ContextLogic Inc. (d/b/a Wish) (Nasdaq: WISH), one of the largest
mobile ecommerce platforms, today reported its financial results
for the quarter ended March 31, 2023.
First-Quarter Fiscal 2023 Financial
Highlights
- Revenues: Revenues
were $96 million, a decrease of 49% YoY
- Core Marketplace
revenues were $28 million, down 69% YoY
- Product Boost
revenues were $8 million, down 43% YoY
- Logistics revenues
were $60 million, down 29% YoY
- Net Loss: Net loss
was $89 million, compared to a net loss of $60 million in the first
quarter of fiscal 2022
- Net loss per share
was $3.83, compared to a net loss of $2.72 per share in the first
quarter of fiscal 2022
- Adjusted EBITDA:
Adjusted EBITDA(1) was a loss of $62 million, compared to a loss of
$40 million in the first quarter of fiscal 2022
- Cash Flow: Cash
flows from operating activities were negative $92 million
- Free Cash Flow(1)
was negative $92 million, compared to negative $148 million in the
first quarter of fiscal 2022
"Revenue declined by 49% year-over-year, driven
by the unfavorable impact from the pricing changes implemented by
the end of the second quarter of 2022, combined with our lower
advertising spend in the quarter. On the bottom line, net loss was
$89 million, and adjusted EBITDA was a loss of $62 million, which
was significantly above the midpoint of the guidance range. The
better-than-expected adjusted EBITDA result was attributable to the
significant improvements in our unit economics, coupled with the
disciplined approach to our spending throughout the quarter," said
Joe Yan, Wish CEO. “Our turnaround remains on track, as we continue
to make progress in our key strategic initiatives, specifically our
conversion rates, buyer retention and customer satisfaction. The
path towards growth is clear and we remain energized by the
opportunities that lie ahead.
“Building on the vision we have about the future
of our business, our Board last month authorized a $50 million
share repurchase program. We believe this share repurchase program
will support our efforts to unlock the long-term value and
opportunity we see ahead,” concluded Mr. Yan.
Second Quarter Fiscal 2023 Financial
Guidance
- Revenue: Revenue is expected to be in
the range of $91 million to $102 million.
- Adjusted EBITDA: Adjusted EBITDA(2) is
expected to be a loss in the range of $60 million to $75
million.
First-Quarter Fiscal 2023 Consolidated
Financials
The following tables include unaudited GAAP and non-GAAP
financial highlights for the periods presented:
Revenue(in millions, except percentages;
unaudited)
|
Three Months Ended |
|
|
|
|
|
March 31, |
|
|
|
|
|
2023 |
|
|
2022 |
|
|
YoY% |
|
Core marketplace revenue |
$ |
28 |
|
|
$ |
90 |
|
|
|
(69 |
)% |
ProductBoost revenue |
|
8 |
|
|
|
14 |
|
|
|
(43 |
)% |
Marketplace revenue |
|
36 |
|
|
|
104 |
|
|
|
(65 |
)% |
Logistics revenue |
|
60 |
|
|
|
85 |
|
|
|
(29 |
)% |
Revenue |
$ |
96 |
|
|
$ |
189 |
|
|
|
(49 |
)% |
|
|
|
|
|
|
|
|
|
Other Financial Data(in millions, except
percentages; unaudited)
|
Three Months Ended |
|
|
March 31, |
|
|
2023 |
|
|
2022 |
|
Net loss |
$ |
(89 |
) |
|
$ |
(60 |
) |
% of Revenue |
|
(93 |
)% |
|
|
(32 |
)% |
Adjusted EBITDA(1) |
$ |
(62 |
) |
|
$ |
(40 |
) |
% of Revenue |
|
(65 |
)% |
|
|
(21 |
)% |
Forward Looking Guidance - Second Quarter Fiscal
2023(in millions, except percentages, unaudited)
We expect the following financial results for revenue and
Adjusted EBITDA in the period presented below:
|
|
Three Months Ended |
|
|
|
June 30, 2023 |
|
Revenue |
|
$ |
91 |
|
to |
$ |
102 |
|
% YoY |
|
|
(32 |
)% |
|
|
(24 |
)% |
Adjusted
EBITDA(2) |
|
$ |
(60 |
) |
to |
$ |
(75 |
) |
% YoY |
|
|
(3 |
)% |
|
|
(29 |
)% |
(1) Indicates non-GAAP metric. See below for
more information regarding our presentation of non-GAAP metrics in
the section titled: “Use of Non-GAAP Financial Measures.”
