Earnings call: LightInTheBox reports Q2 2024 results amid challenges

In the second quarter of 2024, LightInTheBox Holding Co., Ltd. (NYSE: LITB) faced intensified competition and increased traffic acquisition costs, which impacted its top-line revenue. Despite these challenges, the company’s strategic focus on profitability, product quality, and localized operations yielded a net income of $0.6 million. This marks a turnaround from the net loss reported in the same period of the previous year and the first quarter of this year. The earnings call highlighted the company’s commitment to operational efficiency, profitability enhancement, and product and service upgrades to drive long-term value for stakeholders.

Key Takeaways

• LightInTheBox reported a net income of $0.6 million in Q2 2024, compared to a net loss in the same quarter last year.
• Total revenues decreased by 64% year-over-year to $69 million due to intense global e-commerce competition.
• Gross margin improved to 62.4%, up from 57.5% the previous year, driven by product upgrades and supply chain advantages.
• Operating expenses decreased by 62% year-over-year to $43 million.
• The company remains focused on operational efficiency and profitability enhancement.

Company Outlook

• LightInTheBox aims to sustain momentum through strategic adjustments prioritizing profitability.
• The company plans to continue elevating product quality and refining its differential strategy.
• LightInTheBox is focused on strengthening localized operations to target customers effectively and build brand loyalty.

Bearish Highlights

• Total revenues saw a significant decline due to the highly competitive nature of the global e-commerce market.

Bullish Highlights

• Despite a decrease in revenues, gross profit margins improved due to successful product upgrades.
• The company achieved a positive net income, indicating effective cost management and strategic adjustments.

Misses

• The company experienced a sharp 64% decline in total revenues compared to the same quarter of the previous year.

Q&A highlights

• There were no questions during the Q&A session of the earnings call.

LightInTheBox’s second quarter of 2024 results demonstrated resilience in a tough market environment. With a strategic shift towards profitability and operational efficiency, the company managed to report a net income despite a significant drop in revenues. The improved gross margin reflects the company’s ability to adapt through product enhancements and supply chain benefits. As LightInTheBox continues to refine its approach to product offerings and customer service, it aims to further distinguish itself in the competitive e-commerce space and deliver sustainable value to its stakeholders.

InvestingPro Insights

LightInTheBox Holding Co., Ltd. (NYSE: LITB) has navigated through a challenging second quarter of 2024, managing to turn a profit despite a sharp decline in revenue. To provide additional context to the company’s recent performance and stock behavior, InvestingPro has highlighted several key metrics and tips that investors may find valuable.

InvestingPro Data shows that LightInTheBox holds a market capitalization of $64.1 million. The company’s price-to-earnings (P/E) ratio stands at -6.46 when adjusted for the last twelve months as of Q1 2024, suggesting that the market has concerns about its profitability. Additionally, the company’s revenue for the last twelve months as of Q1 2024 was reported at $552.82 million, with a revenue growth of -0.85%, indicating a slight decline from the previous period.

InvestingPro Tips reveal that LightInTheBox is trading at a low revenue valuation multiple, which could be of interest to investors looking for potentially undervalued stocks. However, the company is also quickly burning through cash, which is a critical factor for investors to consider. For those interested in the company’s financial health, it’s notable that LightInTheBox holds more cash than debt on its balance sheet, which could provide some financial flexibility in its operations.

In the current market, with LightInTheBox facing intense competition and evolving consumer demands, these InvestingPro Tips and real-time metrics offer a deeper look into the company’s financial standing and market sentiment. Investors seeking a comprehensive analysis of LightInTheBox can access additional insights, as there are 14 more InvestingPro Tips available at: https://www.investing.com/pro/LITB. These tips can provide further guidance on the company’s stock performance and future outlook, helping investors make more informed decisions.

Full transcript – Lghtntbx Hld Adr (LITB) Q2 2024:

Operator: Hello, ladies and gentlemen. Thank you for standing by for LightInTheBox’s Second Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. Today’s conference call is being recorded. I will now turn the call over to your host, Ms. Jenny Cai. Please go ahead, Jenny.

