Poshmark, Inc.

Good afternoon, my name is Lisa and I will be your conference operator today. At this time, I would like to welcome everyone to the Poshmark first quarter 2022 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 would like to ask a question during this time, simply press star one on your telephone keypad. If you would like to withdraw your question, press star one again. Also, we do ask that you limit yourselves to one question. Thank you. I would now like to turn the conference over to Ms. Christine Chen. Please go ahead.

Welcome to Poshmark's first quarter 2022 conference call. Joining me today are Manish Chandra, our founder, chairman, and CEO, and Rodrigo Brumano, 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, 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 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 the call, we will 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 a replay of this call. And with that, I will turn it over to Manish.

Thanks, Christine. Hello and welcome, everyone. Thank you for joining us for our first quarter 2022 earnings call. We're pleased to report that we are off to a strong start in 2022. Our focus on our four core strategies, category growth, product innovation, new seller tools, and international growth remains the foundation for driving GMB revenue and active buyer growth. Our strategies are working and continue to drive our business forward. We plan to discuss these strategies in further detail in a bit. However, let's first discuss our Q1 results. First quarter GMV grew 12% to $493.4 million, and revenue grew 13% to $90.9 million, beating our expectation for the quarter, which is our most difficult comparison for the year, and positioning as well for the year ahead. On a two-year basis, GMV and revenues grew 60% and 59% respectively. Our growth is fueled by the consumer shift to online, social, and sustainable shopping. three trends that Poshmark continues to lead, as demonstrated by 16%, trailing 12-month active buy growth to a record $7.8 million in the first quarter. We continue to adjust our marketing spend to navigate a volatile macro environment and draw attention to Poshmark as a great place to save your wallet and save the planet, particularly among style and value-conscious shoppers who are feeling more constrained due to inflation. In March, we kicked off our seasonal marketing campaign focused on the annual ritual of spring cleaning, which drove increase in listings and engagement across all channels. First quarter sales reflected Poshmark as a fashion destination for moments that matter, as evidenced by the increase in sales of prom items up 75% year over year, and listings for wedding items up 39% year over year. As people increasingly attended physical events, throwback vintage styles are becoming more popular, particularly among Gen Z consumers. Vintage listings were up 68% year-over-year in the first quarter. Our social marketplace continues to define a new, more human way to shop online by making the shopping and discovery experience more interactive and social. Social interactions grew 59% year-over-year during Trading 12 Months Q122. to a record $50.7 billion. This social engagement drives community connection and conversion. We find that more than 80% of all purchases are preceded by social interaction, such as like, comment, or offer. Poshmark's social experience is a key differentiator, and after two years of lockdowns and virtual events, we are overjoyed to announce the return of in-person community events, which launched in Q1. In-person events are an important part of our growth activation engine. They introduce the Poshmark brand to new consumers, foster loyalty and connection at the micro-community level, and grow our highly engaged user base. These events create one-of-a-kind opportunity for our community to come together to socialize and share success stories and advice on how to build their businesses on Poshmark. We held 35 of these events in the first quarter, attracting community members across the U.S. Looking at the rest of the year, we're focused on executing our four long-term growth strategies, category growth, product innovation, new seller tools, and international growth. These remain the foundation for how we will drive GMV revenue and active buyer growth. Our first strategy is to grow our four fashion categories to increase share of wallet with consumers, grow our overall market share, and drive GMV growth. Our marketplace is a leading fashion destination, and as a reminder, Our core fashion categories, apparel, shoes, bags, and accessories represent over 90% of our GMV. High contribution from premium price products continue to be one of the factors that drove year-over-year AOV growth during the first quarter of 2022. We remain committed to growing our market share in premium price products and look forward to expanding our authentication services by end of the year as we integrate our SuedeOne acquisition. We continue to be excited by the opportunity for Brand Closets to contribute to the growth of our core fashion categories. Though still small, Brand Closets' GMV during the first quarter of 2022 grew 2.5x compared to the fourth quarter of 2021, and monthly GMV growth continues to accelerate. We continue to see strong interest from large-scale brands and retailers and have to waitlist for onboarding signed partners. These new partners value being able to directly connect with and sell to our community of more