Q1 2021 ContextLogic Inc Earnings Call

[music].

Ladies and gentlemen, thank you for standing by and welcome to the wishes first quarter 2021 earnings conference call. At this time, all participants lines are in a listen only mode.

After the speaker's presentation, there will be a question and answer session.

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.

I would now like to hand, the conference over to Dennis Walsh.

What's your sort of VEB for investment relations. Thank you. Please go ahead Sir.

Thank you good afternoon and welcome you to me joining me today to discuss our results and wishes founder and CEO Peter shall Jackie season here.

Gary and executive Chair Jackie reasons.

During the call we will make forward looking statements about our future plans and financial performance. These 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.

We encourage you to consider the risk factors described.

T SEC filings for additional information the day to this call is May 12, 2021 and forward looking statements made today are based on assumptions as of this day, we undertake no obligation to and do not intend to update these statements as a result of new information or events.

What is being broadcast on the Internet and is accessible on our Investor Relations website.

Putting up the call will be available later today during the call, we will discuss GAAP and non-GAAP measures, including adjusted EBITDA and free free cash flow. We encourage you to read our quarterly shareholder letter and earnings news release, both of which can be found on our Investor relations website for.

From 8-K, which were filed with the SEC as they contain important information about GAAP and non-GAAP results, including reconciliations of historical non-GAAP financial measures.

Open up with brief remarks, and then we will take your question and with that I'll turn the call over to Peter.

Thank you Dennis and welcome everyone.

We had an impressive start to 2021, our Q1 results exceeded our expectations on both the top and bottom line.

Revenue grew 75% year over year, an acceleration from Q4, and we improved our adjusted EBITDA margin on both a sequential and year over year basis.

These results demonstrate the leverage in our business model and are a testament to the successful execution on our strategy, which I laid out on our last call.

I hope that you all have had a chance to review our shareholder letter. It is available on our Investor Relations website and contains a review of our complete financial results for today's call I want to share a few highlights from the quarter core marketplace revenue growth accelerated to 40% year over year, our efforts to strategically target high LTV Yogurts resulted in Q1 for marketplace revenue per active.

Buyer, increasing 76% year over year, our product book advertising business returned to year over year revenue growth for the first time since Q4 2019. This trend demonstrates renewed advertising spend for merchants as the economy starts to recover. It also indicates the strength in our platform as merchants benefit from increased sales faster delivery times.

Lower refunds are asset light logistics businesses firing on all cylinders revenue grew for X year over year, driven by a strong merchant adoption of our cross border shipping and warehousing solutions, we continue to make significant improvements to our customer experience as a result shipping related refunds reached an all time low during Q1.

One way that we are reducing delivery times is by adopting or adding more local and forward deployed inventory under our wish express offering during Q1, which express listings increased more than 400% year over year, meaning more users can receive orders in five days or fewer in some cases users are able to pick up orders the same day I wish local partner location.

Which brings me to one of our most exciting new initiatives, which local orders shipped to which local partner locations for in person pick up accounted for more than 7% of total order volume in Q1.

And has continued to grow in Q2 in Mexico, Italy, and Spain, which local orders reached 39, 30, and 22% of total order volume in those markets respectively.

Further demonstrates the importance of having a scaled network of partner locations to better serve our value conscious consumers. Finally, we also launched an experiment to attract users that we may not already be reaching with day with shop, one Samsung as a category specific web site that features fashion forward women's apparel with shopping experience on one Samsung is more search and filter driven and.

First party inventory model allows us to efficiently open up a new market enables strong quality control measures and allows us to capture greater consumer wallet share I'm happy to report that initial engagements with one center and users has been positive.

As you can see we are excited about the progress we are making as we execute on our core priorities. Our primary focus this year is to drive efficient customer acquisition monetization and retention. We have made great progress on our initiatives to improve user retention and increased order frequency with new and existing users. However, we strive to achieve even higher levels of engagement and reach.

Pension this.

This year, we are focused on creating a more personalized shopping experience and diversifying our product selection with more high frequency inventory on the app, including CPG items electronics and furniture, we believe that we can drive purchasing behavior and become the every day ecommerce platform for the value conscious shopper. In fact, we increased the number of CPG items listed for sale by 100.

10% year over year during Q1, including many globally recognized brands that we know our users will love.

