Q1 2022 Poshmark Inc Earnings Call
If you would like to ask a question. During this time simply press star one on your telephone keypad. If you would like to withdraw your question Press Star. One again also we do ask that you limit yourselves to one question. Thank you I would now like to turn the conference over to MS. Christine Chen. Please go ahead.
Welcome to <unk> first quarter 2022 conference call. Joining me today are Muni Shandra, our founder Chairman and CEO and Rodrigo Bamana 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 <unk>.
<unk> 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, and our filings with the SEC, including our most recent annual report on Form 10-K and.
Filings any forward looking statements we make on this call are based on our beliefs and assumptions as of today and we don't have any obligation to update them also during the call. We 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 will turn it over to <unk>.
Thanks, Christine Hello, and welcome everyone. Thank you for joining us for our first quarter 2022 earnings call.
We're pleased to report that we're off to a strong start in 2022, our focus on our four core strategies category growth product innovation, new seller tools and international growth remains the foundation for driving <unk> revenue and active buyer growth our strategies are working and continue to drive our business forward.
We plan to discuss these strategies in further detail in a bit however, let's first discuss our Q1 results.
First quarter, GMB grew 12% to $493 4 million.
Revenue grew 13% to $90 9 million.
Meeting our expectation for the quarter, which is our most difficult comparison for the year and positioning us well for the year ahead.
Two year basis, <unk> revenues grew 60% and 59% respectively.
Our growth is fueled by the consumer shift to online social and sustainable shopping three.
Three trends that Bosch Mark continues to lead as demonstrated by 16% trailing 12 month active buyer growth to a record seven 8 million in the first quarter.
We continue to adjust our marketing spend to navigate a volatile macro environment and draw attention to Bosch Mark is a great place to save your wallet and save the planet.
Particularly amongst style and value conscious shoppers, we're feeling more constrained due to inflation in.
In March we kicked off our seasonal marketing campaign focused on the annual ritual of spring cleaning, which drove increase in listings and engagement across all channels.
First quarter sales reflected Bosch, mark as a fashion destination for moments that matter as evidenced by the increase in sales of from items up 75% year over year and listings for wedding items up 39% year over year.
As people increasingly attended physical events throwback vintage styles are becoming more popular.
Particularly among Gen Z consumers vintage listings were up 68% year over year in the first quarter.
Our social marketplace continues to define a new more human way to shop online by making the shopping and discovery experience more interactive and social.
Social interactions grew 59% year over year during trailing 12 months Q1, 'twenty two to a record $50 7 billion. This social engagement drives community connection and conversion.
Find that more than 80% of all purchases are preceded by associate interaction such as like comment or offer.
<unk> social experience is a key differentiator and after two years of Lockdowns and virtual events. We are overjoyed to announce the return of in person community events, which launched in Q1 in person events are an important part of our growth activation engine.
We introduced the <unk> brand to new consumers, Boston know MTN connection at the micro community level and grow our highly engaged user base. These events create one of a kind opportunity for our community to come together to socialize and share success stories and advice on how to build their businesses on <unk> Mark We held 35 of these <unk>.
In the first quarter, attracting community members across the U S.
Looking at the rest of the year, we're focused on executing our four long term growth strategies category growth product innovation use other tools and international growth. These remain the foundation for how we will drive <unk> revenue and active buyer growth.
Our first strategy is to grow our core fashion categories to increase share of wallet with consumers through our overall market share and drive <unk> growth.
Our marketplace as a leading fashion destination and as a reminder, our core fashion categories apparel shoes bags and accessories represented over 90% of our GMB.
Hi contribution from premium priced products continue to be one of the factors that drove year over year <unk> growth during the first quarter of 2022.
We remain committed to growing our market share in premium priced products and look forward to expanding our authentication services by end of the year as we integrate our swayed one acquisition.
We continue to be excited by the opportunity for Grand Plaza to contribute to the growth of our core fashion categories, though still small brand clauses <unk>. During the first quarter of 2022 grew two and a half X compared to the fourth quarter of 2021.
And monthly <unk> growth continues to accelerate we continue to see strong interest from large scale brands and retailers and have to wait list for Onboarding signing partners. These new partners value being able to directly connect within sell through a community of more than 80 million registered users and the benefit from our real time insights with you.
Enables them to effectively address consumer preferences and reached new millennial and Gen Z audiences.
