Boxed, Inc. (BOXD) Q3 2022 Earnings Call Transcript
Boxed, Inc. (NYSE:BOXD) Q3 2022 Earnings Conference Call November 9, 2022 4:30 PM ET
Company Participants
Chris Mandeville – Investor Relations
Chieh Huang – Co-Founder & Chief Executive Officer
Mark Zimowski – Chief Financial Officer
Conference Call Participants
Thomas Forte – D.A. Davidson
Marvin Fong – BTIG
Ron Josey – Citi
Operator
Good afternoon, ladies and gentlemen. Thank you for attending today’s Box Third Quarter 2022 Earnings Call. My name is Tia [ph] and I will be your moderator for today’s call. [Operator Instructions]
I would now like to pass the conference over to your host, Chris Mandeville with Box. You may proceed.
Chris Mandeville
Good afternoon and thank you for joining us on Box third quarter 2022 earnings conference call. On the call today are Chieh Huang, Co-Founder and Chief Executive Officer; and Mark Zimowski, Chief Financial Officer. By now, everyone should have access to the earnings release for the period ended September 30, 2022, that went out this afternoon at approximately 4:00 p.m. Eastern Time. The press release can be found on the company’s website. And shortly after the conclusion of today’s call, a webcast will also be archived and available for replay.
During the course of this call, management may make forward-looking statements within the means of the federal securities laws. These include expectations and assumptions regarding the company’s future operations and financial performance. These statements are based on management’s current expectations and involve risks and uncertainties that could differ materially from actual events and those described in these forward-looking statements. Please refer to Box reports filed from time to time with the Securities and Exchange Commission and its press release issued today for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Management’s remarks today will include non-GAAP or adjusted financial measures. Reconciliations of GAAP results to non-GAAP financial measures are available in the earnings release.
And now I’d like to turn the call over to Chieh.
Chieh Huang
Thanks, Chris and it’s great to be with everyone today. For today’s call, I’ll start by providing some business updates, then I’ll turn it over to Mark to go over Q3 financial results. After that, we’ll open up the line for questions. I’m hoping everyone listening to this call will share in our sentiment that we had quite a third quarter. We’ve been hard at work executing on the margin-driving focus areas that we discussed on our prior call.
As a reminder, we sharpened our strategy last quarter to focus on several high potential high-margin segments of our business: B2B, BoxMarket and espresso. I’m happy to announce that by focusing on these areas and utilizing presso technology, the team quickly began to deliver the increased profitability that we committed to. Third quarter retail gross profit was up 88.8% year-over-year and retail gross margins expanded 503 basis points. As a result of this increased profitability as well as proceeds from financing activities, cash consumption for the quarter decreased by more than half from the prior quarter, down to an average of $3.4 million per month. I know many of our team members are listening to this call today and I’m incredibly proud of them as they work hard day in and day out to produce these results.
Now, let’s go deeper into each one of these focus areas and the progress that we’re making against them. We’ll first start with B2B. As we mentioned last quarter, we’re dedicating additional resources to capture the positive momentum we’re seeing in this channel as strong return to office catalysts continue. Our efforts are producing results as high customer engagement yielded all-time high B2B average order values which came in at $301 for the quarter. Notably, expansion of B2B GMV mix has also led to overall retail net revenue per active customer, reaching an all-time high of $336 after growing 38.4% in Q3. Additionally, this mix shift pushed overall retail AOVs up 21.9% to another all-time high of $150.
Lastly, the B2B segment as a whole continued on its growth path with B2B GMV up 37.1% for the quarter. That puts blended B2B GMV growth throughout this entire year at 51.3%. As you can probably see, these KPIs are just some of the reasons why we’re proud about the team’s Q3 execution. There’s a lot of hard work ahead of us but we’re excited for the future.
Now let’s turn to Box market, our dark store fresh food delivery business. I’m pleased to announce the recent launch of our new location in Westchester, New York and the imminent opening of our Brooklyn dark store. Fox Market has consistently demonstrated AOVs in the $100 range, with third quarter AOVs hitting $113. Historically, these high AOVs have supported strong margins in the business and we look forward to expanding this great product to new locations. Espresso, our software and services platform, also saw good developments in Q3. As a reminder, Espresso is an advanced technology platform consisting of a world-class suite of e-commerce services based upon advanced analytics and machine learning. Customers have the ability to select our complete white label end-to-end offering or choose from a customized suite of individual modules. With this modularization, stresso-can [ph] now suit the needs of a broader set of potential customers, really furthering our mission to e-commerce enablement across the globe through our technology.
