and thank you all for joining us. My name is William Schallmeyer. I'm an account manager here at Three Part Advisors. I'd like to present to you next for our Midwest Ideas Conference, firstdibs.com, listed on NASDAQ under the symbol DIBS. Representing the company today is their CEO, David Rosenblatt.

Thank you. Okay, great. Welcome to First Dibs and learning more about us. So our mission is to enrich lives with extraordinary design. We do that by running a two-sided marketplace. And our goal is to aggregate the best, mostly unique, one-of-a-kind luxury design in the world. We're actually, we've been in business since around 2000, 2001. The original business was to put the Paris Flea Market, which is the design district of Paris, online, primarily for American interior designers the business gained traction very quickly actually after 9-11 when the US interior designer wasn't able to get on a plane to go to Paris and instead learned quickly that he or she had a digital alternative the founder moved the business from Paris to New York thereafter and grew it to incorporate other categories beyond our original furniture business and we've really evolved into a unique position there's no other company that's quite like us since inception we have generated over three billion dollars worth of transactions online on platform across over a million orders and you know for for those of you who are not in the design business it's I think probably not that easy to understand the the fact you know sort of the way in which we're different than everyone else and probably the the easiest way to capture it is with a quick anecdote which is you know my own background is technology it's not design and shortly after joining the company, I got a cold email from Diane von Furstenberg, DVF. And the email was just asking me to have lunch with her. And I assumed that it was a missent email. You know, why would Diane von Furstenberg ever want to have lunch with me? And I emailed back and I said, thank you, but are you sure that you want to do this? Like, did you intend this for me? And she said yeah I know exactly who you are and what you do and you know come on over so I went over first question I asked was why do you want to have lunch and she said other than my own and Amazon there's only one other website that I truly love in the world and that's first dibs I've met the person doing Amazon and I just wanted to meet the person doing first dibs so that is the kind of brand position that we've accomplished as a company and of course the task is to convert that into a large business so how do we work we're a classic two-sided marketplace so our supply side is roughly 6,000 professional sellers so all of our sellers are businesses all of them are vetted so think dealers galleries artisanal brands those are really the folks who sell on first dibs and they have to go through a vetting process and an application process for us to assess both the quality of their inventory and the level of service they offer buyers before they're accepted onto the marketplace in total we've got again as I said roughly 6,000 sellers who have a combined roughly 2 million individual listings on the marketplace the demand side is a combination of both consumers and interior designers what we call the trade or professional buyers 70% of our demand of our GMV is from the professional buyer sorry 30% of our brand is from the professional buyer 70% of our brand is from the consumer interviewer designers obviously buy mostly furniture consumers buy all in all the verticals that we offer furniture jewelry art and fashion what else is important to understand in terms of the the revenue model 75% of our revenue is generated from commissions on the sale of items and the balance is from a combination of advertising that we primarily charge sellers as well as subscription fees and and some listing fees as well so 75 25 commission non commission the history of the marketplace as I mentioned originated in Paris the founder of the company who was American was visiting the Paris flea market and asked the question why isn't this online and he put it online he then Then moved to New York, which is why we're based in the city, and from 2001 until 2011 ran the business very organically, meaning he kind of hand-rolled the supply side, recruited individual sellers, and the business grew slowly, but became a material and important part of the design industry landscape. In 2011, Benchmark, the West Coast VC, did the Series A into the company. It was the first outside capital that First Dibs had ever raised. And as part of that, I joined the business. The two things that attracted me to the company were really the fact that it had two assets that you know in my experience online or with online businesses are the two hardest things to accomplish as a business and also the two most valuable one is a brand that represented quality and luxury and the second is a barrier was a very very strong network effect the reason why the brand was important is, at the point at which I joined, our business was entirely furniture-based, and I believe that the opportunity was to take that brand and amortize it across other categories, like jewelry, like art, and so on, all of which require trust to sell high-priced, expensive items. And the network effect kind of speaks for itself, but is very powerful and really gave us the license to then make business model changes that allowed us to turn this into a kind of economically viable platform so in that regard really the major development since I joined the company and since benchmark invested was our change in business model you know from inception until 2016 we were primarily a listings business meaning sellers would pay a fixed fee effectively fixed fee or mostly fixed fee in exchange for the right to list items but all all contact all communication between buyer and seller that followed that happened off platform so a buyer would see an item and then call or email the seller and negotiate and consummate the order off platform in 2016 we switched the business model to be more of a kind of classic online oriented marketplace and as part of that we've been able to grow GMV from the zero that it was when I joined to you know somewhere between 350 million and 400 million dollars run rate so