What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-03-03 · 296 added, 235 removed, 748 unchanged (42% of the section changed)

37 unchanged sentences

New York, New York

March 3, 2023

February 29, 2024

1STDIBS.COM, INC.

3 unchanged sentences

Cash and cash equivalents $ 37,395 $ 153,209

Short-term investments 101,926 —

Restricted cash, current — 1,500

8 unchanged sentences

Goodwill 4,116 4,075

Intangible assets, net 3 1,164

Other assets 2,200 249

11 unchanged sentences

Total liabilities 46,527 47,774

Commitments and contingencies (Note 16)

Stockholders’ equity:

6 unchanged sentences

and 39,915,136 and 39,260,193 shares outstanding as of December 31, 2023 and 2022, respectively

Treasury stock, at cost;

823,483 and zero shares as of December 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 451,282 439,005

20 unchanged sentences

Loss from operations ( 31,027 ) ( 25,877 ) ( 22,444 )

Other income (expense), net:

Other income, net:

Interest income 6,639 1,606 146

1 unchanged sentence

Other, net 1,703 1,781 1,372

Total other income (expense), net 3,376 1,502 989

Total other income, net 8,342 3,376 1,502

Net loss before income taxes ( 22,685 ) ( 22,501 ) ( 20,942 )

12 unchanged sentences

Net loss $ ( 22,699 ) $ ( 22,538 ) $ ( 20,963 )

Other comprehensive (loss) income:

Other comprehensive income (loss):

Foreign currency translation adjustment, net of tax of $ 0 for the years ended December 31, 2023, 2022, and 2021

75 ( 127 ) ( 27 )

Unrealized gains on marketable securities, net of tax of $ 0 for the years ended December 31, 2023, 2022, and 2021

Comprehensive loss $ ( 22,529 ) $ ( 22,665 ) $ ( 20,990 )

11 unchanged sentences

Balances as of December 31, 2020 19,243,795 $ 298,525 11,376,048 $ 114 $ — $ ( 243,858 ) $ ( 202 ) $ ( 243,946 )

Accretion of redeemable convertible preferred stock to redemption value — 15,095 — ( 2,851 ) ( 12,244 ) — ( 15,095 )

Exercise of stock options — — 511,426 5 2,005 — — 2,010

Stock-based compensation — — — — 846 — — 846

Foreign currency translation adjustment — — — — — — 43 43

Net loss — — — — ( 12,528 ) — ( 12,528 )

Balances as of December 31, 2020 19,243,795 $ 298,525 11,376,048 $ 114 $ — $ ( 243,858 ) $ ( 202 ) $ ( 243,946 )

Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering ( 19,243,795 ) ( 305,586 ) 19,243,795 192 305,394 — — 305,586

10 unchanged sentences

Balances as of December 31, 2021 — $ — 37,991,529 $ 380 $ 425,769 $ ( 268,482 ) $ ( 229 ) $ 157,438

— $ — 37,991,529 $ 380 $ 425,769 $ ( 268,482 ) $ ( 229 ) $ 157,438

See accompanying notes to the consolidated financial statements

3 unchanged sentences

Common Stock Additional

Capital Accumulated

Deficit Accumulated Other

Comprehensive

Stockholders’ Equity

Treasury Stock Total

Stockholders’

Shares Amount

Balances as of December 31, 2021 37,991,529 $ 380 $ 425,769 $ ( 268,482 ) $ ( 229 ) $ — $ 157,438

37,991,529 $ 380 $ 425,769 $ ( 268,482 ) $ ( 229 ) $ 157,438

Issuance of common stock for exercise of stock options 509,694 5 2,030 — — — 2,035

4 unchanged sentences

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 89,251 1 352 — — — 353

Vested restricted stock units converted to common shares, net of shares net settled for taxes 1,389,175 13 ( 621 ) — — — ( 608 )

Stock-based compensation — — 12,546 — — — 12,546

Repurchase of common stock ( 823,483 ) — — — — ( 3,496 ) ( 3,496 )

Other comprehensive income — — — — 170 — 170

Net loss — — — ( 22,699 ) — — ( 22,699 )

Balances as of December 31, 2023

39,915,136 $ 407 $ 451,282 $ ( 313,719 ) $ ( 186 ) $ ( 3,496 ) $ 134,288

16 unchanged sentences

Gain on sale of Design Manager — ( 9,684 ) —

Accretion of discounts and amortization of premiums on marketable securities, net ( 3,390 ) — —

Other, net ( 318 ) 195 21

10 unchanged sentences

Cash flows from investing activities:

Purchase of short-term investments ( 191,093 ) — —

Maturities of short-term investments 92,653 — —

Development of internal-use software ( 1,706 ) ( 1,871 ) ( 2,110 )

Proceeds from repayment of notes receivable with related party — — 3,112

Purchases of property and equipment ( 88 ) ( 93 ) ( 129 )

1 unchanged sentence

Other, net 2 ( 6 ) ( 30 )

Net cash provided by (used in) investing activities 12,641 ( 2,269 ) 1,286

Net cash (used in) provided by investing activities ( 100,232 ) 12,641 ( 2,269 )

Cash flows from financing activities:

1 unchanged sentence

Proceeds from exercise of stock options 353 2,035 2,729

Payments for repurchase of common stock ( 3,374 ) — —

Payments for taxes related to net share settlement of stock-based compensation awards ( 608 ) — —

Payment of deferred acquisition consideration — — ( 640 )

Payment of deferred offering costs — — ( 5,032 )

Net cash provided by financing activities 2,035 120,050 1,562

Net cash (used in) provided by financing activities ( 3,629 ) 2,035 120,050

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 349 ( 278 ) ( 16 )

24 unchanged sentences

(“Design Manager”).

The Company sold its equity interest in Design Manager on June 29, 2022, therefore, the consolidated statements of operations include activity relating to Design Manager through the sale date.

The consolidated balance sheet as of December 31, 2022 no longer includes the assets, liabilities, and equity amounts associated with Design Manager.

The Company sold its equity interest in Design Manager on June 29, 2022, therefore, the consolidated statements of operations for the year ended December 31, 2022 include activity relating to Design Manager through the sale date.

The consolidated balance sheets as of December 31, 2023 and 2022 no longer includes the assets, liabilities, and equity amounts associated with Design Manager.

