Good morning, and thank you all for joining us. My name is William Shelmire. I'm an Account Manager here at Three Part Advisors, and I'd like to present to you next for our Midwest IDEAS Conference: 1stdibs.com, listed on Nasdaq under the symbol DIBS. Representing the company today is their CEO, David Rosenblatt. David? Thank you. Okay, great. Welcome to 1stDibs and learning more about us. 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'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 U.S. 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. We've really evolved into a unique position. There's no other company that's quite like us. Since inception, we have generated over $3 billion worth of transactions online, on platform, across over a million orders. For those of you who are not in the design business, it's probably not that easy to understand the way in which we're different than everyone else. Probably the easiest way to capture it is with a quick anecdote, which is, my own background is technology. It's not design. 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. I assumed that it was a missent email. Why would Diane von Furstenberg ever want to have lunch with me? I emailed back and I said, thank you, but are you sure that you want to do this? Did you intend this for me? She said, "Yeah, I know exactly who you are and what you do, and you know, come on over." I went over. The first question I asked was, "Why do you want to have lunch?" She said, "Other than my own and Amazon, there's only one other website that I truly love in the world, and that's 1stdibs.com. I've met the person doing Amazon, and I just wanted to meet the person doing 1stDibs." That is the kind of brand position that we've accomplished as a company. The task is to convert that into a large business. How do we work? We're a classic two-sided marketplace. Our supply side is roughly 6,000 professional sellers. All of our sellers are businesses. All of them are vetted. Think dealers, galleries, artisanal brands. Those are really the folks who sell on 1stDibs, 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. Interior designers obviously buy mostly furniture. Consumers buy in all the verticals that we offer: furniture, jewelry, art, and fashion. What else is important to understand? In terms of 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 some listing fees as well. 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?" He put it online. He then moved to New York, which is why we're based in the city. From 2001 until 2011, he 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 1stDibs had ever raised. 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, 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 very, or 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. 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. 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. All contact, all communication between buyer and seller that followed that happened off platform. 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. 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 run rate. That was really the biggest change that we've made to the business. The growth levers have been relatively consistent. That's one, the switch in business model from listings business to e-commerce. The second is geographic expansion. 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. The third is, as I mentioned, is category expansion. The business originally was furniture only. We've added jewelry, which is now 20% of gross sales and our fastest growing and biggest market. We've also added art and vintage fashion. I mentioned a few of these numbers. I think probably the one couple of these I would call out. One is our margin profile. We're north of 70% gross margins. Our contribution margin is approaching 60%. While we are not yet profitable, on a gross margin and contribution margin business, 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. The second number that I think is particularly interesting is our AOV, which is over $2,500. If you think of other luxury online marketplaces like The RealReal, FARFETCH, and so on, their AOVs are roughly a quarter of what ours is. 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. In order to be able to do that, you've got to have a super high level of confidence, again, from both the buyer, from 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 $0 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. 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 is a core part of our go-to-market and our strategy going forward. I mentioned this as well. 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. Jewelry is our second largest category today and certainly by far our largest market. We are also in the art business and also in the vintage fashion business. 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. In each of the markets, each of the verticals in which we operate, there's a secondary market component and there's a primary market component, meaning used versus new. In furniture, roughly 10% of our overall GMV, which is about 20% of our total furniture category, is new. We have roughly the same proportion in jewelry. Art has both new and secondary market product. 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. As I look at the business, we have a bunch of assets, most of which are unique to us, that I think position us well for growth in the future. 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 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. There are many substitutes as well, everyone from Tiffany's to RH, others who sell products that are 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 can accommodate additional categories, additional geographies, higher frequency of 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 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 allowed or facilitated a substantial increase in take rate to the seller. 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. The second 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. 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. 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 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. We also have related a very high operating leverage. A substantially high percentage of our revenue from marginal order growth trickles down to the bottom line. We believe we'll be a beneficiary, again, similar to many other companies in our category and in the economy at large. We believe that AI can directly benefit our business. It already has. The sort of initial application of AI and machine learning in our business has been to use machine learning 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 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 without machine learning and AI. The last major opportunity in front of us, which is not on this slide, is advertising. We have aggregated 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. Lastly, financials. Q2 GMV, you can read the numbers here, $90 million revenue, $22 million, just EBITDA loss of - $1.8 million. I think probably what's worth calling out here is, as you can see, over the last five quarters, our GMV and 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% 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. In spite of that, we've been able, over the last year, to maintain flat GMV and flat revenue, which of course represents a meaningful market share increase. 