Poshmark, Inc. (POSH) Q1 2022 Earnings Call Transcript

Poshmark, Inc. (POSH)
Q1 2022 Earnings Call
May 12, 2022, 4:45 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Please stand by. Good afternoon. My name is Lisa and I will be your conference operator today. At this time, I would like to welcome everyone to the Poshmark first quarter 2022 Earnings Call [Operator instructions] I would now like to turn the conference over to Ms.

Christine Chen. Please go ahead.

Christine Chen -- Head of Investor Relations

Welcome to Poshmark's first quarter 2022 conference call. Joining me today are Manish Chandra, our founder, chairman and CEO; and Rodrigo Brumana, 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 and our filings with the SEC, including our most recent annual report on Form 10-K and subsequent filings. 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 this 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 the replay of this call.

And with that, I will 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 first quarter 2022 earnings call. We're pleased to report that we are off to a strong start in 2022.

Our focus on our four core strategies, category growth, product innovation, new seller tools and international growth remains the foundation for driving GMV, revenue and active buyer growth. Our strategies are working and continue to drive our business forward. We plan to discuss these strategies in further detail in a bit, however, let's first discuss our Q1 results. First quarter GMV grew 12% to $493.4 million and revenue grew 13% to $90.9 million, beating our expectation for the quarter, which is our most difficult comparison for the year and positioning as well for the year ahead.

On a two-year basis, GMV and revenues grew 60% and 59% respectively. Our growth is fueled by the consumer shift to online, social and sustainable shopping. Three trends that Poshmark continues to lead as demonstrated by 16% trailing 12 month active buy growth to a record $7.8 million in the first quarter. We continue to adjust our marketing spend to navigate a volatile macro environment and draw attention to Poshmark as a great place to save your wallet and save the planet, particularly among style and value conscious shoppers, who are feeling more constrained due to inflation.

In March, we kicked off our seasonal marketing campaign, focused on the annual ritual of spring cleaning, which drove increase in listings and engagement across all channels. First quarter sales reflected Poshmark as a fashion destination for moments that matter, as evidenced by the increase in sales of prom items up 75% year over year and listings for wedding items up 39% year over year. As people increasingly attended physical events, throwback vintage styles are becoming more popular, particularly among Gen Z consumers. Vintage listings were up 68% year over year in the first quarter.

Our social marketplace continues to define a new more human way to shop online by making the shopping and discovery experience more interactive and social. Social interactions grew 59% year over year during trailing 12 months Q1 '22 to a record $50.7 billion. This social engagement drives community connection and conversion. We find that more than 80% of all purchases are preceded by social interaction, such as like, comment or offer.

Poshmark's social experience is a key differentiator. And after two years of lockdowns and virtual events, we are overjoyed to announce the return of in person community events, which launched in Q1. In-person events are an important part of our growth activation engine. They introduce the Poshmark brand to new consumers, foster loyalty and connection at the micro community level and grow our highly engaged user base.

These events create one of a kind opportunity for our community to come together to socialize and share success stories and advise on how to build their businesses on Poshmark. We held 35 of these events in the first quarter, attracting community members across the US. Looking at the rest of the year. We're focused on executing our full long term growth strategies, category growth, product innovation, new seller tools and international growth.

These remain the foundation for how we will drive GMV, revenue and active buyer growth. Our first strategy is to grow our core fashion categories to increase share of wallet with consumers, grow our overall market share and drive GMV growth. Our marketplace is a leading fashion destination. And as a reminder, our core fashion categories, apparel, shoes, bags and accessories, represent over 90% of our GMV.

High contribution from premium price products continue to be one of the factors that drove year-over-year AOV growth during the first quarter of 2022. We remain committed to growing our market share in premium price products and look forward to expanding our authentication services by end of the year, as we integrate our Suede One acquisition. We continue to be excited by the opportunity for Brand Closets to contribute to the growth of our core fashion categories. Though still small Brand Closets GMV during the first quarter of 2022 grew 2.5x compared to the fourth quarter of 2021, and monthly GMV growth continues to accelerate.

We continue to see strong interest from large scale brands and retailers, and have to wait list for onboarding signed partners. These new partners value being able to directly connect with and sell to our community of more than 80 million registered users and they benefit from a real time insights, which enables them to effectively address consumer preferences and reach new millennial and Gen Z audiences. For our community Brand Closets enhance our marketplace as a go to fashion destination by increasing the product assortment available, attracting more buyers to our platform. Our second strategies to focus on product innovation to drive user engagement and buyer conversion, which is fundamental to the retention of our user cohorts and GMV growth.

