Poshmark, Inc. (POSH) Q1 2021 Earnings Call Transcript

Poshmark, Inc. (POSH)
Q1 2021 Earnings Call
May 12, 2021, 4:45 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Poshmark first-quarter 2021 earnings conference call. [Operator instructions] Please be advised at today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ms. Christine Chen, head of investor relations.

Thank you. Please go ahead.

Christine Chen -- Head of Investor Relations

Welcome to Poshmark's first-quarter 2021 conference call. Joining me today are Manish Chandra, our founder, chairman, and CEO; and Anan Kashyap, our chief financial officer. Please keep in mind that our remarks today include forward-looking statements such as statements related to our financial guidance and key drivers, the impact of COVID-19 on our communities, business and strategy, the potential benefits of our marketing and product initiatives, and the anticipated return on our investments and their ability to drive growth. Our actual results may differ materially than those expressed or implied in our forward-looking statements.

Forward-looking statements involve substantial risks and uncertainties which are described in today's earnings release, our annual report on 10-K for the year ended December 31st, 2020, and our subsequent filing for the SEC, including our 10-Q for the quarter ended March 31st, 2021. Any forward-looking statements we make on this call are based on our beliefs and assumptions as of today and we don't have any obligation to update them. Also during the call, we present GAAP non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings release which you can find on our IR website along with a replay of this call.

And with that, I'll turn it over to Manish.

Manish Chandra -- Founder, Chairman, and Chief Executive Officer

Thanks, Christine. Hello and welcome, everyone. Thank you for joining us for our second earnings call as a public company. Before I get into my main remarks, I want to take a moment to acknowledge the crisis in India.

As the second wave of COVID-19 continues to devastate communities across the country, our hearts go out to everyone in India, especially our Poshmark team, who's thankfully staying safe and whose health and safety remains our top priority. Now I'll transition to my main remarks. Our mission is to put people at the heart of commerce, empowering everyone to try, but bearing technology with people's inherent desires to socialize, we have built a vibrant social marketplace that makes the buying and selling experience incredibly seamless, easy, and social. We remain focused on supporting our community, innovating for a fantastic user experience, and expanding the reach and offerings of our social marketplace.

Because our community of millions of sellers are constantly adding new products to the marketplace, our model is incredibly responsive to demand and we are generally not impacted by supply chain disruptions. Our asset-light model holds no inventory leading to consistent high gross margins, resulting in a scalable and profitable business. We're the leader at the intersection of three key trends shaping the future of shopping. The shift to online, the shift to social, and the shift to second hand.

We're unique from other marketplaces as we focus on growing our overall community of users to create hyper engagement and loyalty. These users activate as buyers and sellers, creating a virtual [Inaudible] of growth, monetization, and strong cohort retention. The beauty of our social marketplace is that our users, who spend an average 27 minutes a day on our app, continue to engage and reengage over time, both as buyers and as sellers, fueling the high-velocity flywheel of organic growth. We reported a strong first quarter and grew our GMV end revenue by 43% and 42%, respectively to $441 million and $81 million, a testament to the strength of our cohorts even when faced with near-term disruption.

We delivered a fourth consecutive quarter of adjusted EBITDA profitability with $4.2 million in adjusted EBITDA and 5.2% in adjusted EBITDA margin. Our business model is built on the long-term retention of our cohorts. Despite mid-quarter challenges due to weather and COVID, our cohorts remain resilient as growth rates across states began to normalize and converge once again in the second half of March, as our community express increased optimism about economic conditions and real things. In March, shoppers want aspirational items that they look forward to showing off once the weather improves and restrictions started to lift.

Top-performing secondhand categories by sales were crop tops, up 101%; thick-knees, up 86%; jean shorts, up 85%; and hatch-up 71% year over year. In March, we announced a TV and marketing campaign with Marie Kondo, the master of tidying up, decluttering, and organization. A campaign focused on the emotional connection we have with clothing and the value of resale and secondhand. It featured Marie Kondo encouraging consumers to give new life to items they have loved from their closet by listing them on Poshmark, allowing the items to spark joy for someone new.

