POSH (2021 - Q1)

Ladies and gentlemen, thank you for standing by. And welcome to the Poshmark First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Ms. Christine Chen, Head of Investor Relations. Thank you. Please go ahead. Christin

Welcome to Poshmark’s first quarter 2021 conference call. Joining me today are Manish Chandra, our Founder, Chairman and CEO; and Anan Kashyap, our Chief Financial Officer. Please keep in mind that our remarks today include forward-looking statements such as statements related to our financial guidance and key drivers, the impact of COVID-19 on our communities, business and strategy, the potential benefits of our marketing and product initiatives, and the anticipated return on our investments and their ability to drive growth. Our actual results may differ materially than those expressed or implied in our forward-looking statements. Forward-looking statements involve substantial risks and uncertainties, which are described in today’s earnings release, our annual report on 10-K for the year ended December 31, 2020, and subsequent filings with the SEC including our 10-Q for the quarter ended March 31, 2021. Any forward-looking statements we make on this call are based on our beliefs and assumptions as of today and we don’t have any obligation to update them. Also during the call, we will present GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today’s earnings release, which you can find on our IR website, along with a replay of this call. And with that, I will turn it over to Manish.

Thanks, Christine. Hello, and welcome, everyone. Thank you for joining us for our second earnings call as a public company. Before I get into my main remarks, I want to take a moment to acknowledge the crisis in India as the second wave of COVID-19 continues to devastate communities across the country. Our hearts go heart to everyone in India, especially our own Poshmark team who’s thankfully staying safe, and whose health and safety remains our top priority. Now I will transition to my main remarks. Our mission is to put people at the heart of commerce, empowering everyone to thrive. By pairing technology with people’s inherent desires to socialize, we have built a widened social marketplace that makes the buying and selling experience incredibly seamless, easy and social. We remain focused on supporting our community, innovating for a fantastic use of experience and expanding the reach and offerings of our social marketplace. Because our community of millions of sellers are constantly adding new products to the marketplace, our model is incredibly responsive to demand and we are generally not impacted by supply chain disruptions. Our asset light model affords no inventory, leading to consistent high gross margins, resulting in a scalable and profitable about business. We are the leader at the intersection of three key trends shaping the future of shopping, the shift to online, the shift to social and the shift to second hand. We are unique from other marketplaces as we focus on growing the overall community of users to create hybrid engagement and loyalty. These users activate as buyers and sellers creating a virtual flywheel of growth, monetization and strong cohort retention. The beauty of our social marketplace is that our users who spend an average 27 minutes day on our app continue to engage and reengage over time both as buyers and as sellers, fueling a high velocity flywheel of organic growth. We reported a strong first quarter and grew our GMV and revenue by 43% and 42%, respectively, to $441 million and $81 million, a testament to the strength of our cohorts even when faced with near-term disruption. We delivered our fourth consecutive quarter of adjusted EBITDA profitability, with $4.2 million in adjusted EBITDA and 5.2% in adjusted EBITDA margin. Our business model is built on the long-term retention of our cohorts. Despite mid-quarter challenges due to weather and COVID, our cohorts remained resilient as growth rates across states began to normalize and converge once again in the second half of March, as our community expressed increased optimism about economic condition and re-openings. In March, shoppers bought aspirational items that they look forward to showing off once the weather improved and restrictions started to lift. Top-performing secondhand categories by sales were for crop tops, up 101%, bikinis up 86%, jean shorts up 85%, and Hatch up 71% year-over-year. In March, we announced a TV and marketing campaign with Marie Kondo, the master of tidying up, decluttering and organization. The campaign focused on the emotional connection we have with clothing and the value of resale and secondhand. It featured Marie Kondo encouraging consumers to give new life to items they have loved from their closet by listing them on Poshmark, allowing the items to spark joy for someone new. We are optimistic that as consumers begin to leave their homes and engage in social activities once again, there will be demand for a different wardrobe from the stay-at-home outfits that prevailed in 2020. Pent-up demand for apparel could drive more frequent and a wider range of apparel and accessory purchases, benefiting our marketplace. We enter 2021 as a public company with a business that is stronger than ever, driven in large part by great execution of our four growth strategies. Our first strategy is to focus on product innovation to continue driving user engagement, which is fundamental to the retention of our user cohorts and GMV growth. In March, we completed the full rollout of video listings, which allow sellers to add the deals directly