As a style destination where shoppers come to discover, follow and shop, product innovation enables us to guide the treasure hunt for fashion. In January, we launched the redesign of our Feed and Shop tab, which modernized and refreshed the pages to make it easier to shop. This refresh has led to an increase in engagement and is directionally driving up buyers and orders, too. We completed our rollout of shop by trend, a new merchandising engine that complements our existing brand merchandising capabilities.

Trends is an editorial curated daily feed that brings the best of what's popular in Poshmark's main feed and strengthens searchability and engagement, contributing to the stickiness of our platform and user retention. This first version of Trends includes curated daily trends in the shop tab and a remarketing engine to surface the freshest listings from Trends consumers have engaged within the feed. It also includes new curated communications that are customized to each user. We are excited to see growth in daily page views, listing clicks, likes and conversion as a result of this new feature.

Throughout the first quarter, we also tested versions of our search algorithm to combine the power of sharing with machine learning. We're constantly optimizing our search algorithm to better match supply and demand. Early results of these tests show a positive impact on sales, buy growth, orders and listing views. However, we are empathetic to some of our sellers who are impacted by these changes and continue to work to make it better for everyone in our community.

Our third strategy is to deliver innovative easy to use and effective services to help sellers market, merchandise and sell their listings. In February, we began rolling out a new messaging tool that allows buyers and sellers to communicate directly with each other once an order has been booked. This feature, which was one of the topic was from our community, empowers buyers and sellers to resolve order related issues privately and directly. With this new messaging interface, once an order is booked, the buyer and seller can start a conversation right from the order details page.

About 56% of chat sessions are initiated by sellers and 44% by buyers. We expect this new feature to improve order completion rate, reduce incoming cases and improve the overall user experience. In February, we also launched Posh Ambassador II, a new tier in our Posh Ambassador program, which caters to our most active community members by highlighting them with a gold star badge in their profile, and offering them additional benefits such as exclusive forums with our leadership team, VIP events and other additional perks. Our ambassadors value this new tier and it should help PA II see more success as well as impact engagement, retention and other social commerce metrics.

Posh post, our simple and unique shipping system, allows for items to be shipped in any box with a printable label at an affordable flat rate with a quick trackable one to three day shipping. As shipping costs continue to rise, we have intentionally kept our shipping costs for the buyers competitively low, while providing a single label to ship anything up to five pounds. This stands at not only one of the most economical, but also the simplest solution for shipping, and one that can be used by millions of sellers across the country. Our fourth growth strategy is to expand our international footprint and we continue to invest ahead of revenue for the long-term.

As we look beyond the core, we see international expansion as a strategic long-term growth opportunity. We celebrated Australia's one year anniversary during the first quarter and continue to lay the foundation for building an active community and seller base, and we look forward to holding in person events in that country. As we approach the three year anniversary of Poshmark Canada this month, the majority of our international investment will be focused on driving growth through advertising, community development and shipping innovation. We have seen success in reactivation retention efforts for older cohorts in Canada due to remarketing and targeted promotions.

We're excited to begin holding in person events again across the country to strengthen community connections and accelerate growth in this market as well. In conclusion, our vision remains becoming the world's leading social marketplace and the number one destination for sellers around the world. Our marketplace powered by millions of highly engaged sellers is flexible, adaptable and ready to meet the ever changing needs of shoppers. We believe Poshmark is positioned to win due to its strong cohort retention, unmatched scale, price value appeal and asset light model.

We will continue to navigate near-term headwinds by staying focused on executing our long-term growth strategies and serving our community. Now, I'd like to turn it over to Rodrigo to dive deeper into the financials.

Rodrigo Brumana -- Chief Financial Officer

Thank you, Manish. As we mentioned on our last call, after a better than expect holiday season similar to order in e-commerce and retail, we saw softer trends in January as consumers were impacted by Omicron and events were once again canceled or postponed. Trends improved in February and further into March, resulting in a strong end to the first quarter with both revenues and EBITDA coming in ahead of our guidance. GMV grew 12% to $493.4 million, up from $441 million in the first quarter of 2021 or 60% growth on a two-year basis despite a tough comparison period as we lapsed tenuous.

