ContextLogic Inc.

and thank you for standing by. Welcome to WISH's fourth quarter and full year 2022 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. If you wish to remove yourself from the queue, simply press star 1-1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Mr. Ralph Fong. Wishes Head of Investor Relations.

Please go ahead.

Good afternoon, everyone, and welcome to Wishes' fourth quarter and four-year 2020 earnings conference call. I'm Ralph Fung, Director of Investor Relations, and joining me today are our CEO, Joe Yen, and our CFO and CEO, Vivian Liu. Today's prepared remarks have been pre-recorded. There's also a slide that has been posted to our Investor Relations website, which is available for your reference. Once we are finished with Joe and Vivian's remarks, we will hold a live Q&A session. The remarks made today include forward-looking statements that are related to, among other things, our financial expectations, business and turnaround plans, consumer experience and engagement, expectations regarding merchant relationships and strategic partnerships, the potential impact of our strategic, marketing, and product initiatives, including ad spending and the rebrand, and anticipate a return on our investments in their ability to drive future growth. Our actual results may differ materially from the results implied by these forward-looking statements if certain risks materialize or assumptions prove incorrect. Forward-looking statements involve risks and uncertainties which are described in today's earnings release and our periodic reports filed with the SEC. Any forward-looking statements that we make on this call are based on our beliefs and assumptions today, and we disclaim any obligation to update them. Also during the call, we will present both GAAP and non-GAAP financial numbers and metrics. A reconciliation of non-GAAP to GAAP results is included in today's earnings release. which you can find on our Investor Relations website and which is also filed with the SEC. A replay of this call will be posted to your Investor Relations website. With that, I will now turn the call over to Wish's CEO, Zhou Yan.