See Note 3 “Acquisitions & Disposals” for further details.

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The preparation of the 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 period.

Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, revenue recognition, provision for transaction losses, determination of useful lives of property and equipment, valuation and useful lives of

Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, revenue recognition, provision for transaction losses, impairment assessment of goodwill, capitalization of internal-use software and determination

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

intangible assets, impairment assessment of goodwill, capitalization of internal-use software and determination of useful lives, stock option valuations, the incremental borrowing rate associated with lease liabilities, income taxes, and the recognition and disclosure of contingent liabilities.

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.

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The Company has determined that the functional currency for its foreign operation is the currency of the primary cash flow of the operation, which is generally the local currency in which the operation is located.

All assets and liabilities are translated into U.S.

All assets and liabilities are generally translated into U.S.

dollars using exchange rates in effect at the balance sheet date.

1 unchanged sentence

Unrealized translation gains and losses are recorded as a translation adjustment, which is included in the consolidated statements of redeemable convertible preferred stock and stockholders’ equity (deficit) as a component of accumulated other comprehensive loss.

Adjustments that arise from exchange rate changes on transactions denominated in a currency other than the local currency are included in foreign exchange gain (loss) in total other, net in the consolidated statements of operations.

Adjustments that arise from exchange rate changes on transactions denominated in a currency other than the local currency are included in foreign exchange gain (loss) in other, net in the consolidated statements of operations.

Segment Information

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

2022 2021 2020

(in thousands) 2023 2022 2021

Cash and cash equivalents $ 37,395 $ 153,209 $ 168,226

3 unchanged sentences

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.

The Company’s restricted cash relates to a $ 3.3 million letter of credit for its

Certain cash equivalents consist of investments in debt securities that are classified as available-for-sale.

During the year ended December 31, 2023, the Company purchased $ 43.1 million of available-for-sale securities classified as cash equivalents.

During the years ended December 31, 2022 and 2021, there were no purchases

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

office lease in New York, New York, as well as $ 1.5 million which is held in a joint escrow account for 12 months from the date of the sale of Design Manager.

of available-for-sale securities.

The Company’s restricted cash relates to a $ 3.3 million Letter of Credit for its office lease at 51 Astor Place, New York, NY, and a $ 0.2 million Letter of Credit for its office lease at 300 Park Avenue South, New York, NY.

Additionally, $ 1.5 million was held in a joint escrow account in connection with the sale of Design Manager during the year ended December 31, 2022.

During the year ended December 31, 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 consolidated balance sheets.

In addition, investments with maturities beyond one 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.

Additionally, the Company records accrued interest receivable within other current assets on its consolidated balance sheets.

Accrued interest receivable was $ 0.5 million as of December 31, 2023 and there was no accrued interest receivable as of December 31, 2022.

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 are reclassified from accumulated other comprehensive loss to other, net in the Company’s 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 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 year ended December 31, 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 are recorded at amounts billed to sellers, generally for non-transactional revenue, which includes subscription, listing fees and advertising 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 are estimated based on a number of factors, including age of the receivable, historical losses, and management’s assessment of the financial condition of sellers.

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 sellers.

The evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.

6 unchanged sentences

The portion of the cash and related receivable remaining after deducting the Company’s commission and processing fees represents the total payables due to third parties, which consists of payables due to sellers, payables due to shipping carriers in instances where 1stDibs’ shipping services are elected by sellers, and payables due to tax authorities.

The Company establishes an allowance for seller refunds for amounts that sellers owe the Company after a return is processed.

The Company establishes

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

an allowance for seller refunds for amounts that sellers owe the Company after a return is processed.

The allowance for seller refunds was $ 0.2 million and $ 0.3 million at December 31, 2023 and 2022, respectively and included in other current assets on the Company’s consolidated balance sheets.

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Costs of repairs and maintenance are expensed as incurred.

When events occur or changes in circumstances require, the Company assesses the likelihood of recovering the cost of tangible long-lived assets based on its expectations of future profitability, undiscounted cash flows, and management’s plans with respect to operations to determine if the asset is impaired and subject to write-off.

Measurement of any impairment loss is

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

based on the excess of the carrying value of the asset over the fair value.

When events occur or changes in circumstances require, the Company assesses the likelihood of recovering the cost of long-lived assets based on its expectations of future profitability, undiscounted cash flows, and management’s plans with respect to operations to determine if the asset is impaired and subject to write-off.

Measurement of any impairment loss is based on the excess of the carrying value of the asset over the fair value.

For the years ended December 31, 2023, 2022 and 2021, there were no impairment losses recorded.

2 unchanged sentences

The Company’s goodwill is evaluated at the entity level as it is determined there is one reporting unit, 1stDibs.

Prior to the sale of Design Manager in June 2022, the Company’s goodwill was evaluated at the reporting unit level, based on the Company having two reporting units, 1stDibs and Design Manager.

The Company performs its annual goodwill impairment test as of October 1st or more frequently if events or changes in circumstances indicate that the goodwill may be impaired.

4 unchanged sentences

If the estimated fair value exceeds book value, goodwill is not impaired.

If the book value of the reporting unit exceeds the fair value, an impairment loss is recognized in an amount equal to the excess, not to exceed the total amount of goodwill allocated to that reporting unit.

Based on the Company’s assessments, there were no impairment losses recorded during the years ended December 31, 2023, 2022 and 2021.

Intangible Assets

The Company’s intangible assets included customer relationships, trade names and associated trademarks, acquired and developed technology, and other intangibles such as patents and non-compete agreements obtained through business acquisitions.

Intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods deemed appropriate for the type of intangible asset acquired, and reported net of accumulated amortization, separately from goodwill.

Intangible assets are amortized on a straight-line basis over their estimated useful lives as presented below:

Asset Estimated Useful Life

Customer relationships 15 years

Trade names and associated trademarks 5 - 10 years

Acquired and developed technology 3 years

Other 3 years

When events or changes in circumstances indicate the carrying amount may not be recoverable, the Company reviews the assets for impairment.

The Company measures recoverability by comparing the carrying amounts to the future undiscounted cash flows that the assets or asset groups are expected to generate.

If the carrying value of the assets are not recoverable, the impairment recognized is measured as the amount by which the carrying value of the asset exceeds its fair value.

