1stdibs.com (DIBS) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01We have a history of operating losses, and we may not achieve or maintain profitability in the future, which in turn could negatively impact our financial condition and our stock price
2. 02Our net revenue and results of operations fluctuate within each quarter and from quarter to quarter, causing our stock price to fluctuate and making our financial results difficult to predict
3. 03Our business is affected by seasonality and, if we experience lower than expected net revenue during an anticipated season, our results of operations and financial condition for that year may be impacted, which could substantially harm our business, results of operations, and financial condition
4. 04Our ability to grow our business and market share depend on our ability to attract and maintain an active community of sellers and buyers and to ensure a sufficient volume of listings on our online marketplace
5. 05return on investment. If existing buyers have a negative experience or if the interest in buying luxury design items declines, they may make fewer purchases or they may stop referring others to us
6. 06We may expand our business through acquisitions of other businesses, products, or technologies, which have required, could continue to require, and may require significant management attention, could disrupt our business, dilute stockholder value, adversely affect our operating results, and/or prove to be unsuccessful
7. 07Our ability to establish the authenticity of items listed and sold through our online marketplace is essential to maintaining our business, brand, and reputation. Failure to do so may adversely affect customer trust and pose risks to our operations and standing in the market
8. 08Items listed on our online marketplace may be subject to claims of being counterfeit, infringing, hazardous, illegal, or otherwise subject to regulations or cultural patrimony considerations. Addressing such claims can result in operational, legal, and reputational challenges
9. 09Liability for fraudulent or unlawful activities by sellers, including the listing of stolen items on our online marketplace, poses risks to our business and reputation
10. 10We rely, in part, on sellers to provide a positive experience to buyers, which includes limited disruptions in service by sellers
11. 11Shipping and logistics are critical to our business, and delays, failures, or issues with the condition of items delivered through our online marketplace harm our business and reputation
12. 12If we do not compete effectively, our results of operations and market position could suffer
13. 13Failure to adequately meet these demands may cause us to lose potential sellers and buyers which could harm our business
14. 14Our net revenue could be negatively impacted as a result of greater than expected product returns
15. 15Insufficient allowance for transaction losses could negatively impact our financial results
16. 16Our business and results of operations are sensitive to changes in or uncertainty about economic conditions in the U.S. and international markets that impact consumer spending, including consumer discretionary spending
17. 17National retailers and brands set their own retail prices and promotional discounts on new luxury design items, which could adversely affect our value proposition to our buyers
18. 18If we fail to successfully anticipate and respond to changing preferences among our sellers and buyers, our ability to grow our business and our results of operations may suffer
19. 19If we fail to successfully expand our business model to encompass additional product verticals in a timely and cost-effective manner, our ability to increase our market share would suffer, which in turn could negatively impact our business, financial condition, and results of operations
20. 20If we fail to maintain and promote our brand and reputation, our business, market position, and future growth could suffer
21. 21If our marketing efforts are not effective, our ability to grow our business and maintain or expand our market share could suffer
22. 22We may adjust or re-allocate our advertising spend across channels, product verticals, and geographic markets to optimize the effectiveness of these activities. We may increase advertising spend in future periods to continue driving our growth
23. 23We rely on third parties to drive traffic to our website, and these providers may change their algorithms or pricing in ways that could damage our business, operations, financial condition, and prospects
24. 24If the mobile solutions available to sellers and buyers are not effective, the use of our platform could decline
25. 25As new mobile devices and mobile platforms are released, we may encounter problems in developing or supporting apps for them. In addition, supporting new devices and mobile device operating systems may require substantial time and resources
26. 26We must continue to drive efficiencies in our operations or our business could suffer
27. 27If we fail to manage our growth effectively, or if we are unable to execute our business plan and grow our business, our results of operations, and financial condition could be materially and adversely harmed
28. 28We may require additional capital to support business growth, and we may be unable to obtain additional capital on acceptable terms, if at all, and any additional financing may dilute existing stockholders
29. 29Our strategic initiatives to reduce our cost structure towards cash flow positive operations could have long-term adverse effects on our business operations, and we may not realize the operational or financial benefits from such actions, including achieving our cash flow positive operations
30. 30Further expansion into markets outside of the United States is important to the growth of our business but will subject us to risks associated with operations abroad
31. 31outside the United States and integrating those companies with our operations. These expansion efforts may not be successful and as a result, our business, results of operations, financial condition, and brand could suffer
32. 32Sellers face similar risks in conducting their businesses across borders. Even if we are successful in managing the risks of conducting our business across borders, if sellers are not, our business could be adversely affected
33. 33We may incur significant losses from fraud, which would harm our results of operations
34. 34Our business depends on continued and unimpeded access to the Internet, mobile networks, and third-party services
35. 35We rely on third-party payment processors to process payments made by buyers or to sellers on our online marketplace
36. 36We rely on Amazon Web Services (AWS) for a substantial portion of the computing, storage, data processing, networking, and other services for our online marketplace. A significant disruption of or interference with our use of AWS would negatively impact our operations and seriously harm our business
37. 37If our insurance coverage is insufficient or our insurers are unable to meet their obligations, our insurance may not mitigate the risks facing our business
38. 38Finally, while some sellers on our platforms may be insured for some or all of these risks, many small businesses do not carry any or sufficient insurance, and, even if a seller is insured, the insurance may not cover the relevant loss
39. 39Our cash, cash equivalents and short-term investments may be exposed to failure of our banking institutions

