Conference Transcript - JSDA 2026-06-17

David Rosenblatt, CEO

good morning everyone now presenting david rosenblatt from first dibs.com great thank you good morning everybody welcome to learning about first dibs who is first dibs first dibs is the world's leading marketplace for luxury one-of-a-kind objects our mission as it's written here is to enrich lives with extraordinary design and we do something that's different than every other company in the world. And there are lots of ways that I can illustrate that via facts and figures, which I will later in the presentation, but probably the simplest way to get across the uniqueness of who we are and what we do is with the story. And that is a couple of years into taking over the company, I got a cold email from a person who's known as DVF, stands for Diane von Furstenberg the famous fashion designer and she emailed me and asked me to have lunch with her and I my background previous to first is is I ran kind of ad tech company for quite some for many years and sort of beyond that I'm basically I sort of think of myself and I am really a technology person and so I responded to her and I said you know I'm flattered by the interest but I'm not sure that you have the right David. I get mistaken for other Davids, especially bald ones all the time. And she said, no, I know exactly who I'm emailing. Come on over and I'll explain to you why I was interested in getting together. So I did at the appointed time. And at the end of the lunch, I asked her, so why did you want to have lunch with me? And she had a great line that again, I think sort of conveys to those of us who have not come from the design world, the significance of this business, and that is, she said, other than my own, the only websites that I truly love are Amazon and First Dibs. I've met the guy who did Amazon, and I just wanted to be the person doing First Dibs. So I was very flattered to be put in that company. But I think, again, from the perspective of our customer, the interior designer, the person who cares about design that actually is representative of how they think of us all right so we have a much longer history than most digital companies we were founded in 2000 in the design district of Paris which is called the flea market and the original idea was to put the this this physical marketplace online for the benefit of primarily US interior designers who bought quite a bit from the sellers there the founder is American he moved the business shortly after its founding to New York and between 2001 when he moved there to 2011 ran the business very organically meaning you know it looked more like a project than it did a company certainly a digital or technology company in 2011 he took the company's first outside capital from Benchmark, the Silicon Valley investors. And I came in to replace the founder, Michael, in conjunction with that investment. And really since then, our strategy has been consistent. Before I joined, we were a listings business rather than a marketplace. So think Craigslist as opposed to eBay. So sellers would list their products on the website with their contact information and all contact between the buyer and seller thereafter would happen off platform and they paid a fee in exchange for the right to list our strategy which we adopted shortly after I joined was to convert that business into an e-commerce marketplace so again think Craigslist to eBay all checkout now is done on the platform the The two additional strategies were one, to expand beyond its original focus on antiques, which is kind of the core product of the Paris flea market. So today we're in a bunch of verticals, we'll talk about that. And then the third one is, was, has been to globalize the business. So at the time we were almost entirely US based, despite the fact that we had been founded in Paris on both the supply and the demand side. So those have been the two, or sorry, the three key kind of vectors of our development. Transactionalize the marketplace, globalize the marketplace, and leverage the trust that we gained as a byproduct of our first mover advantage in furniture to sell other products that benefit from that trust. And then the last thing, the last major development is in 2021, June of 2021, we went public on the back of the kind of post-COVID boom in e-commerce and home. And in retrospect, if you map the luxury real estate market in the U.S., which is our primary end market demand driver since June of 21, you know, that month was the literal peak of that market. since then the market has been in decline and our both our GMV and our share price has has tracked that which of course now creates the entry opportunity okay what exactly is it that we do so we're a classic inventory light two-sided marketplace the supply side which really is one of our key differentiators is roughly 6,000 sellers of luxury design so that means all kinds of furniture both new and secondary market furniture jewelry art and fashion the key difference between us and other marketplaces in this respect is that all of our sellers are vetted and they're all professional so we don't take product from consumers, only from businesses, mostly dealers, artisans, artists, art galleries, businesses like that. And those businesses have to apply. It's very difficult to get a kind of seat if you, if you, you know, if you like that as it were on the kind of first dibs marketplace, you have to go through a whole process. We've got the quality of the seller as a business and we've got the quality of the items that that business sells. Roughly half our sellers are outside the U.S., half are inside the U.S., but the average size of a U.S. seller is bigger, therefore most of our inventory, or the majority of our inventory, not the overwhelming majority, I think it's roughly 60% of our inventory is located in the U.S. The demand side is about, in terms of GMV, is about 70%, 70% consumer, 30% professional buyer or interior designer interior designers are great buyers they are to this market what media agencies are to the ad market meaning they buy for a living so they are incredibly important to us both economically and in terms of our brand and our relevance to our sellers and on the consumer side we deliver the high-end buyer to our seller and that's a buyer that otherwise is very difficult to identify and to acquire think Diane von Furstenberg people like that and the business model as I mentioned is asset light so we take no inventory we never touch it we only facilitate orders and that's reflected in a gross margin in the mid 70s and most of our revenues about three quarters are from commissions on the final sale of product so 75 the waterfall is gmv and then revenue of revenue 75 of revenue is from commissions and the balance is through is from a combination of subscription fees so all sellers pay some monthly fee in exchange for the right to participate in the marketplace and then also advertising both endemic advertising meaning ads that we sell to our sellers, and then non-endemic advertising ads that we sell to non-sellers who are interested in paying to reach our audience. So here are a couple numbers to give you a sense of the scale of the business. You know, since inception, we have sold over $3 billion worth of product online across over a million orders. On an annual basis, as you can see here, it's about 360 of GMV roughly 90 of revenue I think other important numbers here we have ten billion dollars worth based on the face value list price times number of items of inventory on the marketplace which kind of indicates the potential of what we have today without having to add additional inventory beyond that our gross margin is in the mid 70s again reflective of the asset light nature of the marketplace that average order value i think is worth calling out 2750 so by comparison other marketplaces that are regarded as or describe themselves as luxury marketplaces like the real real like farfetch their aovs are roughly in the kind of 600 ish range so we're four times our aov is four times higher than other marketplaces that are commonly regarded as luxury let's see what else $0 of owned inventory again indicative of our asset light nature and then I mentioned the kind of cumulative footprint that we've had in our industry since we changed the business model from listings