LightInTheBox Holding Co., Ltd. (NYSE:LITB) Q2 2022 Earnings Conference Call September 6, 2022 8:00 AM ET
Company Participants
Rene Vanguestaine – Investor Relations
Jian He – Chief Executive Officer
Yuan Jun Ye – Chief Financial Officer
Wenyu Liu – Chief Growth Officer
Operator
Good day, everyone and welcome to the Second Quarter 2022 Earnings Conference Call for LightInTheBox Holding Co., Ltd. Today’s conference is being recorded. At this time, I would like to turn the call over to Mr. Rene Vanguestaine for opening remarks and introductions. Please go ahead.
Rene Vanguestaine
Thank you, Andrea. Hello, everyone and welcome to LightInTheBox second quarter 2022 earnings conference call. The company’s earnings results were released earlier today and are available on the company’s IR website as well as through PR Newswire.
On the call from LightInTheBox are Mr. Jian He, CEO; and Ms. Yuan Jun Ye, Chief Financial Officer; and Ms. Wenyu Liu, Chief Growth Officer. Mr. He will give an overview of the company’s strategy and recent developments, followed by Ms. Ye, who will go over the financial results. They will all be available for the Q&A session that will follow.
Before we proceed, I would like to remind you of our Safe Harbor statement. Please note that the discussions today may contain certain 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 current expectations. To understand the factors that could cause results to materially differ from those in the forward-looking statements, please refer to our Form 20-F filed with the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements, except as required under applicable law.
At this point, I’d like to turn the call over to Mr. He. Mr. He, please go ahead.
Jian He
Thanks, Rene and thank you everyone for joining us today. We delivered a solid financial performance in the second quarter of 2022 despite challenges caused by the resurgence of the COVID in many parts of China, unfavorable impact from [indiscernible] in foreign exchange rates, changes in global economic conditions and the customer demand and spending and the world events.
Notably, our revenue returned to the growth track including 8% year-over-year to $132 million and 17% over 2021 Q4. And as we improved the product mix and operating efficiency, our loss narrowed significantly on a quarter-over-quarter basis. These results demonstrated the strong capabilities of our team give us more confidence to continue to execute our proven strategy in the near future. As we consistently migrated our product mix to higher margin categories, apparel has become our most popular category, representing 82% of total revenues, up from 62% a year ago. Revenues from apparel increased 44% year-over-year to $109 million, lifting to our overall gross margin to 55% compared with 47% a year ago.
We have seen various improvements in our supply chain and the logistics in the first half of 2022. We believe only those players with an effective strategy of managed operations and a robust supply chain can [indiscernible] given these difficult economic times. Therefore, we will continue to invest to improve our operational efficiency and the customer experience and some of our spending this past quarter and in the coming quarters reflects this. We believe this is critical for us to be ready to accelerate our growth and build a stronger brand when economic situation improves.
I will now hand the call over to Yuan Jun to go through the financial results.
Yuan Jun Ye
Thank you, Mr. He. Let me start with the financial highlights for the quarter. In the second quarter, our total revenue was $132 million, up 8% year-over-year from $122 million. Revenues from apparels increased by 44% to $109 million, representing 82% of total revenue compared with 62% in the same quarter of 2021. Accordingly, gross margin for the second quarter improved to 55% from 47% a year ago as a result of higher margin from apparel sales.
Total operating expenses were $76 million compared with $61 million during the same quarter of 2021. Selling and marketing expenses were $58 million, an increase of $15 million year-over-year, as we continue to invest to drive top line expansion in a highly competitive market against a challenging macroeconomic environment. Total fulfillment and G&A expenses remained stable at $17 million as a percentage of total revenue both decreased to 13% from 14% a year ago, even though our total revenue grew by 8% in the same period. This demonstrates our efficient control on operational efficiency.
Included in operating expenses, R&D expenses also remained stable at $5 million from a year ago as continuous investment in our R&D function is critical to increase our customers’ shopping experience on a long-term basis. Despite the challenges in the second quarter, we managed to narrow our net loss on a sequential basis to $2 million. Our cash levels remained healthy with $66 million at the end of the quarter, an increase of $6 million from last year-end. With the improvement in the macro environment entering the third quarter, we are confident of steady growth in our top line in the second half of the year.
This concludes our prepared remarks. At this point, we are ready to take some questions. Operator?
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question will come from Matt Lee of CRS [ph] Capital. Please go ahead.
Unidentified Analyst
Yes. Hi, there. Good morning. Thanks for taking my question. Actually, I have two questions, if that’s okay. So first, you mentioned world events, and I was wondering whether you could comment a bit on whether you see some of these world events, particularly conflict in Europe impacting revenue in terms of the category mix or maybe the regional mix as well? And then for the second question, I think you mentioned that your marketing expenses increased quite a lot. And I was just wondering whether you could elaborate on the reasons for that in a little more detail. Thanks.
Yuan Jun Ye
Okay. Thank you for your question. For the first question, yes, there are some world events happening, but despite all the events and challenges, we still managed to see record growth in European markets as well as the North American market. And in terms of category, apparel is still the best-performing category among all. For the question – for the second question regarding the marketing expenses, that’s due to a few reasons like, for example, there are some more world events, and there are some challenges in completion, and we are investing in our apparel category. But as we keep investing in our apparel category and keep having more and more repeated purchase customers, we managed to – we will be able to manage to cut only marketing expenses in near future.
Unidentified Analyst
Okay, thank you.
Operator
[Operator Instructions] There are no further questions at this time. I’ll now hand it back to Mr. Rene Vanguestaine for closing remarks.
End of Q&A
Rene Vanguestaine
Hello. This concludes our second quarter 2022 earnings conference call. Thank you for your participation and ongoing support of LightInTheBox. We look forward to providing you with updates of our business in the coming weeks and months ahead. Have a good day, all. Thank you.
Jian He
Thank you.
Operator
That does conclude our conference for today. Thank you for attending, and you may now disconnect.
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