Recently, we announced the signing of a definitive contract for our end-to-end solution with on Vietnam. And I’m happy to report that we’ve already begun deploying this 9-year 8-figure threats of partnership there. Vietnam is an important growth market for E.ON and we’re pleased that this project follows our implementation with Malaysia, another important market. We’re now actively discussing further opportunities with on, one of Asia’s largest retailers. As we’ve discussed previously, for espresso modules, we’re pursuing a marketplace-driven distribution model and recently announced our exciting partnership to join Snowflake’s Partner Network program. The partnership is expected to support ongoing lead generation and sales efforts and is designed to streamline implementation of presso SaaS capabilities to Snowflake customers.
By leveraging Snowflake’s Data Cloud, joint customers are now able to seamlessly share the data needed to drive results through espresso technology, enabling rapid use of its advanced analytics and machine learning offerings. In short, advanced software technology, analytics and machine learning capabilities are critical in today’s environment and we believe our espresso solutions are able to deliver outsized value for our customers as they have for our box retail business.
Lastly, let me spend a minute on cost savings generally. In addition to focusing our efforts and resources to enhance growth in the highest margin areas of our business, a key part of driving increased profitability is, of course, also taking a closer look at our cost structure, shipping cost improvements, price optimization, restructuring of corporate staff and focused marketing investments towards B2B and box market were all factors in our quarter-over-quarter adjusted EBITDA improvement of $6.1 million. We’ll continue to manage our costs going forward as our priority remains meaningfully improving profitability.
Just about 90 days ago now, we detailed a focused strategic road map for the company. I hope you agree that this team has already begun delivering against that vision. We believe that we’re on the right track to accelerate our overall PASA adjusted EBITDA and cash flow profitability.
Now with that, let me hand it over to Mark.
Mark Zimowski
Thank you, Chieh. As Chieh noted, we are pleased with our financial and operating results this quarter and they are a testament to the enterprise-wide buy-in to our sharpened strategy and the incredible efforts displayed by our team members. When reviewing results for the quarter, in addition to year-over-year, I’d also suggest folks to review our quarter-over-quarter performance. This third quarter, in particular, many of the trends on a year-over-year basis were impacted by lumpiness in our Software & Services segment which had an especially meaningful impact on the P&L during the comparable prior year period in 2021.
With that, I’ll jump into our financial results for the third quarter and then turn to our 2022 outlook. Beginning with the Retail segment; net revenue was $41.6 million, an increase of 8.9% or $3.4 million compared to the prior year. Retail net revenue growth was supported by a 38.4% year-over-year increase in retail net revenue per active customer which hit an all-time high of $336. In addition to stronger retail AOVs, the increase in spend per user was a direct result of strategic initiatives taken to drive enhanced growth of our stickiest and highest profit customers which supported mix shift towards B2B and box market.
Turning to the Software and Services segment. We generated $0.1 million in net revenue in the third quarter. Similar to last quarter, we did not recognize any implementation services or upfront license fee revenue during the third quarter which impacted the year-over-year comparable results across our entire P&L. As we recognize significant upfront high-margin software license fees of approximately $10 million in the prior year period. That said, as we look ahead to Q4, we have begun development of our Aon Vietnam contract which we expect to result in some uptick in software and services revenue going into year-end. Further, while we continue to anticipate near to medium-term revenue variability in this segment, with expansion of the espresso product portfolio, we do expect an increasing mix of recurring revenue over the longer term which will help support greater revenue predictability in the future.
Finally and importantly, compared to our P&L, the cash flow generated from our enterprise software contracts is historically much more consistent from quarter-to-quarter which enables us to manage the business effectively as we focus on our efforts on driving cash flow profitability. Combined for the total enterprise, net revenue was $41.7 million, a decrease of 15% or $7.4 million compared to the prior year. The revenue growth within retail was offset by lower software and services revenue this quarter.
Turning to our profitability. Retail gross profit increased by $2.3 million or 88.8% versus prior year, with gross margin of 11.9% have an increase by 503 basis points year-over-year. Similarly, retail gross profit and gross margin were up meaningfully quarter-over-quarter, up 52.4% and 445 basis points, respectively. We are thrilled by the positive momentum in retail profitability we are seeing, especially in the backdrop of an inflationary and challenged macro environment. Strong margin expansion was supported by an increasing share of B2B customer demand, customers who, as of Q3 had a meaningful margin advantage over our B2C customer. Further, we saw the benefits of transportation cost savings supported by our first full quarter of results following our expanded FedEx alliance, packaging cost savings and machine learning-based pricing optimization which is made possible through our espresso technology capabilities.
