1stdibs.com Inc.
02/27/2026 | Press release | Distributed by Public on 02/27/2026 07:51
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
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 Annual Report on Form 10-K. 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 I, Item 1A in this Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Company Overview
We are one of the world's leading online marketplaces for connecting design lovers with many of the best sellers and makers of vintage, antique, and contemporary furniture, home décor, jewelry, watches, art, and fashion. We believe we are a leading online marketplace for these luxury design items based on the aggregate number of listings on our online marketplace and our Gross Merchandise Value ("GMV"). Our sellers, who undergo an evaluation by our in-house experts to vet the quality of their inventory, in-depth marketing content, and custom-built technology platform create trust in our brand and facilitate high-consideration purchases of luxury design items online. By disrupting the way these items are bought and sold, we are both expanding access to, and growing the market for, luxury design.
As of December 31, 2025, we operate an e-commerce marketplace with approximately 5,700 unique sellers, compared to approximately 5,900 as of December 31, 2024. In 2024, we shifted our seller acquisition strategy and monetization approach to concentrate on fewer, but more highly engaged sellers. As of December 31, 2025, we had 7.8 million users compared to 7.0 million as of December 31, 2024, and approximately 1.9 million listings, compared to 1.8 million as of December 31, 2024. Users represent non-seller visitors who register on our website, including both buyers and prospective buyers, and are identified by a unique email address. Our online marketplace seller stock value, the sum of the listed stock value of all available products listed on our online marketplace, remained consistent year over year and exceeded $10.0 billion as of both December 31, 2025 and 2024. An individual listing's stock value is calculated as the item's current price multiplied by its quantity available for sale.
GMV was $363.9 million for the year ended December 31, 2025 compared to $362.3 million for the year ended December 31, 2024. Our net revenue was $89.6 million for the year ended December 31, 2025, compared to $88.3 million for the year ended December 31, 2024, an increase of 2%. In the year ended December 31, 2025, we generated a net loss of $13.7 million and Adjusted EBITDA loss of $2.4 million, compared to a net loss of $18.6 million and Adjusted EBITDA loss of $8.0 million for the year ended December 31, 2024. See "Non-GAAP Financial Measures" for more information and for a reconciliation of net loss to Adjusted EBITDA, the most directly comparable financial measure calculated and presented in accordance with GAAP.
Restructuring Charges
In June 2023, we announced a workforce reduction designed to further reduce operating costs and further realign investment priorities involving the reduction of approximately 20% of our global workforce. As a result of the reduction, we incurred approximately $2.0 million in restructuring charges during the year ended December 31, 2023, consisting primarily of employee severance and benefits costs.
During the year ended December 31, 2024, we incurred $1.4 million of additional employee severance and benefits costs relating to a further workforce reduction.
During the year ended December 31, 2025, we incurred $0.8 million of employee severance and benefits costs relating to a reorganization intended to improve operational and cost efficiency. The remaining $0.1 million as of December 31, 2025 is anticipated to be paid during the first quarter of 2026. See Note 2, "Summary of Significant Accounting Policies" for further discussion on restructuring charges.
Our Business Model
We generate revenue primarily from fees from our seller marketplace services as well as other services, including advertisements.
Seller Marketplace Services
Seller marketplace services consist of marketplace transactions, subscriptions, and sponsored listings, and accounted for substantially all of our net revenue in the years ended December 31, 2025, 2024, and 2023, respectively.
Marketplace Transaction Fees
Our sellers pay us a commission and processing fees for the successful sale of an item listed on our online marketplace. We have a commission fee structure that is a function of the item's vertical and price. Our commission fees range from 5% to 50% of GMV and we charge processing fees, which are approximately 3% of the buyer's total payment, net of expected refunds. Our marketplace transaction fees represent the majority of our net revenue and accounted for 74%, 74%, and 71% of our net revenue in the years ended December 31, 2025, 2024, and 2023, respectively.