We're optimistic that as consumers begin to leave their homes and engage in social activities once again, there will be demand for a different wardrobe from the stay-at-home outfits that prevailed in 2020. Pent-up demand for apparel could drive more frequent in a wider range of apparel and accessory purchases, benefiting our marketplace. Re-enter 2021 as a public company with a business that is stronger than ever, driven in large part by great execution of our four growth strategies. Our first strategy is to focus on product innovation to continue driving user engagement which is fundamental to the retention of our user cohorts and GMV growth.

In March, we completed the full rollout of video listings which allowed sellers to add videos directly into their listings, providing new ways to market their products, drive traffic to their closets, and engage with potential buyers. We see video commerce as the next generation of e-commerce. In our marketplace, video drives increased engagement, both views and likes and conversion, particularly, with younger customers who've been the first to adopt video as a form of self-expression. In April, we started highlighting listing videos and the use of feature to help sellers increase the visibility of their listings.

Our sellers are excited about this feature and they're starting to update their listings to include video. So far, the most popular categories for videos are dresses, bags, jewelry, makeup, and toys. Though still early, we're excited about this feature and we'll share more details as we continue to evolve and grow adoption of video commerce. Growing our international footprint is a second key strategic focus and we plan to invest ahead of revenue.

We're excited about the opportunity ahead in Australia and have just begun investing in marketing to grow the userbase. Our market research indicates that Australians have $5 billion worth of unused clothes, shoes, and accessories in their wardrobes. Our study found 79% of shoppers bought from online stores in 2020. However, nearly 60% of the items they bought went unworn.

In fact, we found that there were at least $500 worth of unused fashion items in the average Australian's wardrobe and 54% of those surveyed felt guilty throwing those pieces out. Poshmark provides Australians with a simple, social, and sustainable way to keep those items circulating. Our top priority in Australia is building the Poshmark community and one of our first major activations was launching a celebrity charity closet with Serena Williams in March, with proceeds going to Black Dog Institute to support mental health research and suicide prevention for Australia's first-nations people. While still too early to provide much detail, Australia has seen great use of buyer and seller growth since our February launch.

Our third strategy is to go to category expansion. We launched back in February to address the style needs of the entire family. We have seen that attract new sellers and buyers to the platform, demonstrating the scalability of our model. As expected, supply and demand is dominated by dog and cat style items from clothing to collars and leashes, and the majority of these are non-branded, some of which are even handmade.

Though still early, we're excited for the growth potential of the pets category and our excitement is shared by our community with positive feedback and high volumes of user-generated pets content. Our fourth strategy is to deliver robust easy-to-use and effective seller services to help sellers market and sell their product offerings. Our social market base makes it very easy for anyone to sell and we provide incredible demand-generation services to attract shoppers to sellers listings. In mid-March, we completed the rollout of sellers shipping discounts, a new feature which gives sellers the ability to list items with discounted shipping that they began testing in January.

Previously, shipping discounts were only available through private negotiations and offers. We now have more shipping tiers: no discount, the first level of discount, the second level of discount, and free shipping. All tiers provide expedited priority USPS shipping one to three days. Currently, about 7% of listings offer discounted shipping, adoption rate has been highest for the highest price-point items.

Since the introduction of sellers shipping discounts, we have seen increased engagement as repeat listeners and Posh ambassadors, both of whom have adopted this feature at a higher rate, revisit existing listings to add shipping discounts. In mid-April, we introduced icons in review and listing details to indicate items that have discounted or free shipping, which has begun to positively impact conversion and order rates. In April, we introduced two new seller tools, style tags, and price suggester in the listing process. Styled tags give sellers the option to use three relevant phrases to describe the items design, aesthetic, material, and more, enhancing the ability for buyers to search for relevant products.

