Q4 2021 Poshmark Inc Earnings Call
One of 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, and our filings with the SEC, including our most recent annual report on Form 10-K , and subsequent filings any forward looking statements. We make on this call are based on our beliefs and assumption.
As of today, and we don't have any obligation to update them also during this call will 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 <unk>.
Thanks, Christine Hello, and welcome everyone.
Thank you for joining us for our fourth quarter and full year 2021 earnings call.
I am pleased to welcome Rodrigo grew mono who joined us as our CFO in December he.
He will take you through our fourth quarter and full year performance in a moment.
First I wanted to share some of the key highlights.
We had a very strong finish to a historic year for Bosch Mark with record <unk> revenues, despite a very unpredictable and volatile environment globally I'm pleased to report that we delivered our second year of operating profitability during our first year as a public company.
Full year revenue grew 25% to $326 million, which on a two year basis represents 59% growth fully our GMB grew 27% to $1 8 billion, which is 65% growth on a two year basis as we mentioned on our prior earnings call. We began adjusting our marketing spend in the middle of Q3 and started seeing.
The positive impact on October GMB growth, which continued throughout the fourth quarter, resulting in record <unk> active buyers of $7 $6 million.
Throughout the year consumers came to Bosch, Mark will discover and shop, the latest trends and this culminated in our strongest ever holiday performance fourth quarter sales reflected Bosch Mark as a go to destination for self gifting and unique gift, giving items as consumers celebrated the holidays by attending events.
And seeing family.
We saw a surge in demand for luxury items with giftable accessory brands like Ben <unk> art fell up 890% and <unk> up 385%.
We also saw spikes and dressed up styles with suits Blazers up to 115% year over year, and one shoulder dresses up 92% year over year, while cold weather staples, such as buffers ski suits and uggs surged at the end of the quarter.
And we saw demand for one of a kind unique vintage items with searches for vintage up 42% in the fourth quarter.
We continue to lead the three trends shaping the future of shopping the shift to online the shift to social and the shift to second hand.
Our social marketplaces defining a new more human way to shop online by making the shopping and discovery experience more interactive and social.
For the year 2021, social interactions were up 47% year over year to more than $44 6 billion.
This social engagement drives community connection and conversion.
One thing that distinguishes Bosch mark is that more than 80% of all purchases.
All preceded by social components such as alike.
Comment or offer.
Execution of our core long term growth strategies contributed to a strong fiscal performance and are the foundation for driving <unk> revenue and active buyer growth our strategies include category expansion.
<unk> innovation, new seller tools and international growth.
First we continue to focus on growing <unk> through category expansion to increase share of wallet with consumers and grow our overall market share.
We think of our category growth in two base core categories at all price points make up 93% of our GMP.
Our marketplace is a leading fashion destination, which is why women's men's and kids apparel make up 45% of <unk> and is our largest category shoes, another 20% bags of 18% and accessories are the remaining 10% <unk>.
We see opportunities to increase our wallet share with shoppers by focusing on our core segments.
Clearly in high growth categories, such as affordable luxury like shoes, and bags as well as introducing new categories to make boss Martha shopping destination for all style needs.
The balance of our <unk>, 7% comes from our expansion categories, which include beauty home toys and games and now pets and electronics, which we launched in 2021.
<unk> from premium priced products, which we define as $200 plus items has experienced more than one five times the growth of overall GOP driven buybacks in shoes in particular.
As a result, <unk> contribution from these premium $200 plus items increased to the low <unk> as a percentage of <unk> in 2021.
Higher contribution from premium priced products was one of the factors that drove higher <unk> to $40 in 2021 up from $35 in 2020.
We are committed to growing our market share in premium priced products as evidenced by the strategic investments we've made in suite one in the fourth quarter to expand our authentication services.
We're strategic about our approach to categories and evaluate new additions based on fit community demand and potential Tam, while staying focused on keeping our marketplace fresh relevant and engaging.
Cause we are an asset light model, we can enter a new category with minimal investment.
Ahead of the holiday season, we launched the electronics category and we are encouraged by the uptick of new buyers and sellers water factor to Bosch much social shopping experience.
35% of electronic buyers of new buyers and 18% of electronic sellers are first time sellers.
Average year over year electronic items is higher than our overall <unk>.
Initial demand has been strong with video games plus consoles, leading the pack followed by media cell phone and accessories headphones and cameras.
While our expansion categories are still small representing just 7% of <unk>. They are growing faster than our core categories and they are key to our long term growth as we expand beyond apparel and accessories.
Another expansion area is our work with brand closets since launching in October we have delivered six X monthly GSV growth and seeing strong interest from large scale brands and retailers.
Signing long several more new partners, we're excited to directly connect with and sell to <unk> community of more than 80 million registered users. These.
These partners consistently share of the <unk> rich and real time insights are valuable in helping them effectively address consumer preferences and reach new millennial and Gen Z audiences.
