WISH (2021 - Q1)

Ladies and gentlemen, thank you for standing by, and welcome to the Wish’s First Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Dennis Walsh, Wish’s VP for Investor Relations. Thank you. Please go ahead, sir. Dennis W

Thank you. Good afternoon, and welcome, everyone. Joining me today to discuss our results are Wish’s Founder and CEO, Peter Szulczewski; CFO, Raj Bahri and Executive Chair, Jackie Reses reasons. During the call, we will make forward-looking statements about our future plans and financial performance. These statements are subject to risks, uncertainties and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. We encourage you to consider the risk factors described in our SEC filings for additional information. The date of this call is May 12, 2021, and forward-looking statements made today are based on assumptions as of this date. We undertake no obligation to and do not intend to update these statements as a result of new information or events. This call is being broadcast on the Internet and is accessible on our Investor Relations website. A recording of the call will be available later today. During the call, we will discuss GAAP and non-GAAP measures, including adjusted EBITDA and free cash flow. We encourage you to read our quarterly shareholder letter and earnings news release, both of which can be found on our Investor Relations website and on a Form 8-K, which we have filed with the SEC, as they contain important information about GAAP and non-GAAP results, including reconciliations of historical non-GAAP financial measures. We will now open up with brief remarks, and then we will take your questions. And with that, I’ll turn the call over to Peter.

Thank you, Dennis, and welcome, everyone. We had an impressive start to 2021. Our Q1 results exceeded our expectations on both the top and bottom lines. Revenue grew 75% year-over-year, an acceleration from Q4, and we improved our adjusted EBITDA margin on both a sequential and year-over-year basis. These results demonstrate the leverage in our business model and are a testament to the successful execution on our strategy, which I laid out on our last call. I hope that you all have had a chance to review our shareholder letter. It is available on our Investor Relations website and contains a review of our complete financial results. For today’s call, I want to share a few highlights from the quarter. Core marketplace revenue growth accelerated to 40% year-over-year. Our efforts to strategically target high LTV users resulted in Q1 core marketplace revenue per active buyer, increasing 76% year-over-year. Our ProductBoost advertising business return to year-over-year revenue growth for the first time since Q4 2019. This trend demonstrates renewed advertising spend for merchants as the economy starts to recover. It also indicates the strength in our platform as merchants benefit from increased sales, faster delivery times and lower refunds. Our asset-light logistics business is firing on all cylinders. Revenue grew 4x year-over-year driven by a strong merchant adoption of our cross-border shipping and warehousing solutions. We continue to make significant improvements to our customer experience. As a result, shipping-related refunds reached an all-time low during Q1. One way that we are reducing delivery times is by adopting or by adding more local and forward deployed inventory under our Wish Express offering. During Q1, Wish Express listings increased more than 400% year-over-year, meaning more users can receive orders in 5 days or fewer. In some cases, users are able to pick up orders the same day at a Wish Local partner location, which brings me to one of our most exciting new initiatives, Wish Local. Orders shipped to Wish Local partner locations for in-person pickup accounted for more than 7% of total order volume in Q1 and has continued to grow in Q2. In Mexico, Italy and Spain, Wish Local orders reached 39%, 30% and 22% of total order volume in those markets, respectively. This further demonstrates the importance of having a scaled network of partner locations to better serve our value-conscious consumers. Finally, we also launched an experiment to attract users that we may not already be reaching with the Wish app. 1Sansome is a category-specific website that features fashion-forward women’s apparel. The shopping experience on 1Sansome is more search and filter-driven, and the first-party inventory model allows us to efficiently open up a new market, enable strong quality control measures and allows us to capture greater consumer wallet share. I’m happy to report that initial engagement with 1Sansome users has been positive. As you can see, we are excited about the progress we are making as we execute on our core priorities. Our primary focus this year is to drive efficient customer acquisition, monetization and retention. We have made great progress on our initiatives to improve user retention and increase order frequency with new and existing users. However, we strive to achieve even higher levels of engagement and retention. This year, we are focused on creating a more personalized shopping experience and diversifying our product selection. We have more high-frequency inventory on the app, including CPG items, electronics and furniture. We believe that we can drive repurchasing behavior and become the everyday e-commerce platform for the value-conscious shopper. In fact, we increased the number of CPG items listed for sale by 110% year-over-year during Q1, including many globally recognized brands that we know our users will love. With more Wish Local partners, we can provide an affordable option for users to purchase items on the Wish app that can easily be picked up at a store nearby. We continue to optimize our Wish Local partner acquisition strategy and are focused on acquiring stores that support our strategic initiatives. This includes stores that are located within close proximity to a large number of Wish users and those that sell high-frequency CPG inventory. During Q1, we surpassed our own expectations by adding more than 1,000 Wish Local partners in Brazil, which enables us to dramatically improve our operations in a market where we can better serve many users with a ship to store approach. Over time, we believe Wish will win on convenience, location and price to drive repurchasing behavior and higher retention with users. Before I wrap up, in conjunction with today’s earnings, we announced that we are separating the Chair and CEO roles. I’m very happy to share that Jackie Reses, a current member of our Board, has agreed to take on the role of our new Executive Chair and will serve as a strategic adviser, working closely with me and the rest of the leadership team on a day-to-day basis. When I met Jackie over a year ago, I was so impressed that I had to get her to join our Board. So I’m even more excited now that I’ve convinced her to join us full time. Jackie brings a diverse skill set to Wish, spanning technology and financial strategy, operational excellence and executive leadership. Her experience in scaling large global tech companies, like Square, Alibaba and Yahoo! are highly relevant to our strategic efforts as we embark on the next phase of growth for Wish. With that, on behalf of the entire team at Wish, I want to welcome Jackie, and we’ll turn the call over to her now to say a few words.

