What Management Said
Read the full Q2 2026 transcript ↗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. 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 made on a year-over-year basis unless otherwise noted. Our second quarter results confirm that we are on track to sustainable top-line growth and positive adjusted EBITDA.
GMV of $96 million, up 7%, came in above the high end of our guidance range and was our strongest growth since the fourth quarter of 2024. Conversion grew for the 11th consecutive quarter, average order values expanded, and the number of sessions stabilized sequentially. High-end furniture demand, based on the credit card data we track, continues to decline year-over-year and has not shown material improvement. Our 2026 GMV growth expectation does not depend on a macro recovery.
GMV of $96 million and revenue of $23.3 million both came in above the high end of guidance and did so despite substantial sales and marketing reductions. Adjusted EBITDA margin of approximately 6% came in well above the high end of guidance, an improvement of over 13 percentage points versus a year ago. From 2022 through 2025, we re-engineered the business to be able to convert revenue recovery into outsized margin expansion. This dynamic was on full display in Q2, and our confidence in positive full-year adjusted EBITDA remains.
What went well
- GMV of $96 million grew 7% year-over-year, coming in above the high end of guidance and marking 1stDibs' strongest growth since the fourth quarter of 2024, achieved despite sales and marketing spend down more than 30%.
- Adjusted EBITDA of $1.3 million produced a margin of approximately 6%, well above the high end of guidance and an improvement of over 13 percentage points year-over-year, validating the re-engineered cost structure built from 2022 through 2025.
- All three funnel dimensions improved: conversion grew for the 11th consecutive quarter, average order value rose 10% to roughly $2,850 (median order value also up 10% to about $1,500), and sessions were flat sequentially as traffic declines moderated.
- Gross margin expanded 210 basis points year-over-year to 73.9%, at the high end of the 72%-74% target range, helped by lower professional services, depreciation, and shipping costs.
- Product velocity accelerated with AI-assisted development now generating over 70% of new code (up from over 50% last quarter), enabling launches like mobile/desktop image search, ML-powered freight quoting (pre-quote coverage to ~90%), and an AI customer-service chatbot pilot.
- Management upgraded its full-year framework, now expecting GMV to grow year-over-year for all of 2026 and a third consecutive year of revenue growth, alongside a return of $11.1 million to shareholders via buybacks that exhausted the 2026 authorization.
What went wrong
- The demand backdrop stayed weak: the U.S. housing market hovered near a 30-year low, the spring selling season ended softly, and syndicated credit-card data showed high-end home furnishings declining mid-single digits year-over-year with no material improvement.
- Active buyers fell 10% to approximately 57,700 and order volume declined year-over-year, both direct consequences of the deliberate late-2025 reduction in sales and marketing spend.
- The company withdrew its positive free-cash-flow commitment for 2026: an accounting reclassification tied to a change in its payment-processor agreements (~$5.9 million of cash moved to receivables) means reported free cash flow is no longer likely to be positive, though management stressed the underlying business is generating cash ahead of plan.
- Take rates declined about 30 basis points year-over-year and full-year take-rate guidance was cut to 24%-25% (from 25%-26%) as a mix shift toward higher-value orders carries a lower blended commission rate.