I am incredibly grateful for the flexibility of our pressor technology platform and the support of our data science and analytics capabilities. These capabilities have enabled real-time management of retail margins during this inflationary environment and this quarter’s results are firsthand evidence of how impactful our Espresso solutions have been for the box retail business and also why we are so confident in the value proposition of our technology offerings for other retailers. Total gross profit for the third quarter was $4.7 million, a decrease of $7.9 million with total gross margin at 11.3%. The year-over-year total gross profit and margin trend was unfavorably impacted by a decrease in software and services revenue which I discussed earlier. Total gross profit was up $1.9 million quarter-over-quarter, supporting significant reduction in run rate cash burn.
Looking at operating expenses. During the third quarter, we spent $2.4 million on advertising, a meaningful reduction compared to $5.2 million in the prior year period. As discussed previously, as part of our strategic vision, we expect advertising investments will be increasingly focused across B2B and box market to help support enhanced growth of our highest-profit customer channels which we also believe will produce the highest relative return on investment going forward. We are expanding our efforts to test and enter [ph] on dedicated marketing against these customer channels. For the rest of the year, we are targeting similar levels of investment and will continually assess our budget based on the results we are seeing, while also being mindful of the overall macro environment.
Our third quarter net loss was $26.4 million, of which $10 million related to noncash or other onetime transaction-related costs. This compared to a loss of $5.9 million in the prior year. Adjusted EBITDA loss for the quarter was $16.4 million. Sequentially, quarter-over-quarter, this was an improvement of $6.1 million, resulting from the gross profit improvement as well as operating cost reductions previously discussed.
Moving to KPIs. The third quarter saw strong momentum across our key metrics. Gross merchandise value was $49 million, an increase of $3.8 million or 8.3% versus the prior year period. The increase was largely attributable to strong B2B customer demand with GMV up 37.1% year-over-year, combined with an increase in GMV from the box market customer base. In addition to the B2B mix shift, we also saw improvement on both order frequency and average order values across both our B2C and B2B customers which are good indicators of customer engagement and order level profitability, respectively. Peaking AOVs, total retail AOV had another all-time high of $150 which was up 21.9% year-over-year. This increase was primarily driven by B2B mix shift, price inflation and ongoing pricing optimization.
As expected, the reduction in marketing investment also resulted in a decline in new customers acquired which led to the decline in active customers during the quarter. As we continue down the path of our strategic prioritization, the dynamics we’d expect to see here are exactly this. Active customer counts in aggregate will not be a key de driver of growth because of the shift from B2C to B2B. However, we do anticipate an increase in active customer counts within B2B. And on an aggregated basis, when you look at retail, our active customers will, on average, be generating more orders, higher AOVs, higher profits and more revenue per user.
Turning to our balance sheet. At the end of the third quarter, we had a combined total cash and marketable securities balance of $39.4 million which is inclusive of $3.3 million of restricted cash. In Q3, we burned $3.4 million of cash per month which reflects a $4.3 million monthly improvement in cash burn quarter-over-quarter. In addition to our ongoing liquidity management initiatives which yielded these improvements, we continue to actively explore additional capital markets opportunities to help support our operating and growth initiatives go forward. We believe we are making good progress against those initiatives and hope to further improve near-term liquidity with an additional capital raise prior to year-end.
Finally, the for purchase transaction that we executed with Adelia back in November of 2021 has now been fully unwound under the terms of the agreement. This unwinding resulted in $4.1 million of net proceeds to the company during Q3 of 2022 and we expect another approximately $500,000 of proceeds to be paid during Q4. Finally, turning to 2022 outlook. We are reaffirming our guidance and continue to expect net revenue in the range of $165 million to $180 million with adjusted EBITDA loss in the range of $65 million to $80 million.
As we have continued to discuss for the Software and Services segment, the exact timing of revenue recognition remains difficult to predict. We believe these are temporary forecasting dynamics that will abate if we further diversify the customer base and add additional recurring revenues to the business. Between commencing deployment of EM Vietnam, our new Snowflake partnership, ongoing traction within our customer pipeline and the progress we are seeing on the product side, we are really pleased with the momentum in this segment during Q3 and expect to carry that momentum into 2023.
