Good morning, everybody. My name's Kelley Buchhorn, and I'm with Three Part Advisors. Up next is 1stDibs.com. 1stDibs.com operates an online marketplace for luxury design products worldwide, connecting design lovers with highly coveted sellers and makers of vintage, antique, and contemporary furniture, home décor, art, jewelry, watches, and fashion. 1stDibs.com was incorporated in the year 2000 and is headquartered right here in the city. With us this afternoon is David Rosenblatt, the company's Chief Executive Officer. So with that, I'll turn it over to David.
Great. Thanks very much. Welcome to 1stDibs.com. We are the world's leading curated digital luxury marketplace for one-of-a-kind extraordinary objects. Our mission is to enrich lives with extraordinary design. We were founded, as Kelley said, in 2000 in the Paris Flea Market, which is the design district of Paris. The company was moved subsequently to New York, which is where we've been based since. Cumulatively, we have sold over $3 billion worth of product online, and we really do occupy a unique space in the market, and I think there are probably two data point stories to support that. One is our average order value, which by internet standards is very high. The average price of the items that we sell online is over $2,500, which is more than 5x bigger than many other marketplaces that are regarded as luxury.
The second is a story actually that I recall from my early days of the company, which is, sometime after I started, I got a cold email from Diane von Furstenberg asking me to meet. At first I thought it must have been a typo, because my background is in tech, not in design, certainly not in luxury. But she reassured me that no, in fact, she knew who she was reaching out to, and she did want to talk to me. When I got there, I asked her why she wanted to talk to me, and she said, "Well, other than my own, there are only two websites in the world that I truly love. One is Amazon, and one is yours.
I've met the guy who's behind Amazon, and I wanted to meet the person behind 1stDibs.com." As I mentioned, we've been around for over 25 years. We were founded in Paris, and the company was moved shortly thereafter to New York. We've had a couple of key milestones along the way. We started out life as an antiques marketplace for antiques only. Over the years we've added other categories. Probably the biggest change in our history was the change in business model. The founder ran the business for its first 10 years. At the end of that period, Benchmark, the West Coast venture capital firm, invested in us in roughly 2011. As part of that, I joined the company. After I joined the company, or since I joined the company, we really had three major strategies, all initiated at that time.
One is, and most important, we changed the business model from what it had been, which was a listings business, to what it is today, which is an e-commerce business. Think shifting from Craigslist to eBay. The second is, as I mentioned, category expansion. We started out life as a marketplace only for antiques. We have leveraged the trust that we gained as a byproduct of our first-mover advantage in antiques to expand into other categories, including jewelry and contemporary design, art, and fashion. The third is we've globalized the business. Despite the fact that it was founded in Paris, after moving the company to the U.S., it really became a U.S.-only marketplace. The market we're in is fundamentally a global business. In recognition of that, we've expanded the business to be global as well.
For example, half of our sellers are now outside the U.S., versus almost all of them having been in the U.S. in 2011. I suppose the other major financial milestone is we went public in June of 2021. Here we are today. What is the business? It is, in many respects, a classic two-sided asset-light marketplace. Asset-light meaning we don't take inventory. Similar to other business models that many people are familiar with, like eBay, like Etsy, and so on. Our supply side is 6,000 curated and vetted professional sellers of luxury design. Furniture, as I mentioned, art, jewelry, and fashion. Mostly vintage, meaning secondary market, although in each of those verticals, we also have primary market sellers as well.
I think the two key points on the supply side to understand about us is that all of our sellers are professional sellers, we don't source from consumers, only businesses, number one. Number two, it's very difficult for a seller to become one on 1stDibs.com. They have to apply. They're vetted by our team, both in terms of the reliability of the business and the quality of their inventory. That aspect of the company is essential to maintaining the buyer trust that is, I think, ultimately our most important asset. The demand side is a combination of consumers, who represent about 70% of our demand, and professional buyers, interior designers, who represent the balance, or 30%. Our average buyer skews a little bit older than average on the internet. Certainly higher net worth.
