ContextLogic, Inc. (NASDAQ:WISH) Q1 2023 Earnings Conference Call May 4, 2023 5:00 PM ET
Company Participants
Ralph Fong – Head of Investor Relations
Joe Yan – Chief Executive Officer
Vivian Liu – Chief Financial Officer & Chief Operating Officer
Conference Call Participants
Laura Champine – Loop Capital Markets
Steven McDermott – Bank of America
Operator
Good day and thank you for standing by. Welcome to Wish First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ prepared remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Ralph Fong, Wish Director of Investor Relations. Please go ahead.
Ralph Fong
Good afternoon, everyone, and welcome to Wish’s first quarter 2023 earnings conference call. I’m Ralph Fong, Director of Investor Relations. And joining me today are our CEO, Joe Yang; and our CFO and CEO, Vivin Lu. Today’s prepared remarks have been prerecorded. There is also a slide that has been posted to our Investor Relations website, which is available for your reference. Once we are finished with Joe and Vivien’s remarks, we will hold a live Q&A session.
The remarks made today include forward-looking statements that are related to, among other things, our financial expectations, business and turnaround plans, logistics and operational efficiencies, including flat rate shipping initiatives to improve customer experience and engagement, expectations regarding merchant relationships and strategic partnerships, the impact of our strategic marketing and product initiatives, including ad spending and promotional events execution time line of the authorized share repurchase program, supply strategy, ESG efforts and anticipate a return on our investments and their ability to drive future growth. Our actual results may differ materially from the results implied by these forward-looking statements if certain risks materialize or assumptions prove incorrect. Forward-looking statements involve risks and uncertainties, which are prescribed in today’s earnings release and our per audit reports filed with the SEC. Any forward-looking statements that we make on this call are based on our beliefs and assumptions today, and we disclaim any obligation to update them.
Also during the call, we will present both GAAP and non-GAAP financial numbers and metrics. A reconciliation of non-GAAP to GAAP results is included in today’s earnings release, which you can find on our Investor Relations website and which is also filed with the SEC. A replay of this call will be posted to our Investor Relations website.
With that, I will now turn the call over to Wishes CEO, Joan.
Joe Yan
Thank you, Rob. I would like to thank everyone for joining our first quarter 2023 earnings call. On this call, I will share with you our Q1 financial updates, discuss the business highlights and the key strategic focus for 2023. Vivian will then provide a deeper dive into financial results, should the second quarter guidance and comment on our operations. Finally, I will provide additional closing remarks before opening up the call to your questions.
In the first quarter of 2023, we generated total revenues of $96 million, down 49% year-over-year. The revenue decline was largely driven by the unfavorable impact from the pricing changes implemented by the end of the second quarter of 2022, combined with our lower advertising spend in the quarter. On the bottom line, we reported adjusted EBITDA loss of $62 million in Q1, which was well ahead of the guidance range of a loss of $70 million to $80 million. This better-than-expected EBITDA result was attributable to the uneconomic improvements made throughout the quarter, which Vivian will provide more color later on in the call.
We ended the first quarter with cash, cash equivalents and marketable securities of $627 million. We began our transformation journey in 2021, and I’m happy to say that the work carried out in the first quarter of the year and throughout this past month has been another positive step in the transformation of the company. I will now discuss the recent business highlights. First, as part of our efforts to drive basket building and improve the customer experience, we introduced favor shipping and eligible orders in the U.S. in late January, followed by other major markets throughout Q1.
Since inception, we have low out Frary shipping to over 20 countries, including the U.S., Canada, Australia, the U.K., Italy, Spain, France, Germany, Czech Republic, Japan, Brazil, Mexico, Central — we believe freely shipping remains a critical component in addressing one of the major pain points amongst our users on the wish platform. Not only has this improved the shopping experience for our customers. It has incentivized them to build larger baskets. Our internal data shows that the average transaction value increased by double digits attributable to the launch of Freddie shipping. This is encouraging for the team, and we are confident ferry Shipping will continue to have a positive impact on other values, conversion rates and customer retention going forward. Second, the Wismer shopping event was a success for the company.