Great. Thanks, Peter, for the introduction and also for the very warm welcome to Wish today. It’s awesome. I’m really excited to join the Wish leadership team at such an exciting time. When Peter asked me to join Wish’s Board last year, I was drawn in by his vision for the company as well as the massive opportunity within mobile e-commerce. I appreciate and have a passion for the company’s purpose of reimagining e-commerce by unlocking it for millions of underserved value-conscious consumers. With over 100 million users in 100-plus countries, the team at Wish has built an impressive foundation to become one of the most successful e-commerce platforms in the world. Throughout my career, I’ve worked with some of the world’s most inspiring founders and entrepreneurs, helping them scale their businesses globally and optimize for long-term sustainable growth. I’m excited to do that at Wish, too. While today is my first day at Wish, I look forward to playing a larger role in helping Peter and the company execute on its mission. I also look forward to getting to know our shareholders and analysts, many of you I know from prior roles. With that, I’ll turn the call over to Raj.

Thank you, Jackie. We are very excited to have you on our Board. Please note that some metrics we discuss -- we will discuss will be on a non-GAAP basis. A reconciliation of GAAP to non-GAAP results can be found in our earnings news release and shareholder letter, both of which can be found on our Investor Relations website and are filed with the SEC. During Q1, we exceeded our outlook for both revenue and adjusted EBITDA. Revenue growth accelerated to 75% year-over-year to $772 million driven by increased marketplace and logistics revenue. First quarter net loss was $128 million, and adjusted EBITDA loss was $79 million. We continue to demonstrate leverage in our model as adjusted EBITDA margin improved to negative 10.2% from negative 11.6% in Q1 of 2020 and negative 14.9% in Q4 of 2020. Within total revenue, Q1 core marketplace revenue increased 40% [ph] year-over-year to $477 million, an acceleration from 24% year-over-year growth in Q4 of 2020. This growth was driven by better monetization demonstrated by 76% year-over-year increase in core marketplace revenue per active buyer as well as lower refunds. ProductBoost returned to year-over-year growth with revenue of $50 million, an increase of 14% compared to the prior year as merchants return to more normalized advertising spend. Logistics revenue grew 338% year-over-year to $245 million. The significant increase was driven by the continuation of strong merchant adoption of our end-to-end shipping solutions and improved monetization. Turning now to our user metrics. Our strategy has always been to grow our user base efficiently with a focus on high LTV users. Q1 MAUs of 101 million were down 7% year-over-year. However, Q1 core marketplace revenue per active buyer increased 76% year-over-year as a result of our strategic focus on acquiring higher LTV users. As a reminder, we temporarily decrease our advertising spend in some emerging markets where as a result of logistical challenges due to pandemic, we were unable to provide a positive customer experience, and the economics in those markets were not credible. We expect to reengage users in some of these emerging markets where we believe we can generate favorable economics once we have a more reliable logistics offering and a scaled Wish Local network to support increased monetization efforts. In addition, across all markets, we are deemphasizing low-value items, which tend to have high conversion rates, but unfavorable economics then shift individually. Now turning to gross margin expenses for the quarter. All of the measures that follow our non-GAAP for 2021 as they exclude stock-based compensation and related expenses. Q1 gross profit was $442 million, up 56% from Q1 2020, higher than the 40% core marketplace revenue growth rate, which shows that our logistics platform is becoming more efficient over time. Gross margin declined on a year-over-year basis to 37.4% [ph] of revenue, primarily due to higher mix of logistics business as we continue to see positive margin adoption for our shipping solutions. We expect to drive steady gross margin expansion over time, with a long-term target of 70% to 