POSHMARK, INC. The following discussion of our financial condition and results of operations should be read together with our condensed financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes and our Annual Report on Form 10-K filed with theSEC onMarch 23, 2021 . The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. See the discussion under "Note Regarding Forward-Looking Statements" elsewhere in this Quarterly Report on Form 10-Q for more information. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and particularly in the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q, as well as in our other filings with theSEC . Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full calendar year or any other period.
Overview
We are a social marketplace that combines the human connection of a physical shopping experience with the scale, reach, ease, and selection benefits of eCommerce. In doing so, we bring the power of community to buying and selling online. We createdPoshmark in 2011 to make buying and selling simple, social, and fun. Pairing technology with the inherent human desire to socialize, our marketplace creates passion and personal connections among users. We dynamically curate our marketplace into lifestyle categories that our users love, including apparel, accessories, footwear, home, beauty, and pets. Powered by our proprietary technology, our social marketplace is purpose-built to enable simple transactions, seamless logistics, and an engaging experience at scale. As ofMarch 31, 2021 , we had 6.7 million Active Buyers. We empower people to sell a few items or to become successful entrepreneurs by providing them with end-to-end seller tools. We refer to this as "making selling a superpower." Our comprehensive infrastructure makes it easy for sellers to build their businesses with seamless listing, merchandising, promotion, pricing, and shipping. Sellers use content, inventory selection, and social interactions to monetize their listings and drive growth. Our transparent fee structure aligns our success with the success of our sellers. Our fee is 20% of the final price for sales$15 and over, or a flat rate of$2.95 for sales under$15 . We attract, engage, and retain sellers by offering the community the benefits of social connection with the ability to combine personal passion and economic empowerment. We do not own or manage inventory as products are listed, managed, sold, and shipped by our sellers, utilizing our transaction tool that makes the selling process seamless and easy. This asset-light model creates scalability and favorable working capital dynamics. Our social features make the discovery and purchase process simple and enticing for buyers, fostering high engagement and retention. The engagement of our community has fueled strong growth in our business, supported by attractive unit economics and efficient user acquisition. We enable buyers to discover, connect, and curate their network and news feed with that of other users who share similar styles and personal preferences, creating a fun shopping experience. Our marketplace is vast, with sellers listing millions of secondhand and new items across multiple categories. We use data-driven personalization to customize each user's feed to feature the most relevant listings and make it easy to quickly search for and find products of interest. Furthermore, sellers list a variety of items across all price points, with the added benefit of being able to negotiate offers directly with buyers seeking to optimize their budget, allowing sellers to manage their listings to achieve their individual objectives. Because our marketplace features a massive selection of secondhand items, buyers are also able to support their personal style while minimizing their environmental impact. As ofMarch 31, 2021 , our community has generated over$4.8 billion in GMV since 2011 with$441.0 million in the three months endedMarch 31, 2021 and$309.3 million in the three months endedMarch 31, 2020 , representing a 43% growth rate. In the three months endedMarch 31, 2021 and 2020, we had revenue of$81.0 million and$57.1 million , respectively, representing a 42% growth rate. In the three months endedMarch 31, 2021 , we generated a net loss of$74.5 million and Adjusted EBITDA of$4.2 million compared to a net loss of$11.0 million and Adjusted EBITDA loss of$8.7 million in the three months endedMarch 31, 2020 .
Key Operating and Non-GAAP Financial Metrics
We collect and analyze operating and financial data to evaluate the health of
our community, allocate our resources (such as capital, time, and technology
investments), and assess the performance of our business. In addition to
revenue, net loss, and other results under GAAP, the key operating and financial
metrics we use are GMV, Active Buyers, and Adjusted EBITDA.
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Gross Merchandise Value. Our gross merchandise value, or GMV, is the total
dollar value of transactions on our platform in a given period, prior to returns
and cancellations, and excluding shipping and sales taxes. GMV is a measure of
the total economic activity generated by our marketplace, and an indicator of
the scale and growth of our marketplace and the health of our marketplace
ecosystem.