Subscription & Sponsored Listings
We offer our sellers various subscription pricing tiers which allows them to choose the plan that best fits their business, with choices of a higher monthly subscription fee and lower commission rates or a lower monthly subscription fee and higher commission rates. Subscription fees accounted for 21%, 22%, and 24% of our net revenue in the years ended December 31, 2025, 2024, and 2023, respectively. Our ability to maintain the level of our annual subscription fee rates depends on our ability to continue to generate sales for our sellers, which in turn depends on our ability to drive GMV growth, as GMV increases the network effect on our online marketplace. We earn sponsored listing revenue when a user clicks on a listing which a seller requested to be promoted. Sellers do not pay a fee for a basic listing on our online marketplace, but can choose to pay for sponsored listings, which provide promotional advantages over the basic listing. Sponsored listings accounted for 4%, 3%, and 4% of our net revenue in the years ended December 31, 2025, 2024, and 2023, respectively.
Other Services
Other services consist of other charges to our sellers including advertising revenues generated from displaying ads on our online marketplace and accounted for 1% of our net revenue for all of the years ended December 31, 2025, 2024, and 2023. Advertising revenue is generated when impression-based ads are displayed on our online marketplace on our sellers' behalf.
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;
•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 accounting principles generally accepted in the United States of America ("GAAP"), to Adjusted EBITDA); and
•Free cash flow (see "Non-GAAP Financial Measures" for a discussion of free cash flow and a reconciliation of cash from operating activities, the most directly comparable financial measure calculated and presented in accordance with GAAP, to free cash flow)
For GMV, Number of Orders, and Active Buyers, these metrics are based on internal company data, assumptions, and estimates and are used in managing our business. We believe that these figures are reasonable estimates, and we actively take measures to improve their accuracy, such as eliminating known fictitious or duplicate accounts. There are, however, inherent challenges in gathering accurate data across large online and mobile populations. For example, individuals may have multiple email accounts in violation of our terms of service, which would result in an Active Buyer being counted more than once, thus impacting the accuracy of our number of Active Buyers. In addition, certain metrics, such as the number of Active Buyers, Number of Orders, and GMV are measured based on such numbers as reported in a given month, minus cancellations within that month. As we do not retroactively adjust such numbers for cancellations occurring after the month, the metrics presented do not reflect subsequent order cancellations. We regularly review and may adjust our processes for calculating these metrics to improve their accuracy. These key operating and financial metrics may vary from period to period and should not be viewed as indicative of other metrics.
| Year Ended December 31, | |||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| GMV | $ | 363,862 | $ | 362,274 | $ | 362,316 | |||||||||||
| Number of Orders | 133,472 | 139,239 | 133,072 | ||||||||||||||
| Active Buyers | 60,771 | 64,306 | 60,716 | ||||||||||||||
| Adjusted EBITDA (unaudited) | $ | (2,448) | $ | (8,009) | $ | (13,340) | |||||||||||
| Free cash flow (unaudited) | $ | (3,199) | $ | (4,832) | $ | (15,350) | |||||||||||
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 U.S. 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 define "on-platform GMV" as GMV based only on sales placed or reported through the 1stDibs online marketplace, thus on-platform GMV is a subset of GMV. Offline sales consist of sales completed by a small number of sellers outside of our online marketplace and reported to us by these sellers in exchange for increased marketing exposure and/or slightly lower commission rates on both their on-platform and offline sales. We do not intend to add new sellers to this program and have not in the current year. On-platform GMV accounted for $347.1 million or 95%, $346.3 million or 96%, and $346.6 million or 96%, of GMV in the years ended December 31, 2025, 2024 and 2023, respectively. We view GMV as a measure of the total economic activity generated by our online marketplace and as an indicator of the scale, growth, and health of our online marketplace. Our historical performance for GMV may not be indicative of future performance in GMV.
Number of Orders
We define Number of Orders as the total number of orders placed or reported through the 1stDibs online marketplace in a given month, minus cancellations within that month. Our historical performance for Number of Orders may not be indicative of future performance in Number of Orders.
Active Buyers
We define Active Buyers as buyers who have made at least one purchase through our online marketplace during the 12 months ended on the last day of the period presented, net of cancellations. A buyer is identified by a unique email address; thus an Active Buyer could have more than one account if they were to use a separate unique email address to set up each account. We believe this metric reflects scale, engagement and brand awareness, and our ability to convert user activity on our online marketplace into transactions. Our historical performance for Active Buyers may not be indicative of future performance in Active Buyers.
Adjusted EBITDA
We define Adjusted EBITDA as net loss excluding depreciation and amortization, stock-based compensation expense, other income, net, provision for income taxes, restructuring expenses, 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.
