Good morning, ladies and gentlemen, and thank you for standing by. My name is Chris, and I will be your conference operator for today. At this time, I would like to welcome everyone to the first DIB Q2 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your question, you may also press star 1 again. I would now like to turn the conference over to Head of Investor Relations and Corporate Development, Kevin LaBuzz. You may begin.

Good morning, and welcome to First Dibs Earnings Call for the quarter ended June 30, 2025. I'm Kevin LaBuzz, Head of Investor Relations and Corporate Development. Joining me today are CEO, David Rosenblatt, and CFO, Tom Edergino. David will provide an update on our business, including our strategy and growth opportunities, and Tom 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.firstdibs.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, business plans, strategic initiatives, business and economic trends, including e-commerce growth rates, and our potential responses to them, and competitive position. Our actual results may differ materially from those expressed or implied in these forward-looking statements as a result of risk and uncertainties, including those described in our SEC filings. Any forward-looking statements that we make on this call are based on our beliefs and assumptions as a day, and we disclaim any obligation to update them except to the extent required by law. Additionally, during the call, we will present GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which you can find on our investor relations website, along with the replay of this call. Lastly, please note that all growth comparisons are on a year-over-year basis, unless otherwise noted. I will now turn the call over to our CEO, David Rosenblatt. David?

Thanks, Kevin. Good morning, and thank you for joining us today. The second quarter demonstrated continued resilience amidst a dynamic market, with GMV and revenue performing above the midpoint of guidance and adjusted EBITDA exceeding the high end. Our continued commitment to cost management resulted in a 4% year-over-year decline in operating expenses. This performance reflects a continued focus on what we can control and an ability to navigate a difficult external landscape for consumer discretionary. While GMV modestly declined, we continued to gain market share against a contracting luxury home goods market per syndicated credit card data. This performance is a testament to prioritizing core product initiatives and expense discipline. The team is committed to executing against a clear set of priorities to enhance the marketplace and re-accelerate growth. From a funnel perspective, we are pleased to report another quarter of conversion growth, a testament to our continuous optimization efforts. Our focus on product enhancements has now driven conversion gains for seven consecutive quarters. Encouragingly, we saw conversion trends improve in the second half of the quarter, following a slowdown after the April 2nd tariff announcements. During the second quarter, we made sustained progress across our product roadmap, which is designed to enhance both the buyer and seller experience and drive market share gains. Our 2025 roadmap is centered on accelerating organic traffic growth, ensuring competitive pricing for listings and shipping, and optimizing our multi-step conversion funnel. We continue to execute on our organic traffic growth strategy, which is a critical driver of efficient buyer acquisition, given that over 70% of traffic originates from organic sources. This approach centers on improvements to site performance and structure. A key project involved a targeted effort to reduce the number of low-value pages across the platform, which improved the site's overall quality perception for search engines and enhanced crawl efficiency for the most relevant content. Furthermore, we deployed infrastructure improvements that bolstered indexation rates, ensuring that our unique listings are more readily discoverable. These efforts have boosted overall site reliability, creating a more robust and performance user experience. We are also actively tracking the emergence of AI and chatbots in the search ecosystem. While we are keenly aware of the potential shifts this technology could bring, to date the impact on our organic search traffic has been low. This remains an area of ongoing surveillance, ensuring that we will be prepared for any potential future shifts. We also continue to optimize our account registration and email opt-in experiences to expand our email audience, which grew for the third consecutive quarter. Competitive pricing remained a significant focus area. The objective here remains the same, ensuring that the marketplace offers competitive and transparent item prices and shipping costs. As we highlighted last quarter, machine learning base pricing models are now live across all verticals. These proprietary models leverage our proprietary transactional database to bring transparency to what has historically been an opaque market, reinforcing buyer trust and confidence. The integration of the first DIBS estimate directly into product display pages, which began in March, continues to provide buyers with valuable pricing context, fostering trust and confidence, and ultimately leading to higher conversion. With the foundational work of rolling out these models complete, we have shifted our attention to enhancement and adoption of our ML pricing recommendations. Specifically, we are now refining recommendation accuracy, incorporating a wider array of data attributes into the models for enhanced precision, including using AI tools to better utilize unstructured