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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended September 30, 2023

OR

o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from _________ to __________

Commission file number 333-256188

1STDIBS.COM, INC.

(Exact name of registrant as specified in its charter)

Delaware						94-3389618
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
51 Astor Place, 3rd Floor New York, New York						10003
(Address of Principal Executive Offices)						(Zip Code)

(212) 627-3927

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, $0.01 par value per share			DIBS			Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer			o			Accelerated filer			o
Non-accelerated filer			x			Smaller reporting company			x
						Emerging growth company			x

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes   o     No  x

As of October 27, 2023, the registrant had 39,981,248 shares of common stock, $0.01 par value per share outstanding.

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TABLE OF CONTENTS

						Pages
Part I - Financial Information
Item 1.			Condensed Consolidated Financial Statements (Unaudited):			7
			Condensed Consolidated Balance Sheets			7
			Condensed Consolidated Statements of Operations			8
			Condensed Consolidated Statements of Comprehensive Loss			9
			Condensed Consolidated Statements of Stockholders’ Equity			10
			Condensed Consolidated Statements of Cash Flows			11
			Notes to Unaudited Condensed Consolidated Financial Statements			12
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			34
Item 4.			Controls and Procedures			35
Part II - Other Information
Item 1.			Legal Proceedings			36
Item 1A.			Risk Factors			36
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			67
Item 6.			Exhibits Index			68
Signatures						69

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. Any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “can,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “target,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

•our future financial performance, including our expectations regarding our net revenue, cost of revenue, operating expenses, and our ability to achieve and maintain future profitability;

•our ability to effectively manage or sustain our growth and to effectively expand our operations, including internationally;

•our strategies, plans, objectives and goals;

•the market demand for the products offered on our online marketplace, including vintage, antique, and contemporary furniture, home décor, jewelry, watches, art, and fashion, new and authenticated luxury design products in general, and the online market for these products;

•our ability to compete with existing and new competitors in existing and new markets;

•our ability to attract and retain sellers and buyers;

•our ability to increase the supply of luxury design products offered through our online marketplace;

•our ability to timely and effectively scale our operations;

•our ability to enter international markets;

•our ability to successfully implement, launch, and achieve market acceptance of our 1stDibs Auctions offering and to anticipate and manage the risks associated therewith

•our ability to develop and protect our brand;

•our ability to comply with laws and regulations;

•our expectations regarding outstanding litigation;

•our expectations and management of future growth;

•our expectations concerning relationships with third parties;

•economic and industry trends, projected growth, or trend analysis;

•our estimated market opportunity;

•our ability to add capacity, capabilities, and automation to our operations;

•the increased expenses associated with being a public company;

•the timing and amount of share repurchases;

•the effect of catastrophic events or geopolitical conditions, such as the COVID-19 pandemic, including the uncertainty with respect to potential resurgences, on our business and operations;

•our ability to maintain, protect, and enhance our intellectual property rights and successfully defend against claims of infringement, misappropriation, or other violations of third-party intellectual property;

•the availability of capital to grow our business;

•our ability to successfully defend any future litigation brought against us;

•our ability to implement, maintain, and improve effective internal controls;

•adverse economic or market conditions that may harm our business;

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•exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange;

•the dependence of our business on our ability to attract and retain talented employees;

•potential changes in laws and regulations applicable to us or our sellers, or our sellers’ ability to comply therewith; and

•the amount of time for which we expect our cash balances and other available financial resources to be sufficient to fund our operations.

These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this Quarterly Report on Form 10-Q and are subject to risks and uncertainties. You should refer to the section titled “Risk Factors” included under Part II, Item 1A below and elsewhere in this Quarterly Report on Form 10-Q, as well as in our other filings with the Securities and Exchange Commission (the “SEC”), for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on them.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. Such forward-looking statements relate only to events as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations, except as required by law.

You should read this Quarterly Report on Form 10-Q and the documents that we reference and have filed as exhibits with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this Quarterly Report on Form 10-Q by these cautionary statements.

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RISK FACTOR SUMMARY

The following risk factor summary should be read together with the more detailed discussion of risks and uncertainties set forth in the “Risk Factors” section of this report.

•Our history of operating losses and ability to achieve or maintain profitability in the future, which could negatively impact our financial condition and our stock price;

•Fluctuations in our quarterly and annual net revenue and results of operations, which could cause our stock price to fluctuate and the value of your investment to decline;

•Our historical growth, which may not be indicative of our future growth;

•Our ability to generate a sufficient volume of listings of luxury design products on our online marketplace or to accurately vet the authenticity of these products, which could impact our business, brand, and reputation;

•Our ability to maintain the authenticity of the items listed and sold through our online marketplace, which could cause our business, brand, and reputation to suffer;

•Risks associated with claims that items listed on our online marketplace are counterfeit, infringing, hazardous, or illegal, or otherwise subject to regulation or cultural patrimony considerations;

•Risks associated with liability for fraudulent or unlawful activities of sellers who list items on our online marketplace, which could cause our business, brand, and reputation to suffer;

•Our ability to attract and maintain an active community of sellers and buyers, which could impact our growth;

•Our reliance, in part, on sellers to provide a positive experience to buyers;

•Our ability to compete effectively;

•Real or perceived inaccuracies in our metrics and market estimates used to evaluate our performance, which may harm our reputation and negatively affect our business;

•Our ability to successfully expand our business model to encompass additional categories of luxury design products in a timely and cost-effective manner;

•The COVID-19 pandemic, which has impacted, and may continue to impact, our business, key metrics, and results of operations in volatile and unpredictable ways;

•Our ability to maintain and promote our brand and reputation, which could impact our business, market position, and future growth;

•Risks related to acquisitions, which may divert management’s attention and/or prove to be unsuccessful;

•Risks related to further expansion into markets outside of the United States;

•Our ability to successfully protect our intellectual property;

•Risks associated with the disclosure of sensitive information about our sellers and buyers or other third parties with whom we transact business, or cyber-attacks against us or our third-party providers, which could result in curtailed use of our online marketplace, exposure to liability, and reputational damage;

•Risks related to regulatory matters and litigation;

•Risks related to the impact of and focus on Environmental, Social, and Governance (“ESG”) matters;

•Risks related to our operations as a public company;

•Risks related to our internal control over financial reporting and our disclosure controls and procedures; and

•Risks related to our common stock, including that an active trading market for our common stock may not develop or be sustained and that the price of our common stock may be volatile.