Free cash flow
We define free cash flow as net cash from operating activities less purchases of property and equipment. We use free cash flow as a supplemental measure of liquidity and to evaluate our ability to generate cash from operations that can be used for strategic initiatives and working capital requirements. We believe that free cash flow is an important financial measure for use in evaluating our financial performance. See "Non-GAAP Financial Measures" for more information and for a reconciliation of net cash from operating activities, the most directly comparable financial measure calculated and presented in accordance with GAAP, to free cash flow.
Key Factors Affecting Our Performance
We believe that our performance and future success depend on a number of factors that present significant opportunities for us, including those discussed in Part I, Item 1, "Business," but also pose risks and challenges, including those discussed in the section titled "Risk Factors," and elsewhere in this Annual Report on Form 10-K.
Growth and Retention of our Active Buyers
Our success depends in part on our ability to grow and retain our Active Buyer base. Our number of Active Buyers was 60,771 as of December 31, 2025 compared to 64,306 as of December 31, 2024. The total Number of Orders placed or reported through the 1stDibs online marketplace was 133,472 for the year ended December 31, 2025, compared to 139,239 for the year ended December 31, 2024. We had no Active Buyers who represented 5% or more of on-platform GMV for the years ended December 31, 2025 or 2024. Active Buyers drive our on-platform GMV and net revenue and contribute to the network effects that allow us to attract new sellers and exclusive inventory.
During the year ended December 31, 2025, we retained 22% of the 2024 on-platform GMV from buyers acquired in 2024; consistent with the year ended December 31, 2024, where we also retained 23% of the 2023 on-platform GMV from buyers acquired in 2023. We define new buyers as those who placed their first order on our online marketplace. We categorize buyers into cohorts based on the date of their first purchase on the 1stDibs platform. GMV attributed to a buyer cohort represents the total dollar value from items purchased by that buyer cohort in a given period, minus cancellations within that period and excluding shipping and U.S. sales taxes. To calculate the percentage of buyers retained, we divide total GMV in a specific period for a given cohort by the GMV of that cohort in the prior period.
We believe these metrics have been negatively impacted, directly and indirectly, by macroeconomic factors, including significant housing market volatility, significant capital market volatility, and global economic and geopolitical developments.
New buyers represented 34%, 38%, and 35% of GMV for the years ended December 31, 2025, 2024 and 2023, respectively while returning buyers represented 66%, 62%, and 65% of GMV for the years ended December 31, 2025, 2024 and 2023, respectively.
Components of Results of Operations
Net Revenue
Our net revenue consists principally of seller marketplace services. Seller marketplace services primarily consist of marketplace transactions, subscriptions, and sponsored listings. Marketplace transaction fees are collected when sellers pay us commissions ranging from 5% to 50% of GMV, and processing fees, which are approximately 3% of the buyer's total payment, net of expected refunds. If a seller accepts a return or refund for an on-platform purchase, the related commission and, in some cases, processing fees are refunded. Subscriptions provide access to our online marketplace, allowing sellers, who are our customers, to execute successful purchase transactions with buyers. We offer our sellers various subscription pricing tiers which allows them to choose the plan that best fits their business, with choices of a higher monthly subscription fee and lower commission rates or lower monthly subscription fee and higher commission rates. Listing fee revenue is collected when sellers pay us for promoting certain products on their behalf and at their discretion through our online marketplace. Advertisements consist of impression-based ads displayed on our online marketplace on the seller's behalf.
Our revenue recognition policies are discussed under "Critical Accounting Policies" and Note 2, "Summary of Significant Accounting Policies," to our consolidated financial statements.
Cost of Revenue
Cost of revenue includes payment processor fees and hosting expenses. Cost of revenue also includes payroll, employee benefits, stock-based compensation, other headcount-related expenses associated with personnel supporting revenue-related operations and logistics, consulting costs, and amortization expense related to our capitalized internal-use software.
In certain transactions where our shipping services are elected by sellers, we facilitate shipping of items purchased from the seller to the buyer. The difference between the amount collected for shipping and the amount charged by the shipping carrier is included in cost of revenue in our consolidated statements of operations. We facilitate fulfillment and shipping, but do not take ownership of or manage inventory.
