamless transaction experience, including on-platform communications and a wide range of payment solutions, such as credit card, PayPal, Apple Pay, Automated Clearing House (“ACH”), and wire further drives buyer conversion.
Value Proposition to Sellers • Demand Generation: As of December 31, 2022, we provided sellers access to a global base of approximately 5.5 million users in over 150 countries, who would otherwise largely be inaccessible in an offline market.
Value Proposition to Sellers • Demand Generation: As of December 31, 2023, we provided sellers access to a global base of approximately 6.3 million users in over 175 countries, who would otherwise largely be inaccessible in an offline market.
Despite the growth on the seller and user side, we experienced year-over-year decreases in GMV, net revenue, and certain key buyer metrics as they have been negatively impacted, both directly and indirectly, by macroeconomic factors, including significant capital market volatility, the prolonged COVID-19 pandemic and the changing consumer behaviors as a result, significant housing market volatility, raising interest rates, global economic and geopolitical developments, and inflation; however, these impacts are difficult to isolate and quantify.
Despite the growth on the seller side, we experienced year-over-year decreases in GMV, net revenue, and certain key buyer metrics as we believe they have been adversely impacted, both directly and indirectly, by macroeconomic factors, including significant capital market volatility, significant housing market volatility, rising interest rates, inflation, global economic and geopolitical developments, and changing consumer behavior in a post-COVID-19 environment; however, these impacts are difficult to isolate and quantify.
We also use third parties to assist in our security practices and prevent and detect fraud. We intend to continue to invest in efforts associated with the detection and prevention of security breaches and any security-related incidents.
We also use third parties to assist in our security practices and prevent and detect fraud. We intend to continue to invest in efforts associated with the detection and prevention of security breaches and any security-related incidents. Segment and Geographic Information We have one operating and reportable segment.
As of December 31, 2022, 41% of the supply on our online marketplace comes from outside the 7 United States, while only 18% of buyers are located internationally. We believe that this presents a large international expansion opportunity.
As of December 31, 2023, 44% of the supply on our online marketplace comes from outside the United States, while only 20% of buyers are located internationally. We believe that this presents a large international 5 expansion opportunity.
As sellers increase sales they are potentially more able to tap into our platform benefits, such as partner managers, elevated listing visibility, and paid media coverage. • Data Analytics: Our platform provides us with rich data throughout the entire user journey.
This information provides more context about our sellers’ listings and builds trust with our buyer community. As sellers increase sales they are potentially more able to tap into our platform benefits, such as partner managers, elevated listing visibility, and paid media coverage. • Data Analytics: Our platform provides us with rich data throughout the entire user journey.
The discovery and transaction process in our industry is more complex than in most e-commerce categories. Specifically, transacting in unique luxury design products requires the ability for sellers and buyers to exchange messages, negotiate prices, arrange customized shipping support, and pay swiftly and securely through various payment methods.
Specifically, transacting in unique luxury design products requires the ability for sellers and buyers to exchange messages, negotiate prices, arrange customized shipping support, and pay swiftly and securely through various payment methods.
As sellers and buyers of luxury design products gain experience transacting online, we believe our combination of technology, service, and brand positions us to enable and grow this market by providing sellers and buyers the tools and access they need. Our proprietary technology platform enables a purchase funnel that is more robust and interactive than the conventional e-commerce experience.
As sellers and buyers of luxury design products gain experience transacting online, we believe our combination of technology, service, and brand positions us to enable and grow this market by providing sellers and buyers the tools and access they need.
Adding verticals has several benefits, including increasing our addressable market, the number of sellers and buyers, and purchasing frequency, and offering our buyers a wider supply of inventory while strengthening our brand as a preeminent online destination for luxury design products.
Adding verticals has several benefits, including increasing our addressable market, the number of sellers and buyers, and purchasing frequency, and offering our buyers a wider supply of inventory while strengthening our brand as a preeminent online destination for luxury design products. We believe there are also opportunities to diversify our business model by expanding into additional sales formats.
Our Employees, Culture, Values and Human Capital Resources As of December 31, 2022, we had 310 full-time employees, including 80 in technology development, 110 in sales and marketing, 36 in general and administrative, and 84 in operations.
Our Employees, Culture, Values and Human Capital Resources As of December 31, 2023, we had 237 full-time employees, including 56 in technology development, 55 in sales and marketing, 38 in general and administrative, and 88 in operations.
As of December 31, 2022, we had 5.5 million users compared to 4.3 million as of December 31, 2021 and approximately 1.5 million listings, compared to 1.3 million as of December 31, 2021. Users represent non-seller visitors who register on our website and include both buyers and prospective buyers.
We had 6.3 million users and approximately 1.7 million listings as of December 31, 2023, compared to 5.5 million users and approximately 1.5 million listings as of December 31, 2022. Users represent non-seller visitors who register on our website, including both buyers and prospective buyers, and are identified by a unique email address.
Physical and logical access controls are in place, and personally identifiable information is obfuscated. Utilize third-party servers across multiple availability zones with data securely backed up in real time across multiple regions, with ability to rapidly migrate to alternative data centers.
Physical and logical access controls are in place, and personally identifiable information is obfuscated. Utilize third-party servers across multiple availability zones with data securely backed up in real time across multiple regions. As our online marketplace grows, our data becomes increasingly valuable.
Our Technology and Data Technology powers all aspects of our business. Our proprietary services-based architecture is the foundation of our platform. It is designed to connect sellers and buyers worldwide, enabling online transactions of unique products by removing purchase friction. We leverage appropriate technologies to ensure security, performance, and scalability.
It is designed to connect sellers and buyers worldwide, enabling online transactions of unique products by removing purchase friction. We leverage appropriate technologies to ensure security, performance, and scalability. Key features of our technology platform include: • Services-based Architecture : Allows us to scale individual parts of the platform independently from others, increasing engineering efficiency.
Provides the ability to predict the relative likelihood of an item selling, as compared with other items, based upon price point and the quality of the listing, images, and shipping quotes. • Scalable Page Creation : Utilizes unstructured on-platform search query data to create new indexable pages automatically to increase our long-tail organic search traffic and enable broader Search Engine Optimization (“SEO”) and Search Engine Marketing (“SEM”) coverage. • System Security and Business Continuity : Infrastructure has been designed to adhere to industry best practices for secure storage and management of all sensitive data, including encryption (for data at rest as well as in transit), access logging, and internal change controls.
We leverage this data, including user behaviors, sales trends, and seller behaviors, to improve the effectiveness of our buyer targeting and conversion efforts, and increase supply growth from existing and prospective sellers. • Scalable Page Creation : We utilize unstructured on-platform search query data to create new indexable pages automatically to increase our long-tail organic search traffic and enable broader Search Engine Optimization and Search Engine Marketing (“SEM”) coverage. • System Security and Business Continuity : Our infrastructure has been designed to adhere to industry best practices for secure storage and management of all sensitive data, including encryption (for data at rest as well as in transit), access logging, and internal change controls.
Buying an item on our marketplace offsets the need to manufacture a new item, this opportunity to shop sustainably creates a positive economic impact for all parties. We have built a talented, experienced management team led by our CEO, David Rosenblatt, who joined 1stDibs in November 2011 with a vision to transform the online luxury experience.
We have built a talented, experienced management team led by our CEO, David Rosenblatt, who joined 1stDibs in November 2011 with a vision to transform the online luxury experience.
We believe we can continue to expand our buyer audience across a wide swath of buyer demographics including income, geography, and age, as well as level of design experience and design preference.
In addition to continued organic growth, we believe we can significantly increase our buyer base by utilizing targeted, data-driven marketing efforts that generate meaningful returns. We believe we can continue to expand our buyer audience across a wide swath of buyer demographics including income, geography, and age, as well as level of design experience and design preference.
This value proposition drives sellers to our online marketplace, deepens the breadth of our inventory, and helps attract new buyers.
This value proposition drives sellers to our online marketplace, deepens the breadth of our inventory, and helps attract new buyers. As of December 31, 2023, the number of unique sellers grew to approximately 7,800 from approximately 5,600 as of December 31, 2022.
In each of the years ended December 31, 2022 and 2021, we had an on-platform average order value (“AOV”) of above $2,700 and a median order value (“MOV”) of approximately $1,300.
We plan to continue to invest strategically in growth initiatives to be prepared if and when macroeconomic conditions improve. We had an on-platform average order value (“AOV”) of above $2,600 and $2,700, and a median order value (“MOV”) of approximately $1,200 and $1,300 in the years ended December 31, 2023 and 2022, respectively.
Regulatory Our business is subject to foreign and domestic laws and regulations applicable to companies conducting business on the Internet and in the resale market. These include laws governing areas such as personal privacy and data security, consumer protection, payment processing, sales and other taxes, and unfair and deceptive trade practices, among other areas.
These include laws governing areas such as personal privacy and data security, consumer protection, payment processing, sales and other taxes, and unfair and deceptive trade practices, among other areas.
Of our 5.5 million users as of December 31, 2022, we estimate that approximately 67% are U.S.-based and 33% are international, which represents less than 1% penetration of the population of both markets. As of December 31, 2021, of out 4.3 million users, we estimated that approximately 69% were U.S.-based and 31% were international.
Of our 6.3 million users as of December 31, 2023, we estimate based on the available information provided by our users that approximately 66% are U.S.-based and 34% are international, which represents approximately 1% penetration of the U.S. population and less than 1% of the international population.
Our platform turns this complex order flow into an easy-to-use process and converts the valuable data we collect from buyers’ browsing and purchase activity into actionable insights for both sellers and buyers. We empower buyers to engage directly with sellers on our platform throughout all stages of a transaction.
Our platform turns this complex order flow into an easy-to-use process and converts the valuable data we collect from buyers’ browsing and purchase activity into actionable insights for both sellers and buyers. Our platform is scalable, which we believe enables us to efficiently drive expansion into new geographies and verticals while supporting the creation and development of new applications.
Our platform calculates a “salability” score for items using machine learning and gives items with a higher likelihood of selling increased priority in buyers’ search and browse sort order. Additionally, our platform offers pricing insights to show buyers historical pricing data for similar items that have recently sold which can help buyers negotiate, increase confidence, and help in decision-making.
Our platform calculates a “salability” score for items using machine learning and gives items with a higher likelihood of selling increased priority in buyers’ search and browse sort order.
This allows sellers to provide nuanced details about each piece, show scale and curate their inventory to feature specific items. Sellers can make changes at their discretion at any time. This information provides more context about our sellers’ listings and builds trust with our buyer community.
Sellers can customize their listings on 1stDibs by uploading biographies, item descriptions, photos, videos, and content to distinguish themselves. This allows sellers to provide nuanced details about each piece, show scale and curate their inventory to feature specific items. Sellers can make changes at their discretion at any time.
New legislation or regulation or changes thereof due to federal elections, the application of laws from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the Internet and e-commerce generally could result in significant additional compliance costs and responsibilities for our business. 9 Competition We compete with a broad range of sellers of new and pre-owned luxury design products, including traditional brick-and-mortar entities, such as department stores, branded luxury goods stores, and specialty retailers, and entities providing access to more unique luxury goods, such as galleries, boutiques, and auction houses.
New legislation or regulation or changes thereof due to federal elections, the application of laws from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the Internet and e-commerce generally could result in significant additional compliance costs and responsibilities for our business.
Expanding a seller’s ability to share its story across various forms of media, including text, photographs, and videos, significantly increases buyer engagement and conversion. Once sellers are added to our online catalog, we help build sellers’ online presence through editorial and social placements, including our online magazine Introspective , which offers sellers additional avenues through which to advertise online.
Once sellers are added to our online catalog, we help build sellers’ online presence through editorial and social placements, including our online magazine Introspective , which offers sellers additional avenues through which to advertise online. • Online Presence: We help sellers establish an online presence on our online marketplace.
Trust in our online marketplace is critical to facilitating online transactions of highly considered purchases with high price points.
The 1stDibs Marketplace Trust Trust is at the core of the online marketplace that we have built over two decades of operating history. Trust in our online marketplace is critical to facilitating online transactions of purchases with high price points.
Global Luxury Market Our core market, including high-quality design furniture and homewares, fine art, and watches and jewelry, was estimated to be approximately $178 billion in 2022, according to Bain & Company. Our platform is built on a scalable infrastructure that allows us to enter adjacent luxury markets and expand our addressable market with minimal additional investment.
Our platform is built on a scalable infrastructure that allows us to enter adjacent luxury markets and expand our addressable market with minimal additional investment.
We review all applications from these efforts, tier them according to desirability based on their inventory quality and “salability” onsite, and then invite the approved sellers to join our online marketplace. Services and Logistics We are committed to offering exceptional service as an integral part of a digital luxury experience.
We review all applications from these efforts, tier them according to desirability based on their inventory quality and “salability” onsite, and then invite the approved sellers to join our online marketplace. Environmental, Social, and Governance (“ESG”) Our business creates a positive environmental and economic impact, balancing the needs of our buyers, sellers, partners, employees, investors and the environment.
Asian Black or African American Hispanic or Latino White Two or more races Female All Employees 17 % 8 % 8 % 64 % 3 % 56 % Management (1) — % 13 % — % 87 % — % 50 % (1) - Management is defined as our Executive Leadership Team.
Asian Black or African American Hispanic or Latino White Two or more races Female All Employees 16 % 7 % 6 % 67 % 4 % 50 % Management (1) — % 12 % — % 88 % — % 38 % (1) - Management is defined as our CEO and the management team reporting directly to the CEO.
We established six employee resource groups for the purpose of connecting employees with shared identities, backgrounds, and interests to help foster the company’s culture of inclusion, and engage employees in our DEIB efforts. Externally, we continued to provide financial support to organizations through our employee giving and charitable donations program.
We currently have five employee resource groups for the purpose of connecting employees with shared identities, backgrounds, and interests to help foster the company’s culture of inclusion, and engage employees in our DEIB efforts. Our Technology and Data Technology powers all aspects of our business. Our proprietary services-based architecture is the foundation of our platform.
Our customized Private Client and Trade Service teams provide high-touch human support for consumer and Trade Buyers. Our buyer services include: • Buyer-Seller Communication: Given the unique inventory available on our online marketplace and the relatively high price points, buyers are likely to have questions regarding origin and item attributes.
The percentage of our unique sellers based outside of the United States was 55% and 52% as of December 31, 2023 and December 31, 2022, respectively. • Buyer-Seller Communication : Given the unique inventory available on our online marketplace and the relatively high price points, buyers are likely to have questions regarding origin and item attributes.
