1stdibs.com Inc.

11/05/2026 | Press release | Distributed by Public on 11/05/2026 07:54

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion And Analysis of Financial Condition And Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements based upon current plans, expectations, and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" in our Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Company Overview
We are one of the world's leading online marketplaces for connecting design lovers with many of the best sellers and makers of vintage, antique, and contemporary furniture, home décor, jewelry, watches, art, and fashion. We believe we are a leading online marketplace for these luxury design items based on the aggregate number of listings on our online marketplace and our Gross Merchandise Value ("GMV"). Our sellers, who undergo an evaluation by our in-house experts to vet the quality of their inventory, in-depth marketing content, and custom-built technology platform create trust in our brand and facilitate high-consideration purchases of luxury design items online. By disrupting the way these items are bought and sold, we are both expanding access to, and growing the market for, luxury design.
1stDibs began over two decades ago with the vision of bringing the magic of the Paris flea market online by creating a listings site for top vintage and antique furniture sellers. The quality of our initial seller base enabled us to build a reputation in the design industry as a trusted source for unique luxury design. Since then, we have strengthened our brand as well as deepened and broadened our seller relationships. We launched our e-commerce platform in 2013 and transitioned to a full e-commerce marketplace model in 2016.
Key Operating and Financial Metrics
We use the following key metrics and non-GAAP measures to evaluate our performance, identify trends affecting our business, and make strategic decisions:
•GMV;
•Number of Orders;
•Active Buyers; and
•Adjusted EBITDA and Adjusted EBITDA Margin (see "Non-GAAP Financial Measures" for a discussion of Adjusted EBITDA and Adjusted EBITDA Margin and a reconciliation of net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA).
•Free cash flow (see "Non-GAAP Financial Measures" for a discussion of free cash flow and a reconciliation of cash from operating activities, the most directly comparable financial measure calculated and presented in accordance with GAAP, to free cash flow)
For GMV, Number of Orders, and Active Buyers, these metrics are based on internal company data, assumptions, and estimates and are used in managing our business. We believe that these figures are reasonable estimates, and we actively take measures to improve their accuracy, such as eliminating known fictitious or duplicate accounts. There are, however, inherent challenges in gathering accurate data across large online and mobile populations. For example, individuals may have multiple email accounts in violation of our terms of service, which would result in an Active Buyer being counted more than once, thus impacting the accuracy of our number of Active Buyers. In addition, certain metrics, such as the number of Active Buyers, Number of Orders, and GMV are measured based on such numbers as reported in a given month, minus cancellations within that month. As we do not retroactively adjust such numbers for cancellations occurring after the month, the metrics presented do not reflect subsequent order cancellations. We regularly review and may adjust our processes for calculating these metrics to improve their accuracy. These key operating and financial metrics may vary from period to period and should not be viewed as indicative of other metrics.
Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2026 2025 2026 2025
GMV $ 92,632 $ 89,064 $ 278,367 $ 273,695
Number of Orders 32,337 31,960 95,025 100,041
Active Buyers 58,228 63,195 58,228 63,195
Adjusted EBITDA (unaudited) $ 1,030 $ (243) $ 2,890 $ (3,743)
Free cash flow (unaudited) $ 2,929 $ (1,696) $ (1,302) $ (7,384)
Gross Merchandise Value
We define GMV as the total dollar value from items sold by our sellers through 1stDibs in a given month, minus cancellations within that month, and excluding shipping and applicable taxes. GMV includes all sales reported to us by our sellers, whether transacted through the 1stDibs online marketplace or reported as an offline sale. We view GMV as a measure of the total economic activity generated by our online marketplace and as an indicator of the scale, growth, and health of our online marketplace. Our historical performance for GMV may not be indicative of future performance in GMV.
Number of Orders
We define Number of Orders as the total number of orders placed or reported through the 1stDibs online marketplace in a given month, minus cancellations within that month. Our historical performance for Number of Orders may not be indicative of future performance in Number of Orders.
Active Buyers
We define Active Buyers as buyers who have made at least one purchase through our online marketplace during the 12 months ended on the last day of the period presented, net of cancellations. A buyer is identified by a unique email address; thus an Active Buyer could have more than one account if they were to use a separate unique email address to set up each account. We believe this metric reflects scale, engagement and brand awareness, and our ability to convert user activity on our online marketplace into transactions. Our historical performance for Active Buyers may not be indicative of future performance in Active Buyers.
