1stdibs.com, Inc. Q2 FY2021 Earnings Call

Thank you for standing by. And welcome to 1stDibs’ Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference may be recorded. I would now like to hand the conference over to Head of Investor Relations, Kevin LaBuz.

Good evening and welcome to 1stDibs’ earnings call for the quarter ended June 30, 2021. I'm Kevin LaBuz, Head of Investor Relations. Joining me today are CEO, David Rosenblatt, and CFO, Tu Nguyen. David will provide an update on our business, including our strategy and our growth opportunities. And Tu will review our second quarter financial results and third quarter outlook. This call will be available via webcast on our Investor Relations website at investors.1stdibs.com. Before we begin, please keep in mind that our remarks include forward-looking statements, including, but not limited to statements regarding guidance and future financial performance, market demand, growth prospects, and business plans. Our actual results may differ materially. Forward-looking statements involve risks and uncertainties, which are described in our SEC filings. Any forward-looking statements that we make on this call are based on our beliefs and assumptions as of today, and we disclaim any obligation to update them. Additionally, during the call, we will present GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which you can find on our Investor Relations website, along with the replay of this call. I'll now turn the call over to our CEO, David Rosenblatt. David?

Thanks, Kevin. Good evening. And thank you for joining us for our first earnings call as a public company. Before we begin, I'd like to thank our wonderful sellers, buyers, and employees for helping to make 1stDibs a leading marketplace for connecting design lovers with highly coveted sellers and makers of vintage antique and contemporary furniture, home decor, art, jewelry, watches, and fashion. I'd also like to thank our public and private investors for their support. Since many of you are new to our story, before discussing second quarter highlights, I'll touch briefly on our history and our strategy. 1stDibs was founded in 2000 to bring the magic of the Paris flea market online. Today, we're a classic two-sided marketplace with over 4,200 highly vetted sellers globally. Our sellers are small businesses, makers, and artisans. Our buyers are both consumers and professional buyers, interior designers, and architects. Our mission is to enrich lives with extraordinary design. Over the past 21 years, we've built a reputation for helping collectors, design lovers, and interior designers alike discover beautifully designed one-of-a-kind items. We operate in a $129 billion market, which is in the early stages of online adoption. We're excited about the opportunity ahead of us. In addition to the continued secular shift to digital, we have numerous growth levers we are investing in. Luxury design lovers are everywhere, but luxury design isn't. Before 1stDibs, if you didn't live in a design center like New York, Paris, or Milan, much of our supply would be inaccessible. For buyers, 1stDibs eliminates the constraints of geography, unlocking unique global supply and making luxury design more accessible. For example, last year, the average distance between buyers and sellers on confirmed orders was nearly 2,500 miles. Similarly, we provide sellers with access to a global community of well-qualified buyers and a platform to facilitate e-commerce at scale. Trust is the foundation of our marketplace and our most valuable asset enabling highly considered purchases. For example, in the second quarter, a seller based in Rome sold a 7.2 carat diamond ring for over $250,000 through our platform to a private client buyer in the State of Georgia. While we have earned the trust to sell rare and valuable items at higher price points online, the majority of our listings are within reach of the mass affluent buyer. In 2020, our average order value was $2,500, but our median order value was $1,200. This trust, backed by the 1stDibs promise, our comprehensive Buyer Protection Program, enables us to expand our marketplace and our Total Addressable Market. There have been two important business model transitions since our founding. First, in 2016, we shifted from a listing space model in which all communication between buyer and seller, up to and including the transaction itself, occurred off-platform to a full e-commerce model, where both communication and orders occur on-platform. This aligned our incentives with our sellers and buyers and better matched our revenue growth to our GMV growth. Second, we expanded beyond vintage and antique furniture, our initial category, to art, jewelry, fashion, and new and custom furniture. In the second quarter, about 50% of our new buyer orders came from new categories. This morning, we added our latest vertical, NFTs, which I'll touch on below. In 2020, our focus shifted from business model transition and vertical expansion to managing through COVID and supporting our sellers in that difficult period. We enter the second half of 2021 as a well-capitalized public company focused on growth. We have more growth initiatives in process and on the roadmap than at any point in our history. And we believe that each major initiative represents a non-incremental GMV opportunity. For example, this morning we launched our NFT platform, which we launched as a blockchain-native auction. Initially, the platform will feature bi-monthly exhibitions. The debut collection titled Portals is a series of work featuring 11 recognized digital artists curated by the notable artist Metageist. We believe that the