Thank you, Rob. I would like to thank everyone for joining our fourth quarter and a full year 2022 earnings call. On this call, I will recap some of the major highlights of 2022, share our financial updates, and discuss the key strategic initiatives for 2023. Vivian will then provide a deeper dive into financial results, share the first quarter guidance, and comment on our operations. Finally, I will provide additional closing remarks before opening up the call to your questions. 2022 was a year full of challenges. At the macro level, we experienced a higher level of economic uncertainty that emerged in both of North American and our European markets in 2022, which impacted consumer buying behaviors. Our value-oriented consumers were impacted by the steep increase in energy and the food prices, which translated to a slowing of discretionary spending across the region. Governments around the world continue to tighten the money supply and raise interest rates to ease inflationary pressures. As a global e-commerce marketplace, we are not immune to the changes in consumer spending habits, particularly among the lower-income households that shop on our marketplace. Additionally, we experience supply disruption attributable to COVID-related lockdowns in China. I would like to take this opportunity to thank our dedicated and hardworking team in China for the efforts to work through all the supply chain and the logistic challenges during the lockdown throughout 2022. Despite the challenges we faced, we continue the transformation journey that we embarked on in 2021, working diligently to improve the front end for our users and the back end for our merchants. Our foundations for growth are built around three fundamental pillars. First, improving the consumer experience. Second, deepening our merchant relationships. And third, achieving operational excellence. I'm energized that the entire team has continued to make tremendous progress in each of the foundational pillars in the midst of dynamic and a challenging macroeconomic environment. Let me now review some of our major accomplishments in 2022. We successfully launched a rebrand campaign. Our new brand incorporated a new logo, iconography, imagery, and the color palette. And it was accompanied with a refreshed mission statement, bargains made fun, discovery made easy, which more accurately reflects our renewed focus on helping value-oriented consumers discover listings for our new products while having fun in frictionless and a convenient way. We ramp up our merchandising efforts for the 2022 holiday season. Importantly, we ran our Every Day is Black Friday campaign in November, where we had merchant-founded promotions, as well as daily deals and weekly fresh sales for our popular categories, such as electronics, accessories, home, toys, gifts, and a session. Additionally, we launched a new deals hub promotion platform that allow our merchants to showcase the best discounts and increase the product exposure across which platform. While our customers are able to benefit from getting a great deal, feedback from both our merchants and the customers was overly positive. We have learned a lot and again tremendous insights from this first major merchandising event at which and we continue to invest in our merchandising capability in 2023. We also streamline our logistics operations, resulting in better on-time delivery rate. As an example, our on-time delivery rate was approximately 89% in the fourth quarter of 2022, an improvement from approximately 82% during the same period of 2021. Our average time to door has significantly improved in the top markets we serve, with much improved refund rate, customer order, consolidation rate, and the consumer experience. Our customer refund rate fell 36% year over year in the fourth quarter, and the customer order cancellation rate dropped 58% within the same time period as well. We continue to see improvement in customer NPS throughout 2022. To sum it all up, As a result of ongoing efforts to improve the consumer experience, we saw encouraging buyer conversion and customer retention trends in the fourth quarter of 2022 versus a year ago. From a user and a merchant experience standpoint, we continue to innovate and roll out a suite of product features to further improve the user experience on the Wish platform, including the revamped fashion experience which fashion, the shoppable videos feature, which clips, the merchant scoring system, which standards, improve the deals hub, new logout experience, increase the focus on merchandising and the collections, and the redesigned homepage on the Wish app, which features collection modules, category tabs, wish list, etc. We enhanced the transparency by adopting a new pricing practice for buyers and implementing new commission structure for merchants. The new pricing practice has reduced the pricing capacity and helped us build deeper engagement with our buyers and merchants. Finally, we collaborated with a number of affiliate partners to drive incremental traffic throughout 2022, including Affinity, Honey, Klarna, Rakuten, and RetailMeNot. In addition, we formed partnerships with multiple providers of e-commerce software, fulfillment automation, platform integration, and the customer support solutions, including eDesk, Product Hub, and the Eurela to further enhance the merchant experience. We also joined forces with Eversy to fight product counterfeit as part of our efforts to create a shopping experience that is engaging, yet safe and secure for our customers. Putting it all together, we accomplished quite