ContextLogic Inc. (d/b/a Wish) (Nasdaq: WISH), one of the
largest mobile ecommerce platforms, today reported its financial
results for the quarter ended September 30, 2022.
Third-Quarter Fiscal 2022 Financial Highlights
- Revenues: Revenues were $125 million, a decrease of 66% YoY
- Core Marketplace revenues were $40 million, down 78% YoY
- ProductBoost revenues were $11 million, down 70% YoY
- Logistics revenues were $74 million, down 50% YoY
- Net Loss: Net Loss was $124 million, compared to a net loss of
$64 million in the third quarter of fiscal 2021
- Net Loss per share was $0.18, compared to a loss of $0.10 per
share in the third quarter of fiscal 2021
- Adjusted EBITDA: Adjusted EBITDA was a loss of $95 million,
compared to a loss of $30 million in the third quarter of fiscal
2021
- Cash Flow: Cash flows from operating activities were negative
$100 million
- Free Cash Flow was negative $100 million, compared to negative
$344 million in the third quarter of fiscal 2021
“The entire Wish team continued to execute on our foundational
pillars during the third quarter. With our business transformation
underway, we are beginning to see positive operational results,
including a sequential quarterly increase in order volume, declines
in refund rates and customer order cancellations, and on-time
delivery rate of approximately 92%," said Joe Yan, Wish Interim
CEO.
"As one of the largest global ecommerce platforms, our goal is
to focus on becoming a leader in discovery-driven shopping for high
value-for-cost products as well as being a trusted go-to app for
our shoppers in seeking both everyday purchases and fun products.
Looking ahead, we are committed to leveraging our strengths in data
science and predictive capabilities to extensively personalize to
shoppers’ preference, serving buyers with access to affordable and
high value-for-cost goods from an expanding global merchant base,
optimizing our logistics capabilities, and building much stronger
operational performance across various teams at Wish. I would also
like to thank our employees for their hard work, dedication and all
the tough decisions over the last year to make sure we are building
a stronger foundation for the next stage of the turnaround."
Fourth Quarter Fiscal 2022 Financial Guidance
- Adjusted EBITDA: Adjusted EBITDA is expected to be a loss in
the range of $90 million to $110 million.
Third Quarter Fiscal 2022 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
Nine Months Ended
September 30,
September 30,
2022
2021
YoY%
2022
2021
YoY%
Core marketplace revenue
$
40
$
183
(78
)%
$
184
$
1,038
(82
)%
ProductBoost revenue
11
37
(70
)%
36
137
(74
)%
Marketplace revenue
51
220
(77
)%
220
1,175
(81
)%
Logistics revenue
74
148
(50
)%
228
621
(63
)%
Revenue
$
125
$
368
(66
)%
$
448
$
1,796
(75
)%
Other Financial Data
(in millions, except percentages;
unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net loss
$
(124
)
$
(64
)
$
(274
)
$
(303
)
% of Revenue
(99
)%
(17
)%
(61
)%
(17
)%
Adjusted EBITDA*
$
(95
)
$
(30
)
$
(193
)
$
(176
)
% of Revenue
(76
)%
(8
)%
(43
)%
(10
)%
*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.”
