Aiera/aiera-transcript-sentiment huggingface dataset:
And then could you also just dig a little bit into the kind of user engagement trends that you would need to see to once again ramp up that digital ad spend? And what do you want to see from users in terms of that recovery?
Sentiment: neutral
Yes. Thanks, Michael. So on the quarter-to-date trends, I think Jennifer, who's on this call, is probably the best person to sort of handle or be able to sort of answer what we're ready to discuss today. And I'll handle the ProductBoost update or sort of anything around user engagement trends that we will need to sort of ramp back up sort of growth initiatives in the future.
Sentiment: neutral
Your next question comes from the line of Shweta Khajuria of Evercore ISI.
Sentiment: neutral
It's Shweta, but I wonder if my question needs to be answered first before I jump in.
Sentiment: neutral
All right. Thanks for your question, Mike. Yes. So in terms of quarter-to-date declines in Core Marketplace revenue, it's really driven by decline in buyers and users, again, partially driven by macroeconomic trends that we're seeing and partially driven by our reduction in ad spend, which just results in lower buyer and user count and not just resulting in lower orders on the platform.
Sentiment: neutral
Yes. And just sort of a ProductBoost update, look, I don't think we have anything specific to update there. I think ProductBoost is essentially a function of engagement and conversion rates on the platform. So I'll probably just leave it at that.
Sentiment: neutral
And then, Mike, the last part of your question centered around user engagement trends. I mean look, ultimately, it's driven by our conviction in LTV-to-CAC ratio. So sort of there's probably -- we're looking at sort of 2 components there. One which is much more so within our control, which is the numerator of that equation or that formula, which is increasing LTV. So we're seeing sort of some positive trends, although not enough to sort of overcome what we're seeing with the CAC increases. And the other is potentially by reducing CAC, either just due to external factors or potentially diversifying our marketing initiatives into the sort of brand new areas that are still very preliminary but that we're experimenting with.
Sentiment: neutral
Your next question comes from the line of Laura Champine of Loop Capital.
Sentiment: neutral
Just kind of high level, what will you need to see before you invest more in marketing expense? Like what are the signposts that you'll need to see in your business that tell you is the right time to step that up?
Sentiment: negative
Yes. Laura, I think, again, that's a great question. So yes, I think it's, again, sort of our conviction and -- to LTV over CAC and the payback period. And those things can take a while to actually assess, but we believe we have a pretty good sense by leveraging our historical data on being able to extrapolate even from sort of earlier signals. So we don't need a full 2 years to actually figure out what the expected LTV of a particular type of user would actually become.
Sentiment: neutral
And I think, again, sort of the numerator in that equation of LTV is very much so up to us. And the denominator is potentially up to us if we discover ways in which we can diversify our sort of growth strategy or customer acquisition strategy in major ways.
Sentiment: neutral
So I think there's sort of various ways to do this. We discussed increasing engagement at sort of the top of the funnel, right? So this would be all the types of new features and sort of fun and entertaining experiences. The other would be to increase retention, and that would largely be driven now that we've done sort of the logistics improvement by improving product quality, sort of the post purchase -- improving the post-purchase customer experience to drive up higher retention.
Sentiment: neutral
So we think we have all the right metrics and we have the right strategy. We just need to be in a place where it's either sort of market by market or potentially category by category or maybe sort of even more generally where we feel confident about where we're headed with respect to LTV to CAC.
Sentiment: neutral
Okay. Let me try 2, please. Could you talk about revenue per buyer trends you're seeing in the third quarter? And then the second question is, could you please give more color on the CFO search? So what kind of time line are we looking at? What are you looking for in the new CFO? And any color around that, that would be great.
Sentiment: negative
Yes. Thanks for the question, Shweta. Jennifer, do we have anything to share at this point in time in terms of revenue per buyer? I'm assuming this is Core Marketplace revenue or maybe revenue in general per buyer in Q3. I'm not sure if we were sort of disclosing anything there at this point in time.
Sentiment: neutral
I don't think we've disclosed this at the current time.
Sentiment: neutral
Okay. And so for the second part of your question, look, we continue to work with Heidrick & Struggles, a prominent search firm, to find a permanent CFO. We are encouraged by our progress and believe that we will have a strong finance leader before the end of the year.