Adjusted EBITDA and Adjusted EBITDA Margin
We define Adjusted EBITDA as net loss excluding depreciation and amortization, stock-based compensation expense, other income, net, provision for income taxes, litigation reserves, settlements, and related expenses, and restructuring expenses. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net revenue. Adjusted EBITDA and Adjusted EBITDA Margin are a key performance measures used by our management and board of directors to assess our operating performance and the operating leverage of our business. We believe that Adjusted EBITDA and Adjusted EBITDA Margin help identify underlying trends in our business that could otherwise be masked by the effect of the income and expenses that we exclude from Adjusted EBITDA and Adjusted EBITDA Margin. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors and others in understanding and evaluating our operating results, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to key financial metrics used by our management in their financial and operational decision-making. See "Non-GAAP Financial Measures" for more information and for a reconciliation of net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA.
Free cash flow
We define free cash flow as net cash from operating activities less purchases of property and equipment. We use free cash flow as a supplemental measure of liquidity and to evaluate our ability to generate cash from operations that can be used for strategic initiatives and working capital requirements. We believe that free cash flow is an important financial measure for use in evaluating our financial performance. See "Non-GAAP Financial Measures" for more information and for a reconciliation of net cash from operating activities, the most directly comparable financial measure calculated and presented in accordance with GAAP, to free cash flow.
Components of Results of Operations
Net Revenue
Our net revenue consists principally of seller marketplace services. Seller marketplace services primarily consist of marketplace transactions, subscriptions, and sponsored listings. Marketplace transaction fees are collected when sellers pay us commissions ranging from 5% to 50% of GMV and processing fees, which are approximately 3% of the buyer's total payment, net of expected refunds. If a seller accepts a return or refund for an on-platform purchase, the related commission and, in some cases, processing fees are refunded. Subscriptions provide access to our online marketplace, allowing sellers, who are our customers, to execute successful purchase transactions with buyers. We offer our sellers various subscription pricing tiers which allows them to choose the plan that best fits their business, with choices of a higher monthly subscription fee and lower commission rates or lower monthly subscription fee and higher commission rates. Listing fee revenue is collected when sellers pay us for promoting certain products on their behalf and at their discretion through our online marketplace. Advertisements consist of impression-based ads displayed on our online marketplace on the seller's behalf.
Cost of Revenue
Cost of revenue includes payment processor fees and hosting expenses. Cost of revenue also includes payroll, employee benefits, stock-based compensation, other headcount-related expenses associated with personnel supporting revenue-related operations and logistics, consulting costs, and amortization expense related to our capitalized internal-use software.
In certain transactions where our shipping services are elected by sellers, we facilitate shipping of items purchased from the seller to the buyer. The difference between the amount collected for shipping and the amount charged by the shipping carrier is included in cost of revenue in our condensed consolidated statements of operations. We facilitate fulfillment and shipping, but do not take ownership of or manage inventory.
Gross Profit and Gross Margin
Gross profit is net revenue less cost of revenue, and gross margin is gross profit as a percentage of net revenue. Gross profit has been, and will continue to be, affected by various factors, including leveraging economies of scale, the costs associated with hosting our platform, the level of amortization of our internal-use software, the fluctuations in shipping costs including our ability to pass these costs on to buyers, and the extent to which we expand our operations. We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors.
Sales and Marketing
Sales and marketing expenses include payroll, employee benefits, stock-based compensation, other headcount-related expenses associated with sales and marketing personnel, advertising expense, consulting costs, and promotional discounts offered to new and existing buyers. Advertising expenses consist primarily of costs incurred promoting and marketing our services, such as costs associated with acquiring new users through performance-based marketing, social media programs, email, and events. Promotional discounts and incentives represent incentives solely to buyers and, therefore, are not considered payments made to our customers. Buyers are not our customers because access to the 1stDibs online marketplace is free for buyers, and we have no performance obligations with respect to buyers; we consider our sellers to be our customers.
Technology Development
Technology development expenses include payroll, employee benefits, stock-based compensation, and other headcount-related expenses associated with engineering and product development personnel and consulting costs related to technology development. We expense all technology development expenses as incurred, except for those expenses that meet the criteria for capitalization as internal-use software.
General and Administrative
General and administrative expenses include payroll, employee benefits, stock-based compensation, and other headcount-related expenses associated with finance, legal, facility and human resources related personnel, lease expense, net of sublease income, comprehensive insurance costs, accounting, professional fees, consulting costs, and depreciation of property and equipment. We expense all general and administrative expenses as incurred.