Gross Profit and Gross Margin
Gross profit is net revenue less cost of revenue, and gross margin is gross profit as a percentage of net revenue. Gross profit has been, and will continue to be, affected by various factors, including leveraging economies of scale, the costs associated with hosting our platform, the level of amortization of our internal-use software, the fluctuations in shipping costs including our ability to pass these costs on to buyers, and the extent to which we expand our operations. We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors.
Sales and Marketing
Sales and marketing expenses include payroll, employee benefits, stock-based compensation, other headcount-related expenses associated with sales and marketing personnel, advertising expense, consulting costs, and promotional discounts offered to new and existing buyers. Advertising expenses consist primarily of costs incurred promoting and marketing our services, such as costs associated with acquiring new users through performance-based marketing, social media programs, email, and events. Promotional discounts and incentives represent incentives solely to buyers and, therefore, are not considered payments made to our customers. Buyers are not our customers because access to the 1stDibs online marketplace is free for buyers, and we have no performance obligations with respect to buyers; we consider our sellers to be our customers.
Technology Development
Technology development expenses include payroll, employee benefits, stock-based compensation, and other headcount-related expenses associated with engineering and product development personnel and consulting costs related to technology development. We expense all technology development expenses as incurred, except for those expenses that meet the criteria for capitalization as internal-use software.
General and Administrative
General and administrative expenses include payroll, employee benefits, stock-based compensation, and other headcount-related expenses associated with finance, legal, facility and human resources related personnel, lease expense, net of sublease income, business liability insurance, accounting, professional fees, consulting costs, and depreciation of property and equipment. We expense all general and administrative expenses as incurred.
Provision for Transaction Losses
Provision for transaction losses primarily consists of transaction loss expense associated with our purchase protection program, including damages to products caused in shipping and transit, reimbursements to dissatisfied buyers at our discretion, and items that were not received or not as described by the seller. The provision for transaction losses also includes bad debt expense associated with our seller accounts receivable balance.
Results of Operations
The following table summarizes our results of operations for the periods indicated:
| Year Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Net revenue | $ | 89,620 | $ | 88,257 | $ | 84,684 | |||||||||||
| Cost of revenue | 24,182 | 24,831 | 25,111 | ||||||||||||||
| Gross profit | 65,438 | 63,426 | 59,573 | ||||||||||||||
| Operating expenses: | |||||||||||||||||
| Sales and marketing | 31,088 | 38,084 | 36,640 | ||||||||||||||
| Technology development | 23,412 | 21,165 | 21,644 | ||||||||||||||
| General and administrative | 26,871 | 27,372 | 28,587 | ||||||||||||||
| Provision for transaction losses | 3,033 | 3,020 | 3,729 | ||||||||||||||
| Total operating expenses | 84,404 | 89,641 | 90,600 | ||||||||||||||
| Loss from operations | (18,966) | (26,215) | (31,027) | ||||||||||||||
| Other income, net: | |||||||||||||||||
| Interest income | 3,990 | 5,942 | 6,639 | ||||||||||||||
| Other, net | 1,408 | 1,684 | 1,703 | ||||||||||||||
| Total other income, net | 5,398 | 7,626 | 8,342 | ||||||||||||||
| Net loss before income taxes | (13,568) | (18,589) | (22,685) | ||||||||||||||
| Provision for income taxes | (98) | (44) | (14) | ||||||||||||||
| Net loss | $ | (13,666) | $ | (18,633) | $ | (22,699) | |||||||||||
The following table summarizes our results of operations as a percentage of net revenue for the periods indicated:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net revenue | 100 | % | 100 | % | 100 | % | |||||||||||
| Cost of revenue | 27 | 28 | 30 | ||||||||||||||
| Gross profit | 73 | 72 | 70 | ||||||||||||||
| Operating expenses: | |||||||||||||||||
| Sales and marketing | 35 | 43 | 43 | ||||||||||||||
| Technology development | 26 | 24 | 26 | ||||||||||||||
| General and administrative | 30 | 31 | 34 | ||||||||||||||
| Provision for transaction losses | 3 | 4 | 4 | ||||||||||||||
| Total operating expenses | 94 | 102 | 107 | ||||||||||||||
| Loss from operations | (21) | (30) | (37) | ||||||||||||||
| Other income, net: | |||||||||||||||||
| Interest income | 4 | 7 | 8 | ||||||||||||||
| Other, net | 2 | 2 | 2 | ||||||||||||||
| Total other income, net | 6 | 9 | 10 | ||||||||||||||
| Net loss before income taxes | (15) | (21) | (27) | ||||||||||||||
| Provision for income taxes | - | - | - | ||||||||||||||
| Net loss | (15) | % | (21) | % | (27) | % | |||||||||||
Comparison of the Years Ended December 31, 2025 and 2024
Net Revenue
| Year Ended December 31, | |||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Net revenue | $ | 89,620 | $ | 88,257 | $ | 1,363 | 2 | % | |||||||||||||||
Net revenue was $89.6 million for the year ended December 31, 2025, as compared to $88.3 million for the year ended December 31, 2024. The increase of $1.4 million, or 2%, was primarily driven by an increase in non-transactional revenue due to targeted subscription increases in 2025 and higher sales from sponsored listings. Additionally, our take rates increased slightly due to the mix of orders by vertical and price.