Our technology and data represent the cumulative experience of 20 years of business activity, and we believe are extremely difficult to replicate. Our Market Opportunity We connect sellers and buyers in what has historically been a fragmented and highly localized global market for unique luxury design products.
We empower buyers to engage directly with sellers on our platform throughout all stages of a transaction. Our technology and data represent the cumulative experience of over 20 years of business activity, and we believe are extremely difficult to replicate.
This market has generally operated offline, functioning mostly through independent galleries, boutiques, and auction houses, thereby restricting a seller’s potential buyer audience and limiting a buyer’s product selection. These offline operations create barriers to both new supply and new demand, limiting the market’s overall growth potential.
Our Market Opportunity We connect sellers and buyers in what has historically been a fragmented and highly localized global market for unique luxury design products. This market has generally operated offline, functioning mostly through independent galleries, boutiques, and auction houses, thereby restricting a seller’s potential buyer audience and limiting a buyer’s product selection.
We created a single online marketplace that consolidates previously fragmented sellers and buyers on a global scale. We believe our online marketplace, powered by our technology platform, has transformed almost all dimensions of the luxury design buying experience by increasing accessibility and enhancing selection and convenience.
We believe our online marketplace, powered by our technology platform, has transformed almost all dimensions of the luxury design buying experience by increasing accessibility and enhancing selection and convenience. Global Luxury Market Our core market, including high-quality design furniture and homewares, fine art, watches and jewelry, was estimated to be approximately $198 billion in 2023, according to Bain & Company.
These generations are leading the shift from offline to online commerce and will soon dominate the luxury goods market’s customer base. 2 During the year ended December 31, 2022, traffic on our website grew 16% from the year ended December 31, 2021. Additionally, the number of seller accounts grew to approximately 7,300 from over 4,700 as of December 31, 2021.
These generations are leading the shift from offline to online commerce and will soon dominate the luxury goods market’s customer base.
Segment and Geographic Information We have one operating and reportable segment. See Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements for further discussion of our operating and reportable segment. Data Security and Protection We are committed to the security of the sellers and buyers who transact business on our online marketplace.
See Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements for further discussion of our operating and reportable segment. Regulatory Our business is subject to foreign and domestic laws and regulations applicable to companies conducting business on the Internet and in the resale market.
An individual listing’s stock value is calculated as the item’s current price multiplied by its quantity available for sale. We provide our sellers, the vast majority of which are small businesses, access to a global community of buyers and a platform to facilitate e-commerce at scale.
This differs from seller accounts, which counts a unique seller multiple times if that seller has sales in multiple verticals. We provide our sellers, the vast majority of which are small businesses, access to a global community of buyers and a platform to facilitate e-commerce at scale.
It also facilitates using different programming languages appropriate for specific tasks, including python for machine learning, java for big data jobs, and node for front end integrations. • Proprietary Database : Includes taxonomies, structured metadata, an expansive catalog of luxury brands and designers, and an extensive library of luxury design products, product attributes, and pricing data. • Big Data : Leverages browsing history on our platform, followed searches, “favorited” items, and previous purchases to generate personalized emails and on-site recommendations.
It also facilitates using different programming languages appropriate for specific tasks, including python for machine learning, java for big data jobs, and node for front end integrations. • Proprietary Database : We created an extensive digital catalog in luxury design with associated metadata that is used to simplify the buyer experience in an ordinarily complex purchase process.
We use internal and external data to target, acquire, and retain qualified buyers through performance-based, data-driven marketing campaigns. Innovative and Proprietary Technology Our highly sophisticated, purpose-built technology stack facilitates complex, multi-step online transactions and is extremely difficult to replicate.
We use internal and external data to target, acquire, and retain qualified buyers through performance-based, data-driven marketing campaigns. Data Security and Protection We are committed to the security of the sellers and buyers who transact business on our online marketplace.
We built 1stDibs to empower and inspire confidence in our sellers by using our proprietary technology to digitize and transform their businesses. We believe that creating a digital presence and enabling access to buyers across the globe allows us to expand the addressable market for luxury sellers.
We believe that creating a digital presence and enabling access to buyers across the globe allows us to expand the addressable market for luxury sellers. Expanding a seller’s ability to share its story across various forms of media, including text, photographs, and videos, significantly increases buyer engagement and conversion.
As of December 31, 2022, we had a seller stock value in excess of $16.0 billion compared to a seller stock value in excess of $14.0 billion as of December 31, 2021. Our seller stock value is the sum of the stock value of all available products listed on our online marketplace.
Our online marketplace seller stock value, the sum of the stock value of all available products listed on our online marketplace, was consistent year over year and exceeded $10.0 billion as of both December 31, 2023 and 2022. An individual listing’s stock value is calculated as the item’s current price multiplied by its quantity available for sale.
In the year ended December 31, 2022, we launched new seller pricing tiers, including a subscription-free tier with higher commission rates which increased our seller count to approximately 7,300 from over 4,700 as of December 31, 2021, as well as launched localized sites in Germany and France.
In the year ended December 31, 2023, we increased the number of unique sellers on the platform to approximately 7,800 from approximately 5,600 as of December 31, 2022, as well as launched localized sites in Italy and Spain.
We believe these metrics are proof of the increasing online penetration in the luxury goods market, despite the macroeconomic issues effecting GMV and net revenue. The 1stDibs Marketplace Trust Trust is at the core of the online marketplace that we have built in over two decades of operating history.
Additionally, we had 6.3 million users as of 2 December 31, 2023, compared to 5.5 million users as of December 31, 2022. We believe these metrics are indicative of our online penetration in the luxury goods market, despite the macroeconomic issues affecting GMV and net revenue.
Removed
As of December 31, 2022, we operate an e-commerce marketplace with approximately 7,300 seller accounts, compared to over 4,700 as of December 31, 2021. The increase in sellers reflects our launch of new seller pricing tiers in January 2022, including a subscription-free tier with higher commission rates.
Added
As of December 31, 2023, we had approximately 7,800 unique sellers, compared to approximately 5,600 unique sellers as of December 31, 2022. This metric was updated from the previously disclosed seller accounts metric as we believe unique sellers is a more useful measure of our seller base.
Removed
We plan to continue to invest in our strategic initiatives, including those discussed below, in order to continue to drive growth on the seller side and be prepared for if and when macroeconomic conditions improve.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe trading price and volume of our common stock could fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • variations in our results of operations and other financial and operational metrics, including the key financial and operating metrics, as well as how those results and metrics compare to analyst and investor expectations; • speculation about our results of operations; • the financial projections we may provide to the public, if any, any changes in these projections, or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates or ratings by any securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • announcements of new services or offerings, strategic alliances, or significant agreements or other developments by us or our competitors; • announcements by us or our competitors of mergers or acquisitions or rumors of such transactions involving us or our competitors; • changes in our board of directors, management, or other key personnel; 35 • disruptions in our online marketplace due to hardware, software or network problems, security breaches, or other issues; • global economic conditions or economic conditions in the jurisdictions in which we operate, and market conditions in our industry and those affecting our sellers and buyers; • trading activity by our principal stockholders and other market participants; • price and volume fluctuations in the overall stock market; • the performance of the equity markets in general and in our industry; • the operating performance of other similar companies; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • new laws or regulations or new interpretations of existing laws, or regulations applicable to our business; • litigation or other claims against us; • the number of shares of our common stock that are available for public trading; • other events or factors, including those resulting from global health crises such as the COVID-19 pandemic, war, incidents of terrorism, or responses to these events; and • any other factors discussed in this Annual Report on Form 10-K or in the prospectus relating to our initial public offering.
Biggest changeThe trading price and volume of our common stock could fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • variations in our results of operations and other financial and operational metrics, including the key financial and operating metrics, as well as how those results and metrics disclosed in this Annual Report on Form 10-K compare to analyst and investor expectations; • speculation about our results of operations; • the financial projections we may provide to the public, if any, any changes in these projections, or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates or ratings by any securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • events or factors resulting from war or other outbreak of hostilities, geopolitical tensions, acts of terrorism, global health crises, such as the COVID-19 pandemic, responses to these events, or the perception that any such factors or events may occur; • announcements of new services or offerings, strategic alliances, or significant agreements or other developments by us or our competitors; • announcements by us or our competitors of mergers or acquisitions or rumors of such transactions involving us or our competitors; • changes in our board of directors, management, or other key personnel; • disruptions in our online marketplace due to hardware, software or network problems, security breaches, or other issues; • global economic conditions or economic conditions in the jurisdictions in which we operate, and market conditions in our industry and those affecting our sellers and buyers; • trading activity by our principal stockholders and other market participants, in whom ownership of our common stock may be concentrated; • market perception of, or reaction to, our share repurchase program; • price and volume fluctuations, and general volatility, in the overall stock market; • the performance of the equity markets in general and in our industry; • the operating performance of other similar companies; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • new laws or regulations, new interpretations of existing laws, or regulations applicable to our business; • litigation or other claims against us; • the number of shares of our common stock that are available for public trading; and • any other factors discussed in this Annual Report on Form 10-K.
However, we believe that these figures are reasonable estimates, and we take measures to improve their accuracy, such as eliminating known fictitious or duplicate accounts. There 16 are, nonetheless, inherent challenges in gathering accurate data across large online and mobile populations. For example, there may be individuals who have multiple email accounts in violation of our terms of service.
However, we believe that these figures are reasonable 16 estimates, and we take measures to improve their accuracy, such as eliminating known fictitious or duplicate accounts. There are, nonetheless, inherent challenges in gathering accurate data across large online and mobile populations. For example, there may be individuals who have multiple email accounts in violation of our terms of service.
If such obligations were imposed, the additional costs associated with tax collection, remittance, and audit requirements could make selling through our online marketplace less attractive and more costly for sellers, which could harm our business. 33 Our facilitation of transactions in cryptocurrencies such as Ether on our NFT platform exposes us to risks under U.S. and foreign tax laws.
If such obligations were imposed, the additional costs associated with tax collection, remittance, and audit requirements could make selling through our online marketplace less attractive and more costly for sellers, which could harm our business. Our facilitation of transactions in cryptocurrencies such as Ether on our NFT platform exposes us to risks under U.S. and foreign tax laws.
Additionally, the Coronavirus Aid, Relief, and Economic Security Act, which, among other things, suspends the 80% limitation 34 on the deduction for net operating losses in taxable years beginning before January 1, 2021, permits a five-year carryback of net operating losses arising in taxable years beginning after December 31, 2017 and before January 1, 2021, and generally caps the limitation on the deduction for net interest expense at 50% of adjusted taxable income for taxable years beginning in 2019 and 2020.
Additionally, the Coronavirus Aid, Relief, and Economic Security Act, which, among other things, suspends the 80% limitation on the deduction for net operating losses in taxable years beginning before January 1, 2021, permits a five-year carryback of net operating losses arising in taxable years beginning after December 31, 2017 and before January 1, 2021, and generally caps the limitation on the deduction for net interest expense at 50% of adjusted taxable income for taxable years beginning in 2019 and 2020.
Under current U.S. copyright law and the Communications Decency Act, we may benefit from statutory safe harbor provisions that protect us from liability for content posted by our sellers and buyers. However, trademark and patent laws do not include similar statutory provisions and liability for these forms 13 of intellectual property is often determined by court decisions.
Under current U.S. copyright law and the Communications Decency Act, we may benefit from statutory safe harbor provisions that protect us from liability for content posted by our sellers and buyers. However, trademark and patent laws do not include similar statutory provisions and liability for these forms of intellectual property is often determined by court decisions.
In addition, our business may suffer if we are unable to attract new and repeat sellers that supply the necessary high-end, appropriately priced, and in-demand luxury design products in these additional verticals, and these verticals 17 may also have a different range of margin profiles than the pieces currently sold through our online marketplace.
In addition, our business may suffer if we are unable to attract new and repeat sellers that supply the necessary high-end, appropriately priced, and in-demand luxury design products in these additional verticals, and these verticals may also have a different range of margin profiles than the pieces currently sold through our online marketplace.
The imposition by state governments and taxing authorities of sales tax collection obligations on out-of-state e-commerce businesses could also create additional administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on our competitors, and decrease our future sales, which could harm our business and results of operations.
The imposition by state governments and taxing authorities of sales tax collection obligations on out-of-state e-commerce businesses could also create additional administrative burdens for us, put us at a competitive disadvantage if they do 35 not impose similar obligations on our competitors, and decrease our future sales, which could harm our business and results of operations.
Our platform is vulnerable to power outages, telecommunications failures, and catastrophic events, as well as computer viruses, worms, malicious code, break-ins, phishing attacks, denial-of-service attacks, and other cyber-attacks. Any of these incidents could lead to interruptions or shutdowns of our platform, loss of data, or unauthorized disclosure of personally identifiable or other sensitive information.
Our platform is vulnerable to power outages, telecommunications failures, and catastrophic events, as well as computer viruses, worms, malicious code, break-ins, phishing attacks, denial-of-service attacks, ransomware, and other cyber-attacks. Any of these incidents could lead to interruptions or shutdowns of our platform, loss of data, or unauthorized disclosure of personally identifiable or other sensitive information.
Successful claims by third-party rights owners could require us to pay substantial damages or refrain from permitting any further listing of the relevant items. These types of claims could force us to modify our business practices, which could lower our revenue, increase our costs, or make our platform less user-friendly.
Successful claims by third-party rights owners 13 could require us to pay substantial damages or refrain from permitting any further listing of the relevant items. These types of claims could force us to modify our business practices, which could lower our revenue, increase our costs, or make our platform less user-friendly.
In addition, our employees or third 25 parties acting at our direction may knowingly or inadvertently make use of social media in ways that could lead to the loss or infringement of intellectual property, as well as the public disclosure of proprietary, confidential, or sensitive personal information of our business, employees, consumers, or others.
In addition, our employees or third parties acting at our direction may knowingly or inadvertently make use of social media in ways that could lead to the loss or infringement of intellectual property, as well as the public disclosure of proprietary, confidential, or sensitive personal information of our business, employees, consumers, or others.
If we fail to comply with these laws and regulations or are found to be in violation of U.S. sanctions or export control laws, including by facilitating unlawful transactions, we and certain of our employees could be subject to civil or criminal penalties, including the possible loss of export privileges and fines.
If we fail to comply with these laws and regulations or are found to be in violation of U.S. sanctions or export control laws, including by facilitating unlawful transactions, we and certain of our employees could be subject to civil or 29 criminal penalties, including the possible loss of export privileges and fines.
