ContextLogic (LOGC) Q1 2025 Earnings Call May 09, 2025 05:00 PM ET Company Participants Rishi Bajaj - CEO & Director Operator Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to ContextLogic's First Quarter twenty twenty five Earnings Conference Call. At this time, participants are in a listen only mode and there will not be a question and answer session at the conclusion of today's call. However, a recording and transcript will be made available online and management will make t ...

Financial Data and Key Metrics Changes - In Q1 2025, the company raised $75 million in cash from BC Partners, with an additional option for $75 million to fund future acquisitions [5] - The company incurred $6 million in general and administrative expenses, including $2 million related to evaluating potential transactions [5] - Cash expenses were offset by approximately $2 million in interest income, resulting in a closing cash balance of $222 million, up from $149 million at the end of fiscal year 2024 [6] Business Line Data and Key Metrics Changes - The company has focused on maintaining low cash burn to maximize available cash for growth and acquisitions, indicating a strategic shift towards a more sustainable business model [6] Market Data and Key Metrics Changes - The strategic investment from BC Partners has expanded the company's pipeline of opportunities and enhanced its capabilities, reflecting a positive market reception [7] Company Strategy and Development Direction - The company is committed to organic growth and acquisitions, with a strong emphasis on identifying growth opportunities in collaboration with BC Partners [6][7] - Management expressed optimism about the quality of inbound outreach and potential partnerships, indicating a proactive approach to market expansion [7] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of keeping cash expenses low to support future growth and acquisitions, demonstrating a cautious yet optimistic outlook for the business [6] - The collaboration with BC Partners is expected to yield significant opportunities, with management looking forward to sharing progress in upcoming quarters [7] Other Important Information - The company incurred $3 million in costs directly related to the BC Partners investment, recorded as stock issuance costs, indicating a strategic investment in future growth [5] Summary of Q&A Session - There was no question and answer session at the conclusion of the call, as indicated in the opening remarks [4]

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, 2025 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: 001-39775 ContextLogic Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 27-2930953 (State or other ju ...

First-Quarter 2025 Financial Highlights ContextLogic will host a financial results conference call at 5pm EDT on May 9 th . The live conference call may be accessed by registering here. Company Outlook The first quarter of 2025 marked a pivotal step in the Company's evolution with the completion of the previously announced strategic investment from BC Partners (the "Strategic Investment") in a subsidiary of ContextLogic, which was an important milestone in advancing our value-maximization strategy through b ...

Financial Data and Key Metrics Changes - The company has a significant cash position and net operating losses, which are well-positioned to execute on its value maximization strategy [2][3] Business Line Data and Key Metrics Changes - No specific data on individual business lines was provided in the call [1][5] Market Data and Key Metrics Changes - No specific market data or key metrics were discussed during the call [1][5] Company Strategy and Development Direction and Industry Competition - The strategic investment from BC Partners is viewed as transformative, with the potential to unlock substantial value for shareholders [2] - The company aims to pursue a next phase of transformation, focusing on both organic growth and acquisitions [3] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the investment and the opportunities it presents for future growth [3][4] - The management team looks forward to updating shareholders on progress in future calls [3] Other Important Information - The call included a presentation deck available on the company's Investor Relations website, which outlines the strategic investment details [1][2] Summary of Q&A Session - There was no question and answer section at the conclusion of the call [1][5]