These include things like handmade tie-dyed cotton. We also launched price adjuster to help sellers, especially new listers list items more efficiently by providing a suggested price range for their listings. As these tools have just launched, we'll share more details on our next earnings call. Our community is the heart and soul of Poshmark.

Together, we make buying and selling simple, social, and sustainable. We're committed to helping our sellers succeed and have begun accepting applications for our Heart & Hustle community fund. Every day, Poshmark sellers turn their passion into profit by creating new brands, sharing their style, and connecting with shoppers. To help them get closer to their goals, whether that's making extra money, scaling their business, supporting the circular economy, or turning a side hustle into something bigger, we want to recognize and empower them.

Our new fund is one of the ways will do that. In conclusion, we had a strong first quarter and start to 2021, where the Poshmark team once again executed well for the benefit of the entire community. We believe that Poshmark has an incredibly compelling growth potential for years and decades to come, be of high conviction around making the investments that are going to allow us to achieve that full potential. Poshmark will continue to be a place where you can save money, make money, and find human connection.

And with that, I'll turn it over to Anan.

Anan Kashyap -- Chief Financial Officer

Thank you, everyone for joining us. Our first quarter was another great quarter as we delivered strong GMV revenue and our fourth consecutive quarter of operating profitability. Our business model is built on the long-term retention of our cohorts which we demonstrated in 2020, during an extraordinary year due to COVID. During the first quarter of 2021, even when faced with near-term disruptions, our cohorts have remained resilient as growth rates began to normalize in the second half of March, as economic conditions and weather improved.

Our robust cohorts helped us generate $441 million GMV in the first quarter of 2021, which was 43% growth from $309 million in the first quarter of 2020. Commensurately, net revenues were $81 million in the first quarter of 2021, which was 42% growth from $57 million in the first quarter of 2020. This was driven by an increase in GMV in the first quarter of 2021, an overall growth of our community, including an 18% growth in active buyers to 6.7 million from 5.79 million in the first quarter of 2020. Our take rate was 18.4%, which is down slightly from last year's 18.5%, a result of higher-than-expected delayed or canceled orders, resulting partially from severe weather conditions in February.

Cost of revenues was $13 million in the first quarter of 2021, an increase of 31% from the first quarter of 2020, and decreased to 16.1% of revenues due to some leverage in hosting expenses. Therefore, adjusted gross margin which is net revenue less cost of net revenue, improved to 1.2% to 83.9% of revenues in the current period, as compared to the first quarter of 2020. Marketing expenditure, excluding stock-based compensation was $32 million in the first quarter of 2021, a decrease of 6% from the first quarter of 2020. Marketing was 40% of net revenue in the first quarter of 2021, down significantly from 60% of net revenue in the first quarter of 2020, due to rationalizing our marketing spend to focus on strong ROI user acquisition channels.

We invested in upper funnel strategy such a more targeted TV, as well as, influencer marketing. In March, we launched a unique partnership with tudying master, Marie Kondo with two new TV ad to drive more listing activity and build brand visibility. Moving to operating expenses. Operations and support, excluding stock-based compensation was $13 million in the first quarter of 2021, an increase of 15.7% of revenues, up from 14.7% last year.

We experienced an increase in credit as a result of shipping delays from the holiday and severe weather conditions during the quarter. During this unprecedented time, we had to increase hiring across the team to support customer need and maintain our excellence in customer service. Research and development, excluding stock-based compensation was $8 million in the first quarter and decreased to 10.1% of revenues from 11.5% last year, mainly due to slower hiring than planned. Hiring accelerated throughout the back half of the quarter, so we do not expect the first-quarter leverage to persist.