Our marketplace transaction fees represent the majority of our net revenue and accounted for 74% of our net revenue for each of the years ended December 31, 2025 and 2024. Subscription fees accounted for 21% and 22% of our net revenue for the years ended December 31, 2025 and 2024, respectively.
Cost of Revenue
| Year Ended December 31, | |||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Cost of revenue | $ | 24,182 | $ | 24,831 | $ | (649) | (3) | % | |||||||||||||||
Cost of revenue was $24.2 million for the year ended December 31, 2025, as compared to $24.8 million for the year ended December 31, 2024. The decrease of $0.6 million, or 3%, was primarily driven by a $0.6 million decrease in credit card processing fees due to better pricing negotiated with one of our main payment processors.
Gross Profit and Gross Margin
Gross profit was $65.4 million and gross margin was 73.0% for the year ended December 31, 2025, as compared to gross profit of $63.4 million and gross margin of 71.9% for the year ended December 31, 2024. The increase in gross profit and gross margin for the year ended December 31, 2025 was primarily driven by the increase in net revenue, specifically non-transaction revenue, and the decrease in credit card processing fees as outlined above.
Operating Expenses
Sales and Marketing
| Year Ended December 31, | |||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Sales and marketing | $ | 31,088 | $ | 38,084 | $ | (6,996) | (18) | % | |||||||||||||||
Sales and marketing expense was $31.1 million for the year ended December 31, 2025, as compared to $38.1 million for the year ended December 31, 2024. The decrease of $7.0 million, or 18%, was mainly due to a $3.6 million decrease in performance-based marketing and promotional campaigns, and a $3.2 million decrease in salaries, benefits, and stock-based compensation resulting from decreases in headcount primarily related to our reduction in workforce in January 2025 and reorganization in September 2025.
Technology Development
| Year Ended December 31, | |||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Technology development | $ | 23,412 | $ | 21,165 | $ | 2,247 | 11 | % | |||||||||||||||
Technology development expense was $23.4 million for the year ended December 31, 2025, as compared to $21.2 million for the year ended December 31, 2024. The increase of $2.2 million, or 11%, was mainly due to a $2.6 million increase in salaries and benefits resulting from our annual compensation increases in March, partially offset by a $0.4 million decrease in stock-based compensation resulting mainly from equity awards granted at lower stock prices.
General and Administrative
| Year Ended December 31, | |||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| General and administrative | $ | 26,871 | $ | 27,372 | $ | (501) | (2) | % | |||||||||||||||
General and administrative expense was $26.9 million for the year ended December 31, 2025, as compared to $27.4 million for the year ended December 31, 2024. The decrease of $0.5 million, or 2%, was mainly due to a $0.9 million decrease in salaries and wages as a result of our 2024 reductions in workforce, and a $0.3 million decrease in the cost of our business liability insurance. These decreases were partially offset by a $0.4 million increase in professional fees and a $0.2 million increase in stock-based compensation.
Provision for Transaction Losses
| Year Ended December 31, | |||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Provision for transaction losses | $ | 3,033 | $ | 3,020 | $ | 13 | - | % | |||||||||||||||
Provision for transaction losses was generally flat with $3.0 million for the each of the years ended December 31, 2025 and 2024.
Other Income, Net
| Year Ended December 31, | |||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Total other income, net | $ | 5,398 | $ | 7,626 | $ | (2,228) | (29) | % | |||||||||||||||
Other income, net was $5.4 million for the year ended December 31, 2025, as compared to $7.6 million for the year ended December 31, 2024. The decrease of $2.2 million, or 29%, was mainly due to lower interest income driven by lower cash, cash equivalents, and short-term investments for the year ended December 31, 2025, coupled with lower interest rates.
