Wish Reports Fourth Quarter and Fiscal Year 2021 Financial Results

SAN FRANCISCO–(BUSINESS WIRE)–$WISH–ContextLogic Inc. (d/b/a Wish) (Nasdaq: WISH), one of the largest mobile ecommerce platforms, today reported its financial results for the quarter and fiscal year ended December 31, 2021.

Fourth Quarter Fiscal 2021 Financial Highlights

  • Revenues: Revenues were $289 million, a decrease of 64% YoY. Core Marketplace revenues were $139 million, ProductBoost revenues were $28 million, and Logistics revenues were $122 million, down YoY by 74%, 55%, and 40%, respectively.
  • Adjusted EBITDA: Adjusted EBITDA was a loss of $23 million, an improvement of 81% YoY.
  • Net Loss: Net Loss was $58 million, a 90% YoY improvement. Net Loss per share was $0.09, compared to a loss of $3.04 per share in the fourth quarter of fiscal 2020.
  • Cash Flow: Cash flows from operating activities were negative $49 million, compared to negative $24 million in the fourth quarter of fiscal 2020. Free Cash Flow was negative $50 million, compared to negative $25 million in the fourth quarter of fiscal 2020.

“The financial health of our business and the future growth of Wish is dependent on improving our user experience, deepening our merchant relationships, and achieving organizational efficiencies. When we get these three foundational pillars fortified, we expect to drive the company into a new era of growth,” said Vijay Talwar, Wish CEO.

“As part of our turnaround strategy, we have made the difficult decision to reduce our global workforce. We are also making other cost reductions in order to right-size the business. These initiatives are critical to the long-term success and sustainability of Wish,” Talwar concluded.

Fourth-Quarter 2021 and Fiscal Year 2021 Consolidated Financials

The following tables include unaudited GAAP and non-GAAP financial highlights for the periods presented:

Revenue

(in millions, except percentages; unaudited)

Three Months Ended Year Ended
December 31, December 31,

 

2021

 

 

2020

YoY %

 

2021

 

 

2020

YoY %

 
Revenue

$

289

$

794

(64

)%

$

2,085

$

2,541

(18

)%

Core marketplace revenue

$

139

$

527

(74

)%

$

1,177

$

1,827

(36

)%

ProductBoost revenue

$

28

$

62

(55

)%

$

165

$

200

(18

)%

Marketplace revenue

$

167

$

589

(72

)%

$

1,342

$

2,027

(34

)%

Logistics revenue

$

122

$

205

(40

)%

$

743

$

514

45

%

Other Financial Data

(in millions, except percentages; unaudited)

Three Months Ended Year Ended
December 31, December 31,

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Net loss

$

(58

)

$

(569

)

$

(361

)

$

(745

)

% of Revenue

 

(20

)%

 

(72

)%

 

(17

)%

 

(29

)%

Adjusted EBITDA*

$

(23

)

$

(118

)

$

(199

)

$

(217

)

% of Revenue

 

(8

)%

 

(15

)%

 

(10

)%

 

(9

)%

* Indicates non-GAAP metric. See below for more information regarding our presentation of non-GAAP metrics in the section titled: “Use of Non-GAAP Financial Measures.”

Forward Looking Guidance – Q1 2022

(in millions, except percentages, unaudited)

We expect the following financial results for Adjusted EBITDA in the period presented below:

 

Three Months Ended

March 31, 2022

Adjusted EBITDA*

($70)

to

($60)

% Growth YoY

11%

 

24%

* Wish has not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net income (loss) for total Adjusted EBITDA or to forecasted GAAP income (loss) before income taxes for segment Adjusted EBITDA within this earnings release because the company is unable, without making unreasonable efforts, to calculate certain reconciling items with confidence. These items include but are not limited to income taxes which are directly impacted by unpredictable fluctuations in the market price of the company’s stock.

Additional Disclosures

February 2022 Restructuring Plan

On February 24, 2022, the company’s Board of Directors approved a restructuring plan to refocus the company’s operations to support sustainable long-term growth, better align resources, and improve operational efficiencies. The company expects the restructuring plan to be substantially implemented by the end of fiscal year 2022.