In fact, we expect to double down and invest additional resources across a number of key initiatives, including international expansion. G&A excluding stock-based compensation was $11 million in the first quarter, an increase to 13.3% percent of revenues from 11.7% last year, mainly due to the additional ongoing costs of being a public company, including annual audit cost, which was primarily incurred during the first quarter, as well as, greater-than-expected premiums for D&O insurance that we discussed in our last earnings call. Stock-based compensation was $20.4 million in the first quarter in 2021, an increase from $1.8 million last year. First-quarter 2021 stock-based compensation included $22.3 million from restricted stock units, of which $15.6 million was a one-time cumulative expense due to the accelerated vesting of our restricted stock units upon the IPO in January.

We delivered adjusted EBITDA, which excludes stock-based compensation of $4 million with adjusted EBITDA margins of 5.2%, compared to the loss of $9 million and negative 15.2% margins in the first quarter of 2020. The majority of the profitability improvement was driven by strong revenue growth and our decision to lower our marketing investment, as compared to the prior year. As we have discussed before, the remainder of 2021 we will prudently invest in marketing in the future as we did in the first quarter, but with a continued focus on growth and margins. Operating income excluding stock-based compensation was $3 million in the first quarter of 2021, with operating margins of 4.2%, which is a meaningful change as compared to the loss of $9 million or negative 16.4% margins in the first quarter of 2020.

Similar to the improvement and adjusted EBITDA, the increase in income from operations was driven primarily by strong revenue growth and a decrease in marketing expense. Due to the transition from a private company to a public company, we incurred GAAP non-cash other expenses due to the higher share price impact on changes in fair values of our convertible warrants and the loss on extinguishment of our convertible notes. Thus, we believe that excluding all non-cash one-time capital structure expenses, resulting from our IPO in January, our net income is a better indicator of our operating performance. First-quarter 2021 non-GAAP net loss to common stockholders was $21 million that excludes non-cash expenses of $54 million.

This was due to the loss on conversion of our convertible notes into common stock upon the completion of the IPO and change in fair value of preferred stock warrants. The $50 million convertible notes were converted into 1.4 million shares at a price of $35.70, a 15% discount to our IPO price of $42. However, due to the timing of the settlement of shares which occurred at the closing of the IPO, three businesses after pricing, we had to record a non-cash accounting loss of $51 million, of which, $49.5 million was due to the increase in the fair market value of the stock to $74.90 the closing price on January 19th, as well as, the loss on extinguishment on the debt of $1.6 million. In addition, we had a $3 million loss due to a change in fair value of convertible preferred stock warrants, also due to the increase in the fair market value of our common stock share price.

Excluding the combined impact of these non-cash expenses, non-GAAP loss per share to common stockholders was $0.33. Beginning in the second quarter, we no longer have these non-cash capital structure expenses, as all of our convertible securities were converted into common stock at the closing of our IPO in January. Cash, cash equivalents, and marketable securities were $575 million as of March 31st 2021. During the first-quarter 2021, we completed our IPO, raising $297 million net of underwriting discount and commissions.

In addition, all 52 million shares were convertible preferred stock were converted into Class B common shares at the IPO. As we look ahead and think about capital allocation and use of cash, our number one priority is using our strong balance sheet to position us to invest in growth and strategic investments to drive long-term growth internationally. Moving to the cash flow statement for the three months ended March 31st 2021, free cash flow was $19 million, compared to $1 million for the first three months ended in 2020. Our strong cash-flow generation significantly strengthened our balance sheet and liquidity.

Looking ahead, we think the customers' inherent desire to socialize and resume normal activity, combined with their interest in retail should drive demand for apparel going forward which would benefit our marketplace. We expect second-quarter revenues of $79 million to $81 million, resulting in a growth rate of 18% to 21%, taking into consideration difficult comparisons against 41% year-over-year growth last year. Our revenue guidance reflects 59% to 61% growth on a two-year stack basis and acceleration from the two-year stack growth of 50% in the first quarter. We expect our second-quarter take rate to be similar to the first quarter due to slightly higher cancellation rates.