blockchain in general, and NFTs in particular, are game-changing technologies for the art world, and that digital art will become a significant market in its own right, and that the trust we've gained with consumers and artists places NFTs squarely within our right to win. Our NFT launch illustrates the extensibility of the technology platform and capabilities that we have spent the last 10 years building. Our tech platform and associated commercial capabilities enable us to unlock potentially large GMV opportunities in a capital-efficient manner. In this case, we were able to conceptualize the NFT opportunity, build the capability, and launch within a short amount of time, with an investment of less than $1 million to date. We're still in the early stages of realizing our market opportunity. The NFT platform is the first of several new initiatives we plan to launch over the next year. Another example is international expansion and product localization, a strategic priority of ours. While there is significant international demand for our listings, our product is currently only available in English. In 2020, 19% of our buyers and 33% of our traffic came from outside the U.S., despite the fact that we do no local language marketing. Additionally, our conversion rate from international buyers was about half that of U.S. buyers. In addition to vertical expansion and international growth, we see opportunities to grow our buyer base by testing and scaling into new paid marketing channels, improving buyer engagement through product optimizations, introducing new purchase formats, encouraging cross-vertical buying, and growing supply. Turning to the second quarter initiatives, we continue to expand our marketing channels. For example, in early May, we launched a partnership with American Express for their Centurion Black Card members. We worked with American Express to develop a comprehensive integrated marketing campaign, and the partnership was successful in attracting new, potentially high lifetime value buyers. Additionally, we continue to ramp programmatic prospecting, which we began testing in December 2020, and started testing connected video in July. We also continue to enhance our product. For example, we launched an iPad app and improved our jewelry shopping experience by adding structured data like ring size, lab reports, and customization, and continue to add item videos to product pages. In the second quarter, about 20% of our new jewelry listings included a video. Alongside product, we are focused on scaling sales and service. For example, in April, we ramped up a chat customer support feature, allowing us to respond to inquiries from this channel in a matter of seconds, improving customer satisfaction. Today, over 20% of our inbound support volume is chat. Lastly, we continued scaling our facilitated shipping program and in May launched sea freight as a new shipping option. For orders between Europe and the U.S., the sea freight option is 38% cheaper on average versus air. Tu, our CFO, is going to walk through the second quarter numbers in more detail, but I'll quickly share some context and highlights. Overall, Q2 was a very healthy quarter for demand. GMV grew 34% year-over-year and revenue grew 29% year-over-year. Additionally, our 2-year stacked GMV growth rate, which normalizes the COVID impact, remained strong at 48%. We closed the second quarter with roughly 69,000 active buyers, 50% higher than where we ended 2019. 2020 was a record year for new buyer acquisition. We now have relationships with these buyers that we plan to grow over time. Last year, as we know, COVID-19 brought on a period of rapid behavior change, which we began to lap in the second quarter. The reopening of the economy has very different impacts on our two primary customer segments. Interior designers were negatively impacted by COVID-related restrictions last year. Now as the economy reopens, they're busier than ever. Trade GMV growth in the second quarter benefited from continued strength in the real estate market and new and resuming projects. June trade GMV hit an all-time monthly record. While trade GMV grew throughout the quarter, consumer GMV growth slowed, particularly in June. We believe this consumer trend was largely macro-driven, as vaccinations became readily available and the economy reopened. Nevertheless, our 2-year stack for consumer GMV was a healthy 55%. As we lapped the pandemic-related lockdowns and the associated rapid change in consumer behavior, our fundamentals remain strong, and our long-term thesis is unchanged. Looking at the entire business, gross margins expanded and average order value and conversion rates increased year-over-year. Cohort behavior was stable. Encouragingly, buyers who made their first purchase between May and July of 2020 continue to have higher engagement and purchase frequency than our pre-COVID cohorts. Post-pandemic, we expect consumer buyers to drive the majority of our growth due to the relative size of the consumer market as compared to the professional market, as well as the fact that all of our verticals are available to consumers while naturally, trade buyers only buy in the furniture and art verticals. As we look to the future, it is important to remember that not only are we still early in the online adoption curve of our industry, but we are early in the development of our own company. Despite the fact that we have a 21-year-old brand, the 1stDibs business model is just 5 years old. And I believe that we will see as much change over the next 5 years as we have seen in the prior 5. I'll now turn it over to Tu, to discuss second quarter financial results and outlook.

