Q4 2020 Poshmark Inc Earnings Call
Okay.
Yeah.
Ladies and gentlemen, thank you for standing by and welcome to the Q4 2020 Apache Mark Inc. Earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
If you require any further assistance please press star zero.
At the end of the conference over to your Speaker today, Christine Chen have Investor Relations. Thank you. Please go ahead.
Welcome to <unk> fourth quarter, and full year 2020 conference call. Our first call as a public company. Joining me today are many shandra, our founder chairman and CEO and cash up our Chief Financial Officer.
Please keep in mind that our remarks today include forward looking statements such as statements related to our financial guidance and key drivers the impact of COVID-19 on our communities business and strategy the potential benefits of our marketing and product initiatives and anticipated return on our investments and their ability to drive growth. Our actual results may differ materially than those <unk>.
Pressed or implied in our forward looking statements.
Forward looking statements involve substantial risks and uncertainties, which are described in today's earnings release. The final prospectus for our IPO filed with the SEC on January 14th 2021, and subsequent reports that we filed with the SEC included in our annual report on 10-K for the year ended December 31, 2020 any forward looking statements. We make on this call are based on.
Our beliefs and assumptions as of today, and we don't have any obligation to update them.
Also during the call, we'll present GAAP and non-GAAP financial measures a reconciliation of non-GAAP to GAAP measures is included in today's earnings release, which you can find on our IR website, along with a replay of this call and with that I'll turn it over to many.
Thanks, Christine Hello, and welcome everyone. Thank you for joining us for our first earnings call as a public company.
I hope, you're all doing well and staying safe and healthy in these.
Challenging times.
One year ago today, the World Health organization declared COVID-19, a pandemic and our lives forever changed my.
Heart goes out to those who have lost loved ones and to everyone affected by this unprecedented health and economic crisis.
Looking back on the year I'm incredibly proud of how our team came together with <unk>.
Our board our employees and communities during a very unpredictable and volatile time.
We've not only navigate it through a very challenging year. We also delivered profitability for the first time, an accelerated momentum in the business.
Before we discuss our fourth quarter and full year results I want to take a step back to reflect on our mission and provide some historical context to helping outperformance into focus.
<unk> was born from a vision I have nearly a decade ago.
Where people are empowered by technology to make shopping human and social again.
While pursuing their passions supporting sustainability and ultimately thriving financially.
Our mission is to put people at the heart of Commerce empowering everyone to thrive.
By pairing technology with peoples inherent desire to socialize, we built a wideband social marketplace engineered to enable seamless e-commerce transactions and create hybrid engagement.
Our social market basis designed so everyone. Whether you are looking to save money make money find unique items or discover new brands users come to Bosch market shop, and sell everything from apparel accessories, and beauty to home births luxury items and now thats merchandise, we have an asset light mod.
And hold no inventory and instead focus on making the buying and selling experience incredibly seamless easy and social through the power of technology.
We're the leader at the intersection of three key trends shaping the future of shopping the shift to online a shift to social and the shift of secondhand.
Many of these trends are led by younger generations, who continued to grow their spending power as they age.
But the beauty of Bosch Mark is that we have a broad appeal across generations. We grew our market base by growing our overall community of users. These users activate those buyers and sellers, creating a virtual flywheel of growth and monetization when.
When users joined they connect with each other through social interactions, which grew 48% to 34 billion in 2020.
Sellers are at the heart of Bosch, Mark community and we welcome seller of all types from resellers, the retailers' side hospitals for professional sellers.
Most of our sellers are what we call casual sellers people, who are selling items that they can easily source from their closet.
The beauty of our social marketplaces that are users who spend on average 27 minutes daily on that App continue to engage and reengage over time, both as buyers and sellers and this fuels a high velocity flywheel of organic growth.
Honored our CFO is going to take you through the numbers in more detail.
But I wanted to walk you through some of the fourth quarter in 2020 full year highlights.
We reported a strong fourth quarter and grew our <unk> revenue by 28% and 27% respectively as our community of buyers and sellers continue to embrace Bosch March social model.