Risks Related to Human Capital

1. 40If we fail to attract and retain key personnel on our executive team or to effectively manage leadership succession, our business, financial condition, and results of operations could be adversely impacted
2. 41If we fail to recruit and retain specialized employees and contractors, our business and operations could suffer
3. 42If we experience labor disputes or other disruption, it could harm our operations

Risks Related to Data Privacy and Cybersecurity, and Infrastructure

1. 43Our use and other processing of personal information and other data is subject to laws and obligations relating to privacy and data protection, and our failure to comply with such laws and obligations could harm our business
2. 44disclosure, transfer, and other use of personal data of EU and UK data subjects. Complying with the GDPR remains an onerous and potentially costly obligation as interpretations of the specific requirements emerge through the courts, enforcement decisions and regulatory guidance
3. 45If sensitive information about our sellers and buyers or other third parties with whom we transact business is disclosed, or if we or our third-party providers are subject to cyber-attacks, use of our online marketplace could be curtailed, we may be exposed to liability, and our reputation would suffer
4. 46We use social media, emails, phone calls, text messages, and push notifications as part of our omni-channel approach to marketing and communications with sellers and buyers
5. 47Climate change may have an adverse impact on our business

Risks Related to Legal, Regulatory Matters and Litigation

1. 48If we fail to comply with applicable laws or regulations, including those relating to the sale of antique and vintage items, we may be subject to fines, penalties, loss of licensure, registration, and approval, or other governmental enforcement action
2. 49We are subject to governmental export and import controls and anti-corruption laws and regulations that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws
3. 50Claims, lawsuits, government investigations, judgments, settlements, and other legal proceedings could adversely affect our business, financial condition, and results of operations
4. 51Expanding and evolving regulations in the areas of privacy and user data protection could create technological, economic, and complex cross-border business impediments to our business and those of our sellers

Risks Related to Intellectual Property

1. 52If we cannot successfully protect our intellectual property, our business could suffer
2. 53Intellectual property claims, which can be extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies in the future
3. 54We are subject to the terms of open source licenses because our platform incorporates open source software

Risks Related to our Operations as a Public Company

1. 55We may encounter difficulties in the timely and accurate reporting of our financial results, which would impact our ability to provide our investors with information in a timely manner. As a result, our investors could lose confidence in our reported financial information, and our stock price could decline
2. 56We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors
3. 57If some investors find our common stock less attractive because we rely on any of these exemptions, there may be a less active trading market for our common stock and the market price of our common stock may be more volatile
4. 58Our operations as a public company require substantial costs and substantial management attention, and we may not be able to manage our operations as a public company effectively or efficiently
5. 59We are subject to regulatory compliance requirements, including Section 404 of the Sarbanes-Oxley Act, and if we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud

Risks Related to Tax and Accounting Matters

1. 60We could be required to pay or collect sales taxes in jurisdictions in which we do not currently do so, with respect to past or future sales. This could adversely affect our business and results of operations
2. 61Our business and our sellers may be subject to sales tax, value-added tax (“VAT”), provincial taxes, goods and services tax, and other taxes
3. 62Application of existing tax laws, rules or regulations are subject to interpretation by taxing authorities
4. 63We may experience fluctuations in our tax obligations and effective tax rate
5. 64Amendments to existing tax laws, rules, or regulations or enactment of new unfavorable tax laws, rules, or regulations could have an adverse effect on our business and results of operations
6. 65Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited
7. 66Our reported results of operations may be adversely affected by changes in generally accepted accounting principles

Risks Related to Our Common Stock

1. 67The price of our common stock has in the past been, and in the future may be, volatile, and you may lose all or part of your investment
2. 68Sales of a substantial number of shares of our common stock in the public market, such as the perception that sales might occur, could cause the price of our common stock to decline
3. 69We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value. Share repurchases could also increase the volatility of the trading price of our stock and will diminish our cash reserves
4. 70Our actual results of operations may not meet our guidance and investor expectations, which would likely cause our stock price to decline
5. 71If securities analysts or industry analysts do not publish reports about our business, downgrade our common stock, or publish negative research or reports, our stock price and trading volume could decline
6. 72We do not intend to pay dividends on our common stock, so any returns on your investment will be limited to changes in the value of our common stock
7. 73Our directors, executive officers and principal stockholders beneficially own a substantial percentage of our stock and will be able to exert significant control over matters subject to stockholder approval
8. 74Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock
9. 75Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce cash resources