a lot in 2022. Before we move on to other topics, I would like to thank our employees for their hard work and the dedication. I also want to thank our customers, merchants, partners, and shareholders for their continued support. I will now share some high-level financial highlights for the fourth quarter and the full year 2022. We reported fourth quarter revenue of $123 million While it was down 57% from the first quarter of 2021, the rate of quarterly decline slowed, with revenue in Q4 only sequentially down 2% from the third quarter of 2022. The revenue decline was primarily driven by reduced ad spend in a quarter. Our adjusted EBITDA in Q4 was a loss of $95 million, which was at the lower half of guidance range of a loss of $90 million to $110 million. Full year 2022 revenue totalled $571 million, down 73% from the year ago. Adjusted EBITDA in 2022 was a loss of $288 million, compared to a loss of $199 million in 2021. We also ended the year with the cash, cash affluence, and the marketable security of $719 million. These numbers indicate there's still much more work ahead to do in order to put us back on the path to profitability and growth. Looking to 2023, while we are committed to our three foundational business pillars, we intend to instill a strong focus on unit economics to help ensure a continued solid financial foundation for Wish and a prioritized discipline cash flow optimization so that our marketplace can effectively maximize its current opportunities. With that, I would like to spend a couple of minutes outlining the key strategic initiatives to improve our unit economics going forward. We expect to achieve this through increasing average transaction value and the repeated purchases. Our first strategic initiative is to drive basket building, which we believe will increase cost size and the conversion rate by improving listing quality and the trust, reducing fulfillment time, and bringing down shipping costs. Our key efforts in the first quarter include the introduction of February shipping in the US, followed by other major markets. Importantly, we expect February shipping to be a critical component in addressing one of the major pain points amongst our users on the Wish platform. We envision that freight rail shipping will enable Wish to be positioned as a transparent and competitively priced marketplace where users are incentivized to build larger baskets. Not only will this improve the shopping experience for our customers, we are confident it will also result in higher order values, higher conversion rates, and customer retention. Just a quick update on the launch of freight rail shipping in the US, which started in late January, Federal shipping is now available across both the Android and iOS platforms. Data so far indicates that both GMV and the number of items per buyer have increased by double digits. I'm extremely encouraged by the promising early results, and I look forward to keeping you posted on the progress. Second, we strive to grow buyer retention through repeat purchases. In the first half of 2023, we intend to leverage incentives and merchandising campaigns to drive repeat purchases, bring buyers back via unpaid channels, including personalized emails, notifications, and bring in right inventory for our focus category, including home and life, hobbies, electronics, beauty and health, and obsession. In the first half of 2023, we intend to offer customers incentives and coupons for free shipping to encourage basket building and repeat purchases across our key categories. Additionally, we plan to provide more incentives for first-time purchase, repeat purchase, and inactive users as well. Our third initiative is to inspire browse and discovery experience. And with this, our goal is to increase users' engagement, which is measured by product display page views and the click-through rate. For those familiar with Wish platform, the shopping experience is primarily built around the idea of discovery rather than search. In fact, most of the sales on our platform do not involve a search query and instead derive from personalized browsing. In the first half of 2023, We plan to further enhance the category browsing experience to help users not only explore the Wish catalog in a fun and engaging way, but also browse through the breadth and the depth of Wish's product catalog and discover more products through shopping inspiration. Personalization also plays a pivotal role in attracting and retaining users. We intend to bring elements of personalization into every step of the customer journey. from inspirational recommendations through to irresistible deals. Fourth, we plan to diversify our marketing channels to drive buyer growth. While paid ads will remain a key driver for user retention and growth, our goal is to increase the efficiency of our paid ads and decrease the overall advertising spend with raw ad pockets based on customer segments and user life cycles. In parallel, We plan to invest more heavily in our unpaid channels, as we believe that emails and push notifications will be highly effective in bringing users back to Wish and driving customer loyalty over time. Put simply, our marketing activities this year will be much more targeted, both in the selection of channels and content type. In summary, each of our strategic initiatives for 2023 are clear. And we are deliberate and focused in our efforts to improve our unit economics. With that, let me now turn the call over to our CFO and COO, Vivian Liu, to discuss our financial results in more detail and give you an update on our operations.