For fiscal year, 2020, <unk> and revenues grew 29% and 28% respectively to one $4 billion and $262 $1 billion, we delivered our third consecutive quarter of adjusted EBITDA profitability with $4 2 billion.
In adjusted EBITDA, and six 1% and adjusted EBITDA margin.
For fiscal year 2020 are forced you to profitability adjusted EBITDA was $34 $3 billion with 13, 1% margin, we continue to focus on marketing efficiency, while investing in growth.
We are entering this new chapter as a public company with a business that is stronger than ever and this was driven in large part by great execution of our four growth strategies.
Our first strategy is to focus on innovation to drive user engagement, which is fundamental to the retention of our user cohorts <unk> probe to make discovery and shopping even easier for buyers. We remain focused on optimizing search which includes leveraging personalization and strengthening matching to drive conversion.
We believe there is enormous potential here.
We're working hard to extend personalized merchandising do even more areas of our market based experience.
August we completed the rollout of boss stores. Our first video commerce feature that enables sellers to market their listings and short videos and photos.
And allows buyers who discovered and shop items directly from these videos just last month, we began testing a highly requested capability that allows sellers to add video directly into their listings, providing new ways to market their products drive traffic to their closets and engage with potential buyers. These listing videos.
Will automatically be added onto past studies, continuing our goal to bring video into the heart of <unk> social marketplace.
Growing our international footprint and capability is our second key strategic focus and we plan to invest ahead of revenue.
The success of our Canadian market, which launched in May 2019 provides a roadmap for continued international expansion.
In February of 2021, we launched Bosch Mark in Australia, Our second international market. We're excited to offer Australians are simple social and sustainable way to shop selling product.
With this expansion whether you are in the U S Canada, Australia.
All users will be able to switch that out for you between countries to see listings get style inspiration and engage with each other socially foster.
Boston personal connections across the board.
Our third strategy is to grow through category expansion and in 2020, we launched two new categories beauty and wellness and toys and games and just a few weeks ago, we launched pets.
As we think about category expansion, we want to address the style needs of the entire family.
These new offerings demonstrate the scalability of our module.
Our forward strategy is to deliver robust easy to use an effective seller services to help sellers market and sell their product offering.
Our social marketplace makes it very easy for anyone to sell and we provided credible demand generation services to attract shoppers to seller listings.
In September we released drop soon feature which allows sellers to pre market items that are not yet available for purchase buyers get like the items to be notified when its available for sale building demand prior to the product drop and facilitating quicker sell through this.
This feature has been particularly well received by professional resellers brands and boutiques, who are managing deep inventory from day, one we have been committed to giving ourselves tools to simplify and scale their business and we are excited to take this to the next level to ensure we are the social stored for everyone.
We're in the early stages of investing in new technology and services to help our sellers spend time doing what they love Fest, which is connecting with each other and serving their customers and this includes building out capabilities for sellers, who are scaling up their operations.
In January we started rolling out a new feature that gives sellers the ability to list items with discounted shipping to a small segment of sellers.
Obviously shipping discounts were only available through private negotiations and offers.
We are encouraged by the initial conversion rates and expect to roll this out to the entire community of this month.
This month, we reintroduced <unk> party live which is a flagship Bosch merc events Cds that goes back to the early days of our founding and is a popular networking and social event for our communities. Only this time instead of physical events <unk> Party live will be held in our new work to broaden that cautious across the U S scanner.
Now, Australia there'll be able to join these virtual events to socialize and gained seller focused educational programming, while the world remains socially distance we are keeping the <unk> community connected through live virtual events and when it is safe to do so we will plan to introduce unfortunate events, which I know every.
The one is eager to get back to.
During these extraordinary times consumers paving for social interaction has only been intensified and the Bosch Mark experience uniquely brings people and technology together to make shopping fun and social again.
The simplicity of our business model makes it possible for any type of seller smaller lodge to five by selling to buyers, who seek a more social and sustainable way to shop.
Guided by our mission and values, we have more confidence than ever with our strategies will continue to accelerate growth into 2021 and beyond we remain focused on supporting our community.
