Poshmark, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2020 Poshmark Inc. Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Christine Chen, Head of Investor Relations. Thank you. Please go ahead.

Welcome to Poshmark's fourth quarter and full year 2020 conference call, our first call as a public company. Joining me today are Manish Chandra, our founder, chairman, and CEO, Anand Kashyap, our 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 potential 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 than 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, the final prospectus for our IPO filed with the SEC on January 14, 2021, and subsequent reports that we filed with the SEC included in our annual report on 10-K for the year ended December 31, 2020. 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'll 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 the replay of this call. And with that, I'll turn it over to Manish.

Thanks, Christine. Hello and welcome, everyone. Thank you for joining us for our first earnings call as a public company. I hope you're all doing well and staying safe and healthy in these challenging times. One year ago today, the World Health Organization declared COVID-19 a pandemic and our lives were forever changed. My heart goes out to those who have lost loved ones and to everyone affected by this unprecedented health and economic crisis. Looking back on the year, I'm incredibly proud of how our team came together to support our employees and community during a very unpredictable and volatile time. We not only navigated through a very challenging year, we also delivered profitability for the first time and accelerated momentum in the business. Before we discuss our fourth quarter and full year results, I want to take a step back to reflect on our mission and provide some historical context to help bring our performance into focus. Poshmark was born from a vision I had nearly a decade ago, where people are empowered by technology to make shopping human and social again, while pursuing their passions, supporting sustainability and ultimately thriving financially. Our mission is to put people at the heart of commerce, empowering everyone to thrive. By pairing technology with people's inherent desire to socialize, we built a vibrant social marketplace engineered to enable seamless e-commerce transactions and create hyper-engagement. Our social marketplace is designed to serve everyone. Whether you're looking to save money, make money, find unique items, or discover new brands, Users come to Poshmark to shop and sell everything from apparel accessories and beauty to home goods, luxury items, and now pets merchandise. We have an asset life model and hold no inventory and instead focus on making the buying and selling experience incredibly seamless, easy, and social through the power of technology. We're the leader at the intersection of three key trends shaping the future of shopping. The shift to online, the shift to social, and the shift to secondhand. Many of these trends are led by younger generations who continue to grow their spending power as they age. But the beauty of Poshmark is that we have a broad appeal across generations. We grow our marketplace by growing our overall community of users. These users activate as buyers and sellers, creating a virtual flywheel of growth and monetizations. When users join, they connect with each other through social interactions, which grew 48% to $30.4 billion in 2020. Sellers are at the heart of the Poshmark community, and we welcome sellers of all types, from resellers to retailers, side hustlers to professional sellers. Most of our sellers are what we call casual sellers, people who are selling items that they can easily source from their closet. The beauty of our social marketplace is that our users, who spend an average 27 minutes daily on our app, continue to engage and re-engage over time, both as buyers and as sellers. And this fuels a high-velocity flywheel of organic growth. Anand, our CFO, is going to take you through the numbers in more detail. But I want to walk you through some of the fourth quarter and 2020 full-year highlights. We reported a strong fourth quarter and grew our GMB and revenue by 28% and 27% respectively, as our community of buyers and sellers continued to embrace Poshmark's social model. For fiscal year 2020, GMB and revenues grew 29% and 28% respectively to $1.4 billion and $262.1 million. We delivered our third consecutive quarter of adjusted EBITDA profitability with $4.2 billion in adjusted EBITDA and 6.1% in adjusted EBITDA margin. For fiscal year 2020, our first year of profitability, adjusted EBITDA was $34.3 billion with 13.1% margin. We continue to focus on marketing efficiency while investing in growth. We're entering this new chapter as a public company with a business that is stronger than ever, and this was driven in large part by great execution of our four growth strategies. Our first strategy is to focus on innovation to drive user engagement, which is fundamental to the retention of our user cohorts and GMB growth. To make discovery and shopping even easier for buyers, we remain focused on optimizing search, which includes leveraging personalization and strengthening matching to drive