LightInTheBox Q2 2023 Earnings Call Transcript

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Provided by Quartr
September 15, 2023

There are 4 speakers on the call.

Operator

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

Operator

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

Speaker 1

Thank you, operator. Hello, everyone, and welcome to Lighting to Box's Q2 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.

Speaker 1

Jian He, Chairman and CEO Ms. Yuanjun Ye, Chief Financial Officer and Ms. Wenyu Liu, Chief Growth Officer. Mr. He will provide an overview of the company's strategies and recent developments, followed by Ms.

Speaker 1

Ye, who will go over its financial results. Following our 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.

Speaker 1

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 Light in the Box Chairman and CEO, Mr. He.

Speaker 1

Please go ahead.

Speaker 2

Good morning, everyone. Thank you for joining our Q2 2023 earnings conference call today. We are pleased to deliver strong operational and financial performance for the Q2. Amid a complex macro environment, we achieved the highest quarterly revenue in our history, primarily driven by apparel sales growth of 50% over 1 year ago. Meanwhile, our efforts to enhance operating efficiency paid off evidenced by improved profitability and its fulfillment and GA expenses as a percentage of revenue at an all time low.

Speaker 2

Furthermore, our cash balance was CNY95 1,000,000 as of the end of this quarter, demonstrating our robust free cash flow generation ability. Our mission is to create a better lifestyle for consumers worldwide by offering quality products at attractive prices with a convenient and modern online shopping experience. To position ourselves for success in the highly competitive apparel retail markets, we leverage our expertise and tech capabilities to continually refine and develop our brand portfolio. Recently, we refreshed our core brand values to gain traction with existing and new customers. 1st, embrace individuality.

Speaker 2

Everyone is unique and replaceable. Thus, we are dedicated to empowering our customers to readied their confidence through our closing, regardless of their race, age or body shape. 2nd, self expression. We strive to curate a diverse fashion experience. The reason is our consumers' personal style.

Speaker 2

3rd, colorful. Vibrant colors always bring joy and confidence to our target audience. And last but not least, environmental cost effectiveness. The concepts made to order and data driven leads our design philosophy as we try our best to create a balance between fashion and the environment. We believe these ideas relate strongly with our target customers and allow us to engage them on a deeper level.

Speaker 2

In addition, our data analysis capabilities empower us to timely capture consumers' preferences and needs. Our in house design team is international fashion credential, then designs fashionable, especially tailored apparel according to those dynamic customer desires. Furthermore, our supply chain system ensures a steep product output and standards And our strong fulfillment system facilitates a smooth and satisfying shopping experience for consumers. What's more, we conduct each step in the process with maximum efficiency through our advanced technologies, improving our overall operation efficiency. As we move into the Q3 2023, we are seeing the macroeconomic turbulence, together with normal seasonality in the apparel sector, is impacting our top line performance.

Speaker 2

Leather business, we will continue to execute our proven business strategy and hone our core competitive advantages to navigate the evolving market as we strive to deliver sustainable long term value to all our stakeholders. With that, I will now hand the call over to Yuanjun to go through our financial results.

Speaker 3

Thank you, Mr. He. Let me start with our financial highlights for the quarter. In the Q2, our total revenues increased by 44.9 percent year over year to $191,800,000 Revenues from apparel continue to exhibit strong growth momentum, up 50.1 percent year over year to $153,200,000 representing 80 5.1% of total revenues compared with 82.1% in the same quarter of 2022. Furthermore, gross margin improved to 57.5% from 55.3% a year ago, thanks to the growth in apparel sales, which generally carried higher margins.

Speaker 3

Total operating expenses were 100 $11,800,000 compared with $75,600,000 during the same quarter of 2022. We will continue to focus on operational optimizations to promote profitability as we move through the Q3. Selling and marketing expenses were $94,000,000 an increase of $35,800,000 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 $9,900,000 compared with $7,800,000 during the same quarter of 2022. G and A expenses decreased by $1,500,000 year over year to $8,200,000 in the Q2 of 2023.

Speaker 3

As part of G and A expenses, R and D expenses were stable at $5,100,000 on a sequential quarterly basis. As a result of our continuous efforts to enhance operating efficiency, fulfillment expenses and G and A expenses were 5.2% and 4.3 percent of total revenues, respectively, compared with 5.9% and 7.3 percent, respectively, a year ago. Meanwhile, we continue to make quarterly quality investments in our technical capabilities to further improve user experience. Given the factors I just mentioned, our net loss for the 2nd quarter narrowed to 1.5 $1,000,000 from $2,400,000 in the same quarter of 2022. In terms of our balance sheet, as of June 30, 2023, we had cash and cash equivalents and restricted cash of $94,600,000 compared with $55,700,000 a year ago $73,600,000 in the preceding quarter.

Speaker 3

We also minimized our inventory levels, leveraging our environmental consciousness, philosophy and make to order and data driven strategies to optimize inventory in an environmentally conscious manner. Furthermore, we are dedicated to enhance value for our shareholders on June 27, 2023. Our Board approved a share program under which the company may repurchase up to 10,000,000 of the ordinary shares in the form of ADS no later than December 31, 2023. As of December 12, 2023, we have repurchased approximately 0.5000000 ADS to US0.7 million dollars Finally, to our Q3 2023, guidance. Based on information currently available and business seasonality, we expect net revenues to be between $145,000,000 $160,000,000 To sum up, we will continue to focus our core growth strategy while refining our operations to enhance efficiency and improve profitability.

Speaker 3

While we do foresee our growth to moderate in the Q3 given external factors, we believe our solid business fundamentals will support us in executing our strategy and exploring new opportunities ahead of us. As always, we are dedicated to creating long term value for our shareholders. This concludes our prepared remarks, and we will be happy to take some questions. Operator?

Operator

Thank As there are no questions, now I'd like to turn the call back over to the company for closing remarks.

Speaker 1

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 PN20 Financial Communications. Have a great day.

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Key Takeaways

  • Record revenue: Q2 total revenues rose 44.9% YoY to $191.8M, driven by 50.1% apparel sales growth, marking the highest quarterly revenue in company history.
  • Improved profitability: Gross margin climbed to 57.5% (from 55.3%), while fulfillment and G&A expenses as a percentage of revenue hit all-time lows at 5.2% and 4.3%, respectively.
  • Narrowed net loss: Net loss shrank to $1.5M from $2.4M a year ago, reflecting efficiency gains and cost controls.
  • Strong cash position: End-of-quarter cash and equivalents reached $94.6M, and the board approved a program to repurchase up to 10M ADS, with $0.7M repurchased so far.
  • Q3 guidance moderated: The company expects Q3 net revenues of $145M–$160M, citing macroeconomic turbulence and apparel seasonality impacting top-line growth.
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Earnings Conference Call
LightInTheBox Q2 2023
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