Waiting for a fantastic user experience and expanding the reach and offerings of our social marketplace. As we continue to lead the future of shopping in conclusion, we had a strong fourth quarter in 2020.
<unk> really put their energy into executing for the benefits of our entire community. We believe that <unk> is an incredible compelling growth potential for years and decades to come we have high conviction around making the investments that are going to allow us to achieve their full potential Bosch Mark will continue to be a place where you can save money.
Make money and find human connection.
And with that I will turn it over to Aman.
Thank you everyone for joining us for our first earnings call as a public company.
Fourth quarter was another solid quarter as we delivered strong <unk>.
Revenue and our third consecutive quarter of operating profitability.
We generated 387 million G N V for the fourth quarter, which was 28% growth from $302 million in the fourth quarter of 2019.
The robustness of our cohorts and simplicity of our model helped us deliver the strong and consistent growth.
Commensurately net revenues were $69 3 million in the fourth quarter of 2020, which was 27% growth from $54 7 million in the fourth quarter of 2019.
This was driven by an increase in <unk> in the fourth quarter of 2020, and overall growth of our community, including 20% growth in active buyers to $6 5 million from $5 4 million in the fourth quarter of 2019.
Our take rate was 17, 9% down slightly from last year's 18, 1% as a result of higher than expected delayed or canceled orders, resulting from USPS backlog during the holiday season.
Cost of revenues was $11 6 million in the fourth quarter of 2020, an increase of 18, 2% from the fourth quarter of 2019 and decrease of 16, 7% of revenues due to some leverage in hosting expenses.
Therefore, adjusted gross margin, which is net revenue less cost of net revenue improved to 83, 3% of revenues in the current period as compared to the fourth quarter of 2019.
Marketing spend was $27 5 million in the fourth quarter of 2020.
There was a decrease of 24, 8% from the fourth quarter of 2019.
Marketing was 39, 6% of net revenue in the fourth quarter of 2020 down significantly from 66, 8% of net revenue in the fourth quarter of 2019 due to intentionally lowering our spend level and rationalizing our marketing spend to focus on strong ROI user acquisition channels.
We increased marketing spend as compared to the second quarter of 2020 by leaning more heavily into upper funnel strategies, such as TV and Influencer marketing to capitalize on the holiday seasonality.
When Covid hit we chose to cut marketing in the second quarter of 2020 to conserve cash we'd always planned to reduce marketing over time, but that's pulled it forward and we operate with a different growth and a profitability mindset.
But this proves that our core retention and organic growth engine is very strong as our older cohorts are loyal and provide us with profit invest for long term growth.
Moving to operating expenses operating operations and support was $11 9 million in the fourth quarter of 2020 and increased to 17, 2% of revenues up from 15, 7% last year.
We experienced an increase in shipping charges related to the USPS implementation of package weight dimension scanners across the system and we issued a higher level of renewable credits as a result of severe USPS shipping delays stemming from the holiday.
And COVID-19 workforce complications.
During these extraordinary times, we increased our hiring across the team to support customer needs during the fourth quarter to maintain our excellence in customer service.
G&A was $8 3 million in the fourth quarter and decreased 11, 9% of revenues from 14, 5% last year mainly.
Mainly due to decreased travel and entertainment expenses as a result of our remote work policy as well as lower consulting and legal expenses.
We expect this to increase over time as it returned to office and we experience additional costs of being a public company.
We delivered adjusted EBITDA, which excludes stock based compensation of $4 2 million with adjusted EBITDA margin of six 1% compared to a loss of $12 6 million and negative 23% margins in the fourth quarter of 2019.
The majority of the profitability improvement was driven by strong revenue growth and our decision to lower our marketing investment as compared to prior years.
We will prudently invest in sales and marketing in the future as we did in the fourth quarter, but with a focus on growth and margins.
Operating income was $1 6 million in the fourth quarter of 2020 with operating margins of two 3%, which is a meaningful change as compared to a loss of $15 1 million with negative 27, 5% margin in the fourth quarter of 2019.