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Part I - Financial Information

Item 1. Condensed Consolidated Financial Statements (Unaudited)

1STDIBS.COM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)

(Unaudited)

			September 30, 2023						December 31, 2022
Assets
Current assets:
Cash and cash equivalents			$	32,442					$	153,209
Short-term investments			110,552						—
Restricted cash, current			—						1,500
Accounts receivable, net of allowance for doubtful accounts of $195 and $113 at September 30, 2023 and December 31, 2022, respectively			693						972
Prepaid expenses			2,612						3,506
Receivables from payment processors			3,475						2,476
Other current assets			942						800
Total current assets			150,716						162,463
Restricted cash, non-current			3,336						3,334
Property and equipment, net			3,283						3,685
Operating lease right-of-use assets			20,073						21,990
Goodwill			4,082						4,075
Other assets			1,286						249
Total assets			$	182,776					$	195,796
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable			$	2,325					$	2,905
Payables due to sellers			7,789						7,185
Accrued expenses			11,323						10,761
Operating lease liabilities, current			2,891						2,770
Other current liabilities			2,633						2,429
Total current liabilities			26,961						26,050
Operating lease liabilities, non-current			19,494						21,678
Other liabilities			8						46
Total liabilities			46,463						47,774
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized as of September 30, 2023 and December 31, 2022; zero shares issued and outstanding as of September 30, 2023 and December 31, 2022			—						—
Common stock, $0.01 par value; 400,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 40,386,375 and 39,260,193 shares issued as of September 30, 2023 and December 31, 2022, respectively; and 40,051,416 and 39,260,193 outstanding as of September 30, 2023 and December 31, 2022, respectively			403						393
Treasury stock, at cost; 334,959 and zero shares as of September 30, 2023 and December 31, 2022, respectively			(1,377)						—
Additional paid-in capital			448,544						439,005
Accumulated deficit			(310,778)						(291,020)
Accumulated other comprehensive loss			(479)						(356)
Total stockholders’ equity			136,313						148,022
Total liabilities and stockholders’ equity			$	182,776					$	195,796

See accompanying notes to the condensed consolidated financial statements.

7

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1STDIBS.COM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share amounts)

(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Net revenue			$	20,663					$	22,729					$	63,762					$	73,892
Cost of revenue			5,510						7,278						19,144						22,908
Gross profit			15,153						15,451						44,618						50,984
Operating expenses:
Sales and marketing			8,411						11,072						28,007						34,139
Technology development			4,515						6,363						17,199						18,711
General and administrative			6,772						6,731						22,323						20,635
Provision for transaction losses			688						1,183						2,940						4,432
Gain on sale of Design Manager			—						—						—						(9,684)
Total operating expenses			20,386						25,349						70,469						68,233
Loss from operations			(5,233)						(9,898)						(25,851)						(17,249)
Other income, net:
Interest income			1,757						520						4,933						746
Interest expense			—						(3)						—						(11)
Other, net			171						353						1,160						837
Total other income, net			1,928						870						6,093						1,572
Net loss before income taxes			(3,305)						(9,028)						(19,758)						(15,677)
Provision for income taxes			—						—						—						—
Net loss			$	(3,305)					$	(9,028)					(19,758)						(15,677)
Net loss per share—basic and diluted			$	(0.08)					$	(0.23)					$	(0.50)					$	(0.41)
Weighted average common shares outstanding—basic and diluted			39,962,932						38,668,231						39,647,716						38,291,977

See accompanying notes to the condensed consolidated financial statements.

8

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1STDIBS.COM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)

(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Net loss			$	(3,305)					$	(9,028)					$	(19,758)					$	(15,677)
Other comprehensive loss:
Foreign currency translation adjustment, net of tax of $0 for each of the three and nine months ended September 30, 2023 and 2022			(34)						(103)						9						(272)
Unrealized losses on short-term investments, net of tax of $0 for each of the three and nine months ended September 30, 2023 and 2022			(12)						—						(132)						—
Comprehensive loss			$	(3,351)					$	(9,131)					$	(19,881)					$	(15,949)

See accompanying notes to the condensed consolidated financial statements.

9

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1STDIBS.COM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands, except share amounts)

(Unaudited)

																		Three Months Ended September 30, 2023
												Common Stock												Additional Paid - In Capital						Accumulated Deficit						Accumulated Other Comprehensive Loss						Treasury Stock						Total Stockholders’ Equity
																		Shares									Amount
Balances as of June 30, 2023																		40,037,018						$	400					$	445,480					$	(307,473)					$	(433)					$	—					$	137,974
Issuance of common stock for exercise of stock options																		11,000						—						43						—						—						—						43
Vested restricted stock units converted to common stock																		338,357						3						(3)						—						—						—						—
Stock-based compensation																		—						—						3,024						—						—						—						3024
Repurchase of common stock																		(334,959)						—						—						—						—						(1,377)						(1377)
Other comprehensive loss																		—						—						—						—						(46)						—						(46)
Net loss																		—						—						—						(3,305)						—						—						(3305)
Balances as of September 30, 2023																		40,051,416						$	403					$	448,544					$	(310,778)					$	(479)					$	(1,377)					$	136,313

																		Nine Months Ended September 30, 2023
																		Common Stock												Additional Paid - In Capital						Accumulated Deficit						Accumulated Other Comprehensive Loss						Treasury Stock						Total Stockholders’ Equity
																		Shares						Amount
Balances as of December 31, 2022																		39,260,193						$	393					$	439,005					$	(291,020)					$	(356)					$	—					$	148,022
Issuance of common stock for exercise of stock options																		19,978						—						78						—						—						—						78
Vested restricted stock units converted to common shares																		1,106,204						10						(10)						—						—						—						—
Stock-based compensation																		—						—						9,471						—						—						—						9,471
Repurchase of common stock																		(334,959)						—						—						—						—						(1,377)						(1,377)
Other comprehensive loss																		—						—						—						—						(123)						—						(123)
Net loss																		—						—						—						(19,758)						—						—						(19,758)
Balances as of September 30, 2023																		40,051,416						$	403					$	448,544					$	(310,778)					$	(479)					$	(1,377)					$	136,313

																		Three Months Ended September 30, 2022
												Common Stock												Additional Paid - In Capital						Accumulated Deficit						Accumulated Other Comprehensive Loss						Total Stockholders’ Equity
																		Shares									Amount
Balances as of June 30, 2022																		38,573,212						$	383					$	431,513					$	(275,131)					$	(398)					$	156,367
Issuance of common stock for exercise of stock options																		78,011						1						308						—						—						309
Vested restricted stock units converted to common shares																		245,228						—						—						—						—						—
Stock-based compensation																		—						—						3,154						—						—						3,154
Other comprehensive loss																		—						—						—						—						(103)						(103)
Net loss																		—						—						—						(9,028)						—						(9,028)
Balances as of September 30, 2022																		38,896,451						$	384					$	434,975					$	(284,159)					$	(501)					$	150,699

																		Nine Months Ended September 30, 2022
												Common Stock												Additional Paid - In Capital						Accumulated Deficit						Accumulated Other Comprehensive Loss						Total Stockholders’ Equity
																		Shares									Amount
Balances as of December 31, 2021																		37,991,529						$	380					$	425,769					$	(268,482)					$	(229)					$	157,438
Issuance of common stock for exercise of stock options																		396,089						4						1,544						—						—						1,548
Vested restricted stock units converted to common shares																		508,833						—						—						—						—						—
Stock-based compensation																		—						—						7,662						—						—						7,662
Other comprehensive loss																		—						—						—						—						(272)						(272)
Net loss																		—						—						—						(15,677)						—						(15,677)
Balances as of September 30, 2022																		38,896,451						$	384					$	434,975					$	(284,159)					$	(501)					$	150,699

See accompanying notes to the condensed consolidated financial statements.

