LightInTheBox(LITB) - 2023 Q2 - Quarterly Report

Company Overview LightInTheBox, a global apparel e-commerce retailer, announced Q1 2023 financial results, serving middle-aged and senior customers worldwide Introduction LightInTheBox Holding Co., Ltd. (NYSE: LITB), an apparel e-commerce retailer, announced its unaudited financial results for the first quarter ended March 31, 2023, reporting significant growth - LightInTheBox Holding Co., Ltd. (NYSE: LITB) is an apparel e-commerce retailer that ships products to consumers worldwide[1] - The company announced its unaudited financial results for the first quarter ended March 31, 2023[1] About LightInTheBox LightInTheBox is a global apparel e-commerce retailer focusing on middle-aged and senior customers, leveraging its global supply chain, R&D, and design capabilities to offer a wide selection of comfortable and aesthetically pleasing apparel. It operates through various websites and mobile applications in over 140 countries and is headquartered in Singapore - LightInTheBox is an apparel e-commerce retailer serving middle-aged and senior customers globally[15] - The company utilizes its global supply chain, logistics networks, and in-house R&D and design capabilities[15] - Operations span over 20 major languages and 140 countries/regions through websites like www.lightinthebox.com, www.miniinthebox.com, www.ezbuy.sg, and mobile applications[15] First Quarter 2023 Financial Highlights LightInTheBox reported its strongest first quarter in history, with total revenues increasing 57.6% to $147.8 million, driven by apparel sales and improved gross margin, while the CEO emphasized value offerings and AI-powered strategies Key Financial Metrics LightInTheBox achieved its strongest first quarter in company history, with total revenues growing 57.6% year-over-year to $147.8 million, primarily driven by a 77.3% increase in apparel sales. Gross margin significantly improved to 55.8%, and the company maintained a strong cash position of $73.6 million First Quarter 2023 Financial Highlights | Metric (in millions, except percentages) | Q1 2022 | Q1 2023 | Year-over-Year % Change | | :--------------------------------------- | :------ | :------ | :---------------------- | | Total revenues | $93.8 | $147.8 | 57.6% | | Apparel sales | $67.2 | $119.2 | 77.3% | | Apparel sales/total revenues | 71.7% | 80.7% | 9.0% (increase) | | Gross margin | 50.7% | 55.8% | 5.1% (increase) | | Net loss | $(5.5) | $(4.0) | | | Adjusted EBITDA | $(4.6) | $(3.1) | | | Cash, cash equivalents and restricted cash (as of March 31) | $42.8 | $73.6 | | CEO Commentary & Strategic Focus The CEO highlighted Q1 2023 as the strongest first quarter ever, attributing improved performance to robust value-for-money offerings, quality customer cohorts, and AI-powered technologies. The company plans to deepen its commitment to customer lifestyle by offering convenient access to a wide selection of products at attractive prices - Q1 2023 was the strongest first quarter in the Company's history, with revenues exceeding guidance[2] - Improved financial performance is built on robust value-for-money offerings, quality customer cohorts, and innovative AI-powered technologies[2] - The company will deepen its commitment to creating a better lifestyle for customers by offering convenient and modern ways to access a wide selection of products at attractive prices, emphasizing product value and increased efficiency[2] First Quarter 2023 Detailed Financial Results This section details LightInTheBox's Q1 2023 financial performance, including significant revenue growth, improved gross profit, analysis of operating expenses, enhanced profitability, and a stronger cash position Revenues Total revenues increased by 57.6% year-over-year to $147.8 million, with apparel sales being the primary driver, growing 77.3% and representing 80.7% of total revenues Total Revenues Breakdown | Revenue Type (in