Poshmark, Inc.

Good day and welcome to the Poshmark second quarter 2022 earnings conference call. Please note today's conference is being recorded. 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 followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by the number one again. Please limit questions to one. Thank you. At this time, I will turn the conference over to Christine Chin, head of investor relations for Poshmark.

Welcome to Poshmark's second quarter 2022 conference call. Joining me today are Manish Chandra, our founder, chairman, and CEO, and Rodrigo Bumana, 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'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 a 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 second quarter 2022 earnings call. Before we discuss our second quarter results, I want to take a step back to reflect on our mission. When we started Poshmark in 2011, we focused on making selling a superpower by making selling and buying fashion simple, social, and fun by building the world's largest network of shoppable closets and creating a new, more human way to shop online. Our social marketplace is designed to serve everyone, whether you're looking to make money, save money, experiment with new styles, or discover new people and brands. We built every aspect of Poshmark to make selling so easy that anyone with a closet and a smartphone could do it. By empowering everyone to sell fashion directly from their closets, we're transforming shopping online. This has driven our growth for more than a decade. The unique dynamic of Poshmark is that over time, sellers become buyers and buyers become sellers. And by the fifth year, there is over 40% overlap between buyers and sellers. Our community of highly engaged and loyal users is our competitive advantage, and by serving and supporting them, we drove profitability even as we cut down marketing in the first half of 2020. As we mentioned on our last earnings call, we're focused on making Poshmark the number one destination for sellers by empowering them with the tools and support to grow their businesses and making our marketplace the most trusted destination for buyers. Now let's discuss our second quarter results. We're pleased to report that our second quarter performance exceeded our initial expectations due to our strong focus on execution. We reported a strong quarter despite a tough consumer environment, growing revenues 9% to $89.1 million, beating our expectations for the quarter. Second quarter, GMV grew 8% to $483.5 million, while on a two-year basis, GMV grew by 34% and revenues grew by 33%. Our growth is driven by Poshmark's approach to making buying and selling fashion simple, fun, and sustainable. Our users continue to choose Poshmark as a top destination for selling items from their closets and shopping the closets of others. This combined with our boutique sellers continues to make Poshmark a top destination for fashion, as demonstrated by 14% TTM active buyer growth to a record 8 million in the second quarter. We continue to evolve our marketing strategy to navigate the impact of Apple privacy changes and a volatile macro environment. We're drawing attention to Poshmark as a sustainable fashion destination, particularly for style and value conscious shoppers who are feeling more constrained due to inflation and as a place to make money from your closet. Our April marketing campaign focused on Earth Month and storytelling, highlighting secondhand styles and vintage trends. This resonated particularly well with our Gen Z and millennial customers who are shopping vintage and secondhand for eco-friendly purposes and nostalgia. During the second quarter, shoppers came to Poshmark for their fashion needs and to discover the latest trends while saving money. Our marketplace continues to reflect the lives, interests, and changing needs of consumers. During the second quarter, luggage and travel bags were up 50% YY as shoppers embraced vacation and business travel again. As people return to work, shoppers are turning to resale in their hunt for formal workwear to make their budget stretch further. During the second quarter, blazers and suit jackets grew 61%, and sales of ties were up 45% year over year. The evolution of business casual into business comfort is driving a huge spike in sales for comfort sneaker brands like On Running and Hoka, while orders for Birkenstock sandals and flip-flops were up 30% YY. during the quarter. Zara Fair Jeans and Abercrombie Straight Leg Jeans were up 97% and 64% YY in May, demonstrating that we continue to be part of the seismic shift in fashion as silhouette changes to elastic waist, relaxed fits, and fair bottoms. The power of Poshmark's community makes selling and shopping simple. Social interactions combined with our marketplace platform, which provide all the tools a seller needs make selling and shopping simple and fun. Sellers and shoppers and their engagement with our marketplace drove 70% year-over-year growth in social interactions to a record $57.5 billion during TTM Q2 2022. Social interactions range from curation to likes, comments, or offers on the platform. This social engagement drives community connection and ultimately conversion as more than 80% of all purchases are preceded by a social interaction, such as a like, comment, or offer. Poshmark's social experience and inclusive community is a key differentiator, as experienced sellers who are often Posh Ambassadors voluntarily reach out to help new sellers and provide mentorship. Poshmark sellers continue to not only share their own inventory, but curate inventory from the closets of other sellers. After two years of lockdowns and virtual events, we have been overjoyed to return to in-person community events, which are an important part of helping our sellers grow their businesses. This important growth activation engine introduces the Poshmark community to new sellers, fosters loyalty and connection at the micro-community level, and grows 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 87 of these events in the second quarter, up from 35 in the first quarter, attracting community members from across the U.S. We're excited to host Poshfest, our fashion and entrepreneurship conference, and the biggest event of the year at the end of September. This two-day event focuses on educating attendees about