The restructuring plan includes i) reducing the company’s headcount by approximately 15% (or approximately 190 positions), ii) exiting various facility leases, and iii) reducing and realigning vendor expenditures. In connection with the restructuring plan, the company estimates that it will incur one-time charges of $3 million for employee severance and other personnel reduction costs and a maximum of $21 million consisting of costs to exit certain company facility leases and related noncash impairments of lease assets and property and equipment. The company anticipates that related severance payments will occur by the end of the second quarter of 2022. The company expects to achieve an approximate range of $32-37 million in annualized cost savings as a result of the restructuring plan.

Material Weaknesses

During the preparation and the audit of the company’s consolidated financial statements for the year ended December 31, 2021, management and the company’s independent registered public accounting firm identified two material weaknesses in the company’s internal controls over financial reporting: i) the company did not design and maintain effective controls over information technology general controls and ii) the company did not fully implement components of the COSO framework. The management team is developing a remediation plan. We will further address and explain these two material weaknesses in our 10-K filing.

Conference Call & Webcast Information

Wish will host a live conference call to discuss the results today at 2:00 p.m. PT / 5:00 p.m. ET. A link to the live webcast and recorded replay of the conference call will be available on the investor relations section of Wish’s corporate website. The live call may also be accessed via phone at (833) 664-1138 toll-free domestically and at (470) 414-9349 internationally. Please reference conference ID: 6055448.

About Wish

Wish brings an affordable and entertaining shopping experience to millions of consumers around the world. Since our founding in San Francisco in 2010, we have become one of the largest global ecommerce platforms, connecting millions of value-conscious consumers to over half a million merchants globally. Wish combines technology and data science capabilities and an innovative discovery-based mobile shopping experience to create a highly-visual, entertaining, and personalized shopping experience for its users. For more information about the company or to download the Wish mobile app, visit www.wish.com or follow @Wish on Facebook, Instagram and TikTok or @WishShopping on Twitter and YouTube.

Use of Non-GAAP Financial Measures

We provide Adjusted EBITDA, a non-GAAP financial measure that represents our net income (loss) adjusted to exclude: interest and other income (expense), net (which includes foreign exchange gain or loss, foreign exchange forward contracts gain or loss and gain or loss on one-time non-operating transactions); provision or benefit for income taxes; depreciation and amortization; stock-based compensation expense and related payroll taxes; lease impairment related expenses; remeasurement of redeemable convertible preferred stock warrant liability; and other items. Additionally, in this news release, we present Adjusted EBITDA Margin, a non-GAAP financial measure that represents Adjusted EBITDA divided by revenue. The reconciliation between historical GAAP and non-GAAP results of operations is provided below. Our management uses Adjusted EBITDA in conjunction with GAAP and other operating performance measures as part of its overall assessment of the company’s performance for planning purposes, including the preparation of its annual operating budget, to evaluate the effectiveness of its business strategies and to communicate with its board of directors concerning its financial performance. Adjusted EBITDA should not be considered as an alternative financial measure to net loss, which is the most directly comparable financial measure calculated in accordance with GAAP, or any other measure of financial performance calculated in accordance with GAAP.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to, statements regarding Wish’s outlook including expectations with respect to revenue and adjusted EBITDA, priorities, new business strategies and restructuring efforts, including cost-saving measures, expectations regarding turnaround efforts, including a reduction in force and real estate footprint, timelines regarding our ability to execute on new business strategies and our restructuring plan, material weaknesses in internal controls and expectations regarding a remediation plan, new executive hires, including CEO transition, growth opportunities, and quotations from management. In some cases, forward-looking statements can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “foresees,” “forecasts,” “guidance,” “intends” “goals,” “may,” “might,” “outlook,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “targets,” “will,” “would” or similar expressions and the negatives of those terms. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: our ability to attract, retain and monetize users; risks associated with software updates to the platform; the effectiveness of our CEO transition; increasing requirements on collection of sales and value added taxes; the success of our execution on new business strategies; compromises in security; changes by third-parties that restrict our access or ability to identify users; competition; disruption, degradation or interference with the hosting services we use and infrastructure; our financial performance and fluctuations in operating results; pressure and fluctuation in our stock price, including as a result of short selling and short squeezes; challenges in our logistics programs; challenges in growing new initiatives; the effectiveness of our internal controls; the continued services of members of our senior management team; our ability to offer and promote our app on the Apple App Store and the Google Play Store; the dual class structure of our common stock; our brand; legal matters; the ongoing COVID-19 pandemic; supply chain issues; and economic tension between the United States and China. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Further information on these and additional risks that could affect Wish’s results is included in its filings with the Securities and Exchange Commission (“SEC”), including its most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, and future reports that Wish may file with the SEC from time to time, which could cause actual results to vary from expectations. Any forward-looking statement made by Wish in this news release speaks only as of the day on which Wish makes it. Wish assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