Are mostly in the U.S., but we have a significant presence outside the U.S. as well. I mentioned that half our supply is from outside the U.S. On the demand side, roughly 40% of our traffic, and around 20% of our sales are to buyers outside of the U.S. As I mentioned, we are asset light, meaning we never hold or touch the inventory. Rather, we connect buyers and sellers, and we facilitate orders, and importantly also, conversations and discovery between the two sides. In terms of the numbers, we've done roughly $360 million in GMV gross sales over each of the last two years, and roughly $90 million of revenue. Some of the other numbers on this page that I think are important, one is our gross margin, which is in the mid-70s. Our contribution margin is in the mid-60s.
What that means is we have a very low dependence on paid advertising for demand. It's inherently a kind of high operating leverage business. High gross margin, high contribution margin, and low dependence on paid means, as we add top line, that translates efficiently and quickly into EBITDA. I mentioned the cumulative GMV number, supported by over one million cumulative orders that we've executed. Probably the one other number that's relevant here is the stock value. We've got, if you look at the value or you add up the value of all the roughly two million items that are on the marketplace, that translates into $10 billion worth of product. That represents a very attractive and large opportunity as we increase our efficiency in terms of converting supply into demand. This company started in the Paris flea market.
The Paris flea market is a marketplace for vintage and antique furniture. One of our core strategies has been diversifying away from furniture. I think furniture is very closely associated with our brand, but at the end of the day, I think a big opportunity in front of us is to translate that brand from a furniture-only one into one that represents luxury as a whole. In recognition of that, we have prioritized adding other verticals. We've added jewelry, we've added art, we've added fashion. All together, those other categories represent now 40% of our GMV. The other benefit of that, of course, there are probably two other primary benefits. One is it increases our TAM, our available market, but also it increases the frequency of purchase on the part of our buyers. Furniture is a relatively speaking low-frequency category.
However, acquiring the luxury furniture buyer is very difficult, and those buyers, of course, buy other things as well. Part of the idea here is by adding other categories, we can extract more LTV, more lifetime value, from these very difficult but very valuable customers. This slide shows, just put some meat on the bones or some visuals in terms of the kind of products that we sell. I think it's worth mentioning that there's really no other company that looks like us online. It's very difficult to find these products. It's even harder to find them in an environment that's trustworthy, and we have both. We have a unique concentration of supply in these categories, and also uniquely, they're sourced from reliable sellers who are vetted, and we have a very strong buyer assurance policy that underlies that.
Our trust, as I mentioned, is a key component of the value of the business. I think that's probably best exemplified by the fact that we have a very low return rate and a very even lower fraud rate. Combined, those two add up to roughly 5%, which again, is low by any standard, but especially low in these markets. We feel like we have compelling opportunities to grow top line as a function of our product. Again, in consumer internet businesses, there are really only two ways to grow demand. One is via paid advertising and the other is via product. We cut back our paid advertising by 50% towards the end of last year.
The result of which is that 75% of our demand is generated organically. That's a function of both the quality of our supply and also the quality of our product roadmap. We feel like these four levers that are on this slide are the key ones for growing demand. We have already been putting points on the board this year in terms of the impact of our progress against this roadmap. If I had to call out two examples from this slide, I would say one is in terms of discovery, incorporating natural language search in particular, but just improving our search in general, meaning finding products on the website and the app is a great example of something that has kind of immediate translation into demand.
We broadened our capabilities in search in the first quarter, which had the effect of minimizing what are called null search results or the percentage of queries for which there is no search result, meaning people look for something and don't find something. We reduced it by 24%. We did that by improving our own ability to recognize what consumers are looking for, then showing them a broad range of product that corresponds to that. The second is shipping. We saw furniture shipping and logistics as a major source of friction in that market. We were able to lower parcel freight or parcel costs, rather, in the first quarter, by, on average, 30%-40%, which of course, shipping is the single biggest source of friction. The lower we can make those prices, the more readily we can translate that into top-line growth.
We're quite confident. We've told the Street that we expect by the end of the year to resume top-line growth. Part of that is the fact that we'll be comping our cutback in paid, but the other part is because of all of the content that's on this slide, the fact that we're fundamentally making the purchase experience better and with less friction than exists offline and than had existed on 1stDibs.com before. I've mentioned a bunch of these. We're very optimistic in general in terms of our future. The market we're in is large. It's been in a cyclical downturn, really, since we've been public, driven by high interest rates. At some point, that market growth will resume. We will be a better and more efficient company to meet that demand once it returns.