With more with local partners, we can provide an affordable option for users to purchase items on the which app that can easily be picked up at a store nearby we continued to optimize our wish local partner acquisition strategy and are focused on acquiring stores that support our strategic initiatives. This includes stores that are located within close proximity to a large number of users and those that sell high frequency.

CPG inventory during Q1, we surpassed our own expectations by adding more than 1000, which local partners in Brazil, which enables us to dramatically improve our operations in a market, where we can better serve many users with a ship to store approach.

Over time, we.

I believe which will win on convenient location and price to drive purchasing behavior and higher retention with users before I wrap up in conjunction with today's earnings we announced that we are separating the chair and CEO roles I'm very happy to share that Jackie recess. A current member of our board has agreed to take on the role of our new executive Chair and will serve as a strategic advice.

Working closely with me and the rest of the leadership team on a day to day basis.

When I met Jackie over a year ago I was so impressed that it has to get her to join our board. So I'm, even more excited now that I've convinced her to join US full time, Jackie brings a diverse skill set tuition spend in technology and financial strategy operational excellence and executive leadership.

Her experience in scaling large global tech companies like square Alibaba and Yahoo are highly relevant to our strategic efforts as we embark on the next phase of growth for wish.

With that on behalf of the entire team I wish I want to welcome Jackie and I will turn the call over to Harry to say a few words.

Great. Thanks, Peter for the introduction and also for the very warm welcome to which day, it's awesome I'm really excited to join the wish leadership team at such an exciting time when Peter asked me to join wishes Board last year I was drawn in by his vision for the company as well as the massive opportunity within mobile ecommerce I.

And have a passion for the company's purpose of re imagining ecommerce fight unlocking it for millions of underserved value conscious consumers with over 100 million users in 100 plus countries. The team at <unk> has built an impressive foundation to become one of the most successful e-commerce platform and the <unk>.

World.

Throughout my career I've worked with some of them are well, most inspiring founders and entrepreneurs, helping them scale their businesses globally and optimized for long term sustainable growth I'm excited to do that at West Hill ROM Today is my first day at Wes I look forward to playing a larger role in helping Peter in the company execute on its mission.

I also look forward to getting to know our shareholders and analysts many of you I know from prior role.

With that I'll turn the call over to Raj.

Thank you Jackie we are very excited to have you on it.

Please note that some metrics, we discuss we will discuss will be on a non-GAAP basis, a reconciliation of GAAP to non-GAAP results can be found in our earnings news release and shareholder letter both of which can be found on our investor Relations website and filed with the SEC.

During Q1, we exceeded our outlook for both revenue and adjusted EBITDA revenue growth accelerated to 75 year over year to $772 million driven by increased marketplace and logistics revenue.

First quarter net losses of $128 million and adjusted EBITDA loss was $79 million.

We continue to demonstrate leverage in our model as adjusted EBITDA margin improved to negative 10 for two person from negative 11, six months and in Q1 of 2020 and negative $14 nine for some in Q4 of 2020.

Within total revenue.

For marketplace revenue increased 40% year over year to $477 million in exploration from 24% year over year growth from Q4 from touching 20.

Growth was driven by better monetization demonstrated by 76% year over year increase in core marketplace revenue per active buyer as well as no other funds.

Product boost return to year over year growth net revenue of $50 million, an increase of 14% compared to the prior year as margins returned to more normalized guidance.

Logistics revenue growth, we have been pretty easily from year over year with $245 million.

Significant increase was driven by the continuation of strong months in adoption for <unk>.

And shipping solutions and improve monetization.

Turning now to about using that day.

He has always been to grow our user base, especially with a focus on high LTV users Q.

Q1 <unk>.

101 billion were down 7% year over year, However, Q1 for market based revenue per active buyer increased 76% year over year other than those of hospital with purpose and avoiding highest.

As a reminder, we temporarily.

Then in some emerging markets.

As a result of logistical challenges due to pandemic, we're unable to provide a positive customer experience and the economics in those markets were not favorable we expect to reengage users.

Market share we believe we can generate favorable economics once we have a more elaborate logistic software and our scale makes local net book to support increased monetization methods.

In addition across all market, we would be emphasizing low value items, which tend to have hike on book.

Favorable economics been shipped individually.

Now turning to gross margin and expenses for the water.

All of the measures that follow are non-GAAP with the pumps in 'twenty, one as they exclude stock based compensation and related expenses.

Q1, gross profit was $443 million.