into their listings, providing new ways to market their products, drive traffic to their closets and engage with potential buyers. We see video of commerce as the next generation of e-commerce. In our marketplace video drives increased engagement both views and likes, and conversion, particularly with younger customers who have been the first to adopt video as a form of self-expression. In April, we started highlighting listing videos and the user feed to help sellers increase the visibility of their listings. Our sellers are excited about this feature and they are starting to update their listings to include video. So far the most popular categories for videos are dresses, bags, jewelry, makeup and toys. Though still early, we are excited about this feature and we will share more details as we continue to evolve and grow adoption of video commerce. Growing our international footprint is a second key strategic focus and we plan to invest ahead of revenue. We are excited about the opportunity we had in Australia and have just begun investing in marketing to grow the user base. Our market research indicates that Australians have $5 billion worth of unused clothes, shoes and accessories in their wardrobes. Our study found 79% of shoppers bought from online stores in 2020, however nearly 60% of the items they bought went unborn. In fact, we found that they were at least $500 worth of unused fashion items in the average Australian’s wardrobe and 54% of those surveyed felt guilty throwing those pieces out. Poshmark provides Australians with a simple, social and sustainable way to keep those items [Audio Gap] was launching a celebrity charity closet with Serena Williams in March. The proceeds is going to Black Dog Institute to support mental health research and suicide prevention for Australia’s First Nations people. While it is still too early to provide much detail, Australia has seen great user buyer and seller growth since our February launch. Our third strategy is to grow through category expansion. We launched pets in February to address the style needs of the entire family. We have seen pets attract new sellers and buyers to the platform, demonstrating the scalability of our model. As expected, supply and demand is dominated by dog and cat style items from clothing to collars and leashes and the majority of these are non-branded, some of which are even handmade. Though still early, we are excited for the growth potential of the pets category and our excitement is shared by our community with positive feedback and high volumes of user generated pets content. Our fourth strategy is to deliver robust easy-to-use and effective seller services to help sellers market and sell their product offerings. Our social marketplace makes it very easy for anyone to sell and we provide incredible demand generation services to attract shoppers to sellers listings. In mid-March, we completed the rollout of seller shipping discounts, a new feature, which gives sellers the ability to list items with discounted shipping that we began testing in January. Previously, shipping discounts were only available through private negotiations and offers. We now have four shipping tiers, no discount, a first level of discount, a second level of discount and free shipping. All tiers provide expedited priority USPS shipping one day to three days. Currently, about 7% of listings offer discounted shipping. Adoption rate has been highest for the highest price point items. Since the introduction of seller shipping discounts we have seen increased engagement as repeat listers and Posh ambassadors both of whom have adopted this feature at a higher rate, revisit existing listings to add shipping discounts. In mid-April we introduced icons in review and listing details to indicate items that have discounted or free shipping, which has begun to positively impact conversion and order rates. In April we introduced two new seller tools, Style Tags and Price Suggester in the listing process. Style Tags give sellers the option to use three relevant phrases to describe the items design, aesthetic, material and more, enhancing the ability for buyers to search for relevant products. These include things like handmade tie dyed cotton, boho [ph]. We also launch Price Suggester to help sellers, especially new listers list items more efficiently by providing a suggested price range for their listings. As these tools have just launched we will share more details on our next earnings call. Our community is the heart and soul of Poshmark. Together, we make buying and selling simple, social and sustainable. We are committed to helping our sellers succeed and have begun accepting applications for our Heart & Hustle Community Fund. Everyday Poshmark Sellers turn their passion into profit by creating new brands, sharing their style and connecting shoppers, to help them get closer to their goals whether that’s making extra money, scaling their business, supporting the circular economy or turning a side hustle into something bigger. We want to recognize and empower them. Our new fund is one of the ways we will do that. In conclusion, we had a strong first quarter in start to 2021, where the Poshmark being once again executed well for the benefit of our entire community. We believe that Poshmark has an incredibly compelling growth potential for years and decades to come. We have high conviction around making the investments that are going to allow us to achieve that full potential. Poshmark will continue to be a place where you can save money, make money and find human connection. And with that, I will turn it over to Anan.

