Company Reports Progress on Turnaround
Strategy
Wish Also Announces Resignation of CEO Piotr
Szulczewski; Will Remain on Board
ContextLogic Inc. (d/b/a Wish) (Nasdaq: WISH), one of the
world’s largest mobile ecommerce platforms, today reported its
financial results for the quarter ended September 30, 2021.
In a separate announcement, the Company also announced today
that Piotr Szulczewski will be stepping down as Chief Executive
Officer. Mr. Szulczewski will remain Chief Executive Officer until
either a successor is appointed by the Company’s board of
directors, or no later than February 1, 2022. He will remain on the
board of directors. The company has engaged an executive search
firm to assist the board in recruiting a new Chief Executive
Officer.
Third-Quarter 2021 Financial Highlights
The following tables include unaudited GAAP and non-GAAP
financial highlights for the periods presented.
Revenue
(in millions, except percentages,
unaudited)
Three Months
Ended Sept 30,
Nine Months Ended Sept
30,
2021
2020
YoY %
2021
2020
YoY %
Revenue
$
368
$
606
(39%)
$
1,796
$
1,747
3%
Core Marketplace
$
183
$
405
(55%)
$
1,038
$
1,300
(20%)
ProductBoost
$
37
$
49
(24%)
$
137
$
138
(1%)
Marketplace Revenue
$
220
$
454
(52%)
$
1,175
$
1,438
(18%)
Logistics Revenue
$
148
$
152
(3%)
$
621
$
309
101%
Other Financial Data
(in millions, except percentages,
unaudited)
Three Months Ended Sept
30,
Nine Months Ended Sept
30,
2021
2020
2021
2020
Net loss
$
(64)
$
(99)
$
(303)
$
(176)
% of Revenue
(17%)
(16%)
(17%)
(10%)
Adjusted EBITDA*
$
(30)
$
(64)
$
(176)
$
(99)
% of Revenue
(8%)
(11%)
(10%)
(6%)
* 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.”
“We have made good progress in advancing Wish in a positive
direction toward long-term growth and profitability,” said
Jacqueline Reses, Executive Chair at Wish. “From a financial
perspective, we exceeded our bottomline guidance range in part due
to more efficient and reduced digital advertising spend.”
“During the quarter, we continued to implement our aggressive
plan to make key strategic, operational and structural
improvements, which we believe will enable Wish to achieve its full
potential. The foundation of that plan is to improve and maintain
trust with our buyers, and to provide a differentiated and engaging
buying experience. In doing so, we expect to drive long-term growth
and sustainable unit economics for our eCommerce platform. By
redoubling our focus on our most frequent buyers, we’re learning
what features and products are most likely to catalyze our entire
user base to engage and buy on Wish. We are confident in our
ability to return to growth during the second half of 2022, while
creating significant shareholder value over time,” concluded
Reses.
Recent Progress Across Strategic Initiatives
Increasing Buyers’ Confidence in Our Marketplace
- Launched Wish Standards, a new merchant program designed to
reward merchants that consistently provide an exceptional customer
experience with priority placement in the feed, along with
commission discounts. With this program, Wish will evaluate
merchants across many performance metrics, including product
quality, shipping and delivery experience, customer reviews and
ratings.
- Onboarded over 12,000 new merchants, including Trespass,
Dermafirm, and Shopango.
Providing a Differentiated and Engaging eCommerce Experience
- Launched “Wish Clips,” a next generation video-first shopping
experience on Wish.
- Expanded Wish’s payment options for U.S. users by partnering
with Klarna, a leading global retail bank, payments and shopping
service to allow flexible payment options through its ‘Buy Now, Pay
Later’ offering.
Operational & Logistics Improvements
- Reprioritized resources throughout the organization to focus on
executing on the turnaround strategy.
- Wound down 1P and B2B Wholesale products and paused Local
Selling; re-allocated resources to focus on core marketplace and
merchant onboarding.
Outlook - Q4 2021
While we are not providing Q4 revenue guidance, we expect Q4
revenue to be below Q3 despite the holidays. This is primarily
driven by our ongoing reduction of ad spend during the quarters,
resulting in higher ad spend in the beginning of Q3 as compared to
the beginning of Q4. Specifically, Q4 revenue through the end of
October is down approximately 20% compared to our average monthly
revenue in Q3 adjusted for a similar number of days. We expect the
following financial results for Adjusted EBITDA in the period
presented below (in millions, unaudited):
Three Months
Ended Dec 31, 2021
Adjusted EBITDA
$
(35
)
to
$
(30
)
% Growth YoY
70
%
to
75
%
* 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:
income taxes which are directly impacted by unpredictable
fluctuations in the market price of the company's stock.
Conference Call & Webcast Information
Wish will host a live conference call to discuss the results
today at 2:00 p.m. PT / 5:00 p.m. ET. A link to the live webcast
and recorded replay of the conference call will be available on the
investor relations section of Wish’s corporate website. The live
call may also be accessed via phone at (833) 664-1138 toll-free
domestically and at (470) 414-9349 internationally. Please
reference conference ID: 4364918.