If we cannot license or develop technology for any allegedly infringing aspect of our business, we could be forced to limit our service and may be unable to compete effectively. Any of these results could harm our business. 30 We are subject to the terms of open source licenses because our platform incorporates open source software.
If we cannot license or develop technology for any allegedly infringing aspect of our business, we could be forced to limit our service and may be unable to compete effectively. Any of these results could harm our business. We are subject to the terms of open source licenses because our platform incorporates open source software.
We cannot be certain that these efforts will attract more sellers, induce sellers to list and sell more luxury design products on our online marketplace or yield a sufficient return on investment. Moreover, sellers may choose not to continue to list with us or list items as frequently.
We cannot be certain that these efforts will 11 attract more sellers, induce sellers to list and sell more luxury design products on our online marketplace or yield a sufficient return on investment. Moreover, sellers may choose not to continue to list with us or list items as frequently.
These facilities may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, terrorist attacks, power outages and similar events or acts of misconduct. 26 Our business depends on continued and unimpeded access to the Internet and mobile networks. To access our online marketplace, our sellers and buyers rely on access to the Internet.
These facilities may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, terrorist attacks, power outages and similar events or acts of misconduct. Our business depends on continued and unimpeded access to the Internet and mobile networks. To access our online marketplace, our sellers and buyers rely on access to the Internet.
Further, any disruption in the operations of a substantial number of sellers, such as interruptions in delivery services, disruption due to public health crises such as the COVID-19 pandemic, natural disasters, inclement weather, or political unrest, 14 could also result in negative experiences for a substantial number of buyers.
Further, any disruption in the operations of a substantial number of sellers, such as interruptions in delivery services, disruption due to public health crises, such as the COVID-19 pandemic, natural disasters, inclement weather, or political unrest, could also result in negative experiences for a substantial number of buyers.
Security breaches can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or employees of our third-party service providers. 24 We expect to incur ongoing costs associated with the detection and prevention of security breaches and other security-related incidents.
Security breaches can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or employees of our third-party service providers. We expect to incur ongoing costs associated with the detection and prevention of security breaches and other security-related incidents.
We use data science to predict seller and buyer preferences, and there can be no assurance that our data science will accurately anticipate seller or buyer requirements. Lead times relating to these changing preferences may make it difficult for us to respond rapidly to new or changing trends.
We use data science to predict seller and buyer preferences, and there can be no assurance that our data science will accurately anticipate seller or buyer requirements. Lead times relating to these changing preferences may make it difficult for us to respond rapidly to 17 new or changing trends.
Any reduction in our ability to make effective use of such technologies could harm our ability to personalize the experience of buyers, increase our costs and limit our ability to attract new, and retain existing, sellers and buyers on cost-effective terms. As a result, our business could be adversely affected.
Any reduction in our ability to make effective use of such technologies could harm our ability to personalize the 28 experience of buyers, increase our costs and limit our ability to attract new, and retain existing, sellers and buyers on cost-effective terms. As a result, our business could be adversely affected.
We may experience fluctuations in our tax obligations and effective tax rate. We are subject to taxation in the United States and in numerous other jurisdictions. We record tax expense based on current tax payments and our estimates of future tax payments, which may include reserves for estimates of probable settlements of tax audits.
We may experience fluctuations in our tax obligations and effective tax rate. We are subject to taxation in the United States and in numerous other jurisdictions. We record tax expense based on current tax payments and our estimates of future tax payments, which may include reserves for estimates of probable settlements of tax 36 audits.
Our historical seller marketplace services revenue may not be indicative of future revenue. We are highly selective in the sellers we allow onto 12 our online marketplace and sellers must undergo a thorough vetting process with our vetting specialists before they are allowed to join our online marketplace.
Our historical seller marketplace services revenue may not be indicative of future revenue. We are highly selective in the sellers we allow onto our online marketplace and sellers must undergo a thorough vetting process with our vetting specialists before they are allowed to join our online marketplace.
Our business and results of operations may be more susceptible to other macroeconomic conditions or trends due to our reliance on consumer discretionary spending. Our business and results of operations are subject to global economic conditions and their impact on consumer discretionary spending, particularly in the market for luxury design products.
Our business and results of operations may be more susceptible to other macroeconomic conditions or trends due to our reliance on consumer discretionary spending. Our business and results of operations are subject to industry and global economic conditions and their impact on consumer discretionary spending, particularly in the market for luxury design products.
Our insurance policies cover areas such as general liability, errors and omissions liability, employment liability, business interruptions, data breach, crime, product liability and directors’ and officers’ liability. For certain types of business risk, we may not be able to, or may choose not to, acquire insurance.
Our insurance policies cover areas such as general liability, errors and omissions liability, employment liability, business interruptions, data breach, crime, product liability and directors’ and officers’ liability. For certain types of business risk, we may not be able to, or may choose not to, acquire 23 insurance.
Existing sellers and buyers may also stop listing new items for sale or decrease their purchases or close their accounts altogether. Further, any reputational damage resulting from breach of our security measures could create distrust of our company by sellers and buyers.
Existing sellers and buyers may also stop listing new items for sale or decrease their purchases or close 24 their accounts altogether. Further, any reputational damage resulting from breach of our security measures could create distrust of our company by sellers and buyers.
Internet service providers may choose to disrupt or degrade access to our online marketplace or increase the cost of such access. Similarly, to download our mobile applications, application store providers must allow our applications to be listed. Internet service providers or application store providers could also attempt to charge us for providing access to our online marketplace.
Internet service providers may choose to disrupt or degrade access to our online marketplace or increase the cost of such access. Similarly, to download our mobile applications, application store providers must allow our applications to be listed. Internet service providers or 27 application store providers could also attempt to charge us for providing access to our online marketplace.
Completed and future acquisitions may result in unforeseen operational difficulties and expenditures associated with: • incorporating and integrating new businesses, technologies, products, personnel, or operations of any company we may acquire, particularly if key personnel of the acquired company decide not to work for us; • consolidating operational and administrative functions; • coordinating outreach to our community; • disruption to our ongoing business and distraction of our management; 20 • delay or reduction of transactions on our marketplace or in the business of the company we acquired due to uncertainty about continuity and effectiveness of service from either company; • entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions; • effectively managing an increased number of employees in diverse locations; • if we use cash to pay for acquisitions, limiting other potential uses for our cash; • incurring debt to fund such acquisitions, which may subject us to material restrictions on our ability to conduct our business; • incurring impairment charges related to potential write-downs of acquired assets or goodwill; • maintaining morale and culture and retaining and integrating key employees; • maintaining or developing controls, procedures, and policies (including effective internal control over financial reporting and disclosure controls and procedures); and • assuming liabilities related to the activities of the acquired business before the acquisition, including liabilities for violations of laws and regulations, commercial disputes, taxes, and other matters.
Completed and future acquisitions may result in unforeseen operational difficulties and expenditures associated with: • incorporating and integrating new businesses, technologies, products, personnel, or operations of any company we may acquire, particularly if key personnel of the acquired company decide not to work for us; • consolidating operational and administrative functions; • coordinating outreach to our community; • disruption to our ongoing business and distraction of our management; • delay or reduction of transactions on our marketplace or in the business of the company we acquired due to uncertainty about continuity and effectiveness of service from either company; • entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions; • effectively managing an increased number of employees in diverse locations; • if we use cash to pay for acquisitions, limiting other potential uses for our cash; • incurring debt to fund such acquisitions, which may subject us to material restrictions on our ability to conduct our business; • issuing our equity securities; • incurring impairment charges related to potential write-downs of acquired assets or goodwill; • maintaining morale and culture and retaining and integrating key employees; • maintaining or developing controls, procedures, and policies (including effective internal control over financial reporting and disclosure controls and procedures); and • assuming liabilities related to the activities of the acquired business before the acquisition, including liabilities for violations of laws and regulations, commercial disputes, taxes, and other matters.
The current guidance treats the use of cryptocurrency to purchase a NFT as a taxable disposition of the cryptocurrency, which subjects the holder to taxable gain that such holder must report for federal and state tax purposes. Similarly, a seller of a NFT is subject to tax on the sale of the NFT.
The current guidance treats the use of cryptocurrency to purchase a NFT as a taxable disposition of the cryptocurrency, which subjects the holder to taxable gain that such holder must report for federal and state tax purposes. Similarly, a seller of an NFT is subject to tax on the sale of the NFT.
We also compete with the online offerings of these traditional retail competitors, resale players focused on niche or single categories, as well as technology-enabled online marketplaces that may offer the same or similar goods and services that we offer.
We also compete with the online offerings of these traditional retail competitors, resale players focused on niche or single categories, as well as technology-enabled online marketplaces that may offer the same 15 or similar goods and services that we offer.
Our marketing initiatives may become increasingly expensive 19 and generating a return on those initiatives may be difficult. Even if we successfully increase revenue as a result of our paid marketing efforts, such increase may not offset the additional marketing expenses we incur.
Our marketing initiatives may become increasingly expensive and generating a return on those initiatives may be difficult. Even if we successfully increase revenue as a result of our paid marketing efforts, such increase may not offset the additional marketing expenses we incur.
Such recalls or voluntary removal of items can result in, among other things, lost sales, diverted resources, potential harm to our reputation, and increased customer service costs and legal expenses, which could harm on our results of operations.
Such recalls or voluntary removal of items can result in, among other things, lost sales, diverted resources, potential harm to our reputation, and increased customer service costs and legal expenses, which could harm our results of operations.
We may be unable to locate and hire qualified professionals with requisite technical and public company experience when and as needed. In addition, new employees will require time and training to learn our business and operating processes and procedures.
We may 34 be unable to locate and hire qualified professionals with requisite technical and public company experience when and as needed. In addition, new employees will require time and training to learn our business and operating processes and procedures.
With or without our guidance, analysts, and other investors may publish expectations regarding our business, financial condition, and results of operations. We do not accept any responsibility for any projections or reports published by any such third parties.
With or without our guidance, analysts, and other investors may publish expectations regarding our business, financial condition, and results of operations. We do not accept any responsibility for any projections or reports published by 39 any such third parties.
Section 404 compliance may divert internal resources and will take a significant amount of time and effort to complete. We may not be able to successfully complete the procedures and certification and attestation requirements of Section 404 by the time we will 32 be required to do so.
Section 404 compliance may divert internal resources and will take a significant amount of time and effort to complete. We may not be able to successfully complete the procedures and certification and attestation requirements of Section 404 by the time we will be required to do so.
In addition, we rely on our payment processors to understand the destination of our payments to sellers. If our payment processors fail to follow newly imposed sanctions limitations, we may be at risk of being deemed to have violated such sanctions limitations.
In addition, we rely on our payment processors to understand the destination of our payments to sellers. If our payment 22 processors fail to follow newly imposed sanctions limitations, we may be at risk of being deemed to have violated such sanctions limitations.
If some investors find our common stock less attractive because we rely on any of 31 these exemptions, there may be a less active trading market for our common stock and the market price of our common stock may be more volatile.
If some investors find our common stock less attractive because we rely on any of these exemptions, there may be a less active trading market for our common stock and the market price of our common stock may be more volatile.
If we are unable 21 to obtain financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, and our business and prospects could suffer.
If we are unable to obtain financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, and our business and prospects could suffer.
Our testing, or the subsequent testing by our independent public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses.
Our testing, or the subsequent testing by our independent public accounting firm, may reveal deficiencies in our internal control over financial reporting that 33 are deemed to be material weaknesses.
The Court of Chancery of the State of Delaware and the federal district courts of the United States may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders. 39 Item 1B.
The Court of Chancery of the State of Delaware and the federal district courts of the United States may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders. 42 Item 1B.
We list luxury design products from numerous sellers located throughout the United States and from over 85 countries, and the items listed by our sellers may contain materials such as fur, python, ivory, and other exotic animal product components, that are subject to regulation or cultural patrimony considerations.
We list luxury design products from numerous sellers located throughout the United States and from over 90 countries, and the items listed by our sellers may contain materials such as fur, python, ivory, and other exotic animal product components, that are subject to regulation or cultural patrimony considerations.
Cyber-attacks could also result in the theft of our intellectual property. If we gain greater visibility, we may face a higher risk of being targeted by cyber-attacks. Advances in computer capabilities, new technological discoveries, or other developments may result in cyber-attacks becoming more sophisticated and more difficult to detect.
Cyber-attacks could also result in the theft of our intellectual property. As we gain greater visibility, we may face a higher risk of being targeted by cyber-attacks. Advances in computer capabilities, new technological discoveries, or other developments may result in cyber-attacks becoming more sophisticated and more difficult to detect.
In relation to 28 certain compliance issues, we have submitted to OFAC an initial notification of voluntary self-disclosure concerning potential violations.
In relation to certain compliance issues, we have submitted to OFAC an initial notification of voluntary self-disclosure concerning potential violations.
We believe our current primary competitors include Amazon, eBay, Etsy Inc., 15 Restoration Hardware, Inc., Wayfair Inc., Christie’s Inc., and Sotheby’s, Inc.
We believe our current primary competitors include Amazon, eBay, Etsy Inc., Restoration Hardware, Inc., Wayfair Inc., Christie’s Inc., and Sotheby’s, Inc.
In addition, as a public company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company. These expenditures will make it more difficult for us to achieve and maintain profitability.
In addition, as a public company, we have and will continue to incur significant legal, accounting, and other expenses that we did not incur as a private company. These expenditures will make it more difficult for us to achieve and maintain profitability.
In addition, we have in the past experienced, and may in the future experience, slower growth rates. For example, our net revenue decreased in the year ended December 31, 2022 as compared to the year ended December 31, 2021.
In addition, we have in the past experienced, and may in the future experience, slower growth rates. For example, our net revenue decreased in the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Transitioning to a fully or predominantly remote work environment and providing and maintaining the operational infrastructure necessary to support a remote work environment also present significant challenges to maintaining compliance with state requirements such as employee income tax withholding, remittance and reporting, payroll registration, and workers’ compensation insurance.
Operating in a fully or predominantly remote work environment and providing and maintaining the operational infrastructure necessary to support a remote work environment also present significant challenges to maintaining compliance with state requirements such as employee income tax withholding, remittance and reporting, payroll registration, and workers’ compensation insurance.
Our historical growth rates for Active Buyers may not be indicative of future growth rates in new Active Buyers. Failure to attract new buyers and to maintain relationships with existing buyers, or to convert users to Active Buyers on our online marketplace, would harm our results of operations and our ability to attract and retain sellers.