Provision for Transaction Losses
Provision for transaction losses primarily consists of transaction loss expense associated with our purchase protection program, including damages to products caused in shipping and transit, reimbursements to dissatisfied buyers at our discretion, and items that were not received or not as described by the seller. The provision for transaction losses also includes bad debt expense associated with our seller accounts receivable balance.
Results of Operations
The following table summarizes our results of operations for the periods indicated:
(in thousands) Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Net revenue $ 23,094 $ 21,972 $ 68,799 $ 66,652
Cost of revenue 6,193 5,641 18,002 18,101
Gross profit 16,901 16,331 50,797 48,551
Operating expenses:
Sales and marketing 5,347 7,959 17,017 25,217
Technology development 6,364 5,906 18,868 17,420
General and administrative 6,495 6,358 19,996 19,916
Provision for transaction losses 952 791 2,555 2,653
Total operating expenses 19,158 21,014 58,436 65,206
Loss from operations (2,257) (4,683) (7,639) (16,655)
Other income, net:
Interest income 637 977 2,195 3,065
Other, net 390 252 1,055 1,040
Total other income, net 1,027 1,229 3,250 4,105
Net loss before income taxes (1,230) (3,454) (4,389) (12,550)
Provision for income taxes (19) (52) (57) (75)
Net loss $ (1,249) $ (3,506) $ (4,446) $ (12,625)
The following table summarizes our results of operations as a percentage of net revenue for the periods indicated:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Net revenue 100 % 100 % 100 % 100 %
Cost of revenue 27 26 26 27
Gross profit 73 74 74 73
Operating expenses:
Sales and marketing 23 36 25 38
Technology development 28 27 27 26
General and administrative 28 29 29 30
Provision for transaction losses 4 4 4 4
Total operating expenses 83 96 85 98
Loss from operations (10) (22) (11) (25)
Other income, net:
Interest income 3 5 3 5
Other, net 2 1 2 1
Total other income, net 5 6 5 6
Net loss before income taxes (5) (16) (6) (19)
Provision for income taxes - - - -
Net loss (5) % (16) % (6) % (19) %
Comparison of the Three Months Ended September 30, 2026 and 2025
Net Revenue
Three Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
Net revenue $ 23,094 $ 21,972 $ 1,122 5 %
Net revenue was $23.1 million for the three months ended September 30, 2026, as compared to $22.0 million for the three months ended September 30, 2025. The increase of $1.1 million, or 5%, was due to an increase in GMV, mainly due to an increase in average order values and orders for the three months ended September 30, 2026. Additionally, sponsored listings advertising revenue increased $0.3 million. While GMV, number of orders, and net revenue increased, we believe our GMV, number of orders, and net revenue have continued to be impacted negatively, both directly and indirectly, by macroeconomic factors, including significant housing market volatility and global economic and geopolitical developments. While this is our belief, the impacts are difficult to isolate and quantify. We believe we have positioned, and continue to work to position the business to benefit from an improvement in macroeconomic factors.
Our marketplace transaction fees represent the majority of our net revenue and accounted for 74% of our net revenue for both of the three months ended September 30, 2026 and 2025. Subscription fees accounted for 20% and 21% of our net revenue for the three months ended September 30, 2026 and 2025, respectively.
Cost of Revenue
Three Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
Cost of revenue $ 6,193 $ 5,641 $ 552 10 %
Cost of revenue was $6.2 million for the three months ended September 30, 2026, as compared to $5.6 million for the three months ended September 30, 2025. The increase of $0.6 million, or 10%, was mainly due to a $0.3 million increase in credit card processing fees related to the increase in GMV and a $0.2 million increase in net shipping expense mainly due to a one-time insurance recovery related to a shipping matter during the three months ended September 30, 2025.
Gross Profit and Gross Margin
Gross profit was $16.9 million and gross margin was 73.2% for the three months ended September 30, 2026, as compared to gross profit of $16.3 million and gross margin of 74.3% for the three months ended September 30, 2025. The increase in gross profit for the three months ended September 30, 2026 was primarily driven by net revenue increasing $0.6 million more than cost of revenue, as outlined above. The decrease in gross margin percentage was primarily due to cost of revenue increasing at a greater percentage than net revenue, as outlined above.