than 80 billion registered users. And they benefit from our real-time insights, which enables them to effectively address consumer preferences and reach new millennial and Gen Z audiences. For our community, brand closets enhance our marketplace as a go-to fashion destination by increasing the product assortment available, attracting more buyers to our platform. Our second strategy is to focus on product innovation to drive user engagement and buyer conversion, which is fundamental to the retention of our user cohorts and GMV growth. As a style destination where shoppers come to discover, follow, and shop, product innovation enables us to guide the treasure hunt for fashion. In January, we launched a redesign of our Feed and Shop tab, which modernized and refreshed the pages to make it easier to shop. This refresh has led to an increase in engagement and is directionally driving up buyers and orders too. We completed our rollout of Shop by Trend, a new merchandising engine that complements our existing brand merchandising capabilities. Trends is an editorially curated daily feed that brings the best of what's popular in Poshmark's main feed and strengthens searchability and engagement, contributing to the stickiness of our platform and user retention. This first version of Trends includes curated daily trends in the Shop tab, and a remarketing engine to surface the freshest listings from trends consumers have engaged with in the field. It also includes new curated communications that are customized to each user. We are excited to see growth in daily page views, listing clicks, likes, and conversion as a result of this new feature. Throughout the first quarter, we also tested versions of our search algorithm to combine the power of sharing with machine learning. We're constantly optimizing our search algorithm to better match supply and demand. Early results of these tests show a positive impact on sales, buy growth, orders, and listing views. However, we are empathetic to some of our sellers who are impacted by these changes and continue to work to make it better for everyone in our community. Our third strategy is to deliver innovative, easy to use, and effective services to help sellers market, merchandise, and sell their listings. In February, we began rolling out a new messaging tool that allows buyers and sellers to communicate directly with each other once an order has been booked. This feature, which was one of the top requests from our community, empowers buyers and sellers to resolve order-related issues privately and directly. With this new messaging interface, once an order is booked, the buyer and seller can start a conversation right from the order details page. About 56% of chat sessions are initiated by sellers. and 44% by buyers. We expect this new feature to improve order completion rate, reduce incoming cases, and improve the overall user experience. In February, we also launched Posh Ambassador 2, a new tier in our Posh Ambassador program, which caters to our most active community members by highlighting them with a gold star badge in their profile and offering them additional benefits, such as exclusive forums with our leadership team, VIP events, and other additional perks. Our ambassadors value this new tier and it should help PA2 see more success as well as impact engagement, retention, and other social commerce metrics. PoshPost, our simple and unique shipping system, allows for items to be shipped in any box with a printable label at an affordable flat rate with a quick trackable one to three day shipping. As shipping costs continue to rise, we have intentionally kept our shipping costs for the buyers competitively low, while providing a single label to ship anything up to five pounds. This stands at not only one of the most economical, but also the simplest solution for shipping, and one that can be used by millions of sellers across the country. Our fourth growth strategy is to expand our international footprint, and we continue to invest ahead of revenue for the long term. As we look beyond the core, we see international expansion as a strategic long-term growth opportunity. We celebrated Australia's one-year anniversary during the first quarter and continually the foundation for building an active community and seller base. And we look forward to holding in-person events in that country. As we approach the three-year anniversary of Poshmark Canada this month, the majority of our international investment will be focused on driving growth through advertising, community development, and shipping innovation. We have seen success in reactivation and retention efforts for older cohorts in Canada due to remarketing and targeted promotions. We're excited to begin holding in-person events again across the country to strengthen community connections and accelerate growth in this market as well. In conclusion, our vision remains becoming the world's leading social marketplace and the number one destination for sellers around the world. Our marketplace, powered by millions of highly engaged sellers, is flexible, adaptable, and ready to meet the ever-changing needs of shoppers. We believe Poshmark is positioned to win due to its strong cohort retention, unmatched scale, price-value appeal, and asset-light model. We will continue to navigate near-term headwinds by staying focused on executing our long-term growth strategies and serving our community. Now I'd like to turn it over to Rodrigo to dive deeper into the financials.