Thank you, everyone, for joining us. Our first quarter was another great quarter as we delivered strong GMV revenue and our fourth consecutive quarter of operating profitability. Our business model is built on the long-term retention of our cohorts, which we demonstrated in 2020 during an extraordinary year due to COVID. During the first quarter of 2021, even when faced with near-term disruptions, our cohorts have remained resilient, as growth rates began to normalize the second half of March as economic conditions and weather improved. Our robust cohorts helped us generate $441 million in GMV in the first quarter of 2021, which was 43% growth from $309 million in the first quarter of 2020. Commensurately, net revenues were $81 million in the first quarter of 2021, which was 42% growth from $57 million in the first quarter of 2020. This was driven by an increase in GMV in the first quarter of 2021 and overall growth of our community including 18% growth in active buyers to 6.7 million from 5.7 million in the first quarter of 2020. Our take rate was 18.4%, which is down slightly from last year’s 18.5%, a result of higher than expected delayed or canceled orders, resulting partially from severe weather conditions in February. Cost of revenues was $13 million in the first quarter of 2021, an increase of 31% from the first quarter of 2020 and decreased to 16.1% of revenues due to some leverage and hosting expenses. Therefore, adjusted gross margin, which is net revenue less cost of net revenue improved 1.2% to 83.9% of revenues in the current period as compared to the first quarter of 2020. Marketing expenditure excluding stock-based compensation was $32 million in the first quarter of 2021, a decrease of 6% from the first quarter of 2020. Marketing was 40% of net revenue in the first part of 2021, down significantly from 60% of net revenue in the first quarter of 2020 due to rationalizing our marketing spend focused on strong ROI user acquisition channels. We invested in upper funnel strategy, such as more targeted TV, as well as influencer marketing. In March, we launched a unique partnership with tidying master, Marie Kondo with two new TV ad to drive more listing activity and build brand visibility. Moving to operating expenses operations in sport excluding stock-based compensation was $13 million in the first quarter of 2021, an increase of 15.7% of revenues, up from 14.7% last year. We experience an increase in credit as a result of shipping delays from the holidays and severe weather conditions during the quarter. During this unprecedented time, we had to increase hiring across the team to support customer needs and maintain our excellence in customer service. Research and development excluding stock-based compensation was $8 million in the first quarter and decreased to 10.1% of revenues to 11.5% last year mainly due to slower hiring than planned. Hiring accelerated throughout the back half of the quarter, so we do not expect the first quarter leverage to persist. In fact, we expect to double down and invest additional resources across a number of key initiatives including international expansion. G&A excluding stock-based compensation was $11 million in the first quarter, an increase of 13.3% of revenues from 11.7% last year, mainly due to the additional ongoing costs of being a public company, including annual audit costs, which were primarily incurred during the first quarter, as well as greater than expected premiums for D&O insurance that we discussed in our last earnings call. Stock-based compensation was $24.1 million in the first quarter 2021, an increase from $1.8 million last year. First quarter 2021 stock-based compensation included $22.3 million from restricted stock units, of which $15.6 million was a one-time cumulative expense due to the accelerated vesting of our restricted stock units upon the IPO in January. We delivered adjusted EBITDA, which excludes stock-based compensation of $4 million, with adjusted EBITDA margin of 5.2%, compared to the loss of $9 million and negative 15.2% margins in the first quarter of 2020. The majority of the profitability improvement was driven by strong revenue growth and our decision to lower our marketing investment as compared to the prior year. As we have discussed before, for the remainder of 2021, we will prudently invest in marketing in the future, as we did in the first quarter, but with a continued focus on growth and margins. Operating income, excluding stock-based compensation, was $3 million in the first quarter of 2021, with operating margins of 4.2%, which is a meaningful change as compared to the loss of $9 million, with negative 16.4% margins in the first quarter of 2020. Similar to the improvement in adjusted EBITDA, the increase in income from operations was driven primarily by strong revenue growth and a decrease in marketing expense. Due to the transition from a private company to a public company, we incurred GAAP non-cash other expenses due to the higher share price impact on changes in fair values of our convertible warrants and the loss on the extinguishment