textLogic (WISH) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2021, total revenues were $289 million, a year-over-year decrease of 64%, primarily due to lower ad spend [2] - Adjusted EBITDA for Q4 was a loss of $23 million, an improvement of $95 million from the previous year [2] - Free cash flow was negative $50 million, significantly improved from negative $344 million in Q3 2021 [2] - For the full year 2021, revenues were $2.1 billion, an 18% decline year-over-year [7] - Total net loss for Q4 was $58 million, improving from a loss of $569 million in Q4 2020 [6] - The company ended 2021 with cash, cash equivalents, and marketable securities of $1.2 billion [8] Business Line Data and Key Metrics Changes - Core marketplace revenues for 2021 were $1.3 billion, a decline of 34% year-over-year [7] - Product boost revenues were $165 million, an 18% decline year-over-year [7] - Logistics revenues increased by 45% year-over-year to $743 million, driven by merchant adoption of logistics offerings [7] Market Data and Key Metrics Changes - Monthly active users (MAUs) and last 12 months active buyer count declined by 58% and 41% year-over-year, respectively [6] - The company is focusing on 61 markets after exiting 79 markets that provided nominal revenue but negatively impacted margins [5][12] Company Strategy and Development Direction - The company aims to improve user experience, deepen merchant relationships, and achieve operational efficiencies as foundational pillars for growth [2][5] - A new program called Wish Standards was introduced to reward merchants providing outstanding experiences [4] - The company plans to streamline operations by reducing its global workforce by approximately 15% [5] - The focus will be on key markets in North America and Western Europe for future growth [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that a successful turnaround will take time and emphasizes the need for a consumer-centric approach [10][16] - The company expects to see operational progress later in the year but recognizes that sustainable growth will require several months [10] - Adjusted EBITDA guidance for Q1 2022 is expected to be in the range of negative $70 million to negative $60 million [9] Other Important Information - The company is assessing the feasibility of adding new KPIs to better inform investors about operational and financial performance [10] - Significant cost savings have been achieved, which have helped improve profitability despite revenue declines [8] Q&A Session Summary Question: Focus on geographic markets and AOV strategy - Management confirmed a focus on North America and Western Europe as key markets while aiming to increase average order value (AOV) through better consumer experiences [11][12] Question: Impact of exiting 79 markets on user base - Management indicated that the exit from 79 markets would not materially impact the overall user base and was part of a strategy to reduce operational complexity [13][14] Question: Sales and marketing expense strategy for 2022 - The company plans to keep sales and marketing expenses rationalized until consistent operational improvements are observed, with a potential increase in the second half of 2022 [18][19]