Financial Performance - Total revenue for the year ended December 31, 2024, was $43 million, a decrease of $244 million or 85% compared to $287 million in 2023[159] - Loss from operations for 2024 was $79 million, compared to a loss of $328 million in 2023[156] - The company incurred total operating expenses of $86 million in 2024, down from $387 million in 2023, reflecting a decrease of $301 million or 78%[156] - Interest and other income, net decreased by $10 million, or 63%, to $6 million for the year ended December 31, 2024, compared to $16 million in 2023, with 14% of revenue in 2024 versus 6% in 2023[165] - Gain on Asset Sale increased by $4 million, or 100%, to $4 million for the year ended December 31, 2024, due to the Asset Sale completed on April 19, 2024[166] - Provision for income taxes increased by $1 million, or 20%, to $6 million for the year ended December 31, 2024, compared to $5 million in 2023, representing 14% of revenue in 2024 versus 2% in 2023[167] Operating Expenses - Sales and marketing expenses decreased by $125 million or 87% to $18 million in 2024, compared to $143 million in 2023[161] - The cost of revenue decreased by $192 million or 84% to $36 million in 2024, compared to $228 million in 2023[160] - Product development expenses decreased by $126 million, or 83%, to $26 million for the year ended December 31, 2024, compared to $152 million in 2023, representing 60% of revenue in 2024 versus 53% in 2023[162][163] - General and administrative expenses decreased by $50 million, or 54%, to $42 million for the year ended December 31, 2024, compared to $92 million in 2023, accounting for 98% of revenue in 2024 versus 32% in 2023[164] Asset Sale Impact - Following the Asset Sale on April 19, 2024, the company no longer earns operating revenue from its previous marketplace and logistics operations[142] - The Asset Sale involved selling substantially all assets to Qoo10, with the company retaining certain tax attributes and cash equivalents[139] - Following the Asset Sale, the company no longer has revenue or deferred revenue, as it has no marketplace and logistics operations[183][184] Cash Flow and Financial Position - As of December 31, 2024, the company had cash and cash equivalents of $66 million and marketable securities of $83 million, which are expected to meet anticipated cash needs for at least the next 12 months[169] - Net operating cash outflows were $94 million for the year ended December 31, 2024, compared to $341 million in 2023, primarily driven by a net loss of $75 million in 2024[170][175] - Net cash used in investing activities was $68 million for the year ended December 31, 2024, primarily due to $168 million in purchases of marketable securities[177] - Net cash used in financing activities was $1 million for the year ended December 31, 2024, due to payments of taxes related to employee restricted stock unit settlements[179] Tax and Valuation - The company is subject to income taxes in the U.S. and various international jurisdictions, requiring significant judgment and estimation[198] - Deferred tax liabilities and assets are recognized for expected future tax consequences of temporary differences and net operating loss carryforwards[199] - The company utilizes the Black-Scholes option pricing model and Monte Carlo Simulation model for estimating the fair value of stock options and PSUs, respectively[196] - The assumptions in the valuation models are based on management's estimates, which involve uncertainties and could lead to materially different stock-based compensation expenses in the future[197] Future Outlook - The company anticipates continued losses from operations as it incurs costs related to identifying and completing an acquisition[134] - The company expects to incur minimal administrative costs in overseeing and curating the remaining assets post-Asset Sale[142] - The company had an accumulated deficit of $3.3 billion as of December 31, 2024[134] - As a "smaller reporting company," the company is not required to provide quantitative and qualitative disclosures about market risk[200]

Financial Performance - Net loss for Q4 2024 was $2 million, a significant improvement compared to a net loss of $68 million in Q4 2023, representing a reduction of approximately 97%[9] - Revenue for the year ended December 31, 2024, was $43 million, down from $287 million in 2023, indicating a decline of approximately 85%[14] - The company reported a gross profit of $9 million for Q4 2024, compared to $7 million in Q4 2023, reflecting a year-over-year increase of about 29%[14] - Net loss for the three months ended December 31, 2024, was $2 million, compared to a net loss of $68 million for the same period in 2023[16] Cash and Liquidity - As of December 31, 2024, the company had $66 million in cash and cash equivalents and $83 million in marketable securities, totaling $149 million in liquid assets[12] - The company has approximately $225 million in liquidity available for investment, including a recent $75 million investment from BC Partners[2] - Total cash, cash equivalents, and restricted cash at the end of the period was $73 million, down from $238 million at the end of the previous year[16] - The company reported a net increase in cash, cash equivalents, and restricted cash of $33 million for the three months ended December 31, 2024[16] Expenses and Liabilities - The company incurred $4 million in general and administrative expenses during Q4 2024, primarily due to legal and employee expenses[5] - Total liabilities decreased to $5 million as of December 31, 2024, down from $206 million in 2023, indicating a reduction of approximately 98%[12] - Cash used in operating activities for the year ended December 31, 2024, was $94 million, a decrease from $341 million in 2023[16] Investments and Marketable Securities - Purchases of marketable securities for the year ended December 31, 2024, totaled $168 million, down from $313 million in 2023[16] - Maturities of marketable securities for the year ended December 31, 2024, were $228 million, compared to $390 million in 2023[16] - Cash disposed on asset sale, net of proceeds, was $133 million for the year ended December 31, 2024[16] Operational Structure - ContextLogic had eight full-time employees at the end of Q4 2024, reflecting a streamlined operational structure[5] - The company is focusing on strategic opportunities for growth through potential acquisitions and investments[4] Interest Income - Interest income for Q4 2024 was $2 million, with investments primarily in U.S. government instruments[6] Stock-Based Compensation - Stock-based compensation expense for the three months ended December 31, 2023, was $10 million, compared to $64 million for the same period in 2022[16] Cash Flow from Activities - Cash provided by investing activities for the three months ended December 31, 2024, was $35 million, compared to a net cash used of $1 million in the same period of 2023[16] - Cash paid for income taxes, net of refunds, was $1 million for the year ended December 31, 2023[16]