For the years ended December 31, 2022, 2021 and 2020, there were no impairment losses recorded.

During the year ended December 31, 2022, substantially all of the intangible assets, net were included in the sale of Design Manager;

therefore, as of December 31, 2022, there are no intangible assets, net subject to amortization on the Company’s consolidated balance sheet.

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Effective January 1, 2022, the Company adopted ASU 2016-02, utilizing the modified retrospective adoption approach.

2 unchanged sentences

The Company classifies leases as operating or financing in nature, and records the associated right-of-use asset and lease liability on its consolidated balance sheet.

The lease liability represents the present value

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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.

Lease expense is recognized as a single lease cost on a straight-line basis over the lease term.

12 unchanged sentences

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 requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs.

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).

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• 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.

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, net, prepaid expenses, receivables from payment processors, accounts payable, payables due to sellers, accrued expenses, and other current liabilities approximate their fair values due to the short-term nature of these assets and liabilities.

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:

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023

(in thousands) Level 1 Level 2 Level 3 Total

Cash equivalents:

Money market fund $ 5,797 $ — $ — $ 5,797

Treasury securities — 4,991 — 4,991

Total cash equivalents $ 5,797 $ 4,991 $ — $ 10,788

Short-term investments:

Commercial paper $ — $ 18,112 $ — $ 18,112

Corporate notes — 7,641 — 7,641

Treasury securities — 11,971 — 11,971

Government agency securities — 64,202 — 64,202

Total short-term investments $ — $ 101,926 $ — $ 101,926

There were no transfers between Level 1, Level 2 or Level 3 during the years ended December 31, 2023 and 2022.

As of December 31, 2023, all other financial instruments not included in the table above were classified as Level 1.

As of December 31, 2022, the carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, net, prepaid expenses, receivables from payment processors, other current assets, accounts payable, payables due to sellers, accrued expenses and other current liabilities, approximate fair value due to the short-term nature of these assets and liabilities, and therefore were all classified as Level 1.

The Company’s cash equivalents and short-term investments for the periods presented were valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs and were classified as Level 1 or Level 2, accordingly.

Income taxes are computed using the asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements.

3 unchanged sentences

These provisions provide a comprehensive model for the recognition, measurement, and disclosure in the financial statements of uncertain income tax positions that a company has taken or expects to take on a tax return.

Under these provisions, a company can recognize the benefit of an income tax position only if it is more

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

likely than not (greater than 50%) that the tax position will be sustained upon tax examination, based solely on the technical merits of the tax position.

Under these provisions, a company can recognize the benefit of an income tax position only if it is more likely than not (greater than 50%) that the tax position will be sustained upon tax examination, based solely on the technical merits of the tax position.

Otherwise, no benefit can be recognized.

10 unchanged sentences

The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings.

The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period has been distributed.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period has been distributed.

During periods of loss, there is no allocation required under the two-class method.

Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period without consideration of potentially dilutive common stock.

Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares.

Diluted earnings per share attributable to common stockholders is computed by dividing the diluted earnings attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares.

For periods in which the Company reports net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders because potentially dilutive shares of common stock are not assumed to have been issued since their effect is anti-dilutive.

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 the Company's common stock (“Stock Repurchase Program”) traded on public markets.

The repurchased common stock is classified as treasury stock on the consolidated balance sheets.

The direct costs incurred to acquire treasury stock are treated like stock issue costs and added to the cost of the treasury stock, which includes applicable fees and taxes.

Repurchased common stock is stated at cost, determined on an average cost basis and is presented as a reduction of stockholders’ equity on the consolidated balance sheets.

Revenue Recognition

6 unchanged sentences

The Company charges sellers commission and processing fees for successful purchases through its online marketplace.

For the items purchased through the 1stDibs online marketplace, the Company collects the gross merchandise value from the buyer, but the Company recognizes the associated revenue on a net basis, which equates to the commission and processing fees earned in exchange for the seller marketplace services.

The commission fees range from 5 % to 50 % and processing fees are 3 %, net of expected refunds.

For the items purchased through the 1stDibs online marketplace, the Company collects the gross merchandise value from the buyer, and recognizes the associated revenue on a net basis, which equates to the commission and processing fees earned in exchange for the seller marketplace services.

The commission fees range from 5 % to 50 % and processing fees are 3 % of the buyer’s total payment, 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 to the seller.

2 unchanged sentences

The Company does not take title to inventory sold or assume risk of loss at any point in time during the transaction and is authorized to collect consideration from the buyer and remit net consideration to the seller to facilitate the processing of the confirmed purchase transaction.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In January 2022, the Company launched new seller pricing tiers which allow 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.

Depending on the tier chosen, sellers may pay annual subscription fees to access our online marketplace.

The Company sells subscriptions to access the 1stDibs online marketplace, which allow sellers to promote and list items to be sold to buyers and execute successful purchase transactions with buyers for lower commission rates.

Through the subscription, the sellers receive the benefit of marketplace activities for lower commission rates, including listing items for sale, completing sales transactions, and payments processing, which represents a single stand-ready performance obligation.

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.

Additionally, some sellers have no monthly subscription fees and higher commission rates, however, the Company no longer offers this option to new sellers.

Sellers receive the benefit of marketplace activities, including listing items for sale, completing sales transactions, and payments processing, which represents a single stand-ready performance obligation.

The Company has determined that its customers are sellers on its online marketplace since sellers pay for the use of the platform to sell their inventory.

The Company offers sellers annual subscriptions that are payable on a monthly basis and the subscription fee is recognized monthly.

For sellers that pay a subscription, it is on an annual basis, payable monthly, therefore the fee is recognized monthly.

If during the annual subscription period a seller ceases to make its monthly payment, the Company is no longer obligated to provide the subscribed services and the seller can be terminated at the Company’s sole discretion.

The Company earns listing fees from sellers who are subscribed to its online marketplace on a per item basis as directed by the seller to promote certain items at the seller’s discretion.

The Company earns listing fees from sellers on a per item basis as directed by the seller to promote certain items at the seller’s discretion.

Listing fees are recognized ratably over time when the listing is publicly posted.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Advertisements

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The Company determined the estimated seller relationship period by taking into consideration the contractual term of the seller agreements, the seller’s lifetime expected value, and the fact that no additional commission is paid for renewed seller agreements.

