ContextLogic Inc. (d/b/a Wish) (Nasdaq: WISH), one of the
largest mobile ecommerce platforms, today reported its financial
results for the quarter and fiscal year ended December 31,
2021.
Fourth Quarter Fiscal 2021 Financial Highlights
- Revenues: Revenues were $289 million, a decrease of 64% YoY.
Core Marketplace revenues were $139 million, ProductBoost revenues
were $28 million, and Logistics revenues were $122 million, down
YoY by 74%, 55%, and 40%, respectively.
- Adjusted EBITDA: Adjusted EBITDA was a loss of $23 million, an
improvement of 81% YoY.
- Net Loss: Net Loss was $58 million, a 90% YoY improvement. Net
Loss per share was $0.09, compared to a loss of $3.04 per share in
the fourth quarter of fiscal 2020.
- Cash Flow: Cash flows from operating activities were negative
$49 million, compared to negative $24 million in the fourth quarter
of fiscal 2020. Free Cash Flow was negative $50 million, compared
to negative $25 million in the fourth quarter of fiscal 2020.
“The financial health of our business and the future growth of
Wish is dependent on improving our user experience, deepening our
merchant relationships, and achieving organizational efficiencies.
When we get these three foundational pillars fortified, we expect
to drive the company into a new era of growth,” said Vijay Talwar,
Wish CEO.
“As part of our turnaround strategy, we have made the difficult
decision to reduce our global workforce. We are also making other
cost reductions in order to right-size the business. These
initiatives are critical to the long-term success and
sustainability of Wish,” Talwar concluded.
Fourth-Quarter 2021 and Fiscal Year 2021 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 Year Ended December 31,
December 31,
2021
2020
YoY %
2021
2020
YoY %
Revenue
$
289
$
794
(64
)%
$
2,085
$
2,541
(18
)%
Core marketplace revenue
$
139
$
527
(74
)%
$
1,177
$
1,827
(36
)%
ProductBoost revenue
$
28
$
62
(55
)%
$
165
$
200
(18
)%
Marketplace revenue
$
167
$
589
(72
)%
$
1,342
$
2,027
(34
)%
Logistics revenue
$
122
$
205
(40
)%
$
743
$
514
45
%
Other Financial Data (in millions,
except percentages; unaudited)
Three Months Ended Year Ended December 31,
December 31,
2021
2020
2021
2020
Net loss
$
(58
)
$
(569
)
$
(361
)
$
(745
)
% of Revenue
(20
)%
(72
)%
(17
)%
(29
)%
Adjusted EBITDA*
$
(23
)
$
(118
)
$
(199
)
$
(217
)
% of Revenue
(8
)%
(15
)%
(10
)%
(9
)%
* 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 - Q1 2022
(in millions, except percentages, unaudited)
We expect the following financial results for Adjusted EBITDA in
the period presented below:
Three Months Ended March 31,
2022
Adjusted EBITDA*
($70)
to
($60)
% Growth YoY
11%
24%
* 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.
Additional Disclosures
February 2022 Restructuring
Plan
On February 24, 2022, the company’s Board of Directors approved
a restructuring plan to refocus the company’s operations to support
sustainable long-term growth, better align resources, and improve
operational efficiencies. The company expects the restructuring
plan to be substantially implemented by the end of fiscal year
2022.
The restructuring plan includes i) reducing the company’s
headcount by approximately 15% (or approximately 190 positions),
ii) exiting various facility leases, and iii) reducing and
realigning vendor expenditures. In connection with the
restructuring plan, the company estimates that it will incur
one-time charges of $3 million for employee severance and other
personnel reduction costs and a maximum of $21 million consisting
of costs to exit certain company facility leases and related
noncash impairments of lease assets and property and equipment. The
company anticipates that related severance payments will occur by
the end of the second quarter of 2022. The company expects to
achieve an approximate range of $32-37 million in annualized cost
savings as a result of the restructuring plan.
Material Weaknesses
During the preparation and the audit of the company’s
consolidated financial statements for the year ended December 31,
2021, management and the company’s independent registered public
accounting firm identified two material weaknesses in the company’s
internal controls over financial reporting: i) the company did not
design and maintain effective controls over information technology
general controls and ii) the company did not fully implement
components of the COSO framework. The management team is developing
a remediation plan. We will further address and explain these two
material weaknesses in our 10-K filing.
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: 6055448.