conversions. We believe there is enormous potential here, and we are working hard to extend personalized merchandising to even more areas of our marketplace experience. In August, we completed the rollout of Boss Stories, our first video commerce feature that enables sellers to market their listings in short videos and photos, and allows buyers to discover and shop items directly from these videos. Just last month, we began testing a highly requested capability that allows sellers to add videos directly into their listings, providing new ways to market their products, drive traffic to their closets, and engage with potential buyers. These listing videos will automatically be added onto Posh Stories, continuing our goal to bring video into the heart of Poshmark's social marketplace. Growing our international footprint and capability is a second key strategic focus, and we plan to invest ahead of revenue. The success of our Canadian market, which launched in May 2019, provides a roadmap for continued international expansion. In February of 2021, we launched Boschmark in Australia, our second international market. We're excited to offer Australians a simple, social, and sustainable way to shop, sell, and connect. With this expansion, whether you are in US, Canada, or Australia, all users will be able to switch their app view between countries to see listings, get style inspiration, and engage with each other socially, fostering personal connections across the world. Our third strategy is to go through category expansion. And in 2020, we launched two new categories, beauty and wellness, and toys and games. And just a few weeks ago, we launched pets. As we think about category expansion, we want to address the style needs of the entire family. These new offerings demonstrate the scalability of our model. Our fourth strategy is to deliver robust, easy-to-use and effective seller services to help sellers market and sell their product offering. Our social marketplace makes it very easy for anyone to sell, and we provide incredible demand generation services to attract shoppers to sellers' listings. In September, we released Drop Soon feature, which allowed sellers to pre-market items that are not yet available for purchase. Buyers can like the items to be notified when it's available for sale, building demand prior to the product drop and facilitating quicker sell-through. This feature has been particularly well received by professional resellers, brands, and boutiques who are managing deep inventory. From day one, we have been committed to giving our sellers tools to simplify and scale their business. And we are excited to take this to the next level to ensure we're the social store for everyone. We're in the early stages of investing in new technology and services to help our sellers spend time doing what they love best, which is connecting with each other and serving their customers. And this includes building out capabilities for sellers who are scaling up their operations. In January, we started rolling out a new feature that gives sellers the ability to list items with discounted shipping to a small segment of sellers. Previously, shipping discounts were only available through private negotiations and offers. We are encouraged by the initial conversion rates and expect to roll this out to the entire community this month. This month, we reintroduced Posh Party Live, which is a flagship Poshmark event series that goes back to the early days of our founding and is a popular networking and social event for our community. Only this time, instead of physical events, Posh Party Live will be held in a new virtual format. Poshers across the US, Canada, and Australia will be able to join these virtual events to socialize and gain seller-focused educational programming. While the world remains socially distant, we are keeping the Poshmark community connected through live virtual events. And when it is safe to do so, we will plan to introduce in-person events, which I know everyone is eager to get back to. During these extraordinary times, consumers' craving for social interaction has only been intensified, and the Poshmark experience uniquely brings people and technology together to make shopping fun and social again. The simplicity of our business model makes it possible for any type of seller, small or large, to thrive by selling to buyers who seek a more social and sustainable way to shop. Guided by our mission and values, we have more confidence than ever that our strategies will continue to accelerate growth into 2021 and beyond. We remain focused on supporting our community, innovating for a fantastic user experience, and expanding the reach and offerings of our social marketplace as we continue to lead the future of shopping. In conclusion, we had a strong fourth quarter in 2020. where the Poshmark team really put their energy into executing for the benefits of our entire community. We believe that Poshmark has an incredible, compelling growth potential for years and decades to come. We have high conviction around making the investments that are going to allow us to achieve that full potential. Poshmark will continue to be a place where you can save money, make money, and find human connection. And with that, I will turn it over to Anand.