Second we focus on product innovation to drive user engagement and <unk> conversion, which is fundamental to the retention of our user cohorts and GMB growth.
Bosch Mark as a style destination with shoppers come to discover follow and shop for fashion.
In the fourth quarter, we began rolling out shop by trend a new feature that strengthens search ability and engagement contributing to the stickiness of our platform and user retention. We completed the full rollout in mid January and are excited to see growth in daily page views listing clicks likes and conversion.
Gen Z shoppers on Bosch market increasingly shopping by trend as evidenced by the growth of <expletive> talk about trends searches and we are excited to continue innovation in this area.
We're working to integrate our acquisition of suite, one sneaker authentication platform that combines machine learning technologies computer vision human expertise to conduct virtual authentication.
Anticipating launching this capability later in 2022 on our social marketplace and.
Ensuring authenticity and quality of supply will build more trust and loyalty with our shoppers create a more efficient and sustainable approach to authentication and accelerated growth in sneakers and other premium priced categories.
Since we expanded our partnership with a firm in the U S to provide buy now pay later at the end of July due to the $50 $200 price range more of our listings are now eligible for pay overtime solutions we.
We saw adoption of these options accelerate through the remainder of the year, helping drive faster DMV growth during the fourth quarter in the 50 to $200 price range and in the premium priced items than the rest of the business.
Delivering innovative easy to use an effective services to help sellers market merchandise and sell their listings is core to our long term growth.
Our sellers are the heart of the Porsche Mark community casual sellers, which we define as those who generates less than $10000 and <unk> <unk>.
Represent the majority of our GMB casual sellers often evolved to become gross sellers over time, given the ease of monetizing their closets on our platform.
While the growth and health of our casual seller cohorts continues to be important for Bosch. Marc we are focused on growing our pro seller base, those who contributed $10000 or more which experienced three times the growth in <unk> 2021 compared to casual sellers.
At the end of October we launched closet insights, providing our sellers with real time data on their sales inventory b.
We also launched my shoppers our CRM for pro sellers that has driven <unk> lift for those who have adopted it. We also saw continued strong adoption of our bulk listing tools in the fourth quarter gross sellers had the highest adoption rate of 30% and those who use bulk actions saw <unk> lifts from increased orders investing in seller.
Focused product innovation will continue to drive <unk> growth and marketplace differentiation.
Finally, we are focused on enhancing our enterprise selling services to bring more professional sellers brands and retailers to our marketplace. This includes providing them with innovative tools and technology to help them grow and scale.
Expanding our international footprint is our fourth key strategic focus and we continue to invest ahead of revenue for the long term in 2021 International GMB grew <unk> faster than the U S. But from a much smaller base driven by Canada, while our newer markets, Australia, and India are important to our long term growth as.
We mentioned on our last call, we do not expect meaningful contribution from these markets in 2022.
Our asset light model enables us to seed new markets early to establish a presence in the rapidly growing resale space and nurture them over time with minimum initial investment.
As we look through our three year anniversary in Canada in 2022.
The majority of our international investment will be focused on driving growth through advertising.
<unk> development and shipping innovation, we're very excited to begin holding in person events again across the country to strengthen community connections and accelerate growth in this market.
In conclusion, our vision for Bosch markets to become the worlds, leading social marketplace and the number one destination for sellers around the world.
We're focused on making strategic investments that drive long term growth give the best overall experience for sellers and make our marketplace. The most trusted destination for buyers.
Our highly engaged community gives us confidence that we can navigate near term headwinds and we will continue to adjust our marketing to accelerate growth because our billions of sellers are constantly listing new products. Our marketplace is highly adaptable and responsive to buyers changing demands and we are not impacted by supply chain.
Disruptions.
We're optimistic that beginning in 2022 consumers will once again at the end events and see friends and family.
Unlocking pent up demand for apparel and accessories purchases.
Our resale marketplace enables shoppers to rotate styles mixed trends and give a second life two items contributing to a more sustainable fashion ethos for consumers.
Now I would like to turn it over to Rodrigo to dive deeper into the financials.
Thank you Manish <unk> Porsche for their warm welcome.
Having worked at for online marketplaces, before Bosch, Mark, including ebay and most recently Amazon I'm committed to bringing industry expertise and operating <unk> Porsche Mark.
Turning the company for two reasons.
First the social element that drives engagement.
And Taylor cross-pollination irritation labels that I had not seen before he micro reader.
For instance by year five two is over 40% overlap between buyers and sellers.
1021 stacked buyer cohort retention was 104% two points higher than in 2020.
Stacked sailor cohort retention was 112% up one point from the prior year.
Second adamantly believe <unk> mission and commitment to sustainable commerce.
<unk> is leading the way for a new model of sustainable commerce that resonates with today's consumers, especially Gen Z and millennials.
I have spent my first 90 days doing deep dives into various aspects of our business during <unk>.
Past experience is to increase the regrowth, our financial planning process and strengthening our business operation.
