LightInTheBox(LITB) - 2023 Q4 - Annual Report

Q3 2023 Earnings Release Overview This section provides an executive summary of the company's third-quarter performance, including management's strategic commentary and key financial highlights Management Commentary Management emphasizes successful strategy execution, leading to Q3 revenue growth and profitability, with a focus on operational efficiency and profitable growth - The company's core strategy focuses on improving efficiency and profitability amidst an evolving macro environment[3] - The company achieved a positive bottom line in Q3, driven by improved operating leverage and prudent cost management[3] - Future priorities include enhancing operational efficiency and pursuing profitable growth to create sustainable, long-term value[4] Financial Highlights Q3 2023 saw total revenues increase 27.5% to $154.3 million and a return to net income, while nine-month revenues grew 42.3% to $493.9 million with a narrowed net loss Q3 & First Nine Months 2023 Financial Highlights | In millions, except percentages | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2023 | YoY % Change | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | YoY % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total revenues | $121.0 | $154.3 | 27.5% | $347.2 | $493.9 | 42.3% | | - Apparel sales | $99.6 | $127.3 | 27.8% | $275.6 | $409.7 | 48.7% | | Apparel sales/total revenues | 82.3% | 82.5% | 0.2ppts | 79.4% | 83.0% | 3.6ppts | | Gross margin | 57.9% | 59.5% | 1.6ppts | 54.9% | 57.6% | 2.7ppts | | Net (loss) / income | $(0.4) | $0.1 | - | $(8.3) | $(5.3) | - | | Adjusted EBITDA | $0.4 | $0.8 | - | $(5.7) | $(3.0) | - | - Cash, cash equivalents, and restricted cash increased to $80.0 million as of September 30, 2023, from $57.0 million a year prior[1][8] Detailed Financial Performance This section provides an in-depth analysis of the company's financial results for the third quarter and the first nine months of 2023 Third Quarter 2023 Financial Results Q3 2023 revenues grew 27.5% to $154.3 million, with improved gross margin and a turnaround to net income of $0.1 million from a prior-year loss - Total revenues grew 27.5% YoY to $154.3 million, with apparel sales increasing 27.8% to $127.3 million, representing 82.5% of total revenues[5] - Gross profit increased to $91.9 million with a gross margin of 59.5%, compared to $70.0 million and 57.9% margin in Q3 2022[5] - Operating expenses increased to $91.8 million, with selling and marketing expenses rising to $73.8 million (47.8% of revenue) from $53.1 million (43.9% of revenue) in Q3 2022[5][6] - The company reported a net income of $0.1 million (or $0.00 per ADS), compared to a net loss of $0.4 million (or $0.00 per ADS) in Q3 2022[7][8] First Nine Months 2023 Financial Results For the first nine months of 2023, revenues increased 42.3% to $493.9 million, with gross margin expansion and a significant reduction in net loss - Total revenues for the first nine months increased 42.3% YoY to $493.9 million, with apparel sales representing 83.0% of the total[9] - Gross profit for the nine-month period was $284.5 million with a margin of 57.6%, up from $190.7 million and 54.9% margin in the prior year period[9] - Operating loss narrowed to $5.5 million from $9.3 million in the same period of 2022[11] - Net loss was reduced to $5.3 million ($0.05 per ADS) from $8.3 million ($0.07 per ADS) in the first nine months of 2022[12] - Adjusted EBITDA was negative $3.0 million, an improvement from negative $5.7 million in the same period of 2022[12] Corporate Updates and Future Outlook This section covers recent corporate actions, including share repurchases, and provides the company's financial projections for the upcoming quarter Share Repurchase Program The company authorized a $10 million share repurchase program, having bought back 1.35 million ADSs for approximately $1.8 million as of November 24, 2023 - A share repurchase program was authorized on June 27, 2023, allowing the company to buy back up to $10 million of its ADSs by December 31, 2023[13] - As of November 24, 2023, the company has repurchased 1.35 million ADSs for a total of approximately $1.8 million[13] Business Outlook LightInTheBox projects Q4 2023 net revenues to be between $130 million and $145 million, reflecting current