ContextLogic Wish Announced Q4 & FY2021 Earnings | Vijay Talwar Focus on Growth
SAN FRANCISCO–(BUSINESS WIRE)–Mar. 1, 2022– ContextLogic Inc. (d/b/a Wish) (Nasdaq: WISH), one of the largest mobile e-commerce 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.
| 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. |
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% |
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.