Thank you, Joe. Now I will add more color on Q4 and the full year 2022 financial performance. Provided Q1 2023 EBITDA guidance, and expand on certain operational priorities in 2023. In the fourth quarter of 2022, we had 20 million monthly active users and 13 million last 12-month active buyers, which was a decline of 55% and 66%, respectively, year-over-year. The decline was mainly driven by the cumulative reduction in ad spend over the past 12 months. Our total ad spend in 2022 was approximately 20% of that of 2021. In particular, our digital advertising expenses in Q4 were $46 million, down from $66 million in Q4 of 2021. and the $55 million from Q3 2022. The quarter-over-quarter decline was due to increased ROAS targets as we remained focused on marketing efficiency and unit economics. Total revenues in Q4 were $123 million, a decline of 57% year-over-year. This decline was across core marketplace, product boost, and the logistics, mainly driven by reduced ad spend and the new pricing structure, which became fully effective in Q3 2022. The change in the pricing structure made our listing prices more transparent and competitive. However, it adversely impacted our Q4 marketplace revenue and EBITDA, resulting in an unbearable comparison to the prior year. Q4 growth profit was $26 million, a decline of 78% year-over-year. Growth margin was 21% versus 42% in Q4 2021. Growth margin performance was mainly driven by the decline in marketplace growth profits due to the price changes I shared earlier. Total operating expenses were $143 million, a reduction of 22% year-over-year. Lower ad spend, reduction in outside services, and the reduced employee headcount accounted for a majority of the reduction of operating expenses. Our net loss was $110 million compared to a net loss of $58 million in the fourth quarter of 2021. Our adjusted EBITDA was a loss of $95 million compared to an adjusted EBITDA loss of $23 million in Q4 2021. The Q4 2022 EBITDA result was at the lower end of the guided range of a loss of $90 million to $110 million. Operating cash flow for Q4 2022 was negative $109 million. compared to a negative operating cash flow of $49 million in Q4 2021. The Q4 2022 operating cash flow was primarily driven by the net loss of $110 million and the $23 million of unfavorable changes in our operating assets and liabilities. which was partially offset by non-cash expenses of $24 million. Free cash flow was negative $109 million compared to a negative free cash flow of $15 million in Q4 2021. We ended Q4 in a financially healthy position with $719 million in cash, cash equivalent, and marketable securities, and no long-term debt. Now turning to full-year 2022 results. Total revenues were $571 million, a decline of 73% year-over-year. Gross profit was $166 million, a decline of 85% year-over-year. Gross margin was 29%, down from 53% in 2021. Total operating expenses were $564 million, down 62% year-over-year. Total ad spend was $198 million, $8 million, down approximately 80% from 2021. Our net loss was $384 million for the year compared to a net loss of $361 million in 2021. Adjusted EBITDA was a loss of $288 million compared to an EBITDA loss of $199 million in 2021. Our free cash flow was negative $422 million. Our free cash flow was negative $424 million in 2022, a significant improvement from a negative free cash flow of $953 million in 2021. Our 2022 financial reflected the near-term impact of some of the strategic decisions that we made in 2021 and 2022. Firstly, we reduced reliance on performance marketing and started rebuilding the flywheel. Lower ad spend was the major driver of the decline in monthly active users and revenues during 2022. However, we have seen unpaid traffic stabilize and the conversion and retention rates improve thanks to more compelling value for price, better listing quality and app features, as well as faster delivery time. The decline in monthly active users and the last 12 months buyers have also significantly slowed down and started to stabilize in 2022. Secondly, during the first half of 2022, we implemented a new pricing strategy to make prices on Wish more transparent and competitive. This change reduces Wish's marketplace revenues and profits in the near term but is critical in enhancing user retention and the merchant engagement for the long run. Thirdly, we focused on optimizing cash flows throughout 2022. We made the difficult decision to reduce our global workforce back in February and to prioritize unit economics over top line growth. As a result, our cash burn in 2022 was reduced to 50% of that in 2021. From a year-over-year comparison standpoint, Q1 2023 is expected to remain unseparable relative to Q1 2022, as Q1 2022 benefited from the original pricing practice. resulting in higher revenue and EBITDA. We expect this particular discrepancy to normalize in the second half of 2023. Ad spend is expected to remain an important driver of our top-line performance as we continue to focus on unit economics and utilize more diverse marketing channels to deliver higher returns. I would now like to provide our outlook for the first quarter of 2023. We expect adjusted EBITDA to be a loss in the range of $70 million to $80 million. As a reference point, our estimated revenue in January 2023, the first month of Q1, are expected to be down approximately 15% when compared to our revenue in October 2022, the first month of Q4. The decline is mostly driven by seasonality and the lower ad spend. Let me now offer a few updates on operations, particularly on cost efficiency, logistics, and merchandising. On January 31st, we notified WISH employees that we will undergo a reduction in our global workforce to realign our resources with 2023 operational priorities. We anticipated that this reduction will decrease our global workforce by up to 150 positions, representing approximately 17% of our headcount. These are very difficult decisions and ones that we do not take lightly. However, we believe they are necessary to support our ongoing business prioritization efforts and to improve operational efficiencies. We estimate that we will incur one-time charges of approximately $3 to $4 million for severance. We expect the majority of these charges will be incurred in Q1 and that the implementation of workforce reduction will be largely complete by end of Q2 2023. We expected to realize run rate savings of approximately $14 to $23 million on an annualized basis starting in Q3 2023. As Joe shared earlier, a competitive logistic offering remains a critical element to our long-term success. We have continued to invest in our logistics business. In the fourth quarter of 2022, the average time to door in five of our major markets improved by six days when compared to the same period of 2021. Our on-time delivery rate was around 89% in the fourth quarter, and improvement from approximately 82% in the same period of last year. Our goal is to roll out the 15-day time to door initiative in all major markets for WISH this year. In addition, we have started to implement forward deployment capabilities in China, which is expected to further reduce our delivery time to approximately 10 days for high-velocity products listed on Wish. Building upon the success of the Every Day is a Black Friday campaign last November, we will be running multiple merchandising events across the 60-plus markets we serve in 2023. Through this merchandising event, we expected to strengthen Wish's home and life brand narrative across our user base, offering a broad variety of quality, unique lifestyle products at affordable prices, which aims to be the first in mind when a customer thinks about what they need from their home essentials to event-based needs such as holidays and a celebration. Please note that merchandising events will be launched not only on mobile app platforms, but also mobile web, which is becoming an important channel for our platform distribution. I'm energized about our merchandising strategy and expect the merchandising to play an increasingly important role in driving TMV growth, user acquisition, and retention. Now I will turn over the call back to Joe for closing remarks.

