Business Public Venture

Wish Files For IPO Citing Losses, Revenue Growth Due To COVID-19

Mobile e-commerce startup Wish filed to go public Friday, capping off a week that has seen some other big brands doing the same, including Roblox, Affirm and Airbnb.

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San Francisco-based Wish joins a list of nearly 650 e-commerce companies that have gone public since 1995, according to Crunchbase data. This list is by no means exhaustive, but reveals that 18 industry IPOs occurred so far in 2020, down from the 38 during all four quarters in 2019. Meanwhile, the largest concentration of IPOs has happened in the past 10 years.

Before Wish makes its public debut, let’s take a look at its funding history and valuation, and dive into its S-1 registration statement, filed under its corporate name, ContextLogic Inc.. The company intends to list its shares on the Nasdaq Global Select Market under the symbol WISH.

What is Wish?

Wish, founded in 2010, offers a mobile digital shopping mall. It’s known for its highly-visual and personalized browsing format. In fact, the company revealed in its S-1 that more than 70 percent of the sales on its platform came from personalized browsing.

The company said it has 100 million monthly active users in over 100 countries and works with more than 500,000 merchants offering about 150 million items. Approximately 1.8 million items are sold per day through the Wish app.

Wish said it was operating in a global mobile commerce market valued at $2.1 trillion in 2019, and that is expected to more than double to $4.5 trillion by 2024. Meanwhile, the global e-commerce market was valued at $3.4 trillion in 2019, and is expected to nearly double to $6.3 trillion by 2024, the company added.

While an e-commerce company might not want to help brick-and-mortar stores, Wish is different. By creating the Wish Local program in 2019 to help those merchants “increase their online reach and discovery, gain foot traffic and drive additional sales,” it now has more than 50,000 partners in 50 countries.

S-1 reveals rising revenue, net losses

Wish revealed in its IPO filing that it is quite cash wealthy, with about $1.1 billion in cash, cash equivalents and marketable securities.

Meanwhile, its revenue grew steadily between 2017 and 2019, going from $1.1 billion to $1.7 billion in 2018 and then $1.9 billion in 2019. That is an increase of 57 percent between 2017 and 2018, but a more modest growth of 10 percent between 2018 and 2019.

In the first nine months of 2019, Wish reported revenue of $1.3 billion, compared with the $1.7 billion reported for the same period in 2020, a 30 percent increase from the year-ago amount.

In addition to revenue gains, the company reported some losses, too. Although the company had managed to whittle its net losses down to $5 million during the first three quarters of 2019, that loss deepened to $176 million for the same period in 2020.

The COVID-19 pandemic increased the use of e-commerce channels as people stayed home and turned to buying online, and either picking up from the store or having items delivered, which seemed to have a positive impact on Wish.

“We benefited from greater mobile usage and less competition from physical retail as a result of shelter-in-place mandates,” Wish said, also noting the pandemic caused initial supply interruptions and delivery delays in places like China.

“… during the initial outbreak of COVID-19, our cross-border logistics function was severely impacted in terms of both disrupted processing capabilities and increased costs, which resulted in a decrease in sales due to higher logistics costs and higher refund rates due to poor performance,” the company said.

Funding history

Wish first raised money in March 2011, with $1.7 million in angel funding. It then went on to raise money nearly each year, with funding topping out between 2015 and 2017, when it brought in three $500 million rounds led individually by DST Global, Temasek and Everbright-IDG Industrial Fund. In total, the company raised $2.1 billion in venture-backed funding, according to Crunchbase data.

After 2017, the company didn’t raise funds until a $300 million Series H round in 2019, led by General Atlantic. That round brought Wish’s valuation to more than $11 billion.

Among Wish’s largest institutional shareholders are: DST Global, Formation8, Founders Fund, GGV Capital, and Republic Technologies, according to the S-1. Peter Szulczewski, Wish’s founder and CEO, will also be winning once shares begin trading. He controls 65 percent of the company’s Class B shares and approximately 58 percent of the total voting power before the IPO, the filing said.

IPO pipeline

Analysts and venture capitalists who spoke with Crunchbase News earlier this month said they expect to see a robust lineup of venture-backed companies going public in the final two months of 2020 and into early 2021. DoorDash last week filed to go public and, as mentioned above, Airbnb, Affirm and Roblox followed suit earlier this week. Poshmark is also expected to file soon.

Illustration: Dom Guzman

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