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 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, new business strategies and restructuring efforts,
including cost-saving measures, expectations regarding turnaround
efforts, including a reduction in force and real estate footprint,
timelines regarding our ability to execute on new business
strategies and our restructuring plan, material weaknesses in
internal controls and expectations regarding a remediation plan,
new executive hires, including CEO transition, growth
opportunities, and quotations from management. 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; the dual class structure
of our common stock; our brand; legal matters; the ongoing COVID-19
pandemic; supply chain issues; 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
Annual Report on Form 10-K for the fiscal year ended December 31,
2021. Wish assumes no obligation and does not intend to update
these estimates prior to filing its Annual Report on Form 10-K for
the fiscal year ended December 31, 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.
Consolidated Balance
Sheets
(in millions, unaudited)
As of December 31,
2021
2020
Assets Current assets: Cash and cash equivalents
$
1,009
$
1,965
Marketable securities
150
164
Funds receivable
17
83
Prepaid expenses and other current assets
48
102
Total current assets
1,224
2,314
Property and equipment, net
17
25
Right-of-use assets
18
43
Marketable securities
17
4
Other assets
7
11
Total assets
$
1,283
$
2,397
Liabilities and Stockholders’ Equity Current liabilities:
Accounts payable
$
67
$
434
Merchants payable
185
454
Refunds liability
23
77
Accrued liabilities
174
367
Total current liabilities
449
1,332
Lease liabilities, non-current
16
38
Total liabilities
465
1,370
Stockholders’ equity
818
1,027
Total liabilities and stockholders’ equity
$
1,283
$
2,397
ContextLogic, Inc.
Consolidated Statements of
Operations
(in millions except per share
amounts, unaudited)
Three Months Ended Year Ended December 31,
December 31,
2021
2020
2021
2020
Revenue
$
289
$
794
$
2,085
$
2,541
Cost of revenue(1)
169
342
977
947
Gross profit
120
452
1,108
1,594
Operating expenses: Sales and marketing(1)
89
583
1,102
1,708
Product development(1)
51
150
208
222
General and administrative(1)
44
230
165
295
Total operating expenses
184
963
1,475
2,225
Loss from operations
(64
)
(511
)
(367
)
(631
)
Other income (expense), net: Interest and other income (expense),
net
5
(2
)
16
(2
)
Remeasurement of redeemable convertible preferred stock warrant
liability
—
(55
)
—
(110
)
Loss before provision for income taxes
(59
)
(568
)
(351
)
(743
)
Provision for income taxes
(1
)
1
10
2
Net loss
(58
)
(569
)
(361
)
(745
)
Net loss per share, basic and diluted
$
(0.09
)
$
(3.04
)
$
(0.57
)
$
(5.87
)
Weighted-average shares used in computing net loss per
shareattributable to common stockholders, basic and diluted
648
187
629
127
Three Months Ended Year Ended December
31, December 31,
2021
2020
2021
2020
Cost of revenue
$
5
$
35
$
20
$
35
Sales and marketing
2
23
12
23
Product development
13
118
59
118
General and administrative
17
205
50
214
Total stock-based compensation expense
$
37
$
381
$
141
$
390
ContextLogic, Inc.
Consolidated Statements of
Cash Flows
(in millions, unaudited)
Three Months Ended Year Ended December 31,
December 31,
2021
2020
2021
2020
Cash flows from operating activities: Net loss
$
(58
)
$
(569
)
$
(361
)
$
(745
)
Adjustments to reconcile net loss to net cash used in operating
activities: Noncash inventory write downs
1
—
13
—
Depreciation and amortization
2
3
9
12
Noncash lease expense
1
3
11
10
Stock-based compensation expense
37
381
141
390
Remeasurement of redeemable convertible preferred stock warrant
liability
—
55
—
110
Other
4
(1
)
4
(2
)
Changes in operating assets and liabilities: Funds receivable
10
(16
)
66
12
Prepaid expenses, other current and noncurrent assets
24
(16
)
54
(2
)
Accounts payable
(3
)
137
(367
)
263
Merchants payable
(31
)
(33
)
(269
)
(166
)
Accrued and refund liabilities
(32
)
30
(213
)
115
Lease liabilities
—
(3
)
(11
)
(10
)
Other current and noncurrent liabilities
(4
)
5
(28
)
13
Net cash used in operating activities
(49
)
(24
)
(951
)
—
Cash flows from investing activities: Purchases of property
and equipment and development of internal-use software
(1
)
(1
)
(2
)
(2
)
Purchases of marketable securities
(64
)
(41
)
(299
)
(266
)
Sales of marketable securities
—
—
50
—
Maturities of marketable securities
46
130
248
433
Net cash provided by (used in) investing activities
(19
)
88
(3
)
165
Cash flows from financing activities: Proceeds from initial
public offering, net of underwriting discounts and commissions
—
1,052
—
1,052
Proceeds from issuance of common stock through employee equity
incentive plans
7
—
13
—
Payment of taxes related to RSU settlement
—
—
(5
)
—
Payments to repurchase common and redeemable convertible preferred
stock
—
—
—
(1
)
Other
—
(5
)
(1
)
(5
)
Net cash provided by financing activities
7
1,047
7
1,046
Net increase (decrease) in cash, cash equivalents and restricted
cash
(61
)
1,111
(947
)
1,211
Cash, cash equivalents and restricted cash at beginning of period
1,079
854
1,965
754
Cash, cash equivalents and restricted cash at end of period
$
1,018
$
1,965
$
1,018
$
1,965
Reconciliation of cash, cash equivalents, and restricted cash to
the consolidated balance sheets: Cash and cash equivalents
$
1,009
$
1,965
$
1,009
$
1,965
Restricted cash included within prepaid expenses and other current
assets in the consolidated balance sheets
9
—
9
—
Total cash, cash equivalents and restricted cash
$
1,018
$
1,965
$
1,018
$
1,965
ContextLogic Inc.