Our historical performance for Active Buyers may not be indicative of future performance in new Active Buyers. Failure to attract new buyers and to maintain relationships with existing buyers, or to convert users to Active Buyers on our online marketplace, would harm our results of operations and our ability to attract and retain sellers.
Factors that may cause fluctuations in our quarterly results of operations include, but are not limited to, the following: • fluctuations in net revenue generated from sales of luxury design products through our online marketplace; • our success in attracting sellers and buyers to, and retaining sellers and buyers on, our online marketplace, and our ability to do so in a cost-efficient manner; • our ability to attract users to our website and convert users to Active Buyers on our online marketplace; • the amount and timing of our operating expenses; • our ability to continue to source and make luxury design products available on our online marketplace; • the timing and success of new services, features, and offerings we introduce through our e-commerce platform, including our recently launched auction transaction format; • our ability to compete successfully; • our ability to increase brand awareness of our company and our online marketplace; • our ability to manage our existing business and future growth; • our ability to effectively scale our operations while maintaining high-quality service and seller and buyer satisfaction; 11 • the amount, timing, and results of our investments to maintain and improve our technology infrastructure and platform, and our ability to do so in a cost-effective manner; • our ability to increase and manage the growth of our international operations, including our international seller and buyer base, and our ability to manage the risks associated therewith; • changes in our key metrics or the methods used to calculate our key metrics; • seasonality, including seasonal buying patterns, which may vary from quarter to quarter or year to year; • changes in laws, regulations, or accounting principles that impact our business; • disruptions or defects in our e-commerce platform, such as service interruptions or privacy or data security breaches; • changes in the terms of our seller agreements; • our ability to hire and retain talented employees and professional contractors at all levels of our business; • the impact of the ongoing COVID-19 pandemic or other events, such as geopolitical crises, which may cause significant economic or social disruption; and • economic and market conditions, particularly those affecting the luxury design products industry, such as fluctuations in inflation and interest rates or supply chain or global shipping disruptions.
Factors that may cause fluctuations in our quarterly results of operations include, but are not limited to, the following: • fluctuations in net revenue generated from sales of luxury design products through our online marketplace; • our success in attracting sellers and buyers to, and retaining sellers and buyers on, our online marketplace, and our ability to do so in a cost-efficient manner; • our ability to attract users to our website and convert users to Active Buyers on our online marketplace; • the amount and timing of our operating expenses; • our ability to continue to source and make luxury design products available on our online marketplace; • the timing and success of new services, features, and offerings we introduce through our e-commerce platform, including our recently launched auction transaction format; • our ability to compete successfully; • our ability to increase brand awareness of our company and our online marketplace; • our ability to manage our existing business and future growth; • our ability to effectively scale our operations while maintaining high-quality service and seller and buyer satisfaction; 10 • the amount, timing, and results of our investments to maintain and improve our technology infrastructure and platform, and our ability to do so in a cost-effective manner; • our ability to increase and manage the growth of our international operations, including our international seller and buyer base, and our ability to manage the risks associated therewith; • changes in our key metrics or the methods used to calculate our key metrics; • seasonality, including seasonal buying patterns, which may vary from quarter to quarter or year to year; • changes in laws, regulations, or accounting principles that impact our business; • disruptions or defects in our e-commerce platform, such as service interruptions or privacy or data security breaches; • changes in the terms of our seller agreements; • our ability to hire and retain talented employees and professional contractors at all levels of our business; • the changing consumer behaviors as a result of the post COVID-19 pandemic or other events, such as geopolitical crises, which may cause significant economic or social disruption; • our ability to successfully manage previously-minted NFTs that remain available for sale and to anticipate and manage the risks associated therewith; and • economic and market conditions, particularly those affecting the luxury design products industry, such as fluctuations in inflation and interest rates or supply chain or global shipping disruptions.
In addition, standards regarding ESG matters could develop and become more onerous both for us which could also result in costs that have a material adverse effect on our business and financial condition. We may become involved in claims, lawsuits, government investigations, and other proceedings that could adversely affect our business, financial condition, and results of operations.
In addition, standards regarding ESG matters could develop and become more onerous for us to comply with, which could also result in costs that have a material adverse effect on our business and financial condition. We may become involved in claims, lawsuits, government investigations, and other proceedings that could adversely affect our business, financial condition, and results of operations.
Transaction loss expense associated with our buyer protection program accounted for approximately 85%, 81%, and 88% of the provision for transaction losses in the fiscal years ended December 31, 2022, 2021, and 2020, respectively, with discretionary buyer reimbursements, which are part of the buyer protection program, constituting a small portion thereof.
Transaction loss expense associated with our buyer protection program accounted for approximately 87%, 85%, and 81% of the provision for transaction losses in the fiscal years ended December 31, 2023, 2022, and 2021, respectively, with discretionary buyer reimbursements, which are part of the buyer protection program, constituting a small portion thereof.
As a result, marketplaces will be liable to collect, report, and remit the VAT due from the consumer. The United Kingdom has implemented similar VAT marketplace rules which went into effect in January 2021 and make facilitating marketplaces liable for the VAT collections for their overseas sellers.
As a result, marketplaces may be liable to collect, report, and remit the VAT due from the consumer. The United Kingdom has implemented similar VAT marketplace rules, which went into effect in January 2021 and, in certain situations, may make facilitating marketplaces liable for the VAT collections for their overseas sellers.
We have experienced, and expect that in the future we will experience, interruptions, delays, and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions, and capacity constraints which could affect the availability of services on our platform and prevent or inhibit the ability of buyers to access our online marketplace or complete purchases on our online marketplace and app.
We have experienced, and expect that in the future we will experience, interruptions, delays, and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions, and capacity constraints, and lack of network connectivity in one or more regions, which could affect the availability of services on our platform and prevent or inhibit the ability of buyers to access our online marketplace or complete purchases on our online marketplace and app.
In August 2021, we announced the launch of our non-fungible token (“NFT”) platform where creators can make blockchain-encrypted design items, such as artwork, available as NFTs for digital purchase through 1stDibs, utilizing Ethereum, a blockchain technology. NFTs are digital assets recorded on a blockchain ledger for verification of authenticity and ownership of a unique digital asset, such as artwork.
In August 2021, we announced the launch of our NFT platform where creators can make blockchain-encrypted design items, such as artwork, available as NFTs for digital purchase through 1stDibs, utilizing Ethereum, a blockchain technology. NFTs are digital assets recorded on a blockchain ledger for verification of authenticity and ownership of a unique digital asset, such as artwork.
In addition, if we are overly conservative in our approach to canceling or pausing orders in Russia or Ukraine due to general instability in the area, the value of our brand could be harmed, which could negatively impact our business, financial condition, and results of operations.
In addition, if we are overly conservative in our approach to canceling or pausing orders in impacted regions due to general instability in the area, the value of our brand could be harmed, which could negatively impact our business, financial condition, and results of operations.
New investors in such issuances could also receive rights senior to those of holders of our common stock. Our actual results of operations may not meet our guidance and investor expectations, which would likely cause our stock price to decline.
Any such issuances could be dilutive to investors and could cause the price of our common stock to decline. New investors in such issuances could also receive rights senior to those of holders of our common stock. Our actual results of operations may not meet our guidance and investor expectations, which would likely cause our stock price to decline.
Our amended and restated certificate of incorporation and bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock; 37 • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the Chairperson of our board of directors (“Chairperson”), or our Chief Executive Officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into three classes, with each class serving three-year staggered terms; • prohibit cumulative voting in the election of directors; • provide that our directors may be removed only for cause; • provide that vacancies on our board of directors may be filled by a majority of directors then in office, even if less than a quorum; and • require the approval of our board of directors or the holders of at least 66 2/3% of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation.
Our amended and restated certificate of incorporation and bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the Chairperson of our board of directors (“Chairperson”), or our Chief Executive Officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors, which requires, without limitation, compliance with Rule 14a-19 under the Exchange Act, as applicable; • establish that our board of directors is divided into three classes, with each class serving three-year staggered terms; • prohibit cumulative voting in the election of directors; • provide that our directors may be removed only for cause; • provide that vacancies on our board of directors may be filled by a majority of directors then in office, even if less than a quorum; and 40 • require the approval of our board of directors or the holders of at least 66 2/3% of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation.
Our historical growth may not be indicative of our future growth and our net revenue growth rate may decelerate compared to prior years. We have experienced fluctuations in our net revenue growth, with net revenue of $96.8 million, $102.7 million, and $81.9 million during the fiscal years ended December 31, 2022, 2021, and 2020, respectively.
Our historical growth may not be indicative of our future growth and our net revenue growth rate may decelerate compared to prior years. We have experienced fluctuations in our net revenue growth, with net revenue of $84.7 million, $96.8 million, and $102.7 million during the fiscal years ended December 31, 2023, 2022, and 2021, respectively.
We believe that our existing cash and cash equivalents, together with cash generated from operations, will be enough to meet our anticipated cash needs for at least the next 12 months.
We believe that our existing cash, cash equivalents and short-term investments, together with any cash generated from operations, will be enough to meet our anticipated cash needs for at least the next 12 months.
Although the luxury design products available through our online marketplace are generally exclusive, one-of-a-kind products, promotional pricing by these parties may nonetheless adversely affect the value of luxury design products listed with us, and, in turn, our GMV and results of operations.
National retailers and brands set pricing for new luxury design products. Although the luxury design products available through our online marketplace are generally exclusive, one-of-a-kind products, promotional pricing by these parties may nonetheless adversely affect the value of luxury design products listed with us, and, in turn, our GMV and results of operations.
In addition, we may experience a decline in the supply of luxury design products available through our online marketplace if our sellers face difficulty sourcing products in the event of any extended lockdowns or similar restrictions or measures implemented in response to the COVID-19 pandemic.
In addition, we may experience a decline in the supply of luxury design products available through our online marketplace if our sellers face difficulty sourcing products in the event of any extended lockdowns or similar restrictions or measures implemented in response to a public health crisis.
We incurred net losses of $22.5 million, $21.0 million, and $12.5 million during the fiscal years ended December 31, 2022, 2021, and 2020, respectively. We had an accumulated deficit of $291.0 million as of December 31, 2022. We expect to incur significant losses in the future.
We incurred net losses of $22.7 million, $22.5 million, and $21.0 million during the fiscal years ended December 31, 2023, 2022, and 2021, respectively. We had an accumulated deficit of $313.7 million as of December 31, 2023. We expect to incur significant losses in the future.
Further, if sellers and buyers elect to transact business through in-person interactions instead of through our online marketplace, our revenue could be negatively impacted and our business could be harmed. We rely, in part, on sellers to provide a positive experience to buyers.
Further, if sellers and buyers elect to transact business through in-person interactions instead of through our online marketplace, our revenue could be negatively impacted and our business could be harmed. We rely, in part, on sellers to provide a positive experience to buyers, which includes limited disruptions in service by sellers.
This uncertainty increases the risk of non-compliance with tax laws, which in turn could result in adverse tax consequences, penalties, investigations or audits, litigation, account holder lawsuits, or the need to revise or restate our financial statements and associated consequences therewith, among other things.
This uncertainty increases the risk of non-compliance with tax laws, which in turn could result in adverse tax consequences, penalties, investigations or audits, litigation, account holder lawsuits, or the need to revise or restate our financial statements and associated consequences therewith, among other things. We ceased further investment in our NFT platform in January 2023.
We rely on third-party payment processors to process payments made by buyers or to sellers on our online marketplace. We have engaged third-party service providers to perform underlying card processing, currency exchange, identity verification, and fraud analysis services.
Our payments system depends on third-party providers and is subject to evolving laws and regulations. We rely on third-party payment processors to process payments made by buyers or to sellers on our online marketplace. We have engaged third-party service providers to perform underlying card processing, currency exchange, identity verification, and fraud analysis services.
The CCPA has prompted a number of additional proposals for federal and state privacy legislation that, if passed, could increase our potential liability, add layers of complexity to compliance in the U.S. market, increase our compliance costs, and adversely affect our business.
There are a number of additional proposals for U.S. federal and state privacy laws that, if passed, could increase our potential liability, add layers of complexity to compliance in the U.S. market, increase our compliance costs, and adversely affect our business.
In addition, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the price of our common stock could decline for reasons unrelated to our business, results of operations, or financial condition.
In addition, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the price of our common stock, whether due to any of the foregoing factors or otherwise, could decline for reasons unrelated to our 38 business, results of operations, or financial condition.
We expect that our operating expenses will increase substantially for the foreseeable future as we hire additional employees, invest in expanding our seller and buyer base and deepening our existing seller and buyer relationships, expand across and within product verticals, increase our marketing efforts and brand awareness, and invest in expanding our international operations.
Our operating expenses may increase substantially in the foreseeable future to the extent necessary that we may hire additional employees, invest in expanding our seller and buyer base and deepening our existing seller and buyer relationships, expand across and within product verticals, increase our marketing efforts and brand awareness, and invest in expanding our international operations.
Delays or interruptions may be caused by events that are beyond the control of the delivery services, such as inclement weather, natural disasters, transportation disruptions, delays in customs inspections, terrorism, public health crises such as the COVID-19 pandemic, or labor unrest. The delivery services could also be affected by industry consolidation, insolvency, or government shut-downs.
Delays or interruptions may be caused by events that are beyond the control of the delivery services, such as inclement weather, natural disasters, transportation disruptions, delays in customs inspections, terrorism, public health crises such as the COVID-19 pandemic, or labor unrest.
We may incur significant losses from fraud, which would harm our results of operations. We have in the past incurred and may in the future incur losses from various types of fraudulent transactions, including the use of stolen credit card numbers and claims that a buyer did not authorize a purchase.
We have in the past incurred and may in the future incur losses from various types of fraudulent transactions, including the use of stolen credit card numbers and claims that a buyer did not authorize a purchase.
This remote and dispersed work environment could have a negative impact on the execution of our business plans and operations.
This remote and dispersed work environment could have a negative impact on the execution of our business plans and operations and create productivity, connectivity, and oversight challenges.
We completed formal studies through August 18, 2021 to determine if any ownership changes within the meaning of Sections 382 and 383 of the Code have occurred.
We completed formal studies through December 31, 2022 to determine if any ownership changes within the meaning of Sections 382 and 383 of the Code have occurred.
In addition, if we are unable to add automation to our operations, we may be unable to reduce the costs of processing listings and orders, which could cause delays in buyers receiving their purchases. Any of these outcomes could harm our reputation and our relationships with our sellers and buyers.