I’m very pleased that Wismar, which ran from March 30 to April 5, was well received by our merchants and buyers. More than 7,000 merchants participating the week-long shopping event, enlowering over 800,000 product listings and 92,000 doorbuster deals. Importantly, we saw more than a 30% increase in GMV and more than 50% order volume growth during the weeklong shopping event. I’m pleased with the strong results. Coming out of the event, we have seen a lot of momentum and a lot of excitement from our merchants, buyers and employees alike. Additionally, which must allow us to activate and reengage with our dormant or inactive users as one of the priorities for us is to leverage our broad merchandising offering to activate our accumulative user base. More importantly, I’m proud of our team’s functional collaboration and execution.
A special thank you to our employees for their dedication, hard work and efforts which must make the first in a series of major shopping events planned throughout 2023, and it has taught us valuable license, and we expect to leverage what we have learned to build on that success in Q2. Following the Wishes event, we will be running other merchandising events across the 60-plus markets we serve throughout the year. and the merchandising events will be available not only on mobile app platforms, but also mobile web, which is becoming an important channel for our platform distribution, at which we’re excited about our merchandising strategy and expect merchandising events to result in incremental GMV growth, user acquisition and retention.
Third, in March, we announced that our online marketplace has returned to app stores and search engines in France after the French regulators have lifted the listing measure. France is a strategically important market for wish, and we are excited to welcome new and inactive French user back to our platform so that you can enjoy all the enhancements we have made to the shopping experience. Over the coming months, we’ll be banning up our marketing activities in France to ensure our customers know we are back.
Fourth, in the first quarter, we formed a strategic partnership with e-commerce integrator based linker, e-commerce human service provider, ships and e-commerce shipping solution provider, ShipStation and Shipping easy. As a result of partnership established between wish and the base linker, more than 18,000 European merchants can now connect with his users seeking a discovery shopping experience. From the business development perspective, this is an exciting opportunity as we look forward to adding more merchants to the wish marketplace and bringing them together with our wish community across the globe. In the past year, we have made a lot of improvements to our overall time to door and on-time delivery rates. — and the partnership with Shipt, ShipStation and shipping easy, allowed us to build on that success by providing even more logistic fulfillment capabilities to our merchants and delivering an overall better experience to our users.
Fifth, as we continue to optimize the browsing experience, we introduced a number of enhanced personalized category navigation and the category product feeds on both Android and iOS. The improvements we have made to the category browsing experience are for the benefit of our users. This has helped them explore the wish catalog in a fun and engaging way. Brown through the breadth and the depth of the wishes product category and discover products through shopping expiration, essentially, the wish app is designed to help users discover new and exciting products even when they are not searching for anything specific.
We want to facilitate exploration and highlight specific moments where our recommendation can drive users’ engagement. In addition, personalization of our platform will go far beyond product recommendations. We will continue to strive to tailor every expect of the app experience to our users’ preferences from which modules to show them to the sequence in which they encounter them, we will look at their interest priorities and which attributes of our products matter most to them to continuously adapt the experience to their needs.
Finally, we continue to improve our operational excellence. In Q1, our on-time delivery rate was promos 92% compared to approximately 86% during the same period of 2022. We also saw our average time to door further improve in the top market we serve, possibly impacting customer order consideration rates, refund rates and the customer experience. Our customer order translation rates dropped more than 50% year-over-year in Q1, and the customer refund rates also declined within the same time period. Moreover, we continue to see improvements in customer NPS and encouraging buyer conversion and customer retention trends in Q1 versus a year ago.
In particular, payer conversion and customer retention improved by 18% and 10%, respectively, in the first quarter of 2023 when compared to the same period last year. Bringing it all together, I’m pleased with the progress we are making as we continue on our transformation journey. Now I would like to spend a couple of minutes discussing our strategic focus. As I mentioned, last quarter, we strive to grow bioretention through repeat purchases this year, which I would like us to expand on. Over the past 18 months, we have improved the merchant quality and the listing quality. Our key focus for 2023 is to keep improving the customer experience, which we believe plays a pivotal role in driving user growth. As part of our growth strategy, we intend to increase our DAU by investing in our guest experience, accelerating the use of incentives for buyer conversion and further driving operational excellence with our unpaid and paid channels.