The unaudited financial results in this news release are estimates based on information currently available to Wish. While Wish believes these estimates are meaningful, they could differ from the actual amounts that the company ultimately reports in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Wish assumes no obligation and does not intend to update these estimates prior to filing its Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

A Note About Metrics

The numbers for some of our metrics, including MAUs, are calculated and tracked with internal tools, which are not independently verified by any third party. We use these metrics to assess the growth and health of our overall business. While these numbers are based on what we believe to be reasonable estimates of our user or merchant base for the applicable period of measurement, there are inherent challenges in measurement as the methodologies used require significant judgment and may be susceptible to algorithm or other technical errors. In addition, we regularly review and adjust our processes for calculating metrics to improve their accuracy, and our estimates may change due to improvements or changes in technology or our methodology.

ContextLogic, Inc.

Consolidated Balance Sheets

(in millions, unaudited)

As of December 31,

 

2021

 

 

2020

 
Assets
Current assets:
Cash and cash equivalents

$

1,009

$

1,965

Marketable securities

 

150

 

164

Funds receivable

 

17

 

83

Prepaid expenses and other current assets

 

48

 

102

Total current assets

 

1,224

 

2,314

Property and equipment, net

 

17

 

25

Right-of-use assets

 

18

 

43

Marketable securities

 

17

 

4

Other assets

 

7

 

11

Total assets

$

1,283

$

2,397

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable

$

67

$

434

Merchants payable

 

185

 

454

Refunds liability

 

23

 

77

Accrued liabilities

 

174

 

367

Total current liabilities

 

449

 

1,332

Lease liabilities, non-current

 

16

 

38

Total liabilities

 

465

 

1,370

Stockholders’ equity

 

818

 

1,027

Total liabilities and stockholders’ equity

$

1,283

$

2,397

ContextLogic, Inc.

Consolidated Statements of Operations

(in millions except per share amounts, unaudited)

Three Months Ended Year Ended
December 31, December 31,

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 
Revenue

$

289

 

$

794

 

$

2,085

 

$

2,541

 

Cost of revenue(1)

 

169

 

 

342

 

 

977

 

 

947

 

Gross profit

 

120

 

 

452

 

 

1,108

 

 

1,594

 

Operating expenses:
Sales and marketing(1)

 

89

 

 

583

 

 

1,102

 

 

1,708

 

Product development(1)

 

51

 

 

150

 

 

208

 

 

222

 

General and administrative(1)

 

44

 

 

230

 

 

165

 

 

295

 

Total operating expenses

 

184

 

 

963

 

 

1,475

 

 

2,225

 

Loss from operations

 

(64

)

 

(511

)

 

(367

)

 

(631

)

Other income (expense), net:
Interest and other income (expense), net

 

5

 

 

(2

)

 

16

 

 

(2

)

Remeasurement of redeemable convertible preferred stock warrant liability

 

 

 

(55

)

 

 

 

(110

)

Loss before provision for income taxes

 

(59

)

 

(568

)

 

(351

)

 

(743

)

Provision for income taxes

 

(1

)

 

1

 

 

10

 

 

2

 

Net loss

 

(58

)

 

(569

)

 

(361

)

 

(745

)

Net loss per share, basic and diluted

$

(0.09

)

$

(3.04

)

$

(0.57

)

$

(5.87

)

Weighted-average shares used in computing net loss per share
attributable to common stockholders, basic and diluted

 

648

 

 

187

 

 

629

 

 

127

 

 
Three Months Ended Year Ended
December 31, December 31,

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Cost of revenue

$

5

 

$

35

 

$

20

 

$

35

 

Sales and marketing

 

2

 

 

23

 

 

12

 

 

23

 

Product development

 

13

 

 

118

 

 

59

 

 

118

 

General and administrative

 

17

 

 

205

 

 

50

 

 

214

 

Total stock-based compensation expense

$

37

 

$

381

 

$

141

 

$

390

 

ContextLogic, Inc.