thousands) | Q1 2022 | Q1 2023 | YoY Change | YoY % Change | | :-------------------------- | :------ | :------ | :--------- | :----------- | | Product sales | $91,343 | $144,601| $53,258 | 58.3% | | Services and others | $2,425 | $3,180 | $755 | 31.1% | | Total revenues | $93,768| $147,781| $54,013| 57.6% | - Apparel sales increased by 77.3% to $119.2 million in Q1 2023, up from $67.2 million in Q1 2022[3] - Revenues from apparel constituted 80.7% of total revenues in Q1 2023, an increase from 71.7% in Q1 2022[3] Cost of Revenues & Gross Profit Gross profit surged by 73.6% to $82.5 million, and gross margin improved by 5.1 percentage points to 55.8%, primarily due to the increased proportion of higher-margin apparel sales Cost of Revenues and Gross Profit | Metric (in thousands) | Q1 2022 | Q1 2023 | YoY Change | YoY % Change | | :-------------------- | :------ | :------ | :--------- | :----------- | | Total cost of revenues| $46,254 | $65,279 | $19,025 | 41.1% | | Gross profit | $47,514 | $82,502 | $34,988 | 73.6% | | Gross margin | 50.7% | 55.8% | 5.1% (increase) | | - The increase in gross margin was a result of the higher percentage of sales represented by apparel, which typically has higher margins[4] Operating Expenses Total operating expenses increased to $86.5 million. While selling and marketing expenses grew significantly, fulfillment and G&A expenses decreased as a percentage of total revenues Total Operating Expenses | Metric (in thousands) | Q1 2022 | Q1 2023 | YoY Change | YoY % Change | | :-------------------- | :------ | :------ | :--------- | :----------- | | Total operating expenses | $53,896 | $86,460 | $32,564 | 60.4% | Fulfillment Expenses Fulfillment Expenses | Metric (in thousands) | Q1 2022 | Q1 2023 | YoY Change | YoY % Change | | :-------------------- | :------ | :------ | :--------- | :----------- | | Fulfillment expenses | $6,864 | $8,636 | $1,772 | 25.8% | | As % of total revenues | 7.3% | 5.8% | -1.5% (decrease) | | Selling and Marketing Expenses Selling and Marketing Expenses | Metric (in thousands) | Q1 2022 | Q1 2023 | YoY Change | YoY % Change | | :-------------------- | :------ | :------ | :--------- | :----------- | | Selling and marketing expenses | $39,032 | $69,112 | $30,080 | 77.1% | | As % of total revenues | 41.6% | 46.8% | 5.2% (increase) | | General and Administrative Expenses General and Administrative Expenses | Metric (in thousands) | Q1 2022 | Q1 2023 | YoY Change | YoY % Change | | :-------------------- | :------ | :------ | :--------- | :----------- | | G&A expenses | $8,066 | $9,057 | $991 | 12.3% | | As % of total revenues | 8.6% | 6.1% | -2.5% (decrease) | | | R&D expenses (part of G&A) | $4,600 | $5,200 | $600 | 13.0% | Profitability The company significantly reduced its operating loss and net loss year-over-year, with net loss per ADS improving from $0.05 to $0.03. Adjusted EBITDA also showed an improvement, reducing its negative value Profitability Metrics | Metric (in thousands) | Q1 2022 | Q1 2023 | YoY Change | | :-------------------- | :------ | :------ | :--------- | | Loss from operations | $(6,382)| $(3,958)| $2,424 (improvement) | | Net loss | $(5,512)| $(3,956)| $1,556 (improvement) | | Net loss per ADS (Basic & Diluted) | $(0.05) | $(0.03) | $0.02 (improvement) | - Adjusted EBITDA improved from negative $4.6 million in Q1 2022 to negative $3.1 million in Q1 2023[6] Cash and Cash Equivalents LightInTheBox significantly increased its cash, cash equivalents, and restricted cash position to $73.6 million as of March 31, 2023, up from $42.8 million in the prior year Cash and Cash Equivalents | Metric (in thousands) | As of March 31, 2022 | As of March 31, 2023 | YoY Change | | :-------------------- | :------------------- | :------------------- | :--------- | | Cash, cash equivalents and restricted cash | $42,800 | $73,600 | $30,800 (increase) | Business Outlook LightInTheBox projects Q2 2023 net revenues to be between $180 million and $200 million, reflecting current business trends and seasonality Q2 2023 Revenue Guidance For the second quarter of 2023, LightInTheBox expects net revenues to range between $180 million and $200 million, based on current information and business seasonality Q2 2023 Revenue Guidance | Metric | Q2 2023 Guidance | | :----- | :--------------- | | Net revenues | $180 million - $200 million | Non-GAAP Financial Measures This section defines Adjusted EBITDA as a non-GAAP measure for evaluating operating performance and provides a detailed reconciliation of GAAP net loss to Adjusted EBITDA Adjusted EBITDA Definition and Purpose LightInTheBox utilizes Adjusted EBITDA as a non-GAAP measure to evaluate operating performance and identify underlying business trends, excluding specific non-operating and non-cash items. While useful for management, it is not a substitute for GAAP and may have limitations in comparability - Adjusted EBITDA is a non-GAAP measure used to review and assess operating performance and identify underlying business trends[9][10] - It excludes share-based compensation expenses, depreciation and amortization expenses, impairment loss on investment, interest income, interest expenses, and income tax expense[9][25] - Non-GAAP measures have limitations as analytical tools, are not defined under U.S. GAAP, and may not be comparable to those of other companies[11] Reconciliation of GAAP and Non-GAAP Results This section provides a reconciliation of GAAP net loss to Adjusted EBITDA, detailing the adjustments made for interest income/expense, income tax, depreciation, amortization, and share-based compensation Unaudited Reconciliations of GAAP and Non-GAAP Results (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(5,512) | $(3,956) | | Less: Interest income | 10 | 30 | | Interest expense | (2) | (1) | | Income tax expense | - | (48) | | Depreciation and amortization | (858) | (829) | | EBITDA | $(4,662) | $(3,108) | | Less: Share-based compensation | (36) | (5) | | Adjusted EBITDA* | $(4,626) | $(3,103) | Conference Call Information Details for LightInTheBox's Q1 2023 earnings conference call, including access information and webcast availability, are provided Conference Call Details LightInTheBox hosted an earnings conference call on May 26, 2023, providing preregistration details, dial-in numbers for various regions, replay access, and a live/archived webcast on its investor relations website - The Company's management held an earnings conference call on May 26, 2023, at 8:00 a.m. Eastern Time[13] - Participants could preregister online to receive dial-in numbers, an event passcode, and a unique registrant ID for various regions (US/Canada, Singapore, Hong Kong)[14] - A telephone replay was available until June 2, 2023, and a live and archived webcast was accessible on the Company's investor relations website[14] Additional Information This section provides investor relations contact details and important disclosures regarding forward-looking statements and associated risks Investor Relations Contact Contact information for LightInTheBox's Investor Relations department and Piacente Financial Communications is provided for investor inquiries - Investor Relations contact information is provided for LightInTheBox Holding Co., Ltd. (ir@lightinthebox.com) and Piacente Financial Communications (Jenny Cai, Brandi Piacente)[16] Forward-Looking Statements This announcement contains forward-looking statements made under the 'safe harbor' provisions, which involve inherent risks and uncertainties that could cause actual results to differ materially. The company does not undertake to update these statements unless required by law - The announcement contains forward-looking statements made under the 'safe harbor' provisions of the U.S. Private Securities Litigation Reform Act of 1995[17] - These statements involve inherent risks and uncertainties, and actual results