Some of key initiatives include: delivering higher quality messaging will push notifications, e-mails and SMS to drive user back to the WIS platform. Refining lending pages that encore discovery for gas users coming in from apps and e-mails, reducing friction on the website or mobile web for gas users to enable them to discover products as to car and TransAct. — providing upsells and incentives for grain the mobile users to motivate them to adopt the app. — offering the incentive to encourage users back to the app as well as launching a referral program to drive engagement with additional shoppers and optimizing our unpaid marketing efforts and modernizing our app to generate channel growth. At which our team is continuously looking for ways to provide world-class supply quality, making sure that we are serving our users with products that deliver great value.
Through elevated quality and competitive prices, we are partnering closely with our merchants to showcase the best selling products within our highest performing categories, including home and garden, beauty and health fashion and consumer electronics. To that end, we’re introducing our supply strategy, which we believe will be a critical component to our success going forward. Broadly speaking, we will leverage cross-functional collaboration between our category management, supply sourcing, logistics and merchandising teams to drive differentiated and quality supply. Vivian will provide additional details of our supply strategy later on in the call. In summary, our vision is to unlock e-commerce for the underserved by giving users access to a wide selection of affordable goods and providing merchants with success to millions of users globally and which is all about creating the fun, easy and personalized discovery shopping experience that provides the best value for our users looking for the delight in life. On our last earnings call, I outlined the key strategic initiatives to improve our business, and I’m pleased that we are making strides towards each of our initiatives. — specifically our conversion rates, buyer retention and the customer satisfaction. Going forward, we will be doubling down on executing on our supply strategy to further enhance our users’ basket building experience and drive repeat purchases by encouraging users to build their next basket. As one of the largest mobile e-commerce platform in the world, I’d say a large part of which is success is really driven by innovation.
Before I ramp up and turn the call over to Vivian, I would like to reiterate our commitment to innovation. From the user and merchant experience standpoint, which will continue to innovate and invest in capabilities and product features to further improve the user experience on the wish platform. Discovery is our North Star, which we believe will enable us to further strengthen our competitive position in the market going forward.
In particular, our team will be exploring initiatives to incorporate a holistic supply strategy into our real-time personalization engine, leveraging videos, social components and a new AI-driven shopping experience to engage the line and drive meaningful basket building opportunities for our users. I have been impressed with our engineering talent, and I’m energized about the future and the growth opportunity ahead of us.
With that, let me now turn the call over to our CFO and COO, Vivien Liu, to discuss our financial results in more detail and give you an update on our operations.
Vivian Liu
Thank you, Joe. Now I will add more color on Q1 financial performance, provide Q2 financial guidance and expand on the operational priorities for 2023. On the user metrics, we had a 14 million monthly active users and the 12 million last 12-month active buyers in the first quarter of 2023, which represented a decline of 48% and 57%, respectively, year-over-year. The decline was mainly driven by the cumulative reduction in ad spend over the past 18 months. On a quarter-over-quarter basis, monthly active users were down 30%, and the last 12 months, active buyers were down 8%. And mainly driven by the fact that ad spend in Q1 was about 54% lower than that in Q4 as we continue to focus on unit economics during 2023. It’s also worth noting that due to improved conversion rates, the decline in buyers is less significant than the decline in users on a quarter-over-quarter basis.
As discussed in our prior earnings call, performance marketing will remain an important driver for user retention and growth. But our goal is to increase the efficiency of paid ads and become less dependent on digital advertising. As Joe shared earlier, as part of our efforts to drive user growth, we are investing in more organic channels such as e-mail and push notifications, affiliates and the merchandising events to engage and retain our users more effectively and more cost efficiently.
Moving on to other financial metrics. Total revenues in Q1 were $96 million, a decline of 49% year-over-year. This decline was across core marketplace, product boost and logistics, mainly driven by reduced added and the new pricing practices that were fully implemented by the end of Q2 2022. I — the new pricing practices made our listing prices more transparent and competitive. However, similar to what we experienced last quarter, it adversely impacted our Q1 revenues and EBITDA, resulting in an unfavorable comparison to the prior year. Q1 gross profit was $20 million, a decline of 69% year-over-year. Gross margin was 21% versus 34% in Q1 2022. Gross margin performance was mainly driven by the decline in marketplace gross profit due to the price changes, as outlined earlier.