(2) Wish has not provided a quantitative
reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net
income (loss) for Adjusted EBITDA within this release because the
company is unable, without making unreasonable efforts, to
calculate certain reconciling items with confidence. These items
include, but are not limited to stock-based compensation and income
taxes which are directly impacted by unpredictable fluctuations in
the market price of the company's Class A common stock.
Conference Call & Webcast
Information
Information about Wish’s financial results,
including a link to the live webcast and replay will be made
available on the company’s investor relations website at
https://ir.wish.com. The live conference call may be accessed by
registering using this online form. Upon registration, all
telephone participants will receive the dial-in number along with a
unique PIN number that can be used to access the call.
About Wish
Wish brings an affordable and entertaining
shopping experience to millions of consumers around the world.
Since our founding in San Francisco in 2010, we have become one of
the largest global ecommerce platforms, connecting millions of
value-conscious consumers to hundreds of thousands of merchants
globally. Wish combines technology and data science capabilities
and an innovative discovery-based mobile shopping experience to
create a highly-visual, entertaining, and personalized shopping
experience for its users. For more information about the company or
to download the Wish mobile app, visit www.wish.com or follow @Wish
on Facebook, Instagram and TikTok or @WishShopping on Twitter and
YouTube.
Use of Non-GAAP Financial
Measures
We provide Adjusted EBITDA, a non-GAAP financial
measure that represents our loss before interest and other income,
net (which includes foreign exchange gain or loss and other
non-operating income and expenses), income tax expense, and
depreciation and amortization, adjusted to eliminate stock-based
compensation expense, lease termination and impairment related
expenses, restructuring and other discrete charges, and to add back
certain recurring items. Additionally, we provide Adjusted EBITDA
Margin, a non-GAAP financial measure that represents Adjusted
EBITDA Margin divided by revenue. The reconciliation between
historical GAAP and non-GAAP results of operations is provided
below. Our management uses Adjusted EBITDA and Adjusted EBITDA
Margin in conjunction with GAAP and other operating performance
measures as part of its overall assessment of the company’s
performance for planning purposes, including the preparation of its
annual operating budget, to evaluate the effectiveness of its
business strategies and to communicate with its board of directors
concerning its financial performance. Adjusted EBITDA and Adjusted
EBITDA Margin should not be considered as an alternative financial
measure to net loss and net loss as a percentage of revenue, which,
respectively, are the most directly comparable financial measures
calculated in accordance with GAAP, or any other measure of
financial performance calculated in accordance with GAAP. We also
provide Free Cash Flow, a non-U.S. GAAP financial measure that
represents net cash used in operating activities less purchases of
property and equipment. We believe that Free Cash Flow is an
important measure since we use third parties to host our services
and therefore we do not incur significant capital expenditures to
support revenue generating activities. The reconciliation between
net cash used in operating activities and Free Cash Flow is
provided below. Free Cash Flow has limitations as an analytical
measure, and you should not consider it in isolation or as a
substitute for analysis of our net cash used in operating
activities, which is the most directly comparable financial measure
calculated in accordance with GAAP, or any other measure of
financial performance calculated in accordance with GAAP.
Forward-Looking Statements
This news release contains forward-looking
statements within the meaning of the Safe Harbor provisions of the
Private Securities Litigation Reform Act of 1995. All statements
other than statements of historical fact could be deemed
forward-looking, including, but not limited to, statements
regarding Wish’s outlook including expectations with respect to
revenues, adjusted EBITDA, expectations regarding new business
strategies, and ability to capitalize on opportunities, and other
quotes of management. In some cases, forward-looking statements can
be identified by terms such as “anticipates,” “believes,” “could,”
“estimates,” “expects,” “foresees,” “forecasts,” “guidance,”
“intends” “goals,” “may,” “might,” “outlook,” “plans,” “potential,”
“predicts,” “projects,” “seeks,” “should,” “targets,” “will,”
“would” or similar expressions and the negatives of those terms.