Thanks, David. Good evening, everyone. The IPO was a major milestone for the company, and I am proud of the 1stDibs team for staying focused and delivering strong results during the second quarter, which I will review along with providing a third-quarter outlook. Second quarter GMV was $107 million, up 34% year-over-year, with traffic conversion and average order value all increasing year-on-year. On a 2-year stack, GMV growth was 48%. New buyer conversion continues to rise year-over-year, and average order value benefited from the rebound in trade. We're hearing that the trade has never been busier. Designers are benefiting from home sales and renovations. Now, as David mentioned, June trade GMV hit an all-time high. Consumer GMV growth slowed relative to the first quarter, particularly in June as buyer traffic growth slowed. While reopenings could impact near-term consumer behavior, our fundamentals are strong, and we are confident in our long-term opportunity. On a 2-year consumer GMV growth was 55% and trade GMV growth was 43%. Please note that when we reference trade GMV or consumer GMV, we are speaking of the subsets of on-platform GMV attributable to each of these buyer groups. From a vertical perspective, fashion and new and custom furniture led growth, with fashion GMV growth accelerating. Buyers who shop in two or more verticals continue to make up a growing percentage of our GMV mix. Our new verticals, which we defined as art, jewelry, and new and custom furniture, represented 46% of our on-platform GMV. These verticals allow us to reach a wider audience, with about 50% of new buyer orders in the second quarter coming from newer verticals. We see a long runway here and expect these verticals to account for the majority of our GMV looking ahead. Turning to marketplace metrics. There were nearly 69,000 active buyers in the second quarter, representing growth of 39% year-over-year. As a reminder, active buyers is the trailing 12 months metric. Order volume grew 28% and AOV increased 6% year-over-year, driven by trade buyers. Total net revenue of $24.7 million grew 29% year-over-year, driven by GMV growth. As David mentioned earlier, in 2016, we transitioned to a full e-commerce model. Today we generate the majority of our net revenue from selling marketplace services, which consists of transactions, subscriptions, and listings. Of these, transactions is the largest, accounting for about 70% of total net revenue. Growing GMV is our priority. As the marketplace expands, we expect revenue growth to approximate GMV growth. Additionally, we expect transactions revenue to account for a higher percentage of our net revenue over time. We've seen many opportunities to grow the 1stDibs marketplace and cement our leadership position in online luxury design. As such, we are prioritizing investments in growing GMV in a disciplined manner. Given our asset-light business model, we expect to leverage our fixed cost base over time. Gross profit was $17.4 million, up 33% year-over-year, and gross profit margin was 17.4%, up from 16.2% a year ago. This margin improvement was driven by operational efficiency gains and lower depreciation. As a reminder, we account for all of our operations team's headcount costs in our cost of revenue. Sales and marketing expenses were $11.2 million, up 32% year-over-year, driven primarily by growth in performance marketing spend. In the second quarter, we launched a partnership with American Express Centurion Black Card members and continued to test and optimize our performance marketing efforts. For example, in June we ran the programmatic prospecting campaigns that we started testing in late-2020, and in July, we began testing connected video. We are in the early stages of developing our performance marketing capabilities and plan to accelerate our testing efforts to identify new channels for growth. New buyer acquisition and new vertical growth are priorities for the second half of the year. Sales and marketing as a percentage of revenue was 46% compared to 45% a year ago. As a reminder, in the second quarter of 2020, we pulled back on performance marketing activity due to COVID-19 disruptions. Technology and