that's the that was really the biggest change that we've made to the business the growth levers have been relatively consistent So that's one, the switch of business model from listings, business to e-commerce. The second is geographic expansion. So despite the fact that the business had been founded in Europe, when I joined, it was almost all U.S. Today, 50% of our sellers are from outside of the U.S. and roughly 30% of our traffic is from outside the U.S. And then the third is, as I mentioned, is category expansion. The business originally was furniture only. we've added jewelry which is now 20 percent of gross sales in our fastest growing and biggest market and then we've also added art and and vintage fashion so I mentioned a few of these numbers I think probably the one couple of these I would I would call out one is our margin profile so you know we're we have north of 70 percent gross margins our contribution margin is approaching 60%. So while we are not yet profitable, you know, on a gross margin and contribution margin business, you know, we're high enough that we have the ability as we optimize our cost structure to get there, I think, relatively quickly, and at a much lower break-even GMV number than most other marketplaces have accomplished and have been able to accomplish. I'd say the second number that i think is is particularly interesting is our aov which is over 2 500 you know if you think of other luxury online marketplaces like the real real farfetch and so on you know their aovs are roughly a quarter of what ours is and i think the reason why that's so important is that that's only possible because we have both the buyer and seller trust to enable people to transact at those levels This week alone, we've had three orders above $100,000 each, and in order to be able to do that, you've got to have a super high level of confidence, again, from both the seller that the buyer is real and from the buyer that what they're buying is authentic and actually worth what they're paying to get it. The zero dollars of owned inventory is also important. we are an asset and inventory light marketplace we will remain that we don't touch the product we don't ship it you know we can facilitate shipping but none of it passes through our folks hands all of that work is handled by the seller and that's something that you know it's a core part of our of our go-to-market and our strategy going forward I mentioned this as well the the you know we started out life as a vintage furniture only marketplace the strategy is very much to amortize both the customer trust that we have and also the customer acquisition cost across as many verticals as possible all of which benefit from the trust that is required to support these very high average order value transactions and again you know jewelry is our second largest category today and you know certainly by far our largest market but we are also in the art business and also in the vintage fashion business and as we go forward always open to adding additional categories the other flavor of category that I think is worth mentioning is the difference between the secondary market and the primary market so in each of the markets each the verticals in which we operate there's a secondary market component and there's a primary market component meaning used versus new and in furniture you know roughly 10 percent of our overall gmv which is about uh it's about 20 percent of our total furniture category is new we have roughly the same proportion in jewelry you know art has both new and secondary market product and so again it's an example of us taking the customer trust that we gain by virtue of our first mover advantage in the secondary market in these verticals to expand into new markets or the market for new as well so as I look at the business we have a bunch of assets that I think are most of which are unique to us that I think position us well for growth in the future the The first is the market itself, which one can think about either top-down or bottom-up. On a top-down basis, the end market for luxury furniture, jewelry, and so on, and art is well over $100 billion. If you look at other comps in the market, like the large auction houses, they do, on a combined basis, well over $10 billion a year in GMV. Almost all of that is offline, and we think represents an opportunity for us to take share from and then you know there are many many substitutes as well everyone from Tiffany's to you know RH others who sell products that again they're not directly competitive but they do represent substitutes for what we offer and in total comprise a very large market opportunity the second asset is our brand which again can accommodate additional categories, additional geographies, higher frequency purchasing to the customers that we already have, and all at a price point that really no one else is active in. We have a classic network effect. Probably the best example of the sort of economic benefit to us of that network effect was is the fact that we were able to switch our business model from a listings-only business, so think Craigslist, in favor of a transactional business, so think eBay in that regard. The reason why that's relevant or related to the network effect is that that allowed or that sort of facilitated a substantial increase in take rate to the seller. And so in spite of the fact that we increased take rate by virtue of that business model change, we were able to retain almost all of our sellers, almost all of our supply, and ultimately our relevance to the buyer. This sort of second probably primary benefit of the network effect is we have a relatively low dependence on paid, which you can see in our approaching 60% contribution margin number. You know, we offer a product that doesn't really exist anywhere else, which attracts a buyer, which in turn makes us a must-have for sellers in this market, and, you know, that's a kind of mutually reinforcing cycle. We are a highly scalable tech platform, meaning we have the same kind of basic cost structure that most marketplaces have. we have paid advertising obviously but you know the large majority of our costs are fixed and they're people we've done a very good job of increasing the efficiency in terms of managing our cost structure and getting increasing