textLogic (WISH) - 2025 Q1 - Quarterly Report

Special Note Regarding Forward-Looking Statements This section warns that forward-looking statements involve substantial risks and uncertainties, advising against undue reliance - Forward-looking statements relate to future events or financial/operating performance and are not historical facts, involving substantial risks and uncertainties[9] - Actual results, performance, or achievements may be materially different from those expressed or implied by forward-looking statements due to known and unknown risks[10] - Readers should not place undue reliance on any forward-looking statements and should consider the 'Risk Factors' section[10][12] PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents unaudited condensed consolidated financial statements, reflecting financial position and performance post-Asset Sale Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (Selected Data) | Metric | As of March 31, 2025 ($ in millions) | As of December 31, 2024 ($ in millions) | | :-------------------------------- | :----------------------------------- | :------------------------------------ | | Cash and cash equivalents | 64 | 66 | | Marketable securities | 158 | 83 | | Total current assets | 223 | 156 | | Total assets | 223 | 156 | | Total current liabilities | 3 | 5 | | Redeemable non-controlling interest | 75 | — | | Total stockholders' equity | 145 | 151 | Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net loss over specific periods Condensed Consolidated Statements of Operations (Selected Data) | Metric | Three Months Ended March 31, 2025 ($ in millions) | Three Months Ended March 31, 2024 ($ in millions) | | :----------------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Revenue | — | 36 | | Gross profit | — | 6 | | Total operating expenses | 6 | 59 | | Loss from operations | (6) | (53) | | Interest and other income, net | 2 | — | | Net loss | (4) | (59) | | Net loss attributable to common stockholders | (7) | (59) | | Net loss per share, basic and diluted | (0.27) | (2.43) | Condensed Consolidated Statements of Comprehensive Loss This section presents the company's net loss and other comprehensive loss components for specific periods Condensed Consolidated Statements of Comprehensive Loss (Selected Data) | Metric | Three Months Ended March 31, 2025 ($ in millions) | Three Months Ended March 31, 2024 ($ in millions) | | :---------------------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Net loss | (4) | (59) | | Other comprehensive loss | — | (2) | | Total comprehensive loss | (4) | (61) | | Comprehensive loss attributable to common stockholders | (7) | (61) | Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in the company's equity accounts over specific periods Condensed Consolidated Statements of Stockholders' Equity (Selected Data) | Metric | As of March 31, 2025 ($ in millions) | As of December 31, 2024 ($ in millions) | | :---------------------------------------------- | :----------------------------------- | :------------------------------------ | | Total Stockholders' Equity | 145 | 151 | | Accumulated Deficit | (3,334) | (3,330) | | Accretion to adjust redemption value of subsidiary's Preferred Units | (3) | — | Condensed Consolidated Statements of Cash Flows This section reports the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Selected Data) | Metric | Three Months Ended March 31, 2025 ($ in millions) | Three Months Ended March 31, 2024 ($ in millions) | | :---------------------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Net cash used in operating activities | (5) | (75) | | Net cash (used in) provided by investing activities | (75) | 90 | | Net cash provided by (used in) financing activities | 72 | (1) | | Net (decrease) increase in cash, cash equivalents and restricted cash | (8) | 12 | | Cash, cash equivalents and restricted cash at end of period | 65 | 250 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed information supporting the financial statements, covering new business focus, accounting policies, and key financial components NOTE 1. OVERVIEW, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES This note outlines the company's new business focus post-Asset Sale, basis of presentation, and significant accounting policies - ContextLogic Inc. sold substantially all its assets, including the Wish platform, to Qoo10 Delaware on April 19, 2024, and now focuses on developing a de novo business and financing potential bolt-on acquisitions[29][30] - The company currently does not generate revenue[28] - Class A convertible preferred units issued by ContextLogic Holdings, LLC are classified as mezzanine equity due to redemption features outside the company's control[35][36] NOTE 2. DISAGGREGATION OF REVENUE This note details the disaggregation of revenue, highlighting the cessation of revenue generation post-Asset Sale - Following the Asset Sale, the Company no longer has revenue from marketplace and logistics operations[42] Disaggregated Revenue (Three Months Ended March 31) | Revenue Type | 2025 (in millions) | 2024 (in millions) | | :------------------ | :----------------- | :----------------- | | Core marketplace revenue | $ — | $ 11 | | ProductBoost revenue | — | 3 | | Marketplace revenue | — | 14 | | Logistics revenue | — | 22 | | Total Revenue | $ — | $ 36 | NOTE 3. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENT This note describes the company's financial instruments and their fair value measurements, primarily cash equivalents and marketable securities - The company's financial instruments include cash equivalents ($64M) and marketable securities ($158M) as of March 31, 2025, recognized at fair value[15][48] - Marketable securities are solely U.S. Treasury bills, classified as available-for-sale, and all are due within one year[50][51] Fair Value Measurement of Financial Assets (March 31, 2025) | Financial Assets | Total ($ in millions) | Level 1 ($ in millions) | Level 2 ($ in millions) | Level 3 ($ in millions) | | :-------------------- | :-------------------- | :---------------------- | :---------------------- | :---------------------- | | Money market funds | 3 | 3 | — | — | | U.S. Treasury bills | 61 | — | 61 | — | | Total cash equivalents | 64 | 3 | 61 | — | | U.S. Treasury bills | 158 | — | 158 | — | | Total marketable securities | 158 | — | 158 | — | | Total financial assets | 222 | 3 | 219 | — | NOTE 4. BALANCE SHEET COMPONENTS This note provides details on specific components of the balance sheet, including accrued liabilities Accrued Liabilities (Selected Data) | Accrued Liabilities | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :------------------ | :--------------------------- | :------------------------------ | | Accrued services | $ 1 | $ 1 | | Other | 1 | 4 | | Total | $ 2 | $ 5 | - Accrued services in 2025 are primarily associated with the issuance of redeemable convertible Preferred Units[53] - Other accrued liabilities include payables to Qoo10 related to restricted cash for the One Sansome lease's letter of credit[54] NOTE 5. COMMITMENTS AND CONTINGENCIES This note outlines the company's commitments, including credit facilities and lease obligations, and legal contingencies - The $280 million senior secured revolving credit facility was terminated at the closing of the Asset Sale on April 19, 2024[56][58] - A standby Letter of Credit for the previous headquarters lease was reduced to $1 million by March 31, 2025, and is cash collateralized by the Company and the Buyer[57][59] - The company is vigorously defending ongoing securities class action lawsuits and a shareholder derivative action, but cannot estimate a range of potential losses due to the preliminary nature of the proceedings[60][61] NOTE 6. REDEEMABLE NON-CONTROLLING INTEREST This note details the issuance and classification of redeemable convertible Preferred Units as mezzanine equity - In March 2025, Holdings issued 75 thousand Class A convertible preferred units (Preferred Units) for $75 million, with an initial carrying value of $72 million after issuance costs[63][67] - The Preferred Units accrue distributions of 4.0% per annum until an acquisition, then 8.0% per annum, and are convertible into Common Units[64] - The Preferred Units are classified as mezzanine equity because their redemption is outside the control of Holdings, occurring under specific conditions like liquidation or failure to complete an acquisition[65] NOTE 7. EQUITY AWARD ACTIVITY AND STOCK-BASED COMPENSATION This note provides information on equity award activity and the associated stock-based compensation expense Equity Award Activity (Selected Data) | Metric | As of March 31, 2025 (in thousands) | As of December 31, 2024 (in thousands) | | :------------------------- | :---------------------------------- | :----------------------------------- | | Options Outstanding | 366 | 366 | | RSUs Outstanding | 655 | 481 | | Shares available for grant | 4,024 | N/A | Total Stock-Based Compensation Expense | Metric | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Total stock-based compensation | $ 1 | $ 9 | - CEO Rishi Bajaj was awarded 2,372 thousand Class P Units in Holdings (474 thousand time-based and 1,898 thousand performance-based) in March 2025, with a total cumulative fair value of $6 million[71][75] NOTE 8. INCOME TAXES This note details the provision for income taxes and the impact of the Asset Sale on tax attributes Provision for Income Taxes | Metric | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Provision for income taxes | $ 0 | $ 6 | - The decrease in tax provision is due to the sale of the company's operating business and all foreign subsidiaries in April 2024[84] - The company maintains a valuation allowance on its domestic net deferred tax assets and had no unrecognized tax benefits as of March 31, 2025[84][85] NOTE 9. NET LOSS PER SHARE This note presents the calculation of net loss per share, basic and diluted, for the reporting periods Net Loss Per Share Attributable to Common Stockholders | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss attributable to common stockholders ($ in millions) | $ (7) | $ (59) | | Weighted-average shares (in thousands) | 26,306 | 24,315 | | Net loss per share, basic and diluted | $ (0.27) | $ (2.43) | - Potentially dilutive securities totaling 1,021 thousand shares (options, RSUs) were excluded from diluted net loss per share computation for Q1 2025 due to their anti-dilutive effect[88] NOTE 10. SEGMENT INFORMATION This note explains the company's segment reporting, noting the cessation of reportable segments post-Asset Sale - Prior to the Asset Sale in April 2024, the company operated in one