Liquidity and Capital Resources
As of December 31, 2025, we had cash, cash equivalents and short-term investments of $95.0 million and an accumulated deficit of $346.0 million. Net cash used in operating activities was $2.4 million in the year ended December 31, 2025. We expect operating losses to continue in the foreseeable future as we continue to strategically invest in growth activities. Our cash flows, including net cash from operating activities, may vary from quarter to quarter, due to the timing of payments to sellers,
vendor contracts and prepayments, annual bonuses, marketing related expenses, and other factors. Our principal use of cash is to fund our operations including platform development to support our strategic initiatives and anticipated share repurchases under our 2025 Stock Repurchase Program. As we continue to enhance our processes and enter into a new agreement with our payment processors, in 2026 we expect to have certain funds classified as payment processor receivables and seller accounts, an other current asset on our consolidated balance sheet. This change is expected to lower our cash and cash equivalents balance by approximately $6 million to $10 million and increase our other current assets by the same approximate amounts. This change will have no impact on total current assets or total assets.
Based on our current plans, we believe our existing cash, cash equivalents and short-term investments will be sufficient to fund our operations and capital expenditure requirements through at least the next 12 months. We expect to continue to incur substantial expenditures in the near term to support our ongoing activities. While management believes that our current cash, cash equivalents and short-term investments are sufficient to fund our operating expenses, capital expenditure requirements and any anticipated share repurchases under the 2025 Stock Repurchase Program for at least the next 12 months, we may need to borrow funds or raise additional equity to achieve our longer-term business objectives.
Our future capital requirements will depend on many factors, including:
•the emergence of competing online marketplaces and other adverse market developments;
•the timing and extent of our sales and marketing and technology development expenditures; and
•any investments, acquisitions or other similar strategic endeavors we may choose to pursue in the future.
A change in the outcome of any of these or other variables could significantly impact our operating plans, and we may need additional funds to meet operational needs and capital requirements associated with such plans. In addition, any future borrowings may result in additional restrictions on our business and any issuance of additional equity would result in dilution to investors. If we are unable to raise additional capital when we need it, it could harm our business, results of operations, and financial condition.
Stock Repurchase Program
As of December 31, 2025, 7,238,060 shares have been purchased for a total cost of $35.0 million since the commencement of our 2023, 2024 and 2025 stock repurchase programs and approximately $10.4 million remains available for future purchases under the 2025 Stock Repurchase Program.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
| Year Ended December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Net cash used in operating activities | $ | (2,436) | $ | (2,910) | |||||||
| Net cash provided by investing activities | 5,518 | 22,291 | |||||||||
| Net cash used in financing activities | (6,388) | (30,706) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 269 | (29) | |||||||||
| Net decrease in cash, cash equivalents, and restricted cash | $ | (3,037) | $ | (11,354) | |||||||
Cash Flows from Operating Activities
Net cash used in operating activities was $2.4 million for the year ended December 31, 2025, and was due mainly to changes in operating assets and liabilities, including a $4.1 million decrease in operating lease liabilities due to our operating lease payments, a $2.4 million decrease in accounts payable and accrued expenses due to the timing of vendor invoices and related payments, and a $2.0 million decrease in payables due to sellers as a result of timing of when sellers are paid. These decreases were partially offset by a $5.0 million decrease in net loss mainly due to the decreases in operating expenses as described above, as well as a $0.8 million increase in receivables from payment processors due to timing.
Net cash used in operating activities was $2.9 million for the year ended December 31, 2024, and was driven primarily by a $3.3 million decrease in operating lease liabilities due to lease payments on our previous and current NYC headquarters, partially offset by our sublease income, a $1.7 million decrease in accounts payable and accrued expenses due to the timing of payments and invoices, and a $1.8 million decrease in other current liabilities and other liabilities related to payments for sales and other indirect tax contingencies. These decreases were partially offset by a $2.1 million increase in payables due to sellers due to timing of the payments we make to our sellers.
Cash Flows from Investing Activities
Net cash provided by investing activities was $5.5 million for the year ended December 31, 2025, and was driven primarily by $71.4 million maturities and sales of short-term investments, partially offset by $65.2 million purchases of short-term investments.