To summarize, we are pleased with the progress we are seeing with our third quarter results. The entire organization was able to rally behind our updated strategic direction, resulting in strong to-date execution against our commitment to deliver an accelerated path to profitability. During Q4, we are also focused on raising additional capital which will help support continued execution against our strategic growth plan. We believe these efforts are the right immediate steps to set the business up for long-term success and we see a huge opportunity in front of us to deliver value for our shareholders.
With that, thank you all and let me turn the call back over to Chieh for some final remarks.
Chieh Huang
Thanks, Mark. To sum it up, I’m proud of the way our team is executing on our vision to meaningfully accelerate our path to profitability to yield substantial value for our shareholders. We are already seeing tremendous improvement with our retail gross profit and gross margin and we are working hard on continuing those trends. Thank you, all.
With that, we’re now available to take your questions. Operator?
Question-and-Answer Session
Operator
Absolutely. We will now begin the Q&A session. [Operator Instructions] The first question is from the line of Thomas Forte with D.A. Davidson.
Thomas Forte
Great. So Chieh, Mark, congrats on the projects you’re making in 3 areas of focus. One question, one follow-up. For the question on the B2B, when you compare it with your pre-COVID-19 levels, it’s all the way back, halfway back. How should we think about it versus where it was pre-pandemic.
Chieh Huang
Thanks, Tom and thank you for recognizing kind of how hard we’ve worked and the progress we’re making on — in just basically 90 days since our last time. This is the last time we were on the bone together. Specifically, with regards to your B2B question, I’m glad you asked because we’re so excited both from a macro and an internal perspective. So let me parse that out. So from a macro perspective, we still think there’s room to run. I think folks are going back to the office. Recently, we’ve seen data that suggests 50% of — only 50% of folks in New York City based upon key card swipes are back in the office. So from a macro perspective, we feel like we’re not all the way back in a post cover world just yet. Internally, to answer your question very directly, we’re still not at that high watermark that that we set in 2019. So again, excitement because not only externally, do we think that there’s macro tailwinds. But also internally, we know it’s doable just because we’ve previously done it in a normalized world. So it’s the reason why we’re so excited again about B2B.
Thomas Forte
Great. And then for my follow-up question, on Box market, Westchester, hopefully soon to be box market DuratoCounty for personal made. But — all right, now serious. So for box market Westchester, what learnings have you had so far for recognizing it’s still early. What do you hope to learn given that your first expansion outside Manhattan.
Chieh Huang
So let me first start with just some high-level thoughts and I’ll also hand it over to Mark for some follow-ups. So as you suggested, it’s still very early, right? So Brooklyn, the opening there is imminent. Westchester, it’s still very early. We only have a few weeks of data at this point. What we’re finding is that operationally, we can still to. It is a little bit different operating in a world of cars versus just bicycle because you can imagine in Manhattan, we primarily use Bische to deliver, whereas in Westchester County, you’re using cars as well. So we’re taking all that data and now punching — well, operationally, how many folks do you need to be available to drive to the customer’s home. And then also internally for picking and packing, operationally, what is the right mix of folks there. Lastly, another thing that we’re gathering in terms of data is what is the actual customer preference when it comes to items that we should be carrying.
So as much as we like to think, everyone is very similar across the entire country or at least even within the state of New York. The reality is someone in Westchester is buying slightly different items than someone living in downtown in hand. So all these 3 things, I think we’ve begun to gather knowledge on. In terms of financial performance, in terms of AOV, all those things, I think we want to wait until we have statistically relevant data compared to kind of the massive amounts of data that we already have for Box Market New York and Box Core. So it’s probably a little bit too early to opine on just on that just yet.
Mark, I’ll hand it over to you. I know you have some follow-ups as well.
Mark Zimowski
Yes, absolutely, Chieh. So yes, I mean what I would add so far is that the great thing is that the customer behavior itself seems to be very similar from an overall order profile and dynamics at what we’re seeing in Manhattan. And then of course, that was only something that’s been really important to us, right? Because at the end of the day, when we look at that business model, one of the great things and one of the things that we loved about Box market when we acquired it back in December of 2021, if you recall, what was those high AOV. And so that seems to be translating very nicely into Westchester. Obviously, as we launch Bookland that’s going to be something we’re very mindful of as well. And so those are some of the customer behavior things that I think we’re excited about from the early onset seems to be trending in the right direction and being very comparable to what we’re seeing in Mentor.