For our community brand clauses enhance our market based as a go to fashion destination by increasing the product assortment available attracting more buyers to our platform.
Our second strategy is to focus on product innovation to drive user engagement that buyer conversion, which is fundamental to the retention of our user cohorts and GMB growth as.
As a style destination with shoppers come to discover follow ensure product innovation enables us to guide the treasure Hunt for fashion.
In January we launched a redesign of our feed and shocked at <unk>.
Which modernized and refresh the pages to make it easier to shop. This refresh has led to an increase in engagement and it's directionally driving up buyers and orders too.
We completed our rollout of shop by trend a new merchandising engine that complements our existing brand merchandising capabilities trends is it editorially curated daily feed that brings the best of whats popular in Bosch Mark's main feet and spent in search ability and engagement contributing to the stickiness of our platform and user retention.
This first version of trends, including curated daily trends in the shop that and a re marketing engine to surface. The freshest listings from trends consumers have engaged within the feed. It also includes new curated communications that are customized to each user.
We're excited to see growth in daily page views listing clicks likes and conversion as a result of this new feature.
Throughout the first quarter. We also tested versions of our search algorithm to combine the power of sharing with machine learning, we're constantly optimizing our search algorithms to better match supply and demand.
Early results of these tests show a positive impact on sales by growth orders in listing views. However, we are empathetic to some of our sellers who are impacted by these changes and continue to work to make it better for everyone in our community.
Our third strategy is to deliver innovative easy to use an effective services to help sellers market merchandise and sell their listings.
In February we began rolling out our new messaging tool that allows buyers and sellers to communicate directly with each other once an order has been booked.
This feature which was one of the top request from our community and borrowers buyers and sellers resolve order related issues privately indirectly with this new messaging interface once in orders booked the buyer and seller can start a conversation right from the order details page about 56% of chat sessions at initiated by centers and 44.
Percent by buyers, we expect this new feature to improve order completion rates reduce incoming cases and improve the overall user experience.
In February we also launched Bosch ambassador to our.
Nuclear is not Bosch investment program, which caters to our most active community members by highlighting them with the goldstar badge their profile and offering them additional benefits such as exclusive forums with our leadership team.
Events and other additional products are ambassadress value of this new tier and it should help you get to see more success as well as impact engagement retention and other social commerce metrics.
Harsh post our simple and unique shipping system allows for items to be shipped in any box with a printable labels at an affordable flat rate with a quick trackable, one to three day shipping as.
As shipping cost continue to rise we have intentionally kept our shipping costs with the buyers competitively, while providing a single label to ship anything up to five pounds. This stance at not only one of the most economical but also the simplest solution for shipping and one that can be used by millions of sellers across the country.
Our fourth growth strategy is to expand our international footprint and we continue to invest ahead of revenue for the long term.
As we look beyond the core we see international expansion as a strategic long term growth opportunity, we celebrated Australia. His one year anniversary during the first quarter and continue to lay the foundation for building, an active community and southern base and we look forward to holding in person events in that country.
As we approach the three year anniversary of <unk>, Canada. This month, the majority of our international investment will be focused on driving growth through advertising community development and shipping innovation.
We have seen success in reactivation retention efforts for older cohorts in Canada due to remarketing and targeted promotions, we're excited to begin holding in person events.
<unk> across the country to strengthen community connections and accelerate growth in this market as well.
In conclusion, our vision remains becoming the worlds, leading social marketplace and the number one destination for sellers around the world our marketplace powered by millions of highly engaged sellers as flexible adaptable and ready to meet the ever changing needs of shoppers.
We believe Bosch markets positioned to win due to its strong cohort retention unmatched scale price value appeal, an asset like model we.
We will continue to navigate near term headwinds by staying focused on executing our long term growth strategies and serving our community.
Now I'd like to turn it over to Rodrigo to dive deeper into the financials.
Thank you Manish.
As we mentioned on our last call after a better than expected holiday season, similar to others E Commerce and retail we saw softer trends in January as consumers were impacted by army chrome and events, where we're once again canceled or postponed.
Trends improved in February and for each of March resulting in a strength and should the first quarter with both revenues and EBITDA coming in ahead of our guidance.
Jim Z grew 12% to <unk>.
And the $93 4 million up 20 441 million in the first quarter of 2021.