These forward-looking statements are subject to risks,
uncertainties, and assumptions. If the risks materialize or
assumptions prove incorrect, actual results could differ materially
from the results implied by these forward-looking statements. Risks
include, but are not limited to: our ability to acquire new users
and engage existing users; our ability to promote, maintain, and
protect our brand and reputation and offer a compelling user
experience; the effectiveness of our CEO transition; the continued
services of members of our senior management team; our ability to
offer and promote our app on the Apple App Store and the Google
Play Store; the risk of merchants on our platform using unethical
or illegal business practices or if our policies and practices with
respect to such sales are perceived or found to be inadequate; the
success of our execution on new business strategies; competition in
our market and industry; the ongoing COVID-19 pandemic; global
conflicts, including the Russian invasion of Ukraine; economic
tension between the United States and China; supply chain issues;
increasing requirements on collection of sales and value added
taxes; significant disruption in service on our platform or in our
computer systems; litigation matters; general economic conditions,
including the impact of inflation, higher interest rates, and
potential economic downturns; and material weaknesses in our
internal control over financial reporting and the effectiveness of
our internal controls generally. New risks emerge from time to
time. It is not possible for our management to predict all risks,
nor can we assess the impact of all factors on our business or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements we may make. Further information on
these and additional risks that could affect Wish’s results is
included in its filings with the Securities and Exchange Commission
(“SEC”), including its most recent Annual Report on Form 10-K and
Quarterly Report on Form 10-Q, and future reports that Wish may
file with the SEC from time to time, which could cause actual
results to vary from expectations. Any forward-looking statement
made by Wish in this news release speaks only as of the day on
which Wish makes it. Wish assumes no obligation to, and does not
currently intend to, update any such forward-looking statements
after the date of this release.
The unaudited financial results in this news
release are estimates based on information currently available to
Wish. While Wish believes these estimates are meaningful, they
could differ from the actual amounts that the company ultimately
reports in its Quarterly Report on Form 10-Q for the three months
ended March 31, 2023. Wish assumes no obligation and does not
intend to update these estimates prior to filing its Quarterly
Report on Form 10-Q for the three months ended March 31, 2023.
ContextLogic Inc. |
|
Condensed Consolidated Balance Sheets |
|
(in millions) |
|
(unaudited) |
|
|
|
|
|
As of March 31, |
|
|
As of December 31, |
|
|
|
2023 |
|
|
2022 |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
371 |
|
|
$ |
506 |
|
Marketable securities |
|
|
256 |
|
|
|
213 |
|
Funds receivable |
|
|
5 |
|
|
|
14 |
|
Prepaid expenses and other current assets |
|
|
39 |
|
|
|
44 |
|
Total current assets |
|
|
671 |
|
|
|
777 |
|
Property and equipment, net |
|
|
10 |
|
|
|
9 |
|
Right-of-use assets |
|
|
8 |
|
|
|
9 |
|
Other assets |
|
|
4 |
|
|
|
4 |
|
Total assets |
|
$ |
693 |
|
|
$ |
799 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
41 |
|
|
$ |
53 |
|
Merchants payable |
|
|
110 |
|
|
|
120 |
|
Refunds liability |
|
|
5 |
|
|
|
