Q1 2021 Poshmark Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the <unk> first quarter 2021 earnings Conference call.
At this time all participants are in a listen only mode.
After the Speakers' remarks, 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. Please be advised that today's conference is being recorded.
I'd now like to hand, the conference over to your Speaker today, Ms. Christine Chen head of Investor Relations. Thank you. Please go ahead.
Welcome to <unk> first quarter 2021 conference call. Joining me today are many shandra, our founder chairman and CEO and unencumbered 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 the anticipated return on our investments and their ability to drive growth.
Our actual results may differ materially from those expressed or implied in our forward looking statements forward looking statements involve substantial risks and uncertainties, which are described in today's earnings release. Our annual report on 10-K for the year ended December 31, 2020, and our subsequent filings with the SEC, including our 10-Q for the quarter ended March 31, 2021 and.
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 finish.
Thanks, Christine Hello, and welcome everyone. Thank you for joining us for our second earnings call as a public company.
Before I get into my remarks, I want to take a moment to acknowledge the crisis in India as the second wave of COVID-19 continues to devastate communities across the country.
Hearts go out to everyone in India.
Specially our own boss, Mark team, whose tranqully, staying safe and whose health and safety remains our top priority.
Now I'll transition to my remarks.
Our mission is to put people at the heart of Commerce empowering everyone to thrive.
<unk> technology with People's inherent desire to socialize via built a wideband social marketplace that makes the buying and selling experience incredibly seamless easy and social.
We remain focused on supporting our community.
Waiting for a fantastic user experience and expanding the reach and offerings of our social marketplace.
Because our community of millions of sellers are constantly adding new products to the marketplace. Our model is incredibly responsive to demand and we are generally not impacted by supply chain disruptions.
Our asset light model holds no inventory, leading to consistent high gross margins, resulting in a scalable and profitable business.
We're the leader at the intersection of three key trends shaping the future of shopping the shift to online the ship the social and the ship the second half.
We're unique from other marketplaces as we focus on growing our overall community of users to create hybrid engagement and loyalty. These.
These users activate as buyers and sellers, creating a virtual probably beam of growth monetization and strong cohort retention.
The beauty of our social marketplace is that our users who spend on average 27 minutes a day on our App continued to engage and reengage over time, both as buyers and sellers fueling our high velocity flywheel all organic growth.
We reported a strong first quarter and grew our <unk> revenue by 43% and 42%, respectively to $441 million and $81 million a test.
Testament to the strength of our cohorts, even when faced with near term disruption.
We delivered our fourth consecutive quarter of adjusted EBITDA profitability with $4 2 million and adjusted EBITDA and five 2% and adjusted EBITDA margin.
Our business model is built on the long term retention of our cohorts despite mid quarter challenges due to weather and COVID-19, our cohorts remain resilient as growth rates across states began to normalize and converge once again in the second half of March as our community Express increased optimism about economic condition and.
Thanks.
March sharper spot aspirational items that they look forward to showing off once the weather improved and restrictions started to lift.
Outperforming secondhand categories by sales for crop tops up 101% Blakeney's up 86% gene charts up 85% and hatch up 71% year over year in March we announced that TV marketing campaign with Marie Kondo, the master of Tiding Decluttering.
An organization a campaign focused on the emotional connection we have the clothing and the value of resale and secondhand. It featured Marie Kondo encouraging consumers to give new life two items they've learned from their closet by listing them on Bosch, mark, allowing the items to spark joy or someone new.
We are optimistic that thats going to do much begin to leave their homes and engage in social activities. Once again, there will be demand for a different board growth from the stay at home outputs that prevailed in 2020.
Pent up demand for apparel could drive more frequent in a wider range of apparel and accessories purchases benefiting our marketplace. We enter 2021 as a public company with a business that is stronger than ever driven in large part by great execution of our four growth strategies.
Our first strategy is to focus on product innovation to continue driving user engagement.
It's fundamental to the retention of our user cohorts in GMP growth.