We feel like we have the highest trust brand in terms of online luxury out there, full stop. We're a classic two-sided network effect business with increasing returns of scale. As we get better, the quality of the experience gets better, the quality of the network effect gets stronger. We have a very high operating leverage model. I mentioned 65% contribution margin, 75% gross margin. That's not going to change. Lastly, I think many companies are optimistic about the impact of AI. I think AI will have a disproportionately positive impact on us. As I go through the product roadmap in particular, each of those areas is the highest impact areas that we're focused on in each of those four areas wouldn't be possible without AI.
At the simplest level, if one zooms out, furniture and jewelry and art are difficult things to buy for many people if they're not in person and they're not highly educated in this market. AI, in particular, things like image search and being able to superimpose pictures of pieces in their living room and so on, makes it much easier to have the experience be tangible than it was before AI. Last two slides. In terms of our financial performance, again, as I mentioned, Q1 2026 GMV was around $90 million. Revenue, $22.4. For the full year, the last two years, we've been in the mid-$360s for GMV, around $90 million for revenue. The most important number here is the fact that as of Q4 last year, we are now adjusted EBITDA positive.
We will continue to be adjusted EBITDA positive, and we will be free cash flow positive for the full year 2026. That really was enabled by a structural transformation that we undertook in terms of our costs. That, in turn, is a function of two things. One, the fact that we've been able to cut back paid advertising really massively, actually, without having a corresponding impact on top-line demand. Then two, we've reallocated our headcount away from sales and marketing in favor of product engineering because the most durable top-line growth is created through products rather than through advertising, and that's what we're targeting. That's it, right? Thank you very much. Appreciate it. Yeah.
Do I recall a few years ago you had retail outlets?
We did, actually. Good memory. We had a great place. We got quite lucky with that. It was very well received, but retail is expensive and operationally complex. The building was sold, and we were bought out of our contract, as it turns out, a couple of months before COVID. That was fortuitous.
maybe you could just talk a little bit more about AI. You talked a little bit about how it might help you. Could it hurt you at all?
No. I mean, yeah.
I sit here and ask my AI agent to find something.
Yeah
Yeah. I think the disintermediation risk with us is quite low. First of all, the collection of products that we have doesn't exist anywhere else. It's super fragmented on the supply side. It would be very difficult, I think, for an agent to automate discovery. Much of the purchase decision has to do with the identity and the quality of the seller, which is, again, very difficult for AI to determine. It's a subjective purchase, right? If you're buying a piece of jewelry or a beautiful nightstand or something, a piece of lighting, I think that's something that buyers are less likely to outsource to technology. Conversely, when we think about the benefits of AI to us in each of the four product areas that we're focused on, we're going to be able to create a substantially better buyer and seller experience with AI than without it.
For example, the example I gave about search, right? The way people tend to buy really nice things is by using kind of subjective language, right? I want something that looks like what this famous person has, or I want something that goes well with this dress, right? AI supports search that allows that in a way that wasn't possible before. Shipping is quite complex in our business. Machine learning models are much better able to predict shipping costs and do it accurately than the non-AI models that existed before. In terms of service, we're in the process of testing an AI agent to automate service queries, right? Which allows us to redirect our people in favor of much more complex orders and ultimately provide luxury service too, which is what luxury buyers expect.
I think across the board, AI is going to have really a massively kind of leveraging impact on the growth of the business.
I guess just lastly, you've limited the number of sellers. You've limited them because you're physically unable to have more?
No. We limit them because we vet and evaluate each of our sellers very rigorously, and we only accept those whose products are at the quality level that our customers demand and whose service level matches the quality of the products they sell.
That number doesn't change much. Is there much turnover?
It's about 6,000 is roughly the number of sellers we have. No, it doesn't change massively. Yeah.
Okay. Thanks.
Sure. Thank you. Okay. Thank you very much. Appreciate it.