to e-commerce when I joined the business in 2011 100% of the company was focused on on furniture mostly antique furniture the basic strategy I mentioned those three strategies of transactionalization, supply expansion or category expansion and globalization. The kind of basic premise of category expansion is it's really hard to find online and acquire the buyer that we have. So that's the positive of the business. The challenge is that furniture is, unless you're an interior designer, in other words, on the consumer side of the business is a relatively low frequency purchase, right? not like obviously uber or airbnb even or booking marketplaces like that and so the idea behind category expansion is to take the the cost of customer acquisition and amortize that across other verticals that require the same level of trust that we have in order to transact online and in fact we've accomplished that so today sixty percent of our GMV is furniture versus the hundred percent when around the time that benchmark invested and I joined this sort of gives you a quick feel for the range of product that we sell interestingly we've we've had six orders of over a million dollars including one recently which was for an art piece and again these are online orders so these are people you know finding the item on first dibs and checking out online much in the same way that you would buy you know an iPhone or even a book from Amazon in fact one of the ways that I've always thought about our sort of positioning in our marketplace is you know the race for the $50 order is over, right? We know who won that Amazon and Walmart. The race for the $5,000 order has yet to be won, but we feel like we're in pole position to do that. And we do feel that that marketplace and we see it is coming online as customers globally gain a higher and higher comfort level with transacting at all price points online. In terms of what we're focused on, I mean, we are, we regard ourselves as a real kind of digital technology company, despite the products that we traffic in. My own point of view from having worked on the internet over 30 years is that the best companies in every category are technology companies, and the best technology companies are product driven. So we are too. 50% of our headcount is in product and engineering. This is the kind of stuff that they're focused on. You know, rather than walk you through each bullet point of our roadmap, I'll sort of abstract it and say a couple things. One is what this is focused on is really sort of the core, what's called in the Internet industry primitives, or sort of the atomic unit of our business, right? Transacting as efficiently with as little friction as possible. And these are really, these four areas describe the kind of core elements of that atomic unit. the second thing I would say is that AI is really a game-changer for us in a very positive way each of these four areas is is driven by AI and we are doing things in them that would not have been possible without AI and these are things that fundamentally transform the purchase experience and make it better online than it is offline and I'll give you just two kind of super quick examples of recent wins that we've had across this roadmap one is in terms of discovery so as we all know search is probably the single most important kind of buyer or just human activity online in our case searches is especially challenging because we're a so-called long tail marketplace meaning we have 2 million mostly unique items and again these aren't pairs of socks you know these are items that typically require from a technology point of view, you know, eight, nine, 10, 11, 12 words to describe. And so what that means is people, you know, often don't have a great, a great ability to describe exactly what they're looking for with exactly the right terminology. And so as a result of that, we had what was called a null search results problem, right? Meaning people would look for something and because they didn't get the terminology right, you know, we weren't able to match that query with items on the marketplace and so we returned zero results. So we recently used AI, machine learning, to expand our ability to try to figure out what people really mean when they search for something but don't get those words right. And by doing that, we reduced the number of null, the percentage of search queries that result in what's called null search results meaning you search for something and you get nothing back by 25% and search is the is you know it's the core sort of portal or process that buyers go through to find things another kind of second example is shipping shipping is a big source of friction in in any furniture sale on or offline and one of the biggest drivers of shipping is the ability to tell buyers what something will cost in advance of their buying the product. That sounds very simple and obvious in the context of most of our e-commerce experiences, Who, you know, if you went to Amazon and you, there's no way to know what something cost to ship in advance of buying it, it would strike you as ridiculous. However, that is the common experience in furniture marketplaces because it's very difficult to very often very difficult to quote those shipping costs in advance of knowing exactly what the dimensions of the item are where the buyer and the seller are relative to each other supply demand of carriers at that moment in time and so on we were able to use machine learning models just recently a couple of weeks ago to be able to start predicting what that shipping quote would be with a very high degree of accuracy before people indicated interest which again is extraordinarily important as a way of driving conversion okay these are some of the things that we love about the business uh you know i i'll just call out two things the two things that i think are the most important uh one is we have a brand that's that stands for luxury and safety and security that's what gives us the buyer permission and seller permission to be able to transact at such high average order values. And then the second one is the durable two-sided network effect characteristic of our business. You know, when you look at almost every vertical on the internet, most of them tend to be led by one company, right? LinkedIn to recruiting, you know, DoorDash and delivery and on and on and on. The reason for that, the reason why there's typically only one or two players is because of the network effect. Once these companies have accomplished a network effect, it's very difficult to compete against. And every single new buyer and every single new seller adds to the enhances both the buyer and the seller experience. So the bigger these companies are, the better the experience is, which again is what makes it very difficult to compete with we have that in our category and then lastly but certainly not least in terms of financial performance probably the most important thing here is in q4 of last year 2025 we had our first ever adjusted ebitda and free free cash flow positive quarter we have committed that we will achieve that for the full year this year and we're on track to do so and you know given the asset light nature of the business and then also the fact that we have a very low dependence on customer acquisition on paid advertising the flow through is very high our operating leverage is very high our contribution margins for example are 65% and so we you know we we are kind of fully committed to and expect that to continue but the sort of inflection point in that was q4 last year and full year this year our first full year of adjusted ebta and free cash flow positivity okay i'm done uh any questions yeah so uh there the question is uh what's the competitive landscape um there are a lot of companies that are substitutes for what we do there's no company that does what we do. So you could walk into Tiffany's and buy a necklace or you could buy a kind of special either vintage or individually designed piece from First Dibs. So that's typically the competition. Beyond that, we have a small number of much smaller vertical specific, meaning point player competitors. So there's, you know, there are companies that are marketplaces only for vintage furniture and the same and art and so on, but there's no multi-category luxury digital marketplace. Yeah.