We expect to remain profitable with the second-quarter EBITDA of $1.5 million to $2.5 million, as we continue to focus on balancing growth and profitability when investing in marketing. Adjusted gross margin performance during the first-quarter 2021 was ahead of our initial expectations, benefiting from lower-transaction processing costs and leveraging our hosting costs. The remainder of 2021, we expect adjusted gross margin to be similar to 2020 levels due to normalization and closing expenses. We expect operations and support in the second quarter to be a little higher as a percentage of revenue than the first quarter due to the higher costs of managing shipping and logistics.

We expect R&D expenses in the second quarter to increase as a percentage of revenues from the first quarter, as we increase the pace of hiring to support our continued product innovation and international expansion. We expect G&A expenses as a percentage of revenue for the remainder of the year to be similar to the first quarter due to public company expenses. We will remain disciplined with our ROI-based approach and expect marketing as a percentage of revenues in the low 40s in 2021 to grow users and support the launch of geographic expansion and categories. We believe there is still a large opportunity before us and so we plan to invest in building the brand, grow our user community, and international and category expansion.

We continue to see very strong GMV retention due to our social model which drives engagement and repeat transactions. These cohorts have been both resilient and have high residual value after the initial year of acquisition. Thus, we're confident that the growing engagement of our user cohorts will enable us to deliver consistent growth over the long-term. Overall, we believe we have executed very well during a challenging environment with the focus on the safety for our employees, supporting our community, and driving efficiency in our operations.

Thank you. And I will now turn the call over to the operator, so we can take our questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] And your first question comes from the line of Ross Sandler from Barclays. Your line is open.

Ross Sandler -- Barclays -- Analyst

Hey, one for Manish and one for Anan. Manish, and first one, just a question about retention and frequency right now. For the most recent cohorts compared to what you're seeing last year during COVID, the [Inaudible] guide is kind of flattish Q on Q and there was the stimulus benefit in March and then you had the Texas and New York issues that you flagged last quarter. Just, how do we think about if we strip all that noise out, the underlying kind of sequential cadence and how retention is trending? And then on Australia, I know it's early, but just any color on, how we should think about the cadence of that region ramping up, compared to maybe how Canada ramped up in the -- in the early quarters? Like, any a reason why that would be a little faster or a little slower? That's it, guys.

Thanks a lot.

Manish Chandra -- Founder, Chairman, and Chief Executive Officer

Sure. So in terms of the overall retention of our cohorts, it's actually pretty stable and continues to be very stable when you measured it across the quarter. Even though there were some variations within the quarter and we see very, very stable retention across all of our cohorts, as well as, growth on all of that cohort. So I think the predictability and sort of the convergence as we pointed out in the call is back.

So we expect to see pretty healthy sort of movement of the cohorts as we go into Q2 and beyond. And certainly, remain optimistic as the economy opens up, it could provide a positive sort of uplift as people go out and engage with fashion and engage with sort of the outdoor activities. Australia is early, shaping up well despite sort of having to launch the country in a very remote way from here and we haven't seen the team or the community in the early days. It's shaping up sort of in the normal healthy development of the buyers and sellers and the users.

Anan Kashyap -- Chief Financial Officer

Yeah. Just one additional point I want to make, Ross, is that you know, we typically don't see this outsized quarter-over-quarter growth from Q1 to Q2. So when we talk about the guiding toward a $79 million to $81 million, it's a 59% to 62% growth on a two-year stack basis, which is an acceleration of 50% from the first quarter. So you know and we're still, obviously, extremely optimistic about how the quarter is going to go, but it's also important to remember we're remaining profitable throughout all of this as well.

So that dynamic is obviously great for us long-term.

Operator

Your next question comes from the line of Lauren Schenk from Morgan Stanley. Your line is open.

Nathan Feather -- Morgan Stanley -- Analyst

Hi, this is Nathan Feather on for Lauren. Just two quick ones from me. Can you talk about how average order value trend in the quarter, given some of the early success of seller shipping discounts, particularly on higher-value items. And then also you noted hiring came in a bit below your expectations and R&D.