- Q3 is the seasonally softest quarter and faces the toughest year-over-year GMV comparison of 2026, driving guidance for a sequential revenue step-down and an adjusted EBITDA margin of just -1% to +2%.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| GMV | Q3 2026 | $89M-$94M (flat to +6% YoY) |
| Net revenue | Q3 2026 | $22.0M-$22.9M (flat to +4% YoY) |
| Adjusted EBITDA margin | Q3 2026 | -1% to +2% |
| GMV growth | FY2026 | Now expected to grow year-over-year for the full year (Q4 growth reaffirmed) |
| Revenue take rate | FY2026 | 24%-25% (mix shift to higher-value, lower-commission orders) |
| Gross margin | FY2026 | 72%-74% |
| Adjusted EBITDA | FY2026 | Positive for the full year |
| Free cash flow | FY2026 | No longer likely positive due to a non-economic payment-processor accounting reclassification |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| GMV | +7% to $96M | Above the high end of guidance and strongest growth since Q4 2024, driven by roadmap progress across discovery, trust, shipping, and service rather than any macro tailwind. |
| Net revenue | +5% to $23.3M | Above guidance; transaction revenue (tied to GMV) was ~74% of the total, plus ~$270K of non-endemic 1stDibs 50 advertising revenue; grew slower than GMV on a lower blended take rate. |
| Average order value | +10% to ~$2,850 | Broad-based strength (median order value also +10% to ~$1,500), aided by two high-value art sales totaling over $2 million; reflects buyer trust at the high end of the market. |
| Gross margin | +210 bps to 73.9% | High end of the 72%-74% target range on lower professional services, depreciation, and shipping costs. |
| Adjusted EBITDA margin | +13 pts to ~6% | Revenue upside flowing disproportionately to the bottom line from the 2022-2025 cost-structure rebuild; adjusted EBITDA of $1.3M. |
| Sales & marketing expense | -34% to $5.4M | Late-2025 realignment that reset the marketing organization and rationalized performance-marketing spend; S&M fell to 23% of revenue from 37%. |
| Active buyers | -10% to ~57,700 | Deliberate reduction in sales and marketing spend; unique sellers held steady at ~5,700 and listings grew 1% to nearly 1.9 million. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Four-pillar product roadmap | Pillars were discovery, pricing, shipping, and service | The pricing pillar was broadened into a wider 'trust' initiative spanning authenticity, seller quality, and platform integrity; first half built the foundation, second half focuses on broadening deployment across service areas. | — |
| AI as the core growth engine | Over 50% of new code AI-assisted | Over 70% of new code is now AI-assisted; AI drives the highest-priority initiatives in each pillar (semantic/natural-language search, personalization ML model, ML freight quoting, and the customer-service chatbot). | — |
| Discovery and personalization | Recommendations surfaced items similar to prior views | Launched image search on mobile web and desktop across ~1.9 million listings and a new personalization ML model that drove the highest-ever homepage recommendation click-through rate; homepage evolving from an editorial destination to a personalized feed. | — |
| Growth independent of the macro | Growth expected to require an eventual housing recovery | Management repeatedly stressed 2026 GMV growth does not depend on a macro recovery, citing Q2 as proof, while noting the business would benefit whenever the luxury housing and home-furnishings market normalizes. | — |
| Tastemakers / social media | Ambassador program in pilot | Pilot completed with Instagram following topping 1 million, Reels production doubling year-over-year, and total video view time tripling versus Q1; program to be scaled significantly in the second half, improving paid-media efficiency and reaching a younger audience. | — |
| Capital returns | Repurchase program active | Repurchased ~2.4 million shares for $11.1 million in Q2, exhausting the 2026 authorization; cumulative buybacks of ~11.4 million shares for ~$55.3 million; ended the quarter with $67.7 million in cash and investments. | — |
Q&A Summary
Bobby Brooks (Northland Capital Markets) asked what growth or cost initiatives implemented in Q2 or planned for coming quarters could continue to bolster results.
Rosenblatt said growth is driven off the four-pillar roadmap, reached a couple of quarters ahead of plan; the first half built the foundation and the second half is about broadening deployment. Wins included a new personalization ML model on the homepage (rolling out more broadly), doubled price-parity coverage expanding into a broader trust initiative, ML-driven freight pre-quote coverage reaching ~90%, and a successfully tested AI customer-service chatbot to be rolled out more widely.
Brooks asked whether Q2 was helped by any luxury-market trends and how large a benefit a housing recovery could provide.
Rosenblatt confirmed no help from the market -- luxury home furnishings declined mid-single digits per credit-card data -- and attributed the outperformance to stabilized traffic and 10% AOV growth (with median order value up the same 10%, signaling broad-based strength). A market recovery would be positive but is hard to quantify; the point is growth came in spite of a contracting market and while still comping 30%+ S&M cuts.
Brooks asked how scaling the Tastemakers program affects the sales and marketing line and what engagement growth to expect.
Rosenblatt said the program is off to a great start, reaches a broader and younger audience cost-effectively, hedges SEO/search uncertainty, and over time helps the paid program. Etergino added the company stays very disciplined on paid marketing, focused on unit economics, and would increase paid buying only where it remains profitable.
Jack Brenczewski (William Blair, for Ralph Schackart) asked for a framework for continued GMV growth beyond Q4 2026 given the muted housing macro.
Rosenblatt expressed higher conviction than before, citing an improving sales-and-marketing lapping effect (full-quarter benefit in Q4, continuing into early 2027), the compounding foundational roadmap as a multi-year endeavor, AI as the primary driver of the highest-impact initiatives, and eventual TAM-expansion opportunities -- reiterating that growth does not require a housing-market recovery.
More on 1stdibs.com, Inc.
Reported 2026-08-05 · figures from the 1stdibs.com, Inc. Q2 2026 earnings call.
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