Forward Looking Guidance - Fourth Quarter Fiscal 2022 (in
millions, except percentages, unaudited)
We expect the following financial results for Adjusted EBITDA in
the period presented below:
Three Months Ended
December 31, 2022
Adjusted EBITDA*
$
(90
)
to
$
(110
)
% YoY
(291
)%
(378
)%
*Wish has not provided a quantitative reconciliation of
forecasted Adjusted EBITDA to forecasted GAAP net income (loss) for
total Adjusted EBITDA or to forecasted GAAP income (loss) before
income taxes for segment Adjusted EBITDA within this earnings
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 net income (loss) adjusted to exclude: interest and
other income (expense), net (which includes foreign exchange gain
or loss, foreign exchange forward contracts gain or loss and gain
or loss on one-time non-operating transactions); provision or
benefit for income taxes; depreciation and amortization;
stock-based compensation expense and related payroll taxes; lease
impairment related expenses; and other items. Additionally, in this
news release, we present Adjusted EBITDA Margin, a non-GAAP
financial measure that represents Adjusted EBITDA divided by
revenue. The reconciliation between historical GAAP and non-GAAP
results of operations is provided below. Our management uses
Adjusted EBITDA 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 should not be considered as an alternative
financial measure to net loss, 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. 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 adjusted EBITDA, expectations
regarding new business strategies, and the anticipated return on
our investments and their ability to drive future growth and
capitalize on related opportunities. 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
attract, retain and monetize users; risks associated with software
updates to the platform; the effectiveness of our CEO transition;
increasing requirements on collection of sales and value added
taxes; the success of our execution on new business strategies;
compromises in security; changes by third-parties that restrict our
access or ability to identify users; competition; disruption,
degradation or interference with the hosting services we use and
infrastructure; our financial performance and fluctuations in
operating results; pressure and fluctuation in our stock price,
including as a result of short selling and short squeezes;
challenges in our logistics programs; challenges in growing new
initiatives; the effectiveness of our internal controls; 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; our ability to promote, maintain, and protect
our brand; legal matters; the ongoing COVID-19 pandemic; supply
chain issues; the impact of inflation; global conflicts, including
the Russian invasion of Ukraine; and economic tension between the
United States and China. 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
Form 10-Q for the quarter ended September 30, 2022. Wish assumes no
obligation and does not intend to update these estimates prior to
filing its Form 10-Q for the quarter ended September 30, 2022.
A Note About Metrics
The numbers for some of our metrics, including MAUs and LTM
Active Buyers, are calculated and tracked with internal tools,
which are not independently verified by any third party. We use
these metrics to assess the growth and health of our overall
business. While these numbers are based on what we believe to be
reasonable estimates of our user or merchant base for the
applicable period of measurement, there are inherent challenges in
measurement as the methodologies used require significant judgment
and may be susceptible to algorithm or other technical errors. In
addition, we regularly review and adjust our processes for
calculating metrics to improve their accuracy, and our estimates
may change due to improvements or changes in technology or our
methodology.
ContextLogic Inc.
Condensed Consolidated Balance
Sheets
(in millions)
(unaudited)
As of September 30,
As of December 31,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
587
$
1,009
Marketable securities
250
150
Funds receivable
13
17
Prepaid expenses and other current
assets
40
48
Total current assets
890
1,224
Property and equipment, net
11
17
Right-of-use assets
7
18
Marketable securities
—
17
Other assets
3
7
Total assets
$
911
$
1,283
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
56
$
67
Merchants payable
121
185
Refunds liability
6
23
Accrued liabilities
143
174
Total current liabilities
326
449
Lease liabilities, non-current
11
16
Total liabilities
337
465
Stockholders’ equity
574
818
Total liabilities and stockholders’
equity
$
911
$
1,283
ContextLogic Inc.
Condensed Consolidated
Statements of Operations
(in millions, except per share
data)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Revenue
$
125
$
368
$
448
$
1,796
Cost of revenue(1)
91
201
308
808
Gross profit
34
167
140
988
Operating expenses:
Sales and marketing(1)
80
147
181
1,013
Product development(1)
42
54
154
157
General and administrative(1)
40
29
86
121
Total operating expenses
162
230
421
1,291
Loss from operations
(128
)
(63
)
(281
)
(303
)
Other income, net:
Interest and other income, net
6
3
10
11
Loss before provision for income taxes
(122
)
(60
)
(271
)
(292
)
Provision for income taxes
2
4
3
11
Net loss
(124
)
(64
)
(274
)
(303
)
Net loss per share, basic and diluted
$
(0.18
)
$
(0.10
)
$
(0.41
)
$
(0.49
)
Weighted-average shares used in computing
net loss per share, basic and diluted
673
628
667
623
(1) Includes the following stock-based
compensation expense:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Cost of revenue
$
2
$
5
$
4
$
15
Sales and marketing
2
4
5
10
Product development
13
17
41
46
General and administrative
9
4
3
33
Total stock-based compensation
$
26
$
30
$
53
$
104
ContextLogic Inc.