Similar to the improvement in adjusted EBITDA. The increase in income from operations was driven primarily by strong revenue growth and decrease in marketing expense.
Due to the transition from a private company to a public company, we incurred GAAP noncash other expenses due to higher share price impact on changes in fair values of our convertible notes and warrants.
Thus, we believe that excluding all noncash onetime capital structure expenses, resulting from our IPO on January 14th from our net income is a better indicator of our operating performance.
Fourth quarter, 2020, and non-GAAP net income to common was $1 million and excludes $5 1 million in noncash expenses related to convertible notes and warrants due to the increase in the fair market value of our common stock share price.
<unk> and non-GAAP EPS of five cents a share.
For the full year 2020, non-GAAP net income to common was $22 9 million and excludes $18 9 million non cash expense.
Related to convertible notes and warrants due to the increase in the fair market value of our common stock share price.
And undistributed earnings to convertible preferred stock, resulting in non-GAAP EPS of $1 25 per share.
Cash cash equivalents and marketable securities were $262 1 million as of December 31, 2020.
During 2020, we issued $50 million of three year convertible notes during the third quarter, which converted into one 4 million shares of class a common stock at the IPO.
In addition, all $52 $3 million of our convertible preferred stock was converted into class B common shares at the IPO.
As we look ahead and think about capital allocation and the use of cash our number one priority is using our strong balance sheet.
And us to invest in growth and strategic organic investments to drive long term growth internationally.
Moving to the cash flow statement, we had a record year for cash generation and cash flow positive.
For the year ended December 31, 2020. This outflow was $82 9 million compared to a net outflow of $10 9 million in 2019.
Our strong capital generation and significantly strengthened our balance sheet and liquidity.
Looking forward from a macro and long term perspective, the mega trends that we have been leading our only increases specifically the consumer shift to online shopping along with the shift to social commerce and secondhand.
A year ago today, the World Health organization declared COVID-19, a global pandemic in our community suddenly face unprecedented times that continue to this day.
As far as the pandemic here in the U S.
State by state performance varied as our community face different localized concerns and locked down environment.
This began to converge in 2020 progressed.
What we have seen thus far in the first quarter as deep performance once again divergence.
Specifically, we're seeing two types of state groupings.
First group is going to perform well with growth rates above the average such as California and Florida.
Second group has seen more volatility, including things like New York, and Texas, which in addition to Covid fluctuation had been impacted by unseasonably cold weather patterns and our power outages.
Our business model is built on the long term retention of our cohort, which as we demonstrated in 2020, even when faced with near term disruptions have remained resilient.
We conclude that as the night COVID-19 vaccine rolls out in the country begins to reopen trends impacting our community and business will continue to vary state by state as reopening timelines vary and the return to normalcy.
Due to the uncertainty of the timeline of COVID-19 recovery and reopening we are not providing annual guidance at this time, but we'll be providing quarterly guidance.
We expect first quarter revenues of $75 five to $77 5 million, resulting in a growth rate of 32% to 36%.
First quarter started off with an unseasonably strong January however, as noted we are seeing certain states underperformed relative to historic trends in February as our community managers through severe weather and Covid.
We expect to remain profitable with first quarter EBITDA of $1 million to $2 million.
Adjusted gross margin performance during the fourth quarter 2020 was ahead of our initial expectations benefiting from leveraging of hosting costs.
Moving to 2021, we expect gross margin to be similar to 2020 levels due to normalization of hosting expenses.
We expect operational support in the first quarter to be 100 basis points higher than last year as we expect to see similar trends as the fourth quarter due to continued strengths in the USPS.
We now anticipate incremental costs due to the increase in credit issue to address USPS disruptions as well as additional staffing to support the increase in number of customer inquiries.
Some of these trends may continue in the near term.
We expect G&A expenses to be 150 basis points higher during the first quarter.
Driven by higher than expected public company costs for the year totaling $2 5 million.
The vast majority of this was due the D&O insurance.
We will remain disciplined with our ROI based approach and expect marketing as a percentage of revenues to remain in the low to mid forties in the 2021 as a percentage of revenues to grow users and support the launch of category and country expansion.