GMV
($ in millions)
[[Image Removed]]
Our GMV grew 43% from $309.0 million in the three months ended March 31, 2020 to
$441.0 million in the three months ended March 31, 2021 . Our quarterly GMV has
increased year-over-year for the past ten quarters. We have continued to add
users and enhance our social marketplace with the launch of new category
offerings like the launch of the pets category and expansion to Australia in
February 2021 .
Active Buyers. Active Buyers are unique users who have purchased at least one
item on our platform in the trailing 12 months preceding the measurement date,
regardless of returns and cancellations. An Active Buyer could have more than
one account if they were to use a separate unique email address to set up each
account. The number of Active Buyers is a key driver of GMV and revenue, as well
as a measure of the scale and growth of our buyer community. We believe it is
also an important indicator of our ability to convert user activity on our
marketplace into transactions. The number of Active Buyers has increased
steadily every quarter as we attract and retain users. Active Buyers can be new
users to our marketplace who make a purchase, existing users who convert into
buyers for the first time as our marketplace strengthens with more sellers and
items, or repeat buyers.
Active Buyers
(in thousands)
[[Image Removed]]
5,713 6,032 6,231 5,374 4,952 4,550 4,190 3,734 3,345 2,953 2,657 Q1 Q2 Q3 Q4 Q1
Q2 Q3 Q4 Q1 Q2 Q3 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 Active
Buyers measured as of the last day of the quarter presented
Active Buyers measured as of the last day of the quarter presented
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Adjusted EBITDA. We define Adjusted EBITDA as net loss attributable to common
stockholders, excluding depreciation and amortization, stock-based compensation
expense, interest income, other expense, net, and provision (benefit) for income
taxes. Adjusted EBITDA is a key performance measure used by our management and
board of directors to assess our operating performance and the operating
leverage in our business. We believe that Adjusted EBITDA helps identify
underlying trends in our business that could otherwise be masked by the effect
of the loss and expenses that we exclude in Adjusted EBITDA. Accordingly, we
believe that Adjusted EBITDA provides useful information to investors and others
in understanding and evaluating our operating results, enhances the overall
understanding of our past performance and future prospects, and allows for
greater transparency with respect to key financial metrics used by our
management in its financial and operational decision-making. See
"-Reconciliation of Non-GAAP Financial Measures" for more information and for a
reconciliation of net loss, the most directly comparable financial measure
calculated and presented in accordance with GAAP, to Adjusted EBITDA.
Adjusted EBITDA
($ in millions)
[[Image Removed]]
Key Factors Affecting Our Performance
Growth and Retention of Users. We focus on attracting new users and retaining existing users. New users and the social and transactional activities they contribute help keep existing users more active, increasing their lifetime value over time. Users engage in many ways on our social marketplace: they connect, they browse, they buy, and they sell. The positive relationship between new users and existing users illustrates the network effects of our marketplace. As ofMarch 31, 2021 , we had 6.7 million Active Buyers. User Engagement. The engagement of our community has fueled strong growth in our business, supported by attractive unit economics and efficient user acquisition. We believe that cultivating a robust network of users over the longer-term is crucial to bolstering broader community engagement, growing social interactions, and increasing GMV. Users can engage on our marketplace in a variety of activities that range from shopping and social interactions to buying and selling. The continuous increase in users, social interactions, and listings has led to steady activations of buyers and sellers across cohorts, resulting in increasing GMV for these cohorts. Cumulative % Sellers Activated as Buyers from Year 1 to Year 5 31% of First-Time Sellers Also Became Buyers in Year 1 40% 42% 44% 37% 31% Year of Seller's Year 2 Year 3 Year 4 Year 5 First Sale Investments in Growing OurUser Community . We have invested substantially in marketing to grow our user community and drive further awareness of our brand. These investments have enabled us to grow our base of new users, buyers, and sellers while continuing to retain buyers and sellers, resulting in strong growth of our GMV and revenue. Marketing expenses represented 44% and 61% of revenue in the three months endedMarch 31, 2021 and 2020, respectively. We intend to manage our marketing spend to balance growth and profitability. We will continue to invest in user acquisition and retention while the underlying user unit economics indicate the return on investment is strong. Investments in Platform Innovation. We invest in both the people and technology behind our platform. We also intend to continue to make significant investments in the technology and infrastructure of our platform to attract and retain buyers and sellers, expand the capabilities and scope of our platform, and enhance the user experience. We expect to continue to make significant investments to attract and retain employees, particularly engineers, data scientists, designers, product management, and operations personnel. All functions are important, and we intend to invest in our people to help us drive additional efficiencies across our marketplace. In addition, we may invest in new and existing businesses that may lower our margins temporarily but may enhance our platform capabilities, deliver revenue growth, and enable us to achieve and maintain long-term profitability. 