Sentiment: positive
Okay. And then, Peter, if I could please add one more. What are your -- so how -- you laid out your 3 priorities in your shareholder letter and you talked in your prepared remarks. But you also have other growth investment areas and priorities, for example, Wish Local. And then Logistics remains, whether it's Logistics as a Service or Logistics in its own initiative. So how -- are you reprioritizing your internal operations in terms of for the next 6 to 12 months? Are you -- what is not a priority anymore when you compare it to these 3 priorities you laid out in the shareholder letter?
Sentiment: neutral
Yes, Shweta. That's a great question. So look, with respect to Wish Local and that initiative, orders shipped to Wish Local for store pickup continues to grow as an overall percentage of total volume. So it's 10% -- or in Q2 it was 10% of overall total order volume, and that's up from 7% in Q1. And then in some markets like Mexico, it's actually north of 50% now. Italy is, I think, at 37%. Spain is at 27%. And I think we can actually replicate this model in other markets and already seeing strong adoption in markets like Portugal, Hungary, and the Netherlands.
Sentiment: positive
So I think we're not going to discontinue these initiatives. There aren't that many resources put on it as is. We have 60,000 store partners or so in over 50 countries. We're being very selective and strategic around which store partners we choose to engage with and onboard into this program.
Sentiment: negative
So we're not cutting these initiatives off. I just think that we actually have bigger opportunities ahead of us in terms of sort of more foundationally changing some aspects of how our consumers engage with the platform, so just from a sort of digital usage perspective, and then on top of that, really, really, really improving the product quality now that we've improved the Logistics component.
Sentiment: neutral
So I think there's going to be potentially some shuffling of resources in order to sort of pursue those 3 pillars. But I don't think that we're going to shut down any of these sort of very promising initiatives. They might not sort of get the amount of resources that they would have otherwise had, but we think that they're still very promising. And especially in the long term, that will be sort of a key driver for what we do in the future.
Sentiment: neutral
In terms of Logistics, again, we try to do the best that we can, obviously, first and foremost, prioritizing transactions and consumer experiences for Wish. But we still have this pilot that's continuing -- where we continue to add more and more retailers that are potentially not transacting on Wish at all or retailers that are on Wish but are leveraging it for transactions off our platform.
Sentiment: neutral
And again, we're not going to be shutting any of these initiatives down. We might be shuffling resources and reprioritizing things because we think that there are much larger opportunities in some of these areas centered around these 3 pillars. But overall, in the long run, we still have this sort of massive opportunity. And sort of the outlook hasn't changed. Potentially the time line or how we get there has changed around a little bit. But we're super optimistic about the future.
Sentiment: positive
(Operator Instructions) Your next question comes from the line of John Blackledge of Cowen.
Sentiment: neutral
This is Bill on for John. We've heard from several people in the retail and e-commerce industries that shipping and fulfillment environment right now is particularly challenging. Could you just talk about the impact you saw from those headwinds and how your Logistics platform helps you navigate that environment? And then I have one other question.
Sentiment: negative
Sure. Yes. Look, so I think it's been sort of challenging for absolutely everyone. I think our advantage has sort of several ways to actually do this better. One is obviously just the volume cost savings that we get just from partnering with our logistics carriers, logistics partners. Two is just much deeper integration, especially one in the sort of first mile operations and cost savings there, but even more importantly so, in what we're doing with these tighter integrations in the last mile and also going into what we've been able to do with our A+ programs, our sort of combination efforts and extending into sort of what we're doing with Wish Local, where we're getting even larger cost savings.
Sentiment: positive
So I think there have been substantial headwinds. This really, really started with what's been going on with the pandemic. But even earlier, we respected the cost basis. But we think that Logistics will sort of continue to be a large competitive advantage with us, especially with volume and especially as we have these tighter integrations all the way to sort of last-mile delivery carriers, national postal services or their commercial arms and even into local stores, which continues to eat up a larger and larger percentage of order volume.
Sentiment: negative
So there have been lots of headwinds there, but there have been various ways in which we mitigated. One is optimization. Two is volume cost savings. Three is sort of incentivizing customers to buy more and sort of the combination efforts that we have around there, all the optimizations around all those 3 factors and then ultimately shipping items to stores. And we're excited about the competitiveness that we have within our marketplace and eventually extending that, sort of starting with the pilot that we're doing to transactions and merchants off platform as well.
