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CI

ContextLogic Inc. (WISH)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 revenue was $53 million, down 57% year over year; adjusted EBITDA loss improved to $(54) million, and net loss per share was $(2.82) .
  • Results were broadly in line with Q3 guidance (revenue $50–$60 million; adjusted EBITDA loss $(55)–$(65) million), with adjusted EBITDA near the better end of the range at $(54) million .
  • Management announced the sale of substantially all operating assets (Wish platform) to Qoo10 for approximately $173 million cash; guidance was discontinued and no earnings call was held due to the pending transaction, which represented a key stock catalyst .
  • Preliminary January 2024 results indicated revenue of $14 million and adjusted EBITDA loss of $(13) million, underscoring continued top-line pressure post-quarter .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA improved year over year and sequentially: Q4 adjusted EBITDA loss narrowed to $(54) million from $(95) million in Q4 2022 and $(54) million in Q3 2023; management emphasized operational efficiency and expense discipline in prior quarter commentary .
  • Asset monetization and strategic pivot: Board approved the sale of Wish’s operating assets to Qoo10 for ~$173 million cash, intending to monetize ~$2.7 billion of NOLs and reduce expenses post-close .
  • Liquidity remained sizable entering Q4 close with $238 million in cash and $144 million in marketable securities, providing runway during strategic transition .

What Went Wrong

  • Revenue contraction persisted: Q4 revenue declined 57% YoY to $53 million, with Core Marketplace down 58%, ProductBoost down 50%, and Logistics down 57%, reflecting macro and competitive pressures mentioned across prior releases .
  • Cash burn remained heavy: Net cash used in operating activities was $(75) million and free cash flow was $(75) million in Q4, continuing negative trends despite cost actions .
  • No earnings call and guidance discontinued: Management did not host a conference call and withdrew guidance due to the pending asset sale, limiting visibility for investors into near-term operations .

Financial Results

MetricQ2 2023Q3 2023Q4 2023
Revenue ($USD Millions)$78 $60 $53
Net Loss ($USD Millions)$(80) $(80) $(68)
Diluted EPS ($USD)$(3.38) $(3.35) $(2.82)
Net Loss as % of Revenue(102)% (133)% (128)%
Adjusted EBITDA ($USD Millions)$(66) $(54) $(54)
Adjusted EBITDA Margin %(85)% (90)% (102)%
SPGI Consensus RevenueN/A – unavailable via S&P Global (mapping error)
SPGI Consensus EPSN/A – unavailable via S&P Global (mapping error)

Segment revenue breakdown:

Segment Revenue ($USD Millions)Q2 2023Q3 2023Q4 2023
Core Marketplace$24 $19 $15
ProductBoost$6 $5 $5
Logistics$48 $36 $33
Total$78 $60 $53

Liquidity and cash flow KPIs:

KPI ($USD Millions)Q2 2023Q3 2023Q4 2023
Cash and Cash Equivalents$318 $303 $238
Marketable Securities$213 $142 $144
Net Cash Used in Operating Activities$(88) $(86) $(75)
Free Cash Flow$(91) $(86) $(75)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2023$50–$60 million Actual $53 million Delivered within range
Adjusted EBITDAQ4 2023$(55)–$(65) million Actual $(54) million Slightly better than guidance midpoint
All GuidanceQ1 2024+N/ADiscontinued due to pending asset sale Lowered/Withdrawn

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2023)Previous Mentions (Q3 2023)Current Period (Q4 2023)Trend
Macro/competitive pressureCEO cited macro and competitive headwinds impacting top line “Increasingly challenging market dynamics” and focus on efficiency Continued pressure reflected in segment declines; no call; asset sale pivot Persistent headwinds; strategic shift
Cost structure & efficiency“Aggressive actions to significantly lower our cost structure” “Operational efficiency and expense discipline” Cash burn improved QoQ but remains high; focus shifts to monetizing NOLs Ongoing cost focus; liquidity preservation
Strategic alternativesNot presentBoard initiated process to explore alternatives Asset sale to Qoo10 (~$173m) approved by Board; new ticker to follow Transition to asset monetization
Regulatory/legalNot highlightedNot highlightedBylaws litigation settled with $495k fee payment; bylaw definition narrowed Governance clean-up
Tax assets/NOLsNot highlightedNot highlighted~$2.7B NOLs targeted for monetization post-sale; tax benefits preservation plan adopted NOL-centric strategy
Supply chain/geopoliticalRisk disclosures include supply chain; global conflicts Similar risk language in forward-looking Continuation of broader risk disclosures Ongoing risk backdrop

Management Commentary

  • “We closed the third quarter with revenue in-line with our expectations and adjusted EBITDA above the high end of our guidance… our team demonstrated resilience and agility… heightened focus on operational efficiency and expense discipline.” — CEO Joe Yan (Q3 release) .
  • “ContextLogic… approved an agreement to sell… Wish ecommerce platform to Qoo10 for approximately $173 million in cash… Following closing… debt-free… include net cash proceeds… approximately $2.7 billion of NOL carryforwards… The Board intends to use the proceeds… to help monetize its NOLs.” (Q4 release) .
  • “In light of the pending transaction, ContextLogic will not host a conference call or live webcast to discuss these financial results.” (Q4 release) .

Q&A Highlights

  • No Q4 2023 earnings call or webcast due to the pending asset sale; therefore, no Q&A session or clarifications were provided in the quarter .

Estimates Context

  • S&P Global consensus estimates for Q4 2023 EPS and revenue were unavailable due to missing CIQ mapping for WISH; as a result, comparisons versus Wall Street consensus could not be made. Values would normally be retrieved from S&P Global but were not accessible for this ticker (mapping error) [GetEstimates error].
  • Q3 guidance set expectations of revenue $50–$60 million and adjusted EBITDA loss $(55)–$(65) million; actual Q4 delivered $53 million and $(54) million respectively, within/near the better end of guidance ranges .

Key Takeaways for Investors

  • Strategic pivot is the key catalyst: Sale of the Wish platform to Qoo10 (~$173m cash) and a plan to monetize ~$2.7B NOLs, with guidance withdrawn and no call, suggests the near-term narrative is about transaction close and tax asset value realization rather than operating recovery .
  • Operational losses remain significant: Despite sequential improvement, Q4 net cash used in operations was $(75)m and free cash flow was $(75)m; liquidity of $238m cash and $144m marketable securities provides runway during transition .
  • Segment contraction continued: All segments (Core Marketplace, ProductBoost, Logistics) posted large YoY declines in Q4, indicative of persistent demand and competitive pressures; preliminary January 2024 results showed continued revenue weakness ($14m) .
  • Visibility reduced: With guidance discontinued and no earnings call, near-term operating updates will be limited; focus shifts to transaction milestones, new ticker timing, and NOL strategy .
  • Corporate actions to protect tax assets: Adoption of a tax benefits preservation plan and related preferred stock designation aims to prevent ownership changes that could impair NOL usage .
  • Governance/legal cleanup: Settlement of bylaw-related litigation (fee payment of $495k) removes a procedural overhang ahead of strategic execution .
  • Monitor closing conditions and timeline: Transaction targeted for Q2 2024 close, subject to shareholder approval and customary conditions; not subject to financing contingency—timely close is central to thesis .