As of 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.

As of December 31, 2021, 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 $ 0.3 million, $ 0.4 million, and $ 0.5 million for the years ended December 31, 2022, 2021, and 2020, respectively, and are included in sales and marketing in the Company’s consolidated statements of operations.

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.

1 unchanged sentence

A contract liability is an obligation to transfer goods or services for which consideration has been received or is due to a customer.

Contract liabilities consist of deferred revenue that is unearned related to setup fees charged to new sellers at the inception of service and advertising fees charged to advertisers for which advertisements have not been delivered.

Contract liabilities consist of deferred revenue that is unearned related to advertising fees charged to sellers for which advertisements have not been delivered and to a lesser extent setup fees charged to new sellers at the inception of service.

Prior to the sale of Design Manager deferred revenue also included software subscription fees.

Deferred revenue for software and advertising fees is recognized as revenue in the periods in which our performance obligations are satisfied.

Deferred revenue for setup fees is recognized as revenue over the expected life of the seller relationship, which the Company determined to be three years .

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred revenue for software and advertising fees is recognized as revenue in the periods in which services are provided.

As of December 31, 2023 and 2022, deferred revenue was $ 0.1 million and $ 0.2 million, respectively.

The current portion of deferred revenue was $ 0.1 million and $ 0.8 million as of December 31, 2022 and 2021, respectively, and are included in other current liabilities in the Company’s consolidated balance sheets.

The non-current portion of deferred revenue was less than $ 0.1 million and $ 0.1 million as of December 31, 2022 and 2021, and are included in other liabilities in the Company’s consolidated balance sheets, respectively.

The current portion of deferred revenue was $ 0.1 million as of both December 31, 2023 and 2022, and are included in other current liabilities in the Company’s consolidated balance sheets.

The non-current portion of deferred revenue was less than $ 0.1 million as of both December 31, 2023 and 2022, and is included in other liabilities in the Company’s consolidated balance sheets.

Cost of Revenue

7 unchanged sentences

Advertising expenses consist primarily of costs incurred promoting and marketing the Company’s online marketplace, such as costs associated with acquiring new users through performance-based marketing, social media, email, and events.

Promotional discounts and incentives represent incentives solely to end buyers and, therefore, are not considered payments made to the Company’s customers.

Promotional discounts and incentives represent incentives solely to end buyers and, therefore, are not

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

considered payments made to the Company’s customers.

Buyers are not customers because access to the 1stDibs online marketplace is free for buyers and the Company has no performance obligations with respect to buyers.

7 unchanged sentences

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.

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, net of sublease income, business liability insurance, accounting, professional fees, and depreciation and amortization of property and equipment.

The Company expenses all general and administrative expenses as incurred.

3 unchanged sentences

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 restructuring charges during the year ended December 31, 2023, consisting primarily of employee severance and benefits costs.

During the year ended December 31, 2023, $ 1.6 million has been paid in connection with the June 2023 restructuring and $ 0.4 million is included in accrued expenses on the Company’s consolidated balance sheet as of December 31, 2023.

As of December 31, 2023, the restructuring plan was completed and no additional significant amounts are expected to be recognized.

In September 2022, the Company announced and implemented a restructuring plan to reduce operational costs and realign investment priorities involving the reduction of approximately 10 % of the Company’s workforce.

As a result of the reduction, the Company incurred approximately $ 0.7 million in non-recurring restructuring charges, consisting primarily of employee severance and benefits costs.

As of December 31, 2022, the restructuring plan was completed and no additional significant

As a result of the reduction, the Company incurred approximately $ 0.7 million in restructuring charges, consisting primarily of employee severance and benefits costs.

As of December 31, 2022, the restructuring plan was completed and no additional significant amounts are expected to be recognized.

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

amounts are expected to be recognized.

The following table displays a rollforward of the charges to the accrued balance as of December 31, 2023:

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Balance, December 31, 2022

The expense is included within the respective financial statement line items on the consolidated statement of operations as shown in the table below for the year ended December 31, 2022.

(in thousands) Year Ended December 31, 2022

Restructuring charges 2,004

Cash payments ( 1,672 )

Balance, December 31, 2023

The expense is included within the respective financial statement line items on the consolidated statement of operations as shown in the table below for the years ended December 31, 2023, and 2022.

There was no expense included in the year ended December 31, 2021.

Year Ended December 31,

(in thousands) 2023 2022

Cost of revenue $ 135 $ 58

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General and administrative 36 68

Total $ 2,004 $ 660

Stock-Based Compensation

The Company measures all stock-based awards granted to employees, directors, and non-employees based on the fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award.

The fair value of restricted stock units is estimated on the date of grant based on the fair value of the Company’s common stock.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the fair value of the Company’s common stock, expected stock price volatility, the expected term of the award, the risk-free interest rate for a period that approximates the expected term of the option, and the Company’s expected dividend yield.

Expected volatility was calculated based on the implied volatilities from market comparisons of certain publicly traded companies and other factors.

The expected option term was calculated based on the simplified method, which uses the midpoint between the vesting date and the contractual term, as the Company does not have sufficient historical data to develop an estimate based on participant behavior.

The expected option term was calculated based on the simplified method based on options that had been granted to date, which uses the midpoint between the vesting date and the contractual term, as the Company has not had sufficient historical data to develop an estimate based on participant behavior.

The risk-free interest rate was based on the U.S.

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The Company has not paid dividends and has no foreseeable plans to pay dividends.

The fair value of restricted stock units are estimated on the date of grant based on the fair value of the Company’s common stock.

The Company classifies stock-based compensation expense in its consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

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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.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) .

The guidance in ASU 2016-02 supersedes the leasing guidance in Topic 840, Leases .

Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months.

Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of operations.

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

may adopt the guidance either (1) retrospectively to each prior reporting period presented in the financial statements with a cumulative-effect adjustment recognized at the beginning of the earliest comparative period presented or (2) retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment.

The guidance is effective for fiscal years and interim periods beginning after December 15, 2018 for public business entities, and for fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, for all other entities.

The Company adopted this standard on January 1, 2022, which resulted in the Company recording $ 24.5 million of operating lease right-of-use assets, and $ 2.7 million and $ 24.4 million of operating lease liabilities, classified as current and non-current, respectively, on its balance sheet.