Net revenues grew 13% to $90.9 million, up from $80.7 million in the first quarter of 2021 or 57% growth on a two-year basis. This result was ahead of our guidance of $86 million to $88 million due in part by a better than expected take rate and a 15.8% growth in trailing 12 month active buyers to a record $7.8 million, up from $6.7 million in the first quarter of 2021. On a two-year basis, trailing 12 month active buyers grew 36.4%, thanks to our continued marketing investments. Our take rate in the first quarter was 18.4%, up slightly from 18.3% from last year due to lower than expected first quarter cancellation rates from the holidays, which more than offset the pressure from continued mix shift to more orders greater than $15.

Mix shift continues to be a take rate headwind as orders less than $15 have a higher take rate due to the flat fee of $2.95. Cost of revenues of $15 million in the first quarter was 16.5% of revenues, an increase of 16% from the first quarter of 2021. Adjusted gross margin was 83.5% of revenues in the first quarter, slightly down from 83.9% from the first quarter of 2021 due to higher hosting costs. Marketing expenses, excluding stock based compensation or SBC, of $41.3 million in the first quarter was 45.6% of revenues, up from 39.6% in the first quarter of 2021.

That result is lower than our guidance of high 40s. Market increased 30% from $32 million in the first quarter of 2021 due to higher CPU, more in-person events and community building initiatives. Moving toward expenses, ops and support, excluding SBC, of $14.3 million in the first quarter was 15.7% of revenues, which is flat from the first quarter of 2021. R&D excluding SBC of $11.6 billion in the first quarter was 12.7% of revenues, up from 10.1% of revenues in the first quarter of 2021.

This was due to a planned increase in hiring we have previously discussed as we continue to invest additional resources across a number of strategic initiatives. G&A, excluding SBC, of $13.2 million in the first quarter was 14.5% of revenues, up from 12.6% in the first quarter of 2021, primarily due to the ongoing cost of being a public company. Stock based compensation was $8.7 million in the first quarter, down from $24.1 million in the first quarter of 2021 due to the absence of RSU vesting that we saw upon completion of our IPO in January 2021. Adjusted EBITDA, which excludes SBC, was negative $4.7 million, down from $4.8 million in the first quarter of 2021.

Adjusted EBITDA margins were negative 5.2% compared to the 6% margin in the first quarter of 2021. However, it's important to note that these numbers were ahead of our guidance of negative $7 million to $9 million due to lower marketing expenses and lower G&A expenses as we postponed some G&A investments that will hit in the second quarter and second half of 2022. Compared to last year, the decrease in profitability was primarily driven by investments in marketing, which successfully accelerated top-line growth. We will continue to focus on balancing marketing efficiency and investing to accelerate growth in 2022.

Operating loss excluding SBC was negative $5.7 million in the first quarter with operating margins of negative 6.3% that compares to $4 million with margins of 5% in the first quarter of 2021. Net loss to common shareholders was negative $14 million in the first quarter compared to a negative $74.1 million in the first quarter of 2021. Cash, cash equivalents were $596.6 million at the end of the first quarter or about $7.65 in cash per share. Moving to cash flow statement.

For the three months ended March 31, 2022, free cash flow was $13.9 million compared to $19.8 million for the three months ended March 31, 2021. We continued to generate cash despite making investments for the future growth. We remain confident that our asset light and high gross margin model positions us well to grow market share and will continue to optimize our investments in product innovation and marketing to drive GMV growth. We help our community save money during their treasure hunt for a wardrobe refresh as they attend more in-person events in travel, and we are also a destination where consumers can supplement their income by unlocking the value in their closets.

However, the current marketing environment and unpredictability of consumer spending behavior in the face of inflation leaves us to be cautious in our outlook for the second quarter. Now, on to guidance. Looking to the second quarter, we overcame tough comps in April. But in the latter half of the quarter, we often see seasonality impact both engagement and transactions as where they gets better and consumer shift their attention from cleaning out closets to travel for spring and summer break.

We also continue to navigate changes in the digital advertising landscape and expect IDFA to maintain pressure on our revenue growth rates in the second quarter as well into 2022. As such, we expect second quarter revenues of $86 million to $88 million resulting in a growth rate of 5% to 8% as we lap difficult comparisons of 22% growth and 72% growth on a two-year basis. On a two-year basis, growth is expected to be 29% to 32%. We expect our second quarter take rate to be flat versus last year.

