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Poshmark, Inc. (POSH)
Q2 2021 Earnings Call
Aug 10, 2021, 4:45 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Welcome to Poshmark's second 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 of 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 31, 2020, and our 10-Q for the quarter ended March 31, 2021, and other subsequent filings with the SEC, including our 10-Q for the quarter ended June 30, 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'll present GAAP and 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 quarter earnings call. Before I share a recap of our Q2 performance, I'd like to take a moment to welcome Poshmark's newest board member, Ebony Beckwith, whose appointment we announced yesterday.

Ebony is chief philanthropy officer at Salesforce and the CEO of the Salesforce Foundation. She is a powerhouse leader, who brings deep experience across technology, operations and philanthropy, and a deep connection to the brand as an avid Posher, who joined the Poshmark community in 2014. I'm absolutely delighted to welcome a member of our community to the Board. And even more so, I'm also excited about the impact she will have on our company, our community, our culture, and our mission as we empower consumers around the world and shape the future of shopping.

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Now turning to our Q2 results. We remain focused on this executing of our long-term growth strategies and delivered another strong quarter. We grew GMV and revenue by 25% and 22%, respectively, to $450 million and $82 million. Due to the reliability and strength of cohorts and despite difficult comparisons, we delivered our fifth consecutive quarter of adjusted EBITDA profitability with $6.1 million in adjusted EBITDA and 7.4% in adjusted EBITDA margin.

Our asset-light model holds no inventory, leading to some consistent high gross margins, resulting in a scalable and profitable business with a highly engaged community in loyal cohorts. Our community of sellers is both dynamic and flexible, keeping our marketplace constantly refresh with curated merchandise that reflects current and emerging trends and lifestyle preferences. In the second quarter, our sellers were once again the forefront of an ever-changing fashion landscape, staying ahead of emerging trends such as '90s and Y2k styles. Our marketplace is highly adaptable and incredibly responsive to our buyer's changing demands for either staying at home or for going out, and supply it just almost instantaneously.

Thus, we are confident that we can navigate any potential future impact from the Delta variant, as is evidenced by the resilience of cohorts, which delivered strong financial performance during COVID last year and so far in 2021. One of the reasons that we have such a loyal and engaged community is our commitment to making selling on Poshmark as simple as possible. We do this through robust tools that enable broad distribution of sellers' listings to the buyers everywhere. In May, we announced a partnership with Snapchat, which went live on July 8 to all U.S.

Snapchat users. Through Poshmark Mini, Snapchat users can now engage with their Poshmark community, our 10 virtual Posh Parties, shop our entire catalog of merchandise, and easily search for top trending brands and styles in Poshmark, all within Snapchat. The Poshmark Mini will introduce millions of the new shoppers to Poshmark while deepening our relationship with Gen Z, who are an important fast-growing part of community. Gen Z makes up 77% of daily active players using Poshmark Mini on Snapchat.

Our business remains stronger than ever, driven by continued progress of our four growth strategies. Our first strategy is to focus on product innovation to also continue driving user engagement, which is fundamental to the retention of our user cohorts and GMV growth. And to enhance the buyer experience, we introduced Buyer Alerts, a new feature that sends a notification when a listing you have liked receives an offer from another buyer. The item you like was purchased by someone else, we will direct you to similar listings for identical items.

We've seen an increase in listing views, engagement and the order conversion rates as a result of this new enhancement, which puts power in the buyer's hands and that creates a more personalized and curated shopping experience. Expanding our international footprint is our second key strategic focus, and we continue to invest ahead of them. I'm happy to announce we've recently hired a new vice president of international, Sylvie De Wever, who will lead the international growth and expansion plans as we bring the Poshmark social shopping experience to consumers around the world. Prior to Poshmark, Sylvie served as eBay's General Manager of Latin America, where she helped launched the scale of the business, and was also instrumental in expanding the footprint in emerging markets.

I look forward to partnering with Sylvie and our international team to accelerate Poshmark's expansion into new markets. And in the second quarter, we celebrated Poshmark Canada's two-year anniversary. Our thriving community has grown to more than 2.5 million Canadians, who are engaged in more than 1 billion of social interactions and listing nearly half a billion dollars worth of inventory since launch. Our success in Canada provided a playbook for launching Poshmark in Australia, which has seen great user, buyer and seller growth since our Feb launch.