of our convertible notes. Thus, we believe that excluding all non-cash one-time capital structure expenses resulting from our IPO in January from our net income is a better indicator of our operating performance. First quarter 2021 non-GAAP net loss to common stockholders was $21 million that excludes non-cash expenses of $54 million. This was due to the loss on conversion of our convertible notes into common stock upon the completion of the IPO and change in fair value of preferred stock warrants. The $50 million convertible notes were converted into 1.4 million shares at a price of $35.70, a 15% discount for an IPO price of $42. However, due to the timing of the settlement of shares, which occurred at the closing of the IPO, three business days after pricing, we had to record a non-cash accounting loss of $51 million of which $49.5 million was due to increase in the fair market value of the stock to $74.90 to the closing price on January 19th, as well as the loss on extinguishment of the debt of $1.6 million. In addition, we had a $3 million loss due to the change in fair value of convertible preferred stock warrants, also due to the increase in the fair market value of our common stock share price. Excluding the combined impact of these non-cash expenses, non-GAAP loss per share to common stockholders was $0.33. Beginning in the second quarter, we no longer have these non-cash capital structure expenses as all of our convertible securities were converted into common stock at the closing of our IPO in January. Cash, cash equivalents and marketable securities were $575 million as of March 31, 2021. During the first quarter of 2021, we completed our IPO, leaving $297 million net of underwriting discount and commissions. In addition, all 52 million shares or convertible preferred stock were converted into Class D common shares at the IPO. As we look ahead and think about capital allocation and use of cash, our number one priority is using our strong balance sheet to position us to invest in growth and strategic investments to drive long-term growth internationally. Moving to the cash flow statement for the three months ended March 31, 2021, free cash flow was $19 million, compared to $1 million for the first three months ended in 2020. Our strong cash flow generation significantly strengthened our balance sheet and liquidity. Looking ahead, we think that customer’s inherent desire to socialize and resume normal activity, combined with their interest in retail should drive demand for apparel going forward, which should benefit our marketplace. We expect second quarter revenues of $79 million to $81 million, resulting in a growth rate of 18% to 21%, taking into consideration difficult comparisons again 41% year-over-year growth last year. Our revenue guidance reflects 59% to 61% growth on a two-year stack basis, an acceleration from the two-year stock growth of 50% in the first quarter. We expect our second quarter take rate to be similar to the first quarter due to slightly higher inflation rates. We certainly remain profitable with the second quarter EBITDA of $1.5 million to $2.5 million as we continue to focus on balancing growth and profitability while investing in marketing. Adjusted gross margin performance during the first quarter 2021 was ahead of our initial expectations, benefiting from lower transaction process costs and leveraging our posting costs. The remainder of 2021 we expect adjusted gross margin to be similar to 2020 levels due to normalization of closing expenses. We expect operations and support in the second quarter to be a little higher as percentage of revenue than the first quarter due to the higher cost of managing shipping and logistics. We expect R&D expenses for the second quarter to increase as the percentage of revenues from the first quarter as we increase the pace from hiring to support our continued product innovation and international expansion. We expect G&A expenses as a percentage of revenue for the remainder of the year to be similar to the first quarter due to public company expenses. We will remain disciplined with our ROI-based approach and expect marketing as a percentage of revenues in the low 40s and 2021 to grow users and support the launch of geographic expansion and categories. We believe there is still a large opportunity before for us and so we plan to invest in building the brand, grow our user community and international category expansion. We continue to see very strong GMV retention due to our social model which drive engagement and repeat transactions. These cohorts have been both resilient and have high residual value after the initial year of acquisition. Thus, we are confident that the growing engagement of our user cohorts will enable us to deliver consistent growth over the long-term. Overall, we believe we have executed very well during a challenging environment with the focus on the safety for our employees, supporting our community and driving efficiency in our operations. Thank you and I will now turn the call over to the, Operator, so we can take your questions.