26 -------------------------------------------------------------------------------- International Expansion. We began operations inCanada , the first country we expanded to afterthe United States , inMay 2019 . InFebruary 2021 , we expanded our operations toAustralia . As we continue our global expansion, we believe international demand for our platform will develop and increase. Accordingly, we believe there is a significant opportunity to grow our international business. We have invested, and plan to continue to invest, in the adoption of our platform and solutions internationally, including localization of our platform and the addition of critical capabilities to our platform required to serve those local markets. Impact of the COVID-19 Pandemic. The COVID-19 pandemic has had a variety of impacts on our business to date and will continue to impact our business in ways that remain unpredictable. In the initial weeks of the pandemic inthe United States , we experienced a significant decrease in GMV. In the month ofMarch 2020 , we had negative 13% year-over-year GMV growth which in turn impacted the year-over-year GMV growth for the quarter endedMarch 31, 2020 , which was 9%. Subsequently, in the quarter endedJune 30, 2020 , the year-over-year GMV growth rebounded to 42% as buyer and seller activity resumed. However, such trends may not continue and could be reversed. In particular, to the extent that federal and state governmental aid programs initiated in connection with the pandemic are reduced or terminated, consumer discretionary spending would likely decrease, which would have a negative impact on our business. As a result of the COVID-19 pandemic, the lives of our users, buyers, and sellers have been disrupted as people have been required to stay home and many have experienced significant economic and employment disruption. As many people have shifted to a work-from-home environment, there has been less of a need for some to purchase apparel. In some cases, buyers also have a decreased ability to spend on our marketplace due to economic concerns and pressures. In other cases, physical stores have remained closed or are viewed as potentially dangerous, leaving fewer offline shopping alternatives for people and driving demand to online alternatives, includingPoshmark . For our sellers, our marketplace has continued to serve as a means for additional income, though the requirement to handle their own logistics amid quarantine has proven difficult for many. Additionally, the social nature of our platform and the community we have built has attracted users throughout the pandemic to come shop, interact, and share. We have temporarily closed our headquarters and offices, with substantially all of our employees working remotely, temporarily lowering our operating expenses. Additional disruptions or a resurgence of offline shopping demand could adversely affect our business, results of operations, liquidity, and financial condition in future periods. The conditions caused by the pandemic are still evolving and we will continue to evaluate the potential impact of the pandemic on our business. See "Part II, Item 1A. Risk Factors" for further discussion of the possible impact of the COVID-19 pandemic on our business, operations and financial condition. Seasonality. Our business is seasonal in nature as it is affected by the cyclicality of the consumer as well as broader market conditions. Historically, we have often seen both stronger growth in the number of Active Users and Active Buyers and in engagement during the first quarter of the year. In addition, we have seen higher GMV in the fourth quarter of the year, followed by the third quarter, which we believe is due in part to the higher price points of seasonal apparel and footwear and the holiday season. We believe the recent growth in our business, as well as the recent effects of sales taxes and the COVID-19 pandemic, have partially masked these trends to date, and we expect the impact of seasonality to be more pronounced in our future quarterly results as our business matures.
Initial Public Offering
Our registration statement on Form S-1 related to our initial public offering (IPO) was declared effective onJanuary 13, 2021 , and our Class A common stock began trading on the Nasdaq Global Select Market onJanuary 14, 2021 . OnJanuary 19, 2021 , we closed our IPO, in which we issued and sold 6,600,000 shares plus an additional 990,000 shares subject to the underwriters' over-allotment option of our Class A common stock at the public offering price of$42.00 per share. We received net proceeds of$292.3 million after deducting underwriting discounts and commissions and offering expenses.
