ContextLogic 11 Nov 212021 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Wish Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only-mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. [Operator Instructions]. hand Operations. over to Vice Jesse like Business President, would the to conference Beller; I ahead. go Please

Thank you. and Good afternoon welcome, everyone.

Jobs interim Joining results me our will as CPO, our Vivian new Arun Q&A session. join are our Oliver. Brett co-CFO Lou, Jacqueline Reses, and our today our Executive Jane, to CTO, and Jennifer discuss us CFO, the [Indiscernible] Wish's Chair, for

or uncertainties, future the results could described differ we implied information information. is are plans is The forward-looking our materially make incorrect, the to about additional and risk for assumptions. risks, from statements. and and you We factors subject November footprints. no intend consider on date a A events. filings call, call forward-looking the prove statements new today will assumptions available of We on are to, as will later results encourage recording of on these the call Relations of risk made SEC to and our based website. our During be in by the statements undertake today. this do is Investor statements financial not date. this These to the these obligation being Internet assumptions call materialize and If statements XX, as accessible or actual forward-looking update XXXX, broadcast of result This

GAAP non-GAAP financial adjusted encourage release, the flow, SEC, EBITDA, historical During the of which X-K, our results, you information cash including with news found our including call, Investor data. measures. we as read about earnings be filed on which free reconciliations measures, important GAAP and will our Relations statement have Form website, it and contains our non-GAAP to non-GAAP of we discuss and can and operations We

with now I'll to questions. will we the Jackie. take and brief call turn then remarks, with And will that, open We over your

everyone. Jessie. And to welcome Thanks, Awesome.

start our press with like into before we've Quarter an important overview, shortly Third that to shared via I'd announcement release we Before get call. this

Founder down as Szulczweski, personal Peter is committed Peter time As you is stepping made 's to have from his business seen, role Wish away now that experience. team Peter and turnaround leadership assemble Company's our the senior qualified a Peter on the highly Wish, execute my well executives, to fun second of searches CEO. also to and into for strategy a call the step the a CEO, right behalf and the gratitude I in until Directors smooth new Company. entire on he's traded remain publicly fully is transition. providing value express sincerest points, will entertaining the shoppers marketplace decision than of Xst may to team millions Chief or ensuring directors founding Board XXXX. focused with on new CEO Executive to of a Peter organization of Officer. no an and global and board conscious want Peter CEO, helped is quarter the of oversee of helped XXXX, board the in operations the scale the while the well. for at Company's daily to which Since a his February Wish On remain as will board contributions a strong prepared outlined from later

continue With evolve to grow. to Wish well-positioned the Peter helped to foundation is develop, and

Now turning to Wish 's third-quarter results.

core user we and focused efficient on retention, more spend. the guidance, our Beginning we spend key on adjusted to high-end quarter, marketplace in EBITDA to provided outlook while began strategy, we in exceeding financial due our on We our third our digital made QX During digital our of above ad last achieved advertising call. earnings mid-July, significantly back improving fundamentals. we our part cut the while turnaround progress

in made with a return significant remain the more our management experience. to second to to our ad growth execute our differentiated follows. that financial line share quarter to provide about third as to We growth would progress our confidence revenue over Wish and disciplined spend. to Increased and our user and maintain on a We'll As our details expected, user lower strategy. value a of time. improvement to positioning to approach during marketplace more while like are XXXX, ability turnaround in expense strategy in create pillars was as engaging QX. the of the digital half I we return confident a in corresponds also key experienced shareholder we that cash decline X

steps First, designed a We is to Wish announced for consistently that users' platform. our an new merchants program a to this confidence experience. called improve quarter which reward Standards, major provide few we user exceptional took in our merchants