6 |
|
Accrued liabilities |
|
|
115 |
|
|
|
130 |
|
Total current liabilities |
|
|
271 |
|
|
|
309 |
|
Lease liabilities,
non-current |
|
|
11 |
|
|
|
13 |
|
Total liabilities |
|
|
282 |
|
|
|
322 |
|
Stockholders’ equity |
|
|
411 |
|
|
|
477 |
|
Total liabilities and
stockholders’ equity |
|
$ |
693 |
|
|
$ |
799 |
|
|
|
|
|
|
|
|
ContextLogic Inc. |
|
Condensed Consolidated Statements of
Operations |
|
($ in millions, shares in thousands, except per share
data) |
|
(unaudited) |
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2023 |
|
|
2022 |
|
Revenue |
$ |
96 |
|
|
$ |
189 |
|
Cost of revenue(1) |
|
76 |
|
|
|
125 |
|
Gross profit |
|
20 |
|
|
|
64 |
|
Operating expenses: |
|
|
|
|
|
Sales and marketing(1) |
|
37 |
|
|
|
45 |
|
Product development(1) |
|
51 |
|
|
|
66 |
|
General and administrative(1) |
|
25 |
|
|
|
15 |
|
Total operating expenses |
|
113 |
|
|
|
126 |
|
Loss from operations |
|
(93 |
) |
|
|
(62 |
) |
Other income, net: |
|
|
|
|
|
Interest and other income, net |
|
4 |
|
|
|
2 |
|
Loss before provision for income
taxes |
|
(89 |
) |
|
|
(60 |
) |
Provision for income taxes |
|
— |
|
|
|
— |
|
Net loss |
|
(89 |
) |
|
|
(60 |
) |
Net loss per share, basic and
diluted |
$ |
(3.83 |
) |
|
$ |
(2.72 |
) |
Weighted-average shares used
in computing net loss per share, basic and diluted |
|
23,246 |
|
|
|
22,049 |
|
|
|
|
|
|
|
(1) Includes the following stock-based compensation expense:
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
Cost of revenue |
|
$ |
1 |
|
|
$ |
(1 |
) |
Sales and marketing |
|
|
1 |
|
|
|
1 |
|
Product development |
|
|
16 |
|
|
|
14 |
|
General and administrative |
|
|
8 |
|
|
|
(16 |
) |
Total stock-based compensation |
|
$ |
26 |
|
|
$ |
(2 |
) |
|
|
|
|
|
|
|
ContextLogic Inc. |
|
Condensed Consolidated Statements of Cash
Flows |
|
(in millions) |
|
(unaudited) |
|
|
Three Months Ended |
|
|
March 31, |
|
|
2023 |
|
|
2022 |
|
Cash flows from
operating activities: |
|
|
|
|
|
Net loss |
$ |
(89 |
) |
|
$ |
(60 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
Noncash inventory write downs |
|
— |
|
|
|
3 |
|
Depreciation and amortization |
|
1 |
|
|
|
2 |
|
Noncash lease expense |
|
1 |
|
|
|
2 |
|
Impairment of lease assets and property and equipment |
|
— |
|
|
|
4 |
|
Stock-based compensation expense |
|
26 |
|
|
|
(2 |
) |
Other |
|
(4 |
) |
|
|
2 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
Funds receivable |
|
9 |
|
|
|
3 |
|
Prepaid expenses, other current and noncurrent assets |
|
5 |
|
|
|
(1 |
) |
Accounts payable |
|
(13 |
) |
|
|
(27 |
) |
Merchants payable |
|
(10 |
) |
|
|
(35 |
) |
Accrued and refund liabilities |
|
(15 |
) |
|
|
(33 |
) |
Lease liabilities |
|
(2 |
) |
|
|
(2 |
) |
Other current and noncurrent liabilities |
|
(1 |
) |
|
|
(2 |
) |
Net cash used in operating
activities |
|
(92 |
) |
|
|
(146 |
) |
Cash flows from
investing activities: |
|
|
|
|
|
Purchases of property and equipment and development of internal-use
software |
|
— |
|
|
|
(2 |
) |
Purchases of marketable securities |
|
(125 |
) |
|
|
(153 |
) |
Maturities of marketable securities |
|
85 |
|
|
|
50 |
|
Net cash used in investing
activities |
|
(40 |
) |
|
|
(105 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
Payments of taxes related to RSU settlement |
|
(3 |
) |
|
|
— |
|
Net cash used in financing
activities |
|
(3 |
) |
|
|
— |
|
Foreign currency effects on
cash, cash equivalents and restricted cash |
|
1 |
|
|
|
— |
|
Net decrease in cash, cash
equivalents and restricted cash |
|
(134 |
) |
|
|
(251 |
) |
Cash, cash equivalents and
restricted cash at beginning of period |
|
513 |
|
|
|
1,018 |
|