Components of Results of Operations
Net Revenue
We generate revenue from sellers for fees earned when they sell items they have listed on our social marketplace to buyers (20% of the final price for sales$15 and over, or a flat rate of$2.95 for sales under$15 ). The buyer also pays a shipping label fee as part of their order. On some orders, the shipping label fee exceeds our shipping label cost, which we record as revenue. For the three months endedMarch 31, 2020 and 2021, this revenue was 3% and 4%, respectively, of our total net revenue. Our revenue is recognized when we satisfy our performance obligations. We report both revenue from buyers and revenue from sellers based upon the net amount earned, which is reduced by certain buyer and seller incentives. Costs and Expenses Cost of Net Revenue. Cost of net revenue primarily consists of costs associated with credit card processing, transaction fees for order related payments, and hosting expenses associated with operating our platform. Cost of net revenue does not include depreciation and amortization. 27 --------------------------------------------------------------------------------
We expect cost of net revenue to increase in absolute dollars in future periods and to vary from period to period as a percentage of net revenue for the foreseeable future as we grow our platform by increasing Active Buyers and generating higher GMV.
Operations and Support. Operations and support expense primarily consists of personnel-related compensation costs, including stock-based compensation, incurred in providing support to users of our platform including authentication services that we provide. This expense also includes postage and shipping costs that we incur primarily from order losses and cancellations, and credits and incentives issued to buyers for customer satisfaction purposes in excess of shipping facilitation revenue. We expect that operations and support expenses will increase in absolute dollars for the foreseeable future as we continue to grow our operations and hire additional employees to support the scaling of our business. To the extent we are successful in becoming more efficient in supporting our users, we would expect operations and support expenses as a percentage of revenue to decrease over the long term. Research and Development. Research and development expense consist primarily of compensation expenses for engineering, product development, and design employees, including stock-based compensation, expenses associated with ongoing improvements to and maintenance and testing of our platform offerings including website, mobile apps, and other products, and other research and development programs. Research and development expenses are expensed as incurred. We capitalize certain costs associated with website development and software for internal use. We expect that research and development expenses will increase in absolute dollars and vary from period to period as a percentage of revenue for the foreseeable future as we continue to invest in research and development activities relating to ongoing improvements to and maintenance and testing of our platform offerings including website, mobile apps, and other products, and other research and development programs, including the hiring of engineering, product development, and design employees to support these efforts. Marketing. Marketing expense primarily consists of expenses associated with personnel-related compensation costs, including stock-based compensation, and costs related to user acquisition, public relations, marketing events such as Posh Parties, and business development. User acquisition costs primarily consist of costs associated with acquiring new users by spend on advertising channels such as television, Google, Facebook, Instagram,Snapchat , andTikTok . These marketing expenses also include promotional credits and incentives issued to buyers to encourage buyer activity on our platform in excess of shipping facilitation revenue and cost of referral incentives for new user acquisition. We plan to continue to invest in our marketing efforts, including hiring additional employees, in order to attract new users. We expect that marketing expenses will increase in absolute dollars and vary from period to period as a percentage of revenue for the foreseeable future as we plan to continue to invest in marketing to grow the number of Active Users and Active Buyers and increase our brand awareness. The trend and timing of our brand marketing expenses will depend in part on the timing of marketing campaigns. General and Administrative. General and administrative expense consists primarily of employee related costs including stock-based compensation for those employees associated with administrative services such as legal, human resources, information technology, accounting, and finance, and all related costs associated with our facilities, such as rent and office administration. These expenses also include certain third-party consulting services, facilities, IT shared services, meals and other corporate costs not allocated to other expense categories. We expect that general and administrative expenses will increase in absolute dollars and vary from period to period as a percentage of revenue for the foreseeable future as we focus on processes, systems, and controls to enable our internal support functions to scale with the growth of our business. We expect to incur additional expenses as a result of operating as a public company, including expenses to comply with the rules and regulations applicable to companies listed on a national securities exchange, expenses related to compliance and reporting obligations pursuant to the rules and regulations of theSEC , and expenses for general and director and officer insurance, investor relations, and professional services. We also expect rent expense and other facilities related costs to continue to increase in the future.