productivity from our staff we feel like there are additional opportunities in that regard in front of us and we also have related a very high operating leverage so again a substantial the high percentage of our revenue from you know marginal order growth trickles down to the bottom line and then you know we there's there's we we believe will be a beneficiary again similar to many other companies in our category and in the economy at large you know we believe that AI can directly benefit our business it already has so One of the sort of initial application of AI and machine learning in our business has been to use ML models to generate optimal pricing recommendations for sellers and to expose those recommendations to buyers. In a marketplace, it's like real estate or other businesses that are similar. In one-of-a-kind marketplaces, it's hard to know what a fair price is. Machine learning and AI can be used to develop recommendations and models in that regard. beyond that we feel like there are opportunities on the cost side to be able to deliver service customer service much more scalably we believe there are opportunities on the merchandising side both in terms of personalization and recommendations to buyers and also in terms of how we present items to buyers for example we can present furniture or jewelry in context or we will be able to present furniture or jewelry in context in a way that simply isn't possible with machine learning and AI and then you know the last major opportunity in front of us which is not on this slide is advertising you know we have aggregated a uniquely an audience of in-market luxury buyers there are very few other places on the internet where that exists and we think that creates an opportunity to market access to that audience to the advertisers who value it and who find it very hard to find substitutes online. And then lastly, financials. So Q2, GMV, you can read the numbers here, 90 million, revenue 22, adjusted EBITDA loss of negative 1.8. I think probably what's worth calling out here is, as you can see, over the last five quarters, our GMV in revenue has been roughly flat. We are in a market that has been shrinking, is shrinking double digits right now based on syndicated credit card data the reason for that is 60 percent of our sales is furniture the biggest furniture buying catalyst is when people buy a home and that market has been quite depressed for the last several years as we all know and so in spite of that we've been able you know over the last year to maintain flat gmv and flat revenue which of course represents a meaningful market share increase you know going forward I think we have an opportunity to grow revenue through some of the levers that I've already talked about increasing personalization and you know pricing work which has an impact on growing our conversion rate which is something that we've been able to do successfully over the last year and a half two years you know and advertising is another one and similarly at the same time, we also have opportunities to manage our cost structure and realize the benefit of that in terms of EBITDA. Let's see, so this is straightforward. Yeah, I don't think I need to go through this. Anything? No. So that's First Dibs, who we are. Happy to answer any questions to the extent that any of you have any yeah yeah so far not at all so you know we have seen no change in in the you know in the in the volume of our cross border orders and you know I think the primary reason for that is that for every item that's kind of lives outside the US and is bought by a US buyer there's almost always a domestic substitute so it may not be exactly the same product but there's always an alternative and then you know secondly a large percentage of our buyers are relatively relatively less sensitive to you know even 20 to 25 percent increases in price then for say you know commodity price commodity products yeah yeah so the question is how do we how do we acquire and that buyers so the answer is we have two types of buyers we have professional buyers interior designers who represent 30% of our demand and we have consumers who represent 70% of our demand in terms of what's called the trade interior designers they register so they have to apply and then you know and they have to show professional certifications and their interior designers are easily referenceable on the consumer side as with most consumer businesses it's self-selecting right so we advertise we promote ourselves on social media and so on but you know just as with every other business ultimately the buyer shows up and they you know our our job is to is to make you know it's create a clean well-lit environment with attractively priced high quality products but at the end of the day it's up to the buyer to decide whether we meet her needs or not yeah so sellers are able to you know to retain their products on the marketplace for as long as they want you know we do things to encourage them to make changes to the item either change the price or change the imagery or the item description and so on you know for items that have been on the marketplace for quite some time and haven't sold that said the sales cycle in our marketplace can be quite long because these are unique, one-of-a-kind items that generally are more expensive than the substitute that's more broadly available. And so items sometimes can take quite some time to sell. And actually those items tend to be the highest AOV items because they have the smallest audience and it can take a while for supply and demand to meet in the middle. Yeah, we don't some of our sellers you know do and are able to but yeah we're not in the business of financing our buyers purchases yeah so i think it is it's a it is a well getting to to when you say it's a volume issue so so the question is is it a volume i mean why don't you like help me understand exactly yeah okay how do we get to so the question is how do we get to break even yeah so I think we look we again we have an asset light marketplace right so we don't have factories we don't have all that kind of stuff other than paid advertising the large majority of our costs are people and and so first of all we have achieved efficiencies courtesy of our CFO Tom Adargino is in the audience we've achieved efficiencies on paid over