10-Q 1 posh-20220331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-39848

 

Poshmark, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

27-4827617

( State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

203 Redwood Shores Parkway, 8th Floor

Redwood City, California

94065

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (650) 262-4771

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock of $0.0001 par value per share

 

POSH

 

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 2, 2022, the number of outstanding shares of the registrant’s Class A common stock, par value $0.0001 per share, was 53,550,089, and the number of outstanding shares of the registrant’s Class B common stock, par value $0.0001 per share, was 24,573,667.

 

 


Poshmark, Inc.

Table of Contents

 

 

 

Page

 

Note Regarding Forward-Looking Statements

3

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements

4

 

Condensed Consolidated Balance Sheets (unaudited)

4

 

Condensed Consolidated Statements of Operations (unaudited)

5

 

Condensed Consolidated Statements of Comprehensive Loss (unaudited)

6

 

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity (unaudited)

7

 

Condensed Consolidated Statements of Cash Flows (unaudited)

8

 

Notes to Condensed Consolidated Financial Statements (unaudited)

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

34

Item 4.

Controls and Procedures

35

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

36

Item 3.

Defaults Upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

37

Item 6.

Exhibits

38

Signatures

39

 

2


NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which are statements that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

our expectations regarding our revenue, expenses, profitability, and other operating results;
the growth rates of the markets in which we compete;
our ability to acquire new users and successfully engage new and existing users and convert them into Active Users, Active Buyers, and sellers;
the costs and effectiveness of our marketing efforts through paid advertising channels and otherwise, as well as our ability to promote our brand;
our ability to continue to collect meaningful data, improve our algorithms, and provide recommendations for our users;
our reliance on key personnel and our ability to identify, recruit, and retain skilled personnel;
our ability to effectively manage our growth, including offering new categories and any international expansion;
our ability to maintain our profitability;
our ability to maintain the security and availability of our software;
our ability to protect our intellectual property rights and avoid disputes in connection with the use of intellectual property rights of others;
our ability to protect our users’ information and comply with growing and evolving data privacy laws and regulations;
impact of the COVID-19 pandemic on our business and consumers;
future investments in our business, our anticipated capital expenditures, and our estimates regarding our capital requirements;
our ability to compete effectively with existing competitors and new market entrants; and
our ability to remediate our material weakness in our internal control over financial reporting.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, as well as in our other filings with the Securities and Exchange Commission (SEC). Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

3


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Poshmark, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except shares data)

(unaudited)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

596,614

 

 

$

581,538

 

Prepaid expenses and other current assets

 

 

12,365

 

 

 

9,737

 

Total current assets

 

 

608,979

 

 

 

591,275

 

Property and equipment, net

 

 

6,984

 

 

 

7,376

 

Operating lease right-of-use assets

 

 

8,289

 

 

 

 

Intangible assets, net

 

 

1,202

 

 

 

1,360

 

Goodwill

 

 

7,012

 

 

 

7,012

 

Other assets

 

 

1,643

 

 

 

1,650

 

Total assets

 

$

634,109

 

 

$

608,673

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

13,164

 

 

$

1,595

 

Funds payable to customers

 

 

148,623

 

 

 

145,290

 

Operating lease liabilities, current

 

 

5,757

 

 

 

 

Accrued expenses and other current liabilities

 

 

45,629

 

 

 

40,922

 

Total current liabilities

 

 

213,173

 

 

 

187,807

 

Operating lease liabilities, non-current

 

 

7,343

 

 

 

 

Long-term portion of deferred rent and other liabilities

 

 

 

 

 

3,247

 

Total liabilities

 

 

220,516

 

 

 

191,054

 

Commitments and Contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Preferred Stock, $0.0001 par value, 100,000,000 shares authorized as
   of March 31, 2022 and December 31, 2021, respectively;
zero shares issued
   and outstanding as of March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Class A and Class B common stock, $0.0001 par value; 5,000,000,000 Class A shares
   authorized as of March 31, 2022 and December 31, 2021;
53,382,473 and 52,503,819
   Class A shares issued and outstanding as of March 31, 2022 and December 31, 2021,
   respectively;
700,000,000 Class B shares authorized as of March 31, 2022 and
   December 31, 2021;
24,610,222 and 24,777,228 Class B shares
   issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

 

 

8

 

 

 

8

 

Additional paid-in capital

 