development expenses were $4.5 million, up 11% year-over-year. We continually enhance our buyer and seller experiences. For example, adding ring size filters and lab reports to jewelry and launching an iPad app this quarter. In the second half of 2021, we will focus on optimizing the existing funnel, new buyer activation, and beginning product localization for international expansion. As a percentage of revenue, technology and development was 18% this quarter, compared to 21% a year ago. Over the past decade, we have developed our core tech platform. Going forward, we will continue to build upon this platform by adding more personalization, increasing social relevancy, expanding purchase formats, and supporting new verticals. G&A expenses were $4.7 million, up 62% year-over-year. G&A expenses were 19% of revenue in the second quarter, up from 15% a year ago. The increase was driven by public company expenses, including D&O insurance and headcount costs. Lastly, provisions for transaction losses were $1.5 million, up 67% year-over-year, driven primarily by GMV growth and timing of losses. Provisions for transaction loss were 6% of revenue versus 5% a year ago. Adjusted EBITDA loss was $3 million compared to $2 million in the year-ago period, and adjusted EBITDA margin loss was 12.3% compared to 10.7% last year. While we expanded the gross margin in the second quarter, we saw operating expenses as a percentage of revenue increase, driven by G&A, sales and marketing, and loss provision. Our adjusted EBITDA reflects continued investment in the growth opportunities we see ahead. With an asset-light business model and highly variable cost structure, our near-term focus is investing in GMV growth in a disciplined manner. Over time, as we grow GMV and revenue, we expect to generate operating leverage and expand adjusted EBITDA margins. Moving on to the balance sheet, we ended the second quarter with a strong position of $176.1 million in cash and cash equivalents, including the IPO proceeds of $123 million. Now turning to our outlook, given the changing macroeconomic and public health conditions, we are only providing guidance for the third quarter at this time. We focus third quarter GMV of $100 million to $104 million, equating to year-over-year growth between 15% and 19%, and a 2-year stack of approximately 47% to 51%. Net revenue of $23.6 million to $24.3 million, equating to year-over-year growth between 13% and 16%, and a 2-year stack of approximately 34% to 37%. Adjusted EBITDA margin loss of 21% to 18%. Given near-term uncertainties around COVID-19 and consumer behavior, we're likely to share some additional color on the assumptions underlying our third quarter guidance. We are assuming consumer GMV growth is stable at the levels without exiting June. Trade GMV year-over-year growth moderates relative to the second quarter while remaining healthy and no material GMV contribution from NFTs. While we are not providing guidance beyond the third quarter, we note that tougher year-over-year GMV growth comparisons will continue through the first quarter of 2022. We also note different recovery dynamics between consumer and trade buyers. While consumer GMV growth started to improve in the second quarter of 2020, trade GMV growth didn't recover until the first quarter of 2021 as pandemic-related restrictions eased. We are excited about our future opportunities, including growing our new verticals, launching in adjacent categories like NFTs, expanding internationally, and adding new purchase formats. Most of these investments are expected to be in the form of increased headcount in marketing spend. We plan to continue to invest against our large market opportunity in a disciplined manner. In closing, while the pandemic continues to influence the near-term outlook, we are confident in our long-term opportunities. Over the past 21 years, we have earned seller and buyer trust and built a scalable platform to translate rare and valuable items globally. We plan to continue investing in GMV growth and our long-term opportunity in a disciplined and thoughtful manner. Thank you for your time. I will now turn the call over to the operator to take your questions.

