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Additionally, order volumes were flat, a meaningful acceleration versus the fourth quarter and revenue take rates increased on a sequential basis, GMV growth rebounded by 11 percentage points. GMV grew by 6% and active buyers stabilized. Lastly, we continue to demonstrate the impact of our leaner cost structure on our P&L, with adjusted EBITDA margins improving substantially. We see this as validation that our strategy is working while headwinds on luxury housing and high end discretionary items remain. We are hopeful that the worst of the down cycle for luxury home furnishings is now behind us. We will remain disciplined on expenses and focused on high leverage projects as we work to reaccelerate growth and achieve breakeven growth rates improved in the first quarter, order volume was flat.

Our first positive results since the fourth quarter of 2021, helped by conversion improvements, performance, marketing optimizations and a record quarter for options. Additionally, GMV year-over-year growth rates rebounded 11 percentage points sequentially from negative 17% in the fourth quarter to negative 6% in the first, driven by the aforementioned conversion improvements and moderating declines in average order value over the past two years, improving conversion has been a major focus. We are encouraged that our efforts are paying off with conversion rates growing year over year for the second consecutive quarter, notably new buyer conversion increase for the first time since the third quarter of 2021. Over time, we see a meaningful opportunity to grow conversion, especially for new buyers.

Our performance this quarter demonstrates that our revamped A/B testing program and accelerated product velocity are starting to pay dividends. We believe that the higher number of new features that we are releasing are contributing to conversion improvements. During the first quarter, the number of A/B tests we ran was up over 100%. We see plenty of runway for our AV testing program and expect to maintain our heightened product velocity. For example, we recently extended testing, which historically focused on the buyer experience through additional services like the seller experience, returning to funnel dynamics, traffic declines moderated relative to the fourth quarter, helped by performance marketing optimizations. We recently moved to a more accurate attribution methodology, allowing us to increase performance marketing spend while maintaining the same efficiency threshold.

As a result, paid traffic grew for the first time in over a year. In contrast, organic traffic growth remains down year over year, reflecting softness in the home furnishings industry. We ended the quarter with approximately 70% of traffic from organic sources and 30% from paid. Looking ahead, our 2024 focus is on returning to growth while maintaining our leaner cost structure. To accomplish this, our roadmap is focused on these three areas, personalized and frictionless buying competitive inventory, pricing and scalability. During the first quarter, we had a number of wins, particularly around reducing friction in the buyer experience. The goal here is to make it easier for shoppers to find the perfect piece among our over 1.7 million listings.

First, we increased our checkout speed, resulting in higher checkout completion rates. Second, we optimized our guest checkout experience, which also increased checkout completion rates. Third, our logistics team was able to negotiate lower rates for select white glove and Front Door freight routes, allowing us to lower shipping prices by up to 20%. We know from past experience that lower shipping rates are a plus for conversion. Fourth, our logistics team also negotiated fixed rates for intra Europe freight shipments, allowing us to expand European freight coverage by 15%, having upfront shipping costs helps buyers with their purchase decision and reduces checkout friction first. And lastly, we streamline payment options on our product display pages, leading to a higher checkout entry rate.

The net effect of these changes is a quicker, more elegant buyer experience and ultimately higher order volumes. As I mentioned earlier, on a sequential basis, order growth accelerated 11 percentage points in the quarter to flat year on year, helped by these and other product enhancements, we will continue to prioritize reducing friction in the second quarter. For example, we are currently optimizing our make offer flow. Given the highly considered nature of our listings, many orders involve back-and-forth communications or negotiations between buyer and seller. In fact, over 40% of orders originate as buyer initiated negotiations, projects focused on enhancing site reliability and refining logistics are also in flight. We feel good about where we are going based on quarter-to-date trends.

We expect further conversion gains in the second quarter alongside a return to order growth and revenue growth. There is plenty more work to be done, but we are pleased that things are trending in the right direction. Turning to supply, we ended the quarter with over 1.7 billion listings, up 9%. As expected, we saw an increase in the number of churn sellers due to our new pricing structure and inventory minimum requirements. As a reminder, in the fourth quarter, we revised our seller acquisition and monetization approach to focus on sellers with higher engagement. Overall, we ended the quarter with over 7,600 unique sellers, up over 6% year over year, but down modestly versus the fourth quarter. The majority of churn sellers were proactively churned due to low engagement or performance.