A 60% growth on a two year basis, despite the tough comparison period as we lapsed stimulus.
Net revenues grew 13% to $90 9 million.
Up from 83 7 million in the first quarter of 2021 or 57% growth on a two year basis.
This result was ahead of our guidance of 86 to 88 million June in part by a better than expected take rate and 15.
58% growth in 2012 month active buyers.
Record seven 8 million up from $6 7 million in the first quarter of 2021.
On a two year basis trailing 12 month active buyers grew 36, 4%. Thanks to our continued marketing investments.
Our take rate in the first quarter was 18, 4% up slightly from 18, 3% from last year.
Two a lower than expected first quarter cancellation rates from the holidays, which more than offset the pressure from continued mixed shift to more orders greater than $15.
The mix shift to continue this should be a take rate headwind.
As orders less than $15 has a higher take rate due to the flat fee of $2 95.
Cost of revenues of 15 million in the first quarter was 65% of revenues an increase of 16% from the first quarter of 2021.
Adjusted gross margin was 83, 5% of revenues in the first quarter slightly down from 83, 9% from the first quarter of 2021 due to higher hosting costs.
Marketing expenses exclude stock based compensation or SBC.
The $1 3 million in the first quarter was 45, 6% of revenues.
From 39, 6% in the first quarter of 2021.
That result is lower than our guidance of high <unk>.
Market increased 30% from $32 million in the first quarter of 2021 due to higher CPU more in person events and community building initiatives moving to other expenses ops and support excluding SBC of $14 3 million in the first quarter was 57% of revenues.
Which is flat from the first quarter of 2021.
R&D excluding SBC.
11, 6 billion in the first quarter was 12, 7% of revenues up from 10, 1% of revenues in the first quarter of 2021.
This was due to a planned increase in hiring we have previously discussed.
As we continue to invest additional resources across a number of strategic initiatives.
G&A excluding SBC.
$2 2 million in this quarter was 14, 5% of revenues up from 12, 6% in the first quarter of 2021, primarily due to the ongoing costs of being a public company.
Stock based compensation was $8 7 million in the first quarter down from $24 1 million in the first quarter of 2021 due to the absence of <unk> vesting.
Upon completion of our IPO in January 2021.
Adjusted EBITDA, which excludes SBC was negative $4 7 million down from $4 8 million the first quarter of 2021.
Adjusted EBITDA margins were negative five 2% compared to the 6% margin in the first quarter of 2021. However, it is important to note that these numbers were ahead of our guidance of negative 7% to $9 million due to lower marketing expenses and lower G&A.
Expenses as we postponed some G&A investments that will hit in the second quarter and the second half of 202002.
Compared to last year the decrease in profitability was primarily driven by investments in marketing.
Successfully accelerated topline growth.
We will continue to focus.
On balancing marketing efficiency and investing to accelerate growth in 2022.
Operating loss, excluding SBC was negative $5 7 million in the first quarter with operating margins of negative six 3%.
This compares to a $4 million with margins of.
5% in the first quarter 2021.
Net loss to common shareholders was negative $14 million.
First quarter compared to a negative $74 1 million in the first quarter of 2021.
Cash cash equivalents were 596 6 million at the end of the first quarter or about $7 65.
Cash per share.
Moving to cash flow statement.
Three months ended March 31, 2022 three.
Free cash flow was $13 9 million compared to $19 8 million for the three months ended March 31 2021.
We continue to generate cash despite making investments for the future growth.
We remain confident that our asset light and high gross margin model positions us well to grow market share and we'll continue to optimize our investments in product innovation and marketing to drive <unk> growth.
We help our community to save money doing the treasure Hunt for the wardrobe will refresh as they attend in.
Personally advancing travel and we.
We are also a destination where consumers can supplement new income by unlocking the value in their closets. However, they create the microenvironment and unpredictability of consumer spending behavior in the face of inflation.
Those should be cautious.
Look for the second quarter.
Now what's your guidance.
Looking to the second quarter.
We overcame tough comps in April but in the latter half of the quarter. We also see seasonality impact both engagement and transactions as weather gets better and consumer shifts. Thanks.
<unk> from cleaning out closets to travel for spring and summer break.
We also continued to navigate changes in the digital advertising landscape and expect the idea to maintain pressure on our revenue growth rates in the second quarter as well into 2022 as.
As such we expect second quarter revenues of 86 to 88 million.
