LightInTheBox Holding Co Ltd

SWB:L4XA

Earnings Call Transcript 2023-Q1

[Operator]

Hello, ladies and gentlemen. Thank you for standing by for LightInTheBox's First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After managements prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded.

I will now turn the call over to your host, Ms. Jenny Cai. Please go ahead, Jenny. -- Please go ahead, Ms. Cai.

[Jenny Cai, IR, Piacente Financial Communications]

Thank you, operator. Hello, everyone, and welcome to LightInTheBox first quarter 2023 earnings conference call. The company's earnings results were released via Newswire services earlier today and are available on the company's IR website at ir.lightinthebox.com.

On the call from LightInTheBox today are Mr. Jian He, Chairman and CEO; Ms. Yuan Jun Ye, Chief Financial Officer; and Mr. Wenyu Liu, Chief Growth Officer. Mr. He will provide an overview of the company's strategies and recent developments, followed by Ms. Ye, who will go over its financial results. Following their prepared remarks, we'll open the call to questions.

Before we proceed, please note that today's discussion may contain certain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from the company's current expectations.

To understand the factors that could cause results to materially differ from those in forward-looking statements, please refer to the company's Form 20-F filed with the Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law.

Now I'd like to turn the call over to LightInTheBox Chairman and CEO, Mr. He. Please go ahead.

[Jian He, CEO & Director]

Thank you. Good morning, everyone. Thank you for joining us today. The strong growth momentum that we produced in 2022 continued in the first quarter of 2023, despite a complex global macroeconomic environment and the seasonality that our business typically experiences during the first couple of months of the year. Against that backdrop, we had a record first quarter in terms of total revenues and the revenues from apparel.

Revenues grew 58% year-over-year to approximately $148 million, exceeding the high end of our guidance range. Apparel sales also continued to be strong, delivering a 77% increase year-over-year in the first quarter. With apparel sales making up a large portion of our product mix, our gross margin increased to 55.8%.

From a macro standpoint, far reaching economic uncertainties that drive more conscious spending patterns have made our value proposition especially resonant with our growing customer base. Accordingly, our outstanding financial performance reflects the attractiveness of our growing business operations, which are built on the foundation of a robust value-for-money offering, quality customer cohorts and innovative technologies. All these strengths come together to deliver affordable and a convenient online shopping service to our target markets and effectively adjust increasing consumer demand for value-for-money items.

Entering 2023, our strategy for the apparel category will be focused on attracting buyers with affordable, comfortable, aesthetically pleasing items, while elevating our service experience on our online platforms and deepening customer engagement. Our affordable, value oriented fast fashion platform has been well received across our main markets and we continue to build on this momentum. Going forward, these are the ones of our core capabilities that accelerate our top line growth.

At the same time, we are steadily laying our strong foundation to unlock additional growth opportunities and future profitability by leveraging our advanced technology capabilities in big data and AI algorithms. This modern technologies empower our ability in targeting, tracking, analyzing and forecasting customers' shopping needs and their preference while significantly improving our operational efficiency across our supply chain, merchandising, marketing, logistics and customer service management, all of which underpin our core competitiveness in the global e-commerce market.

We remain committed to our mission of providing our customers with convenient and modern ways to shop for a wider selection of products at attractive prices through our well-established online platform and mobile apps. With a sharp focus on improving user experience, we continually create deeper and more meaningful engagement with our customers. We are confident in our strategy, outlook and the revenue growth momentum as we work to deliver long-term value to our shareholders in 2023 and beyond.

With that, I will now hand the call over to Yuan Jun to go through our financial results.

[Yuan Jun Ye, CFO]

Thank you, Mr. He. Let me start with our financial highlights for the quarter. In the first quarter, our total revenues were $148 million, up 58% year-over-year from $94 million in the same period of 2022. Revenues from apparel increased 77% to $119 million, representing 81 percentage of total revenues compared with 72% in the same quarter of 2022.

On that basis, gross margin improved to 56% from 51% a year ago, thanks to an increase in apparel sales, which generally carry higher margins. Meanwhile, we remain dedicated to minimizing our inventory level within this very challenging environment. Total operating expenses were $86 million compared with $54 million during the same quarter of 2022.

Selling and marketing expenses were $69 million, an increase of $30 million year-over-year, due to our continued investment in building our brand awareness and driving top line growth in the face of macroeconomic headwinds. Fulfillment expenses were $9 million compared with $7 million during the same quarter of 2022. G&A expenses increased by $1 million year-over-year to $9 million in the same quarter. As part of the G&A expenses, R&D expenses were stable at $5 million on a sequential quarterly basis.

As a result of our continuous efforts to enhance operating efficiency, fulfillment expenses, G&A expenses were both 6% of total revenues compared with 6% and 9% -- compared with 7% and 9%, respectively, a year ago. Meanwhile, we continue to make quality investments in our technical capabilities to further improve user experience. Given the factors I mentioned, our net loss for the first quarter narrowed to $4 million from $6 million in the same quarter of 2022.

In terms of our balance sheet, as of March 31, 2023, we had cash and cash equivalents and restricted cash of $74 million compared with $43 million a year ago. Finally, for our second quarter of 2023 guidance. Based on information currently available and business seasonality, we expect net revenues to be between $180 million and $200 million. Despite external challenges, we are confident in our ability to navigate through difficult times and stand-out in a competitive marketplace while delivering long-term value for our shareholders.

This concludes our prepared remarks and we will be happy to take some questions. Operator?

[Jenny Cai, IR, Piacente Financial Communications]

Thank you once again for joining us today. If you have further questions, please feel free to contact LightInTheBox Investor Relations through the contact information provided on our website or Piacente Financial Communications. Have a great day.

[Operator]

Thank you. This concludes this conference call. You may now disconnect your line. Thank you.