10

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1STDIBS.COM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

			Nine Months Ended September 30,
			2023						2022
Cash flows from operating activities:
Net loss			$	(19,758)					$	(15,677)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			1,815						2,189
Stock-based compensation expense			9,340						7,662
Provision for transaction losses, returns and refunds			703						277
Amortization of costs to obtain revenue contracts			242						233
Amortization of operating lease right-of-use assets			1,917						1,891
Gain on sale of Design Manager			—						(9,684)
Amortization of (discounts) premiums, net on short-term investments			(2,366)						—
Other, net			(45)						517
Changes in operating assets and liabilities:
Accounts receivable			40						(151)
Prepaid expenses and other current assets			415						(1,448)
Receivables from payment processors			(999)						(619)
Other assets			(1,215)						(602)
Accounts payable and accrued expenses			(210)						(3,692)
Payables due to sellers			606						(977)
Operating lease liabilities			(2,063)						(2,036)
Other current liabilities and other liabilities			103						(293)
Net cash used in operating activities			(11,475)						(22,410)
Cash flows from investing activities:
Purchases of short-term investments			(166,471)						—
Maturities of short-term investments			58,153						—
Development of internal-use software			(1,215)						(1,688)
Purchases of property and equipment			(67)						(84)
Proceeds from sale of Design Manager			—						14,611
Other, net			—						(18)
Net cash (used in) provided by investing activities			(109,600)						12,821
Cash flows from financing activities:
Proceeds from exercise of stock options			78						1,548
Payments for repurchase of common stock			(1,312)						—
Net cash (used in) provided by financing activities			(1,234)						1,548
Effect of exchange rate changes on cash, cash equivalents, and restricted cash			44						(689)
Net decrease in cash, cash equivalents, and restricted cash			(122,265)						(8,730)
Cash, cash equivalents, and restricted cash at beginning of the period			158,043						171,559
Cash, cash equivalents, and restricted cash at end of the period			$	35,778					$	162,829
Supplemental disclosure of cash flow information:
Cash paid for interest			$	—					$	10

See accompanying notes to the condensed consolidated financial statements.

11

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1STDIBS.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies

Description of Business

1stdibs.com, Inc. (“1stDibs” or the “Company”) is one of the world’s leading online marketplaces for connecting design lovers with many of the best sellers and makers of vintage & antique furniture, contemporary furniture, home décor, jewelry, watches, art, and fashion. The Company’s thoroughly vetted seller base, in-depth editorial content, and custom-built technology platform create trust in the Company’s brand and facilitate high-consideration purchases of luxury design products online. By disrupting the way these items are bought and sold, 1stDibs is both expanding access to, and growing the market for, luxury design products.

The Company was incorporated in the state of Delaware on March 10, 2000 and is headquartered in New York, NY.

Basis of Presentation

The accompanying condensed consolidated financial statements are prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries, 1stdibs.com, Ltd. and 1stdibs Design Manager, Inc. (“Design Manager”). The Company sold its equity interest in Design Manager on June 29, 2022, therefore, the condensed consolidated statements of operations for the nine months ended September 30, 2022 includes activity relating to Design Manager. The condensed consolidated balance sheet as of September 30, 2023 no longer includes the assets, liabilities, and equity amounts associated with Design Manager. All intercompany accounts and transactions have been eliminated in consolidation. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K (the “Form 10-K”) for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 3, 2023.

The condensed consolidated balance sheet as of December 31, 2022, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by GAAP on an annual reporting basis.

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of its financial position and its results of operations, changes in stockholders’ equity, and cash flows for the interim periods. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending December 31, 2023.

There have been no material changes to the Company's significant accounting policies as described in the Form 10-K except for the short-term investments and treasury stock discussed below. Certain immaterial amounts in the financial statements of the prior years have been reclassified to conform to the current year presentation for comparative purposes.

Restructuring Charges

In June 2023, the Company announced a workforce reduction designed to reduce operating costs and realign investment priorities involving the reduction of approximately 20% of the Company’s global workforce. As a result of the reduction, the Company incurred approximately $2.0 million in non-recurring restructuring charges during the nine months ended September 30, 2023, consisting primarily of employee severance and benefits costs. During the three months ended September 30, 2023, $1.4 million has been paid and $0.6 million is included in accrued expenses on the Company’s condensed consolidated balance sheet as of September 30, 2023.

12

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1STDIBS.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table displays a rollforward of the charges to the accrued balance as of September 30, 2023:

(in thousands)			Restructuring Charges
Balance, December 31, 2022			$	—
Restructuring charges			2,004
Cash payments			1,374
Balance, September 30, 2023			$	630

The expense is included within the respective financial statement line items on the condensed consolidated statements of operations as shown in the table below for the nine months ended September 30, 2023. There was no expense incurred during the three months ended September 30, 2023.

(in thousands)			Nine Months Ended September 30, 2023
Cost of revenue			$	135
Sales and marketing			789
Technology development			1,044
General and administrative			36
Total			$	2,004

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, revenue recognition, provision for transaction losses, determination of useful lives of property and equipment, impairment assessment of goodwill, capitalization of internal-use software and determination of useful lives, income taxes, and the valuation of stock-based compensation and leases. The Company evaluates its estimates and assumptions on an ongoing basis. Actual results could differ from those estimates and such differences may be material to the condensed consolidated financial statements.

Cash, Cash Equivalents, and Restricted Cash

The following represents the Company’s cash, cash equivalents, and restricted cash as of the periods presented:

(in thousands)			September 30, 2023						September 30, 2022
Cash and cash equivalents			$	32,442					$	157,995
Restricted cash, current			—						1,500
Restricted cash, non-current			3,336						3,334
Total cash, cash equivalents, and restricted cash			$	35,778					$	162,829

The Company considers all short-term, highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents. Certain cash equivalents consist of investments in debt securities that are classified as available-for-sale. During the three and nine months ended September 30, 2023, the Company purchased $3.2 million and $34.9 million of available-for-sale securities classified as cash equivalents, respectively. The Company’s restricted cash relates to a $3.3 million Letter of Credit for its office lease in New York, New York. Prior to September 30, 2023, $1.5 million was held in a joint escrow account in connection with the sale of Design Manager. As of September 30, 2023 the restriction was lifted and the funds were released. The carrying value of the restricted cash approximates fair value.

Short-term Investments

Short-term investments designated as available-for-sale securities are carried at fair value, which is based on quoted market prices for such securities, if available, or is estimated on the basis of quoted market prices of financial instruments with similar characteristics. Investments with original maturities greater than 90 days and less than one year are classified within short-term investments on the Company’s condensed consolidated balance sheets. In addition, investments with maturities beyond one

13

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1STDIBS.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

year at the time of purchase that are highly liquid in nature and represent the investment of cash that is available for current operations are classified as short-term investments. Any other investments with original maturities greater than one year would be classified within long-term investments.

Unrealized gains and losses of available-for-sale securities are excluded from earnings and are reported as a component of other comprehensive income (loss) until the security is sold, has matured, or the Company determines that the fair value of the security has declined below its adjusted cost basis and the decline is not due to a credit loss. Realized gains and losses on short-term investments are calculated based on the specific identification method and would be reclassified from accumulated other comprehensive loss to other, net in the Company’s condensed consolidated statements of operations.

Short-term investments are evaluated for impairment quarterly. The Company’s portfolio of available-for-sale debt securities is required to incorporate forward-looking information to determine any credit losses. This risk is mitigated by the high quality nature of the investments. The Company evaluates the current expected credit loss by considering various factors in determining whether it should recognize an impairment charge, including the credit quality of the issuer, the duration that the fair value has been less than the adjusted cost basis, the severity and reason for the decline in value, and the Company’s intent to sell and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value. If the Company concluded that an investment is impaired or a portion of the unrealized loss is a result of a credit loss, it recognizes the charge at that time in the condensed consolidated statements of operations. Determining whether the decline in fair value is due to a credit loss requires management judgment based on the specific facts and circumstances of each security. The ultimate value realized on these securities is subject to market price volatility until they are sold. The Company did not recognize any credit losses related to available-for-sale debt securities during the three and nine months ended September 30, 2023.