The adoption did not have a material effect on the statement of operations.

The Company utilized the modified retrospective adoption approach, whereby all prior periods continue to be reported under previous lease accounting guidance.

The Company elected the package of practical expedients to not reassess prior conclusions related to lease identification, classification and initial direct costs, and did not elect the hindsight practical expedient which would have permitted the use of hindsight in determining the lease term and assessing impairment.

See Note 9, "Leases" for further discussion on the Company's accounting for leases under ASC 842.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions with ASC 740, and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

This guidance is effective for fiscal years and interim periods beginning after December 15, 2020 for public business entities and for fiscal years beginning after December 15, 2021 for all other entities.

The Company adopted this standard on January 1, 2022, which did not have a material impact on the Company's consolidated financial statements.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 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 consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13 , Financial Instruments-Credit Losses (Topic 326).

The amendments in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

ASU 2016-13, as subsequently amended for various technical issues, is effective for emerging growth companies for fiscal years beginning after December 15, 2022 and for interim periods within those fiscal years.

The Company plans to adopt this standard on January 1, 2023 and, based on the Company’s current mix of financial assets, does not expect the adoption to have a material impact on the Company's consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The standard will require all public entities, including those with a single reportable segment, to disclose significant segment expenses and other segment items on an annual and interim basis.

The guidance requires a public entity to disclose the significant expense categories and amounts that are regularly provided to the chief operating decision-maker.

This standard is effective for annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which modifies the rules on income tax disclosures.

The standard will require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign).

ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes.

The new standard is effective for annual periods beginning after December 15, 2024.

The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.

Acquisitions & Disposals

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On June 29, 2022, the Company sold 100 % of its equity interest in Design Manager for a purchase price of $ 14.8 million.

The Company received net cash proceeds of $ 14.6 million, of which $ 1.5 million will be held in a joint escrow account for 12 months from the date of the sale and is recorded as restricted cash, current in the Company’s consolidated balance sheet.

The Company received net cash proceeds of $ 14.6 million, of which $ 1.5 million was held in a joint escrow account for 12 months from the date of the sale and was recorded as restricted cash, current in the Company’s 2022 consolidated balance sheet.

Additionally, a net gain on the sale of $ 9.7 million was recognized during the year ended December 31, 2022, and is included in loss from operations on the consolidated statement of operations.

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Seller marketplace services primarily consist of marketplace transaction, subscription, 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 after the sale date.

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,

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

typically used by interior designers.

Design Manager was sold on June 29, 2022;

therefore, no related net revenue for software services was recognized after the sale date.

Contract Balances from Contracts with Customers

The following table provides a rollforward of the deferred revenue amounts as follows (in thousands):

The following table provides a rollforward of the deferred revenue amounts as follows:

(in thousands) Amount

Balance as of December 31, 2021

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Revenue recognized ( 1,661 )

Reduction resulting from the sale of Design Manager ( 602 )

Balance as of December 31, 2022

Billings 1,502

Net revenue recognized ( 160 )

Reduction resulting from the sale of Design Manager ( 602 )

Balance as of December 31, 2023

The amount of revenue recognized during the year ended December 31, 2023 that was included in the deferred revenue balance at January 1, 2023 was $ 0.1 million.

As of December 31, 2023, 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.

As of 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 $ 0.3 million, $ 0.3 million, and $ 0.4 million for the years ended December 31, 2023, 2022, and 2021, respectively, and are included in sales and marketing in the Company’s consolidated statements of operations.

Short-Term Investments

The following table summarizes the estimated value of the Company’s short-term investments as of December 31, 2023:

December 31, 2023

(in thousands)

Amortized Cost

Unrealized Gain

Unrealized Loss

Commercial paper

$ 18,101 $ 14 $ ( 3 ) $ 18,112

Corporate notes

7,621 20 — 7,641

Treasury securities

11,975 2 ( 6 ) 11,971

Government agency securities

64,134 89 ( 21 ) 64,202

Total short-term investments

$ 101,831 $ 125 $ ( 30 ) $ 101,926

As of December 31, 2022, the Company had no short-term investments.

The Company does not intend to sell the investments and it is not more likely than not that the company will be required to sell these before recovery.

As of December 31, 2023, the fair value of short-term investments by remaining contractual maturity consisted of the following:

(in thousands)

Remaining maturity date one year or less

Remaining maturity date greater than one year

Total short-term investments

Accounts Receivable, net

Accounts receivable, net was $ 0.6 million and $ 1.0 million at December 31, 2023 and 2022, respectively.

The Company recorded an allowance for doubtful accounts of $ 0.1 million and less than $ 0.1 million as of December 31, 2022 and 2021, respectively.

Changes in the allowance for doubtful accounts for the periods presented were as follows (in thousands):

The Company recorded an allowance for doubtful accounts of $ 0.2 million and $ 0.1 million as of December 31, 2023 and 2022, respectively.

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in the allowance for doubtful accounts for the periods presented were as follows:

(in thousands)

Balance as of January 1, 2022

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Computer equipment and software 919 851

Construction in progress 562 1,047

Software in progress 569 562

Total property and equipment, gross $ 25,765 $ 24,539

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Depreciation and amortization expense related to the Company’s property and equipment totaled $ 2.3 million, $ 2.6 million, and $ 2.9 million, for the years ended December 31, 2023, 2022, and 2021, respectively, which included amortization expense for internal-use software of $ 2.2 million, $ 2.5 million, and $ 2.8 million, respectively.

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and Intangible Assets

The changes in the carrying balance of goodwill for the periods presented were as follows (in thousands):

(in thousands) Amount

Balance as of January 1, 2022

Reduction resulting from the sale of Design Manager ( 3,036 )

Foreign currency translation adjustment ( 91 )

Balance as of December 31, 2022

Reduction resulting from the sale of Design Manager ( 3,036 )

Foreign currency translation adjustment 41

Balance as of December 31, 2023

Intangible Assets, net

On June 29, 2022, the Company sold 100 % of its equity interest in Design Manager, including the majority of the Company’s intangible assets.

See Note 3, “Acquisitions & Disposals” for further discussion of the sale.