We are also focused on the -- aggressively growing our Australian community and continue to invest in marketing to grow our user base. So as you may have seen last week, we announced that India will be the next stop in our global expansion strategy. India is one of the fastest-growing e-commerce markets in the world and has a vibrant culture of resale, thrifting, and pre-loved shopping. We have hired a country general manager and continue to build out our team on the ground.

We have also begun the process of building community and supply to the data phase of development. And on behalf of myself, my co-founders and the team Posh, we're overwhelmed with joy to bring Poshmark to India. Our third strategy is to go through category expansion. We've launched Art & Design as two new subcategories under the Home department and as a natural extension to address the styles of our community.

We have seen Art & Design attract new styles and sellers to the platform, demonstrating the scalability of our model and view these new categories as the foundation for building our handmade artisan business for Poshmark sellers. Our forward strategy is to deliver the -- innovative, easy-to-use, and effective seller services to help sellers market, merchandise and sell in their listings. In April, we introduced Style Tags, a powerful new search and discovery tool that allows our sellers to merchandise and market their listings by style and trends and provides buyers with new ways to shop beyond their usual brand preferences. If, for example, a buyer is shopping for Y2K looks, they can now simply follow Y2K as a trend, which also greatly expands their ability to find and track relevant listing start with that.

Similar to how buyers can follow brands such as Gucci or lululemon, they can now follow these emerging trends such as '90s or Bohemia. In June, 28% of sellers use Style Tags, and a result, we saw increase in daily listing views and buyer engagement with these listings. And though early, we believe that shopping by style and trends is the way consumers want to shop and Poshmark Style Tags will help drive conversion over time. We also launched Price Suggester to help sellers, especially new sellers list items more effectively in providing a suggested price range for their listing.

This new feature not only helps to drive new supply, it also positively impact sell-through rates as it increases the percentage of products are poised to sell in our marketplace. As early pioneers of social commerce, we're always innovating core marketplace functionalities to make it easy for sellers to engage with shoppers and grow their sales. At the end of June, we launched four powerful bulk listing tools that take social selling to a whole new level for Poshmark sellers with these large closets. The new features allow sellers to share multiple listings at once, make closet pipe price adjustment and execute multiple offers like us all at once driving our productivity, engagement and sales.

Our seller community is also responding enthusiastically to this new time-saving functionality. Since day 1, our sellers have been the heart of the Poshmark community, and the Heart & Hustle community fund is an important step in recognizing, rewarding and empowering our diverse seller community. In June, we awarded 142 sellers with $125,000 in brands to help support their business goals. From our dollar balancing full-time business while caring for our sick mother to a college student paying for tuition, this is just one of the ways we support our seller community so that everyone can try.

To experience the vibrancy of the Poshmark community, I invite you to join us in October at Posh Fest, our annual two-day conference, where community members connect, network and learn how to grow and succeed by selling on Poshmark. As many consumers return to work and school in fall and engage in more social activities, we expect new apparel purchase to accurate and the demand for a different type of wardrobe to emerge from the quarantine outputs that prevailed in 2020. In addition, the seismic shift in fashion currently underway is expected to unleash pent-up demand for apparel that we believe lasts for several years, driving more frequent and a wide range of lifestyle purchases benefiting our marketplace. Now I want to take a moment to thank Anan for being my friend and partner for the last five years, helping us scale the business more than 10 times from $160 million in GMV in 2015 to over $1.6 billion in trailing 12 months GMV as of the second quarter and taking us public.

His numerous contributions have helped lay the foundation for consistent revenue growth and continued margin expansion in the years to come. I'm confident in the strong finance team that Anan has built, and truly appreciate the role he has played in positioning Poshmark for long-term success. With support from a leading executive search firm, the board and I have initiated a search for a new CFO. In the meantime, I'm pleased to announce that our VP of finance, Kapil Agrawal, will become interim CFO.

Kapil has been with Poshmark for the last five years, leading finance, strategy and corporate development. Kapil brings a decade of leadership experience in strategy, financial planning, and business analysis at Fortune 500 companies, including Uber and Capital One. On behalf of the entire board, management team and Poshmark, Anan, you will be greatly missed, and we wish you the best of life in your future endeavors. We appreciate that you are staying on as an advisor until the end of the year to help ensure a smooth transition with the next CFO.