75% of revenue as the logistics business begins to achieve economies of scale and product boost accelerates. We continue to demonstrate operating leverage in our model. First quarter sales and marketing expenses of $460 [ph] million were 60% of revenue, down 7 percentage points from Q1 2020 and down 10 percentage points from Q4 of 2020. During Q1, we began to diversify marketing strategy into full funnel approach to help grow awareness of our brand globally, including TV and streaming advertising as well as influential marketing. We continue to target sales and marketing expense of 40% to 45% revenue over the long term, which ended Q1 with a solid cash position of $1.8 billion in cash, cash equivalents and marketable securities. Free cash flow was negative $354 million driven primarily by timing of cash outflows due to shorter merchant and vendor payable terms. During pandemic, we negotiated a temporary extension of payment terms with key digital advertising partners. Those agreements expired at the start of 2021, resulting in shorter payment terms in Q1. In addition, as merchant adoption grows of our logistics solutions, we have improved tracking and delivery information, which results in faster payments to merchants since we pay upon customer receiving delivering. Lastly, Q1 sales are typically lower than Q4, putting some pressure on free cash flow for the first quarter. Turning now to our outlook. It is important to note that Q2 2021 will be a tough year-over-year comparison for us. Last year, during the second quarter, we experienced strong revenue growth as people ordered to stay at home while the global pandemic intensified. With that in mind, we expect Q2 2021 revenues in the range of $715 million to $730 million or a 2% to 4% increase year-over-year. On a 2-year stack basis, revenue expected to grow approximately 72% at the midpoint of guidance compared to Q2 2019. We expect the revenue mix between marketplace and logistics to be consistent with Q1 throughout 2021. In addition, we expect Q2 adjusted EBITDA loss to be in the range of negative $60 [ph] million to negative $55 million or negative 8% to negative 7% of revenue. We’re cautiously optimistic about the remainder of 2021 as we have just begun to lap the initial COVID-19-related stay-at-home orders, which began in mid-March 2020. We are monitoring the potential impact of the ongoing dynamics as much changes to sales tax and value-added taxes in some geographies, specifically in Europe where the VAT is expected to be implemented in July 1, 2021. In addition, we’ll continue to make investments to support our strategic priorities to grow the business and deliver on our long-term goals. This includes investing in headcount as well as marketing campaigns will drive brand awareness. As you can see, we continue to be excited about the opportunity for Wish. We remain committed to our mission and our focus on continuing to enhance the customer experience, growing revenue, driving profitable growth and delivering long-term shareholder value. With that, operator, we are ready for the first question. Thank you.

[Operator Instructions] First question is coming from the line of Doug Anmuth from JP Morgan.

A couple of questions. First, you grew core marketplace revenue 40% in 1Q, and you don’t disclose GMV, but did your GMV grow in the quarter? And in general, just how should we think about GMV growth in relation to revenue growth? And then I’ll follow up as well.

Yes. So we saw growth. We -- as you know, we are monetizing our buyers, and we started that strategy in Q4. So it’s always a combination of expanding margins, and we saw margin expansion as well as GMV growth in Q1. .

And is it reasonable to think that revenue growth -- your core marketplace revenue growth will, in general, be greater than GMV growth just given, as you kind of -- as take rate overall just ticks up in core marketplace?

Yes. We are monetizing the buyer better over time. Yes, that’s a fair assumption. .

Okay. And then just you talked in the outlook section of the letter about recovery and macro trends having a positive impact on your business with stimulus, vaccinations and then reopenings, but yet your revenue outlook for 2Q is down sequentially from 1Q, which I don’t really understand. So I hope you can shed some more light there. .