Jenny Cai: Thank you, operator. Hello everyone, and welcome to LightInTheBox’s second quarter 2024 earnings conference call. The company’s earnings results were released via Newswire services earlier today and are available on the company’s IR website at ir.lightinthebox.com. On the call from LightInTheBox today are Mr. Jian He, Chairman and CEO; Ms. Yuanjun Ye, Chief Financial Officer; and Ms. Wenyu Liu, Chief Growth Officer. Mr. He will provide an overview of the company’s strategies and recent developments; followed by Ms. Ye who will go over its financial results. Following our prepared remarks, we’ll open the call to questions. Before we proceed, please note that today’s discussion may contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from the company’s current expectations. To understand the factors that could cause results to materially differ from those in forward-looking statements, please refer to the company’s Form 20-F filed with the Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please also note that LightInTheBox’s earnings press release and this conference call includes discussions of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. Please refer to the company’s earnings press release, which contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures. Now I’d like to turn the call over to LightInTheBox’s Chairman and CEO, Mr. He. Please go ahead.

Jian He: Good morning and good evening, everyone. Thank you for joining our second quarter 2024 earnings conference call today. The second quarter of 2024 was a challenging month. It intensified competition and high traffic acquisition costs in the global e-commerce market, continuing to weigh on our top line. However, the strategic adjustments we made to prioritize profitability in the first quarter proved effective, resulting in a net income of $0.6 million for the second quarter of 2024, compared to flat net loss from the same period of last year and the first quarter of this year. We are pleased to see our determination, discipline and a strong discretion paying off in our bottom line performance and we remain agile and in the evolving competitive environment to sustain this momentum and drive high quality development. Meanwhile, we continue to proactively elevate our product quality and refine our differential strategy. Our strategic focus remained on strengthening our localized operation in key markets to precisely identify our target customers, better define our competitive advantages and explore potential [indiscernible] as we strict to strengthen our grand values and cultivate a loyal customer space. We are making progress with certain product lines and we are acting on further development in due course. We are encouraged by the results of our profitability and product optimization initiatives thus far and we intend to double down on these core strategies in light of the [indiscernible] global market. Operational efficiency and profitability enhancement will remain our top priorities in the near-to-midterm. At the same time, we will expand our efforts to upgrade our products, services and customer experience, as well as our localized operations to differentiate ourselves and build a brand like [indiscernible] and loyalty. As always, we are committed to driving high quality development and delivering sustainable long-term value to all stakeholders. With that, I will now hand over the call over to Yuanjun to go through our financial results.

Yuanjun Ye: Thank you, Mr. He. Good morning and good evening everyone. Before we start a detailed discussion of our financials, please note that unless otherwise stated, all the financials we present today are in U.S. dollar terms. Now, let me share our financial performance for the quarter. In the second quarter, our total revenues decreased by 64% year-over-year to $69 million, primarily due to the intense competition in the global e-commerce industry. Our gross profit in the second quarter of 2024 was $43 million, compared with $110 million in the same quarter of last year in line with the decrease in sales. However, our gross margin improved to 62.4% this quarter from 57.5% in the same period last year, mainly driven by our well received product upgrades and supply chain advantages. Our total operating expenses decreased by 62% year-over-year to $43 million from $112 million in the same period of last year. The decrease was mainly attributable to the decrease in revenue, while also benefiting from our efforts to enhance overall operational efficiency. Specifically, fulfillment expenses decreased by 49% year-over-year to $5 million. Selling and marketing expenses decreased by 66% year-over-year to $32 million. G&A expenses decreased by 22% year-over-year to $6 million as part of G&A expenses. R&D expenses in the second quarter of 2024 were $4 million, compared with $5 million in the same quarter of last year. We maintain our investment in R&DA at a relatively high level as we view R&D and AI is essential for advancing product differentiation and operational efficiencies. Moving to our bottom line we turned profitable in the second quarter. We recorded net income of $0.6 million compared with a loss of $1.5 million in the same quarter of last year. Our adjusted EBITDA was an income of $1.2 million compared with a loss of $0.7 million in the second quarter of 2023. Profitability was mainly attributable to the gross margin improvement, which in turn was driven by our product upgrades and dedicated cost management efforts. Looking ahead, we will continue to execute our enhanced profitability strategy while also further refining our products and customer services. This concludes our prepared remarks. We’ll be happy to take some questions now. Operator, please continue.

Operator: Thank you. [Operator Instructions] As there are no questions now, I’d like to turn the call back over to the company for closing remarks.

Jenny Cai: Thank you once again for joining us today. If you have further questions, please feel free to contact LightInTheBox’s Investor Relations through the contact information provided on our website or Piacente Financial Communications. Have a great day. Thank you.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

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