That being said, Logistics gross margin saw significant improvements in Q1, driven by increased combined ratios as a result of the introduction of flat reshipping in multiple geographies. Total operating expenses were $113 million, a reduction of 10% year-over-year. Lower ad spend, reduction in outside services and reduced employee headcount accounted for a majority of the reduction in operating expenses. Excluding stock-based compensation expenses, total operating expenses were down 32% year-over-year.
Our net loss was $89 million compared to a net loss of $60 million in the first quarter of 2022. The year-over-year increase in net loss was largely due to lower revenues and an increase in stock-based compensation. Our adjusted EBITDA was a loss of $62 million compared to an EBITDA loss of $40 million in Q1 2022. The year-over-year decline in adjusted EBITDA was largely driven by lower revenues and the impact of our new pricing practices. However, Q1 2023 EBITDA result exceeded the guided range of a loss of $70 million to $80 million. This result was primarily attributed to our strong focus on unit economics in 2023. We have seen improvements in unit economics at a transaction level since last year.
Operating cash flow and free cash flow for Q1 2023 was negative $92 million compared to a negative operating cash flow of $146 million and a negative free cash flow of $148 million in Q1 2022. The year-over-year improvement in operating cash flow was primarily driven by favorable changes in working capital. We ended Q1 in a financially healthy position with $627 million in cash, cash equivalents and marketable securities and no long-term debt. As of March 31, 2023, we had approximately 23 million shares outstanding. The shares outstanding at quarter end had been retroactively adjusted for the 1 430 reverse stock split, enacted on April 12, 2023, to bring with into compliance with the minimum beta price requirement for continued listing on NASDAQ. As of April 26, 2023, we were back in compliance with a minimum data requirement.
I would now like to provide guidance for the second quarter of 2023. Based on the feedback from the investment community, we will provide quarterly revenue guidance in addition to the EBITDA guidance, starting this quarter. For Q2, we expect total revenue to be in the range of $91 million to $102 million and adjusted EBITDA to be a loss in the range of $60 million to $75 million. This EBITDA performance is partially driven by expected higher ad spend in Q2 to drive buyer growth. In Q2, we expect a sequential decline in revenue to moderate potentially seeing the curve flatten out in Q2 or Q3. On a year-over-year basis, Q2 revenue is expected to decrease due to lower ad spend and the change in pricing practices as outlined before.
As we look beyond the second quarter of 2023, we expect a stronger second half relative to the first half 2023, driven by continued operational improvements and the seasonality. Please also note that starting in Q3, our pricing practices will be consistent with those in the second half of 2022. As such, the year-over-year comparison for our financial performance will no longer be unfavorably impacted by the pricing changes, which were fully effective by the end of Q2 2022. As Joe discussed, I will now provide more color on our supply strategy, which aims to further enhance the quality of supply and the customer experiences on wish.
First, within which identity, our home and life narrative will focus on delights and essential for less with a differentiated user experiences for each. Second, we will prioritize resources for high-touch categories, starting with fashion, home, consumer electronics, beauty and health, to higher manage the product quality and the customer experience in those categories. Third, we will continue to enhance the supply diversity, freshness and quality through strategic sourcing. This includes identifying differentiated local merchandise in our key buyer markets as well as cross-border supply opportunities with the flagship merchants from Asia. We will continue to diversify our merchant network through geographic expansion outside of China.
We are committed to expanding and strengthening our merchant bases in Europe, Southeast Asian countries and Americas. Our goal is to enhance the product variety and reduce our reliance on any particular country for supply. Fourth, building on enriched app features and the success of Wish [ph], we intended to connect the quality supplies with the customers through personalized discovery and merchandising. We believe that combining value for price and the fund shopping experiences is key to driving buyer conversion and retention. Fifth, our logistics capability gives us a competitive advantage in the market and has been a significant driver of the improvement in the customer and the merchant NTS.