As a result of the sale, the Company's had a remaining gross carrying amount of $ 6.7 million and accumulated amortization of $ 6.7 million relating to intangible assets subject to amortization as of December 31, 2022, as well as an immaterial amount of intangible assets classified as indefinite-lived that were not subject to amortization.

Intangible assets consisted of the following as of December 31, 2021:

December 31, 2021

(in thousands) Weighted Average Remaining Amortization Period (in years)

Customer relationships 12.3 $ 1,230 $ 219 $ 1,011

Acquired and developed technology 0.1 6,400 6,366 34

Trade names and associated trademarks 1.6 705 595 110

Other intangible assets subject to amortization — 64 64 —

Other intangible assets not subject to amortization — 9 — 9

Total intangible assets 2.4 $ 8,408 $ 7,244 $ 1,164

Total amortization expense for intangible assets was $ 0.1 million, $ 0.2 million, and $ 0.2 million for the years ended December 31, 2022, 2021, and 2020, respectively.

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued Expenses

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Shipping $ 2,934 $ 3,597

Salaries & benefits 1,862 2,174

Sales & use tax payable 1,378 1,721

Compensation & benefits 3,164 1,862

Sales & use taxes payable 1,534 1,378

Allowance for transaction losses 1,172 1,327

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Total accrued expenses $ 10,883 $ 10,761

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s operating lease arrangements are principally for office space in its New York City headquarters.

The Company’s operating lease arrangements are principally for office spaces in New York City.

As of December 31, 2023, the Company had $ 19.7 million of operating lease right-of-use assets, $ 3.1 million and $ 18.8 million of current and non-current operating lease liabilities, respectively, and no finance leases on its consolidated balance sheet.

These operating lease arrangements included in the measurement of lease liabilities had a weighted-average remaining lease term of 6.0 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.

During the year ended December 31, 2022, the Company paid $ 4.2 million, for amounts included in the measurement of lease liabilities.

The Company did not enter into any new lease arrangements during the year ended December 31, 2022.

During the year ended December 31, 2022, the Company recognized $ 5.2 million of lease expense.

During the year ended December 31, 2021, rent expense, including associated common area maintenance charges, was $ 4.1 million.

The Company paid $ 4.1 million and $ 4.2 million for amounts included in the measurement of lease liabilities during the years ended December 31, 2023 and 2022.

In August 2023, the Company entered into a sublease agreement as the sublessor for its office space in its former New York City headquarters (the “Sublease”).

The Sublease commenced on October 1, 2023 for approximately 78 % of the rentable square feet and expanded 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 former 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 certain defined expenses, including increases in taxes after the base year, as well as certain electric, heating, ventilation, and air conditioning charges.

The proportionate share will be 78 % from the commencement of the Sublease until the January 15, 2024, at that time the 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 consolidated statement of operations.

During the year ended December 31, 2023, the Company capitalized its $ 1.1 million broker fee paid which is included in other assets on the consolidated balance sheet, and will be amortized over the life of the Sublease in operating expenses in the consolidated statement of operations.

The Company recognized $ 0.9 million of sublease income during the year ended December 31, 2023.

There was no sublease income recognized in the years ended December 31, 2022, and 2021.

In November 2023, the Company entered into a lease agreement, as the lessee, for approximately 13,000 square feet for a new office which is expected 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 during the first quarter of 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 .

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes total lease expense, net for the years ended December 31, 2023 and 2022:

(in thousands) 2023 2022

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Total lease expense $ 5,214 $ 5,157

As of December 31, 2022, the total remaining operating lease payments included in the measurement of lease liabilities was as follows (in thousands):

Sublease income ( 912 ) —

Total lease expense, net $ 4,302 $ 5,157

Operating lease expense is recognized on a straight-line basis over the term of the arrangement beginning on the lease commencement date for lease arrangements that have an initial term greater than 12 months and therefore are recorded on the balance sheet.

Short-term lease expense is recognized on a straight-line basis over the lease term for lease arrangements that have an initial term of 12 months or less and therefore are not recorded on the balance sheet.

Variable lease expense is recognized as incurred and consists primarily of real estate taxes, utilities, and other office space related expenses.

As of December 31, 2023, the total remaining operating lease payments included in the measurement of lease liabilities, and undiscounted remaining cash receipts from the Company’s Sublease was as follows (in thousands):

Fiscal Year Ending December 31, Operating Lease Payments

Sublease Cash Receipts

2024 $ ( 4,255 ) $ 2,374

2025 ( 4,410 ) 3,435

2026 ( 4,292 ) 3,504

2027 ( 4,292 ) 3,574

2028 ( 4,292 ) 3,645

Thereafter ( 4,292 ) 3,718

Total operating lease payments 29,652

Total (payments) cash receipts $ ( 25,833 ) $ 20,250

imputed interest 3,914

Total lease liabilities $ ( 21,919 )

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Current Liabilities

1 unchanged sentence

(in thousands) 2023 2022

Sales and use tax contingencies 1,863 1,922

Sales and other non-income tax contingencies $ 2,462 $ 1,863

Buyer deposits 377 318

Deferred revenue 140 801

Other 779 $ 248

Total other current liabilities $ 3,618 $ 2,429

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Liabilities

As of December 31, 2022 and 2021, other liabilities consisted of the following:

(in thousands) 2022 2021

Deferred rent $ — $ 2,458

Deferred revenue 43 143

Total other liabilities $ 46 $ 2,605

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

Options to purchase common stock 3,831,710 4,034,287

Restricted stock units 2,807,981 309,530

Restricted stock units outstanding 3,400,489 2,807,981

Shares available for future grant under the 2021 Plan 3,119,122 3,151,824

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Preferred Stock

Effective June 14, 2021, in connection with the closing of the Company’s IPO, the Company’s Board of Directors 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 of Directors 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.

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 December 31, 2023 and 2022, no shares of preferred stock were issued or outstanding.

1 unchanged sentence

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 of Directors 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 December 31, 2023, the Company had 823,483 shares of treasury stock carried at its cost basis of $ 3.5 million, which the Company purchased during the year ended December 31, 2023, and approximately $ 16.5 million remains available for future purchases.

The repurchase may be affected, 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.

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-based compensation

1 unchanged sentence

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 (“ISOs”) or nonqualified stock options (“NSOs”), restricted stock awards, and other stock-based awards to its employees, directors, officers, outside advisors, and non-employee consultants.