Treasury Stock

In August 2023, the Company’s Board of Directors authorized the Company to repurchase up to an aggregate of $20.0 million of its common stock (“Stock Repurchase Program”). Repurchased common stock is stated at cost, determined on an average cost basis and is presented as a reduction of stockholders’ equity on the condensed consolidated balance sheets. The direct costs incurred to acquire treasury stock are treated like stock issuance costs and added to the cost of the treasury stock, which includes applicable fees and taxes. There have been no reissuances of treasury stock as of September 30, 2023.

Accounts Receivable, net

The Company’s accounts receivable are recorded at amounts billed to sellers, generally for subscription revenue, and are presented net of an estimated allowance for doubtful accounts on the Company’s consolidated balance sheets. The Company’s accounts receivable do not bear interest and do not require collateral or other security to support related receivables. The allowance for doubtful accounts considers forward-looking information to estimate expected credit losses using a number of factors, including age of the receivable, current economic conditions, historical losses, and management’s assessment and judgment of the seller. The evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. Losses are charged against the allowance when management believes the un-collectability of a receivable is confirmed and subsequent recoveries, if any, are credited to the allowance. Account balances are written off after all means of collection are exhausted and the potential for non-recovery is determined to be probable. Adjustments to the allowance for doubtful accounts are recorded as a component of provision for transaction losses in the condensed consolidated statements of operations.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which replaces the incurred loss impairment methodology with a methodology that requires the reflection of expected credit losses and also requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. For most financial instruments, the standard requires the use of a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses, which generally results in the earlier recognition of credit losses on financial instruments.

The Company adopted this standard effective January 1, 2023 under a modified retrospective basis and considers forward-looking information to estimate expected credit losses. No adjustment to accumulated deficit was recorded as the adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

14

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1STDIBS.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2. Fair Value of Financial Instruments

Certain assets and liabilities are carried at fair value in accordance with GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value require the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

•Level 1—Quoted prices in active markets for identical assets or liabilities.

•Level 2—Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies, and similar techniques.

Short-term investments and certain cash equivalents consist of investments in debt securities that are available-for-sale. The table below segregates all assets that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date:

			September 30, 2023
(in thousands)			Level 1						Level 2						Level 3						Total
Cash equivalents:
Money market fund			$	6,875					$	—					$	—					$	6,875
U.S. Treasury securities			—						995						—						995
Total cash equivalents			$	6,875					$	995					$	—					$	7,870
Short-term investments:
Commercial paper			$	—					$	15,572					$	—					$	15,572
Corporate notes			—						7,122						—						7,122
U.S. Treasury securities			—						22,757						—						22,757
U.S. Government agency securities			—						65,101						—						65,101
Total short-term investments			$	—					$	110,552					$	—					$	110,552

There were no transfers between Level 1, Level 2, or Level 3 during the three and nine months ended September 30, 2023 and 2022. As of September 30, 2023 and December 31, 2022, the carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses and other current liabilities, approximate fair value because of their short maturities, and therefore were all classified as Level 1.

3. Revenue Recognition

The following table summarizes the Company’s net revenue by type of service for the periods presented:

			Three Months Ended September 30,												Nine Months Ended September 30,
(in thousands)			2023						2022						2023						2022
Seller marketplace services			$	20,467					$	22,504					$	63,239					$	71,597
Other services			196						225						523						2,295
Total net revenue			$	20,663					$	22,729					$	63,762					$	73,892

15

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1STDIBS.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company generates revenue from seller marketplace services and other services. Seller marketplace services primarily consist of marketplace transactions, subscriptions, and listing fees. Other services primarily consist of advertising revenues generated from displaying ads on the Company’s online marketplace and software services revenue related to Design Manager, typically used by interior designers. Design Manager was sold on June 29, 2022; therefore, no related net revenue for software services was recognized during the three and nine months ended September 30, 2023 as well as the three months ended September 30, 2022.

As of both September 30, 2023 and December 31, 2022, the Company recorded $0.5 million of costs to obtain revenue contracts, of which $0.3 million was included in other current assets, and $0.2 million was included in other assets. Amortization of costs to obtain revenue contracts totaled $0.1 million and $0.2 million for both the three and nine months ended September 30, 2023, and 2022, respectively. The Company periodically reviews the costs to obtain revenue contracts to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these costs to obtain revenue contracts.

4. Short-Term Investments

The following table summarizes the estimated value of the Company’s short-term investments as of September 30, 2023:

			September 30, 2023
(in thousands)			Amortized Cost						Unrealized Gain						Unrealized Loss						Fair Value
Commercial paper			$	15,589					$	—					$	(17)					$	15,572
Corporate notes			7,134						—						(12)						7,122
U.S. Treasury securities			22,786						—						(29)						22,757
U.S. Government agency securities			65,175						10						(84)						65,101
Total short-term investments			$	110,684					$	10					$	(142)					$	110,552

As of December 31, 2022, the Company had no short-term investments. As of September 30, 2023, the fair value of short-term investments by remaining contractual maturity consisted of the following:

(in thousands)			Fair Value
Remaining maturity date one year or less			$	99,000
Remaining maturity date greater than one year			11,552
Total short-term investments			$	110,552

5. Property and Equipment, net

As of September 30, 2023 and December 31, 2022, property and equipment, net consisted of the following:

(in thousands)			September 30, 2023						December 31, 2022
Internal-use software			$	19,047					$	18,418
Leasehold improvements			3,605						3,594
Furniture and fixtures			1,131						1,114
Computer equipment and software			898						851
Software in progress			520						562
Total property and equipment, gross			25,201						24,539
Less: Accumulated depreciation and amortization			(21,918)						(20,854)
Total property and equipment, net			$	3,283					$	3,685

As of September 30, 2023 and December 31, 2022, the net book value of internal-use software was $2.6 million and $3.0 million, respectively. Depreciation and amortization expense related to the Company’s property and equipment totaled $0.4 million and $1.8 million for the three and nine months ended September 30, 2023, respectively, which included amortization expense for internal-use software of $0.4 million and $1.7 million, respectively. Included in amortization expense for the nine months ended September 30, 2023, was $0.5 million of accelerated internal-use software amortization related to the shift in strategy to discontinue supporting the Company’s NFT platform. Depreciation and amortization expense related to the Company’s property and equipment totaled $0.7 million and $2.1 million for the three and nine months ended September 30,

16

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1STDIBS.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2022, respectively, which included amortization expense for internal-use software of $0.7 million and $2.0 million, respectively.

6. Accrued Expenses

As of September 30, 2023 and December 31, 2022, accrued expenses consisted of the following:

(in thousands)			September 30, 2023						December 31, 2022
Shipping			$	3,213					$	3,597
Salaries & benefits			3,267						1,862
Sales & use taxes payable			1,159						1,378
Allowance for transaction losses			1,200						1,327
Restructuring charges			630						—
Payment processor fees			525						970
Allowance for e-commerce returns			392						438
Other			937						1,189
Total accrued expenses			$	11,323					$	10,761

7. Leases

The Company enters into contracts in the normal course of business and assesses whether any such contracts contain a lease. The Company determines if an arrangement is a lease at inception if it conveys the right to control the identified asset for a period of time in exchange for consideration. The Company classifies leases as operating or financing in nature, and records the associated right-of-use asset and lease liability on its condensed consolidated balance sheet. The lease liability represents the present value of future lease payments, net of lease incentives, discounted using an incremental borrowing rate, which is a management estimate based on the information available at the commencement date of a lease arrangement.