 

652,062

 

 

 

641,974

 

Treasury stock, at cost (50,595 shares at March 31, 2022 and December 31, 2021)

 

 

(2,651

)

 

 

(2,651

)

Accumulated deficit

 

 

(235,857

)

 

 

(221,835

)

Accumulated other comprehensive income

 

 

31

 

 

 

123

 

Total stockholders’ equity

 

 

413,593

 

 

 

417,619

 

Total liabilities and stockholders’ equity

 

$

634,109

 

 

$

608,673

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

4


Poshmark, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Net revenue

 

$

90,899

 

 

$

80,727

 

Costs and expenses:

 

 

 

 

 

 

Cost of net revenue, exclusive of depreciation and amortization

 

 

15,031

 

 

 

12,970

 

Operations and support

 

 

15,353

 

 

 

14,894

 

Research and development

 

 

16,056

 

 

 

18,800

 

Marketing

 

 

42,847

 

 

 

35,249

 

General and administrative

 

 

15,036

 

 

 

18,152

 

Depreciation and amortization

 

 

1,020

 

 

 

790

 

Total costs and expenses

 

 

105,343

 

 

 

100,855

 

Loss from operations

 

 

(14,444

)

 

 

(20,128

)

Interest income

 

 

51

 

 

 

86

 

Other income (expense), net

 

 

 

 

 

 

Change in fair value of redeemable convertible preferred stock
   warrant liability

 

 

 

 

 

(2,816

)

Change in fair value of the convertible notes

 

 

 

 

 

(49,481

)

Loss on extinguishment of the convertible notes

 

 

 

 

 

(1,620

)

Change in fair value of contingent consideration

 

 

437

 

 

 

 

Other, net

 

 

66

 

 

 

(42

)

 

 

 

503

 

 

 

(53,959

)

Loss before provision for income taxes

 

 

(13,890

)

 

 

(74,001

)

Provision for income taxes

 

 

132

 

 

 

140

 

Net loss

 

$

(14,022

)

 

$

(74,141

)

Net loss per share attributable to common stockholders,
  basic and diluted

 

$

(0.18

)

 

$

(1.18

)

Weighted-average shares used to compute net loss per share
  attributable to common stockholders, basic and diluted

 

 

77,577

 

 

 

62,729

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

5


Poshmark, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Net loss

 

$

(14,022

)

 

$

(74,141

)

Other comprehensive (loss) income:

 

 

 

 

 

 

Reclassification upon extinguishment of the fair value of the
   convertible notes related to instrument-specific credit risk
   to statement of operations

 

 

 

 

 

1,620

 

Change in foreign currency translation adjustment

 

 

(92

)

 

 

6

 

Change in unrealized gains on marketable securities,
   net of tax

 

 

 

 

 

1

 

Total other comprehensive (loss) income

 

 

(92

)

 

 

1,627

 

Comprehensive loss

 

$

(14,114

)

 

$

(72,514

)

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

6


Poshmark, Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity

(in thousands, except share data)

(unaudited)

 

 

 

For the Three Months Ended March 31, 2021

 

 

 

Redeemable
Convertible
Preferred Stock

 

 

 

Class A and Class B
Common Stock

 

 

Additional
Paid-in
Capital

 

 

Treasury
Stock

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
(Loss) Income

 

 

Total
Stockholders’
(Deficit) Equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2020

 

 

52,286,631

 

 

$

156,175

 

 

 

 

13,093,065

 

 

$

1

 

 

$

28,300

 

 

$

 

 

$

(123,506

)

 

$

(1,574

)

 

$

(96,779

)

Conversion of redeemable convertible
   preferred stock to common stock
   upon initial public offering

 

 

(52,286,631

)

 

 

(156,175

)

 

 

 

52,286,631

 

 

 

6

 

 

 

156,169

 

 

 

 

 

 

 

 

 

 

 

 

156,175

 

Issuance of common stock upon initial public
   offering, net of underwriting discounts
   and commissions and offering costs

 

 

 

 

 

 

 

 

 

7,590,000

 

 

 

1

 

 

 

292,259

 

 

 

 

 

 

 

 

 

 

 

 

292,260

 

Conversion of convertible notes to common
   stock upon initial public offering

 

 

 

 

 

 

 

 

 

1,400,560

 

 

 

 

 

 

104,902

 

 

 

 

 

 