In March we completed the full rollout of video listings, which allows sellers to add videos directly into their listings.
<unk>, new ways to market their products drive traffic to their closets and engage with potential buyers.
See video Commerce is the next generation of e-commerce in our marketplace video drives increased engagement, both fusion bikes and conversion, particularly with younger customers, who have been the first to adopt video as a form of self expression in April we started highlighting listing videos and the use of feed to help sellers increase the visibility of their listings.
Our sellers are excited about this feature and Theyre starting to update their listings to include video.
So far the most popular categories for videos are dresses bags jewelry makeup and toys, though still early we are excited about this feature and we'll share more details as we continue to evolve and grow adoption of video commerce.
Growing our international footprint is a second key strategic focus and we plan to invest ahead of revenue.
We're excited about the opportunity ahead in Australia and have just begun investing in marketing to grow the user base. Our market research indicates that Australians at $5 billion worth of unused clothes shoes and accessories and their wardrobes.
Our study found 79% up shoppers bought from online stores in 2020, however, nearly 60% of the items. They bought unborn in fact, we found that they were at least $500 worth of unused fashion items and the average Australians wardrobe and 54% of those surveyed felt guilty.
Drawing those pieces out.
<unk> provides australians with a simple social and sustainable way to keep those items circulated.
Our top priority in Australia is building the <unk> community.
And one of our first major Activations was launching a celebrity charity closet.
Arena William in March with proceeds going to Black Dog Institute to support mental Health research and suicide prevention for Australia's first nations people.
While it is still too early to provide much detail, Australia has seen great user buyer and seller growth since our February launch.
Our third strategy is to grow through category expansion.
Launched in February to address the style needs of the entire family.
Have seen pat's attract new sellers and buyers to the platform demonstrating the scalability of our model as expected supply and demand is dominated by dog and cat style items from clothing, two callers unleashes and the majority of these are non branded some of which are even handmade.
Though still early we're excited for the growth potential of the pet category and our excitement is shared by our community with positive feedback and high volumes of user generated content.
Fourth strategies to deliver robust easy to use an effective seller services to help sellers market and sell their product offerings, our social marketplace makes it very easy for anyone to sell and we provide incredible demand generation services to attract shoppers to seller listings.
In mid March we completed the rollout of sellers shipping discounts, a new feature which give sellers the ability to list items with discounted shipping that we began testing in January.
Previously shipping discounts, but only available through private negotiations and offers we now have four shipping tiers no discount at first level of discount the second level of discount and free shipping.
All theaters to provide expedited priority USPS shipping one to three days.
About 7% of listings offer discounted shipping adoption rate has been highest for the highest price point items.
Since the introduction of seller shipping discounts, we've seen increased engagement as repeat listers and Bosch and bachelors, both of whom have adopted this feature at the highest rate revisit existing listings to add shipping discounts in.
In mid April we introduced icons and we'd view and listing details do indicate items that are discounted or free shipping, which has begun to positively impact conversion and order rates.
In April we introduced two new seller tools style tags and price suggest or in the listing process.
<unk> give sellers the option to use three relevant phases to describe the items design aesthetic material and more enhancing the ability for buyers to search for relevant products. These include things like handmade tie-dye cotton Volvo.
Also launch price suggested to help sell their specialty new listeners missed items more efficiently by providing it suggested price range for their mistakes.
As these tools have just launch we'll share more details on our next earnings call.
Our community is the heart and soul of Bosch bar, together, we make buying and selling simple social and sustainable.
We're committed to helping our sellers succeed and have begun accepting applications for our heart and Hustle community fund everyday Bosch Mark sellers started their passion into profit.
Creating new brands sharing their style and connecting with shoppers to help them get closer to their goals, whether that's making extra money scaling their business supporting the circular economy or turning aside hustled into something bigger we want to recognize and empowered them. Our new fund is one of the base will do that.
In conclusion, we had a strong first quarter and start to 2021, where the Bosch Mark team once again executed well for the benefit of our entire community. We believe that ballpark is an incredibly compelling growth potential for years and decades to come.