56% from Q1, 2020 higher than the 40% core marketplace revenue growth range, which shows that our logistics documents of becoming more efficient over time.

Gross margin declined on a year over basis to 47, 4% of revenue primarily due to harvest some logistics business as we continue to see positive margin adoption for shipping solutions.

We expect to drive steady growth margin expansion over time in a long term target of 70 to 75 for swap revenue.

Six business begins to achieve economies of scale and product inspection.

We continue to demonstrate operating leverage in our model first quarter sales and marketing expenses of $460 million or 60% of revenue down seven basis points from Q1, 2020, and down 10 percentage points from Q4 of 2020.

During Q1, we began to diversify our market sizing for full bundle up growth gourmet and ethnic for brand globally, including TV and streaming advertising as it hasn't cleared for marketing.

We continue to target sales and marketing expenses of 40% to 45% that's for the long term.

We ended Q1 with a solid cash position of $1 $8 billion gas gastric colon and marketable securities book.

Free cash flow was negative $54 million, driven primarily by timing of cash outflows.

Charter merchant and vendor payment terms during the pandemic, we negotiated a temporary extension of payment them with new digital advertising partners.

Agreements expired at the start of 2021, resulting in charter payments from Q1.

In addition, as most of the adoption growth of our logistics solutions, we have improved tracking and delivery information, which can result in faster payments through margin since we pay upon customer receiving day.

Lastly, Q1 sales that typically northern team for putting some pressure on free cash flow for the first quarter.

Turning now to our outlook. It is important to note that Q2 2021 to be tough year over year comparison for us last.

Last year during the second quarter, we experienced strong revenue growth that people, who ordered from stay at home, while the global pandemic intensified.

With that in mind, we expect Q2 2021 revenues in the range of $715 million to $730 million or 2% to 4% increase year over year.

On a two year stack basis revenue expected to grow approximately 72% at the midpoint of guidance compared to Q2 2019.

We expect the revenue mix between marketplace and logistics to be consistent with Q1, two or 2021.

In addition, we expect Q2 adjusted EBITDA loss to be in the range of negative 60 to negative 55 million.

Could it go negative 7% of revenue.

We are cautiously optimistic about the remainder of 2021 as we have just began to lap. The initial COVID-19 related stay at home orders began in mid March 2020.

We are monitoring the potential impact of the ongoing pandemic as much interest to sales tax and value added taxes and some geography.

In Europe, where the value is expected to be implemented on July one 2021.

In addition, we'll continue to make investments to support our strategic value as though the business and deliver on our long term goals include investing in head count as well as marketing campaigns.

As you can see we continue to be excited about the opportunity for which we remain committed to our mission and our focus on continuing to enhance the customer experience growing revenue growth profitable growth and delivering long term shareholder value.

Operator, we are ready for the first question. Thank you.

Yeah.

So I would like to remind everyone. If you would like to ask a question. Please press Star then the number one on your telephone keypad first question is coming from the line of Doug Anmuth from Jpmorgan. Your line is open.

Thank you.

A couple questions first.

Grew core marketplace revenue, 40% in <unk>.

You don't disclose GMB, but did your <unk> gro in the quarter and in general just how should we think about <unk> growth in relation to.

For revenue growth and then I'll and then I'll follow up as well.

Yes, so we saw growth.

We as you know we are monetizing our buyers.

And he started that strategy in Q4, so it's always a combination of expanding margin and we saw margin expansion as well as GMB growth in Q1.

And is it reasonable to think that net revenue growth. Your core marketplace revenue growth will in general will be greater than <unk> growth just given as you kind of let's take rate overall, just ticks up in credit.

Yes, we are monetizing the buyer better overtime, yeah, that's a fair assumption.

Okay, and then just you talked in the outlook section in the letter about recovery in macro trends, having a positive impact on your business stimulus vaccinations and then reopening.

But yet your revenue outlook for <unk> is down sequentially from Q.

Which I don't really understand so hoping you can shed some more light there. Thanks.

Yes, so if you look at.

Last year Q2, we saw a significant expansion of our revenue as more people started shopping online as well as.

Searching for things that are restricted in the pandemic.

But seasonally if you look at 19 or 18 Q2 tends to be seasonally softer than Q1.

And if you look at our growth with Q2 of 2019, we still had a decent growth. So part of it is the seasonality in a normal year Q2 tends to be lower than Q1.

Okay. Thank you.