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 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. Advertising is another one. Similarly, at the same time, we also have opportunities to manage our cost structure and realize the benefit of that in terms of EBITDA. This is straightforward. I don't think I need to go through this. Anything? No. That's 1stDibs, who we are. Happy to answer any questions to the extent that any of you have any. Yeah. So far, not at all. We have seen no change in the volume of our cross-border orders. I think the primary reason for that is that for every item that kind of lives outside the U.S. and is bought by a U.S. buyer, there's almost always a domestic substitute. It may not be exactly the same product, but there's always an alternative. Secondly, a large percentage of our buyers are relatively less sensitive to even 20% - 25% increases in price than for, say, commodity products. Yeah. [audio distortion], you don't vet them. How do we know in selling this idea to the seller? I mean, screw it. Yeah. The question is, how do we acquire and vet buyers? 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 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? We advertise, we promote ourselves on social media and so on. Just as with every other business, ultimately the buyer shows up and our job is to create a clean, well-lit environment with attractively priced, high-quality products. At the end of the day, it's up to the buyer to decide whether we meet her needs or not. How long do you want to either sit there or sit price? Yeah. Sellers are able to retain their products on the marketplace for as long as they want. 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, 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. Items sometimes can take quite some time to sell. 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. We don't. Some of our sellers do and are able to, but we're not in the business of financing our buyers' purchases. Seems to be just a volume issue. Yeah. I think it is, getting to, when you say to volume issues. The question is, is it a volume? I mean, why don't you help me understand exactly? Okay. How do we get to, the question is, how do we get to break even? I think we, look, we have an asset-light marketplace, right? 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. First of all, we have achieved efficiencies, courtesy of our CFO, Tom Etergino, who's in the audience. We've achieved efficiencies on paid over the last couple of months that will express themselves in lower costs, lower paid advertising costs. We believe we have an opportunity to optimize our cost structure as well. We also feel like we have some incremental revenue opportunities, some of which are relatively high margin, like advertising, like seller-related expenses. 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. Management wants that too. I think everybody wants that. [audio distortion]. Yeah. [audio distortion]. Yeah, so mostly they're either very small companies or individual artisans, right? Think a kind of Brooklyn, you know, a Brooklyn artist who develops custom furniture. It's very hard to find venues to sell product like that. We are one. That would be an example. Small brands would be another one. What we stay away from is mass-produced manufactured products because 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. How we acquire sellers in that market is not that much different than how we acquire them in all of our markets. We're the largest source of demand in our market. For the most part, qualified sellers approach us. 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 are sort of brand compatible and service compatible on the marketplace. In areas and categories that are new, we will focus on generating seller demand there. For the most part, we're a very, we're sort of well-known, accepted, and important part of the landscape within the verticals in which we operate. Take rate's the same? Portion of the item that's new? Yeah, take rates do vary to some degree. Again, the new product is still a relatively small part of the marketplace, so not really material economically yet. Important, but not material. Yeah. Do you monitor your reputation amongst consumers? How is that trained? Yeah, so the question is, do we monitor reputation among buyers? We do. For the customers that we have, we do extensive customer surveys. We do customer research. We do all of that. I think the opportunity for 1stdibs.com is we're extraordinarily well-known within our category, right? That's why I told that story about Diane von Furstenberg. The opportunity is we're relatively unknown outside of our categories. 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. With respect to this question, he runs our marketing group and he has an excellent track record of developing and growing awareness in social media channels. That's going to be a really important focus of ours going forward. It has not been a focus to date. It will be starting now. What is your awareness rate? 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. If you do that in most other parts of the country, the likelihood is, you know, that that person will not have heard of us. 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 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. You know, again, not just furniture, right? Jewelry is 20% of our GMV and growing the fastest. Yeah, that's, look, we agree with you. The market opportunity is big. The challenge is how do you reach that audience cost-effectively, particularly when our most important mandate is to get to break even? Again, I think the answer is via social media. [audio distortion]. What, $94 million? Yeah, million. Yeah, yeah. I'm going to the opposite of the way our market for furniture. If you get a 1% rate on a house and you start to pick up dramatically, like you guys invest just automatically. Yeah, I mean, if we did, the question is, can we quantify the relationship between sort of our elasticity of demand, I guess, relative to the market, right? We, so I don't, it would be a guess if I came up with a number. Lower rates and higher volume in the real estate market is good for us. That I know, right? Shrinking demand in the real estate market is bad for us. We've been in that latter market really since we went public in 2021. That clearly is cyclical. It's not structural. At some point, it will rebound and we'll benefit from that. Our goal is to achieve profitability even without a market recovery, and we're confident in our ability to get there. You wouldn't, you know, 1stDibs, I'm not saying to watch from the corner, but I've heard that. I'm a great school guy. Yeah. Could you segment your market maybe a bit differently? Yeah, so the question is, you know, have we thought about changing the brand name to make it more luxury-friendly? I'd sort of dispute the premise of that, right? I mean, would you have thought of autos when you heard the word Ford in 1910? 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. Brands take on the attributes of their operations, of the markets they're in. 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 1stdibs, they would absolutely say luxury. Hence the Diane von Furstenberg story. The only reason I got that email is because she knows and loves 1stDibs. 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 association of the brand among those who have. I was saying just to go deep differently, not changing 1stDibs, but creating another thing. Yeah, we think there's a tremendous amount of equity in the brand name. I think that would be both not helpful from a marketing point of view and very expensive to do as well, by the way. We have a minute and a half left, which is the clock's winding down. Any remaining questions? Thank you very much. I appreciate your interest.