Consolidated Statements of Cash Flows

(in millions, unaudited)

Three Months Ended Year Ended
December 31, December 31,

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Cash flows from operating activities:
Net loss

$

(58

)

$

(569

)

$

(361

)

$

(745

)

Adjustments to reconcile net loss to net cash used in operating activities:
Noncash inventory write downs

 

1

 

 

 

 

13

 

 

 

Depreciation and amortization

 

2

 

 

3

 

 

9

 

 

12

 

Noncash lease expense

 

1

 

 

3

 

 

11

 

 

10

 

Stock-based compensation expense

 

37

 

 

381

 

 

141

 

 

390

 

Remeasurement of redeemable convertible preferred stock warrant liability

 

 

 

55

 

 

 

 

110

 

Other

 

4

 

 

(1

)

 

4

 

 

(2

)

Changes in operating assets and liabilities:
Funds receivable

 

10

 

 

(16

)

 

66

 

 

12

 

Prepaid expenses, other current and noncurrent assets

 

24

 

 

(16

)

 

54

 

 

(2

)

Accounts payable

 

(3

)

 

137

 

 

(367

)

 

263

 

Merchants payable

 

(31

)

 

(33

)

 

(269

)

 

(166

)

Accrued and refund liabilities

 

(32

)

 

30

 

 

(213

)

 

115

 

Lease liabilities

 

 

 

(3

)

 

(11

)

 

(10

)

Other current and noncurrent liabilities

 

(4

)

 

5

 

 

(28

)

 

13

 

Net cash used in operating activities

 

(49

)

 

(24

)

 

(951

)

 

 

Cash flows from investing activities:
Purchases of property and equipment and development of internal-use software

 

(1

)

 

(1

)

 

(2

)

 

(2

)

Purchases of marketable securities

 

(64

)

 

(41

)

 

(299

)

 

(266

)

Sales of marketable securities

 

 

 

 

 

50

 

 

 

Maturities of marketable securities

 

46

 

 

130

 

 

248

 

 

433

 

Net cash provided by (used in) investing activities

 

(19

)

 

88

 

 

(3

)

 

165

 

Cash flows from financing activities:
Proceeds from initial public offering, net of underwriting discounts and commissions

 

 

 

1,052

 

 

 

 

1,052

 

Proceeds from issuance of common stock through employee equity incentive plans

 

7

 

 

 

 

13

 

 

 

Payment of taxes related to RSU settlement

 

 

 

 

 

(5

)

 

 

Payments to repurchase common and redeemable convertible preferred stock

 

 

 

 

 

 

 

(1

)

Other

 

 

 

(5

)

 

(1

)

 

(5

)

Net cash provided by financing activities

 

7

 

 

1,047

 

 

7

 

 

1,046

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

(61

)

 

1,111

 

 

(947

)

 

1,211

 

Cash, cash equivalents and restricted cash at beginning of period

 

1,079

 

 

854

 

 

1,965

 

 

754

 

Cash, cash equivalents and restricted cash at end of period

$

1,018

 

$

1,965

 

$

1,018

 

$

1,965

 

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets:
Cash and cash equivalents

$

1,009

 

$

1,965

 

$

1,009

 

$

1,965

 

Restricted cash included within prepaid expenses and other current assets in the consolidated balance sheets

 

9

 

 

 

 

9

 

 

 

Total cash, cash equivalents and restricted cash

$

1,018

 

$

1,965

 

$

1,018

 

$

1,965

 

ContextLogic Inc.

Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA

(in millions except percentages, unaudited)

Three Months Ended Year Ended
December 31, December 31,

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenue

$

289

 

$

794

 

$

2,085

 

$

2,541

 

Net loss

 

(58

)

 

(569

)

 

(361

)

 

(745

)

Net loss as a percentage of revenue

 

(20

)%

 

(72

)%

 

(17

)%

 

(29

)%

Excluding:
Interest and other expense (income), net

 

(5

)

 

2

 

 

(16

)

 

2

 

Provision for income taxes

 

(1

)

 

1

 

 

10

 

 

2

 

Depreciation and amortization

 

2

 

 

3

 

 

9

 

 

12

 

Stock-based compensation expense

 

37

 

 

381

 

 

141

 

 

390

 

Employer payroll taxes related to stock-based compensation expense

 

2

 

 

8

 

 

9

 

 

8

 

Remeasurement of redeemable convertible preferred stock warrant liability

 

 

 

55

 

 

 

 

110

 

Lease termination and impairment related expenses

 

 

 

 

 

6

 

 

 

Recurring other items

 

 

 

1

 

 

3

 

 

4

 

Adjusted EBITDA

$

(23

)

$

(118

)

$

(199

)

$

(217

)

Adjusted EBITDA margin

 

(8

)%

 

(15

)%

 

(10

)%

 

(9

)%

ContextLogic Inc.