High conviction around making the investments that are going to allow us to achieve that full potential Bosch Mark will continue to be a place where you can save money.
Money and find human connection.
And with that I'll turn it over to Aman.
Thank you everyone for joining us.
Our first quarter was another great quarter, as we delivered strong GNP revenue and our fourth consecutive quarter of operating profitability.
Our business model is built on the long term retention of our cohorts, which we demonstrated in 2020 during an extraordinary year due to COVID-19.
During the first quarter of 2021, even when faced with near term disruptions. Our cohorts have remained resilient as growth rates began to normalize in the second half of March as economic conditions and weather improved.
Our robust cohorts helped us generate $441 million in G. N V first quarter of 2021.
Which was 43% growth from 309 million in the first quarter of 2020.
Commensurately net revenues were $81 million in the first quarter of 2021, which was 42% growth from $57 million in the first quarter of 2020.
This was driven by an increase in <unk> in the first quarter of 2021, and overall growth of our community, including 18% growth in active buyers to $6 7 million from $5 7 million in the first quarter of 2020.
Our take rate was 18, 4%, which is down slightly from last year's 18, 5% a result of higher than expected delayed or canceled orders, resulting partially from severe weather conditions in February.
Cost of revenues was $13 million in the first quarter of 2021, an increase of 31% from the first quarter of 2020 and decreased to 16, 1% of revenues due to some leverage in hosting expenses.
Therefore.
Adjusted gross margin, which is net revenue less cost of net revenue improved one 2% to 83, 9% of revenues in the current period as compared to the first quarter of 2020.
Marketing expenditure, excluding stock based compensation was $32 million in the first quarter of 2021, a decrease of 6% from the first quarter of 2020.
Marketing was 40% of net revenue in the first quarter 2021 down significantly from 60% of that revenue in the first quarter of 2020 due to rationalizing our marketing spend to focus on strong ROI user acquisition channels.
We invested in upper funnel strategies, such as more targeted television as well as influence or marketing.
In March we launched a unique partnership with tightening Master Marie Kondo with two new TV ads drive more listing activity and build brand visibility.
Moving to operating expenses operation to support excluding stock based compensation.
13 million in the first quarter of 2021, an increase of 15, 7% of revenues up from 14, 7% last year.
We experienced an increase in credits as a result of shipping delays from the holiday and severe weather conditions during the quarter.
During this unprecedented time, we had to increase hiring across the team to support customer needs and maintain our excellent customer service.
Research and development, excluding stock based compensation was 8 million in the first quarter a decrease of 10, 1% of revenues 11, 5% last year, mainly due to slower hiring than planned.
Hiring accelerated throughout the back half of the quarter. So we do not expect the first quarter leveraged to persist in.
In fact, we expect to double down and invest additional resources across a number of key initiatives, including the national expansion.
G&A, excluding stock based compensation was 11 million in the first quarter, an increase of 13, 3% of revenues from 11, 7% last year, mainly due to the additional ongoing cost of being a public company, including annual audit costs, which were primarily incurred during the first quarter as well as greater than expected.
Premiums for D&O insurance that we discussed in our last earnings call.
Stock based compensation was $24 1 million in the first part of 2021, an increase from $1 8 million last year.
First quarter 2021 stock based compensation included $22 3 million from restricted stock units of which $15 6 million was a onetime cumulative expense due to the accelerated vesting of our restricted stock units upon the IPO in January.
We delivered adjusted EBITDA, which excludes stock based compensation of $4 million with adjusted EBITDA margins of five 2% compared to the loss of $9 million and negative 15, 2% margins in the first quarter of 2020.
Majority of the profitability improvement was driven by strong revenue growth and our decision to lower our marketing investment as compared to the prior year.
As we have discussed before the remainder of 2021, we will prudently invest in marketing in the future as it did in the first quarter, but with a continued focus on growth and margins.