Thank you, Vivian. To close, I'll leave you with a few final thoughts. Over the last 12 months, the WISH team has devised and implemented some substantial changes that have improved our team's focus, sharpened execution, and led to the setting of key strategic goals that will place WISH in a position of greater strength and future growth. I would also like to reiterate our value proposition, discovery, and affordability. Discovery is a completely different approach to solving search and the relevance in e-commerce. We take people who have a general intent to purchase something and inspire them to build a basket of interesting items that align them at a reasonable price. We expect to drive user experience improvement through operational and product efforts. leverage our strength in data and the predictive capability to deliver personalized and curated products to our users. Additionally, we intend to strengthen our cross-border capabilities by establishing strong partnerships with cross-border merchants and empowering them with the tools and resources to succeed. In the long run, we believe that our cross-border trade expertise will remain crucial for our long-term success. Given the macro environment and the financial challenges increasingly faced by consumers worldwide, we are focused on providing value and a deal to our value-oriented users through extensive and sophisticated merchandising campaigns. We believe this will allow us to not only grow our loyal user base, but also attract and retain new customers. The entire team at Wish is committed to successfully executing on our turnaround plans. And I'm proud of what the team has accomplished and excited to see what we can do together in 2023. At this time, operator, could you please open the call for Q&A?

Certainly. Ladies and gentlemen, if you have a question at this time, please press star 1-1 on your telephone. One moment for our first question. And our first question comes from the line of Doug Anmuth from J.P. Morgan. Your question, please.

Hey, this is Wes. I'm for Doug. Thanks for taking the questions. Two, if I could. I was hoping you could just provide more color on 1Q tracking down sequentially 15% from January. I'm just kind of hoping to understand what you're seeing there and maybe impacts from the China reopening. And then I believe sales and marketing was down sequentially. But, you know, you've talked about leaning back into marketing to reaccelerate the top line. So just kind of want to know what maybe led to the changes in the strategy or your expectations there.

Thanks. For our speakers, I believe you are on mute. One moment while we get our speakers unmuted.

Once again, speakers, you are currently muted. There we go.

Can you hear us now?

Yes, we can hear you now.

Okay, great. Thank you, Doug, for the question. Regarding Q1, as shared in the prepared remarks, the January decline from last October was due to two reasons. One was the seasonality, and this is pretty consistent with the seasonality pattern that we have seen in the past. And the second one, as I shared in the prepared remarks, was the reduced ad spend. and we continue to focus on ad efficiency and unit economics. We started that in Q4, and we continue to do so in 2023. So we have ROAS targets, and we are very focused on that. But at the same time, we do want to drive growth in top of the funnel, the top line. And we do that through, number one, advertising more efficiently, through more diverse marketing channels. And secondly, leveraging our unpaid channels more effectively, you know, notifications and other channels. And then thirdly, the merchandising capabilities we build in-house. As Joe mentioned, we started building that in last November, and we continue to build the merchandising capabilities to engage with our new and existing buyers. And lastly, but not least, we do expect to drive top-line growth in a more balanced approach between organic versus paid going forward as we continue to invest in the features, app features, delivery services, listing quality, and becoming more competitive in the prices. We expect the customers to have more you'll see the compelling value proposition on Wish and have more pleasant shopping experiences with Wish and therefore come back on their own. So long way from answering your question, we care about unit economics and that continues to be the focus, 2023, and we do also care about driving growth both organically and through paid channels as well.