I'm excited by the many potential opportunities for future growth ahead.
That's why my key priorities for 2022 are focusing on execution.
Growing our core business any screen that our initiatives are properly funded.
We ended the year strong with fourth quarter revenues and EBITDA coming in ahead of our guidance.
<unk> grew 27% to $4 million and $90 8 million up from $387 2 million in the fourth quarter of 2020 or 62% growth on a two year basis, despite headwinds from landfill privacy changes.
As we mentioned on our prior earnings calls we began adjusting our marketing spend in the middle of Q3, and you start to see the positive impact on <unk>.
<unk> growth, which continued.
The fourth quarter.
Net revenues grew 22% to $84 2 million up from $69 2 million in the fourth quarter of 2020 or 55% growth on a two year basis and was ahead of our guidance of $80 million to $82 million.
This was driven by a 17, 3% growth in trailing 12 months' active bias to a record $7 6 million up from $6 5 million in the fourth quarter of 2021.
On a two year basis trailing 12 month active buyers grew four.
41%.
Our take rate in the fourth quarter was 17, 2% down from last year's rate of 17, 9%, which is seasonal holiday cancellations and continued mix shift to more or theres greater than $15.
This continues to be take rate headwind as order, it's less than $15 has a higher take rate due to the flat fee of $2 95.
Also revenues of $14 1 million in the fourth quarter was 16, 7% of revenues an increase of 21% on a year over year basis.
Adjusted gross margin was 83, 3% of revenues in the fourth quarter of 2021 platform, while the fourth quarter of 2020.
Marketing expenses, excluding stock based compensation or SBC of $37 4 million in the fourth quarter was 44, 4% of revenues up from 39, 1% in the fourth quarter of 2020.
That's lower than our guidance of high <unk>.
In market increased 38% from 27 billion in the fourth quarter of 2020, though on a two year basis marketing only grew 4%.
Similar to other companies they use digital marketing, we continue to see the impact of ample privacy changes during the fourth quarter as mobile represents about a third of our.
Advertising spend in over 70% of our G&P.
We continue to adapt our marketing investments to minimize the impact of <unk> changes.
Since our marketing mix is highly nimble, we adjusted by focusing on stronger Y user acquisition channels and invested in nonperforming strategies, such as TV in creator partnerships.
We diversified our spanned across platforms by increasing our penetration with Google search kicked off in this map.
The increased investment in marketing accelerated trailing 12 months' active buyer growth to 17, 3% in the fourth quarter, which was up from 66% in the third quarter and 15, 7% in the second quarter.
Moving to other operating expenses ops and support excluding SBC of $14 7 million in the fourth quarter was 17, 4% of revenues up from 69% in Q4 2020 due to higher costs from seasonal cancellations and higher shipping costs.
R&D, excluding SBC of 11 million in the fourth quarter was 13% of revenues up from three 5% of revenues in Q4 2020.
This was due to the planned increase in hiring we have previously discussed.
As we continue to invest additional resources across a number of key strategic initiatives.
G&A, excluding SBC of 11 8 million in the fourth quarter was 14% of revenues up from nine 8% in Q4 2020, primarily due to ongoing cost of being a public company.
Q4, 2020, G&A includes $8 6 million favorable adjustment as a result of revised in G&A expense in order to correct, an overstatement of chargeback losses from our payment processor.
We have outlined these each of these earnings release.
Stock based compensation was $9 3 million in the fourth quarter, an increase from $1 9 million in Q4 2020 due to divesting of Rs use upon completion of our IPO in January 2021.
Adjusted EBITDA, excluding SBC was negative $4 7 million down from $4 8 million in Q4 2020.
Adjusted EBITDA margins were a negative five 5% compared to a 7% margin in Q4 2020. However.
However, it's important to note that these numbers were ahead of our guidance of negative $7 million to $8 million.
Compared to last year. The decrease in profitability was primarily driven by investments in marketing, which successfully accelerated topline growth.
We will continue to focus on balancing marketing efficiency in investing to accelerate growth in 2022.
Operating loss, excluding SBC was negative $5 7 million in the fourth quarter with operating margins of negative six 7%.
That compares to $4 1 billion with margins of five 9% in the fourth quarter of 2020.
Fourth quarter 2021, net loss to common shareholders was negative $14 8 million compared to negative $3 2 million in Q4 2020.
Cash cash equivalence and marketable securities.
581 5 million.
At the end of fourth quarter of 2021 or about $7 52 stints in cash per share.
As we think about capital allocation our number one priority is using our strong balance sheet to make strategic investments to drive long term growth.
Moving to cash flow statement for the 12 months ended December 31, 2021 free cash flow was $26 7 million compared to $84 6 million in the 12 months ended December 31 2020.
We continue to generate cash for the second year in a row.
Before I jump into guidance I wanted to just share some observations from my first few months as CFO .
I believe that you help set the context for how to think about the business and how we will create long term value for all stakeholders.