We expect negative adjusted EBITDA of $9 million to $11 million in Q2 as we continue to invest in R&D to drive product innovation G&A to build the infrastructure necessary to evolve as a publicly traded company and marketing to grow our community of users. We expect adjusted gross margin to be down slightly from Q1 2022 due to higher hosting costs as we anniversary a non-recurring credit in transaction payment processing fees during the second quarter of 2021. Ops and support excluding SBC in the second quarter is expected to be 17% of revenues as we continue to invest in customer support and authentication services. R&D excluding SBC in the second quarter is expected to be 15% of revenues as we continue to increase our investment in product innovation to accelerate growth.

G&A excluding SBC in the second quarter is expected to be 16% of revenues due to the higher cost of being a public company as we build out finance, accounting and legal teams. We continue to expect marketing excluding SBC as a percent of revenues to be in the high 40s in the second quarter and throughout 2022 as we invest in other brands, diversify our marketing channels and address higher costs in digital advertising. We have proved that our platform is sticky and cohorts deliver net positive GMV dollar retention over time. With high gross margins and a strong balance sheet, we have the ability and conviction to continue to invest in marketing to accelerate GMV growth.

In the near-term, these investments will enable us to build our user base and grow active buyers, which will put us in a stronger position in the long-run. In closing, consistent to our messaging the last earning release, while we expect that macroeconomic factors could continue to impact consumer behavior in 2022, we are focused on execution with a strong focus on our core business. First, continuing to enhance our product experience. Second, continuing to build our brand with the global consumer.

And third, invest in marketing, talent and a robust operating mechanism to drive execution. We are confident that our business model is resilient for the current environment and well positioned to benefit from secular trends in resale, sustainable commerce and consumers looking for value in the unique looks. Our sticky platform and asset light model holds no inventory driving high gross margin. Our supply is highly responsive to buyers' changing demands and our product assortment is not impacted by supply chain disruptions, positioning us well to thrive in the shift in fashion environment where consumers maybe more valued and environment conscious.

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

Questions & Answers:

Operator

Thank you. [Operator instructions] And we'll go take our first question from Lauren Schenk, Morgan Stanley.

Nathan Feather -- Morgan Stanley -- Analyst

Hey. This is Nathan Feather on for Lauren. What kind of macro backdrop are you assuming in guidance and as we head into the second half? And then understanding a lot more kind of uncertain at the moment. But how do you think the business would fare in kind of a weaker macro environment? And then how are you thinking about the impact from the US seller income tax reporting change and did that have any impact in 1Q? Thank you.

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

Let me take the question related to the guidance and then we'll figure out the rest. I think you gave us a little bit of a long question, we may have to come back to you, but let's start with your first question here. We are not guiding the second half. So how do we think about it is we stick to how we guided Q2.

And the reason that we are not providing that visibility into the second half is things continue to be a little bit unprecedented in terms of volatility and the macroeconomic environment, it's just premature to give any guidance. We are more specific about Q2 we can provide some color, but we're not guiding the second half.

Rodrigo Brumana -- Chief Financial Officer

So in terms of just if you think about like what's happening in the market today, particularly in the consumer sentiment, there is two or three things driving us. One is inflation is at a level that I think most of us haven't seen in our lifetime. And then we sort of combine that with the pressures on the consumer wallet is very high. So when you think of a platform like Poshmark, we provide ourselves as a key partner to the consumer.

On the one side, we allow the consumer to save money by really shopping for extraordinary deals. Second thing is we allow them to earn money by really leveraging their closet. When you combine these two things, Poshmark can be a really great partner for the consumer in many different ways as this inflationary and recessionary environment comes together. As far as your question on the 1099 process that has come together, let me just sort of take a step back and talk about what's happening here.

As part of the American Rescue Plan Act that passed in March last year, the 1099-K reporting threshold was lowered from $20,000 and 200 transactions per year to $600 gross annual sales with no transaction limit. We began rolling out our 1099-K seller reporting requirements in January and it is now fully launched on our platform. So our results reflect the launch of that. So far we've seen minimal to no impact to our business and for our sellers, they seem to have embraced it.

Nathan Feather -- Morgan Stanley -- Analyst

Great. Thank you.

Operator

Next up is Ross Sandler, Barclays.

Ross Sandler -- Barclays Capital -- Analyst

Hey, guys. Maybe you could talk about what you're seeing quarter-to-date in 2Q, assuming the take rate remains kind of stable, which looked like it improved a little -- a bunch from the Holly cancellation thing in 4Q into 1Q. But assuming that stays about the same in 2Q, your guidance implies like a 3% quarter-on-quarter downtick in GMV. And I think you're normally kind of flat up in 2Q.