Next question is coming from the line of Stephen Ju from Credit Suisse.

Your line is open.

Okay. Thank you so Peter Raj.

Where would you say your time to deliberate days are down to on a regional basis, though I mean, you called out five days in some instances, but I'm interested more in particular you for some of the problem regions that you might have had before like maybe Latam.

Where you're seeing this decline of revenue because you stopped acquiring customers.

It's a service level Cisco aren't there. So what is the plan to deliver for the shortened delivery times for perhaps additional and in addition to that maybe differentiates yourself.

And towards the product selection for the consumer.

Yes. Thanks this is Peter.

That's a great question so the.

Delivery times are roughly at an all time low so globally I think the average is about three weeks I think.

More importantly shipping related refunds are down to an all time low as well. So these are refund that customer's issue.

To.

Logistics issues those are down 43%.

For over a year and then our wish local orders were up two 7% of our total volume in Q1 and up two 9%.

Uh huh.

In April so I think sort of.

But the most important thing to take away from this is yes, we're making significant improvements in reducing DTD.

In terms of the sort of traditional merchandise that we've had on the platform that drop shipped from our <unk> partners <unk> merchants.

From Asia, specifically, China into.

For the U S South America, Europe et cetera. So we are at an all time low.

And a lot of it's actually driven by merchants leveraging our logistics services, where we have a lot more control over their shipping we have a much closer.

<unk> chips and leverage over our partners due to volume and just the amount of data for.

From.

From the feedback loops a lot of.

The countries that we switched into leveraging our own logistics solutions. We now provide a last mile tracking and we have a much better handle on sort of the upper bound of the other delivery window for this is why shifting refunds are down significantly. So we were pleased with the progress there.

I think where we're going to see a significant.

Net leverage and further reducing the time, they were and potentially opening up new use cases for customers to shop on our platform is actually by increasing.

The order volume coming from which express and pickup from store from our wish local partners. So for example, our wish express listings actually increased 414%.

Year over year.

That's meaningful and in those cases as I mentioned in the prepared remarks, both customers are able to get their goods.

Five days or less and then on top of that as we scale out our forward deployment into our store partners, we will be able to actually provide those goods for pick up basically in real time, and obviously that will drag down the average so.

So we will continue to reduce time to door from sort of cross border drop shipping as far as we can.

But sort of the way that we think about sort of reducing that even further or at least from an average perspective is by encouraging our merchants to use wish express and to use our.

Store network in order to forward deployed goods that are likely to be bought.

And the proximity of those stores.

Thank you.

Next question is coming from the line of Kunal.

Who car from Deutsche Bank.

Hi, Thanks for taking my question couple of Prime day, one with rigs.

Guard to Jan.

Your comment about being cautiously optimistic about the rest of the year can you help us understand the puts and takes.

You are.

Whether you've been a COVID-19 beneficiary.

<unk> been on.

Have you been or more.

Uh huh.

Bob.

Are you more.

Bush there too like the recovery side.

And then you also mentioned that in Europe.

Europe.

The value added tax implementation starting in July according to 'twenty, one to kind of impact what yields.

<unk>.

Yeah, that'd be great. If we can answer those thanks.

So on the tax side.

U S implementing.

U S has gone through a phase that in the last few years.

Marketplaces are supposed to collect sales taxes. So we have gone through that created in the last three years.

And then now Europe is starting back space.

So in July.

Marketplaces will be responsible for value added tax in fact in Europe. The only difference is that 22 euros and below are exempt before and they're taking that resumption of way in July of this year. So that's what that's referring to kunal.

And your first question around.

Cautiously optimistic we are happy with the delivery day logistics is performing really well.

And.

As value conscious consumers overtime comes back with high disposable income.

Because they were really last year.

Especially for the consumer segment that we focus on is very value conscious was hurt the most so we are optimistic that they will be.

Spending more in the back half than they did last year.

Thanks, Todd as a quick follow up when we looked at the sales and marketing expense as a percentage of your core marketplace revenue plus the product boost revenue that steady increase year over year. Despite the fact that you've pulled back on marketing in certain geographies.

As you think of the rest of the year. How are you kind of thinking of like sales and marketing spend and how should we kind of think of like two Q3, Q4, Q kind of cadence on sales and marketing spend thank you.

Yes, I think in terms of total revenue.

You were in last year north of 60 per cent for that.

Full year.

And that number was close to 90% a few years ago, we are targeting that number sort of $60 from this year.