In total, all churn sellers accounted for only 25 basis points of our GMV over the trailing 12 months and roughly 1% of listings. While we expect to see some volatility in seller account throughout 2024, as we lap inventory minimums and pricing changes, we expect to see continued listings growth. In conclusion we are encouraged by the positive trends in conversion rates, order volumes, revenue, take rates and adjusted EBITDA margins after two challenging years. Leading indicators are pointing in the right direction. Our performance this quarter demonstrates that our strategy and roadmap are gaining momentum. While these developments are promising and we are pleased with our progress, we will continue to be squarely focused on returning to growth, expense discipline and capital efficiency.

Thank you for your continued support. I will now turn it over to Tom to review our first quarter financial results and second quarter outlook.

Thomas Etergino: Thanks, David. We delivered GMV and revenue above the high end of guidance and adjusted EBITDA margins at the high end of guidance. GMV was $91.7 million down 6%, with growth rates increasing 11 percentage points versus the fourth quarter. On a sequential basis, GMV grew 6%. While we continued to see soft demand for luxury home goods and high end discretionary items, we believe that the worst of the down cycle for luxury home furnishings is now behind us. During the quarter, traffic and average order value were headwinds to GMV growth, partially offset by conversion gains. This was our second consecutive quarter of conversion improvements. Encouragingly, conversion increased for both new and returning buyers as we see ample headroom to increase both over time.

Since mid 2023, we have ramped our A/B testing velocity and launched more product enhancements into production. We believe this is aiding conversion. Consistent with recent trends, average order value was another headwind to GMV growth. Average order value of approximately $2,600 was down 5%. We saw a slight mix shift to orders under $2,000. Additionally, orders over $100,000 accounted for approximately 3% of GMV towards the low end of our historical range of 3% to 5%. In contrast, our median order value of approximately $1,200 was flat. The latter metric is less sensitive to fluctuations in high-value orders. Consumer GMV and trade GMV declined at similar rates. Encouragingly, consumer orders grew for the first time since the third quarter of 2021.

Turning to verticals, jewelry, art and vintage and antique furniture all posted positive order growth. We ended the quarter with approximately 60,700 active buyers, down 9% year over year and flat sequentially. Because it's a trailing 12-month metric, we expected to remain choppy near term. However, we see a return to order growth as a leading indicator of active buyer growth. Based on quarter-to-date trends, we expect order growth to resume in the second quarter. On the supply side of the marketplace, we closed the quarter with over 7,600 unique sellers, up 6%. Additionally, there are now over 1.7 million listings on the marketplace, up 9%. On a sequential basis, we saw a modest decline in the number of unique sellers due to higher than usual churn.

The majority of it proactive related to recent policy changes. However, this churn had a diminimus impact on GMV or total listings. While we do expect some volatility to unique seller count as we cycle through the introduction of inventory minimums, changes to commissions and the launch of monthly minimum subscription fees. We expect continued listings growth throughout the year. Turning to the P&L, net revenue was $22.1 million, down 1%. Transaction revenue, which is tied directly to GMV, was approximately 75% of revenue with subscriptions making up most of the remainder take rates improved modestly due to the combination of several factors, including a higher proportion of orders below our $25,000 commission break growing GMV contribution from essential sellers, which carry a higher commission rate and a revised commission break structure that went into effect late in the fourth quarter.

Gross profit was $16 million, up 7%, growing for the first time since the first quarter of 2022, gross profit margins were 72%, up approximately five percentage points, primarily driven by lower headcount related expenses. As a result of our restructuring initiatives and lower shipping expenses as well as higher take rates. As a reminder, the year-ago period includes approximately $500,000 of amortization expense related to discontinued support of our NFT. platform. Sales and marketing expenses were $9.2 million, down 6%, driven by lower headcount related expenses as a result of our restructuring initiatives. Sales and marketing as a percentage of revenue was 42%, down from 44% a year ago. Technology development expenses were $4.7 million, down 18%, driven by lower headcount related costs as a result of our restructuring initiatives.