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

Anan Kashyap -- Chief Financial Officer

Thank you, Manish. I appreciate the kind words. I'm incredibly thankful to have been part of such an exceptional team over the last five years, a time in which Poshmark has executed a number of transformative steps in its growth strategy. The next stage of Poshmark's development is now solidly underway, and I have complete confidence that Poshmark has a strategy and team in place to capture the enormous opportunities ahead of it.

I'm excited to hand the baton to Kapil, who was my first hire and has been my partner for the last five years, helping us drive growth, reach profitability, and build the finance team. As Manish mentioned, our second quarter was another great quarter as we delivered strong GMV and revenue, building upon the continued demand trends we saw in the first quarter as consumers remain focused on buying apparel for different events in their lives, and we delivered our fifth consecutive quarter of operating profitability. During the second quarter 2021, our cohorts have remained resilient and helped us generate $450 million in GMV in the second quarter of 2021, which was 25% growth from $360 million in the second quarter of 2020 or 67% growth on a two-year stack basis, an acceleration from the two-year stack growth of 52% in the first quarter. Commensurately, net revenues were $82 million in the second quarter 2021, which was 22% growth from $67 million in the second quarter of 2020 or 63% growth on a two-year stack basis, an acceleration from the two-year stack growth of 50% in the first quarter.

This is driven by an increase in GMV in the second quarter of 2021 and strong growth in our community, including a 16% growth in the trailing 12-month active buyers to 7 million from 6 million in the second quarter of 2020 and a 15% increase in trailing 12-month GMV for trailing 12 months' active buyer. Our take rate was 18.2%, which is down slightly from last year's 18.6% due to a mix shift to more orders greater than $15. Orders that are less than $15 have a higher take rate due to the flat fee of $2.95. Cancellation rates peaked in April and improved and stabilized as the quarter progressed.

Cost of revenues was $13 million in the second quarter of 2021, an increase of 19% from the second quarter of 2020 but a decrease of 15.6% of revenues from 16% last year due to nonrecurring credit in transaction payment processing. Therefore, our adjusted gross margin, which is net revenue less cost of net revenue improved 0.4% to 84.4% of revenues in the current period as compared to second quarter of 2020. Marketing expense, excluding stock-based compensation, was $32 million in the second quarter of 2021, a 139% increase from $11 million in the second quarter of 2020, where we dramatically reduced marketing spend in response to the COVID crisis. Marketing was 38.7% of net revenue in the second quarter of 2021 and was slightly below our plan of low 40.

During the second quarter, similar to others who use digital marketing, we began to see the impact of IDFA, which effectively increased the cost of mobile advertising due to less efficacy when running targeted marketing programs. Since our marketing mix is highly diversified and adaptable, we adjusted by focusing on strong ROI user acquisition channels as well as investing in upper funnel strategies such as TV and influence of partnerships to counter the effect of IDFA. Moving to operating expenses. Operations and support, excluding stock-based compensation, was $12 million in the second quarter of 2021, an increase of 34% from the second quarter of 2020.

Ops and support improved to 14.8% of revenues from 15.7% in first quarter, but was up from 13.5% in the second quarter of 2021. The improvement was due to lower issued customer credit as USPS shipping congestion eased and we had a onetime reversal of credits. Research and development, excluding stock-based compensation, was $9 million in the second quarter, up 43% from second quarter of 2020. R&D increased 11.4% of revenues from 10.1% in first quarter of 2021 and from 9.8% in second quarter 2020.

This was due to the planned increase in the hiring we have previously discussed as we invest additional resources across a number of key initiatives, including product innovation, improved platform functionality and international expansion such our most recent India launch. G&A, excluding stock-based compensation, was $10 million in the second quarter, up 74% from the second quarter of 2020, increasing to 11.9% of revenues. This improved from 15.3% of revenues in the first quarter of 2021 due to lower non-personnel costs, but was higher than 8.4% last year due to additional ongoing cost of being a public company. Stock-based compensation was $8.1 million in the second quarter of 2021, an increase from $1.7 million last year, mainly due to performance-based vesting of outstanding RSUs upon completion of our IPO in January 2021.