We expect logistics to play an instrumental role in the continued success with our supply strategy. In the first quarter of 2023, the average time to door in 6 of our major markets improved by 8 days when compared to the same period of 2022. Furthermore, our on-time delivery rate was around 92% in the first quarter, an improvement from approximately 86% in the same period of last year. Our goal for the year is to roll out the 15-day time to door initiative in all major geographies for which. Additionally, we plan on implementing forward deployment capabilities in China, which is expected to help reduce our delivery time to approximately 10 days for high-velocity products listed on wish.
Since we embarked on the turnaround journey, supply quality has been a high priority for which, as Joe mentioned earlier, we have achieved significant improvements in this area, resulting in lower refund rates, lower order cancellation rates and higher customer NPS. While it’s very clear that our customers enjoy the new wish shopping experience and is that we are on the right path. There’s more to be done. With the end-to-end supply strategy which is committed to creating more value for customers while enabling merchant success by promoting merchandise that brings freshness, good quality and competitive prices to the platform.
Before turning the call back to Joe, I’d also like to address 2 more topics for investors. We are being very focused on turning around the business, which has also taken steps to bring more positive impacts to the communities we serve. For example, as part of our efforts to reduce carbon footprint, we are consolidating more parcels in a single shipment without compromising our time to door or on-time delivery rate. Additionally, we continue to make the last mile delivery more efficient and more eco-friendly their local pickup options versus home delivery. Millions of buyers are leveraging the local pickup services to save on shipping costs, also helping to protect the environment.
We are committed to making continuous improvement in ESG and expand ESG-related disclosures through our filings and Investor Relations website. Secondly, in April, the Board authorized a $50 million company stock buyback program, representing over 25% of our market cap as of April 30, 2023. The share repurchase program demonstrates the Board’s and the management’s confidence in the future of our business and our commitment to creating long-term sustainable value for our shareholders.
With that, I will now turn over the call to Joe for his closing remarks.
Joe Yan
Thank you, Vivian. It has been 18 months since we embarked on our transformation journey. And as a reminder, our foundations for growth are built around 3 fundamental pillars: improving the customer experience, deepening our merchant relationships and achieving operational excellence.
I’m very proud of what our employees have accomplished in each of those areas, but also recognize we still have a lot more to accomplish for the final success of our turnaround. Looking ahead, we plan to provide our users with robust basket building experience from beginning to end, offer a variety of exploration capabilities and drive repeat purchase by encouraging user to build their next basket, which we believe is key to optimizing our unit economics. We are restendlessly focused on executing on our growth and supply strategies to put our business back on the path to attaining growth.
At this time, operator, could you please open the call for Q&A.
Question-and-Answer Session
Operator
Thank you. Our first question comes from the line of Steven McDermott with Bank of America.
Steven McDermott
This is Steven McDermott on the line for Michael McGovern — on a year-over-year basis, revenue decline — or sorry, the revenue moderated 8 points sequentially and guidance implies a further 20 points of moderation at the midpoint. So I guess, going forward and especially with the pricing changes that took into effect late 2Q, what can we expect the general revenue trajectory by quarter to be? And then I guess just on a follow-up. We saw 3.5 points of leverage on the product development line. But we’re not really seeing that anywhere else. So I guess, besides just headcount reduction, is there any other leverage in the model that we could expect in other lines?
Vivian Liu
Yes. Thank you, Stephen. This is Vivo. Happy to take your questions. First on the revenue trend. As mentioned, we expect the revenue decline to moderate going forward. And partially because we will see the price change impact that have been with us for 3 quarters will gradually fade away. As mentioned, as we enter Q3 this year, that particular price — and favorable price change will completely go away. But besides that and the continuous improvement in the operations, such as conversion rate, retention rate, lowered cancellation rate, higher AAV and the investment in the user growth. All those factors will hopefully drive the improvement in the trend of revenue for the remainder of the year. And that’s why we mentioned that the curve — the trend expected to flatten out moderate decline start to moderate and even to flatten out later in the year. So that’s on the revenue.