Core Insights - ContextLogic Inc. reported its financial results for the quarter and fiscal year ended December 31, 2024, highlighting significant changes in its business operations [1] - The company has taken steps to streamline operations and has secured a $75 million investment from BC Partners, enhancing its liquidity to approximately $225 million [2][4] Financial Performance - For the three months ended December 31, 2024, ContextLogic incurred a net loss of $2 million, a significant improvement compared to a net loss of $68 million in the same period of the previous year [10] - The company had total current assets of $156 million as of December 31, 2024, down from $410 million a year earlier, primarily due to the sale of its Wish platform [13][14] - Revenue for the fourth quarter of fiscal 2024 was $0, compared to $53 million in the fourth quarter of fiscal 2023 [16] Operational Changes - The company has streamlined its operations, resulting in a reduction of general and administrative expenses to $4 million for the quarter ended December 31, 2024 [5] - ContextLogic had eight full-time employees at the end of the reporting period, indicating a significant reduction in workforce [5] Investment and Liquidity - The recent investment by BC Partners is seen as a crucial milestone for the company, providing it with additional capital for potential acquisitions [4] - ContextLogic's balance sheet includes approximately $66 million in cash and cash equivalents and $83 million in marketable securities, contributing to its liquidity position [2][10] Future Outlook - The company is focused on maximizing value through both organic growth and strategic acquisitions, with management actively seeking opportunities to enhance shareholder value [4][7] - ContextLogic aims to develop a new business model following the sale of its previous operations, indicating a shift in strategic direction [8]

Core Viewpoint - ContextLogic Inc. is set to report its fourth quarter and full year 2024 financial results on March 12, 2025, with a conference call scheduled for the same day to discuss these results and a recent strategic investment by BC Partners [1][2]. Financial Results Announcement - The financial results will be released after market close on March 12, 2025 [1]. - A live conference call and webcast will be hosted by CEO Rishi Bajaj and Chairman Ted Goldthorpe at 5:00 PM ET / 2:00 PM PT [1]. Strategic Investment - The conference call will include commentary on a strategic investment made by BC Partners into ContextLogic Holdings, LLC [1]. Investor Relations Information - Information regarding the financial results and access to the live webcast will be available on the company's investor relations website [2]. - Participants can register for the conference call to receive dial-in information and a unique PIN [2]. Company Background - ContextLogic Inc. is a publicly traded company that completed the sale of substantially all of its operating assets and liabilities in April 2024 [4].

Core Viewpoint - ContextLogic Inc. has entered into a strategic partnership with BC Partners, which will provide the company with up to $300 million in cash and support its acquisition-led value maximization strategy [1][2][4] Investment Details - BC Partners will purchase up to $150 million of convertible preferred units of ContextLogic Holdings, LLC, a wholly-owned subsidiary of ContextLogic [1][3] - The preferred units will have an initial dividend rate of 4.00%, increasing to 8.00% upon the closing of an acquisition [3] - ContextLogic will own 58.4% and BC Partners will own 41.6% of Holdings' common units on a fully diluted basis, assuming full exercise of Holdings' option to issue additional convertible preferred units [3] Strategic Goals - The partnership aims to identify and evaluate strategic opportunities that benefit ContextLogic and its stockholders, following management's initiatives to streamline its administrative and financial structure [2][4] - ContextLogic is pursuing strategic alternatives to generate value for its shareholders after the sale of substantially all its operating assets in April 2024 [9] Leadership Changes - Ted Goldthorpe from BC Partners is expected to be named Chairman of the Board of ContextLogic, with Mark Ward also joining the Board [5][6] Company Background - ContextLogic Inc. is a publicly traded company that has shifted its focus towards strategic acquisitions to enhance shareholder value [9] - BC Partners is a leading international investment firm with approximately €40 billion in assets under management, specializing in private equity, private debt, and real estate strategies [10]