Condensed Consolidated
Statements of Cash Flows
(in millions)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Cash flows from operating
activities:
Net loss
$
(124
)
$
(64
)
$
(274
)
$
(303
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Noncash inventory write downs
—
12
3
12
Depreciation and amortization
1
2
5
7
Noncash lease expense
2
3
5
10
Impairment of lease assets and property
and equipment
5
—
11
—
Stock-based compensation expense
26
30
53
104
Other
(2
)
(5
)
(3
)
—
Changes in operating assets and
liabilities:
Funds receivable
(1
)
19
4
56
Prepaid expenses, other current and
noncurrent assets
—
(3
)
2
30
Accounts payable
2
(185
)
(10
)
(364
)
Merchants payable
(12
)
(97
)
(64
)
(238
)
Accrued and refund liabilities
6
(45
)
(36
)
(181
)
Lease liabilities
(2
)
(4
)
(6
)
(11
)
Other current and noncurrent
liabilities
(1
)
(7
)
(3
)
(24
)
Net cash used in operating activities
(100
)
(344
)
(313
)
(902
)
Cash flows from investing
activities:
Purchases of property and equipment and
development of internal-use software
—
—
(2
)
(1
)
Purchases of marketable securities
(77
)
(111
)
(303
)
(235
)
Sales of marketable securities
—
50
—
50
Maturities of marketable securities
81
79
218
202
Other
2
—
2
—
Net cash provided by (used) in investing
activities
6
18
(85
)
16
Cash flows from financing
activities:
Proceeds from issuance of common stock
through employee equity incentive plans
—
—
1
6
Payment of taxes related to RSU
settlement
(5
)
—
(10
)
(5
)
Other
—
—
—
(1
)
Net cash used in financing activities
(5
)
—
(9
)
—
Foreign currency effects on cash, cash
equivalents and restricted cash
(8
)
—
(17
)
—
Net decrease in cash, cash equivalents and
restricted cash
(107
)
(326
)
(424
)
(886
)
Cash, cash equivalents and restricted cash
at beginning of period
701
1,405
1,018
1,965
Cash, cash equivalents and restricted cash
at end of period
$
594
$
1,079
$
594
$
1,079
Reconciliation of cash, cash
equivalents, and restricted cash to the condensed consolidated
balance sheets:
Cash and cash equivalents
$
587
$
1,072
$
587
$
1,072
Restricted cash included in prepaid and
other current assets in the condensed consolidated balance
sheets
7
7
7
7
Total cash, cash equivalents and
restricted cash
$
594
$
1,079
$
594
$
1,079
Supplemental cash flow
disclosures:
Cash paid for income taxes, net of
refunds
$
—
$
—
$
6
$
4
ContextLogic Inc.
Reconciliation of GAAP Net
Loss to Non-GAAP Adjusted EBITDA
(in millions, except
percentages)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Revenue
$
125
$
368
$
448
$
1,796
Net loss
(124
)
(64
)
(274
)
(303
)
Net loss as a percentage of revenue
(99
)%
(17
)%
(61
)%
(17
)%
Excluding:
Interest and other income, net
(6
)
(3
)
(10
)
(11
)
Provision for income taxes
2
4
3
11
Depreciation and amortization
1
2
5
7
Stock-based compensation expense and
related employer payroll taxes
27
30
55
111
Lease impairment related expenses
—
—
—
6
Restructuring and other discrete items
5
—
29
—
Recurring other items
—
1
(1
)
3
Adjusted EBITDA
(95
)
(30
)
(193
)
(176
)
Adjusted EBITDA margin
(76
)%
(8
)%
(43
)%
(10
)%
ContextLogic Inc.
Reconciliation of GAAP Net
Cash Used in Operating Activities to Non-GAAP Free Cash
Flow
(in millions)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net cash used operating activities
$
(100
)
$
(344
)
$
(313
)
$
(902
)
Less:
Purchases of property and equipment and
development of internal-use software
—
—
2
1
Free Cash Flow
$
(100
)
$
(344
)
$
(315
)
$
(903
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221109005329/en/
Investor Relations: Randy Scherago, Wish ir@wish.com
Media contacts: Carys Comerford-Green, Wish
press@wish.com
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