information and business seasonality - The company expects net revenues for Q4 2023 to be in the range of $130 million to $145 million[14] Financial Statements and Supplementary Data This section presents the unaudited condensed consolidated financial statements and provides a reconciliation of non-GAAP financial measures Unaudited Condensed Consolidated Balance Sheets As of September 30, 2023, total assets were $144.8 million, with a total equity deficit of $4.3 million, a decline from positive equity at year-end 2022 Consolidated Balance Sheet Highlights (in thousands) | | Dec 31, 2022 | Sep 30, 2023 | | :--- | :--- | :--- | | Total Current Assets | $115,975 | $102,576 | | Cash and cash equivalents | $88,575 | $75,474 | | Inventories | $14,260 | $7,349 | | TOTAL ASSETS | $164,813 | $144,797 | | Total Current Liabilities | $154,109 | $146,064 | | TOTAL LIABILITIES | $160,937 | $149,086 | | TOTAL EQUITY / (DEFICIT) | $3,876 | $(4,289) | Unaudited Condensed Consolidated Statements of Operations The statements of operations show a Q3 2023 net income of $89 thousand and a narrowed nine-month net loss of $5.3 million, reflecting improved financial performance Consolidated Statements of Operations Highlights (in thousands) | | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $121,027 | $154,324 | $347,150 | $493,872 | | Gross profit | $70,020 | $91,855 | $190,692 | $284,547 | | (Loss) / income from operations | $(472) | $16 | $(9,330) | $(5,540) | | Net (loss) / income | $(408) | $89 | $(8,316) | $(5,324) | | Net (loss) / income per ADS — Basic | $(0.00) | $0.00 | $(0.07) | $(0.05) | Non-GAAP Financial Measures The company uses Adjusted EBITDA as a non-GAAP measure to provide a clearer view of operational performance, with a full reconciliation from GAAP results provided Explanation of Non-GAAP Measures Adjusted EBITDA is defined as net income/loss before specific non-cash and non-operating items, used by management to assess performance despite its inherent limitations - Adjusted EBITDA is a non-GAAP measure used by management to review and assess operating performance[15] - This measure excludes share-based compensation, depreciation and amortization, interest income, interest expenses, and income tax expense[15] - The company cautions that the non-GAAP measure has limitations and may not be comparable to similar measures used by other companies[17] Reconciliation of GAAP to Non-GAAP Results Q3 2023 GAAP net income of $89 thousand reconciled to Adjusted EBITDA of $801 thousand, while the nine-month net loss improved to negative $3.0 million Adjusted EBITDA Reconciliation of GAAP Net (Loss)/Income to Non-GAAP Adjusted EBITDA (in thousands) | | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) / income | $(408) | $89 | $(8,316) | $(5,324) | | Add back: Interest, Tax, D&A, etc. | | | | | | Adjusted EBITDA | $436 | $801 | $(5,697) | $(2,997) | General Information This section provides background information about LightInTheBox, details on the earnings conference call, and a disclaimer regarding forward-looking statements About LightInTheBox LightInTheBox is a global e-commerce apparel retailer targeting middle-aged and senior customers, operating worldwide through various online platforms - LightInTheBox is an apparel e-commerce retailer shipping products to consumers globally[20] - The company's target demographic is middle-aged and senior customers[20] - Operations are conducted through websites like www.lightinthebox.com and mobile applications, available in over 20 languages and 140 countries[20] Conference Call Information An earnings conference call was held on November 28, 2023, with replay and webcast details provided for investor access - An earnings conference call was held on November 28, 2023, at 8:00 a.m. Eastern Time[18] - A live and archived webcast is available on the company's Investor Relations website[19] Forward-Looking Statements This announcement includes forward-looking statements subject to inherent risks and uncertainties, with no obligation to update them except as legally required - The report includes forward-looking statements regarding the company's beliefs, expectations, business outlook, and strategic plans[23] - These statements are subject to risks and uncertainties, and actual results may differ materially from those projected[24]