First we have a massive opportunity in our core U S specialty business, but as we have expanded into new categories and geographies, we have diluted our focus on the core.
For that reason, we have appointed dedicated leadership to focus on driving and accelerating growth within our core U S business, including improving how we execute.
Our community is obsess about Bosch Mark.
And we must be obsessed about executing flawlessly, so that to deliver an amazing buyer and seller experience.
As we look beyond the core.
We've seen a national expansion as a strategic long term growth opportunity.
We will continue to invest ahead of revenue growth to build the foundation and will ensure our international expansion is set up for success and appropriately funded for strong execution.
Third we have a sticky platform and engaged community.
As said earlier, we have historically seen and continue to see net positive Jim give attention toward cohorts and that is very unusual for any transaction E Commerce player.
In 2021 hour social activity reached an all time high of almost 45 billion, social interactions or 47% growth versus 2020.
We believe this engagement shows there is a big opportunity to drive growth of our core business.
Now onto guidance.
While we are confident that focusing on growing our core business and continue to invest in marketing can positively impact the GNP growth the disruptions from Omi chrome and the beginning of the year and lapping up stimulus and the current geopolitical situation needless should be cautious about our outlook for.
The first quarter.
After a better than expected holiday season, similar to others in E Commerce and retail we saw softer trends in January as consumers, who were impacted by Omi chrome and events, where once again canceled or postponed.
While trends improved in February we have already most difficult comparisons still ahead in the second half of March as we lapsed stimulus.
While we hope that Colgate is becoming endemic we expect that the normal seasonality of consumer spending could continue to be disrupted during 2022.
Especially in the near term as we monitor consumer response to inflation wakes for omicron to fully retreat.
And monitor how the geopolitical situation will impact consumer spending.
We expect first quarter revenues of $86 million to $88 million.
Good thing in a growth rate of 729% as we lapped difficult comparisons at 42% growth in Q1 last year.
On a two year basis growth is expected to be 51% to 54%.
Compared to Q1 last year, we expect to see slight pressure on Q1 take rate.
As the mix shift to orders greater than $15 continues.
We expect negative adjusted EBITDA of 7% to $90 million in Q1, as we continue to invest in R&D to <unk>.
Drive product innovation G&A to build the infrastructure necessary to evolve as a publicly traded company and marketing to grow our community of users.
We expect adjusted gross margin to remain consistently high and similar to Q4 2000 <unk> levels as we hold no inventory.
Ups and support excluding SBC in the first quarter is expected to be 17% of revenues or slightly higher in Q4, 'twenty one as we continue to invest in customer support and authentication services.
R&D, excluding SBC in the first quarter is expected to be 14% of revenues or within a half million dollars higher than Q4 'twenty one as.
As we continue to increase our investments in product innovation to accelerate growth.
G&A, excluding SBC in the first quarter is expected to be 16% to 17% of revenues or $3 million higher than Q4, 'twenty one due to the higher costs of being a public company.
As we build our finance accounting and legal teams.
We continue to expect marketing, excluding SBC as a percentage of revenues to be in the high 40, <unk> seen the first quarter and throughout 2022.
As we invest in the brand and the address higher costs in digital advertising.
We will continue to be disciplined as.
As we invest in marketing to accelerate <unk> growth.
While we continue to diversify our marketing channels to minimize the impact of <unk> changes.
We have proved that our platform is a sticky.
In cohorts delivered net positive GMP dollar retention over time.
With high gross margins and a strong balance sheet.
We have the ability and conviction to continue to invest in marketing.
In the near term these investments will enable us to build our user base and grow active buyers, which will put us in a stronger position in the long run.
In closing.
While we expect that macroeconomic and geopolitical factors could potentially impact consumer behavior in 2022.
We're focused on controlling the things we can control.
First continuing to enhance our product experience.
Second continuing to build our brand with a global consumer.
And third investing marketing talent and they robust operating mechanism to drive execution.
In 2022, our priority is our focusing on our execution, ensuring that our initiatives are properly funded and growing your core business.
First and foremost we.
Our curators of style.
We are well positioned to win as shoppers become more sustainably conscious and find a better value and inventory availability do we period of inflation and supply chain disruptions.
We are well positioned to cater to a growing young population that embraces social and seek self expression through unique luxe. They can find only on Porsche mark.
Our sticky platform and asset light model drives high gross margin holds no inventory in our supply is highly responsive to bias changing demands.
Physician, Neil as well to a thriving the shifting fashion environment.
By strengthening our business operations, improving our execution enhancing our financial planning process.
I am confident that we have a long runway of growth ahead.
We are making strategic investments in growth and focusing relentlessly on building a more seamless more social and more sustainable way to shop.
Thank you and I will now turn the call over to the operator, so we can take your questions.
Yeah.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
In the interest of time, we ask that you. Please limit yourself to one question per person.
Your first question today comes from the line of Lauren Schenk with Morgan Stanley . Your line is now open.