data and driving higher seller adoption. Early data from these initiatives are promising. Specifically, we are seeing increased sell-through rates on items meeting our pricing recommendations compared to those that do not. We have also observed a reduction in price negotiations on items where pricing recommendations have been adopted. Alongside recommending the market-clearing price, the second half of the year will see us prioritizing technology to strengthen seller adherence to our existing price parity policy. This will ensure that items on first dibs are priced consistently with other sales channels. Turning to funnel optimization, we maintain strong momentum in reducing friction and delivering a more compelling user experience. Our aim remains to make it easier for discerning shoppers to discover and purchase the unique items available on First Dibs. Our multi-step checkout process provides substantial headroom for ongoing optimization. A key project in the middle of the funnel was enhancing the product detail page, a critical touchpoint for buyer decision-making. The price negotiation call-to-action was optimized by including clearer, more action-oriented language. This update successfully increased engagement on PDPs and, importantly, lifted the percentage of users entering checkout. This refinement underscores a commitment to making the buyer-seller interaction more seamless and intuitive, especially given the highly considered nature of our listings, where negotiations are common. Building on momentum from the first quarter, we made additional progress at checkout. We refined the user experience to provide an even smoother and more trustworthy transaction flow. In particular, highlighting key elements of the first FIBS promise raised checkout completion rates, especially on mobile web. This directly reinforces buyer trust and confidence at the critical point of purchase. These targeted enhancements, and many others, are directly driving buyer trust and contributing to ongoing conversion growth. We are also actively embedding artificial intelligence throughout our platform, driving efficiencies and elevating capabilities. Development and deployment of AI extends across every function, from enhancing the ability to detect gray market order attempts, to streamlining our trade application, to building a client service chat agent to enhancing item and recommendations and user personalization. These diverse applications, all either in-flight or in-design, underscore a commitment to leveraging AI to grow revenues and drive efficiencies. Beyond core initiatives, we recently overhauled our sponsored listings pay-for-performance product. Additionally, we are beginning to explore non-endemic advertising opportunities. Though we are optimistic about the long-term potential here, no significant revenue impact is expected in the near term. We plan to share more details as these opportunities mature. Moving to supply, we continue to demonstrate our unique ability to aggregate the world's most beautiful items. Consistent with prior periods, we saw steady listings growth, ending the quarter with nearly 1.9 million listings, up 3%. This sustained growth underscores First Dibs' growing relevance to sellers and reinforces our position as the premier destination for luxury design. As we mentioned last quarter, we are becoming more important to our sellers. Our 2025 Seller Sentiment Survey showed that First Dibs is now the primary sales channel for our sellers, surpassing their own showrooms for the first time. This marks a meaningful shift from the past four years when showrooms ranked first. We ended the quarter with approximately 5,900 unique sellers, down 21% year-over-year, but flat sequentially. As we've noted in recent quarters, this outcome was expected and is directly attributable to subscription pricing optimizations, including the retirement of our essential seller program and other pricing adjustments from late 2024. The impact of this elevated churn has been minimal. In total, the churn cohort accounted for less than 50 basis points of GMV over the trailing 12 months and approximately 90 basis points of total listings. As we move forward, we expect continued listings growth throughout 2025. Before we conclude, I am excited to share a significant addition to our leadership team. We are thrilled to welcome Bradford Shellhammer, who joined First Dibs as Chief Marketing Officer and Chief Product Officer this week. Bradford brings a unique and highly relevant skill set with deep experience in scaling online marketplaces in both startups and large public companies. We are confident that his understanding of online marketplaces, combined with his deep passion for design, will be instrumental in shaping marketing strategies, driving customer engagement, and steering product development. In summary, our second quarter results reflect disciplined execution, prudent expense management, and sustained progress against strategic objectives. We delivered strong results for adjusted EBITDA, met our GMV and revenue guidance, and grew conversion for the seventh consecutive quarter, all while navigating a difficult landscape for both luxury design and discretionary consumer goods. The foundational platform work, including the full rollout of ML pricing models and comprehensive funnel optimizations, is steadily enhancing the user experience and marketplace value. Our commitment to a leaner, more efficient operation remains unwavering, positioning us for sustainable growth when market conditions inevitably improve. Thank you for your continued support. I will now turn it over to Tom to review our second quarter financial results and third quarter outlook.