Our first question comes from the line of Justin Post of Bank of America. Your question, please.

Great, thank you for taking my question. I guess I’ll ask about the NFT platform. David, how do you think about the market opportunity for that? And maybe equally important, expanding auctions to other categories? And then Tu, I know you're not guiding for the year or Q4, but we are seeing some sequential declines in GMV. How do you think about Q4 seasonality going back, you know when you looked at financials pre-2000? Thank you.

Hey Justin. I'll address the first question regarding NFTs, and then I'll let Tu discuss Q3 guidance and the implications for performance moving forward. In general, while this isn't new information, we believe that blockchain is a transformative technology, and NFTs, made possible by it, will become a lasting form of art and grow into a significant market. We also believe that establishing a market for NFTs aligns with our broader mission to enhance lives with extraordinary experiences and fits within our strengths. Specifically, I believe curation and authenticity, which we emphasize, are crucial in this market. We are confident that we can support this market with editorial content and unique features that set us apart from competitors, benefiting both collectors and artists. Although we are still in the early stages of launching this product, there are essential functionalities planned for the future. I'm pleased that we could move swiftly and launch this product with a relatively small additional investment, spending less than $1 million on the initial version, which reflects our platform's flexibility and breadth. Regarding the expansion of the auction format beyond NFTs, there's a solid rationale for it. We have $11 billion worth of inventory, meaning that given the lengthy sales cycle in this market, over $10 billion will remain unsold this year. Auctions could be a logical approach to monetize that inventory. While we don't have any specific announcements to make at this time, it's definitely something we are considering.

Thank you for your question, Justin. Before I address Q4, I want to provide some historical context regarding what we typically observe in Q4. This quarter is usually our strongest due to the holiday season, with consumer segment strength while the trade remains stable compared to other quarters. Additionally, regarding our observations from Q2, we see that our conversion rate remains healthy, and the average order value has grown compared to last year. However, there has been a slight decrease in traffic on the consumer side, noticeable across all cohorts. This decline appears to be a shift in the traffic mix from desktop to mobile, which aligns with our expectations following the reopening and mirrors the trends observed by other e-commerce companies. Given the uncertainty in predicting consumer behavior, we believe that Q4 will follow the same seasonal trends we have seen previously.

Got it. Maybe one follow-up. Just so we can think about reopening. Any way of quantifying your exposure to goods for the home versus other areas? How would you think about that?

Yes, what we've observed aligns with our expectations. The trade has continued to strengthen over the quarter after being impacted by COVID last year. We've noticed that many projects had been delayed due to COVID, and we are beginning to see some of that demand returning. The trade primarily purchases furniture, including vintage, antique, and custom pieces. On the consumer side, despite the summer marking the start of reopening, we've actually seen a decline in furniture-related searches on Google. On the other hand, fashion, which falls under the out-of-home category, experienced the highest growth rate in Q2. The positive takeaway here is our strong diversification across buyer segments. The trade is benefiting from the reopening, and it's encouraging to see people being active again. However, there may be some short-term fluctuations in consumer behavior regarding furniture purchases.

Hey, guys, thanks for the question. One of your competitors, Chairish bought Pomono recently. Any thoughts on just overall level of competition that you're seeing in the space and that acquisition, anything high level on that? Are things changing or pretty static on the competitive front? Thanks a lot.

Hey, Ross. Yeah. So Chairish, which is U.S. focused, is merging with Pomono, which is a European-focused and European-based marketplace. Both of those companies are focused primarily on vintage and antique furniture. So listen, I mean, I actually think that it's a positive thing for a couple of reasons. One, in general, I think I'm a believer in competition that both validates the market and also helps grow it. Hopefully, there'll be more marketing dollars spent at raising awareness amongst consumers and so on. But at the same time, I don't think it really changes anything. Both of those companies existed before. We were already competing with them. And I don't feel that the combination of the two of them materially changes the competitive landscape. And I have a high degree of confidence in our roadmap. And I believe that with or without consolidation, it's going to put us in a much stronger place as we begin to roll out some of the things that we're working on.