Hi, This is Nick Hiller on for Lauren.
Can you just give an update on how India is performing in the personnel cost six months after launch along with international more broadly and then how are you thinking about fiscal 'twenty two international expansion and then.
One more on that you saw kind of a material drop in the take rate in <unk> is that just due to the mix shift to items $15 or higher.
And could we expect that kind of lower take rate to continue thank you.
Yes, the simulation I'm going to give the answer for the international I'm going to give you a color on the take rate on the international side, we are continuing to invest in Australia, and India, Australia is going through a period, where we are really focused on our community building now that the world is open we would actually do.
A lot more physical events and lot more sort of direct community building in Australia, and so we're excited about sort of where that is going we are also.
Looking into new markets in terms of new countries or new areas to expand and as we said our focus has been primarily around English speaking countries. So we're going to continue to follow that strategy into 2022.
Alright.
For the take rate question. There are actually two factors. So first we see higher cancellation rates during the holidays.
Particularly in Q4 2021, the soy higher holiday seasonality.
Compared to Q4, 2020, however to say that in Q1 2022, we have seen cancellation rates just normalizing and they are back to the training.
Where they were in Youre going in Q1 2021, and the second point is the one that we pointed out we continue to see a mix shift away from the items under $15, which causes some pressure on take rate.
Okay, great. Thank you.
Your next question comes from the line of Mike <unk> with Goldman Sachs. Your line is now open.
Hey, good afternoon, thanks for all the detail around the marketing investments.
Just wondering if you could talk a little bit more about.
Some of the marketing strategies and the outlook for 2022, specifically.
Have you seen any changes to rois for channels like like Facebook.
<unk> and.
The guidance implies a step up in marketing investments throughout 2020 to any specific areas.
Or channels that you are particularly focused on thank you.
Yes, so just broadly speaking our overall approach to marketing is in response to IV a payer has been number one to focus on the upper funnel strategy. So we're looking at different ways to retool that and that means tweaking channel mix potentially moving to other channels that are more attractive.
So for example, we've shifted in Q4, a little bit of spend to more to TV.
We also are looking at more creative partnerships and so in Q1, we launched a partnership with <unk>, which is a Cape Hot band and we're doing more sort of micro and macro create a partnership in terms of.
Just sheer install channels.
<unk> definitely allocated board predict dokken Snapchat is S. Two channels that are showing very attractive and are more attractive sort of value proposition.
I would say Facebook and Instagram have been improving but are not quite at the pre <unk> levels.
In terms of just their performance.
Great. Thank you for all the culmination.
Your next question comes from the line of Ross Sandler with Barclays. Your line is now open.
The comments about focusing on the pro sellers I think is pretty interesting we've talked to some proves that can do really well on posh mark and others that have kind of struggled. So I guess can you just give us a little overview on.
What tools are these pros asking for would have you already delivered to them and what are the most interesting things that youre going to.
Provide to pros to make there.
Life easier in terms of sewing on Apache Mark Thanks, a lot.
Yes, so over the course of 2021, we've invested quite a bit of our.
Our R&D investments in building out a suite of tools, starting with bulk sharing which was sort of one of the first big massive things, we did which was to really simplify shedding is a promotion engine and activation engine and allows them to work with a lot of listings at the same time, we've launched plaza to insights, which gives them a lot.
Data and analytics on their own stores and closets on <unk>.
We also have the first portion of my shopper solid which is a unique customer relation management team tool that allows them to work through.
A lot of their fast customers prospective customers interact with them almost like a boutique kind of.
CRM system that we've created and there is lot more that we'll be doing in the mice shoppers to area in terms of the innovation.
I think a lot of the work that.
The pro sellers in the enterprise sellers need as is and scaling up the use of tools, how they can sort of work with lot more things at the same time, how they can manage bulk offers.
Upload we also launched bulk upload of listings where people can take a lot of inventory and upload upload that for some of the larger enterprise sellers, who are also integrated with some of the warehouse management system. So they can process. It from there as well. So we continue to invest in a variety of tools that can help.
More efficiently for sellers or scaling up their business on <unk> to manage their business and then continue to listen very closely to them and now that the world is open we hope to be able to have lockwood in person gathering that some of our pro sellers and get their feedback which has been obviously hard to do in the last two years.
We're also excited about our.
This year in terms of just opening up.
Live events that we are starting to horse to engage more with our community and learn more in.
In terms of the needs, which I'm sure many of them continue to evolve as people are readjusting to life.
This sort of COVID-19 transition back into more physical life. So that's sort of the high level perspective on the two words, it's an area of constant innovation and constant sort of distribution for us the other thing which is.
Really powerful that we launched earlier this year as our trend change in our transport <unk> engine and that is extremely powerful because one of the things we've noticed about fashion and style is that going into pandemic people sort of been in a different direction, but coming out of it over the last year.