reportable segment; post-sale, it no longer has a reportable segment[89] - The company's significant measures of profit and loss are now general and administrative expenses and interest and other income, net[90] - Before the Asset Sale, China accounted for substantially all marketplace and logistics revenue based on merchant location[91] NOTE 11. SUBSEQUENT EVENTS This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On April 16, 2025, directors Richard Parisi and Elizabeth LaPuma resigned, and their 247 thousand outstanding RSU awards were fully accelerated and vested[94] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses ContextLogic's financial condition and results of operations, emphasizing the impact of the Asset Sale and new strategic focus Asset Sale This section details the completion of the Asset Sale and the assets retained by the company - ContextLogic completed the Asset Sale of substantially all its assets to Qoo10 Delaware on April 19, 2024[97] - The company retained approximately $162 million in cash, cash equivalents, marketable securities, and net operating losses (NOLs) and other tax attributes[97] Overview This section provides an overview of the company's post-Asset Sale business strategy and primary income sources - Following the Asset Sale, ContextLogic has exited its marketplace and logistics business and is pursuing strategic opportunities[98] - The company's primary source of income is interest earned on marketable securities and cash and cash equivalents[99] - The Board is evaluating strategic alternatives for the Post-Closing Cash, including potential acquisitions to utilize NOLs, but no specific acquisitions are identified or committed[98][99] Results of Operations This section analyzes the company's financial performance, detailing changes in revenue and expenses post-Asset Sale Revenue This section analyzes the significant decrease in revenue due to the Asset Sale Revenue Comparison (Three Months Ended March 31) | Revenue Type | 2025 ($ in millions) | 2024 ($ in millions) | Change ($) | Change (%) | | :------------------ | :------------------- | :------------------- | :--------- | :--------- | | Core marketplace revenue | $ — | $ 11 | $ (11) | (100)% | | ProductBoost revenue | — | 3 | (3) | (100)% | | Marketplace revenue | — | 14 | (14) | (100)% | | Logistics revenue | — | 22 | (22) | (100)% | | Total Revenue | $ — | $ 36 | $ (36) | (100)% | - Revenue decreased 100% to zero for Q1 2025 due to the consummation of the Asset Sale[104] Cost of Revenue and Gross Margin This section analyzes the elimination of cost of revenue and gross margin post-Asset Sale Cost of Revenue and Gross Margin Comparison (Three Months Ended March 31) | Metric | 2025 ($ in millions) | 2024 ($ in millions) | Change ($) | Change (%) | | :-------------- | :------------------- | :------------------- | :--------- | :--------- | | Cost of revenue | $ — | $ 30 | $ (30) | (100)% | | Gross Margin | — | 17% | N/A | N/A | - Cost of revenue decreased 100% to zero for Q1 2025 due to the Asset Sale and cessation of marketplace and logistics operations[106] Sales and Marketing This section analyzes the elimination of sales and marketing expenses due to the Asset Sale Sales and Marketing Expense Comparison (Three Months Ended March 31) | Metric | 2025 ($ in millions) | 2024 ($ in millions) | Change ($) | Change (%) | | :------------------ | :------------------- | :------------------- | :--------- | :--------- | | Sales and marketing | $ — | $ 15 | $ (15) | (100)% | - Sales and marketing expense decreased 100% to zero for Q1 2025 due to the Asset Sale[107] Product Development This section analyzes the elimination of product development expenses due to the Asset Sale Product Development Expense Comparison (Three Months Ended March 31) | Metric | 2025 ($ in millions) | 2024 ($ in millions) | Change ($) | Change (%) | | :------------------ | :------------------- | :------------------- | :--------- | :--------- | | Product development | $ — | $ 22 | $ (22) | (100)% | - Product development expense decreased 100% to zero for Q1 2025 due to the Asset Sale[108] General and Administrative This section analyzes changes in general and administrative expenses post-Asset Sale General and Administrative Expense Comparison (Three Months Ended March 31) | Metric | 2025 ($ in millions) | 2024 ($ in millions) | Change ($) | Change (%) | | :-------------------------- | :------------------- | :------------------- | :--------- | :--------- | | General and administrative | $ 6 | $ 22 | $ (16) | (73)% | - The decrease was primarily due to the Asset Sale, offset by $3 million for employees (including $1 million stock-based compensation), $2 million for strategic alternative evaluations, and $1 million for legal/professional services[109] Interest and Other Income, net This section analyzes the increase in interest and other income, net, post-Asset Sale Interest and Other Income, net Comparison (Three Months Ended March 31) | Metric | 2025 ($ in millions) | 2024 ($ in millions) | Change ($) | Change (%) | | :-------------------------- | :------------------- | :------------------- | :--------- | :--------- | | Interest and other income, net | $ 2 | $ — | $ 2 | — | - The increase was driven by the lack of foreign exchange gains or losses in 2025, which had previously offset interest income, and