 

 

 

 

 

 

104,902

 

Exercise of common stock warrants

 

 

 

 

 

 

 

 

 

85,583

 

 

 

 

 

 

100

 

 

 

 

 

 

 

 

 

 

 

 

100

 

Reclassification of warrant liability to additional
   paid-in capital upon initial public

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,310

 

 

 

 

 

 

 

 

 

 

 

 

6,310

 

Issuance of common stock upon vesting of
   restricted stock units

 

 

 

 

 

 

 

 

 

140,802

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax withholding related to vesting of restricted
   stock units

 

 

 

 

 

 

 

 

 

(49,685

)

 

 

 

 

 

 

 

 

(2,608

)

 

 

 

 

 

 

 

 

(2,608

)

Issuance of common stock upon exercise of
   stock options

 

 

 

 

 

 

 

 

 

792,137

 

 

 

 

 

 

1,843

 

 

 

 

 

 

 

 

 

 

 

 

1,843

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,364

 

 

 

 

 

 

 

 

 

 

 

 

24,364

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,627

 

 

 

1,627

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(74,141

)

 

 

 

 

 

(74,141

)

Balance as of March 31, 2021

 

 

 

 

$

 

 

 

 

75,339,093

 

 

$

8

 

 

$

614,247

 

 

$

(2,608

)

 

$

(197,647

)

 

$

53

 

 

$

414,053

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2022

 

 

 

 

 

 

Redeemable
Convertible
Preferred Stock

 

 

 

Class A and Class B
Common Stock

 

 

Additional
Paid-in
Capital

 

 

Treasury Stock

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Income

 

 

Total
Stockholders’
Equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2021

 

 

 

 

$

 

 

 

 

77,281,047

 

 

$

8

 

 

$

641,974

 

 

$

(2,651

)

 

$

(221,835

)

 

$

123

 

 

$

417,619

 

Issuance of common stock upon vesting of restricted stock units

 

 

 

 

 

 

 

 

 

200,715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon exercise of stock options

 

 

 

 

 

 

 

 

 

510,933

 

 

 

 

 

 

1,280

 

 

 

 

 

 

 

 

 

 

 

 

1,280

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,808

 

 

 

 

 

 

 

 

 

 

 

 

8,808

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(92

)

 

 

(92

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,022

)

 

 

 

 

 

(14,022

)

Balance as of March 31, 2022

 

 

 

 

$

 

 

 

 

77,992,695

 

 

$

8

 

 

$

652,062

 

 

$

(2,651

)

 

$

(235,857

)

 

$

31

 

 

$

413,593

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements

7


Poshmark, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(14,022

)

 

$

(74,141

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

1,020

 

 

 

790

 

Stock-based compensation

 

 

8,735

 

 

 

24,141

 

Change in fair value of redeemable convertible preferred stock warrant liability

 

 

 

 

 

2,816

 

Change in fair value of the convertible notes

 

 

 

 

 

49,481

 

Loss on extinguishment of the convertible notes

 

 

 

 

 

1,620

 

Change in fair value of contingent consideration

 

 

(437

)

 

 

 

Accretion of discounts and amortization of premiums on marketable securities, net

 

 

 

 

 

88

 

Other

 

 

14

 

 

 

1

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(2,621

)

 

 

483

 

Operating lease right-of-use assets

 

 

(8,289

)

 

 

 

Accounts payable

 

 

11,422

 

 

 

3,138

 

Funds payable to customers

 

 

3,333

 

 

 

10,466

 

Accrued expenses and other liabilities

 

 

1,897

 

 

 

1,388

 

Operating lease liabilities

 

 

13,100

 

 

 

 

Net cash provided by operating activities

 

 

14,152

 

 

 

20,271

 

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(264

)

 

 

(439

)

Maturities of marketable securities

 

 

 

 

 

2,900

 

Net cash (used in) provided by investing activities

 

 

(264

)

 

 

2,461

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from initial public offering, net of underwriting discounts and commissions and
   offering costs

 

 

 

 

 

293,899

 

Proceeds from issuance of redeemable convertible preferred stock warrants

 

 

 

 

 

100

 

Tax withholding related to vesting of restricted stock units

 

 

 

 

 

(2,608

)

Proceeds from exercise of stock options

 

 

1,280

 

 

 

1,843

 

Net cash provided by financing activities

 

 

1,280