So is that just kind of the macro uncertainty? Could you talk a little bit about which categories are doing better or a little worse in the current environment? That'd be the first question. And then second question is just marketing intensity picked up a little bit. You mentioned Rodrigo high 40s for this year. Sounds like the offline marketing, in person events is a factor.

But how are you thinking about digital marketing efficiency, I guess, both in the first quarter and then throughout the year as we model out that high 40s? That's it.

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

Let take most of your questions here. So first, how do we think about Q2 into Q1 from a top-line standpoint? Well, we still in May, so we're not going to talk about specifically in May. But let me tell you how we think about the quarter and our guidance. As mentioned in the call, we are pleased that we overcame our toughest comps in April, but the latter half of the quarter, that's where we kind of see the normal seasonality impact on some of the engagements and some of the transactions there.

So while we do think that as folks go out more and they need a wardrobe of fresh, just the macro challenges we're just being cautious about the outlook for the rest of the quarter. So that's one. And also we continue to navigate some of the changes in the digital advertising landscape. So we expect IDFA to maintain some pressure on our revenue growth, not only in the second quarter but also 2022.

That's why we are still shooting for the high 40s on marketing. And also you want to kind of remind, I'll talk about take rates in a bit, but since we mentioned about marketing. We continue to have buy conviction to invest in marketing. And the proof for that is we continue to see a sticky behavior on our cohorts, both in the buyer and the seller side.

And by the way, even through Q1, we started to see some progress on CPU, slightly down from how we begun the quarter Q1. So that gives us confidence that our marketing teams are doing an amazing job in navigating that. So with that high gross margins the majority of our expand being variable, which means things that we can control and we prove that we could be profitable, we continue to invest in marketing. Now take your Q1 take rate question.

So -- and how that translates to Q2. Here's kind of how to think about it. So first the Q1, we came in slightly better than expected, because the cancellation rates from the holidays were better than expected. If you remember last year, we had the USPS disruption and then this year we didn't see as much cancellation from the holidays.

That's kind of Q1 the explanation. When you look at Q2, that's kind of disruption that picked in April last year it's kind of going to go away. And the phenomenal of the mix shift from orders below $15 to orders higher than $15 continue to be a secular headwind to our take rate. So we've taken that in consideration in the take rate of Q2.

So see that deceleration first on GMV, I can't recall your calculation, but it's kind of -- you know it makes sense to see the Q2 GMV below than Q1.

Rodrigo Brumana -- Chief Financial Officer

In terms of, you know, Ross, your question around categories. I think, we generally don't share within a quarter category trends, but there's a couple of things I wanted to highlight. One is we saw an acceleration of apparel, and that's something that's really powerful because it tells us that people are actually going out and engaging in the world of fashion. We saw prom items up 75% year over year, wedding items up 39% year over year.

So real meaningful growth in event oriented shopping. The second thing is again another dimension is that the premium price items, $200 plus items, continue to out base overall growth in 1Q. So that gives you a little bit of flavor of how categories scaled up in Q1.

Operator

[Operator instructions] Next is Alexandra Steiger, Goldman Sachs.

Alexandra Steiger -- Goldman Sachs -- Analyst

Thank you for taking my questions. I wanted to focus on the Brand Closets program. Could you maybe share some milestones here now that we're a few months in and if it helps you to acquire a new court of customers and then could you also talk about the type of brands you're targeting to join the program? And then secondly, can you just give us an update on how international, especially India is performing?

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

So when we think about Brand Closets, we think of them as something that really adds to the overall ecosystem of the Poshmark platform. Very symbiotic with our core sellers, they bring complementary inventory, attracts new buyers and really create a bigger marketplace. Our focus on Brand Closets has been to really integrate it with a series of brands that complement our ecosystem and also benefit our popular on the platform. We've had multi-brand retailers, larger brands, as well as many community brands who've partnered with us on the platform.

And in fact, right now just from an implementation perspective, there's a waiting queue to kind of implement these brands on the platform. A lot of it was contingent on some of the back end integration work that we were rolling out, and that's -- sort of has been rolled out and that's accelerating the growth of these brand closets on the platform. When we think about the kind of sort of people that are on the platform, they include everything from luxury, to beauty, to everyday brands. And the goal is to really compliment the availability of inventory and selection on Poshmark with these brand closets.