On the leverage, you are right. We start to see the benefits of the headcount reductions that we executed in the Q1. And that’s a major driver in the employee-related expenses. And we’re also looking at a different strategic sites for hiring. So we’re looking at potentially lower cost regions within U.S., outside the U.S. for backfills and the new hires, and that could be another lever going into the year to drive more cost efficiency in employee headcount related expenses.
Operator
Our next question will be coming from the line of Laura Champine with Loop Capital One moment.
Laura Champine
I’m wondering when you expect to with currency advertising? And is that what it would take to drive revenue growth on a year-on-year basis?
Vivian Liu
Yes. Thank you, Laura, Vivino again. So as mentioned, we actually expect to — so part of the reason why Q2 EBITDA performance is as guided because we do expect to increase advertising in Q2 relative to Q1. But from a year-over-year standpoint, that will still be a lower spend level because we continue to really focus on unit economics and the efficiency of the advertising. However, given all the very steady improvements we have seen in conversion, retention, product features, quality, AOV, ARV, all that and plenty of green shoes. And we feel it’s the time to invest in growth, right? And that’s why Q2 or adds from a quarter-over-quarter standpoint, will be increased. And as I mentioned, the performance marketing will always be a driver for top line growth. However, we don’t want that to be the only driver for growth, right? And we continue to invest in the organic channels such as e-mail notifications, affiliates and the growth strategy as outlined by Joe in his prepared remarks, merchandising and the improvements in the operations will be hopefully, even more important driver of growth going forward. But yes, but as will always be there for us. And our goal is not to get rid of S completely. It’s achieve growth more through organic channels and have a more balanced approach going forward.
Laura Champine
Thank you.
Operator
All right. Thank you so much for that. And as a reminder, everyone to ask a question, you will need to press star 1 on your telephone and wait for your name to be announced. So the Q&A roster — our next question is coming from the line of Mike Sang with UBS.
Unidentified Analyst
This is Nicole [ph] calling from Komal Modular. Just 2 questions for me. The first one would be if there’s any color that you would call out on the buyer trends into April? And also the second one, in your 2Q guide, what proportion of that could be attributable to logistics?
Vivian Liu
Yes. So on April, there is nothing to be at on the actual performance of April, and we used to provide some color on the month in the quarter because we did not provide revenue guidance in the past, right? Now we do have a revenue guidance, and that will be the most relevant or a recent information as for the entire quarter. So there’s nothing to add for the actual performance of the past month of April. And I think we — overall, we put a guidance out there, and we — I think we expect to hit that guidance. And so that’s number one. Number two, for the Q2 guidance, I think your question is how much is related to logistics versus the marketplace. We don’t guide kind of by business line. And I would just say, we — and which we really provide a bundle of services, right? And I understand we report a bit different business lines, but the — it’s a bundled services that we sell to our merchants, marketplace services and logistics services. And therefore, we should — we tend to look at it as a total economics as a whole.
And the business line level of financial reporting is really just the attribution of how we attribute the total economics. I think it is important to call that out. And as I mentioned, logistically will continue to be a very important part of the value proposition for both buyers and the merchants and they continue to be a very important role in the turnaround of success. And so far, has been very — delivered a very strong performance, not only strong revenue generator, but also pretty strong margin. Once again, we should look at the total performance as a bundle versus just assuming in logistics. And we’re actually in the process of revisiting our kind of the pricing strategy for both logistic and the marketplace in the second quarter. And the that we make sure we are pricing for both services are a proper reflection of the fair value we created for our merchants going forward.
Operator
Our next question will be only from the line of [indiscernible]. Your line is now open.
Unidentified Analyst
I guess just to start on the macro, we’ve seen some pressure on discretionary spend, particularly around lower income demographic. So are you seeing any of that? Or are you seeing any impacts also heard of some trade down impact? So have you seen any benefits from consumers trading down?