Resulting in a growth rate of five 8% as we lap difficult comparison was up 22% growth and 72% growth on a two year basis.
On a two year basis.
Growth is expected to be 29% to 32%.
We expect our second quarter take rates to be flat versus last year.
We expect negative adjusted EBITDA of $9 million to $11 million in Q2.
As we continue to invest in R&D to drive product innovation.
G&A to build the infrastructure necessary to evolve as a publicly traded company in marketing to grow our community of users.
We expect adjusted gross margin to be down slightly from Q1 2022 due to higher hosting costs as we anniversary <unk>.
Rick Green credits and transaction payment processing fees during the second quarter of 2021.
Ups and support excluding SBC in the second quarter is expected to be 17% of revenues as we continue to invest in customer support and authentication services.
Excluding SBC in the second quarter is expected to be 16% of revenues as we continue to increase our investment in product innovation to accelerate growth.
G&A, excluding SBC in the second quarter is expected to be 16% of revenues due to the higher cost of being a public company as we build out finance accounting and legal teams.
We continue to expect marketing, excluding SBC as a percentage of revenues to be in the high <unk> in the second quarter and throughout 2022 as we invest in another brand maybe youre spire marketing channels.
<unk> higher costs.
<unk> advertising.
We have proved that our platform is the speaking and cohorts delivered a net positive <unk> <unk> all of the detail over time.
With high gross margins in the strong balance sheet.
We have the ability equals <unk> <unk>.
<unk> to invest in marketing to accelerate <unk> growth.
In the near term these investments will enable us to build our user base and grow active buyers, which would put us in a stronger position in the long run.
In closing consistent to our messaging the last earnings release.
While we expect that microeconomic factors.
Continue to impact consumer behavior in 2022, we are focused on execution with a strong focus on our core business.
First continuing to enhance our product experience second continuing to build our brand with a global consumer.
And third invest in marketing.
And the robust operating mechanism to drive the execution.
We are confident that the business model is resilient for the current environment.
And well positioned to benefit from secular trends in Brazil, sustainable commerce and consumers looking for value immune unique looks.
Our sticky platform and asset light model holds no inventory driving high gross margin.
Our supply is highly responsive to buyers changing demands and our product assortment is not impacted by supply chain disruptions positioning us well to provide the shifting session environment, where consumers may be more value environment conscious.
Thank you and I will now turn the call over the operator, so we can take your questions.
Thank you and once again, everyone. It is star one if you have a question today, we do ask that you limit yourself to one follow up question I'm sorry, one question and we will take our first question from Lauren Shank Morgan Stanley .
Hey, this is <unk> from other out for Lauren.
What kind of macro backdrop are you assuming in guidance.
As we head into the second half and then understanding a lot more kind of uncertain uncertain at the moment, but how do you think that business would fare in kind of a weaker macro environment and then how are you thinking about the impact from the U S. Dollar income tax reporting change and did that have any.
<unk> and <unk>.
Thank you.
Let me take that question related to the guidance and then we'll figure out the rest I think give us a little bit of a long question. We may have to come back to you, but let's start with the first question here.
We're not guiding the second half.
So how do we think about it is <unk>.
Stick to how we guided Q2 and the reason that we are not providing that visibility into the second half as things continue to be a little bit.
Chris at the empty in terms of volatility in the macroeconomic environment.
It's just premature to give any any guidance to have more specific about Q2, we can provide some color, but youre now guiding the second half yes.
Yes. So in terms of just if you think about sort of what's happening.
In the market today, particularly in the consumer sentiment there is two or three things driving us one is inflation as you know.
At the level that I think most of us haven't seen in our lifetime and and then we sort of combine that with the pressure from the consumer wallet is very high. So when you think of our platform by crush Mark we provide ourselves as a key partner to the consumer on the one side that allow the consumer to save money by really shopping for extraordinary deal.
Second thing is we allowed them to earn money by really leveraging.
Their closet when you combine these two things.
Brushmark can be a really great factor for the consumer in many different ways as this inflationary and recessionary environment comes together.
As far as your question on the $10 99.
Process that has come together, let me just sort of take a step back and talk about what's happening here as part of the American Rescue Plan Act that fast in March last year. The 10, 99, K reporting threshold was lowered from $20000 and 200 transactions per year to $600 gross annual sales with no transaction.