Your second question was centered around India. What we've seen in sort of the first few months of India is that the core engagement metrics and the scaling is happening as we would expect in the early days. It's still super early and it's going to take some time to develop that market. But the kind of Posh Ambassador growth kind of early community growth is very much in line.

And in fact in line with what we shared about our in person events, India is starting to see a lot of these in person events happening for both closet activation but also community engagement. And we're just super excited about the market, because it's a very large market. It's a market that's growing very fast in a broader sense of e-commerce adoption. And certainly the focus on resale has been there for the beginning.

So it just continues to be an exciting but early stage market for us.

Operator

Oliver Chen with Cowen and Company has the next question.

Oliver Chen -- Cowen and Company -- Analyst

Hi. Thank you very much. Digital advertising, you called out higher cost a few times and also in light of the privacy changes. What's happening in terms of how you're approaching return on ad spend? And do you expect privacy to continue to drive some risk factors around thinking about the right ROAs as well as customer acquisition costs? And a follow-up, you've had attractive user growth and there's low unemployment, and you offer strong consumer value.

So which parts of the nature of the consumer are you more concerned about as it impacts your business? Thank you.

Rodrigo Brumana -- Chief Financial Officer

Yeah. Let me take the first one and then I think the other parts, Manish, you can take. Here's kind of how we think about the IDFA changes. First, to clarify, it will take until at least for a company in Q4 this year to fully lap IDFA impact, because that is when we begun invest more in marketing last year.

So having said that, we have made progress on lowering marketing costs by looking for other channels, which I'll talk in a minute that diversified encounter some of the IDFA headwind. And in fact, we have begun seeing some signs of CPU improvements during the first quarter and into April. So that's a good sign, that's a good progress there. And since our marketing mix is highly adaptable, what we have done we adjusted by focusing on strong ROI user acquisition channels, outside that, investing upper funnel strategies, such as TV and creator partnerships.

We also see a strong traction on the organic creator in our community kind of being reignited with some of the in person events, and that continue to adjust our marketing strategies toward that type of channel. And then I think this is kind of the social experience as being a key differentiator of Poshmark, especially when you think about 2022. So again, reigniting the in person events, we think that that is a key part of our growth in the activation engine. And what it does as well, it introduces Poshmark brand to new consumers, folks that are new to the platform.

And that continues to fulfill or foster our flywheel, which drives their loyalty and the stickness or cohort...

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

In terms of what are the dimensions of what could sort of concern the consumer? I think, consumer is impacted by a lot of different things. Many of them could be unsettling for us in the short term, but a lot of them can be very positive for Poshmark. So if you think about their concern for the wallet they could dampen in their spending, but they could look to Poshmark for finding bargains. Number two is they could be concerned about how much money they're making.

Again, they can look to Poshmark to sell their closet. So when we think of these two disruptions, they can be in some ways positive for Poshmark. The third thing is supply chain disruptions that are happening. And again, Poshmark can complement that supply chain.

So if you look at the beginning of the pandemic, at that point ,we didn't know when the pandemic was starting, how the consumer is going to react to a secondhand used clothing marketplace. It ended up being a source of income and a source of sort of shopping for many consumers. So I think it's more the uncertainty that we are managing through having gone through two years of a pandemic, inflation, supply chain disruption. It's like every time you think that the world is going to become stable, there's something little bit more happening.

So we continue to navigate through it and adapt to it. But if you look at the heart of what Poshmark has, we have an inventory less marketplace, super adaptable, inventory quickly response, as we've seen in terms of shifting our supply and demand, a very vast assortment, dynamic pricing and 7.8 million active buyers. But you combine all of that I think it gives us a lot of confidence that we'll be able to navigate through the challenges that come in the next few months.

Operator

And next up is Tom Nikic, Wedbush Securities.

Tom Nikic -- Wedbush Securities -- Analyst

Hey. Good afternoon. Thanks for taking my question. So when we think about Poshmark in, I mean, I guess post IDFA world or after you kind of readjust the marketing and stuff like that.

Like how do we think about the top-line growth potential of the company? I mean you grew low double digits in Q1, you're kind of guiding us to mid to high single digits for Q2. I would imagine that that's not where you envision kind of the sort of multi-year growth trajectory of the business. So once the marketing is kind of realigned and some of those headwinds go away, like how do we think about GMV and top-line growth here?