Operating Expenses
Sales and Marketing
Three Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
Sales and marketing $ 5,347 $ 7,959 $ (2,612) (33) %
Sales and marketing expense was $5.3 million for the three months ended September 30, 2026, as compared to $8.0 million for the three months ended September 30, 2025. The decrease of $2.6 million, or 33%, was mainly due to a $2.0 million decrease in headcount costs which included a $1.7 million decrease in salaries and benefits and a $0.3 million decrease in stock-based compensation expense mainly due to our recent reorganizations. General marketing and performance-based marketing expenses each decreased by $0.3 million, further contributing to the overall decline in expenses.
Technology Development
Three Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
Technology development $ 6,364 $ 5,906 $ 458 8 %
Technology development expense was $6.4 million for the three months ended September 30, 2026, as compared to $5.9 million for the three months ended September 30, 2025. The increase of $0.5 million, or 8%, was mainly due to a $0.3 million increase in salaries and benefits from our annual March compensation adjustments.
General and Administrative
Three Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
General and administrative $ 6,495 $ 6,358 $ 137 2 %
General and administrative expense was $6.5 million for the three months ended September 30, 2026, as compared to $6.4 million for the three months ended September 30, 2025. The increase of $0.1 million, or 2%, was mainly due to a $0.3
million increase in salaries and benefits from our annual March compensation adjustments partially offset by a $0.2 million decrease in stock-based compensation expense as fully vested awards were replenished with awards at lower fair values.
Provision for Transaction Losses
Three Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
Provision for transaction losses $ 952 $ 791 $ 161 20 %
Provision for transaction losses was $1.0 million for the three months ended September 30, 2026, as compared to $0.8 million for the three months ended September 30, 2025. The increase of $0.2 million, or 20%, was mainly due to increased shipping damage charges and seller bad debts.
Other Income, Net
Three Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
Total other income, net $ 1,027 $ 1,229 $ (202) (16) %
Other income, net was $1.0 million for the three months ended September 30, 2026, as compared to $1.2 million for the three months ended September 30, 2025. The decrease of $0.2 million, or 16%, was mainly due to lower interest income driven by lower cash, cash equivalents, and short-term investments for the three months ended September 30, 2026.
Comparison of the Nine Months Ended September 30, 2026 and 2025
Net Revenue
Nine Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
Net revenue $ 68,799 $ 66,652 $ 2,147 3 %
Net revenue was $68.8 million for the nine months ended September 30, 2026, as compared to $66.7 million for the nine months ended September 30, 2025. The increase of $2.1 million, or 3%, was primarily driven by an increase in GMV which was mainly due to an increase in average order values partially offset by a decrease in orders. Sponsored listings and non-endemic advertising increased $1.1 million further contributing to the overall net revenue increase. While GMV and net revenue increased, we believe our GMV, number of orders, and net revenue have continued to be impacted negatively, both directly and indirectly, by macroeconomic factors, including significant housing market volatility and global economic and geopolitical developments. While this is our belief, the impacts are difficult to isolate and quantify. We believe we have positioned, and continue to work to position the business to benefit from an improvement in macroeconomic factors.
Our marketplace transaction fees represent the majority of our net revenue and accounted for 74% of our net revenue for each of the nine months ended September 30, 2026 and 2025. Subscription fees accounted for 21% of our net revenue for each of the nine months ended September 30, 2026 and 2025.
Cost of Revenue
Nine Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
Cost of revenue $ 18,002 $ 18,101 $ (99) (1) %
Cost of revenue was $18.0 million for the nine months ended September 30, 2026, relatively flat compared to $18.1 million for the nine months ended September 30, 2025. There was a $0.4 million decrease in hosting expenses due to lower rates negotiated with our vendors, partially offset by a $0.3 million increase in credit card fees related to the increase in GMV.
Gross Profit and Gross Margin
Gross profit was $50.8 million and gross margin was 73.8% for the nine months ended September 30, 2026, as compared to gross profit of $48.6 million and gross margin of 72.8% for the nine months ended September 30, 2025. The increase in gross profit and gross margin for the nine months ended September 30, 2026 was primarily driven by the increase in revenue while cost of revenue remained relatively flat, as outlined above.