In addition, if we are unable to add automation to our operations, we may be unable to reduce the costs of processing listings and orders, which could cause delays in buyers receiving their purchases.
If we invest substantial time and resources to expand our operations outside of the United States and cannot manage these risks effectively, 22 the costs of doing business in those markets may be prohibitive or our expenses may increase disproportionately to the revenue generated in those markets.
If we invest substantial time and resources to expand our operations outside of the United States and cannot manage these risks effectively, the costs of doing business in those markets may be prohibitive or our expenses may increase disproportionately to the revenue generated in those markets. We may incur significant losses from fraud, which would harm our results of operations.
We also may incur marketing and advertising expenses significantly in advance of recognizing revenue associated with such expenses and our marketing and advertising expenditures may not generate sufficient levels of brand awareness or result in increased revenue. Even if our marketing and advertising expenses result in increased sales, the increase might not offset our related expenditures.
We also may incur marketing and advertising expenses significantly in advance of recognizing revenue associated with such expenses and our marketing and advertising expenditures may not generate sufficient levels of brand awareness or result in increased revenue.
In June 2022, we sold 100% of our equity interest in Design Manager. Acquisitions may divert management’s time and focus from operating our business. Acquisitions also may require us to spend a substantial portion of our available cash, incur debt or other liabilities, amortize expenses related to intangible assets, or incur write-offs of goodwill or other assets.
Acquisitions may divert management’s time and focus from operating our business. Acquisitions also may require us to spend a substantial portion of our available cash, incur debt or other liabilities, amortize expenses related to intangible assets, or incur write-offs of goodwill or other assets.
For example, in the year ended December 31, 2022, we launched localized sites in Germany and France, which may require significant financial investments to maintain.
For example, in the year ended December 31, 2023, we launched localized sites in Italy and Spain, which may require significant financial investments to maintain.
If we are unable to maintain our marketing and advertising channels on cost-effective terms or replace or supplement existing marketing and advertising channels with similarly or more effective channels, our marketing and advertising expenses could increase substantially, our seller and buyer base could be adversely affected, and our business, results of operations, financial condition, and brand could suffer.
Even if our marketing and advertising expenses result in increased sales, the increase might not offset our related expenditures. 18 If we are unable to maintain our marketing and advertising channels on cost-effective terms or replace or supplement existing marketing and advertising channels with similarly or more effective channels, our marketing and advertising expenses could increase substantially, our seller and buyer base could be adversely affected, and our business, results of operations, financial condition, and brand could suffer.
For example, if our shipping carriers are unable to fulfill orders in Russia or Ukraine, as is presently the case, the resultant disruptions to our delivery chain could negatively affect the timely delivery of our other orders, which could adversely affect our business and reputation.
For example, if our shipping carriers are unable to fulfill orders in impacted regions, as has been the case, the resultant disruptions to our delivery chain could negatively affect the timely delivery of our other orders, which could adversely affect our business and reputation.
As NFTs are a relatively new and emerging type of digital asset, the regulatory, commercial, and legal framework governing NFTs (as well as cryptocurrencies) is likely to evolve both in the United States and internationally and implicates issues regarding a range of matters, including, but not limited to, intellectual property rights, privacy and cybersecurity, fraud, anti-money laundering, sanctions, and currency, commodity, and securities law implications. 18 If we fail to maintain and promote our brand and reputation, our business, market position, and future growth could suffer.
As NFTs are a relatively new and emerging type of digital asset, the regulatory, commercial, and legal framework governing NFTs (as well as cryptocurrencies) is likely to evolve both in the United States and internationally and implicates issues regarding a range of matters, including, but not limited to, intellectual property rights, privacy and cybersecurity, fraud, anti-money laundering, sanctions, and currency, commodity, and securities law implications.
Among other things, the order eliminates rules adopted in 2015 that prohibited broadband providers from blocking, impairing, or degrading access to legal content, applications, services, or non-harmful devices, or engaging in the practice of “paid prioritization” of content or services by Internet service providers.
Among other things, the order eliminates rules adopted in 2015 that prohibited broadband providers from blocking, impairing, or degrading access to legal content, applications, services, or non-harmful devices, or engaging in the practice of “paid prioritization” of content or services by Internet service providers (e.g., the favoring of some lawful internet traffic over other traffic in exchange for higher payments).
Further, a stockholder’s investment may be harmed to the extent that we pay the costs of settlement and damage awards against our directors and executive officers as required by these indemnification provisions. 38 Our amended and restated certificate of incorporation and amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and provides that federal district courts will be the sole and exclusive forum for Securities Act claims, which could limit our stockholders’ ability to obtain what they believe to be a favorable judicial forum for disputes with us or our directors, officers, or other employees.
Our amended and restated certificate of incorporation and amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and provides that federal district courts will be the sole and exclusive forum for Securities Act claims, which could limit our stockholders’ ability to obtain what they believe to be a favorable judicial forum for disputes with us or our directors, officers, or other employees.
If we are unable to cost-effectively protect our intellectual property rights, then our business could be harmed. An adverse decision in any of these legal actions could limit our ability to assert our intellectual property or proprietary rights, limit the value of our intellectual property or proprietary rights or otherwise negatively impact our business, financial condition, and results of operations.
An adverse decision in any of these legal actions could limit our ability to assert our intellectual property or proprietary rights, limit the value of our intellectual property or proprietary rights or otherwise negatively impact our business, financial condition, and results of operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters are located in New York, New York, where we currently lease approximately 42,000 square feet under a lease agreement that expires on December 31, 2029. We believe that our facilities are suitable to meet our current needs and that, if we require additional space, we will be able to obtain additional facilities.
Biggest changeWe also lease approximately 42,000 square feet in New York, New York, which we are currently subleasing to a third party. See Note 10, “Leases” for further discussion. We believe that our facilities are suitable to meet our current needs and that, if we require additional space, we will be able to obtain additional facilities.
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Item 2. Properties Our corporate headquarters are located in New York, New York. Effective January 2024, our corporate headquarters have been relocated to 300 Park Avenue South, New York, New York where we currently lease approximately 13,000 square feet under a lease agreement that expires in December 2028.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeEven if any particular litigation or claim is not resolved in a manner that is adverse to our interests, such litigation can have a negative impact on us because of defense and settlement costs, diversion of management resources from our business, and other factors. Item 4. Mine Safety Disclosures Not applicable. 40 PART II
Biggest changeEven if any particular litigation or claim is not resolved in a manner that is adverse to our interests, such litigation can have a negative impact on us because of defense and settlement costs, diversion of management resources from our business, and other factors. Item 4. Mine Safety Disclosures Not applicable. 43 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans The information required by this item with respect to our equity compensation plans is incorporated by reference to our 2023 proxy statement set forth in the section titled “Securities Authorized for Issuance under Equity Compensation Plans” to be filed with the SEC within 120 days of the year ended December 31, 2022 (the “Proxy Statement”).
Biggest change(b) On August 4, 2023, the Board of Directors authorized a Stock Repurchase Program to repurchase up to an aggregate of $20.0 million of our common stock. 44 Securities Authorized for Issuance under Equity Compensation Plans The information required by this item with respect to our equity compensation plans is incorporated by reference to our 2024 proxy statement set forth in the section titled “Securities Authorized for Issuance under Equity Compensation Plans” to be filed with the SEC within 120 days of the year ended December 31, 2023 (the “Proxy Statement”).
Performance Graph We have presented below the cumulative total return to our stockholders in comparison to the Nasdaq Composite Index (Nasdaq Composite) and Russell 2000. All values assume a $100 initial investment at the market close on June 10, 2021, the date our common stock began trading on the Nasdaq Stock Market, through December 31, 2022.
Performance Graph We have presented below the cumulative total return to our stockholders in comparison to the Nasdaq Composite Index (Nasdaq Composite) and Russell 2000. All values assume a $100 initial investment at the market close on June 10, 2021, the date our common stock began trading on the Nasdaq Stock Market, through December 31, 2023.
As of the date of this Annual Report on Form 10-K, we cannot predict with certainty all of the particular uses for the net proceeds, or the amounts that we will actually spend on the uses set forth in the prospectus. Sales of Unregistered Equity Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
As of the date of this Annual Report on Form 10-K, we cannot predict with certainty all of the particular uses for the net proceeds, or the amounts that we will actually spend on the uses set forth in the prospectus. Sales of Unregistered Equity Securities None.
Holders of Record As of the close of business on February 16, 2023, there were approximately 21 stockholders of record of our common stock.
Holders of Record As of the close of business on February 1, 2024, there were approximately 106 stockholders of record of our common stock.
The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock. 41 This performance graph shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or incorporated by reference into any of our other filings under the Securities Act or the Exchange Act.
This performance graph shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or incorporated by reference into any of our other filings under the Securities Act or the Exchange Act. Item 6. [Reserved] 45
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Purchases of Equity Securities by the Issuer and Affiliated Purchasers In August 2023, the Board of Directors authorized a Stock Repurchase Program to repurchase up to an aggregate of $20.0 million of our common stock.
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As of December 31, 2023, 823,483 shares have been purchased for a total cost of $3.5 million since the commencement of the program and approximately $16.5 million remains available for future purchases under the program.
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The following table presents details of our monthly share repurchases for the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share (a) Total number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs (in thousands) October 1, 2023 - October 31, 2023 116,194 $ 3.87 116,194 $ 18,174 November 1, 2023 - November 30, 2023 167,263 $ 4.44 167,263 $ 17,431 December 1, 2023 - December 31 2023 205,067 $ 4.52 205,067 $ 16,504 Total 488,524 488,524 (a) Average price per share includes broker commissions.
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The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe provision for transaction losses also includes bad debt expense associated with our accounts receivable balance. 49 Results of Operations The following table summarizes our results of operations for the periods indicated: Year Ended December 31, (in thousands) 2022 2021 2020 Net revenue $ 96,849 $ 102,731 $ 81,863 Cost of revenue 29,670 32,167 25,948 Gross profit 67,179 70,564 55,915 Operating expenses: Sales and marketing 44,776 47,414 36,526 Technology development 24,437 19,110 16,510 General and administrative 27,594 21,293 12,565 Provision for transaction losses 5,933 5,191 3,820 Gain on sale of Design Manager (9,684) — — Total operating expenses 93,056 93,008 69,421 Loss from operations (25,877) (22,444) (13,506) Other income (expense), net: Interest income 1,606 146 194 Interest expense (11) (16) (14) Other, net 1,781 1,372 809 Total other income (expense), net 3,376 1,502 989 Net loss before income taxes (22,501) (20,942) (12,517) Provision for income taxes (37) (21) (11) Net loss $ (22,538) $ (20,963) $ (12,528) The following table summarizes our results of operations as a percentage of net revenue for the periods indicated: Year Ended December 31, 2022 2021 2020 Net revenue 100 % 100 % 100 % Cost of revenue 31 31 32 Gross profit 69 69 68 Operating expenses: Sales and marketing 46 46 44 Technology development 25 19 20 General and administrative 29 21 15 Provision for transaction losses 6 5 5 Gain on sale of Design Manager (10) — — Total operating expenses 96 91 84 Loss from operations (27) (22) (16) Other income (expense), net: Interest income 2 — — Interest expense — — — Other, net 2 2 1 Total other income (expense), net 4 2 1 Net loss before income taxes (23) (20) (15) Provision for income taxes — — — Net loss (23) % (20) % (15) % 50 Comparison of the Years Ended December 31, 2022 and 2021 Net Revenue Year Ended December 31, (in thousands) 2022 2021 $ Change % Change Net revenue $ 96,849 $ 102,731 $ (5,882) (6) % Net revenue was $96.8 million for the year ended December 31, 2022, as compared to $102.7 million for the year ended December 31, 2021.
Biggest changeThe provision for transaction losses also includes bad debt expense associated with our accounts receivable balance. 51 Results of Operations The following table summarizes our results of operations for the periods indicated: Year Ended December 31, (in thousands) 2023 2022 2021 Net revenue $ 84,684 $ 96,849 $ 102,731 Cost of revenue 25,111 29,670 32,167 Gross profit 59,573 67,179 70,564 Operating expenses: Sales and marketing 36,640 44,776 47,414 Technology development 21,644 24,437 19,110 General and administrative 28,587 27,594 21,293 Provision for transaction losses 3,729 5,933 5,191 Gain on sale of Design Manager — (9,684) — Total operating expenses 90,600 93,056 93,008 Loss from operations (31,027) (25,877) (22,444) Other income, net: Interest income 6,639 1,606 146 Interest expense — (11) (16) Other, net 1,703 1,781 1,372 Total other income, net 8,342 3,376 1,502 Net loss before income taxes (22,685) (22,501) (20,942) Provision for income taxes (14) (37) (21) Net loss $ (22,699) $ (22,538) $ (20,963) The following table summarizes our results of operations as a percentage of net revenue for the periods indicated: Year Ended December 31, 2023 2022 2021 Net revenue 100 % 100 % 100 % Cost of revenue 30 31 31 Gross profit 70 69 69 Operating expenses: Sales and marketing 43 46 46 Technology development 26 25 19 General and administrative 34 29 21 Provision for transaction losses 4 6 5 Gain on sale of Design Manager — (10) — Total operating expenses 107 96 91 Loss from operations (37) (27) (22) Other income, net: Interest income 8 2 — Interest expense — — — Other, net 2 2 2 Total other income, net 10 4 2 Net loss before income taxes (27) (23) (20) Provision for income taxes — — — Net loss (27) % (23) % (20) % 52 Comparison of the Years Ended December 31, 2023 and 2022 Net Revenue Year Ended December 31, (in thousands) 2023 2022 $ Change % Change Net revenue $ 84,684 $ 96,849 $ (12,165) (13) % Net revenue was $84.7 million for the year ended December 31, 2023, as compared to $96.8 million for the year ended December 31, 2022.
Cost of revenue also includes expenses associated with payroll, employee benefits, stock-based compensation, other headcount-related expenses associated with operations personnel supporting revenue-related operations, consulting costs, and amortization expense related to our capitalized internal-use software. In certain transactions where our shipping services are elected by sellers, we enable shipping of items purchased from the seller to the buyer.
Cost of revenue also includes expenses associated with payroll, employee benefits, stock-based compensation, other headcount-related expenses associated with operations personnel supporting revenue-related operations and logistics, consulting costs, and amortization expense related to our capitalized internal-use software. In certain transactions where our shipping services are elected by sellers, we enable shipping of items purchased from the seller to the buyer.