Okay. Thank you yeah, Kunal just to shed more light.

We've mentioned this before on the previous call regarding whether or not the beneficiary of.

Or not.

So look I think.

Raj mentioned the value conscious consumer segment has been probably hurt the most by the <unk>.

In terms of access to disposable income.

Remember that because we are still.

Drop shipping the majority of our order volume from China to the rest of the world.

And when when flight, meaning airfreight out of China.

Went down.

Last year.

That significantly hurt our ability to ship items at least from a cross border perspective from China for the rest of the world, which hurt the consumer experience and certainly hurt our cohort and retention metrics and we're still we're still sort of flowing through that.

So I would say.

In many ways I think.

We anticipate that for.

From a recovery will be better for us as the world returns to full employment.

Flights around the world get back to the same capacity as before the pandemic.

Thank you for you.

Thank you.

Next question is coming from the line of Jason <unk> from open Hymer.

So I think in the letter you kind of called out the kind of slower revenue growth on comps, but if I kind of do it on a two year basis like a two year two year average it's still slowing.

Yet it looks like your EBITDA is going to be a lot better. So I mean is there a.

Is there a goal to try to kind of run the business more for it.

EBITDA margin improvement and free cash flow.

So just talk about that kind of broadly and then we continue to get a lot of questions from investors about dynamic pricing there seems to be a concern that dynamic pricing kind of boosted that.

The business or the marketplace revenue in the past and that's no longer something that you can use as a lever so maybe.

Talk about you know kind of.

This year, how you plan to use dynamic pricing and obviously, it's not just about driving marketplace revenue book conversion and kind of EBITDA per order I guess, so two questions. Thank you.

On the first question. If you look at first half of 2019, when we slow down growth we became extremely profitable. So we know this business when you sort of growth becomes very profitable interest because we have a lot of returning cohorts.

But we are focused on driving growth.

And we are focused on driving growth at the same time, improving our EBITDA margin.

And if you look at our history, our EBITDA margin has improved from negative 30% to negative 9% while delivering growth.

So our goal would always be tubular for growth and at the same time continues to do flow.

Our EBITDA margin by spending looking forward going expanding gross margin as well as getting leverage in operating expenses.

So that's how we got to think of the business.

And secondly on dynamic pricing.

Enterprise influence for years ago, and we continue to get better at it over time and we try to do it in a way that it does not impact the margin.

I know if you have anything to add to that.

Yes, Raj I mean, those are great points, I think sort of the other points.

Obviously, we're looking for growth in a variety of ways across.

Various metrics and business streams and revenue models. So I mean, one takeaway take core marketplace revenue growth actually accelerated.

240% year over year growth in Q1 versus 24% in Q4 over Q for the prior the prior year and then the other key takeaways.

We're able to attract and monetize our customers better. So these are potentially still value conscious consumers, but we've moved upstream and we're able to monetize them better as well. So if you look at our core marketplace revenue per active buyer that actually grew 76%.

Year over year.

So that's quite a help.

The growth rate and that's been that's been consistently growing so.

On top of that we're seeing.

Growth and boost again for the first time since Q4 2019.

Modest growth, but it's but it's back and of course, we're seeing significant growth and other <unk>.

Revenue streams, such as our logistics revenue.

Thank you.

Next question is coming from the line for sure.

Julia from Evercore ISI.

Okay. Thank you.

Let me try two please first is if we look at the first quarter and trends.

Here in the second quarter up until now.

Can you talk about engagement trends and.

Trees that we opened like United States, and then international geographies that may not be fully reopen and then the second question is in the first quarter did you see a meaningful impact from stimulus checks. If so can you frame the magnitude of it and then the second quarter guidance is below our.

Our expectation for can you talk about your second quarter guide versus your own expectations range. Thank you.

Yes. Thank you. So this is Peter I'll address the first question.

And our share holder or we actually broke out the core marketplace revenue by geography. So as we noted before due to the logistics for logistics performance and ultimately customer experience and some other emerging markets like South America and others.

Actually pulled back from from those regions those regions typically.

Very desirable or attractive acquisition metrics, so it's easier to get.

M, a U or a sign up or even a buyer.

Tend to have lower retention, especially when the capacity of those logistics network and infrastructure.