Thank you. [Operator Instructions] And your first question comes from the line of Ross Sandler from Barclays. Your line is open.

Hey. One for Manish and one for Anan. I mean the first one just question about retention and frequency right now for these most recent cohorts compared to what you are seeing last year during COVID. And since you got is this kind of flattish Q-on-Q, I know there were some stimulus benefit in March and you have the Texas and New York issue that you flagged last quarter. So just how do we think about, if we strip all that noise out, the underlying kind of sequential cadence and how retention is trending? And then, on Australia, I know it’s early, but just any color on how we should think about the cadence of that region ramping up compared to maybe how Canada ramped up in the early quarters, like, any reason why that would be a little faster or a little slower? That’s it guys. Thanks a lot.

Sure. So, in terms of the overall retention of our cohorts, it’s actually pretty stable and continues to be very stable when you measured it across the quarter even though there were some variations within the quarter and we see very, very stable retention across all of our cohorts, as well as growth on all of the cohorts. So I think the predictability and sort of the convergence as we pointed out in the call is back. So we expect to see pretty healthy sort of movement of the cohorts as we go into Q2 and beyond. And certainly remain optimistic as the economy opens up. It could provide a positive uplift as people go out and engage with fashion and engage with sort of the outdoor activities. Australia is early shaping up well despite sort of having to launch the country in a very remote way from here and we haven’t seen the theme or the community in the early days. It’s shaping up sort of in the normal healthy development of the buyer, sellers and the users.

Yeah. Just one additional point I want to make, Ross, is that we typically don’t see outsized quarter-over-quarter growth from Q1 to Q2. So and when we talk about the guiding towards a $79 million to $81 million, it’s a 59% to 62% growth on a two-year stack basis, which is an acceleration of 50% from the first quarter. So and we are so obviously extremely optimistic about how the quarter’s going to go, but it’s also important to remember we are remaining profitable throughout all these as well. So that dynamic is obviously great for us long-term.

Your next question comes from the line of Lauren Schenk from Morgan Stanley. Your line is open.

Hi. This is Nathan Feather on for Lauren. Just two questions from me. Can you talk about how average order value trends…

Hi.

… in the quarter given there are some early success of seller shipping discounts particularly on higher value items? And then, also your noted hiring came at a bit below your expectations in R&D. Can you just talk to why that was and I know you mentioned hiring was accelerated back up to your front? Thank you.

Yeah. So, on average order value, we have actually seen -- it basically remained relatively stable throughout the last few months. The seller shipping, I think, has been a positive impact for conversion in general. And how we think about it is, sellers ultimately dictate their pricing both on the item, as well as the shipping. And so we think this is just another tool for them over the long-term. As far as R&D hiring, two things I think are sort of interesting. We actually started the quarter with very sort of positive momentum. But when it came down to actually the timing of when people were hired, it ended up being more back-end loaded towards the end of the quarter. And so, we started catching up towards the end, but as you can imagine, just the dynamics of the ramp from the beginning to the end of the quarter was what caused the numbers to be a little bit lower. But for us, R&D is a very critical investment especially in terms of product innovation. So as you can see from the pace of features that we are launching, it’s a major area of investment for us and it will continue remainder of the year.

Your next question comes from the line of Ralph Schackart from William Blair. Your line is open.

Good afternoon. Thanks for taking the question. On the strong trend that you saw in GMV and Anan, you talked about kind of reacceleration in Q2 into your stack basis. Just curious how much of that was just on a strength of the business? I know there are some stimulus in there and maybe some tough compares or some comparability issues with COVID during last year. But just love your overall thoughts on that. That’s the first question. And if I could add on, as you think about your non-apparel vertical such as beauty, home and pet. Manish, I think you talked about pet bring buyers to the platform, but just love your thoughts in terms of, are these new categories also adding to GMV at this point? Thanks so much.