could differ materially due to various factors including business development, market growth, customer attraction, supply chain efficiency, competition, and economic conditions[18] - LightInTheBox does not undertake any obligation to update any forward-looking statement, except as required under applicable law[19] Financial Statements This section presents the unaudited condensed consolidated balance sheets and statements of operations for LightInTheBox for Q1 2022 and Q1 2023 Unaudited Condensed Consolidated Balance Sheets This section presents the unaudited condensed consolidated balance sheets for LightInTheBox as of March 31, 2022, and March 31, 2023, detailing assets, liabilities, and equity Unaudited Condensed Consolidated Balance Sheets (in thousands) | ASSETS (as of March 31) | 2022 | 2023 | | :---------------------- | :-------- | :-------- | | Current Assets | | | | Cash and cash equivalents | 88,575 | 68,252 | | Restricted cash | 5,993 | 5,311 | | Accounts receivable, net | 695 | 370 | | Inventories | 14,260 | 10,972 | | Prepaid expenses and other current assets | 6,452 | 9,662 | | Total current assets| 115,975| 94,567| | Property and equipment, net | 2,946 | 2,918 | | Intangible assets, net | 5,630 | 5,131 | | Goodwill | 28,177 | 28,296 | | Operating lease right-of-use assets | 10,874 | 10,234 | | Long-term rental deposits | 1,211 | 1,299 | | TOTAL ASSETS | 164,813| 142,445| | LIABILITIES AND EQUITY| | | | Current Liabilities | | | | Accounts payable | 26,518 | 18,258 | | Advance from customers | 32,241 | 31,425 | | Operating lease liabilities | 4,993 | 5,280 | | Accrued expenses and other current liabilities | 90,357 | 81,455 | | Total current liabilities| 154,109| 136,418| | Operating lease liabilities | 6,576 | 5,617 | | Long-term payable | 34 | 22 | | Deferred tax liabilities | 111 | 153 | | Unrecognized tax benefits | 107 | 107 | | TOTAL LIABILITIES | 160,937| 142,317| | EQUITY | | | | Ordinary shares | 17 | 17 | | Additional paid-in capital | 282,722 | 282,727 | | Treasury shares | (28,615) | (28,425) | | Accumulated other comprehensive loss | (1,024) | (866) | | Accumulated deficit | (249,224) | (253,325) | | TOTAL EQUITY | 3,876 | 128 | | TOTAL LIABILITIES AND EQUITY| 164,813| 142,445| Unaudited Condensed Consolidated Statements of Operations This section provides the unaudited condensed consolidated statements of operations for the three months ended March 31, 2022, and March 31, 2023, covering revenues, costs, expenses, and net loss Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2023 | | :----------------------------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Revenues | | | | Product sales | 91,343 | 144,601 | | Services and others | 2,425 | 3,180 | | Total revenues | 93,768 | 147,781 | | Cost of revenues | | | | Product sales | (45,070) | (64,176) | | Services and others | (1,184) | (1,103) | | Total Cost of revenues | (46,254) | (65,279) | | Gross profit | 47,514 | 82,502 | | Operating expenses | | | | Fulfillment | (6,864) | (8,636) | | Selling and marketing | (39,032) | (69,112) | | General and administrative | (8,066) | (9,057) | | Other operating income | 66 | 345 | | Total operating expenses | (53,896) | (86,460) | | Loss from operations | (6,382) | (3,958) | | Interest income | 10 | 30 | | Interest expense | (2) | (1) | | Other income, net | 862 | 21 | | Total other income | 870 | 50 | | Loss before income taxes | (5,512) | (3,908) | | Income tax expense | - | (48) | | Net loss | (5,512) | (3,956) | | Net loss attributable to LightInTheBox Holding Co., Ltd. | (5,512) | (3,956) | | Weighted average numbers of shares used in calculating loss per ordinary share —Basic | 226,107,269 | 226,660,302 | | —Diluted | 226,107,269 | 226,660,302 | | Net loss per ordinary share —Basic | (0.02) | (0.02) | | —Diluted | (0.02) | (0.02) | | Net loss per ADS (2 ordinary shares equal to 1 ADS) —Basic | (0.05) | (0.03) | | —Diluted | (0.05) | (0.03) |