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| Statement |
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| Lastly, turning to supply, we were pleased with double-digit listings growth despite the soft demand environment |
| And we are seeing positive traction |
| We have undertaken rigorous efforts to optimize our operations, re-engineer our cost structure, and focus our efforts on a narrower set of priorities, laying a strong foundation for future growth and profitability |
| We have made significant strides towards improving our financial health and positioning ourselves for future success |
| In the fourth quarter, the benefits of this work were on full display, with headcount and operating expenses down materially and adjusted EBITDA margins improving meaningfully |
| Take rates improved modestly due to the combination of several factors, including growing GMV contribution from essential sellers, which carry a higher commission rate, a higher proportion of orders below our $25, 000 commission break and a revised commission break structure that went into effect during the quarter |
| Our P&L is showing the benefits of the actions we have taken over the past two years with headcount and operating expenses down roughly 20% and adjusted EBITDA margins up over 11 percentage points |
| With our reengineered cost structure and streamlined operations, we are well positioned to realize significant operating leverage when revenue growth resumes |
| As we have mentioned before, given the operating margin leverage in our two-sided marketplace business model, we expect revenue growth to be the primary driver of margin expansion from here |
| Lastly, supply remained healthy with listings up 12% |
| We are releasing a high number of new features into the market, and we believe this is contributing to conversion improvements |
| Set another way, the changes we made over the past two years increase our operating leverage potential |
| They do benefit from all the other stuff that we do |
| First, by reorganizing our operations teams and finding other efficiencies, we expanded gross margins from the high 60s to the low 70s |
| Success here is growing our GMV and revenue well in excess of our costs |
| From our new cost base, we expect to be able to add meaningful GMV and revenue without proportionate increases in headcount |
| International grew in the four localized markets that we prioritize grew both order volume in traffic and GMV by double digits |
| I think most encouraging is that on a dollar basis, at the midpoint of our Q1 GMV guidance, Q1 would be the third quarter in a row of flat, sequential GMV |
| Over time, our objective is to deliver sustainable revenue growth, expand margins, become profitable, and ultimately grow free cash flow per share |
| In dollar terms, adjusted EBITDA improved to negative $3.5 million in the second half of 2023, from negative $9.9 million in the second half of 2022 |
| Encouragingly, we are starting to see tangible results |
| In terms of organic versus paid, we're actually quite happy with some of the advancements we've made in terms of both our methodology and kind of spend targeting and so on, and we've been able to increase spend versus while still maintaining kind of remaining faithful to our ROI cost per new thresholds |
| We believe this is helping conversion |
| While category demand remains subdued and GMV growth is far from where we would like it to be, we have made meaningful progress on all of these fronts |
| This provides sellers with data-driven recommendations aimed at improving sell-through and conversion |
| Auctions, for example, in the first, or sorry, in the fourth quarter on an order volume basis, which is the metric we optimize to grew 7%, which is about, what 17 percentage points faster than the overall order growth in the marketplace |
| As David mentioned, conversion rates returned to positive growth for the first time since the third quarter of 2021 |
| Our revenue guidance reflects modest take rate expansion due to a number of factors including updated commission tiers, a higher mix of orders under our commission break, and instituting a minimal monthly subscription fee for new sellers |
| We expect these two changes should have a modest positive impact on take rates looking forward |
| Lastly, scalability and order retention are about streamlining processes to improve efficiency |
| Statement |
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| GMV was $86.4 million, down 17% due to soft demand for luxury home goods and high end discretionary items |
| Average order values were another headwind to GMV growth |
| Our GMV guidance reflects continued macro headwinds, including shifting consumer behavior, ongoing economic and geopolitical uncertainty, and softness in the luxury housing market |
| Notably, this happened on lower revenue |
| Gross profit was $15 million, down 8% |
| We forecast first quarter GMV of $83 million to $90 million down 14% to 7%, net revenue of $20.6 million to $21.9 million down 7% to 1%, and adjusted EBITDA margin loss of minus 13% to minus 8% |
| We expect this metric to mean choppy near-term as we manage through a period of soft demand |
| Average order value of approximately $2, 530 was down 7% |
| During the quarter, traffic was the primary driver of orders softness consistent with the third quarter trends |
| Organic traffic is declining, and it's been under pressure |
| We also saw fewer orders in the $20, 000 to $100, 000 range |
| Year -over -year declines in traffic and AOB partially offset by conversion improvements, with AOB being the primary headwind, and quarter-to-date order volumes that are down low single digits year-over-year |
| Adjusted EBITDA margin was a loss of 8% versus a loss of 19% last year due to savings from restructuring, partially offset by lower revenue |
| Adjusted EBITDA margins in the second half of 2023 were negative 8.4%, compared to negative 21.7% in the second half of 2022 |
| While the fourth quarter is our seasonally weak quarter for AOV due to gifting, we believe these trends signify lingering consumer hesitancy around discretionary categories and big ticket purchases |
| Lastly, provision for transaction losses were $800, 000, 4% of revenue, down from 7%, primarily driven by a decrease in damage claims as a result of lower GMV as well as new policies implemented in partnership with our carriers |
| We ended the quarter with approximately 60, 700 active buyers down 10% |
| Both paid and non-paid traffic were down year-over-year |
| Turning to the P&L, net revenue was $20.9 million, down 9%, but up 1% sequentially |
| Similar to the third quarter, traffic and average order value were headwinds to GMV, partially offset by conversion rate improvements, particularly from returning buyers |
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