Reconciliation of GAAP Net
Loss to Non-GAAP Adjusted EBITDA
(in millions except percentages,
unaudited)
Three Months Ended Year Ended December 31,
December 31,
2021
2020
2021
2020
Revenue
$
289
$
794
$
2,085
$
2,541
Net loss
(58
)
(569
)
(361
)
(745
)
Net loss as a percentage of revenue
(20
)%
(72
)%
(17
)%
(29
)%
Excluding: Interest and other expense (income), net
(5
)
2
(16
)
2
Provision for income taxes
(1
)
1
10
2
Depreciation and amortization
2
3
9
12
Stock-based compensation expense
37
381
141
390
Employer payroll taxes related to stock-based compensation expense
2
8
9
8
Remeasurement of redeemable convertible preferred stock warrant
liability
—
55
—
110
Lease termination and impairment related expenses
—
—
6
—
Recurring other items
—
1
3
4
Adjusted EBITDA
$
(23
)
$
(118
)
$
(199
)
$
(217
)
Adjusted EBITDA margin
(8
)%
(15
)%
(10
)%
(9
)%
ContextLogic Inc.
Reconciliation of GAAP Net
Cash Used in Operating Activities to Non-GAAP Free Cash
Flow
(in millions, unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2021
2020
2021
2020
Cash used in operating activities
$
(49
)
$
(24
)
$
(951
)
$
—
Less: Purchases of property and equipment
1
1
2
2
Free Cash Flow
$
(50
)
$
(25
)
$
(953
)
$
(2
)
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 December 31, 2021 GAAP Non-GAAP
Adjustments Non-GAAP Q4'21
(1)
(2)
Q4'21 Revenue
$
289
$
—
$
—
$
289
Cost of revenue
169
(5
)
—
164
Gross profit
120
5
—
125
Operating expenses: Sales and marketing
89
(2
)
—
87
Product development
51
(13
)
(1
)
37
General and administrative
44
(17
)
(1
)
26
Total operating expenses
184
(32
)
(2
)
150
Loss from operations
(64
)
37
2
(25
)
Other expense, net: Interest and other expense, net
5
—
—
5
Loss before provision for income taxes
(59
)
37
2
(20
)
Provision for income taxes
(1
)
—
—
(1
)
Net loss
$
(58
)
$
37
$
2
$
(19
)
1) Stock-based compensation
2) Payroll taxes related to stock-based
compensation
Three Months Ended December 31, 2020 GAAP Non-GAAP
Adjustments Non-GAAP Q4'20
(1)
(2)
(3)
Q4'20 Revenue
$
794
$
—
$
—
$
—
$
794
Cost of revenue
342
(35
)
(1
)
—
306
Gross profit
452
35
1
—
488
Operating expenses: Sales and marketing
583
(23
)
(2
)
—
558
Product development
150
(118
)
(1
)
—
31
General and administrative
230
(205
)
(4
)
—
21
Total operating expenses
963
(346
)
(7
)
—
610
Loss from operations
(511
)
381
8
—
(122
)
Other expense, net: Interest and other expense, net
(2
)
—
—
—
(2
)
Remeasurement of redeemable convertible preferred stock warrant
liability
(55
)
—
—
55
—
Loss before provision for income taxes
(568
)
381
8
55
(124
)
Provision for income taxes
1
—
—
—
1
Net loss
$
(569
)
$
381
$
8
$
55
$
(125
)
1) Stock-based compensation
2) Payroll taxes related to stock-based
compensation
3) Remeasurement of redeemable convertible
preferred stock warrant liability
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220228006219/en/
Investor Relations: Randy Scherago, Wish ir@wish.com
Media contacts: Carys Comerford-Green, Wish
press@wish.com
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