We began rolling out our 2099 Capes are reporting requirements in January and it is now fully launched on our platform.
Results reflect the launch of that so far we've seen minimal to no impact to our business and for our sellers they seem to have.
<unk>.
Great. Thank you.
Next step is Ross Sandler Barclays.
Hey, guys.
Maybe you could talk about what you're seeing quarter to date in <unk>, assuming the take rate remains stable, which looked like it improved a bunch from the.
Holly cancellation thing in <unk>, and <unk>, but assuming that stays about the same.
<unk> your guidance.
Implies like a 3%.
Quarter on quarter down tick in <unk>, and I think you normally kind of a flat to up in <unk>. So is that just kind of the macro uncertainty.
Could you talk a little bit about which categories are doing better or a little worse in the current environment that would be the.
First question and then <unk>.
Second question, just marketing intensity picked up a little bit you mentioned Rodrigo hi, <unk> for this year.
It sounds like the offline marketing in person events as a factor, but how are you thinking about.
Digital marketing efficiency.
Both in the first quarter and then throughout the year as we as we model out that high Forty's.
Okay.
Okay. Thanks.
Thanks, Ross, let me take most of your <unk>.
Questions here. So first how do we think about Q2 into Q1 from a topline standpoint.
Well, we are skewing in May so we are not going to talk about specifics, but let me tell you. How we are thinking about the quarter and our guidance as <unk> mentioned in the call. We are pleased that we will regain our toughest comps in April with.
With the latter half of the quarter, that's where we kind of see the normal seasonality.
Yeah.
Some of the engagements in some of the transactions there so.
We do think that as folks go out more in the need to work with Joe fresh.
Just the macro challenges, we're just being cautious about the outlook for the rest of the quarter. So that's one and also we continue to navigate some of the changes in the digital advertising landscape. So we expect <unk> seen some pressure on our revenue growth not only in the second quarter, but also into 2022 and that's why.
Like we are you shooting for the height.
Fortis on marketing and also you want to kind of remind I'll talk about take rates in the bids, but since you mentioned about marketing.
We continue to have my conviction to invest in marketing in the proof for that is we continue to see a sticky behavior on our cohorts both in the buyer and the seller side and by the way even through Q1, we started to see some progress on CPU slightly down from how we bid.
<unk>.
The quarter Q1, so that gives us confidence that our marketing teams are doing an amazing job in navigating that so with that high gross margins. The majority offer a standard being variable, which means things that we can control and we prove that we could be profitable.
We continue to invest in marketing.
Now take your Q1.
Take rate question so.
And how that translates to Q2 of his kind of how to think about it. So first the Q1, we came in slightly better than expected because the cancellation rates from the holidays were better than expected. If you remember last year, we had the USPS disruption and then this year, we didn't see as much against.
Relation from the holidays, that's kind of Q1 the explanation.
When you look at Q2.
That's kind of disruption that peaked in April last year, it's kind of going to go away.
The nominal up and mix shift.
Others below $15 through August $18 continues to be a secular headwind to our take rates. So we have taken that consideration in and the take rate of futures. So see that deceleration first.
GMB.
I can't recall your calculation, but it's kind of.
It's kind of.
It makes sense, you'll see that Q2, Jim you'll be lower than Q1.
Yes in terms of Ross your question around categories I think.
We generally don't share.
And within a quarter category trends, but there's a couple of things I wanted to highlight one is we saw an acceleration of the ferro.
And that's something that's really powerful because it tells us that people are actually going out and engaging in the world of fashion, we saw from items up 75% year over year.
Heading items up 39% year over year, so real meaningful growth in the event oriented shopping.
The second thing is again another dimension is that the premium priced items 200, plus items continued to outpace overall growth in <unk>. So that gives you a little bit of a flavor of how categories scaled up in Q1.
And just a reminder, everyone. Please limit yourself to one question at next is Alexandra sneaker.
Goldman Sachs. Thank you.
Thank you for taking my questions.
I wanted to focus on the brand <unk> program could you maybe share some milestones here now that we're a few months then and it helps you to acquire new customers and then could you also talk about the type of brands you're targeting two to join the program and then secondly can you just give us an update on how international especially.
India is performing thank you so much.
Sure.
So when we think about brand closets, we think of them as something that really adds to the overall ecosystem of the <unk> platform very symbiotic with our core sellers. They bring complementary inventory attracts new buyers and really create a bigger marketplace. Our focus on brand closets has been to really integrate it with our series.