Depreciation and Amortization. Depreciation and amortization expense primarily consists of depreciation of computer equipment and software, furniture and fixtures, leasehold improvements, and website development and software for internal use.
We expect that depreciation and amortization expense will increase in absolute dollars as we continue to build out our network infrastructure and establish new office locations to support our growth.
Interest Income
Interest income primarily relates to amounts earned on our cash and cash equivalents and marketable securities.
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--------------------------------------------------------------------------------Other Expense, Net
Other expense, net mainly relates to changes in fair value of the Convertible Notes and redeemable convertible preferred stock warrants, and foreign exchange remeasurement gains and losses recorded from consolidating our foreign subsidiaries at each period end. Upon the closing on our IPO, the Convertible Notes converted into 1,400,560 shares of our Class A common stock. As a result, we expect other expense, net to be immaterial in future periods.
Provision (Benefit) for Income Taxes
Our provision (benefit) for income taxes consists primarily of foreign taxes and state minimum taxes inthe United States . As we expand the scale of our international business activities, any changes in theU.S. and foreign taxation of such activities may increase our overall provision (benefit) for income taxes in the future. We have established a valuation allowance for ourU.S. deferred tax assets, including federal and state NOLs.
We expect to maintain this valuation allowance until it becomes more likely than
not that the benefit of our federal and state deferred tax assets will be
realized by way of expected future taxable income in
Results of Operations
The following tables set forth our condensed consolidated results of operations
data and such data as a percentage of net revenue for the periods presented:
Three Months Ended March 31,
2020 2021
(in thousands)
Net revenue $ 57,108 $ 80,956
Costs and expenses (1):
Cost of net revenue, exclusive of depreciation and
amortization 9,897 12,970
Operations and support 8,536 14,894
Research and development 7,076 18,800
Marketing 34,596 35,478
General and administrative 7,458 18,743
Depreciation and amortization 711 790
Total costs and expenses 68,274 101,675
Loss from operations (11,166 ) (20,719 )
Interest income 328 86
Other expense, net
Change in fair value of redeemable convertible preferred
stock warrant liability (97 ) (2,816 )
Change in fair value of the convertible notes - (49,481 )
Loss on extinguishment of the convertible notes - (1,620 )
Other, net 6 (42 )
(91 ) (53,959 )
Loss before provision (benefit) for income taxes (10,929 ) (74,592 )
Provision (benefit) for income taxes 58 (70 )
Net loss attributable to common stockholders $ (10,987 ) $ (74,522 ) (1) Costs and expenses include stock-based compensation expense as follows:
Three Months Ended March 31,
2020 2021
(in thousands)
Operations and support $ 163 $ 2,218
Research and development 536 10,641
Marketing 307 3,289
General and administrative 793 7,993
Total $ 1,799 $ 24,141
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Comparison of Three Months Ended
Net Revenue
Three Months Ended March 31, Change
2020 2021 $ %
(dollars in thousands)
Net revenue $ 57,108 $ 80,956 $ 23,848 42 %
Net revenue increased $23.8 million for the three months ended March 31, 2021
compared to the same period in 2020. This growth was primarily due to an
increase in the volume of GMV on our marketplace to a total of $0.4 billion , an
increase of 43% for the three months ended March 31, 2021 compared to the same
period in 2020. The increase in GMV was substantially driven by the increase
in Active Buyers on the platform to 6.7 million for the trailing 12 months ended
March 31, 2021 , a 18% increase compared to the same period in 2020, and a 17%
increase in GMV per Active Buyer for the trailing 12 months ended March 31,
2021 compared to the same period in 2020.
Cost of Net Revenue
Three Months Ended March 31, Change
2020 2021 $ %
(dollars in thousands)
Cost of net revenue $ 9,897 $ 12,970 $ 3,073 31 %
Cost of net revenue increased $3.1 million for three months ended March 31, 2021
compared to the same period in 2020. The increase was driven by a $3.0 million
increase in costs related to overall volume increases on our marketplace,
including increased credit card processing fees and associated expenses, and an
increase in data hosting costs of $0.1 million to support the increased usage of
our platform and upgrades we made to our systems which were required to support
our growth.