Cash, cash equivalents and
restricted cash at end of period |
$ |
379 |
|
|
$ |
767 |
|
Reconciliation of
cash, cash equivalents, and restricted cash to the condensed
consolidated balance sheets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
371 |
|
|
$ |
760 |
|
Restricted cash included in
prepaid and other current assets in the condensed consolidated
balance sheets |
|
8 |
|
|
|
7 |
|
Total cash, cash equivalents
and restricted cash |
$ |
379 |
|
|
$ |
767 |
|
Supplemental cash flow
disclosures: |
|
|
|
|
|
Cash paid for income taxes, net of refunds |
$ |
— |
|
|
$ |
3 |
|
Supplemental noncash
investing activities: |
|
|
|
|
|
Purchase of property and equipment included in accounts
payable |
$ |
2 |
|
|
$ |
— |
|
ContextLogic Inc. |
|
Reconciliation of GAAP Net Loss to Non-GAAP Adjusted
EBITDA |
|
($ in millions, except percentages) |
|
(unaudited) |
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
Revenue |
|
$ |
96 |
|
|
$ |
189 |
|
Net loss |
|
|
(89 |
) |
|
|
(60 |
) |
Net loss as a percentage of
revenue |
|
|
(93 |
)% |
|
|
(32 |
)% |
Excluding: |
|
|
|
|
|
|
Interest and other income, net |
|
|
(4 |
) |
|
|
(2 |
) |
Depreciation and amortization |
|
|
1 |
|
|
|
2 |
|
Stock-based compensation expense and related employer payroll
taxes(1)(2) |
|
|
27 |
|
|
|
(2 |
) |
Restructuring and other discrete items(3) |
|
|
3 |
|
|
|
22 |
|
Adjusted EBITDA |
|
|
(62 |
) |
|
|
(40 |
) |
Adjusted EBITDA margin |
|
|
(65 |
)% |
|
|
(21 |
)% |
|
|
|
|
|
|
|
(1) Total amount for the
three months ended March 31, 2023 consisted of $26 million of
stock-based compensation expense and $1 million of related employer
payroll taxes. Total amount for the three months ended March 31,
2022 consisted of negative $2 million of stock-based compensation
expense and an immaterial amount of related employer payroll
taxes.
(2) Total stock-based
compensation for the three months ended March 31, 2023 increased by
$28 million compared to the three months ended March 31, 2022
primarily due to i) accelerated vesting of the Company's former
Chief Product Officer and Chief Administrative Officer's RSUs upon
their departures in accordance to their separation agreements
during the first quarter of 2023 and ii) forfeitures originating
from the resignation of the Company’s former Chief Executive
Officer (Piotr Szulcewski), and modifications to the Company’s
former Executive Chair’s equity awards during the first quarter of
2022.
(3) Total amount for the
three months ended March 31, 2023 consisted of $3 million of
employee severance and other personnel reduction costs. Total
amount for three months ended March 31, 2022 included a $15 million
one-time discretionary cash bonus paid to select employees to cover
their respective tax obligations triggered by the settlement of
their RSUs that vested upon the Company’s initial public offering
as well as restructuring charges consisting of $3 million of
severance and other personnel reduction costs and $4 million in
impairment of lease assets and property and equipment.
ContextLogic Inc. |
|
Reconciliation of GAAP Net Cash Used in Operating
Activities to Non-GAAP Free Cash Flow |
|
(in millions) |
|
(unaudited) |
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
Net cash used operating activities |
|
$ |
(92 |
) |
|
$ |
(146 |
) |
Less: |
|
|
|
|
|
|
Purchases of property and equipment and development of internal-use
software |
|
|
— |
|
|
|
2 |
|
Free Cash Flow |
|
$ |
(92 |
) |
|
$ |
(148 |
) |
|
|
|
|
|
|
|
Contacts
Investor Relations:Ralph Fong,
Wishir@wish.com
Media contacts:Carys Comerford-Green,
Wishpress@wish.com
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