Trends in fashion has been changing very rapidly driven by newer social media platforms like Tech talk but also driven by the fact that lot of people are remixing stuff from their closets vintage secondhand et cetera, so actually the importance of educating our seller and our shoppers through our trends engine has been has taken on a new meaning.
And Thats an engine that we are investing a lot in in 2012.
Yeah.
Okay.
Your next question comes from the line of Oliver Chen with Cowen. Your line is now open.
Hi initiative, a lot of really exciting new business opportunities with 200, plus electronics and thinking about.
Footwear as well what are your thoughts in terms of how these evolve with new customer or existing customer acquisition and also the nature of competition and how that intersects with how you think about top of funnel marketing just would love some thoughts there and then Rodrigo.
Mentioned in detail, our focus on core and execution, there and the product experience. If you could elaborate on what you mean and where you see the most opportunity there that would be helpful.
And then finally, just the near term modeling question very helpful with March and the nature of comparison in March and the softer trends in January .
Could you speak to which categories are most sensitive to that and whats within your control as you algebraically face tough compares.
Thank you.
Thanks, Oliver So just talking a little bit about electronics and category and sort of how we see top of the funnel I think for US. We go back to who we are with ultimately a community platform and so we see the world evolving around what we think of it as micro communities, which is when you think of electronics, we don't think of it.
Just as products, which we think of communities that gathered around the products it could be the gaming community it could be.
People, who are sort of looking at specific kind of hobbyist around that and so a lot of the work. We do here is focused on style focused on sort of personal direction.
And that is where we see the excitement, but do you think of that it's not just as much about that says as a category. We think of it as a community of people who are part of the different kinds of pets communities and so a lot of the innovation you will see for from US in 2020 is encouraging connecting these micro communities in a more direct way and you can see some of that.
In our App today.
We gather a college communities together, we have city communities and those things have been really powerful and connecting people and people discovering so you're going to have a chapter out of Louisiana, very cautious or gathering together and connecting.
And most recently, we actually bought back our caution coffee, which we had suspended the beginning covered almost two years back and the first set of physical Boston coffee are starting to happen as well. So we're excited about encouraging in creating these micro communities owned both style and other categories on the platform.
Yes, and Oliver Rodrigo here.
So your question about.
Some of our emphasis.
On business operations, and especially our focus on core.
As mentioned our core when you step back core fashion categories apparel bags shoes and accessories.
90% of <unk>. So we've seen this core we are focused on growing our market share of premium priced products.
And that's one of the reasons that we acquired with one and then.
We are integrating assets part of our product and we are excited about it so.
Is it really focused on heavily on users that are looking for those priced premium priced products and thats one of the capabilities that we built.
We also have this sharp buy trend is an example of how we are using product innovation to drive growth for our core fashion categories.
And when you think about the seller side, we're focused on growing the prostate overdoses Manish talked about.
We have some focus on the pricing sailing through their closets.
We are not eliminating our cash or casual sellers. So the good thing about Porsche Mark is we build that.
Platform saw <unk> five years, so that's kind of how to think about.
The categories and you have a third question you can remind me please.
Thanks Rodrigo.
As you less stimulus.
Categories have been more volatile and you spoke to the softer trends in January so what's in your control in terms of.
Facing this tough comparison and executing against it.
Yes, it's a good question, we don't comment on the category specific but as you mentioned March in March marches, where the lapping is happening because that's when we saw the stimulus checks kind of kick in and last year. So we're lapping that period as we speak we're not guiding.
Which obviously because we haven't closed March but how do you think about it focus on things that we can control I'll highlight marketing. So if you look at this platform.
We see when.
When you acquire user over time date user produces more Jim the overtime.
Thickness I have not seen in my career, so far and this is my fifth marketplace that I am working for so focus on the things that we can control, especially marketing is where we have high conviction to focus as we lap.
Part of Q1.
Thank you best regards.
Thank you.
Your next question comes from the line of Ralph Shakur with William Blair. Your line is now open.
Good afternoon, and thanks for taking my question first question just on cohort retention.
If you can provide some color if you could please on both a buyer and seller side sort of what's driving the increased retention engagement and investing in new products, such as new seller tools, but if you could elaborate on that that'd be great and then I have a follow up.
Yes, it's really a continued focus on.
Product innovation I mean, if you think about what we've done all of last year has invested in our discovery engines invested in our search invested in seller tools.
And certainly continue to sort of bring more demand to our sellers and more supply to our shoppers. So all of those core product innovation is really the key to long term retention of our cohorts and so we continue to invest in that at various levels, whether it's a casual seller who is going to benefit from some of the casual seller listings improve.
We've done into the core listing flow or you look at sort of more of a pro seller who benefits from my shoppers. We just continue to invest in these things and that I think is ultimately how we thrived in the platform serving our community.
To the finished.
Great and maybe one for Rodrigo sounds like Rodrigo that youre going to be leaning into some marketing spend it sounds like youre getting some efficiencies and some new channels. So just curious as youre thinking about sort of balancing growth and profitability for 2022, how are you thinking about that trade off and.