The Company accounts for lease and non-lease components related to operating leases as a single lease component. The Company has elected that costs associated with leases having an initial term of 12 months or less ("short-term leases") are recognized in the condensed consolidated statements of operations on a straight-line basis over the lease term and are not recorded on the balance sheet. Lease expense is recognized as a single lease cost on a straight-line basis over the lease term. The lease term consists of non-cancelable periods and may include options, including those to extend or terminate, if it is reasonably certain they will be exercised. Variable lease expense is recognized as incurred and consists primarily of real estate taxes, utilities, and other office space related expenses.

The Company’s operating lease arrangements are principally for office space in its New York City headquarters. As of September 30, 2023, the Company had $20.1 million of operating lease right-of-use assets, $2.9 million and $19.5 million of current and non-current operating lease liabilities, respectively, and no finance leases on its condensed consolidated balance sheet. These operating lease arrangements, included in the measurement of lease liabilities, had a weighted-average remaining lease term of 6.25 years, a weighted-average discount rate of 5.9%, and do not reflect options to extend or terminate, as management does not consider the exercise of these options to be reasonably certain. As of December 31, 2022, the Company had $22.0 million of operating lease right-of-use assets, $2.8 million and $21.7 million of current and non-current operating lease liabilities, respectively, and no finance leases on its condensed consolidated balance sheet.

During the three and nine months ended September 30, 2023, the Company paid $1.0 million and $3.1 million, respectively, for amounts included in the measurement of lease liabilities, and $1.1 million and $3.2 million during the three and nine months ended September 30, 2022, respectively. The Company did not enter into any new lease arrangements as a lessee during the three and nine months ended September 30, 2022.

In August 2023, the Company entered into a sublease agreement as the sublessor for its office space in its New York City headquarters (the “Sublease”). The Sublease will commence on October 1, 2023 for approximately 78% of the rentable square feet and expand to 100% of the rentable square feet on January 15, 2024. The sublease ends on December 31, 2029, the expiration date of the Company’s New York City headquarter’s lease, and contains an option for the lessee to terminate on the third anniversary of the commencement date. The Sublease contains a five-month rent abatement provision, with an additional abatement against fixed rent for the sixth calendar month. Beginning in April 2024 the Company will collect monthly lease payments of $0.3 million with annual increases over the term. In addition, the subtenant will be responsible for its proportionate share of the operating expenses of the building, including taxes, electric, heating, ventilation, and air conditioning. The proportionate share will be 78% from the commencement of the Sublease until the January 15, 2024, at that time the

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1STDIBS.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

proportionate share will be increased to 100%. Sublease income is recognized as an offset to lease expense on a straight-line basis over the lease term and is included in general and administrative expenses on the Company’s condensed consolidated statement of operations. During the three months ended September 30, 2023, the Company capitalized its $1.1 million broker fee paid which will be amortized over the life of the Sublease. There was no sublease income recognized in the three and nine months ended September 30, 2023 and 2022.

Subsequent to the balance sheet date, in November 2023, the Company entered into a lease agreement, as the lessee, for 13,671 square feet for a new office which is anticipated to be the Company’s new corporate headquarters in New York City (the Lease Agreement”). The Lease Agreement is expected to have a commencement date of January 15, 2024 with a five year term and an initial seven month rent abatement period. The lease agreement includes an option for the Company to extend the lease for an additional five years.

The Company recognized lease expense for the periods presented:

			Three Months Ended September 30,												Nine Months Ended September 30,
(in thousands)			2023						2022						2023						2022
Operating lease expense			$	991					$	1,000					$	2,979					$	2,987
Short-term lease expense			33						22						87						100
Variable lease expense			196						287						772						776
Total lease expense			$	1,220					$	1,309					$	3,838					$	3,863

As of September 30, 2023, the total remaining operating lease payments included in the measurement of lease liabilities was as follows (in thousands):

Fiscal Year Ending December 31,			Operating Lease Payments
2023 (remaining)			$	1,020
2024			4,114
2025			4,292
2026			4,292
2027			4,292
Thereafter			8,583
Total operating lease payments			26,593
Less: imputed interest			(4,208)
Total lease liabilities			$	22,385

8. Other Current Liabilities

As of September 30, 2023 and December 31, 2022, other current liabilities consisted of the following:

(in thousands)			September 30, 2023						December 31, 2022
Sales and use tax contingencies			$	1,946					$	1,863
Buyer deposits			392						318
Deferred revenue			99						140
Other			196						108
Total other current liabilities			$	2,633					$	2,429

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1STDIBS.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

9. Equity

As of September 30, 2023 and December 31, 2022, the Company had reserved shares of common stock for issuance in connection with the following:

			September 30, 2023						December 31, 2022
Options to purchase common stock			3,930,336						4,034,287
Restricted stock units outstanding			4,116,974						2,807,981
Shares available for future grant under the 2021 Plan			2,781,826						3,151,824
Shares available for future grant under the ESPP			1,572,504						1,179,902
Total			12,401,640						11,173,994

Preferred Stock

Effective June 14, 2021, in connection with the closing of the Company’s IPO, the Company’s board of directors (“Board”) is authorized to issue up to 10,000,000 shares of preferred stock, $0.01 par value per share, in one or more series. The Company's Board has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. As of September 30, 2023 and December 31, 2022, no shares of preferred stock were issued or outstanding.

Common Stock

As of September 30, 2023 and December 31, 2022, the Company had authorized 400,000,000 shares of voting common stock, $0.01 par value per share. Each holder of the Company's common stock is entitled to one vote for each share on all matters to be voted upon by the stockholders and there are no cumulative rights. Subject to any preferential rights of any outstanding preferred stock, holders of the Company's common stock are entitled to receive ratably the dividends, if any, as may be declared from time to time by the Board out of legally available funds. If there is a liquidation, dissolution, or winding up of the Company, holders of the Company's common stock would be entitled to share in the Company's assets remaining after the payment of liabilities and any preferential rights of any outstanding preferred stock. The rights, preferences, and privileges of the holders of the Company's common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which the Company may designate and issue in the future.

Treasury Stock

As of September 30, 2023, the Company had 334,959 shares of treasury stock carried at its cost basis of $1.4 million, which the Company purchased during the three months ended September 30, 2023, and approximately $18.6 million remains available for future purchases.

The repurchase may be effected, from time-to-time, through open market purchases, privately negotiated transactions, Rule 10b5-1 plans, accelerated stock repurchases, block trades, derivative contracts or otherwise in compliance with Rule 10b-18 of the Exchange Act. The repurchase program is not subject to a termination or expiration date, and it does not obligate the Company to acquire any specific number of shares. The timing, price and volume of repurchases will be based on a number of factors, including market conditions, relevant securities laws, and other considerations.

10. Stock-based compensation

2011 Option Plan

The Company adopted the 2011 Stock Option and Grant Plan (the “2011 Plan”) on September 2, 2011 and amended and restated the plan on December 14, 2011. The 2011 Plan provided for the Company to grant incentive stock options or nonqualified stock options, restricted stock awards, and other stock-based awards to its employees, directors, officers, outside advisors, and non-employee consultants. At the time of grant, the options issued to new employees pursuant to the 2011 Plan expire ten years from the date of grant and generally vest over four years, with 25% vesting on the first anniversary and the balance vesting ratably over the remaining 36 months. Options issued pursuant to the 2011 Plan expire ten years from the date of grant and generally vest ratably over 48 months.