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

Well, let me start by -- that type of predictability or guidance, we're not kind of going there and give you guys like a number. But the way that we think about is we come back to the notion of the stickiness of our cohort. And as long as -- and in the early question, as long as we can continue to lower the CAC, which saw an increase due to the IDFA, and having conviction the LTV and getting that equation to remain positive or remain attractive to us, we continue to make that investment in marketing. On the top of that, one of the things that we are also doing is improving retention, which we have a set of 80 million users that we can drop on, and that can be another area of us just not to focus only on the top of the funnel or the new user acquisition, but also turn on some of our engines related to the retention.

There are a lot of opportunities there and the marketing team is actually working on it. But when you kind of step back and think about like the long term goals that I think we said on the roadshow, especially toward the profitability of the business, we have shown that we can be profitable, it'd be highly profitable. And what drives that is, first, again, most of our spend is variable and is still with our control. We have conviction today that continue to invest in marketing is the right thing to do.

If we needed to, we can kind of come back and slow down the growth in marketing spend. We just don't think this is the time to do so. And again, we are kind of sticking to the plan. We are making these a long term play in our LTV2 capture, they continue to be a positive equation and we continue to have that high conviction to continue to invest in marketing.

Operator

[Operator instructions] Next is Anna Andreeva, Needham.

Anna Andreeva -- Needham and Company -- Analyst

Great. Thank you so much. Good afternoon, guys. Two questions.

I think you said you saw sales acceleration in March. But just curious what drove that a little counterintuitive, I think March was tougher for the industry mostly. So was that better traffic or any specific categories that performed well? And then secondly, you had mentioned adding new leadership for Posh core business to accelerate growth and execute better. Can you provide some color on what they're focused on specifically and maybe some of the early innings -- early learnings from that? Thank you so much.

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

Sure. Thank you, Anna. The first thing is, I think, it was a roll out of some of the core product innovation work we did, roll out of our new search, roll out of shop by trends. So it was the investment in our core product that was part of the acceleration.

And the second thing was some of the optimization we did on marketing in terms of our costs. So those were the things that help us counteract some of the macro challenges that were there in the second half of the quarter. In terms of the core leadership, we've added several executives actually just in the last few months. And a couple of things that we are really partnering with them is some of the core product innovation, adding some key aspects to the product and platform that we are growing, as well as adding to the overall financial and process management within the business.

So it's all about taking us to that next scale of leadership team to help us scale the business to the next level.

Operator

Our next question will come from Ashley Helgans, Jefferies.

Ashley Helgans -- Jefferies -- Analyst

Hey. Thanks for taking our questions. You had active buyer growth in the quarter. We're just curious what you're seeing from the seller side.

And then also on the last earnings call, I believe you mentioned that you were exploring or potentially exploring some other countries in 2022. Any update you could provide us that would be great. Thanks.

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

Sure. I mean -- I think our seller ecosystem is, continues to be very healthy, we don't provide the actual numbers intra quarter. And what we did provide in Q1 for was 2021 stack cohort retention metrics for our sellers and those were very healthy. Coming back to -- can you repeat the question?

Ashley Helgans -- Jefferies -- Analyst

The second question was on the last earnings call. I believe you talked about maybe exploring some additional countries for international expansion in 2022. Just curious if there was an update there.

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

Yes. No updates to share right now. We certainly continue to explore and make sure that our international plan continues to be healthy and growing and scaling, but nothing new to report yet.

Operator

Next up, we'll take a question from Seth Sigman, Guggenheim.

Seth Sigman -- Guggenheim Partners -- Analyst

Hey, everybody. I wanted to follow-up on the margins and the cost question earlier. So seemed like most cost buckets actually came in better for the quarter, even excluding the sales upside. Now, I think you mentioned some timing.

Can you just elaborate on that timing? How much of that hit this quarter, when does that actually come back? And then based on the guidance, should we be thinking about Q2 as the low point for EBITDA for the year?

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

Well, let me take, and there is some background noise maybe from the operator. Your first question related to some of the goodness that we saw, again, based on two things. First was the marketing spend and the marketing spend came in a little bit lower than expected because of some of the phenomenal that we discussed about seeing the CPUs getting slightly better than our expectation as we guided the high 40s, so that's contributed. We are still shooting for the high 40s in Q2 and that's kind of how we started.