Vivian Liu
Okay. So I think yes, we are — our core customers are value-conscious customers. So in the tougher macro environment, we do expect to trade down like customers trading on price, which should be a tailwind for our business. To be very transparent, we also potentially experience some headwind in such macro environment because we are more discretionary spend, right, and for our buyers. And we don’t sell food, water and very daily essential. So that could be in the — when customers need to make a trade-off. We may experience some of the headwind in that — from that perspective. So I would say net-net, is probably usual for us. And our growth strategy going forward is less about focusing on writing the macroeconomic trends, it’s more about focusing on improving the core operations of Wish and using basic improving the quality, improving the user experience to drive the retention and repeat the purchases and building baskets for our buyers so that they come back more often. So that’s really our — I would say, the key formula to — for growth and better economics going forward. But to directly answer your question on the macro level, I think everything considered might be I would say, neutral to maybe slightly positive.
Joe Yan
Yes. And this is Joe Anne. Just maybe add on a little bit, just to Vianjust said, right? So I wish actually as a company, we started preparing the way ahead of the industry for this uncertain macro environment, right? So when we started the turnaround journey 18 months ago, so financially, actually, we focus on reducing the cash burn and improving the cost efficiency, right? So one thing to mention here is that our cash use in 2022 was 50% of that of 2021, right? So operationally, we’re also focused on building the strong core marketplace capability, which we have seen tremendous improvements, right? So in the listing quality and also a customer NPS and a better conversion on the retention in Central. So we believe actually we have the right strategy in place to respond to the changes in the macro environment, and we are taking a disciplined approach, right, in financial management to make sure that we have sufficient capital to complete the turnaround journey.
Unidentified Analyst
Okay. That’s super helpful. And then maybe just one on the competitive environment. Can you just comment on the last quarter and what you’ve seen through April. The competitive environment gotten as intensity increased at all? And is the marketing spend in 2Q? We’ve seen, I think, some new entrants come into the market and push on marketing. Is that the marketing spend in 2Q, is that any response to that at all?
Joe Yan
Yes. I think, first of all, looking at the global e-commerce landscape, right? This is the multitrillion market, right? So market is massive enough for many e-commerce companies to have the unique play in the market, right? And which we, as a global e-commerce marketplace, right? So we still keep focusing on providing our value proposition, which are the affordability and the discovery, right? And the list of things definitely allowed us can really provide affordable product to the consumer globally and also provide the customer more fun, entertaining and personalized discovery-based shopping experience, right? On demand side, so actually, we have the consumer from over 60 countries. So in terms of this geography coverage, right? So we have broader coverage compared to many other players in the market.
And on the supply side, right, we have a very diverse portfolio of merchants, right, from the different supply markets, not only in China, Asia and also we have the merchants in U.S. and Europe, which can allow us to really kind of provide a very diverse and competitive assortment and merchandise to the consumer from the over 60 countries in the world. So the show answer here is actually we’re still focusing on our kind of unique value proposition, right? And definitely, I think the competitive environment is something we need to monitor and track, right? And there’s something as Vivian just mentioned, right? So the spend the marketing thing is always the driver of the business, but it’s not the only thing we will bet on, right? So we still focus on a lot of other initiatives to drive the efficiency on both on pay-and-pay, marketing and also from the — what we shared in the prepared remarks, right?
So, we’re also doubling down on the growth product and to see how twe can invest more in the guest experience and also accelerating the use of the incentive, right, to kind of convert to drive the buyer conversion, right? Those things that you combine together with the effort, right? So we believe actually can really help us to kind of win in the competitive environment.
Operator
Our next question will be coming from the line of [indiscernible] with UBS.
Unidentified Analyst
Just a quick follow-up to the question Nicole [ph] asked. So on the free cash flow, I saw that the free cash flow for the quarter was like negative $95 million. Can you talk about how we should kind of think about the evolution of cash as we go through ’23 and as we go through ’24, what is contemplated in your turnaround plan?
Vivian Liu
Yes. Thank you, Kunal, for the question. So first of all, yes, so the Q1 cash flow — cash consumption or cash flow from operating activity is about $90 million to $95 million. And just a reminder, that’s a significant improvement from a year-over-year standpoint to be exact about 37% year-over-year improvement. And quarter-over-quarter, it’s also about 16% quarter-on-quarter improvement. So the cash flow is getting better, right? And also, as Joe mentioned, if you look at the entire 2022, the cash consumption compared to the entire 2021, we only consumed about 50%, right, and from a year-over-year standpoint. So we’re certainly very much focused on cash flow optimization. Now going forward, keep in mind, the cash consumption comes from sources. One is the EBITDA being our loss, right?