Operating Expenses
Sales and Marketing
Nine Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
Sales and marketing $ 17,017 $ 25,217 $ (8,200) (33) %
Sales and marketing expense was $17.0 million for the nine months ended September 30, 2026, as compared to $25.2 million for the nine months ended September 30, 2025. The decrease of $8.2 million, or 33%, was mainly due to a $3.9 million decrease in headcount costs which included a $2.9 million decrease in salaries and benefits and a $1.0 million decrease in stock-based compensation expense mainly due to our recent reorganizations, and a $3.5 million decrease in performance-based marketing. Additionally, there was a $0.6 million decrease in general marketing expenses due to lower usage of certain vendors.
Technology Development
Nine Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
Technology development $ 18,868 $ 17,420 $ 1,448 8 %
Technology development expense was $18.9 million for the nine months ended September 30, 2026, as compared to $17.4 million for the nine months ended September 30, 2025. The increase of $1.4 million, or 8%, was mainly due to a $1.0 million increase in salaries and benefits resulting from our annual compensation adjustments in March and a $0.3 million increase due to professional fees incurred mainly for non-capitalizable, one-time, application implementation costs.
General and Administrative
Nine Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
General and administrative $ 19,996 $ 19,916 $ 80 - %
General and administrative expense was $20.0 million for the nine months ended September 30, 2026, relatively flat compared to $19.9 million for the nine months ended September 30, 2025.
Provision for Transaction Losses
Nine Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
Provision for transaction losses $ 2,555 $ 2,653 $ (98) (4) %
Provision for transaction losses was $2.6 million for the nine months ended September 30, 2026, as compared to $2.7 million for the nine months ended September 30, 2025. The decrease of $0.1 million, or 4%, was mainly due to the timing and volume of damage and chargeback claims.
Other Income, Net
Nine Months Ended September 30,
(in thousands) 2026 2025 $ Change % Change
Total other income, net $ 3,250 $ 4,105 $ (855) (21) %
Other income, net was $3.3 million for the nine months ended September 30, 2026, as compared to $4.1 million for the nine months ended September 30, 2025. The decrease of $0.9 million, or 21%, was mainly due to lower interest income, driven by lower cash, cash equivalents, and short-term investments for the nine months ended September 30, 2026.
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin
We have included Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures, because they are key measures used by our management team and our board of directors to help us to assess our operating performance and the operating leverage in our business. We also use these measures to analyze our financial results, establish budgets and operational goals for managing our business, and make strategic decisions. We believe that Adjusted EBITDA and Adjusted EBITDA Margin help identify underlying trends in our business that could otherwise be masked by the effect of the income and expenses that we exclude from Adjusted EBITDA and Adjusted EBITDA Margin. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors and others in understanding and evaluating our results of operations, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to key financial metrics used by our management in their financial and operational decision-making. We also believe that the presentation of these non-GAAP financial measures provides an additional tool for investors to use in comparing our core business and results of operations over multiple periods with other companies in our industry, many of which present similar non-GAAP financial measures to investors, and to analyze our operating performance.
The non-GAAP financial measures presented may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated. The non-GAAP financial measures presented should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, comparable financial measures calculated in accordance with GAAP. Further, these non-GAAP financial measures have certain limitations in that they do not include the impact of certain expenses that are reflected in our condensed consolidated statements of operations. Accordingly, these non-GAAP financial measures should be considered as supplemental in nature, and are not intended, and should not be construed, as a substitute for the related financial information calculated in accordance with GAAP. These limitations of Adjusted EBITDA and Adjusted EBITDA Margin include the following:
•The exclusion of certain recurring, non-cash charges, such as depreciation and amortization of property and equipment. While these are non-cash charges, we may need to replace the assets being depreciated in the future and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect cash requirements for these replacements or new capital expenditure requirements;
•The exclusion of stock-based compensation expense, which has been a significant recurring expense and will continue to constitute a significant recurring expense for the foreseeable future, as equity awards are expected to continue to be an important component of our compensation strategy;
•The exclusion of other income, net, which includes interest income related to our cash, cash equivalents and short-term investments, and realized and unrealized gains and losses on foreign currency exchange;
•The exclusion of provision for income taxes;
•The exclusion of litigation reserves, settlements, and related expenses for specific proceedings that we have determined arise outside of the ordinary course of business and are nonrecurring, infrequent or unusual; and
•The exclusion of discrete restructuring expenses such as severance and benefit costs from reductions in force and reorganizations that are fundamentally different in strategic nature from ongoing initiatives. We believe the exclusion of these items facilitates a more consistent comparison of operating performance over time because they are distinct from ongoing operational costs.