We delivered adjusted EBITDA, which excludes stock-based compensation of $6.1 million with adjusted EBITDA margins of 7.4%, up from 5.2% in Q1, compared to $23.7 million and 35.4% margin in the second quarter of 2020. The decrease in profitability was primarily driven by an increase in marketing investment as compared to the prior year, where we lowered our marketing spend during the initial onset of COVID-19. As we've discussed before, for the remainder of 2021, we will prudently invest in marketing in the future as we did in the second quarter but with a continued focus on growth and margins. Operating income, excluding stock-based compensation, was $5 million in the second quarter 2021 with operating margin of 6.4% compared to $23 million with margins of 34.4% in the second quarter of 2020.

Second quarter 2021 net loss to common was $3 million, compared to $11 million in income last year. Cash, cash equivalents, and marketable securities were $579 million as of June 30, 2021. As we think about capital allocation, our No.1 priority is using our strong balance sheet to make strategic investments to drive long-term growth internationally. Moving to the cash flow statement for the six months ended June 30, 2021, free cash flow was $24 million, compared to $33 million for the first six months ended in 2020.

Our strong cash flow generation significantly strengthened our balance sheet and liquidity. We expect third quarter revenues of $81 million to $83 million, resulting in a growth rate of 18% to 21%, taking into consideration difficult comparisons against 38% year-over-year growth last year. Our revenue guidance reflects 56% to 59% growth on a two-year stack basis. We expect our third quarter take rate to be similar to last year due to an improvement in cancellation rates from the first half of the year.

We expect to remain profitable with third quarter EBITDA of $1 million to $2 million as we continue to focus on balancing growth and profitability while investing in marketing. Adjusted gross margin during the second quarter of 2021 was ahead of our initial expectations. And for the remainder of 2021, we expect adjusted gross margin to be similar to 2020 levels due to normalization of hosting expenses. We expect operations and support in the third quarter to be similar as a percentage of revenue to the first quarter.

R&D expenses in the third quarter are expected to increase as a percentage of revenues from the second quarter as we continue to increase our investment in international expansion and product innovation. For the remainder of the year, G&A expenses as a percentage of revenue should be similar to the first quarter. Due to the timing of different public company expenses, we continue to expect marketing as a percentage of revenues to be in the low 40 in the remainder of 2021 as we grow users, support geographic expansion, and launch new categories. We will continue to invest in a highly diversified mix of channels and expect the impact of IDFA to normalize throughout the year.

Our marketplace is adaptable, as evidenced by the resilience of our cohorts and our strong financial performance during COVID last year. Looking ahead, we think that consumers' inherent desire to socialize and resume normal activity, combined with the interest in resale, should drive demand for apparel going forward, which should benefit our marketplace. We remain very excited both about our opportunities in the U.S. as well as our global expansion into Canada, Australia, and India.

And finally, before we begin Q&A, I would like to thank Manish for trusting me five years ago and giving me the opportunity to build Poshmark into a dynamic social marketplace that empowers millions of our loyal Poshers. I've had the pleasure of working closely with some of the most talented individuals in my career. And to them, I would like to say thank you for your partnership, your [Inaudible] and your kindness. And I'm going to continue being Poshmark's biggest supporter and look forward to following Manish and the Poshmark team continue building a truly global marketplace that puts people at the heart of commerce.

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

Questions & Answers:


[Operator instructions] We have the first question come from the line of Lauren Schenk of Morgan Stanley. Your line is now open. You may ask your question.

Lauren Schenk -- Morgan Stanley -- Analyst

Great. Thanks. I wanted to dig into international a little bit, curious if there's anything you can share on how the Australia launch is going thus far? And then just on the India announcement sort of the marketing strategy around that, if there's any color on unit economics you can share there. I know it's still early.

And then lastly, I think the U.K. is sort of the other big market you had talked about entering this year, what sort of the expected time line of that launch as well? Thanks so much.

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

Lauren, thanks for the question. This is Manish. Number one, for Australia, we're seeing the metrics continue to be very healthy. The community is performing very well.