Sort of that growth phase I guess as we think about it for 2022.
Hey, Ralph.
We're not guiding 2022, but I'll stick to what we said in the beginning of the call so be.
We are guiding to the high forty's on marketing and how you're thinking about it.
Coming back and looking at how are we with the insurer has trended. So first again I highlight that.
In by year, 540% for the buyers become sellers and sellers become buyers. So I like that and the fact that when you look at the stack cohort retention from both buyers and sellers. They continue not only to return more than 100% retention, but they grow over time and then we saw.
Saw that we accelerated on both.
Buyers and sellers so with that in mind, we are sticking to the plan to lean into marketing to the high forties through 2022.
Okay. Thanks, Andreas Thanks, so much.
Your next question comes from the line of Andrew Boone with JMP Securities. Your line is now open.
Hi, guys. Thanks for taking my questions as we think about apparel rebounding with the reopening of the economy can you just remind us in terms of the trends that you've seen as we've now gone through multiple waves of COVID-19 .
Think about maybe getting through coders, how demand has trended for apparel and help us think about that as we think about the puts and takes for 2020.
On a barrel.
Broadly defines bulk of our of our sales as we pointed out and.
Within the apparel categories. What we continue to see is the distribution between the different groups, whether you look at bags of shoes in court seems to be very stable.
What we are really seeing is the shift in <unk>.
Shift.
<unk> sort of when we start to think about the shift to.
The different styles and silhouettes that are happening is apparent and Bosch Mark. So for example.
You've talked about the shift to sort of more loser.
The basic sort of tightened the top end.
Got it the bottom kind of a silhouette that that sort of is apparent about apparel mix. The core that you have to see and you can see that youll be change is a little bit of shift more towards the premium price points in both apparel and bags and handbags.
Hi, Sean.
And then stepping back as I think about efficiency in 2023rd from any change competitively against other secondhand platforms that are out there do you guys feel like Thats changed since pre COVID-19 during the pandemic and then as we sit today. Thanks so much.
Yeah. So I think look in general I would say that there has been definitely an increase in competition, but if you look at sort of where we are we have been growing our business at a pretty good good rate and what you see in the latest quarter, we showed us that our active buyers have grown.
17% delivering a record at Dubai at up 7%.
The more than 7 million active buyers on our platform and so we feel that in this landscape, we are fairing pretty well and again it goes back to the strength of our community the strength of our cohorts and this very unique experience that we've crafted which is not just about buying and not just about selling but it brings a deterioration in the community.
Integrated thing and as you see the proof in everything that happens on Bosch Mark whether it is increased social interactions. It is how people buy and sell auditors, how our cohorts are trending. So so we feel we're pretty well competitively positioned to play in this in this landscape.
At the same time in the last two years that opportunity has exploded massively.
Talk about the future of shopping as being secondhand, we talk about the future of shopping has been online and we talk about the future of shopping is being social while these strengths are exploding in a massive way.
But the younger generations with the older generations and Covid has just accelerated it so we find ourselves in even a bigger market opportunity than we did when we were starting out with COVID-19 . So while competition has increased the opportunity has increased even bigger so we see we see a really exciting future as we invest into it and grow into it.
Okay.
Your next question comes from the line of Ana <unk> with Mizuho. Your line is now open.
Great. Thank you so much and good.
Good quarter, guys, congrats and thanks for all the color.
We have two questions. We noticed there were some changes to search functionality in the last month.
I understand there is a new iteration was launched just last week just curious how is the community reacting to that and I guess do you anticipate any additional changes down the road and I know youre not providing annual guidance.
But as we think about the year should we expect the sales growth to accelerate after one Q and I had a quick follow up as well.
I am going to answer the first part and then have Rodrigo sort of answer the second part so.
We want to continue to provide the best matching experience for buyers and sellers on our platform and for that we are constantly optimizing our discovery and search experiences.
Did a shift.
Shifted our just shared algorithm earlier this quarter, we got feedback from the community. We took a step back we did it and relaunched it fully just this week, it's been 100% live this week.
All of the testing from the first quarter and the second version of actually showing growth across both buyers and sellers in the platform.
And we will continue to optimize it I think there's so much opportunity here as we are using a combination of algorithms machine learning and social curation.
The thing that we have our commitment to our community to ourselves and to our shoppers is that the focus is always on them.
For example, sharing which is very unique to <unk> and that sort of something that has been great for both the sellers and the shoppers in creating a highly curated fresh experience will always be front and center for us. So we'll continue to invest in it but at the same time, we also want to enhance it.
Laura think relevance in other pieces. So this is an area of active innovation and active evolution for us and we'll continue to sort of grow it.
Overall.
And ultimately our goal is to help all of our sellers drive whether theyre smaller big and all of our shoppers being able to quickly find what they're looking for and that drives all of our true north.