Operating income excluding stock based compensation was $3 million in the first quarter of 2021 with operating margins of four 2%, which is a meaningful change as compared to the loss of $9 million negative 16, 4% margins in the first quarter of 2020.
Similar to the improvement in adjusted EBITDA increase and income from operations was driven primarily by strong revenue growth and a decrease in marketing expense.
Due to the transition from a private company to a public company, we incurred GAAP noncash other expenses due to the higher share price impact on changes in fair values of our convertible warrants and a loss on extinguishment of our convertible notes doesn't believe that excluding all noncash onetime capital structure expenses, resulting from.
Our IPO in January from our net income is a better indicator of our operating performance.
First quarter 2021, non-GAAP net loss to common stockholders was $21 million excludes noncash expenses of $54 million.
This was due to the loss on conversion of our convertible notes into common stock upon the completion of the IPO and change in fair value of preferred stock warrants.
The $50 million convertible notes were converted into one 4 million shares at a price of $35 78.
A 15% discount to our IPO price of $42.
However, due to the timing of the settlement of shares which occurred at the closing of the IPO three business days after pricing, we had to record a non cash accounting loss of $51 million.
Which $49 5 million was due to the increase in the fair market value of the stock to $74 a night that.
Hosing price on January 19 as.
As well as the loss on extinguishment of debt of $1 6 million.
In addition, we added $3 million loss due to the change in fair value of convertible preferred stock warrants also due to the increase in the fair market value of our common stock share price.
Excluding the combined impact of these noncash expenses non-GAAP loss per share to come stockholders was 33.
Beginning in the second quarter, we no longer have these noncash capital structure expenses as all of our convertible securities were converted into common stock at the closing of our IPO in January.
Cash cash equivalents and marketable securities were $575 million as of March 31, 2021 during.
During the first quarter 2021, we completed our IPO raising $297 million net of underwriting discounts and commissions.
All 52 million shares of our convertible preferred stock were converted into class B common shares at the IPO.
As we look ahead and think about capital allocation use of cash our number one priority is usually a strong balance sheet to position us to invest in growth and strategic investments to drive long term growth internationally.
Moving to the cash flow statement for the three months ended March 31, 2021 free cash flow was $19 million compared to $1 million for the first three months ended in 2020.
Our strong cash flow generation significantly strengthened our balance sheet and liquidity.
Looking ahead, we think that customers inherent desire to socialize and resume normal activity combined with their interest in retail should drive demand for apparel going forward, which should benefit our marketplace.
We expect second quarter revenues of 79 to 81 million, resulting in a growth rate of 18% to 21% taking into consideration difficult comparisons against 41% year over year growth last year.
Revenue guidance reflects 59%, 61% growth on a two year stacked basis and acceleration from the two year stack growth of 50% in the first quarter.
We expect our second quarter take rates I mean, similar to the first quarter due to slightly higher cancellation rates.
We expect to remain profitable with the second quarter EBITDA of $1 5 million to $2 5 million as we continue to focus on balancing growth and profitability when investing in marketing.
Adjusted gross margin performance during the first quarter of 2021 was ahead of our initial expectations benefiting from lower transaction processing costs and leveraging our hosting costs.
The remainder of 2021, we expect adjusted gross margin to be similar to 2020 levels due to normalization of hosting expenses.
We expect operations and support in the second quarter to be a little higher as a percentage of revenue in the first quarter due to the higher cost of managing shipping and logistics.
We expect R&D expenses for the second quarter to increase as a percentage of revenues from the first quarter as we increase the pace of hiring to support our continued product innovation and international expansion.
We expect G&A expenses as a percentage of revenue for the remainder of the year to be similar to the first quarter due to public company expenses.
We will remain disciplined with our ROI based approach and expect marketing as a percentage of revenues in the low 40% in 2021 to grow users and support the launch of geographic expansion and categories. We.
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 internationally and category expansion.
We continue to see very strong G&P retention due to a social model, which drives engagement and repeat transactions.
These cohorts have been both resilient and have high residual value after the initial year of acquisition.