Even though we comped April, like I said, we remain cautious for May and June, just because of that's when the seasonality started kind of lowering a little bit in our total GMV, as folks go to summer break and take a trip, etc. For EBITDA, we are not guiding the second half. But how to think about it is we -- some of that spend in Q1 is happening Q2, mostly on the G&A, there were some shifts there and some of that sprinkled through to the second half as well. We are not guiding the second half but we are also not expecting to make drastic changes to the course of our other no marketing lines.

And then we kind of gave you guys an idea for Q2 as a percentage of revenue, that's not a bad place to start as you update your models.

Operator

Up next, we'll take a question from Brian McNamara, Berenberg Capital Markets.

Brian McNamara -- Berenberg Capital Markets -- Analyst

Hey. Thanks for taking the question. So one of your peers had some pretty downbeat comments earlier in the week. I'm curious how fast do you guys think the digital resale market is growing, and are you taking share in your view? And with close to 80% of your market cap and cash, what does the market not appreciate about your stock here? Thanks.

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

We believe, I think, the resale market is pretty healthy. We're going through sort of a lot of the adjustments that you see in the broader e-commerce markets in terms of the growth, we all saw in the pandemic timeframe and just sort of a little bit of readjustment. We do believe our market share has grown a little bit, again, many of the resale players are still private. So we have to use second order data to take a look at that.

I think there's two things that are hard for the market to appreciate. One is the stage of development we are in and the investment required to develop this market. And I remember 10 years back when I started the company, nobody even believed that anybody would buy secondhand and today you can find a secondhand section at almost every major brand and every major retailer. So that's sort of the growth that has happened in a decade.

So if you look out another decade, it's going to be pretty phenomenal in terms of what happens here, especially as we look to the future on both the convenience aspect of secondhand, the variety, but also the impact to the planet. So that's one aspect of it. I think the second thing is just the growth that's happening in terms of the younger demographic, millennials and Gen Z and their adoption is a seismic shift. I remember I was talking to a group of shoppers and sellers in our company who are younger.

They're all in their early 20s and late 20s. And we were just talking about different ways of shopping. And I said, you guys talk about planet health, etc. And then you go in and talk shop some of the cheapest fashion clothing.

And their answer was secondhand is a little expensive. That is completely a 10 year opposite if I talk 10 years back. So I think part of the whole thing is as people are getting introduced to secondhand and understanding what's happening here, there's a generational shift that's happening and that's going to take time for people to fully understand. What we've done is preserved a very consistent partnership with both our sellers and shoppers through the 10 years.

If you go back 10 years and take a look at when we started, we had a 20/80 partnership with our sellers. 10 years later, we have a great 20/80 partnership sellers, we have a minimum fee. What is interesting is 10 years back, we had -- we offered our shipping at $7, today our shipping is $7.67. So that consistency ultimately allows for that stickiness of cohort combined with our social model and all of that, ultimately, I think will lead to the meaningful profitable growth that will manifest in the future.

So excited about the future. We are at a point in time in the history and sort of where we are.

Rodrigo Brumana -- Chief Financial Officer

And I'll add a few things to Manish's comments here, which I point this strength of our financial architecture. Manish talks about the sticky cohorts. And when you go down to the P&L, you see high gross margins and you see the majority of our spend is variable within our control. We hold no inventory.

We are asset light. We proved that we could be profitable. We can be at any point we want, and we have a strong balance sheet. And I call your attention to $7.65 off cash per share.

So I think there are a few things here that the market may not be appreciating, and that's what I would add to Manish's comment there.

Operator

And everyone at this time, there are no further questions. I'll hand the call back to management for any additional or closing remarks.

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

Thank you, everyone for joining. And I know that week has been kind of interesting for everyone, so good luck with all your sort of things, and we hope to see you next quarter. Thanks everyone.

Operator

[Operator signoff]

Duration: 52 minutes

Call participants:

Christine Chen -- Head of Investor Relations

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

Rodrigo Brumana -- Chief Financial Officer

Nathan Feather -- Morgan Stanley -- Analyst

Ross Sandler -- Barclays Capital -- Analyst

Alexandra Steiger -- Goldman Sachs -- Analyst

Oliver Chen -- Cowen and Company -- Analyst

Tom Nikic -- Wedbush Securities -- Analyst

Anna Andreeva -- Needham and Company -- Analyst

Ashley Helgans -- Jefferies -- Analyst

Seth Sigman -- Guggenheim Partners -- Analyst

Brian McNamara -- Berenberg Capital Markets -- Analyst

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