Thanks, David. Second quarter results demonstrate solid performance, meeting or exceeding guidance across all key metrics. Our financial outcomes reflect the strength of our underlying strategy, highlighted by our seventh consecutive quarter of conversion growth, continued market share gains, and operating expenses falling 4%, underscoring our continued vigilance on costs and commitment to an efficient operating model. On a sequential basis, GMB growth rates decelerated due to softening traffic and moderating average order value growth, partially offset by continued conversion gains. While the quarter began with some softness in April around tariff announcements, we were encouraged to see conversion trends improve in the second half of the quarter. On-platform, average order value of nearly $2,600 was flat year-over-year, while median order values of approximately $1,350 was up 10%. This dynamic was driven by a slight mixed shift away from higher value orders. This suggests macroeconomic uncertainties may have prompted consumers to defer or trade down on significant high-value purchases. A defining characteristic of FirstSibs is the trust we have built with our community, enabling transactions at high average order values across multiple categories. This unique confidence allows us to deliver qualified buyers at prices ranging from under $100 to over $1 million. Returning to funnel trends, traffic growth softened, driven by a slowdown in paid, due in part to continued performance marketing optimizations. We entered the quarter with over 70% of traffic from organic sources. Conversion growth improved sequentially, partially offsetting softening traffic and AOV growth. Conversion rates have now increased year over year for seven straight quarters. Additionally, both new and returning conversion increased. From a buyer perspective, trade GMV was flat while consumer GMV declined modestly jewelry which account for approximately 20 percent of total gmv increased high single digits while all other verticals were flat or down the broader impact of the soft housing market continued to be felt across our home categories specifically furniture and art active buyers totals approximately 64 400 at the end of the quarter up five percent on the supply side of the marketplace we experienced steady listings growth closing the quarter with nearly 1.9 million listings up 3%. We ended the quarter with approximately 5,900 unique sellers down 21% but flat sequentially. Seller churn remained elevated, consistent with our expectations following recent subscription pricing optimizations. Importantly, this had a de minimis impact on both GMV and overall listings. We expect to see listings grow throughout the year. Moving on to the income statement, net revenue was $22.1 million flat year-over-year. Transaction revenue, which is tied directly to GMB, was approximately 75% of total revenue, with subscriptions making up most of the remainder. Tick rates were up approximately 30 basis points year-over-year due primarily to a makeshift to lower-value orders. Gross profit was $15.9 million flat year-over-year. Gross profit margins were 72%, also flat year-over-year. Sales and marketing expenses were $8.1 million, down 12%, driven by performance marketing optimizations and lower headcount-related expenses due to reduction in force in January. Sales and marketing as a percentage of revenue was 37%, down from 42% a year ago. Technology development expenses were $5.9 million, up 8%, driven by higher headcount-related costs due to our annual merit increases awarded in March. As a percentage of revenue, technology development was 27% up from 24% a year ago. General administrative expenses were $6.6 million down 4% due to lower headcount related costs. As a percentage of revenue, general administrative expenses were 30% down from 31% a year ago. Lastly, provision for transaction losses were approximately $965,000, four percent of revenue, flat year over year. Total operating expenses were $21.6 million, a four percent reduction. This is a direct reflection of our diligent expense discipline and ongoing vigilance in maintaining an efficient operating model. Adjusted EBITDA loss was $1.8 million compared to a loss of $1.6 million last year. Adjusted EBITDA margin was a loss of 8% compared to a loss of 7% a year ago. We continue to prioritize driving operating leverage through efficient scaling. Given that the majority of our operating expenses are headcount related, our asset light model allows us to increase revenue without a commensurate increase in hiring. In 2025, we expect to keep headcount approximately flat. Moving on to the balance sheet, we enter the quarter with a strong cash, cash equivalents, and short-term investments position of $94 million. Of the approximately $6.7 million sequential reduction, $3.2 million was due to annual prepayments of various services, and $1.3 million was due to an increase in restricted cash held at a payment processor, which reversed itself in July. Turning to the outlook, our guidance reflects quarter-to-date results and our forecast for the remainder of the period. We forecast third quarter GMV of $83 million to $89 million, down 2% to up 5%. Net revenue of $21 million to $22.1 million down 1% to up 4%. An adjusted EBITDA margin loss of 12% to 8%. Our GMB guidance reflects continued conversion growth and a modest rebound in average order value growth. Our adjusted EBITDA margin guidance reflects the impact of seasonally low revenue, gross margins towards the lower end of our 71 to 73% range, and continued benefits from paid marketing optimizations. To conclude, our second quarter performance reflects a commitment to disciplined execution and vigilant expense management. Despite a challenging demand backdrop, our ability to achieve guidance targets coupled with a 4% year-over-year reduction in operating expenses underscores our dedication to efficiency. Our consistent conversion growth remains a bright spot, directly reflecting ongoing improvements across our platform. We appreciate your continued support and look forward to updating you on our progress in the coming quarters. I will now turn the call over to the operator to take your questions.