Because of these limitations, you should consider Adjusted EBITDA and Adjusted EBITDA Margin alongside other financial performance measures, including net loss and our other GAAP results.
We define Adjusted EBITDA as our net loss, excluding: (1) depreciation and amortization; (2) stock-based compensation expense; (3) other income, net; (4) provision for income taxes; (5) litigation reserves, settlements, and related expenses; and (6) restructuring expenses. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net revenue. The following table provides a reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2026 2025 2026 2025
Net loss $ (1,249) $ (3,506) $ (4,446) $ (12,625)
Excluding:
Depreciation and amortization 358 392 1,113 1,272
Stock-based compensation expense 2,772 3,246 8,765 10,838
Other income, net (1,027) (1,229) (3,250) (4,105)
Provision for income taxes 19 52 57 75
Litigation reserves, settlements, and related expenses 157 - 157 -
Restructuring expenses - 802 494 802
Adjusted EBITDA (non-GAAP) $ 1,030 $ (243) $ 2,890 $ (3,743)
Divided by:
Net revenue $ 23,094 $ 21,972 $ 68,799 $ 66,652
Adjusted EBITDA Margin (non-GAAP) 4.5 % (1.1) % 4.2 % (5.6) %
Free Cash Flow
Free cash flow is a non-GAAP financial measure defined as net cash from operating activities less purchases of property and equipment. We use free cash flow as a supplemental measure of liquidity and to evaluate our ability to generate cash from operations that can be used for strategic initiatives and working capital requirements.
We believe that free cash flow is an important financial measure for use in evaluating our financial performance. Free cash flow has limitations as it omits certain components of the condensed consolidated statements of cash flows and does not represent the residual cash flow available for discretionary expenditures. Other companies may calculate free cash flow differently, which reduces its usefulness as a comparative measure. As a result of these limitations, free cash flow should be considered in addition to, rather than as a substitute for, net cash from operating activities as a measure of our liquidity and our other GAAP results.
The following table reflects the reconciliation of net cash from operating activities to free cash flow for each of the periods indicated:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2026 2025 2026 2025
Net cash provided by (used in) operating activities
$ 3,268 $ (1,468) $ (434) $ (6,707)
Purchases of property and equipment (339) (228) (868) (677)
Free cash flow (unaudited) $ 2,929 $ (1,696) $ (1,302) $ (7,384)
Liquidity and Capital Resources
As of September 30, 2026, we had cash, cash equivalents and short-term investments of $69.0 million and an accumulated deficit of $350.5 million. Net cash used in operating activities was $0.4 million in the nine months ended September 30, 2026. We expect operating losses to continue in the foreseeable future as we continue to strategically invest in growth activities. Our cash flows, including net cash used in or provided by operating activities, may vary from quarter to quarter, due to the timing of payments to sellers, vendor contracts and prepayments, annual bonuses, marketing related expenses, and other factors. Our principal use of cash is to fund our operations including platform development to support our strategic initiatives and anticipated share repurchases under our Stock Repurchase Programs. As of September 30, 2026, a change to our payment processor agreement resulted in a reclassification of cash and cash equivalents to receivables from payment processors and seller accounts, which is recorded in total current assets. These amounts represent amounts received or expected to be received from buyers through third-party payment processors which flow through a bank account for payment to sellers in connection with marketplace transactions. Additionally, our net cash provided by (used in) operating activities and free cash flow for the three and nine months ended September 30, 2026, were negatively impacted by approximately $2.3 million and $8.2 million, respectively.
Based on our current plans, we believe our existing cash, cash equivalents and short-term investments will be sufficient to fund our operations and capital expenditure requirements through at least the next 12 months. We expect to continue to incur substantial expenditures in the near term to support our ongoing activities. While management believes that our current cash, cash equivalents and short-term investments are sufficient to fund our operating expenses and capital expenditure requirements for at least the next 12 months, we may need to borrow funds or raise additional equity to achieve our longer-term business objectives.
Our future capital requirements will depend on many factors, including:
•the emergence of competing online marketplaces and other adverse market developments;
•the timing and extent of our sales and marketing and technology development expenditures; and
•any investments, acquisitions or other similar strategic endeavors we may choose to pursue in the future.
A change in the outcome of any of these or other variables could significantly impact our operating plans, and we may need additional funds to meet operational needs and capital requirements associated with such plans. In addition, any future borrowings may result in additional restrictions on our business and any issuance of additional equity would result in dilution to investors. If we are unable to raise additional capital when we need it, it could harm our business, results of operations, and financial condition.