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, Wish has become one of the largest global
ecommerce platforms, connecting millions of value-conscious
consumers in over 100 countries to over half a million 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; remeasurement of redeemable
convertible preferred stock warrant liability; 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.
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 revenue and adjusted EBITDA,
priorities, initiatives including actions to enhance the user
experience and engagement, expectations relating to our advertising
spend and plans with respect to investments in user acquisition,
expectations regarding turnaround efforts, timelines regarding our
ability to achieve growth, new executive hires, product quality,
app performance, reducing delivery times and growth opportunities,
and quotations from management. In some cases, forward-looking
statements can be identified by terms such as “anticipates,”
“believes,” “could,” “estimates,” “expects,” “guidance,” “intends,”
“may,” “outlook,” “plans,” “potential,” “predicts,” “projects,”
“seeks,” “should,” “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; increasing requirements on collection of
sales and value added taxes; 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 our Wish Local program and other new
initiatives; the continued services of members of our senior
management team; our ability to effectively hire additional 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 brand;
legal matters; the COVID-19 pandemic; 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
Quarterly Report on Form 10-Q for the quarter ended September 30,
2021. Wish assumes no obligation and does not intend to update
these estimates prior to filing its Quarterly Report on Form 10-Q
for the quarter ended September 30, 2021.
A Note About Metrics
The numbers for some of our metrics, including MAUs, 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,
2021
2020
Assets Current assets: Cash and cash equivalents
$
1,072
$
1,965
Marketable securities
143
164
Funds receivable
27
83
Prepaid expenses and other current assets
73
102
Total current assets
1,315
2,314
Property and equipment, net
17
25
Right-of-use assets
20
43
Marketable securities
7
4
Other assets
6
11
Total assets
$
1,365
$
2,397
Liabilities and Stockholders’ Equity Current liabilities:
Accounts payable
$
70
$
434
Merchants payable
216
454
Refunds liability
23
77
Accrued liabilities
209
367
Total current liabilities
518
1,332
Lease liabilities, non-current
18
38
Total liabilities
536
1,370
Stockholders’ equity
829
1,027
Total liabilities and stockholders’ equity
$
1,365
$
2,397
ContextLogic Inc.
Consolidated Statements of
Operations
(in millions, except per share
amounts)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Revenue
$
368
$
606
$
1,796
$
1,747
Cost of revenue(1)
201
241
808
605
Gross profit
167
365
988
1,142
Operating expenses: Sales and marketing(1)
147
386
1,013
1,125
Product development(1)
54
24
157
72
General and administrative(1)
29
33
121
65
Total operating expenses
230
443
1,291
1,262
Loss from operations
(63
)
(78
)
(303
)
(120
)
Other income (expense), net: Interest and other income (expense),
net
3
(8
)
11
—
Remeasurement of redeemable convertible preferred stock warrant
liability
—
(12
)
—
(55
)
Loss before provision for income taxes
(60
)
(98
)
(292
)
(175
)
Provision for income taxes
4
1
11
1
Net loss
$
(64
)
$
(99
)
$
(303
)
$
(176
)
Net loss per share, basic and diluted
$
(0.10
)
$
(0.92
)
$
(0.49
)
$
(1.65
)
Weighted-average shares used in computing net loss per share, basic
and diluted
628
108
623
107
(1) includes the following stock-based compensation
expense:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Cost of revenue
$
5
$
—
$
15
$
—
Sales and marketing
4
—
10
—
Product development
17
—
46
—
General and administrative
4
9
33
9
Total stock-based compensation expense
$
30
$
9
$
104
$
9
ContextLogic Inc.
Consolidated Statements of
Cash Flows
(in millions)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Cash flows from operating activities: Net loss
$
(64
)
$
(99
)
$
(303
)
$
(176
)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: Noncash inventory write downs
12
—
12
—
Depreciation and amortization
2
4
7
9
Noncash lease expense
3
2
10
7
Stock-based compensation expense
30
9
104
9
Remeasurement of redeemable convertible preferred stock warrant
liability
—
12
—
55
Other
(5
)
—
—
(1
)
Changes in operating assets and liabilities: Funds receivable
19
10
56
28
Prepaid expenses, other current and noncurrent assets
(3
)
25
30
14
Accounts payable
(185
)
(97
)
(364
)
126
Merchants payable
(97
)
(318
)
(238
)
(133
)
Accrued and refund liabilities
(45
)
(4
)
(181
)
85
Lease liabilities
(4
)
(3
)
(11
)
(7
)
Other current and noncurrent liabilities
(7
)
(13
)
(24
)
8
Net cash provided by (used in) operating activities
(344
)
(472
)
(902
)
24
Cash flows from investing activities: Purchases of property
and equipment
—
(1
)
(1
)
(1
)
Purchases of marketable securities
(111
)
(47
)
(235
)
(225
)
Sales of marketable securities
50
—
50
—
Maturities of marketable securities
79
59
202
303
Net cash provided by investing activities
18
11
16
77
Cash flows from financing activities: Proceeds from sales of
shares through employee equity incentive plans
—
1
6
2
Payment of taxes related to RSU settlement
—
—
(5
)
—
Other
—
(2
)
(1
)
(3
)
Net cash used in financing activities
—
(1
)
—
(1
)
Net increase (decrease) in cash, cash equivalents and restricted
cash
(326
)
(462
)
(886
)
100
Cash, cash equivalents and restricted cash at beginning of period
1,405
1,316
1,965
754
Cash, cash equivalents and restricted cash at end of period
$
1,079
$
854
$
1,079
$
854
Reconciliation of cash, cash equivalents, and restricted cash to
the condensed consolidated balance sheets: Cash and cash
equivalents
$
1,072
$
844
$
1,072
$
844
Restricted cash included in prepaid and other current assets and
other assets in the condensed consolidated balance sheets
7
10
7
10
Total cash, cash equivalents and restricted cash
$
1,079
$
854
$
1,079
$
854
ContextLogic Inc.