Yes. So if you look at last year, Q2, we saw significant expansion of our revenue as more people started shopping online as well as searching for things that are restricted in the pandemic. But seasonally, if you look at ‘19 or ‘18, Q2 tends to be seasonally softer than Q1. And if you look at our growth versus Q2 of 2019, we still had a decent growth. So part of it is the seasonality in a normal year. Q2 tends to be lower than Q1.

Next question is coming from the line of Stephen Ju from Credit Suisse.

So Peter, Raj, what would you say your time to deliver days are down to on a regional basis now? I mean you called out 5 days in some instances. But I’m interested more in -- particularly for some of the problem regions that you might have had before like maybe LatAm where you’re seeing this decline in revenue because you stopped acquiring customers because the service levels just aren’t there. So what is the plan to deliver -- to shorten the delivery times perhaps, in addition to that, maybe differentiates yourself in terms of product selection for the consumer?

Yes. Thanks. This is Peter. I think that’s a great question. So delivery times are roughly at an all-time low. So globally, I think the average is about 3 weeks. I think more importantly, shipping-related refunds are down to an all-time low as well. So these are reasons that customers issue due to logistics issues. Those are down 43% year-over-year. And then our Wish Local orders were up to 7% of total volume in Q1 and up to 9% in April. So I think sort of the most important thing to take away from this is, yes, we’re making significant improvements in reducing TTD in terms of the sort of traditional merchandise that we’ve had on the platform that drop shipped from 3P partners, 3P merchants typically from Asia, specifically China into the U.S., North America, Europe, et cetera. So we are at an all-time low, and a lot of it is actually driven by merchants leveraging our logistics services where we have a lot more control over the shipping. We have much closer relationships and leverage over our partners due to volume and just the amount of data from the feedback loops. A lot of the countries that we switched into leveraging our own logistics solutions, we now provide a last-mile tracking. And we have a much better handle on sort of the upper bound of the delivery window. This is why shipping refunds are down significantly. So we’re pleased with the progress there. I think where we’re going to see significant leverage and further reducing the types there and potentially opening up new use cases for customers to shop on our platform is actually by increasing the order volume coming from Wish Express and pick up from store from our Wish Local partners. So for example, our Wish Express listings actually increased 414% year-over-year. So that’s meaningful. And in those cases, as I mentioned in the prepared remarks, those customers are able to get their goods in 5 days or less. And then on top of that, as we scale out our forward deployment into our store partners, we will be able to actually provide those goods for a pickup basically in real time. And obviously, that will drag down the average. So we will continue to reduce time to door from sort of cross-border drop shipping as far as we can. But sort of the way that we think about sort of reducing that even further, at least from an average perspective, is by encouraging our merchants to use Wish Express and to use our store network in order to forward deployed goods that are likely to be bought in the proximity of those stores.

Next question is coming from the line of Kunal Madhukar from Deutsche Bank.

A couple, if I may. One, with regard to your comment about being cautiously optimistic about the rest of the year, can you help us understand the puts and takes, whether you are -- whether you’ve been a COVID beneficiary or are you more proportioned to like the recovery side? And then you also mentioned that in Europe, do you expect the value-added tax implementation starting in July 2021 to kind of impact volumes? Yes, that will be great if you can answer those.

So on the tax side, EU is implementing -- U.S. has gone to a phase that in the last few years, marketplaces are supposed to collect sales taxes. So we have gone through that phase in the last 3 years. And then now Europe is starting that phase. So in July, marketplaces will be responsible for value-added tax. In fact, in Europe, the only difference is that €22 [ph] and below was exempt before, and they’re taking that exemption away in July of this year. So that’s what that’s referring to, Kunal. And your first question around cautiously optimistic, we are happy where the delivery data are. Logistics is performing really well. And as value-conscious consumers over time comes back with higher disposable income because they were really, last year -- especially the consumer segment that we focus on is very value-conscious would hurt the most. So we are optimistic that they will be spending more in the back half than they did last year.

As a quick follow-up, when we look at the sales and marketing expense and as a percentage of your core marketplace revenue, plus the ProductBoost revenue, that still increased year-over-year despite the fact that you pulled back on marketing in certain geographies. So as you think of the rest of the year, how are you kind of thinking of like sales and marketing spend? And how should we kind of think of like 2Q, 3Q, 4Q kind of cadence on sales and marketing spend?