In addition, certain metrics, such as the number of Active Buyers and Number of Orders, are measured based on such numbers as reported in a given month, minus cancellations within that month. As we do not retroactively adjust such numbers for cancellations occurring after the month, the metrics presented do not reflect subsequent order cancellations.
In addition, certain metrics, such as the number of Active Buyers, Number of Orders, and GMV are measured based on such numbers as reported in a given month, minus cancellations within that month. As we do not retroactively adjust such numbers for cancellations occurring after the month, the metrics presented do not reflect subsequent order cancellations.
Capitalized costs associated with internal-use software are amortized on a straight-line basis over 55 their estimated useful life, which is generally three years, and are included in cost of revenue in the consolidated statements of operations.
Capitalized costs associated with internal-use software are amortized on a straight-line basis over their estimated useful life, which is generally three years, and are included in cost of revenue in the consolidated statements of operations.
The non-GAAP financial measures presented should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, comparable financial measures calculated in accordance with GAAP.
The non-GAAP financial measures presented should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a 54 substitute for, comparable financial measures calculated in accordance with GAAP.
The figures below represent our on-platform GMV from our online marketplace by buyer cohort for the year ended December 31, 2022. We expect the current macroeconomic factors to continue to negatively impact our operations into 2023. We plan to invest in strategic initiatives to drive supply growth through more sellers and listings.
The figures below represent our on-platform GMV from our online marketplace by buyer cohort for the year ended December 31, 2023. We expect the current macroeconomic factors to continue to negatively impact our operations into 2024. We plan to invest in strategic initiatives to drive supply growth through more sellers and listings.
Based on our current plans, we believe our existing cash and cash equivalents will be sufficient to fund our operations and capital expenditure requirements through at least the next 12 months. We expect to continue to incur substantial expenditures in the near term to support our ongoing activities.
Based on our current plans, we believe our existing cash, cash equivalents and short-term investments will be sufficient to fund our operations and capital expenditure requirements through at least the next 12 months. We expect to continue to incur substantial expenditures in the near term to support our ongoing activities.
We regularly 44 review and may adjust our processes for calculating these metrics to improve their accuracy. These key operating and financial metrics may vary from period to period and should not be viewed as indicative of other metrics.
We regularly review and may adjust our processes for calculating these metrics to 47 improve their accuracy. These key operating and financial metrics may vary from period to period and should not be viewed as indicative of other metrics.
Other Services Other services consist of advertisements and, prior to the sale of Design Manager, software services and accounted for 3%, 4% and 4% of our net revenue in the years ended December 31, 2022, 2021, and 2020, respectively. Advertising revenue is generated when impression-based ads are displayed on our online marketplace on our sellers’ behalf.
Other Services Other services consist of advertisements and, prior to the sale of Design Manager, software services and accounted for 1%, 3% and 4% of our net revenue in the years ended December 31, 2023, 2022, and 2021, respectively. Advertising revenue is generated when impression-based ads are displayed on our online marketplace on our sellers’ behalf.
We also believe that the presentation of this non-GAAP financial measure provides an additional tool for investors to use in comparing our core 52 business and results of operations over multiple periods with other companies in our industry, many of which present similar non-GAAP financial measures to investors, and to analyze our cash performance.
We also believe that the presentation of this non-GAAP financial measure provides an additional tool for investors to use in comparing our core business and results of operations over multiple periods with other companies in our industry, many of which present similar non-GAAP financial measures to investors, and to analyze our operating performance.
Our long-term strategy is to localize the user experience by providing technology solutions such as translation and payment capabilities, focus on local marketing efforts through organic search, email, performance-based marketing, and optimized public relations, and customize content and collections to suit regional tastes.
Our long-term strategy is to localize the user experience in other countries by providing technology solutions such as translation and payment capabilities, focus on local marketing efforts through organic search, email, performance-based marketing, and optimized public relations, and customize content and collections to suit regional tastes.
Our historical growth rates for Number of Orders may not be indicative of future growth rates in Number of Orders. Active Buyers We define Active Buyers as buyers who have made at least one purchase through our online marketplace during the 12 months ended on the last day of the period presented, net of cancellations.
Our historical performance for Number of Orders may not be indicative of future performance in Number of Orders. Active Buyers We define Active Buyers as buyers who have made at least one purchase through our online marketplace during the 12 months ended on the last day of the period presented, net of cancellations.
International Growth Our growth will depend in part on international sellers and buyers, both of which constitute an increasing portion of our online marketplace transactions. Currently, our sellers and buyers are based in over 150 countries.
International Growth Our growth will depend in part on international sellers and buyers, both of which constitute an increasing portion of our online marketplace transactions. Currently, our sellers and buyers are based in over 175 countries.
General and Administrative General and administrative expenses include payroll, employee benefits, stock-based compensation, other headcount-related expenses associated with finance, legal, facility and human resources related personnel, lease expense, business liability insurance, accounting, professional fees, and depreciation and amortization of property and equipment. We expense all general and administrative expenses as incurred.
General and Administrative General and administrative expenses include payroll, employee benefits, stock-based compensation, other headcount-related expenses associated with finance, legal, facility and human resources related personnel, lease expense, net of sublease income, business liability insurance, accounting, professional fees, and depreciation and amortization of property and equipment. We expense all general and administrative expenses as incurred.
Our future capital requirements will depend on many factors, including: • the emergence of competing online marketplaces and other adverse marketing developments; • the timing and extent of our sales and marketing and technology development expenditures; and • any investments or acquisitions we may choose to pursue in the future.
Our future capital requirements will depend on many factors, including: • the emergence of competing online marketplaces and other adverse marketing developments; • the timing and extent of our sales and marketing and technology development expenditures; and • any investments, acquisitions or other similar strategic endeavors we may choose to pursue in the future.
Our historical growth rates for GMV may not be indicative of future growth rates in GMV. Number of Orders We define Number of Orders as the total number of orders placed or reported through the 1stDibs online marketplace in a given month, minus cancellations within that month.
Our historical performance for GMV may not be indicative of future performance in GMV. Number of Orders We define Number of Orders as the total number of orders placed or reported through the 1stDibs online marketplace in a given month, minus cancellations within that month.
Offline sales consist of sales completed by a small number of sellers outside of our online marketplace and reported to us by these sellers in exchange for increased marketing exposure and/or slightly lower commission rates on both their on-platform and offline sales. We do not intend to add new sellers to this program.
Offline sales consist of sales completed by a small number of sellers outside of our online marketplace and reported to us by these sellers in exchange for increased marketing exposure and/or slightly lower commission rates on both their on-platform and offline sales. We do not intend to add new sellers to this program and have not in the current year.
On-platform GMV accounted for $409.4 million, or 96%, $432.6 million, or 97%, and $328.8 million, or 96% of GMV in the years ended December 31, 2022, 2021 and 2020, respectively. We view GMV as a measure of the total economic activity generated by our online marketplace and as an indicator of the scale, growth, and health of our online marketplace.
On-platform GMV accounted for $346.6 million, or 96%, $409.4 million, or 96%, and $432.6 million, or 97% of GMV in the years ended December 31, 2023, 2022 and 2021, respectively. We view GMV as a measure of the total economic activity generated by our online marketplace and as an indicator of the scale, growth, and health of our online marketplace.
Software services revenue consists of monthly and annual subscriptions previously sold through our Design Manager subsidiary allowing users, typically interior designers, to access our project management and accounting software. On June 29, 2022, we sold Design Manager and no revenue related to software services has been recognized since.
Software services revenue consisted of monthly and annual subscriptions previously sold through our Design Manager subsidiary which allowed users, typically interior designers, to access our project management and accounting software. On June 29, 2022, we sold Design Manager and no revenue related to software services has been recognized since.
By disrupting the way these items are bought and sold, we are both expanding access to, and growing the market for, luxury design products. 1stDibs began over two decades ago with the vision of bringing the magic of the Paris flea market online by creating a listings site for top vintage and antique furniture sellers.
By disrupting the way these items are bought and sold, we are both expanding access to, and growing the market for, luxury design products. 1stDibs began in 2000 with the vision of bringing the magic of the Paris flea market online by creating a listings site for top vintage and antique furniture sellers.
We believe our brand and operating track record in existing verticals allow us to unlock valuable supply across adjacent and new verticals, increasing the exclusive products available on our online marketplace, thereby increasing the Long Term Value (“ LTV”) of our new and existing buyer cohorts.
We believe our brand and operating track record in existing verticals allow us to unlock valuable supply across adjacent and new verticals, increasing the exclusive products available on our online marketplace, thereby increasing the Lifetime Value (“LTV”) of our new and existing buyer cohorts.
We evaluate whether it is appropriate to recognize revenue on a gross or net basis based upon our evaluation of whether we obtain control of the specified goods or services by considering if we are primarily responsible for fulfillment of the promise, have inventory risk, or have latitude in establishing pricing and selecting suppliers, among other factors.
We evaluate whether it is appropriate to recognize revenue on a gross or net basis based upon our evaluation of whether we obtain control of the specified goods or services by considering if we are primarily responsible for fulfillment of the promise, have inventory risk, or have latitude in establishing pricing and selecting suppliers, among other factors. 57 Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation and amortization.
Marketplace transaction fees are collected when sellers pay us commissions ranging from 5% to 50%, and processing fees of 3%, for successful purchase transactions, net of expected refunds. If a seller accepts a return or refund of an on-platform purchase, the related commission and processing fees are refunded.
Marketplace transaction fees are collected when sellers pay us commissions ranging from 5% to 50% of GMV and processing fees are 3% of the buyer’s total payment, net of expected refunds. If a seller accepts a return or refund of an on-platform purchase, the related commission and processing fees are refunded.
As a result of the reduction, we incurred approximately $0.7 million in non-recurring restructuring charges in the year ended December 31, 2022, consisting primarily of employee severance and benefits costs. We do not expect to incur any significant additional charges related to restructuring in the fiscal year ended December 31, 2022.
As a result of the reduction, we incurred approximately $2.0 million in restructuring charges during the year ended December 31, 2023, consisting primarily of employee severance and benefits costs. We do not expect to incur any significant additional charges related to restructuring in the fiscal year ended December 31, 2023.
Gross profit has been, and will continue to be, affected by various factors, including leveraging economies of scale, the costs associated with hosting our platform, the level of amortization of our internal-use software, and the extent to which we expand our operations.
Gross profit has been, and will continue to be, affected by various factors, including leveraging economies of scale, the costs associated with hosting our platform, the level of amortization of our internal-use software, the fluctuations in shipping costs and our ability to pass these costs on to buyers, and the extent to which we expand our operations.
Our marketplace transaction fees represent the majority of our net revenue and accounted for 71%, 71% and 67% of our net revenue in the years ended December 31, 2022, 2021, and 2020, respectively.
Our marketplace transaction fees represent the majority of our net revenue and accounted for 71% of our net revenue in each of the years ended December 31, 2023, 2022, and 2021.
We expect operating losses and negative cash flows from operations to continue in the foreseeable future as we continue to strategically invest in growth activities. Our principal use of cash is to fund our operations and platform development to support our strategic initiatives.
We expect operating losses and negative cash flows from operations to continue in the foreseeable future as we continue to strategically invest in growth activities. Our principal use of cash is to fund our operations including platform development to support our strategic initiatives and potential share repurchases under the Stock Repurchase Program.
Key Factors Affecting Our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us, including those discussed in Part I, Item 1, “Business,” but also pose risks and challenges, including those discussed in the section titled “Risk Factors,” and elsewhere in this Annual Report on Form 10-K. 45 Growth and Retention of our Active Buyers Our success depends in part on our ability to grow and retain our Active Buyer base.
Key Factors Affecting Our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us, including those discussed in Part I, Item 1, “Business,” but also pose risks and challenges, including those discussed in the section titled “Risk Factors,” and elsewhere in this Annual Report on Form 10-K.
While management believes that our current cash and cash equivalents are sufficient to fund our operating expenses and capital expenditure requirements for at least the next 12 months, we may need to borrow funds or raise additional equity to achieve our longer-term business objectives.
While management believes that our current cash, cash equivalents and short-term investments are sufficient to fund our operating expenses, capital expenditure requirements and any potential share repurchases under the Stock Repurchase Program for at least the next 12 months, we may need to borrow funds or raise additional equity to achieve our longer-term business objectives.
Additionally, there was a $0.9 million decrease in software services as a result of the sale of Design Manager in June 2022. Our marketplace transaction fees represent the majority of our net revenue and accounted for 71% of our net revenue for both years ended December 31, 2022 and 2021, respectively.
Additionally, there was a $1.4 million decrease in software services revenue as a result of the sale of Design Manager in June 2022. Our marketplace transaction fees represent the majority of our net revenue and accounted for 71% of our net revenue for each of the years ended December 31, 2023 and 2022.
We believe our GMV and net revenue have been negatively impacted, both directly and indirectly, by macroeconomic factors, including significant capital market volatility, the prolonged COVID-19 pandemic and the changing consumer behaviors as a result, significant housing market volatility, rising interest rates, global economic and geopolitical developments, and inflation; however, these impacts are difficult to isolate and quantify.
We believe our GMV and net revenue have been adversely impacted, both directly and indirectly, by macroeconomic factors, including significant capital market volatility, significant housing market volatility, rising interest rates, inflation, global economic and geopolitical developments, and changing consumer behavior in a post-COVID-19 environment; however, these impacts are difficult to isolate and quantify.
Year Ended December 31, (dollars in thousands) 2022 2021 2020 GMV $ 425,375 $ 447,471 $ 342,586 Number of orders 148,399 158,061 127,911 Active Buyers 67,598 72,420 58,159 Adjusted EBITDA (unaudited) $ (20,670) $ (16,493) $ (6,637) Gross Merchandise Value We define GMV as the total dollar value from items sold by our sellers through 1stDibs in a given month, minus cancellations within that month, and excluding shipping and sales taxes.
Year Ended December 31, (dollars in thousands) 2023 2022 2021 GMV $ 362,316 $ 425,375 $ 447,471 Number of Orders 133,072 148,399 158,061 Active Buyers 60,716 67,598 72,420 Adjusted EBITDA (unaudited) $ (13,340) $ (20,670) $ (16,493) Gross Merchandise Value We define GMV as the total dollar value from items sold by our sellers through 1stDibs in a given month, minus cancellations within that month, and excluding shipping and sales taxes.
In the year ended December 31, 2022, we generated a net loss of $(22.5) million and Adjusted EBITDA of $(20.7) million, compared to a net loss of $(21.0) million and Adjusted EBITDA of $(16.5) million for the year ended December 31, 2021.