We believe there is still a large opportunity before us and so we plan to invest in building the brand grow our user community and international and category expansion.
We see very strong G&P retention due to a social model drives engagement and repeat transactions.
These cohorts have been both resilient and have high residual value after the initial year of acquisition.
We're confident that the growing engagement of our user cohorts will enable us to deliver consistent growth over the long term.
Overall, we believe we have executed very well during a challenging environment with a focus on the safety of our employees supporting our community and driving efficiency in our operations.
Thank you and I'll now turn the call over to the operator, so we can take your questions.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or hash key in order to allow everyone time for questions. We ask that you. Please limit yourself to one question each.
Please standby, while we compile the Q&A roster.
Your first question comes from Lauren Chung from Morgan Stanley.
Great. Thanks, so much I guess, starting with a bigger picture question you know.
The market is expecting a rebound in apparel spending as we progress through the year, which should benefit you guys, but how are you thinking about the supply environment in 2020. One just given the business that you saw in 2020 and do you feel like you have the right composition of supply on the platform to capture that demand through the course of the year.
And then my second I know that last second question. My quick modeling question, but <unk> take rate slightly below 18%.
I know, it's seasonally higher in the fourth quarter due to the cancellations in packages being stolen is was that higher than expected again any different client there would be really helpful. Thanks, so much.
Great. Thanks, Lauren let me. This is an issue I'm going to just start with giving you a little bit of a bigger picture. So one of the things about our asset light marketplace model that is pretty key to understand is that the seller community can very quickly adapt to the changing profile of the demand characteristics in that sort of something we saw in Q2 as well.
<unk> from <unk>.
A platform that was built on dresses and outdoor and everything else and everyone started to move towards sweats and tie dyed in sort of a very different model.
And what you'll see very similarly, as we adapt to the world opening up is this change in demand in sales across the board I wanted to share a specific data point on the platform is between January and February there has been a difference in customer demand where customers are searching for summer address.
Is 200% more than they were in January and debating so demand in terms of searches has gone up by 150%. So what are you seeing as the customers are starting to prepare for the opening and the platform them quickly respond to that demand as it prepares for that opening.
And Laura and I will take the second part of your question about the take rates. So traditionally Q4 actually it tends to have a higher.
Higher cancellation rate.
What we saw this year was obviously significantly different primarily because of the USPS delays as you know some of our customers have their package delayed by a week and some had their package arrived four weeks later, so we had a higher than usual.
Cancellation rate because of that.
As part of that we actually have to issue more credits as well as yossi.
Operations and support expense in the fourth quarter, we expect there'll be a little bit more returned to more normalcy once USPS as services or <unk>.
Back up and running.
There were some issues again in the middle of February but.
Since then has been returned to normal.
Great. Thank you.
Your next question comes from making from Goldman Sachs.
Hi, good afternoon, and thank you for the question would you just talk a little bit about the progress you've made expanding into Australia to date and any learnings or challenges that will form your expansion plans for other international markets later this year.
And then just as a quick follow up do you have any color about how we should think about buyer net additions.
For 2021 or even the first quarter. Thank you very much.
But can you repeat the second part of your question again.
The second part of the question on buyers was just could you talk a little bit about your expectations for.
Buyer growth and.
Early 'twenty one.
So in terms of Australia, where in the community building phase of that country, where when we launch a country. We spend the first phase is just building out the community getting the operations and systems going in that phase is progressing really well.
In fact last week launched our partnership with our Board member Serena Williams and created our first Plaza for charity in Australia.
That has worked really well so we continue to.
Being that community formation phase and then we'll move into a marketing sort of scaling up phase as we start to feel the communities coming together.
It's honestly a very different experience in launching Canada, because it's been all done in Covid. However, the community is coming together very well, even though we are using more virtual events and sort of reaching out through video and zoom calls in terms of building that initial set of community. There is a little bit more movement in Australia than we appreciate in the U S, but it's still quite restrictive.
So we're learning how to build communities and probate times and we're seeing that coming together there is even more intense than what we saw in pre Covid times as people search for social continues to be very very strong.