The monetization per buyer, etc., all of those metrics are trending in absolutely the right direction. It's only four or five months since the launch, so we expect the marketplace to continue to evolve in a positive direction. India, the plan is to take it live in this quarter. We just sort of announced the pre-launch phase of the product.

Our general economic strategy there is very congruent with our other markets, but we'll get more data as we get experience in that market over the next few quarters. And then broadly, what you've seen as this year has launched Australia, launched India and we'll continue to sort of march to the other countries starting -- continuing with sort of English language countries and then going beyond that. I can't comment on the specific plans, but broadly, that's sort of our strategy. And Canada also continues to move in a very healthy direction, broadly speaking.

Lauren Schenk -- Morgan Stanley -- Analyst

OK. Thanks so much.


Thank you. We have the next question comes from the line of Oliver Chen of Cowen. Your line is now open. You may ask your question.

Oliver Chen -- Cowen and Company -- Analyst

Hi. Thank you very much. Apparel and apparel performance, we were curious about apparel in relation to frequency of purchase and any observations you've had about the back-to-school season? Have you noticed changes in consumer behavior? My second question is in relation to new active buyers and your additions this quarter. What do you think is the right level for new buyer numbers that we should think about going forward? Thank you very much.

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

On the back-to-school side, it's a little too early to comment because we're just in that season right now. But broadly, we are seeing the health of the cohorts and sort of all of the cohorts shaping up very much in line with history and continue to scale up in terms of stacking up and the growth and the health of the cohorts. I'll let Anan comment a little bit on the active buyers.

Anan Kashyap -- Chief Financial Officer

Yes. So thank you for the question. No, we don't ultimately dive too much toward active buyers but what I would say is that we normally expect active volume growth to be relatively in line with the overall growth of the business. As we've mentioned earlier, similar to others who've faced some of the challenges in digital marketing, we saw the impact of IDFA at the end of the second quarter, which results in a little bit less efficacy when running kind of targeted marketing campaigns.

So we expect this to essentially continue in the third quarter. We have -- we do a very diversified and adaptable marketing mix and we adjusted as we went through the quarter, and we'll continue to do so. And we are currently investing a little bit more in some upper funnel strategies but we think all this should normalize by the time we get to the back half of the year, and especially into the fourth quarter. We think the impact of mobile is -- mobile advertising is real, but we will manage our ROI thresholds to balance out especially growth and profitability.

Oliver Chen -- Cowen and Company -- Analyst

OK. Thank you. And on the reopening as well as the volatility we're experiencing with Delta, what about the apparel category? And what have you been seeing with category trends that have been interesting to you? Anan, it's been great working with you as well.

Anan Kashyap -- Chief Financial Officer

Thank you.

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

Yes, thank you, Oliver. On the apparel trends, what we are seeing is really the adaptability of the marketplace toward the market demand. So a few things we saw in Q2 was the surge in sandals, mini-dresses, and blouses. Again, all congruent as people plan to start going out.

We also saw some of the vintage trends like Y2K and '90s come back in a strong wave across the platform. And as we go into fall, we expect, again, the market to respond, both in terms of going out, going to school, but also I think the Delta variant will continue to sort of put a twist on the fashion and fashion demand. But broadly, the apparel demand was extremely healthy, and we saw our category mix in line with our historical data.

Oliver Chen -- Cowen and Company -- Analyst

Thank you very much. Best regards.


[Operator instructions] Next question, we have a line of Ralph Schackart of William Blair. Your line is now open. You may ask your question.

Ralph Schackart -- William Blair & Company -- Analyst

Good afternoon. Thanks for taking the question. Two, if I could. First, just in the nonapparel categories, Pet and Home and Beauty and on the others, just curious if you're still continuing or if you're seeing impact both on GMV as well as helping to attract new buyers and new sellers to the platform, and then I have a follow-up.

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

Yes. These categories are extremely attractive and it being able to both monetize existing buyers and sellers could also attract new buyers and sellers. And certainly, Pets, which we launched in Q1 has been a good magnet to continue to grow those areas. Art & Design mode at the subcategory level and -- just recently launched but yes, the categories have been generally very positive and accretive to buyers and sellers overall.