While we as performance review metrics evaluate across quality, and product and fulfillment, such merchants ratings. and shipping user

early performing We've on protection purchases voice to with or low priority listings experiences, commission transaction the from product seen, ramp and of our intend merchants improved proactively detect, as efforts continue quality these platform. platform. to The the our we provide prevent, efforts for we merchants defect offer share our for the reviewed and and highest also merchants. as poorly -- higher-quality increased all results rate as We will buyer NPS, encouraging, are fraudulent, improved with remove We as qualified discounts. placement reduced well up as misleading, retention we've across buying

progress encouraging our reinventing and it users making more products our experience love. and they make easier we're shopping to for entertaining in purchase to Secondly,

initiatives. is experiments from live to and shop video. Our trusted merchant and users directly feature our new Clips users shopping allows into that incorporating high-quality experience important created an video with a is modernization of our component Wish

that of on devices And we playback of U.S. are high-quality largest build Android in the shoppable of and the world. intend key are We both this repositories live we in testing shopping believe the and platform. video shopping currently feature videos discovery-based one to components the

both and cost partnered a products. global payment deals, partnership, we're flexibility And our experimentation, over homepage also with U.S. active users we QX, to and allowing initiative. in made service retail toward allow - users of their Wish part browse repayments. this bank, to key X the the testing also of the payments our U.S. later to the flexibility users a best shopping interest leading create make Providing an more to flexible to having showcase progress is broader This in to the and more account. In with options We buy-now-pay purchases have offering. spread appealing payments, to With through expand is Klarna, Wish of it users a unique trends, our without freely visually for in better redesigning drive

will and volume new We partnership increased drive expect order average this revenue.

continue we to drive and give quality our top them recruit to Third, additional merchants to own brands success. tools their and platform

new tools value while direct enables a promotion empowering campaigns. merchants new Merchant and our announced with new variety than more hosted better than run Wish support businesses, the a these merchant week, XXX partners. provide of to Earlier on-boarded of At our platform promotion this users reduce Promotion more tools to We their we with Among campaign. the costs, own this of our will partners variety the at and all merchant fund event, manage China. we are their platform. in QX, During features believe merchants Summit we the our easily their XX,XXX own and Merchant sustainability to long-term

will merchants Wish we around be create on storefront We merchants focus world. will on improved enable launching to stores direct-to-consumer provide more the merchant brands, to we plan customers customized tools platform. directly followers engage As to their for that the and

tool for an effective ads list growth. products and conversions incremental our been has Our to drive merchants

models, and our We continue to pricing invest advertisers. ad ROAS new formats, delivering load in compelling while optimization, engaging ad to

times On window improving users global by the times, increasing supply rate. see delivery the shocks the and improve on-time to our our delivery reduce we continue we reducing logistics on were at to checkout. side, rates, narrowing chain during on-time and able quarter, consistency focus Despite delivery

added Officer. Vivian line Financial transforming to position with to Company for at user recently recently maintaining look while our successfully seasoned the joined Wish We strategy. profitability. -- throughout -holiday quality Along all merchant ahead make XPL fixed season, number merchants, shipping to Chief the pre Vivian in we've will costs here finance and from Furthermore, a experience holiday achieve enable Shutterfly, season. to we've a we towards where for and taken she our our manage on the be holiday announced costs, with we our improvements the Her the business executive, announced goals merchants greater best will team the air be capacity oversaw experiences, the is topline our directly who's is of execute Lou growth we leadership the Wish. our easier finance deliveries. steps ring-fencing, planning to appointment to accelerated the function cargo while to to As of

Jennifer has been take Oliver Brett what I Brett results. transformational opportunity Finally, as to turn I during thank to for the to for and in stepping our co interim will would review business. this a like the call financial - Jobs CFOS of With for that, time a

which our that non-GAAP with non-GAAP GAAP in can on Please Jackie. release, to the found Investor reconciliation you be some our discuss we basis. filed news be note A metrics Thank website is will a today and earnings relations on included results of SEC. is

XX% revenue QX. was During XX% total of and a decline million. year-over-year represents That over QX, $XXX

the back to primarily ad As revenue on last was Jackie while by spend addressed outlined significantly mentioned, driven operating challenges we pull the decline in our on call. decision we digital our

adjusted range. digital XXX XX% QX, basis Jackie revenue was end absolute in a was spend sales fact, EBITDA was improved last points of million ahead compared on In was more only to sales QX of million, high XX% ad to $XX spend, net of lower XXX and as an and year. $XX with loss with our marketing points basis QX XXXX. XX% outlook dollar adjusted X% loss compared described, year-over-year. from EBITDA basis, part, due QX of to In and a spend margin basis our efficient well On marketing of