the last couple of months that that will express themselves in lower costs, lower paid advertising costs. And then secondly, we believe we have an opportunity to optimize our cost structure as well. And then we also feel like we have some incremental revenue opportunities, some of which are relatively high margin, like advertising, like seller related expenses. So that while the easiest way to get to break even would be to grow gmv we feel like we actually don't necessarily need meaningful growth in gmv to be able to get to break even yeah well management wants that too i mean i think everybody wants that yeah yeah so mostly they're either very small companies or individual artisans right so think a kind of brooklyn you know a brooklyn artist who develops custom furniture You know, it's very hard to find venues to sell product like that. We are one, so that would be an example. Small brands would be another one. What we stay away from is mass-produced manufactured product because the competitive, the sort of basis of competition in that market is in areas that we're just not equipped as a marketplace of one-of-a-kind items to deliver better value in. yeah so how we acquire sellers in that market is not that much different than how we acquire them in all of our markets are we're the largest source of demand in our market so for the most part qualified sellers approach us we we have a very small seller sales team what we do is we vet them and we evaluate their application and then we accept those that you know are sort of brand compatible and service compatible on the marketplace. And then in areas and categories that are new, you know, we will focus on generating seller demand there. But for the most part, you know, we're a very, we're sort of well-known, accepted and important part of the landscape within the verticals in which we operate. Yeah, take rates do, they do vary to some degree. But again, the new product is still a relatively small part of the marketplace. so not really material economically yet important but not material yeah yeah so the question is do we monitor reputation among buyers so we do for the customers that we have we do extensive customer surveys we do customer research so sure we do all of that I think the opportunity for first dibs is we're extraordinarily well known within our category, right? That's why I told that story about Diana von Furstenberg. You know, the opportunity is we're relatively unknown outside of our categories. So I think the most efficient way for us to grow our awareness outside of the kind of educated buyer that we currently work with is via social media. A month ago we brought on board a new CMO who's also our head of product but with respect to this question you know he runs our marketing group and he has an excellent track record of developing and growing awareness in social media channels and that's gonna be a really important focus of ours going forward it has not been a focus today it will be starting now yeah again it depends who those hundred people are right if you ask you know if you look if you stand on you know 50th and Park and throw a stone, chances are you're, you know, you're going to touch somebody who knows us and has heard of us. You know, if you do that, most other parts of the country, the likelihood is, you know, that that person will not have heard of us. So the most efficient way we think to reach that buyer is via social media and, you know, specifically video on the big platforms, TikTok, YouTube, Instagram video. We have a million followers on Instagram. So that's a, that's an attractive kind of near term target. We have very few followers on TikTok and YouTube because we have not prioritized those channels to date, we will going forward.

That's true.

Yeah. And, you know, again, not just furniture, right? Jewelry is 20% of our GMV and growing the fastest. So yeah, that's, look, we agree with you. The market opportunity is big. You know, the challenge is how do you reach that audience cost effectively, particularly when our most important mandate is to get to break even? And again, I think the answer is via social media what 94 yeah million yeah yeah yeah I mean I you know if we did so the question is can we quantify the relationship between sort of our you know elasticity of demand I guess relative to the market right the you know we so I I don't it would be a guess if I came up with a number but you know, lower rates and higher volume in the real estate market is good for us. You know, that I know, right? Shrinking demand in real estate market is bad for us. We've been in that latter market really since we went public in 21. You know, that clearly is cyclical. It's not structural. At some point it will rebound and we'll benefit from that. But, you know, look, our goal is to achieve profitability even without a market recovery and we're confident in our ability to get there yeah yeah so the question is you know have we thought about changing the brand name to to make it more luxury friendly so I'd sort of dispute the premise of that right I mean you know would you would you have thought of autos when you heard the word Ford in 1910 you know would you have thought of search engines when you heard the word Google which is a mathematical which is a number in 1998, no and no. So brands take on the attributes of their operations, of the markets they're in, and what I would say is if you asked the average educated luxury buyer, particularly a home-focused buyer, to kind of free associate when they hear the word first dibs, they would absolutely say luxury, hence the Diane von Furstenberg story. The only reason I got that email is because she knows and loves first dibs, and that's true of most educated luxury buyers the opportunity for us the mandate for us as you correctly pointed out is to expand awareness of the brand to those that haven't heard of us it's not to change the the association of the brand among those who have yeah we think there's you know a tremendous amount of equity in the brand name and so I think that would be both not helpful from a marketing point of view and very expensive to do as well by the way yeah for we have a minute and a half left which is the clocks winding down any remaining questions okay thank you very much I appreciate your interest and