And with that, our first question in queue is Ralph Shackert of William Blair. Please go ahead.

Morning, this is Justin on Pharrell. Thanks for having the question. Just one for you. On the macro uncertainty, you noted that the environment for luxury home goods remains challenging, but have you seen any changes in the overall environment since the beginning of the year, even if just on the margin?

Good morning. Thanks for the question. We haven't really seen major changes in the macro environment. Both the U.S. housing market and the market for luxury home goods, which are our primary drivers, remain soft. Just as an example, the U.S. housing market just posted, I think, the slowest spring selling season in 13 years per Redfin. And to measure market share in luxury home goods, we mostly rely on syndicated credit card data. And that data shows that demand in that market also softened in Q2. You know, on the other hand, while we're in a soft market, we do believe just comparing our GMB growth to that of the syndicated data. that we've been gaining market share over the past six quarters so we're not satisfied or happy with our current gmb growth rate but on the other hand we do believe that it represents a market share gain and we believe that we can continue to do that based on the strength of our product roadmap and other opportunities in front of us all right next up we have austin riddick of evercore hey Hey, guys.

Thanks for taking the question. I think I heard over 70% of traffic originates from organic sources. And so I guess I just wanted to ask, how vulnerable do you think that mix is to the growing share of AI-driven search results and chat interfaces? I know that's not exactly the most easy question to answer, but curious to hear your thoughts.

Good question. We think about that quite a bit. It's something that we track very actively. Obviously, AI and chatbots over time, we think, are going to be a significant, have a significant impact on our traffic. On the other hand, while we're aware of those potential shifts, you know, we haven't actually seen any material impact to our organic search traffic and the kind of key terms or key keywords that we rely on to drive the most traffic yet. However, you know, we're very focused on it. we're focused on AI and ML in general. This is one of many areas. And we'll report back as and if things change.

All right. And with that, there are no further questions in queue. So this will conclude today's call. Ladies and gentlemen, thank you for joining us today. You may now disconnect your line.