The 2011 Plan provided for the Company to grant incentive stock options (“ISOs”), 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.

Additional options issued to current employees, current outside advisors, and non-employee consultants pursuant to the 2011 Plan expire ten years from the date of grant and generally vest ratably over 48 months.

The 2011 Plan is administered by the Company’s board of directors or, at the discretion of the Company’s board of directors, by a committee thereof.

The exercise prices, vesting, and other restrictions are determined at the discretion of the

1STDIBS.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company’s board of directors, or its committee if so delegated.

In February 2021, the Company’s board of directors approved an increase of 2,333,333 shares of common stock to be available for future issuance under the 2011 Option Plan, which was approved by the stockholders in March 2021.

Following the completion of the Company’s IPO, no additional awards and no shares of the Company’s common stock remain available for future issuance under the 2011 Plan.

The 2011 Plan was administered by the Compensation Committee of the Board.

The exercise prices, vesting, and other restrictions were determined at the discretion of Compensation Committee of the Board.

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.

2021 Stock Incentive Plan

In May 2021, the Company's board of directors 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 ISOs, NSOs, restricted share awards, stock unit awards (“RSUs”), stock appreciation rights, cash-based awards, and performance-based stock awards, or collectively, stock awards.

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, nonstatutory stock options, restricted share awards, stock unit awards (“RSUs”), 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, and consultants and the employees and consultants of its parent, subsidiaries, and affiliates.

Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Award Agreement.

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 requisite service period for RSUs to vest is generally over four years from the grant date, with 25 % vesting on the first anniversary and the balance vesting ratably on a quarterly basis over the remaining vesting period.

Additional RSUs, generally granted to current employees, vest ratably on a quarterly basis over the four years beginning on the three month anniversary from the grant date.

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 determines for purposes of the annual increase for that fiscal year.

Additional RSUs vest ratably on a quarterly basis over three or four years beginning on the three month anniversary from the grant date.

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 December 31, 2023, 3,119,122 shares were available for future grants of the Company’s common stock.

Stock Option Valuation

The following table presents, on a weighted-average basis, the assumptions used in the Black Scholes option-pricing model to determine the grant-date fair value:

No stock options were granted during the year ended December 31, 2023.

The following table presents, on a weighted-average basis, the assumptions used in the Black Scholes option-pricing model to determine the grant-date fair value for the years ended December 31, 2022 and 2021:

Year Ended December 31,

2022 2021 2020

Expected term in years 6.0 6.0

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4,034,287 $ 6.90 6.9 $ 1,625

Granted 1,040,000 7.39

Exercised ( 89,251 ) 3.94

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The aggregate intrinsic value of stock options exercised was $ 0.1 million, $ 1.3 million, and $ 4.8 million during the years ended December 31, 2023, 2022, and 2021 respectively.

No stock options were granted during the year ended December 31, 2023.

The weighted-average grant-date fair value per share of stock options granted was $ 4.43 , and $ 6.20 during the years ended December 31, 2022 and 2021, respectively.

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The estimated weighted-average grant date fair value of restricted stock units granted was $ 3.96 , $ 7.51 , and $ 15.32 per share for the years ended December 31, 2023, 2022, and 2021 respectively.

The total grant date fair value of restricted stock units vested was $ 6.7 million and less than $ 0.1 million for the years ended December 31, 2022 and 2021, respectively.

The total grant date fair value of restricted stock units vested was $ 9.7 million, $ 6.7 million, and less than $ 0.1 million for the years ended December 31, 2023, 2022, and 2021 respectively.

Employee Stock Purchase Plan

In May 2021, the Company's board of directors adopted, and its stockholders approved, the Company's 2021 Employee Stock Purchase Plan (the "ESPP").

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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.

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.

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As of December 31, 2023, an initial offering period has not commenced, and for the year ended December 31, 2023, no shares of common stock were purchased under the ESPP.

Stock-Based Compensation

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

Stock-Based Compensation Expense

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

Year Ended December 31,

2022 2021 2020

(in thousands) 2023 2022 2021

Cost of revenue $ 390 $ 574 $ 81

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General and administrative 5,465 4,000 1,492

Total stock-based compensation $ 11,214 $ 2,839 $ 846

Total stock-based compensation expense $ 12,363 $ 11,214 $ 2,839

Stock-based compensation capitalized in connection with the Company’s internal-use software was $ 0.2 million for the year ended December 31, 2023, and less than $ 0.1 million for the year ended December 31, 2022.

As of December 31, 2023, total unrecognized compensation expense related to unvested stock-based awards was $ 21.9 million, which is expected to be recognized over a weighted-average period of 2.2 years.

Net (loss) income before income taxes for the years ended December 31, 2022, 2021, and 2020 was as follows:

Net loss before income taxes for the years ended December 31, 2023, 2022, and 2021 was as follows:

Year Ended December 31,

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Other ( 0.4 ) — ( 0.1 )

Income tax benefit (provision), net ( 0.2 )% ( 0.1 )% ( 0.1 )%

Provision for income taxes ( 0.1 )% ( 0.2 )% ( 0.1 )%

1STDIBS.COM, INC.

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Operating lease liabilities 5,541 6,204

Stock-based compensation 2,295 1,716

Other 1,903 1,464

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Deferred tax liabilities

Intangible assets and goodwill — ( 291 )

Capitalized internal-use software ( 674 ) ( 754 )

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Increases recorded to income tax provision 4,887 5,226

Decreases recorded to equity ( 24 ) —

Valuation allowance at end of year $ 49,814 $ 44,951

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As a result, these net operating loss carryforwards will expire, if not utilized, between 2031 and 2037 for federal and state income tax purposes.

In response to the market volatility and instability resulting from the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law on March 27, 2020.

The CARES Act lifts certain deduction limitations originally imposed by the TCJA that was enacted in the U.S.

in December 2017.

The CARES Act allows for a five-year carryback of federal NOLs generated in 2018 through 2020 and eliminates the 80% taxable income limitation by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018 through 2020.

Furthermore, the post 2017 NOLs are subject to an indefinite carryforward period;

The post 2017 NOLs are subject to an indefinite carryforward period;

therefore, $ 60.2 million of federal NOLs generated after 2017 may be carried forward indefinitely.