Stock Repurchase Program
In November 2025, our Board of Directors authorized us to repurchase up to an aggregate of $12.0 million of our common stock ("2025 Stock Repurchase Program"). In May 2026, the Company's Board of Directors authorized the Company to repurchase up to an aggregate of $10.0 million of its common stock ("2026 Stock Repurchase Program") and as of June 30, 2026, the 2025 Stock Repurchase Program was completed. In November 2026, the Company's Board of Directors authorized the Company to repurchase up to an aggregate of $5.0 million of its common stock ("November 2026 Stock Repurchase Program").
During the nine months ended September 30, 2026, 4,141,020 shares of our common stock were repurchased for a total cost of $20.7 million. As of September 30, 2026, no funds remained available for future repurchases under our 2026 Stock Repurchase Program. The following table summarizes total treasury stock purchased under each of the Company's programs as of the periods presented:
(in thousands except share amounts) September 30, 2026 December 31, 2025
Shares Cost Basis Shares Cost Basis
2023 Stock Repurchase Program 4,926,635 $ 25,373 4,926,635 $ 25,373
2024 Stock Repurchase Program 1,994,879 8,039 1,994,879 8,039
2025 Stock Repurchase Program 2,267,670 12,095 316,546 1,565
2026 Stock Repurchase Program 2,189,896 $ 10,200 - $ -
Total 11,379,080 $ 55,707 7,238,060 $ 34,977
Cash Flows
The following table summarizes our cash flows for the periods indicated:
Nine Months Ended September 30,
(in thousands) 2026 2025
Net cash used in operating activities
$ (434) $ (6,707)
Net cash provided by investing activities 21,880 4,202
Net cash used in financing activities
(24,260) (3,776)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (62) 294
Net decrease in cash, cash equivalents, and restricted cash $ (2,876) $ (5,987)
Cash Flows from Operating Activities
Net cash used in operating activities was $0.4 million for the nine months ended September 30, 2026 and was due mainly to the $9.4 million increase in receivables from payment processors and seller accounts mainly due to the $8.2 million impact resulting from a change to our payment processor agreement, as further discussed above, and the timing of receivable settlements. There was also a $3.3 million decrease in operating lease liabilities due to our operating lease payments. These changes were partially offset by positive operating results and a $2.2 million increase in payables due to sellers due to the timing of seller payments and GMV.
Net cash used in operating activities was $6.7 million for the nine months ended September 30, 2025 and was due mainly to changes in operating assets and liabilities, including a $3.1 million decrease in operating lease liabilities due to our operating lease payments, a $1.8 million increase in prepaid expenses and other current assets due to timing of prepaid contracts, a $1.5 million decrease in payables due to sellers as a result of timing of when sellers are paid, and a $1.1 million decrease in accounts payable and accrued expenses due to the timing of vendor invoices and related invoices.
Cash Flows from Investing Activities
Net cash provided by investing activities was $21.9 million for the nine months ended September 30, 2026, and was mainly due to $50.5 million in maturities and sales of short-term investments, partially offset by $27.8 million in purchases of short-term investments and $0.9 million in purchases of property and equipment.
Net cash provided by investing activities was $4.2 million for the nine months ended September 30, 2025, and was mainly due to $56.8 million in maturities and sales of short-term investments, partially offset by $51.9 million in purchases of short-term investments.
Cash Flows from Financing Activities
Net cash used in financing activities was $24.3 million for the nine months ended September 30, 2026, and was driven primarily by $20.7 million in repurchases of our common stock as part of our 2025 and 2026 Stock Repurchase Programs and $3.6 million of payments for taxes related to net share settlements of stock-based compensation awards.
Net cash used in financing activities was $3.8 million for the nine months ended September 30, 2025, and was driven primarily by $2.0 million of payments for taxes related to net share settlements of stock-based compensation awards and $1.8 million in repurchases of our common stock as part of our 2024 Stock Repurchase Program.
Contractual Obligations
As of September 30, 2026, any changes in commitments under contractual obligations compared to the contractual obligations disclosed in our Form 10-K were disclosed in Note 13 "Commitments and Contingencies".
Recent Accounting Pronouncements
See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" to our condensed consolidated financial statements for a description of recently issued accounting pronouncements.
Emerging Growth Company
We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.
There have been no significant changes to our critical accounting policies and estimates included in our Form 10-K.
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