Following the completion of the Company’s IPO in June 2021, no additional awards and no shares of the Company’s common stock remain available for future issuance under the 2011 Plan. However, the 2011 Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder.

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1STDIBS.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2021 Stock Incentive Plan

In May 2021, the Company's Board adopted, and its stockholders approved, the 2021 Stock Incentive Plan (the “2021 Plan”), which became effective upon the SEC declaring the Company’s IPO registration statement effective. The 2021 Plan provides for the grant of incentive stock options (“ISOs”), nonstatutory stock options, restricted share awards, stock unit awards, stock appreciation rights, cash-based awards, and performance-based stock awards, or collectively, stock awards. ISOs may be granted only to the Company’s employees, including officers, and the employees of its parent or subsidiaries. All other stock awards may be granted to the Company’s employees, officers, non-employee directors, consultants, and the employees and consultants of its parent, subsidiaries, and affiliates.

The aggregate number of shares of the Company’s common stock that may be issued pursuant to stock awards under the 2021 Plan will not exceed the sum of (x) 4,333,333 shares (as adjusted for stock splits, stock dividends, combinations, and the like), plus (y) the sum of (1) the number of reserved shares not issued or subject to outstanding awards under the 2011 Plan on the effective date of the 2021 Plan and (2) the number of shares subject to outstanding stock awards granted under the 2011 Plan and that, following the effective date of the 2021 Plan, (A) are subsequently forfeited or terminated for any reason before being exercised or settled, (B) are not issued because such stock award is settled in cash, (C) are subject to vesting restrictions and are subsequently forfeited, (D) are withheld or reacquired to satisfy the applicable exercise, strike, or purchase price, or (E) are withheld or reacquired to satisfy a tax withholding obligation, plus (z) an annual increase on the first day of each fiscal year, for a period of not more than 10 years, beginning on January 1, 2022 and ending on, and including, January 1, 2031, in an amount equal to the lesser of (i) 5% of the outstanding shares on the last day of the immediately preceding fiscal year or (ii) such lesser amount that the Compensation Committee of the Board determines for purposes of the annual increase for that fiscal year. On January 1, 2023, the number of shares of common stock available for issuance under the 2021 Plan was automatically increased according to its terms by 1,963,010 shares.

As of September 30, 2023, 2,781,826 shares were available for future grants of the Company’s common stock.

Stock Option Valuation

No stock options were granted during the three and nine months ended September 30, 2023, or the three months ended September 30, 2022. On a weighted-average basis, the assumptions used in the Black Scholes option-pricing model to determine the grant date fair value of the options granted to the Company’s employees were an expected term of 6 years, an expected stock price volatility of 64.6%, and a risk-free interest rate of 2.3% for the nine months ended September 30, 2022.

Stock Options

The following table summarizes the Company’s stock option activity since December 31, 2022:

			Number of Options						Weighted-Average Exercise Price						Weighted-Average Remaining Contractual Term (Years)						Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2022			4,034,287						$	6.90					6.9						$	1,625
Granted			—						$	—
Exercised			(19,978)						$	3.90
Cancelled/Forfeited			(83,973)						$	6.38
Outstanding as of September 30, 2023			3,930,336						$	6.92					6.1						$	—
Options exercisable as of September 30, 2023			2,799,980						$	6.27					5.4						$	—
Options vested and expected to vest as of September 30, 2023			3,930,336						$	6.92					6.1						$	—

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for all stock options that had exercise prices lower than the fair value of the Company’s common stock.

The aggregate intrinsic value of stock options exercised was less than $0.1 million during each of the three and nine months ended September 30, 2023, and $0.2 million and $1.1 million during the three and nine months ended September 30, 2022, respectively. The weighted-average grant date fair value per share of stock options granted was $4.43 for the nine months ended September 30, 2022.

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1STDIBS.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The total fair value of stock options vested was $0.7 million and $2.7 million during the three and nine months ended September 30, 2023, respectively, and $0.8 million and $3.4 million during the three and nine months ended September 30, 2022, respectively.

The stock options granted during the fiscal year ended December 31, 2021 included 615,997 stock options granted to executive officers that include a performance condition related to a sale event or initial public offering occurring before December 31, 2021 in addition to the standard service condition. These options will vest over four years, with approximately 21% vested on January 1, 2022, and the balance vesting ratably over the remaining 38 months. Stock-based compensation expense of $0.2 million and $0.5 million was recognized for options having a performance condition during the three and nine months ended September 30, 2023, respectively, and $0.2 million and $0.6 million during the three and nine months ended September 30, 2022, respectively.

Restricted Stock Units

The following table summarizes the activity related to the Company's restricted stock units:

			Outstanding Restricted Stock Units						Weighted-Average Grant Date Fair Value
Outstanding as of December 31, 2022			2,807,981						$	7.85
Granted			2,992,595						3.95
Vested			(1,106,204)						6.54
Cancelled			(577,398)						7.00
Outstanding as of September 30, 2023			4,116,974						$	5.49

The estimated weighted-average grant date fair value of restricted stock units granted was $4.11 and $3.95 per share for the three and nine months ended September 30, 2023, and $7.23 and $7.61 per share for the three and nine months ended September 30, 2022, respectively. The total grant date fair value of restricted stock units vested was $2.0 million and $7.2 million for the three and nine months ended September 30, 2023, respectively, and $2.1 million and $4.3 million for the three and nine months ended September 30, 2022.

Employee Stock Purchase Plan

In May 2021, the Company's Board adopted, and its stockholders approved, the Company's 2021 Employee Stock Purchase Plan (the "ESPP"). A total of 1,572,504 shares of the Company's authorized but unissued or reacquired shares of its common stock (as adjusted for stock splits, stock dividends, combinations, and the like) are available for issuance under the ESPP. The number of shares of the Company's common stock that will be available for issuance under the ESPP also includes an annual increase on the first day of each fiscal year, for a period of not more than 10 years, beginning on January 1, 2022, equal to the least of: (i) 1% of the outstanding shares of the Company’s common stock on such date, (ii) 400,000 shares (as adjusted for stock splits, stock dividends, combinations, and the like) or (iii) a lesser amount determined by the Compensation Committee or the Company’s Board of Directors. On January 1, 2023, the number of shares of common stock available for issuance under the ESPP was automatically increased according to its terms by 392,602 shares.

During regularly scheduled “offerings” under the ESPP, participants may purchase the Company’s common stock through payroll deductions, up to a maximum of 15% of their eligible compensation, or such lower limit as may be determined by the Compensation Committee from time to time. Participants will be able to withdraw their accumulated payroll deductions prior to the end of the offering period in accordance with the terms of the offering. Participation in the ESPP will end automatically on termination of employment. The purchase price will be specified pursuant to the offering, but cannot, under the terms of the ESPP, be less than 85% of the fair market value per share of the Company’s common stock on either the offering date or on the purchase date, whichever is less. The fair market value of the Company’s common stock for this purpose will generally be the closing price on Nasdaq (or such other exchange as the Company’s common stock may be traded at the relevant time) for the date in question, or if such date is not a trading day, for the last trading day before the date in question. As of September 30, 2023, an initial offering period has not commenced, and for the three and nine months ended September 30, 2023, no shares of common stock were purchased under the ESPP.