Did that answer all your questions? Yep, thanks.

Thank you. And as a reminder, ladies and gentlemen, once again, if you have a question at this time, please press star 11 on your telephone. Our next question comes from the line of Laura Champagne from Loop Capital. Your question, please.

Thanks for taking my question. I was wondering, and I think this one is for Vivian, what you would need to see to have enough visibility to provide a revenue guidance similar to your adjusted EBITDA guidance range that you give?

Yes, that's a great question, Laura. I think we've been, you know, deliberating on adding more top-line guidance since last year, and I think I'm comfortable to say that we're very close to making that decision, and we will most likely start providing top-line guidance, whether it's GMV or revenue, in the very near term.

Got it. And then could you give us an update on what's happening with the women's fashion vertical?

Yeah, so we had a fashion relaunch last year, and fashion is one of the top five core categories we have on Wish. And the launch was successful, and we saw customer satisfaction, average order growth, GMV per buyer improved materially through the fashion relaunch. But more importantly, we learned a lot through that relaunch, how we improve listing quality, delivery time, how we engage with our buyers more effectively and our merchants. And we have a lot of merchants now participating on the fashion relaunch and start to see success through that participation. We took all the learnings and applied to other core categories so that we are, you know, focusing on Intel on 23 on top of fashion. So long way of saying we consider that a very successful relaunch and we continue to leverage the experiences and the learnings to make other categories successful on Wish platform as well.

Yeah, just to add on what Vivian said, right? So I think it's ongoing progress, right, for the fashion relaunch, things actually updated for Q3. So now we have over 3,000 merchants in new fashion category, providing over 300,000. selections in this category. So this is something actually we see ongoing progress. And as William mentioned just now, so this is a very, very important learning process for us. So with the focus category, we emphasize this here. So this is a very important learning for us to know actually how important the structured data means to us, right, and how actually we can service, you know, the product, you know, better to our consumers and by providing a better consumer experience, right? So this is something definitely we will see how actually we can replicate to the other focus category to build a better verticalized, you know, customer shopping experience in the focus categories.

Great. Thank you. And congratulations, Joe, on getting the permanent CEO role.

Thanks, Laura. Thank you. One moment for our next question. And our next question comes from the line of from Citi. Your question, please.

Hi, this is Max on Free Call. Thanks for taking the question. First, could you just help us understand the fulfillment operations a bit more? You know, there's still almost double the product rep or the marketplace revenue. So you just kind of double click on what's driving that and going forward, you know, what's the right level of fulfillment as a percent of marketplace revenue?

Yeah, that's a great question. Thank you. I think the first of all, the marketplace revenue, the performance of marketplace in general was really impacted by two major strategic decisions that we made in 2021. And one was the accumulation reduction on the added spend so that we can restart the flywheel based on the core marketplace competencies that we are building. We have been building since the turnaround. So that has a lot more direct impact on marketplace revenue versus logistics. And the second important change we implemented in 2022 was the new pricing practice, as I mentioned earlier. And that essentially almost entirely impacts, it's a direct impact on marketplace revenue versus logistics in the near term. So I would say those two decisions were both necessary to build customer retention and merchant trust engagement for the long run, but they had some adverse impact for the near term on the marketplace revenue and profitability. And I think, you know, going forward, we expected the marketplace and the logistic performance to be more aligned as we, you know, kind of gradually work through the changes and, you know, as we move into the, especially second half of 2023, it will be a much more kind of comparable from year-over-year standpoint. But longer term, you know, we expected those two businesses to be much more aligned in terms of performance level. And ultimately, we are a marketplace, you know, business, and we are very much focused on improving the revenue, GMV, and profitability of marketplace business. And the logistics remains a very critical offering, and it's a competitive advantage of Wish. and a major driver for, you know, improving customer satisfaction over the past 18 months, and also a very critical value proposition for the wish merchants. So we definitely will, you know, we remain committed to investing in logistics business as well.