Can you just talk us through why that was? And I know you mentioned hiring was accelerating that cost back up to your plan. Thank you.

Anan Kashyap -- Chief Financial Officer

Yeah. So on an average order value, we actually seen it basically remain relatively stable throughout the last few months. You know, the seller shipping I think has been a positive impact for conversion in general. And how we think about it is, you know, sellers ultimately dictate the pricing, both on that item, as well as, the shipping.

And so we think this is just another tool for them over the long-term. You know, as far as R&D hiring, two things I think are sort of interesting. We actually started the quarter with very sort of positive momentum, but when it came down to actually the timing of when people were hired, it was -- it ended up being more back-end loaded toward the end of the quarter and so we started catching up toward the end. But as you can imagine, just the dynamics of the ramp from the beginning to the end the quarter was what caused the numbers to be a little bit lower.

But for us, you know, R&D is a very critical investment, especially in terms of product innovation. So as you can see from the pace of features that we're launching, it's a major area of investment for us and will be something that will continue for the remainder of the year.

Operator

Your next question comes from the line of Ralph Schackart from William Blair. Your line is open.

Ralph Schackart -- William Blair & Company -- Analyst

Good afternoon. Thanks for taking the question. I know the strong trend and the GMV I know you talked about kind of reacceleration in Q2 in a tier-stack basis. Just curious how much of that was turning to strength in the business? I know there's some stimulus in there and maybe some tough comparers or some comparability issues due to COVID last year, but just love your overall thoughts on that.

That's the first question. You know, if I get add-on, as you think about your non-apparel vertical such as beauty, home, and pet, Maneesh, I think you talked about pet bringing buyers to the platform. We just love your thoughts in terms of, you know, are these new categories also adding to GMV at this point? Thanks so much.

Anan Kashyap -- Chief Financial Officer

Yeah, just -- maybe we'll talk about the overarching dynamics of stimulus last year and this year. As you can imagine, last year in the first quarter was weak for us right around when COVID hit around the end of sort of the end of February and the beginning of March. And if you look at the second quarter, we actually had great quarter with reacceleration of the business to 40% growth and so that was, part of the reason why the comp is actually a little bit higher for us this year. As far as, you know, stimulus and how we think about it, look at the positive uplift for consumers, the economy, and numerous businesses, we think it's really a true testament to the strength of our cohorts which overcame some mid-quarter challenges due to weather and COVID and remains resilient, and we actually saw the states actually begun to -- begin to normalize and converge once again in the second half of March.

Now it's impossible to determine the -- to separate the exact impact of stimulus. The timing also coincided with a rival's spring and optimism about reopenings. The second is also, we can produce a number of great seller tools in March, the video listing, seller discounted shipping which have also positively impacted the business. So we think that innovation is one of the key drivers of growth is, why we continue invest there.

So we think long-term the consumers desire to socialize and resume normal activities to drive demand for apparel going forward which should benefit the marketplace. And I'll let Manish talk about --

Manish Chandra -- Founder, Chairman, and Chief Executive Officer

Sure. Yeah, I think that all of the categories are already starting to drive GMV growth, as well as, listing scope. The expansion in categories, both in direct apparel and beyond apparel, for us brings in growth from two different perspectives. One is it activates new buyers and sellers on the platform.

And second is, it gives existing buyers and sellers new ways to sell and shop on the platform. So it sort of drives in on both dimensions and reaching positive impacts of these categories on both of those fronts in terms of driving growth, and ultimately, GMV per buyer.

Ralph Schackart -- William Blair & Company -- Analyst

Great. Thanks, Manish. Thanks, Anan.

Operator

Your next question comes from the line of Aaron Kessler from Raymond James. Your line is open.

Aaron Kessler -- Raymond James -- Analyst

Great. Thanks, guys. One, can you talk about how many from the advertising side, any expected impact from IDFA and also another retailer mentioned that recently. And second just maybe, are you seeing kind of increased interest from brands or vendors as well? Thank you.