We feel that.
As we open up other countries, we're going to learn some of the lessons of pre and post COVID-19 world and merge them, depending upon the exact circumstances, both being up of each country, but the core of our market base and core foundation core to behaviors seem to mimic what we've seen in the U S and Canada and Australia.
Yeah, Thanks, Mike as far as active buyer growth for the remainder of the year, obviously, we're not providing.
Guidance.
Beyond just the first quarter I think what we expect in terms of.
First quarter is very similar dynamics of the fourth quarter.
With regards to.
Active buyer growth probably more in the high teens than anything else.
Hopefully that gives enough color.
Great. Thank you munition thanks Alan.
Your next question comes from Ross Sandler from Barclays.
Hey, guys.
Yeah.
Question on <unk>.
New non apparel categories like toys, and beauty that you mentioned, how big of an opportunity do you see these as <unk>.
<unk>.
Are these the same sellers or are you, bringing in new sellers and new categories.
Kind of look out five years.
Which he ranked higher in terms of the growth opportunity. Some of these new non apparel adjacencies or international we're going to be a bigger growth driver over the next five years.
Hello.
Yeah, So so beauty and home where are really the highest scoring categories in Q4 for us we see both of them is becoming fairly significant over time a lot of the usage you are seeing the categories come from existing sellers, but they are both catalyst for growing new sellers into the marketplace, but also new shoppers.
Into the marketplace.
Looking out five years, I think we expect categories to be a meaningful part of our growth. However, I still feel that international will turn out to be.
A much bigger opportunity for us just given the universality of prepared on we're seeing across the world.
We expect both to be pretty significant as we look into the next five years.
Yeah.
Your next question comes from Oliver Chen from Cowen.
I think as we do look forward do you expect that there will be this divergence in the regional trends or do you think it will harmonize in the context of reopening and.
Would also love your take on longer term like tactics or strategy to try to weather proof the business and if weather maybe a risk factor that's out of your control going forward. Thank you.
Great question, Oliver I think a lot of the variability. We are seeing is a combination of weather and COVID-19 related sort of divergence in the state of cohorts.
We see some if you if you go back historically prior to Covid, we saw some level of divergence based on weather, but over a longer period of multiple months things would convert so if you took a variance from sort of the main revenue from different states. I mean do you have any for different states the variance in the growth rates would be.
Very small I mean, we're talking single digits et cetera.
Divergence, we're seeing right now, it's definitely COVID-19 exacerbated would rather but not completely weather related. So so that's sort of the one thing to talk about and that's why it's a little bit more complicated to model it.
I expect that.
As states normalized Covid normalizes I think these very highly local ordinances vaccine distributions et cetera should start to normalize and we should start to see the states converge back.
Hard to say, whether it takes a quarter or two but I feel that the world is already opening up.
And the differences we're seeing in states that are open in states that are more slowly opening is not as material as much as the very specific local ordinances that are shaping up these states yes.
Yes, the only thing I would add about.
What we see in some of these scenarios with regards to whether it's.
Obviously sort of twofold, one is the <unk>.
Extreme weather like states like Texas, and with the power outage impacting from the scenarios and the second is this how we see the dovetailing into the impact of the USPS and their ability to essentially deliver packages service.
At the end of the day, we're an e-commerce business.
About delivering the products right. So.
I would say those extreme scenarios, we don't expect to happen consistently.
So I would say, it's not about weather proofing the business.
The unfortunate scenarios.
Thank you very much best regards.
Your next question comes from Ralph Shakur from William Blair.
Good afternoon first question just on customer acquisition costs on and you talked a little bit about more and more upper funnel in prepared remarks, but just curious what trends you saw in Q4 and perhaps more importantly, how are you.
Thinking about CAC or how should we think about CAC in 2021 states and the world.
Slowly reopen here and then maybe shifting gears with the stimulus package that was just recently side can you remind us how the business performed last year when the stimulus checks rolled out and then just any perspective thoughts on 2021 as those checks are rolled back out again would be helpful. Thanks, So much.