<unk> was severely impacted by the pandemic and just sort of stretched weighted so if you look at kind of like our core marketplace revenue by geography, and its growth in Q1, like Europe, and North America actually grew 48% year over year, whereas South America declined 22% year over year and the rest of the world was at about like plus 19%, 20% year over year.

So hopefully that addresses some of those issues and then also it's important to note that.

Typically from Q4 to Q1, we do experience a sequential decline in Niu.

Raj I don't know if you want to add anything else for that.

Got it.

Okay.

Next question is from Nick Jones from Citi.

Great two questions I guess.

First can you maybe remind us relative to how we should be thinking about logistics revenue.

As a percent of core marketplace revenue.

How big can that get us kind of an attach rate to order sales over time as you're driving improvements.

And then the second question is around the increase.

So I guess listing.

This just isn't a search and discovery platform is people are kind of browsing.

I understand kind of roughly the same number of impressions every time since they are searching for something specific how do your algorithm is taken into account doubling the inventory and then still being able to do.

You have the appropriate recommendations or is this kind of you've added a bunch of brands and these things can kind of funnel into the existing al goes with your users.

Yes, Thanks, Mike.

This is Peter.

Just sort of address that.

The first part look we're super excited about.

The type of logistics performance.

And cost savings that we can offer to our partners. Even if it were just sort of drop shipping solution, but especially if we extend that to.

Sort of our combination efforts.

And ship to store. So we're very excited about that business it.

It grew 338% year over year that estimates to two how how useful our business partners actually find it we continue to make improvements to it and I've mentioned before we are.

We are actually running a pilot where we're opening this up to merchants.

And transactions that aren't even happening on marketplaces that have anything to do.

With our own marketplace with wish or any of our apps or destination websites.

Got.

In terms of adding new branded merchandise.

Look we haven't exploration process.

Think sort of our key lesson and takeaway from that is merchant in different regions and different types of merchants behaved very differently than that sort of typical merchant that was successful and wish.

Sort of any original marketplace.

And we're adapting to that and making sure that those merchants are as successful as possible.

So we have an exploration process.

From a sort of recommendation.

Technology perspective, but we're also building features on the product side.

Net leverage consumer segmentation and then target users that we think would likely to actually we'd like to purchase those types of goods typically there.

Higher higher priced products.

And it's actually not available.

Sure.

And.

We are seeing obviously, a significant increase in the number of listings.

Listings.

Which is which is pretty exciting for us.

And we're seeing a large increase for instance in orders.

Orders of <unk>.

$20 or more so if you look at sort of percentage of orders for the transaction value of over $20 that actually increased 54%.

Year over year.

Yeah.

For pretty exciting to us.

Then in terms of getting merchant partnerships outside of China that increased 351 per cent of year over year. If you look at Japan, and Korea that increase almost 500% year over year and in the U S where we have for this.

Already a large number of merchants that actually grew.

Nearly 200% year over year and wish expenses I mentioned grew about 400 per cent year over year. So yes.

I think we're taking a full funnel approach and realizing that these merchants are different.

Perhaps need sort of a different set of policies different onboarding process.

And one sort of making sure that the recommendation algorithms to understand that but also building specific features.

Promotional feed tiles tabs splash pages.

Do you really make sure that our customers want those types of goods are ready to make those types of large sort of ticket item purchases on wish and that we're educating them about those types of purchases and this will include all the things that we're adding in terms of high frequency purchase products like CPG.

Including stocking diamond store for pickup.

Rajiv or anyone else has anything else go ahead.

Yes.

A lot has been on logistics is almost now we control close to 85% of our merchants.

The adoption is often really fast and.

Now we expect the mixed center can stay similar to what it was in Q1 unless these book.

Pilots, we have where we extended the platform.

That non risk merchants, but thats, probably a bigger for longer term journey.

Great. Thank you.

As a reminder, if you'd like to ask a question. Please press Star then the number one on your telephone keypad again Thats star one to ask a question.

Next question is coming from the line of John Blackledge from Cowen.

Great. Thanks, two questions two questions first on.

Can you broadly discuss the investments youre, making in the wish local initiative and you referenced which local 9% of <unk> in April.

Or would you expect that to trend over time.

The average order value higher for wished local volume versus non which local volume and then just the second question is could you guys discuss jackie's roll in and how she will help drive the business going forward. Thank.

Thank you.

Hey, John This is Peter so yeah, great question look.

We scaled the wish local network around the world and that gives us a strategic advantage over a lot of other ecommerce platforms, especially when it comes to value conscious consumers. So we continue to build out the network.