The brands that complement our ecosystem and ultra bands that are popular on the platform.
We've had multi brand retailers larger brands as well as many community banks, who partnered with US on the platform and in fact right now just from an implementation perspective, there is a waiting in queue to kind of implement these these brands on the platform.
A lot of it was contingent on some of the backend integration work that we were rolling out and that's <unk>.
<unk> has been rolled out and thats accelerating the growth of these <unk> projects on the platform.
When we think about.
The kind of sort of people that are on the platform.
Include everything from luxury to beauty to everyday brands.
And the goal is to really complement the availability of inventory and selection on Bosch Mark with these brand Closets Youre second question was centered around India.
What we've seen in sort of the first few months of India is.
The core engagement metrics and the scaling is happening as we would expect in the early days, it's still super early and it's going to take some time to develop that market.
But the kind of Bosch investor growth kind of early community growth is very much in line and in fact in line with what we shared about our in person events, India is starting to see a lot of these in person events happening for both closet activation, but also community engagement.
And we're just super excited about the market because it's a very large market. It's a market that's growing very fast in a broader sense of e-commerce adoption and certainly the focus on resale has been there from the beginning so it.
It continues to be an exciting but early stage market for us.
Oliver Chen with Cowen <unk> Company has the next question.
Alright. Thank you very much digital advertising you called out higher cost a few times and also in light of the privacy changes whats happening in terms of how you're approaching return on AD spend and do you expect privacy to continue to drive some risk factors around thinking about the right.
ROA as well as customer acquisition costs.
A follow up.
<unk> had attractive user growth and there's low unemployment and you offer a strong consumer value, so which parts of all.
The nature of the consumer are you more concerned about as it impacts your business. Thank you.
Okay.
Yes, let me take the first one and then I think the other part is.
And when you can take.
He is kind of how we think about the <unk> changes.
First to clarify you have taken to at least for our company in Q4 this year to fully lap idea feedback.
Because that is when we began.
More in marketing last year, so having said that we have made progress in lowering marketing costs by looking for other channels, which I'll talk in a minute.
We're diversified encounter some of the idea of a headwind in.
And in fact, we have begun seeing some site.
CPU improvements.
First quarter in each of April so that's a good sign that's a good progress there.
Since our marketing mix is highly adaptable what do we have done we adjusted by focusing on stronger ROI user acquisition channels outside that.
Investing upper funnel with strategies, such as television creative partnerships.
We also see a strong traction on the organic creator in our community kind of be reignited with us some of the in person events.
And that continued to adjust our marketing strategy is towards that type of channel.
In.
And then I think this is kind of the social experience.
Key differentiator of Bosch Merck.
Especially when you think about 2022, so again as we get to 90 in the in person events.
We think that that is a key part of our growth in the activation engine.
What it does as well <unk> introduces portion work brand to new consumers folks that are new to the platform that continues to fuel or foster, our flywheel, which drive that loyalty and the.
It's taken US a report for the year.
Yeah in terms of what are the dimensions of what could what could sort of concern to the consumer.
I think.
<unk> is impacted by a lot of different things.
Many of them could be unsettling for us in the short term.
But a lot of them can be very positive for Apache Mark. So if you think about their concern for the wallet could dampen their spending but they could look to push mark. We're finding bargains number two is they could be concerned about how much money. They are making again, they can look to <unk> to sell their closet. So when we think of these two disruptions they can be.
In some way is positive for benchmark. The third thing is supply chain disruptions that are happening and again Bosch mark and complement that supply chain. So.
If you look at the beginning of the pandemic at that point, we didn't know when the pandemic was starting how the consumer is going to react to.
Second hand used clothing marketplace. It ended up being a source of income and a source of sort of shopping for many consumers. So I think it's more of the uncertainty that we are managing through having gone through.
We also have been that make inflation supply chain disruptions. It's like every time, you think that the world is going to become stable, that's something little bit more.
Happening so we continue to navigate through it and and adapt to it but if you look at the heart of what Brushmark cash we have in inventory less marketplace Super adaptable.
Inventory quickly responds as we've seen in terms of shifting our supply and demand a very vast assortment dynamic pricing and seven 8 million active buyers. When you combine all of that I think it gives us a lot of confidence that we'll be able to navigate through that.