Yes. I think in terms of total revenue, we were, in last year, north of 60% for the full year, and that number was close to 90% a few years ago. We are targeting that number south of 60% this year.

Yes. Kunal, just to shed more light on -- and we mentioned this before in the previous call regarding whether we’re a beneficiary of COVID or not. So look, I think, as Raj mentioned, the very conscious consumer segment has been probably hurt the most by the pandemic because of access to disposable income. But remember that because we are still drop shipping the majority of our order volume from China to the rest of the world, and when flights, meaning airfreight out of China, went down last year, that significantly hurt our ability to ship items, at least from a cross-border perspective, from China to the rest of the world, which hurt the consumer experience, and certainly hurt sort of our cohort and retention metrics. And we’re still sort of flowing through that. So I would say, in many ways, I think we anticipate that a recovery will be better for us as the world returns to full employment, as flights around the world get back to the same capacity as before the pandemic.

Next question is coming from the line of Jason Helfstein from Oppenheimer.

So I think in the letter, you kind of called out the kind of slower revenue growth on comps. But if I kind of do it on a 2-year basis, like a 2-year average, it’s still slowing. Yet, it looks like your EBITDA is going to be a lot better. So I mean is there a goal to try to kind of run the business more for kind of EBITDA margin improvement and free cash flow? So just talk about that kind of broadly. And then we continue to get a lot of questions from investors about dynamic pricing. There seems to be a concern that dynamic pricing kind of boosted the business or the marketplace revenue in the past, and that’s no longer something that you can use as a lever. So maybe talk about kind of this year, how you plan to use dynamic pricing. And obviously, it’s not just about driving marketplace revenue but conversion and kind of EBITDA per order, I guess. So 2 questions.

So on the first question, if you look at first half of 2019, when we slowed down growth, we became extremely profitable. So we know this business when you slowed on growth becomes very profitable just because we have a lot of returning cohorts. But we are focused on driving growth, and we are focused on driving growth, at the same time, improving our EBITDA margin. And if you look at our history, our EBITDA margin has improved from negative 30% to negative 9% while delivering growth. So our goal would always be to deliver growth, and at the same time, continuously to improve our EBITDA margin by expanding -- looking forward, going expanding gross margins as well as getting leverage in operating expenses. So that’s how we kind of think of the business. And secondly, on dynamic pricing, we’ve been doing dynamic pricing since 4 years ago. And we continuously to get better at it over time, and we try to do it in a way that it does not impact conversion. Peter, I don’t know if you have anything to add to that.

Yes, Raj. I mean those are great points. I think sort of the other points are -- like obviously, we’re looking for growth in a variety of ways across various metrics and business streams and revenue models. So I mean one takeaway, say, core marketplace revenue growth actually accelerated to 40% year-over-year growth in Q1 versus 24% in Q4 -- over Q4 -- the prior year. And then the other key takeaway is we’re able to attract and monetize our customers better. So these are potentially still value-conscious consumers, but we’ve moved upstream, and we’re able to monetize them better as well. So if you look at our core marketplace revenue per active buyer, that actually grew 76% year-over-year. So that’s quite a healthy growth rate, and that’s been consistently growing. So on top of that, we’re seeing growth in Boost again for the first time since Q4 2019. It’s modest growth, but it’s bad. And of course, we’re seeing significant growth in other revenue streams such as our logistics revenue.

Next question is coming from the line of Shweta Khajuria from Evercore ISI.

Let me try 2, please. First is if we look at the first quarter and trends here in the second quarter up until now, can you talk about engagement trends in countries that reopened like United States and then international geographies that may not be fully reopened? And then the second question is, in the first quarter, did you see a meaningful impact from stimulus checks? If so, can you frame the magnitude of it? And then the second quarter guide is below where our expectations were. Can you talk about your second quarter guide versus your own expectations, please?

Yes. Thank you. So this is Peter. I’ll address the first question. So in our shareholder letter, we actually broke out the core marketplace revenue by geography. So as we noted before, due to the logistics -- poor logistics performance and, ultimately, the customer experience in some of the emerging markets like South America and others, we’ve actually pulled back from those regions. Those regions typically have very desirable or attractive acquisition metrics. So it’s easier to get an MAU or a sign-up or even a buyer but tend to have lower retention, especially when the capacity of those logistics work and infrastructure was severely impacted by the pandemic and just sort of stretched way too thin. So if you look at kind of like our core marketplace revenue by geography and its growth in Q1, like Europe and North America actually grew 48% year-over-year, where South America declined 22% year-over-year, and the rest of the world was at about like plus 19% or 20% year-over-year. So hopefully, that addresses some of those issues. And then also, it’s important to note that typically, from Q4 to Q1, we do experience a sequential decline in MAU. Raj, I don’t know if you want to add anything else to that.