Operations and Support
Three Months Ended March 31, Change
2020 2021 $ %
(dollars in thousands)
Operations and support $ 8,536 $ 14,894 $ 6,358 74 %
Operations and support expense increased $6.4 million for the three months ended
March 31, 2021 compared to the same period in 2020. The increase was primarily
driven by the combined effect from a $3.5 million increase in customer service
and support personnel costs, including $2.1 million in stock-based compensation,
mainly due to the satisfaction of the performance-based vesting condition for
our outstanding RSUs upon the effectiveness of our IPO in January 2021 , a $1.8
million increase in net shipping costs as a result of our growth, and a $1.0
million increase in credits and incentives issued to users for the purposes of
dispute resolution.
Research and Development
Three Months Ended March 31, Change
2020 2021 $ %
(dollars in thousands)
Research and development $ 7,076 $ 18,800 $ 11,724 166 %
Research and development expense increased $11.7 million for the three months
ended March 31, 2021 compared to the same period in 2020. The increase was
primarily due to an increase of $11.8 million in engineering personnel costs
required to support the growth of our business as we launch new innovations and
improve functionality on our platform, including $10.1 million in stock-based
compensation, mainly due to the satisfaction of the performance based vesting
condition for our outstanding RSUs upon the effectiveness of our IPO in January
2021 .
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Marketing
Three Months Ended March 31, Change
2020 2021 $ %
(dollars in thousands)
Marketing $ 34,596 $ 35,478 $ 882 3 %
Marketing expense increased $0.9 million for the three months ended March 31,
2021 compared to the same period in 2020. The increase was primarily driven by a
$3.6 million increase in marketing personnel costs, including $3.0 million in
stock-based compensation, mainly due to the satisfaction of the
performance-based vesting condition for our outstanding RSUs upon the
effectiveness of our IPO in January 2021 , offset by $2.6 million decrease in
spending on marketing programs, including decreased spending on television ad
campaigns and digital marketing.
General and Administrative
Three Months Ended March 31, Change
2020 2021 $ %
(dollars in thousands)
General and administrative $ 7,458 $ 18,743 $ 11,285 151 %
General and administrative expense increased $11.3 million for the three months
ended March 31, 2021 compared to the same period in 2020. This increase was
primarily driven by the net effect from increases of $8.7 million increase in
personnel costs which were required to support our growth and transition to a
public company and included $7.2 million in stock-based compensation mainly due
to the satisfaction of the performance-based vesting condition for our
outstanding RSUs upon the effectiveness of our IPO in January 2021 , increased
legal and consulting fees of $1.8 million required to support our public company
transition, and increased insurance costs of $1.1 million required as a result
of becoming a public company. These increases were partially offset by a $0.4
million decrease in chargeback costs due to lower fraud activity in the current
period.
Depreciation and Amortization
Three Months Ended March 31, Change
2020 2021 $ %
(dollars in thousands)
Depreciation and amortization $ 711 $ 790
Depreciation and amortization expense increased$0.1 million for the three months endedMarch 31, 2021 compared to the same period in 2020, primarily driven by an increase in capitalization of website and software development. Interest Income Three Months Ended March 31, Change 2020 2021 $ % (dollars in thousands) Interest income $ 328$ 86 $ (242 ) (74 )%
The decrease in interest income is due to the lower balance of our marketable securities and lower interest rates earned from our marketable securities.
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Other Expense, Net
Three Months Ended March 31, Change
2020 2021 $ %
(dollars in thousands)
Other expenses, net $ (91 ) $ (53,959 ) $ (53,868 ) 59,196 %
The increase in other expense, net is primarily due to an increase in fair value
of the Convertible Notes for the three months ended March 31, 2021 with no
comparable activity in the same period in 2020, and the change in fair value of
the redeemable convertible preferred stock warrant liability which was driven by
an increase in the fair value of the underlying redeemable convertible preferred
stock.