Yeah. Just maybe we will talk about the overarching dynamics of stimulus last year and this year. As you can imagine, last year the first quarter was weak for us right around when COVID hit around the end of sort of the end of February, beginning of March. And if you look at the second quarter, we actually had a great quarter of reacceleration of the business to 40% growth and so that was -- part of the reason why the comp is actually a little bit higher for us this year. As far as stimulus and how we think about it, look at the positive uplift for consumers, the economy and numerous businesses, we think it’s really a true testament to the strength of our cohorts, which overcame some mid-quarter challenges due to weather and COVID, and remained resilient. And we actually saw, the states actually begun to -- begin to normalize and converge once again in the second half of March. Now, it’s impossible to determine or to separate the exact impact of stimulus, the timing also coincided with arrival of spring and optimism about re-openings. The second is also we can choose a number of great seller tools in March, the video listings, some of discounted shipping which have also positively impact the business. So we think that innovation is one of the key drivers of growth is why we continue to invest there. So we think long-term the consumer’s desire to socialize and resume normal activities to drive demand for apparel going forward which should benefit the marketplace. And I will let talk Manish talk about it.

Sure. Yeah. I think all of the categories are already starting to drive GMV growth, as well as listing growth. The expansion in categories both in direct apparel and beyond apparel for us brings in growth from two different perspectives. One is it activates new buyers and sellers on the platform. And second is it gives existing buyers and those who wish to sell and shop on the platform. So it’s sort of drivers on both dimensions and we have seen positive impacts of these categories on both of those of fronts in terms of driving growth and ultimately GMV per buyer.

Okay. Thanks Manish. Thanks, Anan.

Your next question comes from the line of Aaron Kessler from Raymond James. Your line is open.

Great. Thanks, guys. Anan, could you talk maybe on the advertising side, any expected impact from IDFA? Another retailer mentioned that recently? And secondly, are you seeing kind of increased interest from brands or vendors as well? Thank you?

Sure. So IDFA is of course going to have a shift in spending and channel mix for the short-term, over the long-term, it’s a little bit unknown how it sort of shifts the overall mix. For us because we have focused on a very diverse set of marketing channels it allows us to rebalance the spend and continue to focus on growth despite the short-term shift in the advertising landscape overall.

[Operator Instructions]

Can you repeat the second part. Anan, can you repeat the second question again.

If you can please press star one again to re-queue up. And he has not re-queued. I am sorry. He just re-queued up now. Your line is open.

Okay. Thank you. Sorry. The second question is on brands and kind of vendors. Are you seeing kind of increased interest from them as well or just any update there? Thank you.

Absolutely. So, yeah, we continue to experiment pretty aggressively with brands. We believe that the size and scale of our community, the interest for brand on both resell and social commerce makes a partnership with them inevitable for Poshmark and we continue to do pretty aggressive experiments -- experimentation there. Nothing specific to announce right now but a lot of good work going on there.

Okay. Thank you.

[Operator Instructions] Your next question comes from the line of Oliver Chen from Cowen. Your line is open.

Hi. Thank you. As we look ahead to the active buyer growth, should we expect it to be in the high-teens or maybe accelerate as some of the growth comparisons ease? And as you think about the marketing spend for the balance of the year, how are you thinking about the composition, as you referred, the upper funnel and also the global opportunities that you are addressing as well?

Yeah. So I will start with kind of the upper funnel dynamics and sort of marketing in general for the year. The main thing, I would say is, as Manish mentioned, one of the important strategies for us is to actually be very diversified both from a -- both from an upper funnel, as well as kind of purely transactional basis. And what we found is that by allowing that flexibility we can shift betting on what we see with IDFA or any other sort of disruption in the marketing ecosystem. So how we think about it is we have got a tremendous ROI based approach which is focused on a payback of about two years and that continues to be our modus operandi. And the only time that that shift as you think about kind of international expansion opportunities around Canada and we have launched Australia, obviously, where those payback periods are usually extended as we are essentially investing in those markets. Hopefully that answers your question.