Thus, we are 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 for our employees supporting our community and driving efficiency in our operations.
Thank you and I will now turn the call over to the operator, so we can take your questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.
And your first question comes from the line of Ross Sandler from Barclays. Your line is open.
Okay.
Our revenues for them.
Indeed.
Question about retention and frequency right now.
For the most recent cohorts compared to what you were seeing last year during COVID-19.
Your guide is kind of flattish Q on Q I know there were some stimulus benefit in March and then you had the Texas and New York issues that you flagged last quarter. So just how do we think about if we strip all that noise out the underlying kind of sequential cadence and how retention is trending and then on Australia I know it's early.
Or just any color on how we should think about the cadence of that region ramping up compared to maybe how Canada ramped up in the early quarters like any reason why that would be a little faster or little slower. That's it guys. Thanks a lot.
Sure. So in terms of the overall retention of our cohorts is actually pretty stable and continues to be very stable. When you measure that across the quarter, even though there were some variations within the quarter and we see very very stable retention across all of our cohorts as well as growth.
All of the cohorts, so I think the predictability and sort of the convergence as we pointed out in the call is.
Is back so we expect to see pretty healthy sort of movement.
Movement of the cohorts as we go into Q2 and beyond.
Certainly remain optimistic as the economy opens up it could provide a positive sort of uplift as people go out and engage with fashion engaged with sort of the outdoor activities.
Australia is early shaping up well.
Despite sort of having to launch the country. There is a motorway.
From here and we haven't seen the theme of the community.
It's shaping up sort of in the normal healthy development of the Biosimilars of the users. Yes, just one additional point I want to make Ross is that we typically don't see outsized quarter over quarter growth from Q1 to Q2, so when we talk about the.
Guiding towards the $79 million to $81 million, it's a 59% to 62% growth on a two year stacked basis.
As an acceleration of 50% from the first quarter. So.
We're still obviously extremely optimistic about how the quarter is going to go but it's also important to remember we're remaining profitable throughout all of this as well.
So that dynamic is obviously great for us long term.
Our next question comes from the line of Lauren Chung from Morgan Stanley. Your line is open.
Hi, This is Nathan and Lauren just two quick ones for me can you talk about how average order while you trend in the quarter given the early success of seller shipping discounts, particularly on higher value items. And then also you noted hiring came in a bit below your expectations. R&D can you just talk to why that was and I know you mentioned hiring with access.
<unk> looked at that caught back up to your point.
Yes, so on an average order value.
We actually see it basically remained relatively stable throughout the last few months.
The seller shipping I think has been a positive impact for conversion in general and how we think about it is.
Sellers ultimately dictate the pricing both on the item as well as the shipping and so we think this is just another tool for them over the long term.
As far as R&D hiring two things I think are sort of interesting.
We actually started the quarter very sort of positive momentum, but when it came down to actually the timing of when people were hired as this data being more backend loaded towards the end of the quarter.
And so we started catching up towards the end as you can imagine just the dynamics of the ramp from the beginning to end the quarter was what caused the numbers to get a little bit lower for us.
R&D is a very critical investment, especially in terms of product innovation. So as you can see from the pace of.
Features that we're launching it as a major area of investment for us and will be something that will continue for the remainder of the year.
Your next question comes from the line of Ralph <unk> from William Blair. Your line is open.
Good afternoon, and thanks for taking the question on the strong trends that you saw in <unk> and you talked about kind of Reacceleration in Q2, two year stack basis, just curious how much of that was just on the.
Strengths in the business I know, there's some stimulus and there maybe some tough compares or some some comparability issues starting last year, but just love your overall thoughts on that.
First question, if I can add on as you think about your non apparel verticals such as beauty.
In Asia, you talked about pet, bringing buyers the platform both would just love your thoughts in terms of.
These new categories also adding to G&A at this point thanks, so much.
Yeah, just maybe we'll talk about the.