In the year ended December 31, 2023, we generated a net loss of $(22.7) million and Adjusted EBITDA of $(13.3) million, compared to a net loss of $(22.5) million and Adjusted EBITDA of $(20.7) million for the year ended December 31, 2022.
Revenue from subscriptions consist of access to our online marketplace, allowing sellers, who are our customers, to execute successful purchase transactions with buyers.
Subscriptions provide access to our online marketplace, allowing sellers, who are our customers, to execute successful purchase transactions with buyers.
Subscription fees accounted for 24% and 23% of our net revenue for the years ended December 31, 2022 and 2021, respectively.
Subscription fees accounted for 24% of our net revenue for each of the years ended December 31, 2023 and 2022.
We believe our GMV and net revenue have been impacted negatively, both directly and indirectly, by macroeconomic factors, including significant capital market volatility, the prolonged COVID-19 pandemic and the changing consumer behaviors as a result, significant housing market volatility, raising interest rates, global economic and geopolitical developments, and inflation; however, these impacts are difficult to isolate and quantify.
We believe our GMV and net revenue have been adversely impacted, both directly and indirectly, by macroeconomic factors, including significant capital market volatility, significant housing market volatility, rising interest rates, inflation, global economic and geopolitical developments, and changing consumer behavior in a post-COVID-19 environment; however, these impacts are difficult to isolate and quantify.
The decrease of $5.9 million, or 6%, was primarily due to a $4.7 million decrease in seller marketplace services revenue, which was primarily due to a decrease in marketplace transaction fees as a result of the decrease in our GMV.
The decrease of $12.2 million, or 13%, was primarily due to a $10.4 million decrease in seller marketplace services revenue, which was primarily due to a decrease in marketplace transaction fees as a result of the decrease in our GMV.
See “Non-GAAP Financial Measures” for more information and for a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP. Restructuring Charges In September 2022, we announced and implemented a restructuring plan to reduce operational costs and realign investment priorities involving the reduction of approximately 10% of our workforce.
See “Non-GAAP Financial Measures” for more information and for a reconciliation of net loss to Adjusted EBITDA, the most directly comparable financial measure calculated and presented in accordance with GAAP. Restructuring Charges In June 2023, we announced a workforce reduction designed to reduce operating costs and realign investment priorities involving the reduction of approximately 20% of the Company’s global workforce.
The following table provides a reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA: Year Ended December 31, (in thousands) 2022 2021 2020 Net loss $ (22,538) $ (20,963) $ (12,528) Depreciation and amortization 2,710 3,112 6,023 Stock-based compensation expense 11,214 2,839 846 Other income, net (3,376) (1,502) (989) Provision for income taxes 37 21 11 Gain on sale of Design Manager (9,684) — — One-time expenses related to sale of Design Manger 307 — — Restructuring charges 660 — — Adjusted EBITDA (unaudited) $ (20,670) $ (16,493) $ (6,637) Seasonality We have historically experienced increased sales during the fourth quarter holiday shopping season compared to the other quarters.
The following table provides a reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA: Year Ended December 31, (in thousands) 2023 2022 2021 Net loss $ (22,699) $ (22,538) $ (20,963) Depreciation and amortization 2,278 2,710 3,112 Stock-based compensation expense 12,363 11,214 2,839 Other income, net (8,342) (3,376) (1,502) Provision for income taxes 14 37 21 Gain on sale of Design Manager — (9,684) — Strategic alternative expenses 3,046 967 — Adjusted EBITDA (unaudited) $ (13,340) $ (20,670) $ (16,493) Seasonality We have historically experienced increased sales during the fourth quarter holiday shopping season compared to the other quarters which has generally resulted in increased GMV and net revenue during the fourth quarter of each fiscal year.
Operating Expenses Sales and Marketing Year Ended December 31, (in thousands) 2022 2021 $ Change % Change Sales and marketing $ 44,776 $ 47,414 $ (2,638) (6) % Sales and marketing expense was $44.8 million for the year ended December 31, 2022, as compared to $47.4 million for the year ended December 31, 2021.
Operating Expenses Sales and Marketing Year Ended December 31, (in thousands) 2023 2022 $ Change % Change Sales and marketing $ 36,640 $ 44,776 $ (8,136) (18) % Sales and marketing expense was $36.6 million for the year ended December 31, 2023, as compared to $44.8 million for the year ended December 31, 2022.
While these are non-cash charges, we may need to replace the assets being depreciated and amortized in the future and Adjusted EBITDA does not reflect cash requirements for these replacements or new capital expenditure requirements; • The exclusion of stock-based compensation expense, which has been a significant recurring expense and will continue to constitute a significant recurring expense for the foreseeable future, as equity awards are expected to continue to be an important component of our compensation strategy; • The exclusion of other income (expense), net, which includes interest income related to our cash equivalents, interest expense, and realized and unrealized gains and losses on foreign currency exchange; • The exclusion of gain on sale of Design Manager, which is a one-time sale of our wholly owned subsidiary, as well as the related one-time expenses to sell the subsidiary which include primarily legal fees; and • The exclusion of restructuring charges, which are expenses from non-recurring employee severance and benefits costs.
While these are non-cash charges, we may need to replace the assets being depreciated and amortized in the future and Adjusted EBITDA does not reflect cash requirements for these replacements or new capital expenditure requirements; • The exclusion of stock-based compensation expense, which has been a significant recurring expense and will continue to constitute a significant recurring expense for the foreseeable future, as equity awards are expected to continue to be an important component of our compensation strategy; • The exclusion of other income, net, which includes interest income related to our cash, cash equivalents and short-term investments, interest expense, and realized and unrealized gains and losses on foreign currency exchange; • The exclusion of gain on sale of Design Manager, which is a one-time sale of our wholly owned subsidiary; and • The exclusion of strategic alternative expenses in connection with capital return strategies, buy- and sell-side mergers, acquisitions and partnerships, sale of a business or subsidiary, business optimization costs related to revisions of operational objectives and priorities, cost saving initiatives related to restructuring charges and integration costs, in all cases outside the ordinary course.
For example, individuals may have multiple email accounts in violation of our terms of service, which would result in an Active Buyer being counted more than once, thus impacting the accuracy of our number of Active Buyers.
There are, however, inherent challenges in gathering accurate data across large online and mobile populations. For example, individuals may have multiple email accounts in violation of our terms of service, which would result in an Active Buyer being counted more than once, thus impacting the accuracy of our number of Active Buyers.
Provision for Transaction Losses Year Ended December 31, (in thousands) 2022 2021 $ Change % Change Provision for transaction losses $ 5,933 $ 5,191 $ 742 14 % Provision for transaction losses was $5.9 million for the year ended December 31, 2022, as compared to $5.2 million for the year ended December 31, 2021.
Provision for Transaction Losses Year Ended December 31, (in thousands) 2023 2022 $ Change % Change Provision for transaction losses $ 3,729 $ 5,933 $ (2,204) (37) % Provision for transaction losses was $3.7 million for the year ended December 31, 2023, as compared to $5.9 million for the year ended December 31, 2022.
The difference between the amount collected for shipping and the amount charged by the shipping carrier is included in cost of revenue in our consolidated statements of operations. We enable fulfillment and shipping, but do not own or manage inventory.
The difference between the amount collected for shipping and the amount charged by the shipping carrier is included in cost of revenue in our consolidated statements of operations.
The increase in gross margin percentage was primarily driven by a decrease in our cost of revenue, as explained above, decreasing at a faster pace than the decrease in net revenue, due mainly to the decreases in shipping expense.
The decrease in gross profit was primarily driven by net revenue decreasing $7.6 million more than cost of revenue, as outlined above. The increase in gross margin percentage was primarily driven by a decrease in our cost of revenue, as explained above, decreasing at a faster pace than the decrease in net revenue.
As of December 31, 2022, we had 5.5 million users compared to 4.3 million as of December 31, 2021, and approximately 1.5 million listings, compared to 1.3 million as of December 31, 2021. Users represent non-seller visitors who register on our website and include both buyers and prospective buyers.
As of December 31, 2023, we had 6.3 million users compared to 5.5 million as of December 31, 2022, and approximately 1.7 million listings, compared to 1.5 million as of December 31, 2022. Users represent non-seller visitors who register on our website, including both buyers and prospective buyers, and are identified by a unique email address.
If and when macroeconomic conditions improve, we will look to increase retention in existing buyers and grow new buyers by further penetration of the luxury consumer market, including growing our business in non-U.S. markets and the growth of our supply. 47 Other Factors Affecting Our Performance Our results of operations are impacted by a number of other factors, including, but not limited to, those discussed below.
If and when macroeconomic conditions improve, we will look to increase retention in existing buyers and grow new buyers by further penetration of the luxury consumer market, including growing our business in non-U.S. markets and the growth of our supply.
The decrease of $2.6 million, or 6%, was primarily due to decreases in discretionary expenses, including a $4.1 million decrease in performance-based marketing and a $1.7 million decrease in promotional marketing campaigns.
The decrease of $8.1 million, or 18%, was primarily driven by a $6.6 million decrease in discretionary expenses, including performance-based marketing and promotional campaigns.
General and Administrative Year Ended December 31, (in thousands) 2022 2021 $ Change % Change General and administrative $ 27,594 $ 21,293 $ 6,301 30 % General and administrative expense was $27.6 million for the year ended December 31, 2022, as compared to $21.3 million for the year ended December 31, 2021.
General and Administrative Year Ended December 31, (in thousands) 2023 2022 $ Change % Change General and administrative $ 28,587 $ 27,594 $ 993 4 % General and administrative expense was $28.6 million for the year ended December 31, 2023, as compared to $27.6 million for the year ended December 31, 2022.
GMV attributed to a buyer cohort represents the total dollar value from items purchased by that buyer cohort in a given period, minus cancellations within that period and excluding shipping and sales taxes.
We categorize buyers into cohorts based on the date of their first purchase on the 1stDibs platform. GMV attributed to a buyer cohort represents the total dollar value from items purchased by that buyer cohort in a given period, minus cancellations within that period and excluding shipping and sales taxes.
Seller marketplace services primarily consist of marketplace transactions, subscriptions, and listing fees. Other services primarily consist of advertising revenues generated from displaying ads on our online marketplace and software services revenue related to Design Manager, typically used by interior designers.
Seller marketplace services primarily consist of marketplace transactions, subscriptions, and listing fees. Other services primarily consist of advertising revenues generated from displaying ads on our online marketplace.
As our growth rates fluctuate or other unforeseen factors arise, the impact of these seasonality trends on our results of operations may become more or less pronounced.
As our growth rates fluctuate or other unforeseen factors arise, the impact of these seasonality trends on our results of operations may become more or less pronounced. We enable fulfillment and shipping, but do not own or manage inventory. If our growth rates change, the impact of these seasonality trends on our results of operations may become more pronounced.
Other Income (Expense), Net Year Ended December 31, (in thousands) 2022 2021 $ Change % Change Total other income (expense), net $ 3,376 $ 1,502 $ 1,874 125 % Other income (expense), net was $3.4 million for the year ended December 31, 2022, as compared to $1.5 million for the year ended December 31, 2021.
Other Income, Net Year Ended December 31, (in thousands) 2023 2022 $ Change % Change Total other income, net $ 8,342 $ 3,376 $ 4,966 147 % Other income, net was $8.3 million for the year ended December 31, 2023, as compared to $3.4 million for the year ended December 31, 2022.
Gross Profit and Gross Margin Gross profit was $67.2 million and gross margin was 69.4% for the year ended December 31, 2022, as compared to gross profit of $70.6 million and gross margin of 68.7% for the year ended December 31, 2021. The decrease in gross profit was primarily driven by the decrease in net revenue.
Gross Profit and Gross Margin Gross profit was $59.6 million and gross margin was 70.3% for the year ended December 31, 2023, as compared to gross profit of $67.2 million and gross margin of 69.4% for the year ended December 31, 2022.
Design Manager was sold on June 29, 2022; therefore, no related net revenue for software services was recognized after the sale date. Revenue is recognized as we transfer control of promised goods or services transfers to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
Revenue is recognized as we transfer control of promised goods or services transfers to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
Antique and vintage furniture comprised less than 50% of our on-platform GMV in the years ended December 31, 2022 and 2021, respectively. We expect antique and vintage furniture to account for less than 50% of on-platform GMV for the foreseeable future as we are investing in our new and custom furniture, jewelry, art, and fashion verticals.
Antique and vintage 49 furniture comprised less than 50% of our on-platform GMV in the years ended December 31, 2023 and 2022, respectively. We expect antique and vintage furniture to account for less than 50% of on-platform GMV for the foreseeable future. We anticipate these verticals will account for an increasing percentage of our on-platform GMV for the foreseeable future.
Our net revenue was $96.8 million for the year ended December 31, 2022 compared to $102.7 million for the year ended December 31, 2021, a decrease of 6%.
GMV was $362.3 million for the year ended December 31, 2023 compared to $425.4 million for the year ended December 31, 2022, a decrease of 15%. Our net revenue was $84.7 million for the year ended December 31, 2023, compared to $96.8 million for the year ended December 31, 2022, a decrease of 13%.
Marketplace Transaction Fees Our sellers pay us a commission fee and a processing fee for the successful sale of an item listed on our online marketplace. We have a commission fee structure that is a function of the item’s category and price. Our commission fees range from 5% to 50% and processing fees are 3%, net of expected refunds.
We have a commission fee structure that is a function of the item’s category and price. Our commission fees range from 5% to 50% of GMV and processing fees are 3% of the buyer’s total payment, net of expected refunds.
On-platform GMV from buyers in non-U.S. markets constituted 17% in the year ended December 31, 2022, a slight decrease from 19% in the year ended December 31, 2021. We believe there is an opportunity to grow our GMV from non-U.S. markets. Diversify Product Verticals Historically, our largest vertical by GMV has been antique and vintage furniture.
We believe there is an opportunity to grow our GMV from non-U.S. markets. Diversify Product Verticals Historically, our largest vertical by GMV has been antique and vintage furniture.
Cost of Revenue Year Ended December 31, (in thousands) 2022 2021 $ Change % Change Cost of revenue $ 29,670 $ 32,167 $ (2,497) (8) % Cost of revenue was $29.7 million for the year ended December 31, 2022, as compared to $32.2 million for the year ended December 31, 2021.
Cost of Revenue Year Ended December 31, (in thousands) 2023 2022 $ Change % Change Cost of revenue $ 25,111 $ 29,670 $ (4,559) (15) % Cost of revenue was $25.1 million for the year ended December 31, 2023, as compared to $29.7 million for the year ended December 31, 2022.