Got it. Okay. You mentioned a bit about the macro situation in the third quarter, but the high end of the GMV guidance was slightly below our estimates and has decreased sequentially from the second quarter to the third quarter. Is there anything else you can highlight regarding the macro situation for the third quarter? Thanks.

Yeah. So in terms of the guidance that we gave for Q3, again, I would just reiterate the assumptions that we have going into that guidance, is that on the consumer side we are expecting that the level of GMV that we're seeing on the consumer side is at the level we exited June. And then on the trade side, we expect that, that level continues to be healthy. Although we are comping bigger number for Q3 for the trade. And so potentially the growth rate there, we are assuming that that will moderate as well. And then lastly, no material contribution from NFT, which is something that we launched today.

Good evening. Thanks for taking the question. First one, David, you talked about driving or converting more international buyers. I think you said about 19% of the base that was from international. Just curious, as you've tested some of the paid search or some of the other strategies that you laid out, what's the response been to some of those new strategies?

On international?

Yeah, international buyers.

Yeah. So just to clarify, we have not tested paid search in non-English language. Because, in order to do that, we need a non-English language buyer experience, which we don't have yet. So again, just to reiterate the opportunity, as you said, the 19% number plus one third of our traffic is from outside the U.S. and 40% of our supplies from outside the U.S. In spite of that, because we don't have a local language experience, conversion rates of non-U.S. buyers are roughly half that of U.S. buyers. So when you put all that together, we're pretty optimistic in the opportunity, and we have a team that's focused on building that out. Once we have that, then we can start to invest in local language paid advertising, along with editorial and all the other things that we use to drive demand.

Okay. Sorry, I thought you had said that you were testing it. Just on any impact you could call out of the Delta variant that we're seeing in the market? I'm sure it's kind of tough. But just sort of any thoughts on that? And then if I could just bolt one more on maybe for Tu. I think you said the consumer trends that you saw in June, I guess, were sort of baked into the assumptions for Q3. But just any more updated thoughts on how July trended, I guess, perhaps into August? Thank you.

Sure. And I can take both of that questions in one. I would say that while we're not commenting on quarter-to-date and in particular July. What we are assuming is for Q3 the level of GMV that we're going to see is similar on the consumer side exiting June. So in terms of what we saw in Q2, we thought like there was a slowdown in consumer GMV starting in June. And when we looked at what was really driving that, that was all attributable to a slowdown in traffic. Conversion rate has been very healthy, and AOV continues to grow on a year-over-year basis. So again, I think that because of the reopening, there has been that shift from desktop to mobile, and potentially people are not spending as much time in the home online. When we do have traffic coming into the site, given the conversion rate, like we are seeing that those people are buying at the same rate. And they are buying at the same AOV that we have seen historically. So again, the quality of the buyers continues to be very strong. But again, in terms of the near-term impact of Delta, again it's difficult to predict what's likely to happen. And that's why in terms of our assumption going for Q3, what we are assuming is that there is a similar environment as what we have observed in Q2. Any changes because of that obviously would impact potentially our consumer behavior and the way that they interact with us as well. What is encouraging again is that the fundamentals of the company continue to be healthy, all across all of our cohort. And we continue to see that we are able to add new buyers at a very healthy rate.

Hey, thanks guys. A couple of questions. Maybe just on the consumer side, maybe for Q2. Specifically, were there any categories you would highlight for strength or weakness? Or was it really more across the board slowdown in terms of traffic? And just with the NFT, kind of what's your kind of strategy for marketing that given that's a pretty new business? And in terms of the auction format, any thoughts on expanding the auction format to other of the core business as well? Thank you.