Ralph Schackart -- William Blair & Company -- Analyst

Great. And just on India, in particular, just given the opportunity with the population there. Just, Manish, maybe if you could share some color? Just -- I know it's super early, but just any trends you're seeing there that gets you excited. And then assuming that trends remain positive there, how should we think about sort of the GMV per buyer there or AOB? And could there be some potential downward pressure on that metric if India scales? And I guess, the reverse will be true potential upside to buyers if it takes off?

Anan Kashyap -- Chief Financial Officer

Well, I don't really have any data to share yet because the product is not fully launched yet. We're in the prelaunch phase, so really hard to share. I think generally, I would expect the GMV per buyer will be slightly lower than the average, but the number of buyers will be more just given the population of the mix and sort of that's the way to think about it. If you think about our GMV, it's a multiplier of number of [Inaudible] GMV per buyer.

So that's sort of the way I think about it. But again, we'll have more to share in a couple of quarters once we get real data in the market. So far in Australia, Canada, and U.S.A. have been very, very similar in that characteristics.

Ralph Schackart -- William Blair & Company -- Analyst

Great. And, Anan, best of luck in the next role.

Anan Kashyap -- Chief Financial Officer

Thank you, Ralph. Appreciate it.


Thank you. Next question, we have the line from Aaron Kessler of Raymond James. Your line is now open. You may ask your question.

Aaron Kessler -- Raymond James -- Analyst

Hey, guys. Thanks. A couple of questions. Maybe first, just if you can comment a little bit on the video uptake there that you're seeing from buyers and sellers? And then second, with the bulk of listings, actions, any updates there thus far, maybe traction? And does that open up to any more retailers or brands as well to more effectively sell in the platform? Thank you.

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

Yes. So number one, the video continues to sort of see an uptick, and we continue to invest in embedding it in more and more places. You'll see it roll out more and more across the site as we gain confidence in its conversion ability as well as sort of just the engagement metrics that we are seeing come out of the video area. The bulk sharing tools have been extremely well received as sort of the bulk listing action tools for sharing, price tags, etc., and really open up our platform for a pretty large-scale resellers and certainly brands who want to participate in it as well.

So we continue to see that as a massive game-changer in our key enablement. And for the brands, we continue to partner and experiment with them. We don't have specific updates yet but as soon as we do, we'll definitely let you know, but we see that as an exciting opportunity. Certainly, bulk listing is a powerful enabler of that market.

Aaron Kessler -- Raymond James -- Analyst

Great. Thank you. And I'll echo our comments. Anan, great working with you.

Anan Kashyap -- Chief Financial Officer

Thank you, Aaron.


The next question comes from the line of Ross Sandler of Barclays. Your line is now open. You may ask your question.

Ross Sandler -- Barclays Investment Bank -- Analyst

Hey, guys. Just a question on the marketing efficiency comments. So it looks like you're guiding here, marketing is going to grow about 60% in the back half, and GMV or revs are growing closer to 20, buyers closer to high teens or so. So how much of that market investment is going to international versus sellers versus buyers? And if it's mostly international, is the EBITDA margin in the U.S.

like comparable to kind of where we were last year, a little bit lower? Any color on like where the margin pressure is coming from? And then similarly on retention, now you got these new categories, what does your retention look like now versus maybe pre-COVID and during the peak last year this time? Thank a lot.

Anan Kashyap -- Chief Financial Officer

Yes. Thanks a lot, Ross. Great question on marketing. So if you recall last year, I think we were still coming out of the whole -- coming out of the COVID crisis, and we spent only 17% of revenue on marketing in the second quarter, and we only increased it marginally in the third quarter.

And so that's the primary driver for what I would consider easier comp store from a marketing investment standpoint versus revenue growth overall. I think the structure of how we allocate spend between the countries is much more focused on ROI. So in the U.S., especially, which is a market that we've been in for almost eight to 10 years, we have a very -- essentially called payback policy. So we like that to be approximately two years.

We're going to stay very disciplined on it. It's actually in the second quarter when we saw some issues with IDFA. We essentially decided to reduce some of our investment in mobile advertising and shift it to other channels. I think the reality is that if you look at some of the newer markets, there is going to be a bit more investment ahead of revenue.

So India being the perfect example but even in Australia. It's still very early stages in its development. Canada, I would consider more middle stage. So we do have ROI targets and thresholds for Canada.