Reconciliation of GAAP Net Cash Used in Operating Activities to Non-GAAP Free Cash Flow

(in millions, unaudited)

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 
Cash used in operating activities

$

(49

)

$

(24

)

$

(951

)

$

 

Less:
Purchases of property and equipment

 

1

 

 

1

 

 

2

 

 

2

 

Free Cash Flow

$

(50

)

$

(25

)

$

(953

)

$

(2

)

Non-GAAP Statement of Operations

Our presentation of non-GAAP Statement of Operations excludes the impact of stock-based compensation expense and related payroll taxes. This measure is not a key metric used by our management and board of directors to measure operating performance or otherwise manage the business. However, we provide non-GAAP Statement of Operations as supplemental information to investors, as we believe the exclusion of stock-based compensation expense and related payroll facilitates investors’ operating performance comparisons on a period-to-period basis. You should not consider non-GAAP Statement of Operations in isolation or as a substitute for analysis of our results as reported under GAAP.

ContextLogic Inc.

Reconciliation of GAAP Statement of Operations to Non-GAAP Statement of Operations

(in millions, unaudited)

Three Months Ended December 31, 2021
GAAP Non-GAAP Adjustments Non-GAAP
Q4’21

 

(1)

 

 

(2)

Q4’21
 
Revenue

$

289

 

$

 

$

 

$

289

 

Cost of revenue

 

169

 

 

(5

)

 

 

 

164

 

Gross profit

 

120

 

 

5

 

 

 

 

125

 

Operating expenses:
Sales and marketing

 

89

 

 

(2

)

 

 

 

87

 

Product development

 

51

 

 

(13

)

 

(1

)

 

37

 

General and administrative

 

44

 

 

(17

)

 

(1

)

 

26

 

Total operating expenses

 

184

 

 

(32

)

 

(2

)

 

150

 

Loss from operations

 

(64

)

 

37

 

 

2

 

 

(25

)

Other expense, net:
Interest and other expense, net

 

5

 

 

 

 

 

 

5

 

Loss before provision for income taxes

 

(59

)

 

37

 

 

2

 

 

(20

)

Provision for income taxes

 

(1

)

 

 

 

 

 

(1

)

Net loss

$

(58

)

$

37

 

$

2

 

$

(19

)

 

1) Stock-based compensation

2) Payroll taxes related to stock-based compensation

Three Months Ended December 31, 2020
GAAP Non-GAAP Adjustments Non-GAAP
Q4’20

 

(1)

 

 

(2)

 

 

(3)

Q4’20
 
Revenue

$

794

 

$

 

$

 

$

 

$

794

 

Cost of revenue

 

342

 

 

(35

)

 

(1

)

 

 

 

306

 

Gross profit

 

452

 

 

35

 

 

1

 

 

 

 

488

 

Operating expenses:
Sales and marketing

 

583

 

 

(23

)

 

(2

)

 

 

 

558

 

Product development

 

150

 

 

(118

)

 

(1

)

 

 

 

31

 

General and administrative

 

230

 

 

(205

)

 

(4

)

 

 

 

21

 

Total operating expenses

 

963

 

 

(346

)

 

(7

)

 

 

 

610

 

Loss from operations

 

(511

)

 

381

 

 

8

 

 

 

 

(122

)

Other expense, net:
Interest and other expense, net

 

(2

)

 

 

 

 

 

 

 

(2

)

Remeasurement of redeemable convertible preferred stock warrant liability

 

(55

)

 

 

 

 

 

55

 

 

 

Loss before provision for income taxes

 

(568

)

 

381

 

 

8

 

 

55

 

 

(124

)

Provision for income taxes

 

1

 

 

 

 

 

 

 

 

1

 

Net loss

$

(569

)

$

381

 

$

8

 

$

55

 

$

(125

)

 

1) Stock-based compensation

2) Payroll taxes related to stock-based compensation

3) Remeasurement of redeemable convertible preferred stock warrant liability

 

Contacts

Investor Relations:
Randy Scherago, Wish

[email protected]

Media contacts:
Carys Comerford-Green, Wish

[email protected]

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