Sellers do not pay a listing fee for a basic listing on our online marketplace, but can choose to pay for other listing fees, which provide promotional advantages over the basic listing.
We earn listing fees from sellers, on a per item basis, as directed by the seller to promote certain items at the seller’s discretion. Sellers do not pay a listing fee for a basic listing on our online marketplace, but can choose to pay for other listing fees, which provide promotional advantages over the basic listing.
Subscription & Listing Fees In January 2022, we launched new seller pricing tiers which allow sellers to choose the plan that best fits their business and includes choices of a higher monthly subscription fee and lower commission rates, as well as a subscription-free tier with higher commission rates.
Subscription & Listing Fees We offer our sellers various subscription pricing tiers which allows them to choose the plan that best fits their business, with choices of a higher monthly subscription fee and lower commission rates or a lower monthly subscription fee and higher commission rates.
We intend to continue making strategic investments in marketing to drive future net revenue growth. We also intend to continue strategically investing in our technology development efforts to improve and expand our platform. We expect the majority of our technology development expenses will result from consulting and/or headcount-related expenses.
We also intend to continue strategically investing in our technology development efforts to improve and expand our platform. We expect the majority of our technology development expenses will result from consulting and/or headcount-related expenses. We expect provision for transaction losses to vary based on fluctuations in GMV.
In January 2022, we launched new seller pricing tiers which allow new sellers to choose the plan that best fits their business and includes choices of a higher monthly subscription fee and lower commission rates, as well as a subscription-free tier with higher commission 48 rates.
We offer our sellers various subscription pricing tiers which allows them to choose the plan that best fits their business, with choices of a higher monthly subscription fee and lower commission rates or lower monthly subscription fee and higher commission rates.
We define Adjusted EBITDA as our net loss, excluding: (1) depreciation and amortization; (2) stock-based compensation expense; (3) other income (expense), net; (4) provision for income taxes; (5) gain on sale of Design Manager; (6) one-time expenses related to the sale of Design Manager; and (7) restructuring charges.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net loss and our other GAAP results. We define Adjusted EBITDA as our net loss, excluding: (1) depreciation and amortization; (2) stock-based compensation expense; (3) other income, net; (4) provision for income taxes; (5) gain on sale of business; and (6) strategic alternative expenses.
Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, (in thousands) 2022 2021 2020 Net cash used in operating activities $ (27,914) $ (4,401) $ (3,443) Net cash provided by (used in) investing activities 12,641 (2,269) 1,286 Net cash provided by financing activities 2,035 120,050 1,562 Effect of exchange rate changes on cash, cash equivalents, and restricted cash (278) (16) (14) Net (decrease) increase in cash, cash equivalents, and restricted cash $ (13,516) $ 113,364 $ (609) Cash Flows from Operating Activities Net cash used in operating activities was $27.9 million for the year ended December 31, 2022, as compared to net cash used in operating activities of $4.4 million for the year ended December 31, 2021.
Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, (in thousands) 2023 2022 Net cash used in operating activities $ (13,556) $ (27,914) Net cash (used in) provided by investing activities (100,232) 12,641 Net cash (used in) provided by financing activities (3,629) 2,035 Effect of exchange rate changes on cash, cash equivalents, and restricted cash 349 (278) Net (decrease) increase in cash, cash equivalents, and restricted cash $ (117,068) $ (13,516) Cash Flows from Operating Activities Net cash used in operating activities was $13.6 million for the year ended December 31, 2023, and was driven primarily by net revenue decreasing at a faster pace than operating expenses as described in the “Results of Operations” section.
The increase in cash provided by investing activities of $14.9 million was primarily due to the $14.6 million of proceeds from the sale of Design Manager. 54 Cash Flows from Financing Activities Net cash provided by financing activities was $2.0 million for the year ended December 31, 2022, as compared to $120.1 million for the year ended December 31, 2021.
Net cash provided by investing activities was $12.6 million for the year ended December 31, 2022 and was driven primarily by the $14.6 million of proceeds from the sale of Design Manager, partially offset by $1.9 million of development of internal use software.
Off-Balance Sheet Arrangements For the periods presented, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
Net Cash provided by financing activities was $2.0 million for the year ended December 31, 2022 related to the proceeds from the exercise of stock options. Off-Balance Sheet Arrangements For the periods presented, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
If we are unable to raise additional capital when we need it, it could harm our business, results of operations, and financial condition.
If we are unable to raise additional capital when we need it, it could harm our business, results of operations, and financial condition. Stock Repurchase Program In August 2023, the Board of Directors authorized a Stock Repurchase Program to repurchase up to an aggregate of $20.0 million of our common stock.
We anticipate these verticals will account for an increasing percentage of our on-platform GMV for the foreseeable future. Our new and custom furniture, jewelry, watches, and art verticals together comprised 48% and 46% of our on-platform GMV in the years ended December 31, 2022 and 2021, respectively.
Our new and custom furniture, jewelry, watches, art, and fashion verticals together comprised 52% of our on-platform GMV for each of the years ended December 31, 2023 and 2022.
Key Operating and Financial Metrics We use the following key metrics and non-GAAP measures to measure our performance, identify trends affecting our business, and make strategic decisions: • GMV; • Number of Orders; • Active Buyers; and • Adjusted EBITDA. These metrics are based on internal company data, assumptions, and estimates and are used in managing our business.
Key Operating and Financial Metrics We use the following key metrics and non-GAAP measures to evaluate our performance, identify trends affecting our business, and make strategic decisions: • GMV; • Number of Orders; • Active Buyers; and • Adjusted EBITDA (see “Non-GAAP Financial Measures” for a discussion of Adjusted EBITDA and a reconciliation of net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA).
If our growth rates moderate, the impact of these seasonality trends on our results of operations may become more pronounced. We anticipate that gross margin may fluctuate from quarter to quarter based on variability in the costs associated with hosting our online marketplace and supporting order processing.
We anticipate that gross margin may fluctuate from quarter to quarter based on variability in the costs associated with hosting our online marketplace and supporting order processing. 55 We intend to continue making strategic investments in marketing to drive future net revenue growth.
Active Buyers drive our on-platform GMV and net revenue and contribute to the network effects that allow us to attract new sellers and exclusive inventory. 46 During the year ended December 31, 2022, we retained 27% of the 2021 on-platform GMV from buyers acquired in 2021; this is a decrease from the year ended December 31, 2021, where we retained 39% of the 2020 on-platform GMV from buyers acquired in 2020.
We had no Active Buyers who represented 5% or more of on-platform GMV for the years ended December 31, 2023 or 2022. Active Buyers drive our on-platform GMV and net revenue and contribute to the network effects that allow us to attract new sellers and exclusive inventory.
Listing fee revenue is collected when sellers pay us for promoting certain products on their behalf and at their discretion through our online marketplace. Prior to the sale of Design Manager, software services revenue consisted of monthly and annual subscriptions allowing customers to access our Design Manager software, typically used by interior designers.
Prior to the sale of Design Manager, software services revenue consisted of monthly and annual subscriptions allowing access to our Design Manager software, typically used by interior designers.
Additionally, sellers may choose our no subscription fee and higher commission rate model, which in turn, could decrease our subscription fee revenue. Subscription fees accounted for 24%, 23%, and 27% of our net revenue in the years ended December 31, 2022, 2021, and 2020, respectively.
Additionally, some sellers have no monthly subscription fees and higher commission rates, however, we no longer offers this option to new sellers. Subscription fees accounted for 24%, 24%, and 23% of our net revenue in the years ended December 31, 2023, 2022, and 2021, respectively.
Our Business Model We generate revenue primarily from fees from our seller marketplace services as well as other services, including advertisements and, prior to the sale of Design Manager, software services. 43 Seller Marketplace Services Seller marketplace services consist of marketplace transactions, subscriptions, and listings, and accounted for 97%, 96% and 96% of our net revenue in the years ended December 31, 2022, 2021, and 2020, respectively.
See Note 3, “Acquisitions & Disposals” for further discussion of our accounting for the sale of Design Manager. 46 Our Business Model We generate revenue primarily from fees from our seller marketplace services as well as other services, including advertisements and, prior to the sale of Design Manager, software services.
We had over 51% and 47% of seller accounts and 41% and 40% of the supply on our online marketplace come from outside the United States in the years ended December 31, 2022, and 2021, respectively.
We had 55% and 52% of unique sellers and 44% and 41% of the supply on our online marketplace come from outside the United States in the years ended December 31, 2023, and 2022, respectively. On-platform GMV from buyers in non-U.S. markets constituted 17% in each of the years ended December 31, 2023, and 2022.
Gross Profit and Gross Margin Gross profit is net revenue less cost of revenue, and gross margin is gross profit as a percentage of net revenue.
We enable fulfillment and shipping, but do not take ownership of or manage inventory. 50 Gross Profit and Gross Margin Gross profit is net revenue less cost of revenue, and gross margin is gross profit as a percentage of net revenue.
Cash Flows from Investing Activities Net cash provided by investing activities was $12.6 million for the year ended December 31, 2022, as compared to net cash used in investing activities of $2.3 million for the year ended December 31, 2021.
Cash Flows from Financing Activities Net cash used in financing activities was $3.6 million for the year ended December 31, 2023, due mainly to the purchase of $3.4 million of our common stock as part of our Stock Repurchase Program.
Adjusted EBITDA We define Adjusted EBITDA as net loss excluding depreciation and amortization, stock-based compensation expense, other income (expense), net, provision for income taxes, gain on sale of Design Manager, one-time expenses related to the sale of Design Manager, and non-recurring restructuring charges.
Our historical performance for Active Buyers may not be indicative of future performance in new Active Buyers. Adjusted EBITDA We define Adjusted EBITDA as net loss excluding depreciation and amortization, stock-based compensation expense, other income, net, provision for income taxes, gain on sale of business, and strategic alternative expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe sensitivity analysis presented assumes interest rate changes are instantaneous, parallel shifts in the yield curve. In reality, interest rate changes of this magnitude are rarely instantaneous or parallel. Our principal use of cash and cash equivalents is to fund our operations and platform development to support our strategic initiatives and the remainder are held for working capital purposes.
Biggest changeWhile these are our best estimates of the impact of the specified interest rate scenario, actual results could differ from those projected. The sensitivity analysis presented assumes interest rate changes are instantaneous, parallel shifts in the yield curve. In reality, interest rate changes of this magnitude are rarely instantaneous or parallel.
Item 7A. Qualitative and Quantitative Disclosures About Market Risk We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes and foreign currency fluctuations. Information relating to quantitative and qualitative disclosures about these market risks are described below.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes and foreign currency fluctuations. Information relating to quantitative and qualitative disclosures about these market risks are described below.
Additionally, if our costs were to become subject to inflationary pressures, we might not be able to fully offset such higher costs through net revenue and GMV increases. 56 Our inability or failure to do so could harm our business, financial condition, and results of operations.
Additionally, if our costs were to become subject to inflationary pressures, we might not be able to fully offset such higher costs through net revenue and GMV increases. Our inability or failure to do so could harm our business, financial condition, and results of operations.
This risk is mitigated by requiring upfront payment for many of our services and due to our diverse customer base, dispersed over various geographic regions and industrial sectors. For the years ended December 31, 2022 and 2021, no single customer accounted for more than 10% of our net revenue.
This risk is mitigated by requiring upfront payment for many of our services and due to our diverse customer base, dispersed over various geographic regions and industrial sectors. For the years ended December 31, 2023 and 2022, no single customer accounted for more than 10% of our net revenue.
We cannot assure you our business will not be affected in the future by inflation. 57
We cannot assure you our business will not be affected in the future by inflation. 59
We do not enter into investments for trading or speculative purposes. Foreign Currency Risk Our net revenue is primarily denominated in U.S. dollars, Euros, and British pounds, depending on the currency selection of the seller. Our cost of revenue and operating expenses are primarily denominated in U.S. dollars.
The remainder of cash, cash equivalents and short-term investments are held for working capital purposes. We do not enter into investments for trading or speculative purposes. 58 Foreign Currency Risk Our net revenue is primarily denominated in U.S. dollars, Euros, and British pounds, depending on the currency selection of the seller.
As our online marketplace continues to grow globally, our results of operations and cash flows may be subject to fluctuations due to the change in foreign exchange rates.
Our cost of revenue and operating expenses are primarily denominated in U.S. dollars. As our online marketplace continues to grow globally, our results of operations and cash flows may be subject to fluctuations due to the change in foreign exchange rates.
We generally hold our cash for immediate operating needs in non-interest bearing checking accounts and the majority of the remaining cash and cash equivalents are held in interest bearing money market accounts.
As of December 31, 2023, we had cash, cash equivalents and short-term investments of $139.3 million. We generally hold our cash for immediate operating needs in non-interest bearing checking accounts and the majority of the remaining cash and cash equivalents are held in interest bearing money market funds.
As of December 31, 2022, we would expect that a 10% increase or decrease in current exchange rates would not result in more than a $3.5 million change in revenue, a $1.5 million change in operating expenses, and a $0.5 million change in assets and liabilities. Credit Risk We are exposed to credit risk on accounts receivable balances.
As of December 31, 2023, we would expect an adverse 10% change in current exchange rates would result in no more than a $2.9 million decrease in net revenue. Credit Risk We are exposed to credit risk on accounts receivable balances.
Due to the nature of our cash and cash equivalents, we would expect a hypothetical 100 basis point change in interest rates may result in an approximate $1.5 million change in our cash and cash equivalents. While these are our best estimates of the impact of the specified interest rate scenario, actual results could differ from those projected.
Due to the nature of our cash, cash equivalents and short-term investments, we would expect a 100 basis point increase or decrease in interest rates would result in an approximate increase or decrease of $0.8 million in our cash, cash equivalents and short-term investments.
Interest Rate Sensitivity Interest rate risk relates to the loss we could incur in our cash portfolios due to a change in interest rates. We held cash and cash equivalents of $153.2 million as of December 31, 2022.
At times, our cash balances with individual banking institutions are in excess of federally insured limits. We have not experienced any credit losses related to our cash, cash equivalents, and short-term investments balances. Interest Rate Sensitivity Interest rate risk relates to the loss we could incur in our cash portfolios due to a change in interest rates.
Added
Our principal use of cash, cash equivalents and short-term investments is to fund our operations including platform development to support our strategic initiatives. Additionally, in August 2023, the Board of Directors authorized a Stock Repurchase Program to repurchase up to an aggregate of $20.0 million of our common stock.

Other DIBS 10-K year-over-year comparisons