$WISH - Here's the Q2 2021 Shareholder Letter if you haven't see it yet. TL:DR - Revenue down to $656 million or 6% YoY decrease. Logistics revenue up 126% YoY, but was offset by a 29% decrease in Marketplace revenue. Long story short: WISH had a record year in Q2 2020 due to the lockdowns and increased mobile usage. The growth wasn't sustainable once things started to get back to normal. Resulting in the hard miss in earnings. Things are expected to pick back up in 2022 (guh). No forward guidance on Q3 revenue.
Quick Notes/Summary from the earning call:
- Basically if you read the shareholder letter that's the first 10 minutes of prepared remarks from the CEO.
- CFO Search: Expecting to hire a new CFO by EOY.
- No longer the #1 customer compliant that's product quality now.
- Expected user retention to increase due to the better logistics obviously didn't happen.
- Piloting Logistics as a service for non-WISH vendors. Too early to share any details, but they're encouraged by the early feedback by participants.
- WISH local represent 10% of total shipping volume up 3% QoQ. In some local markets WISH local represents a significant amount of shipping volume. (MX - 60%, IT/ES - 20% for example.)
- Overall the CEO sound positive about the current state of logistics.
- Scaling back on marketing spend, until the LTV:CAC (Customer Lifetime Value to Customer Acquisition) ratio makes sense based on their data.
- Marketing cost rose significantly due to the new iOS privacy changes. New privacy changes caused marketing to be focused on android and further drove up cost. On some platforms CPC doubled YoY and on other Cost per thousand (CPM) rose 50% YoY.
- TLDR: Stop marketing spending in segments with little return.
- Forward outlook
- As a company they're focusing on a few initiative to make a better user experience/increase retention. Product Quality, user engagement, and app performance (basically the new ELT hires was to drive these initiatives)
- Q3 to date - down 40% revenue with the core marketplace YoY. (so another 11% QoQ). Expected to drop further with reduction in marketing. (I believe this is what they said. Not 100% here) The marketing reduction starting in July. Topline will be driven by significantly lower marketing spend. Previous marketing was focused on getting new users/app installs aka why the lower marketplace revenue.
- Marketing expenses will still low until they feel the LTV:CAC ratio is good. Likely until 2022 when they feel their initiatives will start showing value.
- Looking to add more brand name/ higher quality items
- New revenue share structure to incentive higher quality items and fast ship times.
Personal commentary: Guhhhhguuhhguuughh. Long term sounds they know what their issues are and are working on fixing them (crackpipe amazon image) to create a sustainable business. The logistics business they're building out sounds like it could be a major revenue source especially in other countries as they further build out the business. No mentions of the payment license so unknown whats the plan there. So in summary: These bags are heavy, maybe I'll be able to get rid of them in 2022. (guh) So I guess i'm part of thetagang for the next year.