Manish Chandra -- Founder, Chairman, and Chief Executive Officer

Sure. So IDFA is of course, going to have a shift in spend and channel mix for the short-term over the long-term. You know, it's a little bit unknown how it sort of shifts the overall mix for us because we have focused on a very diverse set of marketing channels. It allows us to rebalance the spend and continue to focus on growth despite the short-term shift of the advertising landscape overall.

Operator

[Operator instructions]

Manish Chandra -- Founder, Chairman, and Chief Executive Officer

Aaron, can you reapeat the second question again?

Operator

[Operator instructions] And he has not re -- I'm sorry. He just requeued up now. Your line is open.

Aaron Kessler -- Raymond James -- Analyst

Thank you. Sorry. The second question is on the brands and kind of vendors, are you seeing kind of increased interest from -- from them as well? Or just any update there? Thank you.

Manish Chandra -- Founder, Chairman, and Chief Executive Officer

Absolutely. So you have to continue to experiment pretty aggressively brands we believe that the size and scale of our community have the interest on brand on, both retail and social commerce, makes the partnership with them inhabitable for Poshmark. And we continue to do pretty aggressive experiments and experimentation there. Nothing specific to announce right now, but a lot of good work going on there.

Aaron Kessler -- Raymond James -- Analyst

Great. Thank you.

Operator

[Operator instructions] Your next question comes from line of Oliver Chen from Cowen. Your line is open.

Oliver Chen -- Cowen and Company -- Analyst

Hi, thank you. As we look ahead to the active buyer growth, should we expect it to be in the high teens or maybe accelerate as some of the growth comparisons ease? And as you think about the marketing spend for the balance of the year, how are you thinking about the composition as you referred to upper funnel and also the global opportunities that you're addressing as well?

Anan Kashyap -- Chief Financial Officer

Yeah. So I'll start with -- I'll start with the kind of upper funnel dynamics and sort of marketing in general for the year. But the main thing I would say is, you know, as Manish mentioned, one of the important strategies for us is, to actually be very diversified, both from a upper funnel, as well as, kind of purely transactional basis. And what we've found is that, by allowing that flexibility, we can shift depending on what we see with IDFA or any other sort of disruption in the marketing ecosystem.

So how we think about it is, you know, we've got a tremendous ROI-based approach which is focused on a payback of about two years and that continues to be our modus operandi. And the only time that that shift as you think about kind of international expansion opportunities around Canada and we've launched Australia, obviously, where those payback periods are usually extended as we are essentially investing in those markets. Hopefully, that answers your question.

Oliver Chen -- Cowen and Company -- Analyst

That's very helpful. And active buyers, what are your thoughts on how that may proceed through the year?

Anan Kashyap -- Chief Financial Officer

Yeah. So I think we -- we haven't really guided toward active buyers in our commentary. I think, you know, what we would normally expect that to be relatively in line with overall growth of the business. You know, there may be some differentiations when it comes to certain markets, but today that that dynamic is very consistent, as compared to overarching GMV and revenue growth.

Oliver Chen -- Cowen and Company -- Analyst

Thank you. And lastly, a big bigger picture, as the competition does get more competitive in resale. Why would the customer choose to list on Poshmark versus others. Could you speak to the defensibility of your take rate? Thank you.

Manish Chandra -- Founder, Chairman, and Chief Executive Officer

Sure. You know, first of all, I think as the market for resale is growing, we're sort of seeing -- we feel getting adopted in every single dimension with a [Inaudible] adopting it, marketplaces are adopting it which is exciting. So we think of resale as a massive expanding opportunity which paves the way for our own sort of scaling and expansion. And for us from day one, we have been the simplest and the most social and the most engaging way for people to buy and sell fashion and fashion-related, style-related products, and that continues to be our core focus.