merchandising, business planning, branding, and data to help sellers grow their businesses on Poshmark. As our first Poshfest back in person in three years, our community is ecstatic to once again have the opportunity to connect with one another and gain valuable expertise to increase their sales and have an immersive Posh experience. Looking at the second half of the year, we continue to focus on growing our core fashion categories. by continuing our product innovation to enhance both the seller and buyer experience. Fashion-related categories, apparel, shoes, bags, and accessories, which is the core of Poshmark, drives more than 90% of our GMV, and we remain focused on strengthening this core in 2022 to increase our wallet share gains with consumers and drive market share gains and GMV growth. Higher contribution from premium price product continues to be one of the factors that drove year over year AOV growth during the second quarter of 2022. We remain committed to growing our market share in premium price products and have started testing various applications of the technology from our suede one acquisition to drive innovation in our current authentication processes. We intend to expand our authentication services to price points below 500 by the end of the year. We are a very seller-centric marketplace, and seller success and liquidity is where everything starts at Poshmark. Thus, we remain focused on product innovation to give sellers better ways to market merchandise and sell their listings, and new ways for buyers to discover trends and engage with our marketplace to drive conversion. We continue to deliver innovative and easy-to-use solutions that contribute to the long-term growth of our sellers by helping sellers of all sizes easily manage their Poshmark closets, and connect with customers in new ways to drive sales. In May, we updated My Shoppers, our CRM that we launched in October 2021, which enables sellers to communicate with shoppers who have engaged with their closets and make offers to group of potential buyers. We continue to make these powerful tools available to all our sellers with the focus on making selling simple and accessible to everyone, from a seller with a few items in their closet to large resellers with thousands of items. This new version has seen higher adoption by sellers and resulted in an increase in seller offers. In June, we introduced closet QR codes, making it easy to scan, share, view, and engage with sellers' closets with a quick scan of your phone, which will be particularly useful with the return of in-person events, making it simple for sellers to market their closet to buyers and increase their number of followers. Personal closet QR codes can be used as an identifier on seller's social media accounts, printed on flyer and business cards, or intruded in the packages they ship to buyers. 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 CMV during the second quarter of 2022 grew 1.5x compared to the first quarter of 2022. We continue to have a strong pipeline of entrusted brands and retailers. During the second quarter, we launched our integration with Channel Advisor, another milestone in making it easy for high-volume sellers to sell at Poshmark, providing them with the ability to integrate our marketplace to synchronize product, inventory, and order information with other e-commerce platforms. As a style destination where shoppers come to discover, follow, and shop, product innovation enables us to guide the treasure hunt for fashion. We continue to innovate our shop by trends feature and introduce trends guidelines in April. This feature allows sellers and buyers to see more details about trending products down to color, brand, and keywords. It provides sellers with more ways to strengthen their trend-related listings and drive conversion. At the end of June, we added a new buyer protection banner to help drive trust and confidence with the new buyers. Poshmark offers an amazing protection policy to all buyers. But not all buyers know about this policy, which includes refunding orders that do not match the listing description. Initial tests of this new feature have shown an increase in buy-now orders, first-time buyers, new-use orders, and new-user GMV. Looking beyond the core, we view international expansion as a strategic long-term growth opportunity. In May, we celebrated Poshmark Canada's three-year anniversary. Over the last three years, we have built and grown a community of over 4 million users across all provinces and territories in Canada. These secondhand lovers and entrepreneurial sellers have listed close to a billion dollars worth of inventory on Poshmark. Over 2.6 billion total social interactions have been made on Poshmark Canada since launch. And our Canadian community has attended over 100 virtual and in-person events. During the second quarter, we rolled out Adyen as a new payment service provider in Canada, which enabled us to process payments locally in Canada instead of cross-border to the U.S., which saves in card network cross-border costs. For the second half of 2022, the majority of our international investment continues to be focused on driving growth through advertising, community development, and shipping innovation to grow our seller base. In conclusion, our focus remains becoming the world's leading social marketplace and the number one destination for sellers around the world. We're focused on what we can control and continue to innovate for the future so our sellers can succeed. By tapping into our sellers' entrepreneurial spirit, we're positioning ourselves to emerge from any potential economic downturn stronger than ever. We empower millions of sellers to easily turn their closets into shop and connect with customers, resulting in a flexible, frictionless marketplace that's ready to meet the ever-changing needs of shoppers. We help Poshmark sellers control their destiny through good and challenging economic times by providing them a reliable and supportive lifeline to help them pay their bills, build emergency funds, cover college costs, and go after their dreams. Our competitive advantage is a loyal community of fashion lovers who believe in our new way of shopping, one that is simple, social, and fun, and sustainable. Now I'd like to turn it over to Rodrigo to dive deeper into the financials. Thank you, Manish.