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1STDIBS.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Stock-Based Compensation Expense

The following table summarizes the classification of the Company’s stock-based compensation expense in the condensed consolidated statements of operations:

(in thousands)			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Cost of revenue			$	75					$	149					$	312					$	402
Sales and marketing			727						704						2,176						1,765
Technology development			792						1,134						2,802						2,865
General and administrative			1,388						1,167						4,050						2,630
Total stock-based compensation expense			$	2,982					$	3,154					$	9,340					$	7,662

Stock-based compensation capitalized in connection with the Company’s internal-use software was less than $0.1 million for the three months ended September 30, 2023, $0.1 million for the nine months ended September 30, 2023, and less than $0.1 million for each of the three and nine months ended September 30, 2022. As of September 30, 2023, total unrecognized compensation expense related to unvested stock-based awards was $27.0 million, which is expected to be recognized over a weighted-average period of 2.4 years.

11. Income Taxes

The income tax provision was immaterial for the three and nine months ended September 30, 2023 and 2022 due to the net loss before income taxes incurred for the fiscal year ended December 31, 2022 and expected to be incurred for the fiscal year ending December 31, 2023. The Company’s continues to maintain a full valuation allowance against its net deferred tax assets. There were no material liabilities for interest and penalties accrued as of September 30, 2023.

12. Net Loss Per Share

The following table summarizes the computation of basic and diluted net loss per share attributable to common stockholders for the three and nine months ended September 30, 2023 and 2022:

			Three Months Ended September 30,												Nine Months Ended September 30,
(in thousands, except share and per share amounts)			2023						2022						2023						2022
Numerator:
Net loss			$	(3,305)					$	(9,028)					$	(19,758)					$	(15,677)
Denominator:
Weighted average common shares outstanding—basic and diluted			39,962,932						38,668,231						39,647,716						38,291,977
Net loss per share—basic and diluted			$	(0.08)					$	(0.23)					$	(0.50)					$	(0.41)

The Company’s potentially dilutive securities, which include outstanding stock options and restricted stock units have been excluded from the computation of diluted net loss per share from each period as including them would have had an anti-dilutive effect. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same. The Company excluded the following potentially dilutive securities for each period presented:

			September 30,
			2023						2022
Options to purchase common stock			3,930,336						4,202,430
Restricted stock units			4,116,974						2,954,549
Total			8,047,310						7,156,979

13. Commitments and Contingencies

Contractual Obligations

The Company has $28.8 million of non-cancelable contractual commitments as of September 30, 2023, primarily related to its operating lease agreement for its corporate headquarters in New York, NY, as well as other software and support services. For those agreements with variable terms, the Company does not estimate what the total obligation may be beyond any

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1STDIBS.COM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

minimum obligations. The following table represents the Company’s commitments under its purchase obligations as of September 30, 2023 (in thousands):

Fiscal Year Ending December 31,			Lease Obligations						Other Obligations						Total Obligations
2023 (remaining)			$	1,020					$	372					$	1,392
2024			4,114						1,291						5,405
2025			4,292						506						4,798
2026			4,292						33						4,325
2027			4,292						—						4,292
Thereafter			8,583						—						8,583
Total			$	26,593					$	2,202					$	28,795

Legal Proceedings

The Company is subject to various claims and contingencies which are in the scope of ordinary and routine litigation incidental to its business, including those related to regulation, litigation, business transactions, employee-related matters, and taxes, among others. When the Company becomes aware of a claim or potential claim, the likelihood of any loss or exposure is assessed. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company records a liability for the loss. The liability recorded includes probable and estimable legal costs incurred to date and future legal costs to the point in the legal matter where the Company believes a conclusion to the matter will be reached. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the claim if the likelihood of a potential loss is reasonably possible. The Company does not believe that it is party to any pending legal proceedings that are likely to have a material effect on its business, financial condition, or results of operations for the three and nine months ended September 30, 2023 and 2022.

Indemnification

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its Board and officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications.

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Item 2. 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” under Part II, Item 1A in this Quarterly Report on Form 10-Q. 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 products based on the aggregate number of such listings on our online marketplace and our Gross Merchandise Value (“GMV”). Our thoroughly vetted seller base, in-depth editorial content, and custom-built technology platform create trust in our brand and facilitate high-consideration purchases. By disrupting the way these items are bought and sold, we are both expanding access to, and growing the market for, luxury design products.

1stDibs began in 2000 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. Soon thereafter, we moved our headquarters to New York City and focused primarily on adding U.S.-based sellers to our site. 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 products. In over two decades of operating history, we have strengthened our brand and deepened our seller relationships. We launched our e-commerce platform in 2013 and transitioned to a full e-commerce marketplace model in 2016. We provide our sellers, the vast majority of which are small businesses, access to a global community of buyers and a platform to facilitate e-commerce at scale. Our sellers use our platform to manage their inventory, build their digital marketing presence, and communicate and negotiate orders directly with buyers. We provide our buyers a trusted purchase experience with our user-friendly interface, dedicated specialist support, and 1stDibs Promise, our comprehensive buyer protection program. We operate an asset-light business model which allows us to scale in a capital efficient manner. While we facilitate shipping and fulfillment logistics, we do not take physical possession of the items sold on our online marketplace. 

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 (see “Non-GAAP Financial Measures” for a discussion of Adjusted EBITDA and a reconciliation of net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA).

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 and Number of Orders, 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

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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)			2023						2022						2023						2022
GMV			$	88,983					$	99,213					$	275,905					$	321,514
Number of Orders			31,202						35,235						98,988						110,111
Active Buyers			63,227						68,011						63,227						68,011
Adjusted EBITDA (unaudited)			$	(1,802)					$	(5,456)					$	(11,635)					$	(16,195)

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 sales 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 growth rates for GMV may not be indicative of future growth rates 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 growth rates for Number of Orders may not be indicative of future growth rates 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 growth rates for Active Buyers may not be indicative of future growth rates in new Active Buyers.

Adjusted EBITDA

We define Adjusted EBITDA as net loss excluding depreciation and amortization, stock-based compensation expense, other income, net, provision for income taxes, gain on sale of business, and strategic alternative expenses. Adjusted EBITDA is a key performance measure 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 helps 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. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhances the overall understanding of our past performance and future prospects, and allows 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.

Components of Results of Operations

Net Revenue

Our net revenue consists principally of seller marketplace services, advertisements, and, prior to the sale of Design Manager, software services. Seller marketplace services primarily consist of marketplace transactions, subscriptions, and listing fees. Marketplace transaction fees are collected when sellers pay us commissions ranging from 5% to 50%, and processing fees of 3%, for successful purchase transactions, net of expected refunds. If a seller accepts a return or refund of an on-platform purchase, the related commission and processing fees are refunded. Revenue from subscriptions consist of access to our online marketplace, allowing sellers, who are our customers, to execute successful purchase transactions with buyers. In January 2022, we launched new seller pricing tiers which allow new sellers to choose the plan that best fits their business and includes choices of a higher monthly subscription fee and lower commission rates, as well as a subscription-free tier with 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. Prior to the sale of Design Manager, software services revenue consisted of monthly and annual subscriptions allowing customers to access our Design Manager software, typically used by interior designers. Due to the sale of Design Manager on June 29, 2022, there was no net revenue related to software services after the sale and we

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anticipate that net revenue will no longer include software services in future periods. 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 expenses associated with payroll, employee benefits, stock-based compensation, other headcount-related expenses associated with operations 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 enable 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 consolidated statements of operations. We enable fulfillment and shipping, but do not take ownership of or manage inventory.