The overarching dynamics of stimulus last year and this year as you can imagine last year. The first quarter was weak for us right around when COVID-19 hit around the end of sort of the end of February beginning of March.
And if you look at the second quarter, we actually had a great quarter as the acceleration of the business to 40% growth and so that was part of the reason why the comp is actually a little bit harder for us this year.
As far as stimulus and how do we think about it look at the positive uplift for consumers economy numerous businesses.
Think it's a.
Really a true testament to the strength of our cohorts, which overcame some mid quarter challenges due to weather and COVID-19 and remained resilient and we actually saw the states actually begun to begin to normalize and converge once again in the second half of March now, it's impossible to determine the separate pick back impact of stimulus.
The timing also coincide with the arrival of spring and optimism about re openings. The second is also we introduced a number of great seller tools in March the video listing seller discounted shipping which.
Which are also positively impact the business. So we think that innovation is one of the key drivers of growth is why we continue to invest there. So we think long term the consumers' desire to socialize and resume normal activities to drive demand for apparel going forward, which should benefit the marketplace and I'll, let many should talk about.
Sure, Yes, I think all of the categories are already starting to drive <unk> growth as well as listing scope.
The <unk>.
Expansion in categories, both in direct apparel and beyond apparel for us brings in growth from two different perspectives. One is it activates new buyers and sellers on the platform and second is it gives existing buyers and large new wish to sell and shop on the platform. So it sort of drives on both dimensions and reaching positive in <unk>.
On both of those funds in terms of driving growth and ultimately GM deeper buyer.
Okay. Thanks, Thanks, Tom.
Your next question comes from the line of Aaron Kessler from Raymond James Your line is open.
Great. Thanks, guys. One can you talk about maybe on the advertising side any expected impact from idea thing.
Another retailer I mentioned that recently and second just maybe are you seeing kind of increased interest from our brands our vendors as well. Thank you.
Sure. So idea is of course going to have a shift.
In spend and channel mix for the short term over the long term, it's a little bit unknown, how it sort of shifts the overall mix for us because we have focused on a very diverse set of marketing channels. It allows us to rebalance the spend and continuing to focus on growth.
Despite the short term shifted the advertising landscape.
Overall.
Again, we would like to ask the second one.
Kevin could you repeat the second question again.
It didn't please press star one again to re queue up.
And he has not read Q I'm, sorry, Jess re queued up now your line is open.
Great. Thank you sorry, yes. The second question is just on the brands and kind of vendors are you seeing kind of increased interest from from them as well.
Any update there thank you.
Absolutely. So yeah, we continue to experiment pretty aggressively brands, we believe that the size and scale of our community. The interest some band on both resale and social Commerce makes the partnership. It then we'd have to double for Apache spark.
Continuing to pretty aggressive experiment.
Orientation there.
I think specific to announce right though.
A lot of good work going on there.
Great. Thank you.
And again, if you would like to ask a question. Please press star one on your telephone Keypad. Your next question comes from the line of Oliver Chen from Cowen. Your line is open.
Alright. Thank you as we look ahead to the active buyer growth should we expect it to be in the high teens or made accelerate at some of the growth comparisons ease and as you think about the marketing spend for the balance of the year. How are you thinking about the composition.
As you referred to upper funnel and also the global opportunities that you're addressing as well.
Yes, so I'll start with.
I'll start with the kind of the upper funnel dynamics and sort of marketing in general for the year.
The main thing I would say is.
And as you mentioned.
One of the important strategies for us is to actually be very diversified both from a both.
Both from the upper funnel as well as kind of purely transactional basis and what we found is that by allowing that flexibility. We can shift depending on what we see with either <unk> or any other sort of disruption in the marketing ecosystem. So how we think about it is we've got a.
Tremendous ROI based approach, which is focused on a payback of about two years and that continues to be our modus operandi and the only time that the shifts as you think about kind of international expansion opportunities around Canada, and we've launched Australia, obviously, where those payback periods are used.
Extended as we are essentially investing in those markets.
Hopefully that answers your question.
