Social media-focused clothing reseller Poshmark became the latest platform company to file for an initial public offering (IPO) this week, hoping to catch an IPO wave that saw big first-day pops recently for Airbnb and DoorDash.
Poshmark is a popular site for consumers to sell secondhand clothes, relying on a heavy social media aspect in which buyers and sellers interact and share “likes” about items instead of just conducting commerce.
“We are a social marketplace that combines the human connection of a physical shopping experience with the scale, reach, ease and selection benefits of eCommerce,” the company wrote in its S-1 filing. “In doing so, we bring the power of community to buying and selling online. We created Poshmark in 2011 to make buying and selling simple, social and fun. Pairing technology with the inherent human desire to socialize, our marketplace creates passion and personal connections among users.”
Here are five key takeaways from the S-1:
1. Poshmark Is Turning a Profit
Unlike some platform companies that have filed to go public, Poshmark is actually profitable.
The company turned its first profit in the quarter that ended June 30. After losing $14.5 million in 2018 and $48.7 million in 2019, Poshmark made $21.1 million in the June 30 quarter and $10.7 million in the Sept. 30 quarter.
That stands in stark contrast to Wish parent ContextLogic, which went public earlier this week despite still losing money. Experts think that’s one reason ContextLogic stock fell 16.4 percent on its first trading day instead of soaring the way Airbnb and DoorDash recently did.
2. Revenues Are Growing
Poshmark reported $192.8 million in revenues for 2020’s first nine months. That’s up 28 percent from the same 2019 period.
The company saw even better sales growth in its Sept. 30 quarter, with revenues rising 37.7 percent year over year to $68.8 million from $50 million in the same 2019 period.
However, that might not be good enough to impress IPO investors. For instance, ContextLogic saw its revenues gain 31.8 percent in 2020’s first nine months, which didn’t sway the market once the stock started trading. That’s not surprising, as Target reported a 155 percent jump in third-quarter digital sales, while Walmart’s online sales grew 79 percent during the same period.
3. Gross Merchandise Volume Is Rising
After losing ground during the COVID-19 outbreak’s early days, Poshmark’s gross merchandise volume – a key measure of total items sold online – has come roaring back.
The company said its monthly GMV fell 13 percent year over year in March, when the pandemic first spanned the globe. As a result, GMV only rose 9 percent year on year for the March 31 quarter as whole.
But things turned around later in the pandemic as shoppers moved online. Poshmark said its GMV rebounded 42 percent year over year to $360 million in the June 30 quarter, followed by 39 percent growth to $375 million in the period ending Sept. 30.
4. Consumer Engagement Is Rising
Poshmark’s active users have risen 46 percent in roughly two years, growing from 21.7 million in 2018 to 31.7 million as of this Sept. 30.
The company added that its active users spent an average of 27 minutes a day on the site in 2019, “browsing, shopping, buying, selling and connecting with each other via 20.5 billion social interactions.”
Poshmark also said it had 6.2 million active buyers and 4.5 million active sellers as of Sept. 30.
5. Poshmark Has a Desirable, Young Demographic
The company disclosed that 80 percent of its active users as of Dec. 31 were millennials or Gen Zers, which is a very desirable demographic for an online platform.
“Our users live in big cities and small towns and engage with each other across geographies to discover, list, buy and sell items across all price points,” Poshmark wrote in its filing. “Active buyers placed 6.3 orders on average on our platform in 2019.”