active As to affected XX million XX% and by million. Total expected, were lower XX-month declined year-over-year buyers to XX% our XX spend. user ad monthly users decreased digital the metrics active last year-over-year directly

saw As anticipated, main revenue streams quarter. X during declines the each our of

flower, For an volume year-over-year $XX decreased active a million to ad due and able XX% to to year-over-year App X% deliver year-over-year by traffic $XXX in revenue the to in buyers. primarily the gross to to marketplace overall impressions third volume reduced our mouse of quarter Wish decreased Product million LTM due spend. volume. revenue $XXX was Logistics the XX% as revenue lower by overall decrease, million, Wish driven order associated with parcel driven that pullback lower or was lower

year-over-year. XX% for million, Non-GAAP XX% margin was decrease. order basis to cost and or GAAP year-over-year overall prior compensation, profile and of volumes year. was due of million, XXXX respectively, from was stock-based to margin million, logistics cost Gross lower a our was revenue, of mix which profit, and a costs which decrease compared XX% $XXX QX Now which than the gross non-GAAP of stock-based lower as excludes year-over-year. sequential million third revenue. to $XXX related Non-GAAP to down gross profit quarter year-over-year from revenue logistics turning significantly revenue, we XXXX. on The was to XX% the revenue a compensation declined has primarily costs lower of down $XXX XX% Marketplace XX% expenses, excludes decrease due primarily $XXX had and higher a

revenue sales as our was Third in spend sales engagement excludes $XXX to non-GAAP in were XX% and XX% from and XXXX. quarter half which compensation to XX% will of down we revenue GAAP begin sales XX% to XX% lower expense operating of continue QX believe year-over-year, of digital non-GAAP We of of and investment and from positive revenue advertising in expense, acquisition due address to primarily once in user we revenue revenue, million in to which see down stock-based resume marketing be XXXX. were challenges. down achieved user our of marketing and XXXX, XX% back of plan QX, respectively and the we trends, XXXX. marketing worked XX% QX expenses

or product or were of million development $XX $XX Third revenue. expenses, of development which million quarter product compensation, were excludes stock-based Non-GAAP XX% expenses revenue. XX%

the As we invest continue user to in experience. improving

G&A quarter or were and compensation, administrative or were $XX excluding million Third expenses, $XX Non-GAAP stock-based general expenses of of revenue. revenue. X% million X%

$XXX QX in statement, a flow billion QX and vendors. bring marketable payable, and and Looking refund driven cash balance to changes should negative by changes of securities. approved, which operating million the These us order primarily be cash down solid net of working to loss, were sheet net ended equivalents payable, in working capital timing onetime merchants in Free $X.X unfavorable to flow was capital merchants Wish our mainly position nature driven and with cash, primarily cash due cash to lower driven The cash changes accounts lower liabilities. by and the level. was volumes at negative our outflows by

Going start next later to to we free cash invest remain year. flow forward, near we can growth until expect even again break in

we holidays. at benefit providing QX This we by to While of the of be higher the beginning QX revenue despite are ad driven expect QX the below not guidance, spend is primarily QX. revenue

Specifically, QX our of of through a the for similar October average revenue XX% adjusted number approximately days. to QX down end revenue is compared

In in million of fourth the range loss terms $XX adjusted the EBITDA of quarter, for outlook expect million. we $XX to

basis. a maintain approach cash to to closely disciplined a go-forward We on our and management will monitor EBITDA adjusted continue

Jackie to our closing Now, to to turn provide I would remarks. back call the like

to core, Brett. we leader. right incredible have Thank to engaging At opportunity. its be enhance capitalize has into great space. global the platform the opportunity and a we We Great. know able it our technology believe building differentiated experience the are macro But eCommerce be challenge within e-commerce to certainly, do. face team We can have be. platform And an e-commerce we Wish you, work headwinds a and to to the and we mobile the on

digital to We core user significantly maintain ad lowered on marketplace fundamentals. while we continue focus retention will key and spend improving

our We momentum that made believe our we merchants. close strategic of aggressive continuing improve are an solid and the XXXX turnaround new experiences at we We year. be and the transform our quarter, confident we strategy progress of the we'll the we're proceed way that users third during into the will operate and out beginning as and

build will momentum the XXXX. this ultimately, in translate expect of into second We and, growth half

that, And first ready question. operator, for I'll So stop. we're the with

Q&A [Operator presenters. just roster. pause moment Instructions] to Thank a the you, will for We compile

question JPMorgan. first Doug Anmuth from our have from We

Your line is open.