No. I think…

Next question is from Nick Jones from Citi.

Great. Two questions. I guess, first, can you maybe remind us, Raj, on how we should be thinking about logistics revenue as a percent of core marketplace revenue, how big can that get as kind of an attach rate to order sales over time as you’re driving improvements? And then the second question is around the increase, I guess, listing. Since this isn’t a search and discovery platform, if you were kind of browsing, I imagine you’re seeing kind of roughly the same number of impressions every time since they aren’t searching for something specific. How do your algorithms take into account doubling the inventory kind of still being able to give the appropriate recommendations, or is this kind of you’ve added a bunch of brands and these things can kind of funnel into the existing algos with your users?

Yes. Thanks, Nick. This is Peter. I can sort of address the first part. Look, we’re super excited about the type of logistics performance and cost savings that we can offer to our partners, even with the sort of drop shipping solution, but especially if we extend that to sort of our combination efforts and ship to store. So we’re very excited about that business. It grew 338% year-over-year. It’s a testament to how useful our business partners actually find it. We continue to make improvements to it. And as mentioned before, we are actually running a pilot where we’re opening this up to merchant and transactions that aren’t even happening on marketplaces that have anything to do with our own marketplace, with Wish or any of our apps or destination websites. In terms of adding new and rebranded merchandise, look, we have an exploration process. I think sort of our key lesson and takeaway from that is merchants in different regions and different types of merchants behave very differently than the sort of typical merchant that was successful on Wish, sort of in the original marketplace. And we’re adapting to that and making sure that those merchants are as successful as possible. So we have an exploration process from a sort of recommendation, sort of technology perspective, but we’re also building features on the product side. That leverage consumer segmentation and then target users that we think would likely to actually -- would like to purchase those types of goods. Typically, they’re higher-priced products and potentially not available everywhere. And we are seeing, obviously, a significant increase in the number of listings, which is pretty exciting for us. And we’re seeing a large increase, for instance, in orders of $20 or more. So if you look at sort of percentage of orders with a transaction value of over $20, that actually increased 54% [ph] year-over-year, which is pretty exciting to us. And then in terms of getting merchant partnerships outside of China, that increased 351% [ph] year-over-year. If you look at Japan and Korea, that increased almost 500% year-over-year. And in the U.S., where we have sort of already a large number of merchants, that actually grew nearly 200% year-over-year. And Wish Express, as I mentioned, grew about 400% year-over-year. So yes, I think sort of we’re taking a full funnel approach and realizing that these merchants are different. They perhaps need sort of a different set of policies, different onboarding process. And one, sort of making sure that the recommendation algorithm understand that, but also building specific features, promotional C files, tabs/pages, to really make sure that our customers, one, want those types of goods, are ready to make those types of large sort of ticket item purchases on Wish and that we’re educating them about those types of purchases. And this will include all the things that we’re adding in terms of high-frequency purchase products like CPG and including stocking them in stores to pickup. I don’t know, Raj, if -- I don’t know if you have anything else to add.

Yes. I think just I’ll add, logistics is almost -- now we control close to 85% of our merchants. So the adoption has happened really fast. And now we expect the mix kind of to stay similar to what it was in Q1, unless these merchants, these pilots we have where we’re extending the platform that do not Wish merchants, but that’s probably a bit of a longer term journey.

[Operator Instructions] Next question is coming from the line of John Blackledge from Cowen.

Great. Two questions. First on Wish Local. Could you broadly discuss the investments you’re making in the Wish Local initiative? And you referenced Wish Local 9% of GMV in April. How would you expect that to trend over time? And is the average order value higher for Wish Local volume versus non-Wish Local volume? And then just the second question is, could you guys discuss Jackie’s role and how she will help drive the business going forward?