Our take rate has also been consistent since we started the company. We've partnered with sellers since day one. Haven't taken it up and haven't taken it down, it's been a very consistent partnership and we continue to maintain that partnership as we build out the product. What we have done is in that same partnership, is added tremendous level of services for our seller and buyers over that time, whether it is adding things like Posh Post Posh Authenticate or adding listing videos, seller discounts, other seller tools, etc.

So we continue to show our core community of buyers and sellers on all different dimensions, bringing the best engaging online experience, the best social experience. And that we believe is, ultimately, the key to our growth, our long-term growth, but also key to a successful partnership with our seller community.

Oliver Chen -- Cowen and Company -- Analyst

Thank you, very helpful. Best regards.

Manish Chandra -- Founder, Chairman, and Chief Executive Officer

Thank you.

Operator

And your next question comes from the line of Ron Josey from JMP Securities. Your line is open.

Ron Josey -- JMP Securities -- Analyst

Great. Thanks for taking the question. I had two. You know, you talked about sellers shipping discounts now live and the four shipping cures.

Can you give us some updates or talk to us about his conversion rates you're seeing across the fourth [Inaudible]. The use cases that a seller might use when they offer discounts from from zero to call it, fully discounted and what that means, the conversion rates? And I ask this in reference to, I guess, the question just ask now from Oliver around just as seller tools and newer services that you're offering. So conversion rates or asking about conversion rates on shipping. And then lastly, another question on just category expansion.

You know, it's a key focus for Posh and it's great to hear pets are bringing new users and sellers to the platform. Let's talk a little bit more about what we might look forward to for categories this year and next? Thank you.

Manish Chandra -- Founder, Chairman, and Chief Executive Officer

So sellers shipping discounts, when you think of the different players and tiers we offer, it's really a tool for sellers to decide how they want to price their product. Do they want to build more of the margin and the core price and then offer a shipping discount? Or sort of use those two knobs continuously and sellers are still playing with it. We're seeing increased adoption, but I feel that there is significant potential for much more adoption in the marketplace. And typically, you'll see free shipping being added to the place where the pricing can sustain a free-shipping margin and then lower shipping discounts available for a couple of different tiers.

A lot of sellers are starting to experiment with at least the basic tier of discounting to offer value to their shoppers, as shoppers are used to different kinds of shipping out there. So we see that happening. Really, the place where shipping discounts ultimately have a positive impact to the sellers is, the speed with which they clear that item. So it touched on sort of their sell through rate and the speed of timing, and that's been very positive to measure of there.

We'll continue to build more and more seller goods to both help them promote and market that. So for example, one of the things we recently launched is, the ability for shoppers to filters by different seller discounts over time. The second question that you asked about categories, if you think about focus for categories, it has been categories that are really put it into your style and your best in categories that particularly foster discovery more than just [Inaudible]. So you start to see as expanding from -- our original focus was women then we expanded to mens, kids, home, beauty, and most recently, pet.

So you should see adjust in categories that express an individual style, and ultimately, lead to more discovery-oriented architecture. And that's sort of going to be a our goal mantra in terms of helping them out a full category portfolio on Poshmark.

Oliver Chen -- Cowen and Company -- Analyst

Great. Thank you.

Operator

And there are no further questions at this time. Mr. Manish Chandra, I turn the call back over to you for some closing remarks.

Manish Chandra -- Founder, Chairman, and Chief Executive Officer

Thank you, everyone for joining our call and for your questions. We look forward to speaking to you again next quarter. Thank you.

Operator

[Operator signoff]

Duration: 41 minutes

Call participants:

Christine Chen -- Head of Investor Relations

Manish Chandra -- Founder, Chairman, and Chief Executive Officer

Anan Kashyap -- Chief Financial Officer

Ross Sandler -- Barclays -- Analyst

Nathan Feather -- Morgan Stanley -- Analyst

Ralph Schackart -- William Blair & Company -- Analyst

Aaron Kessler -- Raymond James -- Analyst

Oliver Chen -- Cowen and Company -- Analyst

Ron Josey -- JMP Securities -- Analyst

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