This is for Neon Yeah. on Doug.

X some So just quarterly you if just buyer a couple provide provide is last you could do trends the the Number on that of to questions. used quarter. color

data. X provide the you to strategy. that on is touch if And can just So, number wanted I new

not any priority near-term? local did the Wish Wish at we so all on see updates a in is local, So

Sir, thank you so for much your questions.

buyers. this by driven quarterly of the into MAUs quarterly we And and buyer and QX will Brett anticipate as continue our In mentioned, terms heightened of trends, so spend. QX down were that our in -- the trend we're lack out QX, ad massive the

add. me And for let question. everybody. Kassaei, Thank Chief And afternoon good you Hamid the I'm Technology Officer.

and Yes, On on because it the us. focused local experiences buyers. synergies WIsh really network. both for our return, going Also, a our ship-to-home then local are question remains QX with pickup on local for good QX, Wish Wish these cost and local. into we has priority local

are local as So we're logistic we reporting they available. improving our network new become expanding and and results

unchanged the XX% that local remains actually. about about, significantly total and coming As in actually from countries some we more talked XX% of networks are plus, orders our and

point can I we do strategy. the on local users. to we great to you're by us got our that want X our add see great the focus focus that we've users pickup core providing to where Making is I trust. If that for the going and think be on building absolutely that's the our continue to experience to experience can priorities: broader And for And meta

key pursue to continue these of strategies be pickup marketplace. within experienced so we'll that part may And for better as that our

Thanks right. All guys.

Thank you.

Cowen. our Blackledge from next John have We question from

Your line is open.

I this could. is on John. have if X I This Bill for questions Hi. is

a you just that the frame you when tighten back your you marketing 'XX You do would just And anticipate can quarter. color in more for and that think there third expenses XQ us of bit spend guys on? were Is expected little turning that expectations able Do on more? belt helpful. ahead we for sales to spend any Just then that marketing turnaround? for be second-half than

going break-even cash free strategy a You just on have us your update forward, Thanks. and buybacks? given think for capital expectations potential an share you the solid for you and do could flow allocation guys cash give position

question. so thank much you the for Sir,

exiting of since things, the side the we've our ad on was marketing actually seen So XXXX. highest efficiency QX

take a so. our second green do to spend, retention continue in user and disciplined continue approach to is We're and shoots the NPS and the still plan part We specific XXXX. to before to loyal ad invest of the those really growth looking rate to going growth for in we're transaction we invest further in growth, in to

to cash EBITDA as it our free piece plan we in growth start quarters on monitor monitor to associated the the we low. the adjusted with we On next flow, reinvesting few before

the to it XXXX. until on growth - the start we plan in in near we So reinvesting breakeven

on in at been that on in buyback, business right customers stay a buyback. the that sure reinvesting the trapped looking now laser-focused user we experience Finally, have have. on we making focused not and We're the our

And so priority. core that's really been our

helpful. really Thank it's Great, you.

Instructions] is Ju [Operator question Stephen from Our Credit Suisse. next from

Your open. line is

Hey, question thanks. on the just honing time. one for Stephen. is active guess buyer more on in I This Taylor

account XQ, about October Just in expected your expectations? Thanks. similar terms of for decreased we be versus your buyer thinking levels revenue should

Thanks so your much for question.

I quarter. line [Indiscernible] say our it's in will with think and fair decline to for revenue the that buyers

Thank you.

this at Thank [Operator to the are you. the call will I no management. over Instructions] There back time. turn questions

Thank very much. Great. you

and Thanks we thank to our questions like look providing call today. you next We update appreciate bye. Bye everyone I'd First your forward for greatly much. February. it, on an to

and for participating. today's Thank this concludes you Ladies gentlemen, conference call.

disconnect. may You now