And we continue to sort of chip inventory and order some stores that customers can pick up and.

And if we forward deployed that can actually pick it up.

Yes.

7%.

In Q1.

And I think this is the best measure of our progress on wish local so it continues to be something that resonates with consumers and our store partners.

This is above 90% of order volume.

In April and right now.

We're taking a strategic approach, where we're targeting specific locations in close proximity to a large number of active buyers on wish and we're also targeting stores that have.

Strategic inventories such as high frequency CPG items.

That can be uploaded for onto the wished platform and really enhance the customer experience drive higher retention and a larger share of wallet from existing.

And new customers.

On the.

Second question.

Jackie joined the team like look first and foremost book.

Im Super excited about Jackie coming along I've been working with for a closely for quite a while.

Since.

Are you convinced our two joined our board in extremely excited to have her sort of play a more active day to day role with us so.

So we since we started wish.

Many of you are probably aware, we have been a very sort of engineering and data science, driven company and I am going to continue to focus on that and also drive drive the long term strategy.

Customer messaging support she has a ton of expertise through square Alibaba, which is obviously highly relevant and Yahoo, and scaling e-commerce businesses and technology businesses, but for the most part I'll be doing the same things building.

<unk> focusing on product and driving our long term vision and since Jackie is on the call I don't know if you wanted to sort of.

Let's say anything or add to that.

Yeah, I mean, what I found very interesting about where she is the intersection with my background.

And what I really enjoy doing.

The combination of a focused on underserved small businesses.

Building on an omni channel set of products working around Chinese based ecommerce, it's all very complementary to where I've spent my time and I think it's a place where I can be helpful to working with the team.

I'm really looking forward to it I started today.

More actively.

So I've got a lot to learn but.

Very excited for the opportunity.

Thank you.

Again, if you would like to ask a question you compress Star then the number one on your telephone keypad.

Again, Thats star one to ask a question.

Next question is coming from the one for Justin Post from Bank of America.

Thank you a couple of questions on your cohorts and then seasonality.

What have you seen since you're kind of fixed for shipping times as far as cohorts how are their behavior and when do you expect the ill effects of the shipping issues last year kind of anniversary out and then the second question on seasonality I think there is some surprise on that <unk> number. So can you revisit the seasonality.

<unk> and <unk> and how you think a normal year would evolve in the back half. Thank you.

Yeah. So let me just sort of address maybe a part of the first question, Yes look I mean, ultimately because we relied on logistics network that basically collapsed.

Disappointed a lot of users and like you said, we sort of have to match that.

That was unfortunate we're doing all we can to actually get those users back.

But that's going to be an issue.

Look we have a tough comp with Q2.

Thank.

Everyone kind of realize.

That as well.

Raj I'll, let you answer the second question or add anything to answer the first question.

Look at last years seasonality went out of the window because of the pandemic I think this is going to be a more normal year.

And if you look at our.

18, 19 quarters, you will see similar listen to that this year.

Q2, and it could be done with Q1 Q3 tends to be higher than Q2, and then Q4 tends to be much higher than Q3.

And that's how we see the business this year.

Q2 down and then can queue back up and then Q4 higher than Q3.

And as far as well what is that conceptually speaking, we definitely recovered from the low point, but we do hit last year, but last year.

And we are continuing to see improvements, but it does take a little while to get those users back and really get two highest cohorts, but we have clearly seem to Calgary from the low points from last year.

Got it and maybe one follow up.

On the that can you help us understand what percent of orders or any data on on how much orders are below $20 versus above in Europe. Thank you.

Yes, so we've had experience with dealing with sales and rock that we have been doing like three years, two and half years ago.

We had we did have to collect any wacko sales taxes marketplaces makes up.

At this point.

We are actually made.

Being an annualized basis north of $200 million of taxes from pretty much zero.

<unk>.

And we've been able to manage that over the last few years I think this is the last piece of it.

And it's the EU countries, the back half and I would say.

I would say, 70% of our orders tend to be below 22 years.

And so just to give you some magnitude on that.

Great. Thank you.

We don't have any questions at this time I'll be turning it back to Peter she'll Jessica.

Apologies.

On mute.

At this time I'd like to thank everyone for joining the call.

And looking forward to the next one.

Thanks, everyone.

This concludes today's conference call. Thank you all for participating.

May now disconnect.

[music].