Reconciliation of GAAP Net
Loss to Non-GAAP Adjusted EBITDA
(in millions)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Revenue
$
368
$
606
$
1,796
$
1,747
Net loss
(64
)
(99
)
(303
)
(176
)
Net loss as a percentage of revenue
(17
)%
(16
)%
(17
)%
(10
)%
Excluding: Interest and other expense (income), net
(3
)
8
(11
)
—
Provision for income taxes
4
1
11
1
Depreciation and amortization
2
4
7
9
Stock-based compensation expense
30
9
104
9
Employer payroll taxes related to stock-based compensation expense
—
—
7
—
Remeasurement of redeemable convertible preferred stock warrant
liability
—
12
—
55
Lease impairment related expenses
—
—
6
—
Recurring other items
1
1
3
3
Adjusted EBITDA
(30
)
(64
)
(176
)
(99
)
Adjusted EBITDA margin
(8
)%
(11
)%
(10
)%
(6
)%
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,
2021
2020
2021
2020
(in millions) Cash provided by (used in) operating
activities
$
(344
)
$
(472
)
$
(902
)
$
24
Less: Purchases of property and equipment
—
1
1
1
Free Cash Flow
$
(344
)
$
(473
)
$
(903
)
$
23
Non-GAAP Statement of Operations
Our presentation of non-GAAP Statement of Operations excludes
the impact of stock-based compensation expense and related payroll
taxes. This measure is not a key metric used by our management and
board of directors to measure operating performance or otherwise
manage the business. However, we provide non-GAAP Statement of
Operations as supplemental information to investors, as we believe
the exclusion of stock-based compensation expense and related
payroll facilitates investors’ operating performance
comparisons on a period-to-period basis. You should not consider
non-GAAP Statement of Operations in isolation or as a substitute
for analysis of our results as reported under GAAP.
ContextLogic Inc.
Reconciliation of GAAP
Statement of Operations to Non-GAAP Statement of Operations
(in millions)
(unaudited)
Three Months Ended September
30, 2021
GAAP
Non-GAAP Adjustments
Non-GAAP
Q3'21
(1)
Q3'21
(in millions) Revenue
$
368
$
—
$
368
Cost of revenue
201
(5
)
196
Gross profit
167
5
172
Operating expenses: Sales and marketing
147
(4
)
143
Product development
54
(17
)
37
General and administrative
29
(4
)
25
Total operating expenses
230
(25
)
205
Loss from operations
(63
)
30
(33
)
Interest and other expense, net
3
—
3
Loss before provision for income taxes
(60
)
30
(30
)
Provision for income taxes
4
—
4
Net loss
$
(64
)
$
30
$
(34
)
(1) Stock-based compensation
ContextLogic Inc.
Reconciliation of GAAP
Statement of Operations to Non-GAAP Statement of Operations
(in millions)
(unaudited)
Three Months Ended September
30, 2020
GAAP
Non-GAAP Adjustments
Non-GAAP
Q3'20
(1)
(2)
Q3'20
(in millions)
Revenue
$
606
$
—
$
—
$
606
Cost of revenue
241
—
—
241
Gross profit
365
—
—
365
Operating expenses: Sales and marketing
386
—
—
386
Product development
24
—
—
24
General and administrative
33
(9
)
—
24
Total operating expenses
443
(9
)
—
434
Loss from operations
(78
)
9
—
(69
)
Other expense, net: Interest and other expense, net
(8
)
—
—
(8
)
Remeasurement of redeemable convertible preferred stock warrant
liability
(12
)
—
12
—
Loss before provision for income taxes
(98
)
9
12
(77
)
Provision for income taxes
1
—
—
1
Net loss
$
(99
)
$
9
$
12
$
(78
) (1) Stock-based compensation (2) Remeasurement of
redeemable convertible preferred stock warrant liability
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211110006210/en/
Investor Relations: David Anhalt, Wish ir@wish.com
Media contacts: Carys Comerford-Green, Wish
press@wish.com
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