That's very helpful and active buyers what are your thoughts on how that May proceed through the year.
Yes, I think we we haven't really guided towards active buyers in our in our commentary I think what we would normally expect that to be relatively in line with overall growth of the business.
There may be some differentiations when it comes to certain markets, but.
Today that dynamic is very consistent as compared to overarching <unk> and revenue growth.
Thank you and lastly, a big bigger picture as the competition does get more competitive and resell.
Why would a customer choose to list on <unk> versus others could you speak to the defensibility of your take rate. Thank you.
Sure.
First of all I think as the market for these sales is growing we're sort of seeing we still getting adopted in every single dimension with the brands that are adopting it.
Marketplaces that are adopting it which is exciting. So we think of resale is a massive expanding opportunity, which paves the way for our own setup scaling and expansion and for US from day, one we have been the simplest and the most social and the most engaging way for people to buy and sell.
Fashion and fashion related side related products and that continues to be our core focus.
<unk> has also been consistent since we started the company we partnered with our sellers since day, one haven't taken it up and haven't taken it down it's been a very consistent partnership and we continue to maintain that partnership as we build out the product. What we have done is in that same partnership added tremendous level of services for our seller and buyer.
Over that time.
It is adding things like Bosch Bosch Bosch authenticate on adding listing videos seller discounts bottler seller tools et cetera. So we continue to serve our core community of buyers and sellers on all different dimensions, bringing the best engaging online experience the best social experience and that we believe is ultimately the key to our <unk>.
Our long term growth with ultra key to a successful partnership with our seller community.
Thank you very helpful Best regards.
Thank you.
And your next question comes from the line of Ron Josey from JMP Securities. Your line is open.
Great. Thanks for taking the question I had too many you talked about sellers shipping discounts now live in the four shifting gears can you give us some updates or talk to us about this conversion rates youre seeing across the four tiers.
The use cases that a seller might use did when they offered discounts from from zero to call. It fully discounted and what that means to conversion rates and I ask this in reference to I guess the question just asked now from all of her around.
Just a seller tools and newer services that youre offering so conversion rate or asking about conversion rates on shipping and then lastly, another question no I'm just category expansion. It's a key focus for Porsche and great to hear pets is bringing new users and sellers to the platform can you just talk a little bit more about what we might look forward to for categories. This year and next thank you.
There are so stellar shipping discounts when you think of the distantly S&P as we offer it is really a tool for sellers to decide how they want to price their product that they want to build more of the margin and the core size and then all for shipping to stone or sort of use those two knobs continuously and sellers are still staying with it we are seeing an increase.
Adoption, but I feel that there is significant potential for much more adoption in the marketplace and typically youll see these shipping being at the place where the pricing can sustain a free shipping margin and then lower shipping discounts available for a couple of different tiers. A lot of sellers are starting to experiment with each of the basic tier of discounting to offer.
Our value to their shoppers as shoppers are used to different kinds of shipping out there. So we see that happening.
Really the place where shipping discounts ultimately have a positive impact to the astellas is the speed with which to clear that.
The items I touched on sort of their sell through rate and the speed of timing and that's been very positive to measure that.
We'll continue to build more than more seller boost to both help them promote and market that so for example, one of the things. We recently launched the ability for shoppers to filters by different center discounts over time.
Yeah.
The second question that you asked about categories. If you think about focus for categories. It has been in categories that are really pertinent to your style and your passion and Scott categories, particularly.
Foster discovery more than just a wall Street. So you start to see us expanding from our original focus was women that we extended the men's kids home.
Judy and most recently <unk>, so you should see adjusted categories that.
And individual style and ultimately lead to more discovery oriented architecture and that sort of going to be our core mantra in terms of helping build out our full category portfolio in Baltimore.
Great. Thank you.
And there are no further questions at this time, Mr. Many shandra I turn the call back over to you for some closing remarks.
Thank you everyone for joining our call and for your questions. We look forward to speaking to you again next quarter. Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Okay.
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Okay.