Net cash provided by investing activities was $22.3 million for the year ended December 31, 2024, and was driven primarily by $110.3 million maturities and sales of short-term investments, partially offset by $86.4 million purchases of short-term investments.
Cash Flows from Financing Activities
Net cash used in financing activities was $6.4 million for the year ended December 31, 2025, and was driven primarily by $3.8 million of payments for taxes related to net share settlements of stock-based compensation awards and $3.4 million in purchases of our common stock as part of our 2024 and 2025 stock repurchase programs, partially offset by $0.7 million in proceeds from the exercise of stock options.
Net cash used in financing activities was $30.7 million for the year ended December 31, 2024, and was driven primarily by $27.7 million in purchases of our common stock as part of our 2023 and 2024 stock repurchase programs and $3.8 million of payments for taxes related to net share settlements of stock-based compensation awards, partially offset by $0.8 million in proceeds from the exercise of stock options.
Non-GAAP Financial Measures
We have included Adjusted EBITDA, which is a non-GAAP financial measure, because it is a key measure used by our management team and our board of directors to help us to assess our operating performance and the operating leverage in our business. We also use this measure to analyze our financial results, establish budgets and operational goals for managing our business, and make strategic decisions. 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 results of operations, 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. We also believe that the presentation of this non-GAAP financial measure provides an additional tool for investors to use in comparing our core business and results of operations over multiple periods with other companies in our industry, many of which present similar non-GAAP financial measures to investors, and to analyze our operating performance.
The non-GAAP financial measures presented may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated. The non-GAAP financial measures presented should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, comparable financial measures calculated in accordance with GAAP. Further, these non-GAAP financial measures have certain limitations in that they do not include the impact of certain expenses that are reflected in our consolidated statements of operations. Accordingly, these non-GAAP financial measures should be considered as supplemental in nature, and are not intended, and should not be construed, as a substitute for the related financial information calculated in accordance with GAAP. These limitations of Adjusted EBITDA include the following:
•The exclusion of certain recurring, non-cash charges, such as depreciation and amortization of property and equipment. While these are non-cash charges, we may need to replace the assets being depreciated in the future and Adjusted EBITDA does not reflect cash requirements for these replacements or new capital expenditure requirements;
•The exclusion of stock-based compensation expense, which has been a significant recurring expense and will continue to constitute a significant recurring expense for the foreseeable future, as equity awards are expected to continue to be an important component of our compensation strategy;
•The exclusion of other income, net, which includes interest income related to our cash, cash equivalents and short-term investments, and realized and unrealized gains and losses on foreign currency exchange;
•The exclusion of discrete restructuring expenses such as severance and benefit costs from reductions in force and reorganizations that are fundamentally different in strategic nature from ongoing initiatives. We believe the exclusion of these items facilitates a more consistent comparison of operating performance over time because they are distinct from ongoing operational costs; and
•The exclusion of strategic alternative expenses in connection with capital return strategies, buy and sell-side mergers, acquisitions, partnerships and divestitures, including integration costs.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net loss and our other GAAP results.
We define Adjusted EBITDA as our net loss, excluding: (1) depreciation and amortization; (2) stock-based compensation expense; (3) other income, net; (4) provision for income taxes; (5) restructuring expenses; and (6) strategic alternative expenses. The following table provides a reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA:
| Year Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Net loss | $ | (13,666) | $ | (18,633) | $ | (22,699) | |||||||||||
| Depreciation and amortization | 1,661 | 1,986 | 2,278 | ||||||||||||||
| Stock-based compensation expense | 14,055 | 14,776 | 12,363 | ||||||||||||||
| Other income, net | (5,398) | (7,626) | (8,342) | ||||||||||||||
| Provision for income taxes | 98 | 44 | 14 | ||||||||||||||
| Restructuring expenses | 802 | 1,367 | 1,989 | ||||||||||||||
| Strategic alternative expenses | - | 77 | 1,057 | ||||||||||||||
| Adjusted EBITDA (unaudited) | $ | (2,448) | $ | (8,009) | $ | (13,340) | |||||||||||
Free cash flow is a non-GAAP financial measure defined as net cash from operating activities less purchases of property and equipment. We use free cash flow as a supplemental measure of liquidity and to evaluate our ability to generate cash from operations that can be used for strategic initiatives and working capital requirements.