Speaker 4

So is each skewed in one off?

David Rosenblatt, CEO

Most, almost all are one off. Yeah. One of a kind.

Speaker 3

And then so is the seller then annotating the site? Like, is there a manual?

Speaker 4

I'm sorry. is the seller then annotating the site?

David Rosenblatt, CEO

Yeah. So the seller is responsible for all item descriptions, photography, and so on. Um, you know, yet another AI opportunity, which we're doing is to do that for them. Uh, and we've started that process. We have an AI product that automates the creation of item titles. And you know, you can imagine that that only gets bigger and better over time. Yeah. Yeah. So two things, a couple of things, actually three, three primary. One is in Q4 of last year, we cut paid spend by 50%, paid advertising by 50%. We did that after extensive testing that had the impact of only reducing GMV by 5%. So GMV was negative 5% in last Q4 and Q1 as well, which is a great trade. If you think about it, we cut paid in GMV of five percent so number one is we're gonna start lapping that for the full quarter in Q4 of this year so that's a big tailwind the second is in I think most important in the long run is we feel like we have a really really good product roadmap so we brought on board a new head of product and marketing Bradford who's here with us today he brought with who's got many years of marketplace experience. He brought with him a roadmap, which we feel is targeted exactly the kind of highest leverage parts of the buyer and seller experience. That is already, that roadmap is already producing results. There's of course a compounding effect of roadmaps. Each quarter it gets better and better. And so we're very confident in resuming growth, even in the absence of a market rebound however the last in the you know the the ultimately the most significant thing will be when the market comes back and it is a when not an if right buying you know this is not a market like linear tv that's in secular decline you know what do people do when they make money you know they buy better houses what do they do when they buy better houses they want to make it look as good as possible so they hire a designer or they buy product themselves and then we have optionality on other markets as well like jewelry and art and so on so we've got these kind of three tailwinds two of which are you know pretty much locked in and the third of which i think is just a matter of time yeah yeah so we are uh free cash flow and adjusted ebda positive as of q4 last year 2025 and we've committed to maintaining that for the full year and again the sort of the the you know financially exciting or compelling dimension of this marketplace is like many other asset light marketplaces we have very high operating leverage so you know once we are able to achieve revenue growth we have very high flow flow through of that revenue to ebitda and and again you know probably the easiest way to think about that is 65% contribution margins. Yeah. So, um, we came out of our IPO actually with 135 million in cash. I think we ended last quarter with 85, not 95. Um, we, most of that has been via most of that reduction has been, been via stock buybacks. We've bought back $40 million of stock and, uh, we announced a fresh $10 million buyback, uh, at the end of last quarter. Yeah. Yeah. So in the first part of your question, absolutely. I mean, one of the things that Bradford engineered actually shortly after he started was a reduction in our marketing investment in total, both headcount and non-headcount related. We also actually added engineers at that time. So we sort of changed the internal balance of our investment distribution. And yeah, the reason why we did it is because the best kind of top line growth is product driven, it's sustainable it's higher margin and it also creates a competitive advantage so we're already seeing the benefit of that more robust product roadmap and again as I said you know product roadmaps the impact of product roadmaps compounds over time right and so we expect to see that as well okay thank you very much appreciate your interest and we'll be around