Poshmark, Inc.

Good afternoon. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Poshmark fourth quarter and full year 2021 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Christine Chen, Head of Investor Relations, you may begin your conference.

Welcome to Poshmark's fourth quarter and full year 2021 conference call. Joining me today are Manish Chandra, our Founder, Chairman, and CEO, and Rodrigo Brumana, 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 community's business and strategy, 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 and our filings with the SEC, including our most recent annual report on Form 10-K and subsequent filings. 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 this 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 fourth quarter and full year 2021 earnings call. I'm pleased to welcome Rodrigo Brumano, who joined us as our CFO in December. He will take you through our fourth quarter and full year performance in a moment. But first, I wanted to share some of the key highlights. We had a very strong finish to a historic year for Boschmark with record GMV and revenues. Despite a very unpredictable and volatile environment globally, I'm pleased to report that we delivered our second year of operating profitability during our first year as a public company. Full-year revenue grew 25% to $326 million, which on a two-year basis represents 59% growth. Full-year GMV grew 27% to $1.8 billion, which is 65% growth on a two-year basis. As we mentioned on our prior earnings call, we began adjusting our marketing spend in the middle of Q3 and started seeing the positive impact on October GMV growth, which continued throughout our fourth quarter, resulting in record TTM active buyers of 7.6 million. Throughout the year, consumers came to Poshmark to discover and shop the latest trends, and this culminated in our strongest ever holiday performance. Fourth quarter sales reflected Poshmark as a go-to destination for self-gifting and unique gift-giving items as consumers celebrated the holidays by attending events and seeing family. We saw a surge in demand for luxury items with giftable accessory brands like Van Cleef and Art Pal up 890% and Loewe up 385%. We also saw spikes in dressed-up styles with suits and blazers up 215% year-over-year and one-shoulder dresses up 92% year-over-year, while cold weather staples such as buffers, ski suits, and Uggs surged at the end of the quarter. and we saw demand for one-of-a-kind unique vintage items with searches for vintage up 42% in the fourth quarter. We continue to lead the three trends shaping the future of shopping, the shift to online, the shift to social, and the shift to secondhand. Our social marketplace is defining a new more human way to shop online by making the shopping and discovery experience more interactive and social. For the year 2021, social interactions were up 47% year over year to more than 44.6 billion. This social engagement drives community connection and conversion. One thing that distinguishes Washmark is that more than 80% of all purchases are preceded by social components such as a like, comment, or offer. Execution of our four long-term growth strategies contributed to our strong fiscal performance and are the foundation for driving GMV revenue and active buyer growth. Our strategies include category expansion, product innovation, new seller tools, and international growth. First, we continue to focus on growing GMV through category expansion to increase share of wallet with consumers and grow our overall market share. We think of our category growth in two ways. Core categories at all price points make up 93% of our GMV. Our marketplace is a leading fashion destination, which is why women's, men's, and kids' apparel make up 45% of GMV and is our largest category. Shoes are another 20%, bags are 18%, and accessories are the remaining 10%. We see opportunities to increase our wallet share with shoppers by focusing on our core segments, particularly in high growth categories such as affordable luxury like shoes and bags, as well as introducing new categories to make Poshmark a shopping destination for all style needs. The balance of our GMV 7% comes from our expansion categories, which include beauty, home, toys and games, and now pets and electronics, which we launched in 2021. GMV from premium-priced products, which we define as $200-plus items, has experienced more than 1.5 times the growth of overall GMV, driven by bags and shoes in particular. As a result, GMV contribution from these premium $200-plus items increased to the low 20s as a percentage of GMV in 2021. Higher contribution from premium-priced products was one of the factors that drove higher AOV to $40 in 2021, up from $35 in 2020. We are committed to growing our market share in premium price products, as evidenced by the strategic investment we made in SuedeOne in the fourth quarter to expand our authentication services. We're strategic about our approach to categories and evaluate new additions based on fit, community demand, and potential TAM, while staying focused on keeping our marketplace fresh, relevant, and engaging. Because we are an asset-like model, we can enter a new category with minimal investment. Ahead of the holiday season, we launched the electronics category, and we are encouraged by the uptake in new buyers and sellers who are attracted to Poshmark's social shopping experience. 