But in Australia and India, the investment is a little bit heftier. So as a percentage of revenue, if you're looking -- thinking about it from a leverage standpoint, the U.S. is going to be lower than that, call it, 40 -- low 40s target we gave as a totality but the rest -- the remainder of the investment is really going international. And then as far as retention is concerned, look, the older cohorts continue to be very, very stable and continue to see very solid growth.

I think the category expansion is definitely helping. Hard to say if that's the primary driver or really, it's the fact that we've got this great social ecosystem. And so we think of both being very sort of positive dynamics for us in the long term, and that's why we continue building products toward improving retention in the long term.


Thank you. We have the next question comes from the line of Ron Josey of JMP Securities. Your line is now open. You may ask your question.

Ron Josey -- JMP Securities -- Analyst

Great. Thanks for taking the question, Anan. We'll miss you going forward, as you know. So, Manish, I wanted to ask about Delta.

I think you said Poshmark is confident that it can manage any disruption. And so can you help us understand -- maybe unpack those comments, any insights on July, August GMV trends? Of course, it would be helpful and/or maybe how you're thinking about growth on a two-year stack? That would be super helpful to understand your comments on managing through Delta. And then I wanted to ask a little bit more about the Snap partnership. I think I -- I think you said it launched this a month or two ago.

Just talk about how this could play out. We're seeing a lot of adoption here for social commerce, and I think the Snap Mini is pretty fascinating. So any insights would be helpful. Thank you.

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

Sure. So on the Delta, when we sort of get into COVID-related changes that are happening, it's hard to predict exactly how the world is going to shape up as we saw last year. The thing we do know is that our marketplace is pretty adaptable. So if you think about the core tenets of a market, which is online.

It's online, social, it's secondhand. So a lot of the inventory is coming from people who have the inventory to sell. You can sell from home, you can shop from home, you can ship from home. So all of those things allow us to be fairly robust in case people have to stay back at home or mingle and sort of order back and forth as the world is.

And even the variances aross the country in terms of the attitudes, that will be there. So that's really the strength we see in the core marketplace that has allowed us to manage through all of the different changes over the last 18 months or so that we've seen with COVID and COVID-related attitude or changes. So that's the confidence underlying that comes in. I think when you look at a two-year stack basis we shared for Q1 and Q2, we're looking at 52% for Q1 GMV two-year stack and 67% for two-year stack on the GMV basis.

So we're seeing consistent growth across the cohorts and consistency there. And ultimately, it is that consistency and stacking of the cohorts, combined with the adaptive by the marketplace that gives us confidence going into Q3 and facing sort of the uncertainty that broadly Delta brings to the table.

Ron Josey -- JMP Securities -- Analyst

That's great. Thank you, Manish. Very helpful. Any thoughts on Snap?

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

Oh, yes. So Snapchat is very exciting. I think for us, we think of ourselves technically in a super innovative sort of space and continue to invest in innovation across the board. If you go back all the way to when we started the company, we were the first people to bet 100% on iPhone and mobile back in 2010, 2011 when everyone thought you needed a website.

So when you look at this new platform opening up with Snapchat and Posh winning on Snapchat, it's an exciting place. The way we've designed it is that you can shop natively in Snapchat on Poshmark. You can shop the closets, you can shop the inventory, but you can also shop the virtual Posh parties there and make the purchase directly there as well. So that's sort of how we see it.

And it's -- the idea is to open up Poshmark to audiences and then bring them back into Poshmark as a broader platform of engagement. And the early results show that a significant number of engagement -- amount of engagement we are seeing, over 77% of what they call active daily users or active daily players are Gen Z. And so that just continues to broaden the appeal of Poshmark to different audiences overall. And we certainly see this approach as something that other platforms might take, and we'll be there to partner with them as we expand our footprint.

Duration: 39 minutes

Call participants:

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

Anan Kashyap -- Chief Financial Officer

Lauren Schenk -- Morgan Stanley -- Analyst

Oliver Chen -- Cowen and Company -- Analyst

Ralph Schackart -- William Blair & Company -- Analyst

Aaron Kessler -- Raymond James -- Analyst

Ross Sandler -- Barclays Investment Bank -- Analyst

Ron Josey -- JMP Securities -- Analyst

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