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Contextlogic Inc.(LOGC) - 2024 Q3 - Quarterly Report
LOGCContextlogic Inc.(LOGC)2024-11-07 21:16

Asset Sale - ContextLogic Inc. completed the Asset Sale to Qoo10 on April 19, 2024, selling substantially all of its assets, including the Wish platform, while retaining net operating losses and certain cash equivalents[22]. - The Company completed an asset sale on April 19, 2024, with total proceeds of 214million[48].−FollowingtheAssetSale,theCompanynolongerhasrevenuesfrommarketplaceandlogisticsoperations[42].−Followingtheassetsale,thecompanyreceived214 million[48]. - Following the Asset Sale, the Company no longer has revenues from marketplace and logistics operations[42]. - Following the asset sale, the company received 162 million in cash from Qoo10, which included certain purchase price adjustments[113]. - Following the Asset Sale, all outstanding equity awards became fully vested, impacting the Company's stock-based compensation[73]. - Substantially all employees became employees of the buyer after the asset sale[83]. Financial Performance - The Company reported marketplace revenue of 24millionandlogisticsrevenueof24 million and logistics revenue of 36 million for 2023, totaling 60millioninrevenue[41].−Coremarketplacerevenuewas60 million in revenue[41]. - Core marketplace revenue was 19 million in 2023, while ProductBoost revenue was 5million,contributingtoatotalmarketplacerevenueof5 million, contributing to a total marketplace revenue of 24 million[41]. - The Company reported a net loss of 1millionforthethreemonthsendedSeptember30,2024,comparedtoanetlossof1 million for the three months ended September 30, 2024, compared to a net loss of 80 million for the same period in 2023[77]. - The provision for income taxes was 0millionforthethreemonthsendedSeptember30,2024,comparedto0 million for the three months ended September 30, 2024, compared to 3 million for the same period in 2023, primarily due to withholding taxes on intercompany dividends[75]. Cash and Assets - As of September 30, 2024, the Company held cash equivalents totaling 31millionandmarketablesecuritiesof31 million and marketable securities of 117 million, resulting in total financial assets of 148million[43].−TheCompany’smarketablesecuritiesareclassifiedasavailable−for−sale,withnoidentifiedcreditlossorimpairmentintheperiodspresented[47].−TheCompanyhadnooperatingleaseliabilitiesasofSeptember30,2024,duetotheassetsaletransferringallleasestoQoo10[61].−TheCompanyhadnounrecognizedtaxbenefitsasofSeptember30,2024,downfrom148 million[43]. - The Company’s marketable securities are classified as available-for-sale, with no identified credit loss or impairment in the periods presented[47]. - The Company had no operating lease liabilities as of September 30, 2024, due to the asset sale transferring all leases to Qoo10[61]. - The Company had no unrecognized tax benefits as of September 30, 2024, down from 4 million as of December 31, 2023[75]. Debt and Liabilities - The Company terminated its Revolving Credit Agreement, which previously allowed borrowing up to 280million,onApril19,2024[50].−Followingtheassetsale,accruedliabilitiesdecreasedby100280 million, on April 19, 2024[50]. - Following the asset sale, accrued liabilities decreased by 100% to 4 million, down from 90millionasofDecember31,2023[51][52].−Otheraccruedliabilitiesdecreasedby8790 million as of December 31, 2023[51][52]. - Other accrued liabilities decreased by 87% to 4 million primarily due to the asset sale[52]. - The Company reduced its Revolving Credit Facility from 280millionto280 million to 7 million as of March 2024, with a minimum liquidity covenant of 350million[63].AccountingandReporting−TheinterimfinancialstatementsforthethreeandninemonthsendedSeptember30,2024,areunauditedandincludeallnormalrecurringadjustmentsnecessaryforfairpresentation[25].−TherehavebeennochangestotheCompany′ssignificantaccountingpoliciesthathavemateriallyimpacteditscondensedconsolidatedfinancialstatementssincethe2023Form10−Kfiling[36].−TheCompanyexpectsnomaterialimpactfromtheadoptionofrecentaccountingstandardsupdatesrelatedtosegmentreportingandincometaxdisclosures[37].−TheCompanyidentifiedmaterialweaknessesininternalcontroloverfinancialreporting,includinginsufficientmanagementoversightandinadequateITgeneralcontrols[112].WorkforceandCompensation−Thecompanyreduceditsworkforcebyapproximately17350 million[63]. Accounting and Reporting - The interim financial statements for the three and nine months ended September 30, 2024, are unaudited and include all normal recurring adjustments necessary for fair presentation[25]. - There have been no changes to the Company's significant accounting policies that have materially impacted its condensed consolidated financial statements since the 2023 Form 10-K filing[36]. - The Company expects no material impact from the adoption of recent accounting standards updates related to segment reporting and income tax disclosures[37]. - The Company identified material weaknesses in internal control over financial reporting, including insufficient management oversight and inadequate IT general controls[112]. Workforce and Compensation - The company reduced its workforce by approximately 17% in January 2023 and 34% in August 2023, resulting in charges of approximately 13 million for severance and personnel reduction costs[82]. - The total stock-based compensation expense for the nine months ended September 30, 2024, was 12million,adecreasefrom12 million, a decrease from 54 million for the same period in 2023[74]. - The Company’s CEO, Jun Yan, received RSUs and options with a total grant date fair value of 6million,whichbecamefullyvestedupontheAssetSale[69].−Thefairvalueofstockoptionswasestimatedat6 million, which became fully vested upon the Asset Sale[69]. - The fair value of stock options was estimated at 11.27 per share for the nine months ended September 30, 2023, with a risk-free interest rate of 4.15%[72]. Revenue Recognition - The Company recognized logistics revenue on a gross basis, while marketplace revenue was generally recognized on a net basis[38]. - The Company evaluated revenue recognition based on control of goods or services, fulfillment responsibility, inventory risk, and pricing latitude[38]. - The Company’s logistics services required merchants to prepay on a per order basis, with revenue recognized over time as services were performed[40].