As it pertains to the

As it pertains to the approximately $ 39.2 million of state NOLs generated after 2017, not all states have conformed to the Act;

therefore, some state’s NOLs are unlimited while some will expire based on the respective state.

The Company also has federal and state tax credits relating to research and development credits of $ 4.1 million and less than $ 0.1 million, which begin to expire in 2031.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

approximately $ 37.6 million of state NOLs generated after 2017, not all states have conformed to the Act;

therefore, the NOL expiration will vary based on the state.

The Company also has federal and state tax credits of $ 4.1 million and less than $ 0.1 million, which begin to expire in 2031.

The utilization of NOLs and tax credit carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that have occurred previously or may occur in the future.

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An ownership change is defined as a cumulative change of 50% or more in the ownership positions of certain stockholders during a rolling three-year period.

The Company is in the process of completing a formal study to determine if any ownership changes within the meaning of IRC Section 382 and 383 have occurred.

Based on the analysis to date, any limitation from any ownership change will not result in any of the NOLs or tax credits expiring unutilized.

The Company completed formal studies through December 31, 2022 to determine if any ownership changes within the meaning of IRC Section 382 and 383 have occurred.

As a result of the studies, the Company determined that although it experienced an ownership change on July 28, 2015, the limitation from the ownership change will not result in any of the NOLs or tax credits expiring unutilized.

No additional ownership changes have occurred through the date of the most recent study.

The Tax Cuts and Jobs Act of 2017 (“TCJA”) requires taxpayers to capitalize and amortize research and development costs pursuant to IRC Section 174.

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The Company assesses foreign investment levels periodically to determine if all or a portion of the Company’s investments in its foreign subsidiary are indefinitely invested.

The Company is permanently reinvested in its foreign subsidiary.

The Company’s current intention is to permanently reinvest undistributed earnings of our foreign subsidiary.

Any required adjustment to the income tax provision would be reflected in the period that the Company changes this assessment.

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These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.

As of each December 31, 2022 and 2021, the Company had liabilities for uncertain tax positions of $ 1.0 million, which, if recognized, would not impact the Company’s tax provision and effective income tax rate due to a full valuation allowance.

As of December 31, 2023 and 2022, the Company had liabilities for uncertain tax positions of $ 1.0 million, which, if recognized, would not impact the Company’s tax provision and effective income tax rate due to a full valuation allowance.

The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision.

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The Company’s income tax returns for December 31, 2015 through December 31, 2023 for their foreign subsidiary remain subject to examination by tax authorities in the United Kingdom.

During the year ended December 31, 2021, the Finance Act 2021 (the “Act”) was enacted in the United Kingdom.

The Act increases the corporate income tax rate from 19% to 25% effective April 1, 2023 and enhances the first-year capital allowance on qualifying new plant and machinery assets effective April 1, 2021.

The effects on the Company’s existing deferred tax

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

balances have been recorded and is offset by the valuation allowance maintained against the Company’s U.K.

net deferred tax assets.

Net Loss Per Share

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Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The Company excluded the following potential common shares for each period presented:

The Company excluded the following potentially dilutive securities for each period presented:

Year Ended December 31,

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Restricted stock units 3,400,489 2,807,981 309,530

Common stock warrants to purchase common stock — — 44,222

Redeemable convertible preferred stock (as converted to common stock) — — 19,243,795

Total 7,232,199 6,842,268 4,259,473

1 unchanged sentence

Contractual Obligations

The Company has $ 32.9 million of non-cancelable contractual commitments as of December 31, 2022, primarily related to it operating lease agreement for its corporate headquarters in New York, NY, as well as other software and support services.

The Company has $ 33.3 million of non-cancelable contractual commitments as of December 31, 2023, primarily related to its operating lease agreements for both its current and former corporate headquarters in New York, NY, not including any offset for sublease income, 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 minimum obligations.

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Total $ 30,121 $ 3,194 $ 33,315

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Legal Proceedings

2 unchanged sentences

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.

The liability recorded includes probable and estimable legal costs incurred to date and future legal costs to

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 a party to any pending legal proceedings that are likely to have a material adverse effect on its business, financial condition or results of operations for the years ended December 31, 2022 and 2021.

The Company does not believe that it is a 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 years ended December 31, 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 of directors 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.

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.

Sales and Use Taxes

On June 21, 2018, the U.S.

Supreme Court issued an opinion in South Dakota v.

The State of South Dakota alleged that U.S.

constitutional law should be revised to permit South Dakota to require remote marketplace sellers to collect and remit sales tax in South Dakota in accordance with South Dakota’s sales tax statute.

Under the U.S.

Supreme Court’s ruling, the longstanding Quill Corp v.

North Dakota sales tax case was overruled, and states may now require remote marketplace sellers to collect sales tax under certain circumstances.

Additionally, certain states have extended these requirements to marketplace facilitators like 1stDibs.

The Company began collecting sales tax in relevant jurisdictions in 2019.

The Company recognized liabilities for contingencies related to state sales and use tax deemed probable and estimable totaling $ 1.9 million as of each December 31, 2022 and 2021, which are included in other current liabilities in the Company’s consolidated balance sheets.

Sales and other non-income tax contingencies

The Company conducts operations in many tax jurisdictions for which non-income-based taxes, such as sales, use and other indirect taxes, are assessed on its operations.

Although the Company is diligent in collecting and remitting such taxes, there is uncertainty as to what constitutes sufficient presence or responsibility for a jurisdiction to levy taxes, fees, and surcharges for sales made on an e-commerce platform.

The Company recognized liabilities for contingencies related to sales and other non-income taxes deemed probable and estimable totaling $ 2.5 million and $ 1.9 million as of December 31, 2023 and 2022, respectively, which are included in other current liabilities in the Company’s consolidated balance sheets.

401(K) Savings Plans

The Company established defined contribution savings plans under Section 401(k) of the Internal Revenue Code.

These plans cover substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis.

For the Company’s United States employees it maintains a 401(k) retirement savings plan, which is offered to all eligible employees, and participants may make voluntary contributions.

Company contributions to the plan may be made at the discretion of the Company’s board of directors.

These contributions to date have been immaterial.

The Company also has various pension plans for its non-U.S.

employees, some of which are required by local laws, and allow or require employer contributions.

These plans cover substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data