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 end 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.

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, other headcount-related expenses associated with finance, legal, facility and human resources related personnel, lease expense, business liability insurance, accounting, professional fees, and depreciation and amortization 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 buyer protection program, including damages to products caused by shipping and transit, items that were not received or not as represented by the seller, and reimbursements to buyers at our discretion if they are dissatisfied with their experience. The provision for transaction losses also includes bad debt expense associated with our accounts receivable balance.

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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,
			2023						2022						2023						2022
Net revenue			$	20,663					$	22,729					$	63,762					$	73,892
Cost of revenue			5,510						7,278						19,144						22,908
Gross profit			15,153						15,451						44,618						50,984
Operating expenses:
Sales and marketing			8,411						11,072						28,007						34,139
Technology development			4,515						6,363						17,199						18,711
General and administrative			6,772						6,731						22,323						20,635
Provision for transaction losses			688						1,183						2,940						4,432
Gain on sale of Design Manager			—						—						—						(9,684)
Total operating expenses			20,386						25,349						70,469						68,233
Loss from operations			(5,233)						(9,898)						(25,851)						(17,249)
Other income, net:
Interest income			1,757						520						4,933						746
Interest expense			—						(3)						—						(11)
Other, net			171						353						1,160						837
Total other income, net			1,928						870						6,093						1,572
Net loss before income taxes			(3,305)						(9,028)						(19,758)						(15,677)
Provision for income taxes			—						—						—						—
Net loss			$	(3,305)					$	(9,028)					$	(19,758)					$	(15,677)

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,
			2023						2022						2023						2022
Net revenue			100		%				100		%				100		%				100		%
Cost of revenue			27						32						30						31
Gross profit			73						68						70						69
Operating expenses:
Sales and marketing			41						49						44						46
Technology development			22						28						27						25
General and administrative			33						30						35						28
Provision for transaction losses			3						5						5						6
Gain on sale of Design Manager			—						—						—						(13)
Total operating expenses			99						112						111						92
Loss from operations			(26)						(44)						(41)						(23)
Other income, net:
Interest income			9						2						8						1
Interest expense			—						—						—						—
Other, net			1						2						2						1
Total other income, net			10						4						10						2
Net loss before income taxes			(16)						(40)						(31)						(21)
Provision for income taxes			—						—						—						—
Net loss			(16)		%				(40)		%				(31)		%				(21)		%

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Comparison of the Three Months Ended September 30, 2023 and 2022

Net Revenue

			Three Months Ended September 30,
(in thousands)			2023						2022						$ Change						% Change
Net revenue			$	20,663					$	22,729					$	(2,066)					(9)		%

Net revenue was $20.7 million for the three months ended September 30, 2023, as compared to $22.7 million for the three months ended September 30, 2022. The decrease of $2.1 million, or 9%, was primarily due to a $2.0 million decrease in seller marketplace services revenue, which was due to a decrease in marketplace transaction fees resulting from the decrease in our GMV. We believe our GMV and net revenue have been impacted negatively, both directly and indirectly, by macroeconomic factors, including significant capital market volatility, significant housing market volatility, rising interest rates, inflation, global economic, and geopolitical developments and the changing consumer behaviors as a result of the COVID-19 pandemic; however, these impacts are difficult to isolate and quantify.

Our marketplace transaction fees represent the majority of our net revenue and accounted for 71% of our net revenue for each of the three months ended September 30, 2023 and 2022. Subscription fees accounted for 24% and 25% of our net revenue for the three months ended September 30, 2023 and 2022, respectively.

Cost of Revenue

			Three Months Ended September 30,
(in thousands)			2023						2022						$ Change						% Change
Cost of revenue			$	5,510					$	7,278					$	(1,768)					(24)		%

Cost of revenue was $5.5 million for the three months ended September 30, 2023, as compared to $7.3 million for the three months ended September 30, 2022. The decrease of $1.8 million, or 24%, was primarily driven by a $0.6 million decrease in salaries and benefits resulting from decreases in headcount from the prior period, primarily related to our reduction in workforce in June 2023. There was also a $0.5 million decrease in shipping expenses due to more efficient pricing and better negotiated rates from our carriers, a $0.3 million decrease in credit card processing fees due to the decrease in net revenue, and a $0.3 million decrease in depreciation expense.

Gross Profit and Gross Margin

Gross profit was $15.2 million and gross margin was 73.3% for the three months ended September 30, 2023, as compared to gross profit of $15.5 million and gross margin of 68.0% for the three months ended September 30, 2022. The decrease in gross profit for the three months ended September 30, 2023 was primarily driven by net revenue decreasing $0.3 million more than cost of revenue, as outlined above. The increase in gross margin percentage was primarily driven by our cost of revenue decreasing at a faster pace than net revenue, as outlined above.

Operating Expenses

Sales and Marketing

			Three Months Ended September 30,
(in thousands)			2023						2022						$ Change						% Change
Sales and marketing			$	8,411					$	11,072					$	(2,661)					(24)		%

Sales and marketing expense was $8.4 million for the three months ended September 30, 2023, as compared to $11.1 million for the three months ended September 30, 2022. The decrease of $2.7 million, or 24% was primarily driven by a $1.2 million decrease in salaries and benefits resulting from decreases in headcount from the prior period, primarily related to our reduction in workforce in June 2023, and a $1.3 million decrease in discretionary expenses, including performance-based marketing and promotional campaigns.

Technology Development

			Three Months Ended September 30,
(in thousands)			2023						2022						$ Change						% Change
Technology development			$	4,515					$	6,363					$	(1,848)					(29)		%

Technology development expense was $4.5 million for the three months ended September 30, 2023 as compared to $6.4 million for the three months ended September 30, 2022. The decrease of $1.8 million, or 29% was primarily driven by a

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$1.5 million decrease in salaries and benefits and a $0.3 million decrease in stock-based compensation resulting from decreases in headcount from the prior period, primarily related to our reduction in workforce in June 2023.

General and Administrative

			Three Months Ended September 30,
(in thousands)			2023						2022						$ Change						% Change
General and administrative			$	6,772					$	6,731					$	41					1		%

General and administrative expense was $6.8 million for the three months ended September 30, 2023, as compared to $6.7 million for the three months ended September 30, 2022. There were nominal increases in salaries and benefits as well as stock-based compensation due to our annual compensation increases which occur each March. These increases were partially offset by lower rates negotiated with vendors, including lower liability insurance expense.

Provision for Transaction Losses

			Three Months Ended September 30,
(in thousands)			2023						2022						$ Change						% Change
Provision for transaction losses			$	688					$	1,183					$	(495)					(42)		%

Provision for transaction losses was $0.7 million for the three months ended September 30, 2023, as compared to $1.2 million for the three months ended September 30, 2022. The decrease of $0.5 million, or 42%, was primarily driven by a decrease in damage claims as a result of the decrease in GMV as well as new policies implemented in partnership with our carriers.

Other Income, Net

			Three Months Ended September 30,
(in thousands)			2023						2022						$ Change						% Change
Total other income, net			$	1,928					$	870					$	1,058					122		%

Other income, net was $1.9 million for the three months ended September 30, 2023, as compared to $0.9 million for the three months ended September 30, 2022. The increase of $1.1 million, or 122%, was primarily driven by an increase in interest income due to our shift in investment strategies in cash, cash equivalents and short-term investments providing higher rates of return.

Comparison of the Nine Months Ended September 30, 2023 and 2022

Net Revenue

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