We believe that free cash flow is an important financial measure for use in evaluating our financial performance. Free cash flow has limitations as it omits certain components of the consolidated statements of cash flows and does not represent the residual cash flow available for discretionary expenditures. Other companies may calculate free cash flow differently, which reduces its usefulness as a comparative measure. As a result of these limitations, free cash flow should be considered in addition to, rather than as a substitute for, net cash from operating activities as a measure of our liquidity and our other GAAP results.
The following table reflects the reconciliation of net cash from operating activities to free cash flow for each of the periods indicated:
| Year Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Net cash used in operating activities | $ | (2,436) | $ | (2,910) | $ | (13,556) | |||||||||||
| Purchases of property and equipment | (763) | (1,922) | (1,794) | ||||||||||||||
| Free cash flow (unaudited) | $ | (3,199) | $ | (4,832) | $ | (15,350) | |||||||||||
Seasonality
We have historically experienced increased sales during the fourth quarter holiday shopping season compared to the other quarters which has generally resulted in increased GMV and net revenue during the fourth quarter of each fiscal year. Our cost of revenue and sales and marketing expenses generally follow this trend, with our highest costs being incurred in the fourth quarter. We believe that our GMV and revenue have been adversely impacted, both directly and indirectly, by macroeconomic factors, including significant housing market volatility, significant capital market volatility, and global economic and geopolitical developments. As our growth rates fluctuate or other unforeseen factors arise, the impact of these seasonality trends on our results of operations may become more or less pronounced.
We enable fulfillment and shipping, but do not own or manage inventory. If our growth rates change, the impact of these seasonality trends on our results of operations may become more pronounced. We anticipate that gross margin may fluctuate from quarter to quarter based on variability in the costs associated with hosting our online marketplace and supporting order processing.
We intend to continue strategically investing in our technology development efforts, inclusive of investments in machine learning and artificial intelligence, to improve and expand our platform. We expect the majority of our technology development expenses will result from consulting and/or headcount-related expenses. We also intend to continue making strategic investments in marketing to drive future net revenue growth. We expect provision for transaction losses to vary based on fluctuations in GMV.
Off-Balance Sheet Arrangements
For the periods presented, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
Recent Accounting Pronouncements
See Note 2, "Summary of Significant Accounting Policies" to our consolidated financial statements, for a description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows.
Emerging Growth Company
We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.
Critical Accounting Policies and Estimates
Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.
While our significant accounting policies are described in greater detail in Note 2, "Summary of Significant Accounting Policies," to our consolidated financial statements, we believe that the following policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Revenue Recognition
We generate revenue from seller marketplace services and other services. Seller marketplace services primarily consist of marketplace transactions, subscriptions, and sponsored listings. Other services consist of other charges to our sellers including advertising revenues generated from displaying ads on our online marketplace. Revenue is recognized as we transfer control of promised goods or services to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Control is transferred when the buyer and seller have agreed to the sale. We do not obtain legal title to or control the goods being purchased. We evaluate whether it is appropriate to recognize revenue on a gross or net basis based upon our evaluation of whether we obtain control of the specified goods or services by considering if we are primarily responsible for fulfillment of the promise, have inventory risk, or have latitude in establishing pricing and selecting suppliers, among other factors. Based on our evaluation we recognize revenue on a net basis.
Property and Equipment, net
Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives. The general range of useful lives of property and equipment is as follows:
| Estimated Useful Life | |||||
| Leasehold improvements | Lesser of lease term or life of asset | ||||
| Furniture and fixtures | 3 years | ||||
| Computer equipment and software | 3 years | ||||
| Internal-use software |
Lesser of contract term or 3 years
|
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We capitalize costs related to internal-use software during the application development stage, including consulting costs and compensation expenses related to employees who devote time to the development projects. We record software development costs in property and equipment, net. Costs incurred in the preliminary stages of development activities and post implementation activities are expensed in the period incurred and are included in technology development in the consolidated statements of operations. We also capitalize costs related to specific upgrades and enhancements when it is probable the
expenditures will result in additional functionality. Once the project is available for general release, capitalization ceases, and asset amortization begins. Capitalized costs associated with internal-use software are amortized on a straight-line basis over their estimated useful life, which is generally three years, and are included in cost of revenue in the consolidated statements of operations.
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