And the level of — the EBITDA gain on loss is number one. Number two is the change in working capital. So the Cine working capital is driven by the movement in the top line, right? When you have a positive growth in the top line or less decline in the top line, that tend to generate a change in working capital that is favorable to cash flow. So back to your question, how do we think about those 2 factors to play out going forward. We have already seen a lot of improvements in unit economics as both Joe and I have mentioned. And that improved pretty steadily since last year, unit economics is getting better. thanks to cost efficiency, thanks to the better average transaction value. So we expect to continue that trend with unit economics, and so that should help our EBITDA loss and reducing the loss level. That’s number one. Number two, as we invest in growth, that will drive the positive trend in the top line, right?
And even less decline slightly out or start going back up. So that movement in the top line will create a change in working capital that will be favorable to cash flow. So if both factors are moving in the right direction, certainly, which certainly is our bow, we should see cash flow continue to improve for the remainder of the year question.
Operator
All right. Our last question will be coming from the line of Steven McDermott with Bank of America.
Steven McDermott
This is Steven McDermott with Bank of America again. Just 2 follow-ups. I guess since the revenue guidance is new. What goes into guidance? Can we get some color there? And then you said you’re going to read or you are revisiting the pricing strategy for logistics and marketplace. Could we actually expect that to be another headwind in 2H of this year?
Vivian Liu
Yes, maybe first to answer your second question. No, we do not expect this revisiting to the pricing strategy on both sides to be generate similar impact as to the last pricing changes we made in Q2 — by the end of Q2 2022, those are very different type of pricing changes. So to answer your question — second question first. No, we do not expect a similar impact for the new initiatives where we are undertaking. On the first question, how — what went into the revenue guidance, which is — which we put out for the first time, we really started with our expected volume, expected buyer counts expected transaction size, which is ATV. And basically, we first form a view on the volume and ATV and then take that into the model and work out the revenue forecast. So it’s nothing too fancy here, but it really goes back to the fundamentals of our business. Where do we see our business going in all the OKRs, conversions, retention, ATV, MAUs buyer accounts, where we are today, what we are implementing in this current quarter or what we have implemented in previous quarters? And how would that impact all the PRs, which then in the — our expectation on the GMV and then work that down to revenue. So I hope that’s what we’re looking for, but that’s kind of the exercise that we went through to form a revenue guidance for this quarter.
Steven McDermott
Yes. I guess just more granularly, — is the expectation that you’re seeing based on data from the most current months, say, April or kind of a more overarching year-over-year trend that we’re seeing? How granular is it?
Vivian Liu
Yes. It’s based on the trend we have seen, but it’s not just a year-over-year like a quarter over — 1 quarter over the same quarter last year. It’s based on the trends that we have observed in the past few quarters, right? And we look at the pattern where we’re moving in terms of conversion rate, retention rate, ATV and the buyer counts and how that correlates with our investment level and spend and what we plan to do in Q2 and the other features we’re implementing or improvements we are implementing the time line of that, and that’s how we model out the top line. So it’s based on the trend, not only over — year-over-year, but it’s actually a pattern that we have observed.
Operator
Thank you so much for the right. At this time, we will actually set in a few more questions for our question-and-answer session. As a reminder, to ask a question, you will need to press Star 1 1 on your telephone and wait for your name to be announced. So as we compile the Q&A roster. Okay. So that was our final question
Ralph Fong
Yes, I think we can conclude the call.
Operator
Okay. Well, this will conclude our question-and-answer portion of today’s call. At this time, I would like to turn the conference over to Wish CEO, Joe Yan for closing remarks.
Joe Yan
Thanks, everyone, for joining our earnings conference call, and we look forward to talking to you throughout the quarter.
Operator
Okay. Ladies and gentlemen, this does conclude today’s conference call. You may all disconnect, and have a wonderful day.
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