35% of electronic buyers are new buyers, and 18% of electronic sellers are first-time sellers. Average AOV of electronic items is higher than our overall AOV. Initial demand has been strong, with video games plus consoles leading the pack, followed by media, cell phone and accessories, headphones, and cameras. While our expansion categories are still small, representing just 7% of GMV, they are growing faster than our core categories, and they are key to our long-term growth as we expand beyond apparel and accessories. Another expansion area is our work with brand closets. Since launching in October, we have delivered 6x monthly GMV growth and seen strong interest from large-scale brands and retailers. Signing on, several more new partners were excited to directly connect with and sell to Poshmark's community of more than 80 million registered users. These partners consistently share the Poshmark's rich and real-time insights, are valuable in helping them effectively address consumer preferences, and reach new millennial and Gen Z audiences. Second, we focus on product innovation to drive user engagement and buyer conversion, which is fundamental to the retention of our user cohorts and GMB growth. Boschmark is a style destination where shoppers come to discover, follow, and shop for fashion. In the fourth quarter, we began rolling out Shop by Trend, a new feature that strengthens searchability and engagement, contributing to the stickiness of our platform and user retention. We completed the full rollout in mid-January and are excited to see growth in daily page views, listing clicks, likes, and conversion. Gen Z shoppers on Poshmark are increasingly shopping by trend as evidenced by the growth in TikTok-driven trend searches. And we are excited to continue innovation in this area. We're working to integrate our acquisition of SuedeOne, a sneaker authentication platform that combines machine learning technologies, computer vision, human expertise to conduct virtual authentication. We anticipate launching this capability later in 2022 on our social marketplace. Ensuring authenticity and quality of supply will build more trust and loyalty with our shoppers, create a more efficient and sustainable approach to authentication, and accelerate growth in sneakers and other premium-priced categories. Since we expanded our partnership with a firm in the U.S. to provide buy-now-pay-later at the end of July to include the $50 to $200 price range, more of our listings are now eligible for pay-over-time solutions. We saw adoption of these options accelerate through the remainder of the year, helping drive faster GMV growth during the fourth quarter in the $50 to $200 price range and in the premium priced items than the rest of the business. Delivering innovative, easy-to-use, and effective services to help sellers market, merchandise, and sell their listings is core to our long-term growth. Our sellers are the heart of the Poshmark community. Casual sellers, which we define as those who generate less than $10,000 in GMV annually, represent the majority of our GMV. Casual sellers often evolve to become pro sellers over time, given the ease of monetizing their closets on our platform. While the growth and health of our casual seller cohorts continues to be important for Poshmark, we are focused on growing our pro seller base, those who contributed $10,000 or more. which experienced three times the growth in GMV in 2021 compared to casual sellers. At the end of October, we launched Closet Insights, providing our sellers with real-time data on their sales and inventory. We also launched MyShoppers, our CRM for pro sellers that has driven GMV lift for those who have adopted it. We also saw continued strong adoption of our bulk listing tools in the fourth quarter. Pro sellers had the highest adoption rate of 30%, And those who use bulk actions saw GMV lifts from increased orders. Investing in seller-focused product innovation will continue to drive long-term GMV growth and marketplace differentiation. Finally, we are focused on enhancing our enterprise selling services to bring more professional sellers, brands, and retailers to our marketplace. This includes providing them with innovative tools and technology to help them grow and scale. Expanding our international footprint is our fourth key strategic focus, and we continue to invest ahead of revenue for the long term. In 2021, international GMV grew 3x faster than the U.S., but from a much smaller base driven by Canada. While our newer markets, Australia and India, are important to our long-term growth, as we mentioned on our last call, we do not expect meaningful contribution from these markets in 2022. Our asset-like model enables us to seed new markets early to establish a presence in the rapidly growing resale space and nurture them over time with minimum initial investment. As we look to our three-year anniversary in Canada in 2022, the majority of our international investment will be focused on driving growth through advertising, community development, and shipping innovation. We're very excited to begin holding in-person events again across the country. to strengthen community connections and accelerate growth in this market. In conclusion, our vision for Poshmark is to become the world's leading social marketplace and the number one destination for sellers around the world. We're focused on making strategic investments that drive long-term growth, give the best overall experience for sellers, and make our marketplace the most trusted destination for buyers. Our highly engaged community gives us confidence that we can navigate near-term headwinds, and we will continue to adjust our marketing to accelerate growth. Because our millions of sellers are constantly listing new products, our marketplace is highly adaptable and responsive to buyers changing demands, and we are not impacted by supply chain disruptions. We're optimistic that beginning in 2022, consumers will once again attend events and see friends and family, unlocking pent-up demand for apparel and accessory purchases. Our resale marketplace enables shoppers to rotate styles, mix trends, and give a second life to items, contributing to a more sustainable fashion ethos for consumers. Now, I'd like to turn it over to Rodrigo to dive deeper into the financials.