Waiting in search and discovery on the block.
Hi, Anna Rodrigo here, so obviously, you're not guiding the year.
But since we last reported the results in November there has been unprecedented volatility in the microenvironment and does it feels premature to be giving any 2022 guidance. We all know the last few years have been anything but.
And at current atmosphere, just creates more volatility in the consumer behavior.
And that is just coming out of Covid and ensure the flash and the rate environment right. Now so it's just difficult to predict but having said that.
We are focusing on the things we can control.
Continuing to invest in product innovation through R&D and acquiring new users through marketing and we do that because we continue to see the net positive Jim irritation from both buyers and sellers and we believe this will pave the way for the long term growth and Thats why we are focusing right now long term growth.
Okay. No I appreciate that that's helpful and my follow up was just on the take rate.
Great to hear that the higher priced product is doing well just curious with the acquisition of swayed as you're increasingly pivoting into higher price. How do you guys think what's the right level structure.
Structurally for take rates for Apache Mark.
For us we are very much focused on delivering an integrated simple transparent value in everything that we do whether you look at our shipping system you look at our fee structure should look at sort of our tooling infrastructure et cetera, we have made everything universally available.
All of our sellers across all of the pieces and that simplicity philosophy guides, our decision and everything we make we feel ultimately being simple.
Being sort of clear about these fee structures have been able to build a sustainable business, which serves our service and our shoppers.
Is the way we do so we have in fact pretty much since day, one had the same take rate and today. We are sort of certainly don't see any reason to make changes to the take rate as we look into the future.
And ultimately the key for US is to continue to deliver value to both our sellers and sharper. So that's what we'll do.
Alright, well I appreciate it thanks, so much.
As a reminder, we ask that you. Please limit yourself to one question. Your next question comes from the line of Ashley Hogan with Jefferies. Your line is now open.
Hi, Good afternoon, it's Blake on for Ashley just wanted to ask a more high level. One on inflation I know you mentioned lapping stimulus in the omicron impacts.
Obviously, you've talked about a higher mix of higher price point item is doing well so should we read that as.
You're not having as much elasticity for some of the other categories or how do we think about the category impact by maybe higher prices are you seeing maybe some higher income consumers coming to the platform.
And then also do you think inflation could actually be a positive for your platform at all given the affordability of retail. Thank you.
Yes, so look inflation is a challenging thing that the American consumer and the consumer is probably around the world face.
Okay.
We believe our platform can really be a great partner.
Or consumer faced with inflationary pressure on one side, we provide a way that anybody can sell stuff from their closet and allows them to provide that liquidity really rotate that stuff, which is great for the planet and great for the wallet on the flip side, we have amazing amount of value oriented.
New but also motor book in the second half inventory available that people can come and shop, and we provide different kinds of pricing negotiation tools to drive at a good price.
We believe that that combined with our asset light model, where the inventory can re vector dynamically gives us tremendous flexibility as people.
Deal with inflation going into 2022 I think your question is why are we not seeing downward or upward pricing pressures I think at the minute. It is full.
Fully I would say in the platform. It is really hard to say exactly how the consumer will completely the actual inflation I think the inflation is not in my opinion is not fully factored into people's decisions across the board, it's starting to come more and more as we've seen with recent gas prices. So that picture will unfold, but we do know is being asked.
At like giving the people the ability to sell and giving people the ability to shop will allow us to be a great partner to the consumer in these very inflationary times.
Okay.
Your next question comes from the line of Brian Mcnamara with Bahrenburg. Your line is now open.
Hi, Thanks for taking the question I understand you're lapping your toughest comp in Q1, but it's also I believe your easiest comp for the year on a two year basis. So how should we think about your growth relative to the resale market growth in general are you gaining or losing share. Thanks.
From our perspective.
It's hard to know exactly what they are gaining or losing share because isn't available quarter, but I would say if you look at last year. Our performance has been relatively quite strong compared to the other players in the market some of our private somewhat publix its hydro under percent compare across the board.
Okay.
When we think of.
Yes.
In this this quarter, particularly in Q4.
It's a very strong growth in our <unk> active buyers of 17% with a record of little over $7 billion.
Buyers that would be.
<unk>, which is the highest.
Active buyers that we've had we've also continue to see the hugely.
Huge retention both in our sellers and buyers in both of them accelerated so we continue to see that we have a very strong business in this changing landscape.
And I think.
The entire market is growing so fast, but I think it also gives us.
Oh.
Okay.
The tremendous set of opportunities.
One thing to just think about our active buyer number is that $7 6 million active buyers is bigger than most other players out in the market. So that can give you a little bit of a sense of how we then with respect to other marketplaces.
Thank you.
That concludes our Q&A for today I'll now turn the call back over to Manish.
So thank you all for joining us for our earnings call and we look forward to speaking to you in a couple of months. Thank you everyone.
Concludes today's conference call. Thank you for attending you may now disconnect.
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