As a percentage of revenue of technology development was 21%, down from 26%. General and administrative expenses were $7 million, down 13%, driven primarily by savings from lower professional service fees, reducing our New York City real estate footprint and lower insurance rates, partially offset by an increase in headcount related expenses due to our annual merit cycle in March. As a percentage of revenue, general administrative expenses were 32%, down from 37%. Lastly, provision for transaction losses were approximately $400,000 or 2% of revenue, down from 6%, primarily driven by a decrease in damage claims as a result of new policies implemented in partnership with our carriers as well as lower GMV. We continue to manage operating expenses with discipline.

Total operating expenses were $21.3 million, down 15%, reflecting the benefits of restructuring. Adjusted EBITDA loss was $1.8 million compared to a loss of $5.2 million last year. Adjusted EBITDA margin was a loss of 8% versus a loss of 24% last year due to savings from restructuring. Moving onto the balance sheet, we ended the quarter with a strong cash cash equivalents and short-term investments position of $134 million. During the quarter, we repurchased $2.9 million of shares under our $20 million board authorized repurchase program since inception in August of 2023, we have repurchased approximately $6.4 million of shares. Before discussing guidance, and I'll take a moment to review the progress we've made over the past two years and building a stronger financial foundation.

First, revenue take rates are higher today versus a year ago due to various monetization initiatives. Second, gross margins have expanded from the high 60s to low 70s on improved operational efficiency. Third, our operating expense run rate is meaningfully lower due to headcount reductions, rationalizing our real estate footprint in New York City, increasing efficiency thresholds for performing marketing spend and other cost savings measures. The net effect of this is that each incremental dollar of GMV that we generate in the future should yield more revenue and flow through at a higher incremental margin. To illustrate the changes, our high watermark for GMV was $117.5 million in the fourth quarter of 2022. Adjusted EBITDA loss in the first quarter of 2022 was $4.7 million or negative 18% of revenue compared to a loss of $1.8 million or negative 8% in the first quarter of 2024.

Notably, this improvement was against a base of GMV and revenue that is 22% and 17% lower, respectively. A point worth stressing is that the majority of our operating expenses about two-thirds are headcount related from our new cost base. We expect to be able to add meaningful GMV and revenue without proportional increases in headcount or said another way, the changes we made over the past two years increase our operating leverage potential. Turning to the outlook. Our guidance reflects quarter to date results and our forecast for the remainder of the period. We forecast second quarter GMV of $85 million to $92 million, down 5% to up 2%. Net revenue of $21 million to $22.3 million, flat to up 7% and adjusted EBITDA margin loss of minus 14% to minus 9%.

Our GMV guidance reflects moderating year-over-year declines in traffic and AOV and continued conversion improvements quarter to date, positive order volume growth and more moderate seasonality as our self-help product initiatives counteract some of the typical second quarter seasonal softness. Our revenue guidance reflects modest take rate expansion due to a number of factors, including updated commission tiers, a higher mix of orders under our commission break a higher mix of GMV from our central sellers and instituting a minimum monthly subscription fee for new sellers. Lastly, adjusted EBITDA margin guidance reflects gross margins in the range of 71% to 73%. And on a sequential basis, we expect operating expenses to increase modestly due to higher headcount expenses from a full quarter of our annual merit cycle in March and backfilling open roles.

However, we are expecting minimal net headcount growth in 2024. Over the past two years, we have made difficult decisions to reengineer our cost structure and reevaluate our priorities. The positive trends that we are witnessing indicate that our strategy is working. The first quarter represented our second consecutive quarter of conversion rate increases or return to gross profit growth and our third consecutive quarter of meaningful year-over-year adjusted EBITDA margin improvement. Additionally, order growth improved 11 percentage points from the fourth quarter to flat and active buyers stabilized. Furthermore, at the midpoint of guidance, we anticipate a return to order growth and revenue growth in the second quarter helped by continued conversion improvements while much has changed in our business and our market throughout the past two years, our financial goals have not over time.

Our objective remains to deliver sustainable revenue growth, expand margins become profitable and ultimately grow free cash flow per share. We look to build on the first quarter's progress as we move throughout the year. Thank you for your time. I will now turn the call over to the operator to take your questions.

See also

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