1stDibs files for IPO

Original article posted at Business of Home by Fred Nicolaus.

1stDibs is going public. The online luxury resale giant announced today that it had filed paperwork with the Securities and Exchange Commission for its stock to be sold on the NASDAQ exchange under the ticker symbol “DIBS.” The IPO will be led by Bank of America and Barclays. A date and a suggested price for the listing were not given.

Like any company that files for its shares to be sold on public markets, 1stDibs has submitted an S-1 to the SEC along with its prospectus for potential investors. The document dives deep into the company’s financial performance to date, and is a trove of information for would-be buyers and industry analysts alike.

The biggest topline takeaways? 1stDibs has experienced tremendous growth over the span of its 20-year history, especially in the last decade, going from an annual gross merchandise value of $13.8 million in 2013 to $342.6 million in 2020 (that number indicates the total value of what 1stDibs sold before commissions—its own revenue was $81 million last year). Despite that, the company is not profitable, nor do the filings suggest it’s on the verge of operating in the black. In 2019, it lost $29.9 million. In 2020, it lost $12.5 million.

“We expect to incur significant losses in the future,” the company wrote. “We will need to generate and sustain increased revenue levels or reduce operating costs materially in future periods to achieve profitability, and even if we achieve profitability, we may not be able to maintain or increase our level of profitability.”

Still, 1stDibs has plenty to be optimistic about. Its average order value, over $2,500, is shockingly high for e-commerce (the company pegs it as 24 times greater than the average online sale). That number is especially important as the cost of acquiring customers continues to go up—it’s increasingly expensive to lure new shoppers, so how much they spend is critical. (A small but telling example from the S-1: 1stDibs indicated that in 2017, it was spending $252 to win one customer, who would go on to spend an average of $1,168, almost five times a return on investment.)

So why is 1stDibs doing this right now? The company declined to comment on the IPO, but the puzzle pieces are not too hard to put together. Since its launch 20 years ago, the platform has amassed more than $250 million in funding. Investors are likely getting antsy for a return, and with that much capital already sunk into the business, the potential pool of direct buyers is very small.

Timing is also a factor. Though the stock market has been wobbling a bit in recent weeks, the demand for IPOs is still quite strong—this is a great time to take any company public. It’s a great time for 1stDibs in particular, as the surge in online shopping and demand for home products has bolstered the company’s balance sheet, just in time for its public debut.

Much will become clear in the weeks ahead, as the company sets a date for its IPO and a price on its stock. The immediate impact on the platform’s buyers and sellers is likely to be inconsequential; however, once 1stDibs begins trading publicly, its performance will be watched with a heightened level of scrutiny. Over time, the market will have its say. If it likes what 1stDibs is up to, expect more of the same. If it doesn’t, change will come.