Provision (Benefit) for Income Taxes
Three Months Ended March 31, Change
2020 2021 $ %
(dollars in thousands)
Provision (benefit) for income taxes $ 58 $ (70 ) $ (128 ) (221 )%
The change in our provision (benefit) for income taxes is primarily attributable to a state income tax benefit related to 2020 state income taxes over-accrued.
GAAP and Non-GAAP Financial Measures
We also review the following GAAP and non-GAAP financial measures to evaluate
our business, measure our performance, identify trends affecting our business,
formulate business plans, and make strategic decisions.
Three Months Ended March 31,
2020 2021
(in thousands)
Net Loss $ (10,987 ) $ (74,522 )
Net Loss Income Margin(1) (19 )% (92 )%
Adjusted EBITDA $ (8,656 ) $ 4,212
Adjusted EBITDA Margin(2) (15 )% 5 %
(1) Net Loss Margin is calculated by dividing Net Loss for a period by revenue
for the same period.
(2) Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA for a period
by revenue for the same period.
Adjusted EBITDA
Adjusted EBITDA is a key performance measure that we use to assess our operating performance and the operating leverage in our business. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes.
We calculate Adjusted EBITDA as net loss attributable to common stockholders, adjusted to exclude:
• depreciation and amortization; • stock-based compensation expense; • interest income; • other expense, net; and • provision (benefit) for income taxes.
Adjusted EBITDA increased
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--------------------------------------------------------------------------------Reconciliation of Non-GAAP Financial Measures
We use Adjusted EBITDA and Adjusted EBITDA Margin in conjunction with GAAP
measures as part of our overall assessment of our performance, including the
preparation of our annual operating budget and quarterly forecasts, and to
evaluate the effectiveness of our business strategies. Our definition may differ
from the definitions used by other companies and therefore comparability may be
limited. In addition, other companies may not publish similar metrics.
Furthermore, this metric has certain limitations in that it does not include the
impact of certain expenses that are reflected in our condensed consolidated
statements of operations that are necessary to run our business. Thus, our
Adjusted EBITDA and Adjusted EBITDA Margin should be considered in addition to,
not as a substitute for, or in isolation from, measures prepared in accordance
with GAAP.
We compensate for these limitations by providing a reconciliation of Adjusted
EBITDA and Adjusted EBITDA Margin to the related GAAP financial measure, net
loss attributable to common stockholders. We encourage investors and others to
review our financial information in its entirety, not to rely on any single
financial measure, and to view Adjusted EBITDA and Adjusted EBITDA Margin in
conjunction with their respective related GAAP financial measures.
The following table provides a reconciliation of net loss to Adjusted EBITDA (in
thousands):
Three Months Ended March 31,
2020 2021
(in thousands)
Net loss attributable to common stockholders $ (10,987 ) $ (74,522 )
Adjusted to exclude the following:
Depreciation and amortization 711 790
Stock-based compensation 1,799 24,141
Interest income (328 ) (86 )
Other expense, net 91 53,959
Provision (benefit) for income taxes 58 (70 )
Adjusted EBITDA $ (8,656 ) $ 4,212 Liquidity and Capital Resources
As ofMarch 31, 2021 , our principal sources of liquidity were cash and cash equivalents of$551.4 million , and marketable securities of$23.3 million . Cash equivalents consisted of institutional money market funds, and cash in transit from third-party credit card providers that we receive within approximately three to five business days from the date of the underlying transaction. Marketable securities consisted of commercial paper, corporate bonds, andU.S. Treasury securities, which mature in twelve months or less.
As of
Since our inception, we have most often generated negative cash flows from operations and as ofMarch 31, 2021 , we had an accumulated deficit of$201.0 million , and we have financed our operations primarily through private sales of equity securities, payments received through our platform, and the issuance of convertible debt. Upon the closing of our IPO inJanuary 2021 , we received net proceeds of$292.3 million after deducting underwriting discounts and commissions and offering expenses. We believe our existing cash, cash equivalents, and marketable securities will be sufficient to meet our working capital and capital expenditures needs over at least the next 12 months. However, our liquidity assumptions may prove to be incorrect, and we could exhaust our available financial resources sooner than we currently expect. We may seek to raise additional funds at any time through the issuance of debt, equity, and equity-linked arrangements.
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