Hey, Ralph.
As far as our CAC is concerned.
Maybe talk high level about marketing and our overall strategy so maybe ill.
Pinpoint to that again, a little bit here. The first is we're focused on driving as many active users on the platform and then converting them into buyers and sellers over time.
So the way we approach marketing is to take a very ROI based approach. So we look at all of our different marketing channels, we are pretty rigorous about looking at payback periods and so for especially for the U S. As a primary market.
We're targeting approximately a two year payback there and so when we look at kind of Q4.
Basically manage the business around some of those thresholds.
We obviously look at times, where if it gets too expensive then we go back and if it's cheap theres opportunity, we basically press down on the gas pedal.
International is the only one where we obviously expect to be some investment ahead of revenue, but as far as 2021.
Don't think we see.
Any sort of fundamental change in the advertising markets.
Compared to what it was in sort of back half of the year.
And to your second part of your question about stimulus.
We are obviously extremely happy that the administration has done the right thing for a lot of our community. Many of them have been suffering obviously for a decent period of time. So this is was much needed.
As far as how it impacted the business, yes, I would say, it's obviously great for all retailers, both online and offline.
However, we don't think about that as kind of the primary driver of our business. We're focused on building great cohorts, but because we have retained over a period of time.
If this is a short term feasible into call it the overall economy.
We don't think of it as something long term in terms of how we should plan and run the business.
Yes.
Okay. That's helpful. Thank you Adam.
Yes.
Your next question comes from Ron Josey from JMP Securities.
Great. Thanks for taking the question maybe.
Two or so munis, just bigger picture here, we've talked a lot about seller tools and just the opportunities here and you talked about dropped soon launching in shipping discounts and Posh Party live launched can you just talk about the roadmap for seller tools, how you see them as a driver for just overall greater supply both on the seller side, but then how they could attract more demand.
And then on and I just wanted to make sure I understand.
You mentioned canceled orders due to shipping delays in <unk> January I think you said was seasonally stronger February was hit by weather wondering if we return to a normalized cadence here in March post weather and if there were any issues with like sales that were missed in February do you think those get made up maybe that was the comment around.
Some some apparel.
Apparel growth early on in the quarter and maybe one last one if I can sneak it in just any any thoughts on shipping alternatives. Besides USPS. So maybe like if there's a local buyer and seller, maybe using a delivery service or something along those lines. Thank you guys.
Right.
Great questions.
Yeah.
Yeah. So when we sort of look at our entire set of roadmap. It is really designed to empower them to do three or four things. One is how does it merchandise better. So when you think of our stories and videos. It is allowing them to do deeper merchandising on their platform and really take it didn't do.
A faster sell through of the listings that they're creating.
The second piece is how did the market. These listings have been exposed to more eyeballs, both insight Bosh, Mark and then outside Bosch, Mark and that is focused on things like drop soon.
Our stories and Bosch videos also help them fan out their reach so that's the second piece of the piece and the third is to really offer the right economics to what the shopper shopper's needs and Thats, where discount shipping etcetera, Hudson, helping them fine tune the right value proposition to their customers. We have other tools that we built and historically like offer to like ours.
Price drops that help them get to the right sort of pricing matching with the shopper. So we continue to serve the sellers on that front the second set of tools.
<unk> talked about that we're working on is really help.
Helping them scale their businesses as they go for managing small businesses to medium size business with large businesses, we want to be giving them the kind of tools that they need to scaling those businesses. So that is about really supporting the seller certainly from small to big to medium and attracts not just not just allows our current sellers to grow but also <unk>.
It's larger sellers as they have the more efficient tools available on the platform.
And then the third thing is opening up our categories, but also sellers have more things to sell attracting different kinds of buyers have more buyers on the platform.
Our platform is really designed to serve everyone. Whether you are an everyday seller all the way to people who are large sellers and brands on the platform and so we want to build a tool set to serve that entire community of sellers I'm going to take your third question and then turn it over to <unk> for the second question. The third question really is all about logistics.
And partnerships and we have been really we've seen a great partnership with USPS.