John, this is Peter. So yes, great questions. Look, we scaled the Wish Local network around the world, and that gives us a strategic advantage over a lot of other e-commerce platforms, especially when it comes to value-conscious consumers. So we continue to build up the network, and we continue to sort of ship inventory and orders to stores that customers can pick up. And if we forward deploy, they can actually pick it up on. [Technical Difficulty] at 7% in Q1. And I think this is the best measure of our progress on Wish Local. So it continues to be something that resonates with consumers and our store partners. This is above 9% [ph] of order volume in April. And right now, we’re taking a strategic approach where we’re targeting specific locations in close proximity to a large number of active buyers on Wish. And we’re also targeting stores that have strategic inventory such as high-frequency CPG items that can be uploaded for -- onto the Wish platform and really enhance the customer experience, drive higher retention and a larger share of wallet from existing and new customers. On the second question, on Jackie joining the team, like, look, first and foremost, look, I’m super excited about Jackie coming along. I’ve been working with her closely for quite a while ever since I convinced her to join our Board and extremely excited to have her sort of play more active day-to-day role with us. So we -- since we started Wish, many of you are probably aware, we have been a very sort of engineering and data science-driven company, and I’m going to continue to focus on that and also drive the long-term strategy and [Technical Difficulty] customer messaging, support. She has a ton of sort of expertise through Square, Alibaba, which is obviously highly relevant, and Yahoo! in scaling e-commerce businesses and technology businesses. But for the most part, I’ll be doing the same things, building strategy, focusing on product and driving long-term vision. And since Jackie is on the call, I don’t know if you want to sort of say anything or add to that.

Yes. I mean what I found very interesting about Wish is the intersection with my background and what I really enjoy doing. I mean the combination of a focus on underserved small businesses, building on an omnichannel set of products, working around Chinese-based e-commerce is all very complementary to where I’ve spent my time, and I think it’s a place where I can be helpful to working with the team. So I’m really looking forward to it. I started today more actively. And so I’ve got a lot to learn, but I’m very excited for the opportunity.

[Operator Instructions] Next question is coming from the line of Justin Post from Bank of America.

A couple of questions on your cohorts and then seasonality. What have you seen since you kind of fix the shipping times as far as cohorts? How are they behaving? And when do you expect the ill effects of the shipping issues last year to kind of anniversary out? And then the second question, on seasonality, I think there is some surprise on that 2Q number. So can you revisit the seasonality in 2Q and how you think a normal year would evolve in the back half?

Yes. So let me just sort of address maybe a part of the first question. Yes, look, I mean, ultimately, because we relied on logistics network that basically collapsed, we disappointed a lot of users. And like you said, we sort of have to lapse that. That was unfortunate. We’re doing all we can to actually get those users back. But that’s going to be an issue. Seasonality, look, we have, I think, tough comp with Q2. I think everyone kind of realizes that as well. Raj, I’ll let you answer the second question or add anything to answer the first question.

Justin, if you look at, last year’s seasonality went out of the window because the pandemic. I think this is going to be a more normal year. And if you look at our ‘18 and ‘19 quarters, you will see similar seasonality this year. Q2 tends to be down versus Q1. Q3 tends to be higher than Q2, and then Q4 tends to be much higher than Q3. And that’s how we see the business this year. Q2 down, and then Q3 back up, and then Q4 higher than Q3. And as far as cohorts are concerned, clearly, we definitely recovered from the low point, which we hit last year, middle of last year, and we are continuing to see improvements but that will take a little while to get those users back and really get to higher cohorts. But we have clearly seen recovery from the low points from last year.

Got it. And maybe one follow-up. On the VAT, can you help us understand what percent of orders or any data on how much orders are below $20 versus above in Europe?

Yes. So we’ve had -- experience we’re dealing with sales and VAT, right, we have been doing -- like 3 years, 2.5 years ago, we had -- we didn’t have to collect any VAT or sales taxes. Marketplace is an example. At this point, we are actually remitting an annualized basis north of $200 million of taxes from pretty much 0, and we’ve been able to manage that over the last few years. I think this is the last piece of it. And it’s the EU countries in the back half. And I would say 70% of our orders tend to be below EUR 22. And so just to give you some magnitude on that.

We don’t have any questions at this time. I’ll be turning it back to Peter Szulczewski.

Apologies. I was on mute. At this time, I’d like to thank everyone for joining the call and looking forward to the next one. Thanks, everyone.

This concludes today’s conference call. Thank you all for participating. You may now disconnect.