<unk> come in the next few months.
And next up is Tom Nick at Wedbush Securities.
Okay.
Hey, good afternoon, Thanks for taking my question.
So when we think about potash market.
I mean, I guess post <unk> world.
After you kind of adjust the marketing and stuff like that like how do we think about.
The topline growth potential of the company.
<unk> grew low double digits in Q1, you're kind of guiding us playing on mid to high single digits for Q2.
I would imagine that that's not.
Where you envision kind of the.
Sort of multiyear.
January of the business once once the marketing is kind of realigned and some of those headwinds go away like how do we think about <unk> and top line growth here.
Well.
Let me start by that.
That type of.
Predictability or guidance, we are not kind of.
Going there and give you guys like a number but.
But the way that we we think about is we come back.
To the notion of the stickiness of our cohorts.
And as long as.
And in the earlier question as long as we can continue to lower that Kirk.
Which saw an increase due to the idea.
And having conviction the LTV indebted equation should remain.
Positive or really attractive to us we continue to make that investment in marketing.
On the top of that what are the things that we also believe is improving retention.
Which we have.
Sample 80 million users that we can draw upon.
And that can be another area of us just not to focus only on the top of the funnel or the new user acquisition, but also turn on some of our <unk> related to retention. There are a lot of opportunities there and the marketing team is actually working on it.
But when you kind of step back and think about like the long term goals that I think we said on the roadshow.
Especially it towards the.
Profitability of the business.
We have shown that we can be profitable can be highly profitable in what drives that is.
First again.
Most of our spend is variable in you see with our control.
We have conviction today that we choose to invest in marketing is the right thing to do if we needed to we can kind of come back in and slow down the growth in marketing spend that we just don't each business the time to do so.
And again, we're kind of sticking to the plan that we are making to use a long term play in our LTV to CAC should they continue should be.
A positive equation and we continue to have that high conviction to continue to invest in marketing.
And then just to reminder, everyone. Please limit yourself to one question next is Ana and Dreamer Needham.
Great. Thank you so much good afternoon guys.
Two questions I think you said you saw sales acceleration in March, but just curious what drove that a little counter intuitive I think.
March like the tougher today industry, most of that was that better traffic or any specific category.
<unk> performed well and then secondly, you had mentioned, adding new leadership for <unk> core business to accelerate growth and exited better can you provide some color on what theyre focused on specifically and maybe some of the early inning early learnings from that thank you so much.
Sure. Thank you and the first thing is I think it was the rollout of some of the core product innovation work, we did rollout of our new search rollout of shop by trends. So it was it was the investment in our core product that was part of the exploration and the second thing was some of the optimization. We did on marketing in terms of our cost. So those were the things that helped us.
Counteract some of the.
The macro challenges that what they had in the second half of the quarter.
In terms of the core leadership.
We've added several executives actually just in the last few months.
A couple of things that we're really partnering with them as some of the core product innovation, adding some key aspects of the product and platform that we are growing as well as.
Adding to the overall financial and across the Spanish bank within the business. So it's all about taking us to that next scale of leadership team to help us scale the business to the next level.
Our next question will come from Ashley Hogan Jeffrey.
Hey, Thanks for taking our question you have.
Active buyer growth in the quarter here.
Curious what youre seeing from the seller side and then also on the last earnings call. I believe you mentioned that you were exploring or potentially exploring some other countries in 2022.
Or you could provide us that'd be great. Thanks.
Sure I mean, I think our salary ecosystem is continues to be very healthy we don't provide the actual numbers intra quarter.
And what we did provide.
In Q1 core was 2021.
Cohort retention metrics with our sellers and those were very healthy coming back too.
Can you repeat the question.
Oh. The second question was on the last earnings call I believe you talked about maybe exploring some additional countries for international expansion in 2022, I'm just curious if there was any update there.
Yes, no updates to share right now, we certainly continue to explore and.
Make sure that our international plan continues to be healthy and growing and scaling, but nothing nothing new to report yet.
Okay.
Next up we'll take a question from Seth Sigman with Guggenheim.
Hi, everybody I wanted to follow up on the margins and the cost question earlier. So it seemed like most cost buckets actually came in better for the quarter, even excluding the sales upside I think you mentioned some timing can you just elaborate on that timing how much of that hit this quarter when does that actually come back and then based on the guidance.