Sentiment: positive
Great. That's super helpful. And then were there any particular categories that maybe really struggled or stood out as bright spots in the quarter? And any we should look forward to in 3Q and as we run into the year that should help to drive some level of growth?
Sentiment: negative
Sure. Yes. So look, our largest categories typically include accessory, hobbies, sort of gadgets, electronics, home decor or fashion, makeup and sort of beauty. I think sort of consistent with what we've been seeing is as we sort of add higher-quality products, as we add more branded products, we're seeing sort of an increase in AOV for the most part. Now we've sort of launched this new revenue share structure that actually incentivizes higher-quality products and products that shipped much, much faster.
Sentiment: positive
I think both electronics and home decor have been doing quite well. So we're going to be leaning into those categories, but we're always looking at adding more branded inventory and filling in the gaps in our catalog as long as those types of products, we feel, will delight our consumers and the consumers are looking for products in those categories.
Sentiment: positive
Your next question comes from the line of Nick Jones of Citi.
Sentiment: neutral
Can you touch on revenue per active buyer trends in 3Q versus 2Q and how that feeds into kind of the trends that were in the press release? And then as we think about ad spend, I think, for the rest of the year, are you thinking of an uptick in ad rates and just efficiency breaking down? And how are you thinking about that maybe longer term? Is that kind of temporary as more dollars come online? Or is this kind of structurally higher as there's a bigger focus on digital?
Sentiment: neutral
Yes. Nick, so thanks for the question. I'll handle sort of your second question first. And then I think, again, sort of Jennifer is sort of better positioned to discuss the sort of revenue per active buyer trends Q2, Q3 this year. So in terms of how we're thinking about the ad spend over the next several quarters, like look, much of the top line impact will primarily be driven by significantly lower digital advertising spend and especially on new buyer acquisition as we address sort of our issues with retention and marketing efficiency and the unit economics around that, which we believe we have a very, very strong and effective plan for.
Sentiment: positive
Right now, LTV to CAC is just not in the place where it makes sense for us to spend at historical levels. So we have made a strategic decision to temporarily slow down, especially on new user and new buyer acquisition. So kind of thinking about the next several quarters, look, we're going to be taking a very disciplined approach to expand on cash management. And again, sort of the main lever, of course, for our EBITDA is our digital ad spend. Historically, it's been 95% or so of sales and marketing expense. For Q3, we began significantly reducing ad spend, especially starting in July. And we expect the ad spend to be lower for the second half of Q3 than the first.
Sentiment: neutral
So as a result, adjusted EBITDA is expected to be in the range of negative $70 million to negative $65 million, as mentioned earlier. And we plan to maintain ad spend at this reduced level until we see an improvement trend in terms of user engagement and really sort of the numerator of the LTV to CAC equation.
Sentiment: negative
Just a sort of a reminder, historically, approximately 60% of our digital ad spend has been focused on driving new app installs. And that's what have been reduced. We're reducing that spend significantly, and we will continue to do so likely for the next few quarters as we focus on sort of engaging with our existing users, resurrecting quality past users, et cetera. So going forward, we expect to see sequential improvement in EBITDA, but that's going to be sort of an outcome of lowering ad spend.
Sentiment: negative
And Jennifer, I don't know if you have any further comments on revenue per active buyer, Q3 versus Q2, et cetera.
Sentiment: neutral
Yes. Sure. Thanks, Peter, and thanks, Nick, for your question. On active buyers, we did not provide revenue guidance for Q3. However, based on Peter's opening remarks, we shared that quarter-to-date revenue was down roughly 40% in July. And that's primarily driven by lower buyer count, again, driven by lower ad spend. And going through the rest of the quarter, we expect that to decline further as we only started pulling back ad spend part of the way through July.
Sentiment: negative
We've reached the end of our call, and I will turn back to Peter for any closing comments or remarks.
Sentiment: neutral
Thank you, everyone, for your questions today. I'd just like to remind everyone, we're not satisfied with these results and the outlook. We all know that we can do better. We're taking action to improve our performance for the long term, especially with a focus on enhancing the user experience and increasing retention. We look forward to providing an update on our next call in November. So thank you all.
Sentiment: negative
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.
Sentiment: neutral