It's really helpful.

And then I guess another one, if I could, just looking at going back to marketing, just looking at just the kind of taking out the brand, I guess, as a percent of marketplace revenue is still pretty high as a percent. And as a percent of total revenue, understand you're going to look into less paid channels for marketing going forward in 2023. So I guess, could you just help us understand maybe the overall strategies as we move through the year? Do you expect a similar kind of cadence of more back half spending? And just, I guess, the overall level of marketing spend as a percent of revenue, you know, and how we can start to drive some organic growth from it.

Yeah, absolutely. Happy to add more color on that. So you are absolutely right. We used to spend a lot more on the marketing dollars. And I think, if I remember correctly, in the past three years, in 2020, it was more than, it's about 67% of revenue spending in sales and marketing. And then 2021, it was 53%. And then last year, it was 40 plus percent. So every year, we made a tremendous progress in reducing our reliance on performance marketing revenue. And it therefore reduced the percentage of marketing spent as a percentage of the total revenue. But we still have more work to do. And that's the reason why in Q4 last year, we started to really focus on ROAS, right? And we set a ROAS target. And we only spent the marketing dollar if we generate the desired returns. And then we continue to focus on ROAS and marketing efficiency going into 2023. As Joe and I both shared earlier, unit economics will be very important in 2023. And if you think about the levers to improve unit economics, really there are three. And the first is average transaction value. And the second one is repeated purchases. And the third one is the marketing efficiency, ad efficiency, right? And we are focused on all three of them to improve unit economics. But to answer your question, yeah, we will continue to focus on the ROAS, the return on marketing in 2023. I think from seasonality standpoint, we probably will see a little more in the second half just because of seasonality. But we are not really managing towards marketing dollar budget as a percentage of revenue. Instead, we focus on the ROAS, the return on every dollar we spend.

Thank you. One moment for our next question. And as a reminder, if you have a question at this time, please press star 1-1 on your telephone. Our next question comes from the line. It appears to be – one moment. Our next question comes from the line of Stephen McDermott from Bank of America. Your question, please. Hi, this is Stephen McDermott on for Michael McGovern.

Just if we look at the – sorry. Sorry. If we look at the EBITDA guidance, it implies, let's say, a negative 45 to 50% year-on-year decline in revenue, kind of assuming that all the OPEX as a percentage of revenue stays roughly the same. Obviously, you know, there are going to be some moving parts there, but how should we think about it? Are you taking more from kind of the revenue side or, you know, seeing pressure there? Or, you know, will there – be significant cuts in the OpEx that go beyond just the risk of kicking a 2Q or a 3Q? Thank you.

Yeah, that's a great question. And I think we talk about the revenue of January actual, right? And it was a 15% decline relative to October. And that's mostly driven by seasonality. And I also shared, you know, that's also driven by lower ad spend. And I think the, if you look at a, quarter over quarter, our EBITDA guidance is actually more favorable compared to the Q4 actual EBITDA performance. So I guess you could, you know, kind of make an observation that we are getting, certainly getting more efficient with the cost and beyond the added spend and also the workforce reduction. So unit economics, as I mentioned, is the top priority for us in 2023. And we will continue to drive growth, but it will be, you know, through more like organic growth versus the paid growth. So I think all of those factors will help us achieve, you know, lower EBITDA loss in Q1 with some pressure from revenue due to the seasonality in terms of like from quarter over quarter standpoint. Hopefully that answers your question.

No, it does. Thank you very much. Appreciate it.

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to WISH's CEO, Joe Yen, for any further remarks.

Thanks, everyone, for joining our earnings conference call, and we look forward to talking to you throughout the quarter.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Thank you all.