Would we be thinking about Q2 as the.
The low point for EBITDA for the year.
Hello.
Well let.
Let me say there is some background noise maybe.
Maybe from the operator.
Your first question related to some of the goodness that we saw again.
Based on two things first with our marketing spend in the marketing spend came in a little bit.
Lower than expected because of some of the phenomenon of bad debts, we discuss about C. The Cpus.
Getting slightly better than our expectation as we guided a high 40, so that contributed.
We are still shooting for the high <unk> in Q2, and that's kind of how we started even though we comp April like like I said, we remain cautious for me June just because that's when the season early started kind of lowering a little bit in our Porto GMT as folks go to summer break and.
They take a trip et cetera.
For EBITDA, we are not guiding the second half but.
How do you think about it is.
We need some of that spending in Q1 is happening in Q2, mostly on the G&A. There were some shifts there and some of that sprinkled through to the second half as well we are not guiding the second half, but we are also not expecting to make drastic changes.
Through the course of our other no marketing lines and then we kind of gave you guys an idea for Q2 as a percentage of revenue.
That's not a bad place to start as you update your models.
Next we'll take a question from Brian Mcnamara Bahrenburg capital market.
Okay.
Hey, Thanks for taking the question.
So one of your peers had some pretty downbeat comments earlier in the week I am curious how fast you guys think the digital retail market is growing and are you taking share in your view and with close to 80% of your market cap in cash what is the market not appreciate about your stock here.
Thanks.
We believe I think the resale market is pretty healthy were going through sort of a lot of the adjustment that you see in the broader e-commerce markets in terms of.
The growth, we all saw the pandemic timeframe and just talk a little bit of readjustment.
We do believe our market share.
Has grown a little bit again.
Many of the resale players are still private so.
You have to use second order data to take a look at that.
I think I think there's two things that are hard for the market depreciate. One is the stage of development we are in.
Investment required to develop this market and I remember 10 years back when I started the company nobody would have believed that anybody would buy secondhand and today you can find the secondhand section that almost every major Brad and every major retailer. So that's sort of the growth that has happened in a decade. So if you look out another decade, it's going to be pretty phenomenal in terms of what happens here.
<unk> as we look to the future in both the convenience aspect of second half the variety, but also the impact of the planet. So that's one aspect of it I think the second thing is just the growth that's happening in terms of the younger demographics millennials Gen Z and their adoption is a seismic shift.
Remember, let's talk to a group of.
Shoppers and sellers in our in our company.
For younger they are all in their early Twenty's in late twenties, and we were just talking about different ways of shopping and I.
I said you guys talk about planet health et cetera, and then you go out and top shop, but on some of the cheapest.
Fashion clothing.
And the answer was the second one is an expensive that is completely if tenure opposite if I thought 10 years back. So I think part of the whole thing is people are getting introduced the secondhand and understanding of what's happening here.
There is a generational shift thats happening and thats going to take time for people to fully understand.
What we've done is preserved a very consistent.
Our partnership with both our sellers and shoppers through the 10 years. If you go back 10 years and take a look at when we started we had a 2008 the partnership with our sellers to any state that we have a great 2080 partnership service, we have a minimum fee.
What is interesting is 70 810 years back we had we offered our shipping at $7 per day are shipping $7 67.
So that consistency ultimately allows for that stickiness of cohort combined with our social model and all of that ultimately I think will lead to meaningful profitable growth.
That will manifest in the future. So excited about the future. We are at a point in time in the history and sort of where we are so good.
And I'll add.
A few things.
To <unk> comments here, which I point this strength of our financial picture Munis box about they sticky sticky cohorts and we go back to the P&L, you'll see high gross margins and you'll see the majority of our spend is variable within our control we hold no inventory we are asset light.
We proved that we could be profitable became be at any point, we want and you have a strong balance sheet.
And I call your attention to $7 six five same soft cash per share. So I think there are a few things here that the market may not be appreciating and thats, what I would add to when you're coming to here.
And everyone. At this time there are no further questions I'll hand, the call back to management for any additional or closing remarks.
So thank you everyone for joining.
And I know that <unk> has been kind of interesting for everyone. So good luck with all your sort of things that we hope to see you next quarter. Thanks, everyone.
Everyone that does conclude today's conference we would like to thank you all for your participation today you may now disconnect.
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Okay.