Let me start with the latter two questions, and I'll kick it over to Tu. So first of all, in terms of NFT marketing strategy, I think what's interesting about NFTs from a marketing point of view is most of the activity is on platforms like Twitter and Discord. And it's important to us that we enter this market as a kind of authentic member of the community. So fortunately, we were able to partner with an artist who is very well-known called Metageist. Metageist is curating the initial set of artists that we're offering, and so we're very much working with him and other influencers in the community and establishing our presence on both Twitter and Discord. So that's our approach to NFTs. In terms of auctions. Again, I talked about this a little bit earlier, but I do feel like the opportunity for the auction format is significant. Again, we've got $11 billion worth of product on the marketplace. 95% of that will not sell through this year, and auctions would present, I think, a kind of efficient way to monetize that as well as creating urgency and other things that we lack today on the platform. But we're not in a position to announce any details in terms of timing or specific plans or anything like that.

In Q2, we noticed that the fashion segment within the out-of-home category has seen acceleration throughout the quarter. Our trade performance was strong, particularly in furniture, with trends evident in both custom and vintage items. Additionally, we have focused on cross-selling within existing verticals to our current buyers. Notably, the share of GMV generated by buyers engaging in cross-vertical purchases has increased, with 50% of our new buyers in Q2 coming from newer verticals. Overall, the various segments in the marketplace remain consistent with our expectations, particularly in how well the out-of-home category is performing.

And could you take one more question.

Yes, sir. Our next question comes from Ron Josey of JMP Securities. Your line is open.

Great, thanks for taking the question here. And maybe, David, I don't want to go back and harp on performance or what have you. But I do want to talk about new buyer acquisition. And I think, too, you mentioned that as a core growth priority in the back half of the year. And so I know you're testing a bunch of different paths to acquire. We did see pretty good new buyer acquisition in terms of growth this quarter. So just talk about the strategy that makes it a top priority in the back half. I know you talked about video. But anything else specifically that we can look for? You talked about the AmEx partnership. But anything that makes us the growth priority so we can look for sort of traffic gains? Thank you.

Yeah. So I think, again, let's start with some data points that illustrate the opportunity. We have 3.5 million registered users of the site. We had 69,000 buyers in the trailing 12 months. So that presents a very good opportunity for us. And it is something that is a core focus. I think there are sort of a couple of different ways when you think about it. First of all, we have an always-on effort to improve conversion and improve the user experience. So as an example, in Q2 we introduced our first iPad app. We also introduced a filter for ring size. Again, as has been described by others, improving conversion is a ground gain. And so that's something that again for us is an always-on effort. Beyond that though, I think there are lots of opportunities on both the supply and the demand side. We've talked about a couple of them on the demand side. Certainly, international is a big one. Again, conversion rates for non-U.S. visitors are roughly half that of U.S. new order formats, which we've talked about. Similarly, I think on the supply side, we have an opportunity to grow our rate of supply acquisition faster than we have historically. So that's something that is in process that we're taking a look at. And then beyond that, again we have a funnel that has more steps in it than the conventional e-commerce experience. And we think that there's an opportunity to improve conversion at each step of that funnel. So that would include things like more videos on product pages. Product pages with video have a much higher rate than those without. So that's a focus giving potentially more context to pricing, which is another thing that we're working on, improving personalization as well as top-of-funnel paid, which I talked about as well as SEO. So again, I think sort of across the board, both operationally and also strategically. And at each stage of the funnel, we do have real levers that we can pull and that we're working on pulling to improve activation and conversion.

Great, thank you, David.

Thank you. And at this time, I'd like to turn the call back over to CEO, David Rosenblatt for closing remarks. Sir?

Great. So I'd just like to thank everyone who joined the call. I'm proud of what we accomplished in our first quarter as a public company. And I'm also proud of the pipeline that we've established, which will produce good things in the future. Thank you very much.

And this concludes today's conference call. Thank you for participating. You may now disconnect.