That’s very helpful. On active buyers, what are your thoughts on how that may proceed through the year?

Yeah. So I think we haven’t really guided towards active buyers in our commentary. I think what we would normally expect that to be relatively in line with overall growth of the business. There may be some differentiations when it comes to certain markets. But today that dynamic is very consistent as compared to overarching GMV and revenue growth.

Thank you. And lastly a big bigger picture, as the competition does get more competitive in resell. Why would the customer choose to list on Poshmark versus others and could you speak to the defensibility of your pick rate? Thank you.

Sure. First of all, I think, as the market for resell is growing. We are sort of seeing resell getting adopted in every single dimension, whether brands that are adopting it, marketplaces are adopting it, which is exciting. So we think resell as a massive expanding opportunity, which paves the way for our own sort of scaling and expansion. And for us from day one we have been the simplest and the most social and the most engaging way for people to buy and sell fashion and fashion-related, style-related products and that continues to be our core focus. Out take rate has also been consistent since we started the company. We partnered with our sellers since day one, haven’t taken it up and haven’t taken it down. It’s been a very consistent partnership and we continue to maintain that partnership as we build out the product. What we have done is in that same partnership added tremendous level of services for our sellers and buyers over that time, whether it is adding things like Posh Post, Posh Authenticate, all adding listing videos, seller discounts, power seller tools, et cetera. So we continue to serve our core community of buyers and sellers on all different dimensions bringing the best engaging online experience, the best social experience. And that we believe is ultimately the key to our growth, our long-term growth, but also key to a successful partnership with our seller community.

Thank you. Very helpful. Best regards.

Thank you.

And your next question comes from the line of Ron Josey from JMP Securities. Your line is open.

Great. Thanks for taking the question. I had two. Manish, you talked about seller shipping discounts now live in the four shipping tiers. Can you give us some updates or talk to us about this conversion rates you are seeing across these four tiers. The use cases that a seller might use when they offer discounts from zero to, call it, fully discounted and what that means to conversion rates? And I ask this in reference to, I guess, the question just to ask now from all over around just the seller tools and newer services that you are offering. So conversion rate or asking about conversion rates on shipping? And then lastly, another question on just category expansion, it’s a key focus for Posh and great to hear pets is bringing new users and sellers to the platform. Just talk a little bit more about what we might look forward to for categories this year and next? Thank you.

Yeah. So seller shipping discounts when you think about the different players and tiers we offer, it’s really a tool for sellers to decide how they want to price their product. Do they want to build more of the margin in the core price and then offer shipping discount or sort of used those two knobs continuously. And sellers are still paying with it. We are seeing increased adoption. But I feel that there are significant potential for much more adoption in the marketplace. And typically you will see free shipping being added to place where the pricing can sustain a fee shipping margin and then lower shipping discounts available for a couple of different tiers. A lot of sellers are starting to experiment with at least the basic tier of discounting to offer value to their shoppers as shoppers are used to different kinds of shipping out there. So we see that happening. Really the place where shipping discounts ultimately have a positive impact for the sellers is the speed that which the clear that items, so it touchdown sort of their sell-through rate in the speed of timing and that’s been very positive to measure there. We will continue to build more and more seller tools to both help and promote and market that. So for example, one of the things we recently launched is the ability for shoppers to filters by different seller discounts over time. The second question that you asked about categories, if you think about focus for categories, it has been categories that are really pertinent to your style and your pace and categories that particularly foster discovery more than just about straight search. So you start to see us expanding from -- our original focus was women, then we expanded to men’s, kid’s, home, beauty, and most recently pets. So, you should see just in categories that express an individual style and ultimately lead to more discovery-oriented architecture. And that’s sort of going to be our core mantra in terms of helping build out a full category portfolio on Poshmark.

Great. Thank you.

And there are no further questions at this time. Mr. Manish Chandra, I turn the call back over to you for some closing remarks.

Thank you everyone for joining our call and for your questions. We look forward to speaking to you again next quarter. Thank you.

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