expected interest income on retained marketable securities and cash[110][111] Provision for Income Taxes This section analyzes the decrease in provision for income taxes due to the Asset Sale Provision for Income Taxes Comparison (Three Months Ended March 31) | Metric | 2025 ($ in millions) | 2024 ($ in millions) | Change ($) | Change (%) | | :-------------------------- | :------------------- | :------------------- | :--------- | :--------- | | Provision for income taxes | $ — | $ 6 | $ (6) | (100)% | - The provision for income taxes decreased 100% due to the sale of the company's operating business and all foreign subsidiaries in April 2024[112] Liquidity and Capital Resources This section discusses the company's cash position, marketable securities, and ability to meet future cash needs Sources of Liquidity This section identifies the company's primary sources of liquidity, including cash and marketable securities - As of March 31, 2025, the company had $64 million in cash and cash equivalents and $158 million in marketable securities[113][116] - The company believes its existing cash, cash equivalents, and marketable securities will be sufficient to meet anticipated cash needs for at least the next 12 months[113] - Material cash requirements outside normal operating costs include $3 million in total liabilities[114] Cash Flows This section analyzes the company's cash flows from operating, investing, and financing activities Net Cash Provided by (Used in) Activities (Three Months Ended March 31) | Activity | 2025 ($ in millions) | 2024 ($ in millions) | | :------------------ | :------------------- | :------------------- | | Operating activities | $ (5) | $ (75) | | Investing activities | $ (75) | $ 90 | | Financing activities | $ 72 | $ (1) | - Net cash used in operating activities decreased significantly from $(75) million in Q1 2024 to $(5) million in Q1 2025[118][119] - Net cash used in investing activities was $75 million in Q1 2025, primarily due to $158 million in purchases of marketable securities, partially offset by $83 million in maturities[120] - Net cash provided by financing activities was $72 million in Q1 2025, driven by proceeds from the issuance of redeemable convertible Preferred Units[122] Off Balance Sheet Arrangements This section confirms the absence of any off-balance sheet arrangements for the reported periods - The company did not have any off-balance sheet arrangements for the three months ended March 31, 2025, or March 31, 2024[123] Critical Accounting Policies This section notes no material changes to critical accounting policies, except for redeemable non-controlling interest - There have been no material changes to the company's critical accounting policies and estimates compared to those described in its 2024 Form 10-K, other than the redeemable non-controlling interest policy[124] Recent Accounting Pronouncements This section refers to Note 1 for a full description of recent accounting pronouncements - Refer to Note 1 of Part I, Item 1 for a full description of recent accounting pronouncements[125] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a 'smaller reporting company,' ContextLogic Inc. is exempt from market risk disclosures - The company is exempt from providing quantitative and qualitative disclosures about market risk as a 'smaller reporting company'[127] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - The company's disclosure controls and procedures were effective as of March 31, 2025, at a reasonable assurance level[129] - There were no material changes in internal control over financial reporting during the quarter ended March 31, 2025[130] - Management acknowledges the inherent limitations of control systems, which can only provide reasonable, not absolute, assurance[131] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section incorporates legal proceedings information by reference from Note 5, Commitments and Contingencies - Information regarding legal proceedings is incorporated by reference from Note 5, Commitments and Contingencies[132] Item 1A. Risk Factors Investing in common stock involves high risk, including counterparty risk with the Buyer and significant delisting risk from Nasdaq - Investing in the company's common stock involves a high degree of risk, especially after the Asset Sale[133] - The company faces counterparty risk with the Buyer for ongoing obligations under the Asset Purchase Agreement, such as the lease for the former headquarters, where the company maintains a letter of credit[134][135] - Nasdaq notified the company of potential delisting due to being a 'public shell' and the company is appealing this decision; delisting could adversely affect stock liquidity and price[136][137][139] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including key agreements and officer certifications - Exhibits include Investment Agreements, the Amended and Restated Limited Liability Company Agreement, and the Employment Agreement for Rishi Bajaj[141] - Certifications of the Principal Executive Officer and Principal Financial Officer are filed herewith[141] Signatures The report is signed by the Chief Executive Officer and Chief Financial Officer, affirming compliance with SEC requirements - The report is signed by Rishi Bajaj, Chief Executive Officer, and Brett Just, Chief Financial Officer[147]