2020 was an exceptional year for everyone in terms of just the stress that has been put on the system at the level of pressure every logistics carrier went through and USPS of course took a big brunt of it we certainly see them rebounding and continue to get healthier as the year progresses.
We wanted to serve our customers ourselves and sharper strides. So we are going to look at what are the other things that we can offer them for different kinds of logistics overtime, but we have a great partnership with USPS and remain committed to that partnership.
I'm just here for now.
So.
So I think just to answer your question on kind of intra quarter dynamics around apparel I think the one thing I would say is.
Rather than spending too much time talking about what could or may not happen I think the guidance hopefully as is.
Enough color there, we do we do see some real variability amongst the states and so that's kind of a I guess a key takeaway I would have there.
States like California, and Florida are we've got a few more in that group or just essentially outpacing the overall growth rate.
And we've seen some lagging effect in certain states like New York, and Texas I think the key in terms of apparel sales, we do believe that hopefully as the.
The markets in general start to reopen and we do expect apparel to essentially come back in terms of all the different alternatives rather than just looking at sweat and more on sort of traditional dresses and swim suits et cetera.
As far as what's going to happen in the quarter, we really don't know but.
That effect may actually continue on towards maybe.
Next quarter in the floor after that so that's just something that we really don't have any idea about at the moment and we'll just have to wait and see.
Great. Thank you guys.
Your next question comes from Aaron Kessler from Raymond James.
Great. Thanks, guys. Congrats on the quarter, there's a couple of questions on the bridge talk a little bit about the brands and vendor opportunity per cent kind of more marketplaces move towards that maybe the opportunity. There and then just additionally on the kind of marketing how do you think about the U S investments versus international for 2021.
As well thank you.
So I'll take the first question I'll take the second question on the first question.
We've built a platform as it is.
That form that really.
Any kind of seller to participate in the marketplace and we have seen engagement from not just casual sellers, but from professional sellers.
Also shared that independent brands have engaged with it and we continue to experiment and partnerships are the brands not quite ready to share specifics there, but we really believe that.
Our marketplace as a social marketplace provides a unique opportunity for the sellers.
And a unique opportunity for shoppers to create a new experience, where they can come and talk to each other engage and being sort of that offline interaction in the online world. So more to say that in the future but for now.
We can tell you that we've been experimenting with all of that.
Across the board.
Alright.
We have time for.
Sorry, one more.
I think I didn't forget.
The marketing questions. So on marketing the way, we think about the U S is going to be extremely disciplined as I was talking about earlier about the two year payback dynamics. So I think we do expect that the investment in international markets will continue to increase as we launch more and more markets throughout the year.
The core of the business you should still see.
Decent amount of investment in the U S.
We're targeting approximately call it low forties to.
Mid forties of marketing as a percentage of revenue and I think we're going to stay very close to those numbers throughout the year.
Okay, Great. That's helpful. Thank you.
We have time for one last question. Your last question comes from Roxanne Meyer from Nam Kim.
Great. Thank you.
Gratulation its on a great year on your IPO.
My question is about the pet category I mean, that's such an interesting market to go into lots of white space. It feels like very little competition, just wondering how youre thinking about the opportunity there.
Okay and great to talk to you.
We're excited I think it is very much built for a social marketplace model.
Some of the features we've introduced recently bought stories and videos really allow people to express and tell a more compelling story.
That category.
Certainly seemed broadly a much wider adoption of <unk>.
Just.
In 2020 as people were more isolated thats has been a growing part of the business and it's something that we've seen organically a theater in the marketplace and I can tell you countless events, where people came to me and said when are you going to enable that sort of a category or in the marketplace. So so we're pretty excited I think theres a lot of unique things we can offer in that category. It's the early stage.
So expect us to share mode as we as we make progress in that category.
Great. Thanks, looking forward to it and best of luck.
Thank you thanks, so much.
I will now turn the call over to my knees, China for closing remarks.
Well. Thank you everyone for joining us for our quarterly first quarterly earnings call and we look forward to seeing you next quarter. Thank you everyone.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Yes.
Okay.
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