Thomas Forte
Thank you, Chieh. Thank you, Mark.
Operator
The next question comes from the line of Robert [ph] with Wells Fargo.
Unidentified Analyst
Great. Anything maybe qualitatively you can share on B2B customer adds or momentum in the quarter. And then a couple on liquidity. Just wondering if you could — thanks for the update there. But just wondering if you could give us maybe a sense of exit rate ex the forward purchase receivable adjustment or settlement. And then on the conflate [ph] and financing, anything you could tell us about how you’re thinking about that, the committed capital and the man facility versus other options that may be available to you?
Mark Zimowski
Yes. And thanks so much for the question. So with regards to active customer accounts and customer ads related to B2B. So that’s something that we specifically broken out up until this point. And so what I would say is that as we move forward, obviously, one of the things that we’re focused on is shifting that marketing investment and shifting our resources towards acquiring more customers on the B2B side. So I kind of mentioned earlier, hey, overall active customers, as we dig into that one layer deeper, what we anticipate is that B2B active customer base is going to continue to grow as we move forward. And obviously, what’s going to happen as part of that is mix shift as well, right? So that’s why I mentioned all of our KPIs because B2B has higher order frequency, higher stickiness, higher AOVs, all those things are going to provide nice tailwinds to the overall business KPIs as we move forward from the total retail perspective.
Now, moving to the liquidity side and some of the questions around there. Obviously, we’re excited about what we’ve been able to accomplish on Q3. We significantly reduced cash for earn, brought that down by more than half on a quarter-over-quarter basis. Obviously, a lot of that is being driven by the profitability improvements we made, the cost savings measures that we took in point. In addition to that, we are exploring, as I mentioned earlier, additional capital markets opportunities. And I think those will comment in a few different dynamics. But the great thing that we’re seeing is that I think there are some actionable opportunities out there here in the near term. And so as we move into year-end, we’re very hopeful that we’ll be able to announce something in the market before we finish up the year.
Unidentified Analyst
Thank you very much.
Operator
Thank you. The next question comes from the line of Marvin Fong with BTIG.
Marvin Fong
Congratulations on all the progress. I guess another question on B2B, maybe just a bit bigger picture. Obviously, it’s now the emphasis. Have you given any thoughts to maybe at a more mature level where you’d like to see your mix for B2B, I think, historically roughly a quarter. Maybe just comment on where that could go? And is there things you can do on the cost side since you’ve historically kind of been more oriented and position the first the consumer that you can do to kind of optimize — further optimize profitability there? And then second question, just maybe on espresso; how is the pipeline shaping up there? Should we think about any or be concerned about any macro issues that might be causing the sales cycle to extend or anything along those lines that be great to hear about.
Mark Zimowski
Awesome. Thanks so much, Marvin. So I’ll start with the B2B question and then I’ll probably kick it off to Chieh to add a little bit of color on both B2B and Espresso as well. So with regard to the mix, certainly, I think over the medium to longer term, we do anticipate that the B2B mix will start to shift above where we were sort of pre-pandemic. So as a reminder, going back to what we sort of put out in our investor presentation last year was that during 2019, about 1/4 of the business was related to B2B customer demand. And so we do anticipate that as we move forward, we should surpass that mix. As Sam mentioned earlier, we’re not quite there yet in terms of overall penetration but we do anticipate that to occur. And then, we do anticipate extending well beyond that as we move forward.
With regards to the profitability points you asked, many of the things that work from a B2C profitability standpoint are a lot of the same sort of dynamics that we see on the B2B side as well, right? How do we drive up higher average order value, so that we’re better utilizing the space in the box? How do we better negotiate our shipping contracts and our packaging contracts in order to really drive up the unit economics of that business. The good thing is that as we sort of hone in on B2B specifically, I think there are areas of opportunity there that we’ll continue to iterate upon and improve upon. But overall, we’ve been doing this for 9 years on the B2C side and many, many of the learnings that we’ve seen there are very, very transferable to B2B customers as well.
Chieh Huang
Marvin, you got Chieh. Thanks very much for joining the call and for the question. And if I could kind of expand a bit on what Mark said, absolutely true that in a lot of ways, the playbook of increasing profitability of B2B customers looks very similar to B2C. And let me explain that a little bit. So I’m sure you’ve joined us for several calls now, including kind of when we first kind of met each other at our Analyst Day and probably since then, you’ve heard a steady drumbeat of us constantly talking about AOVs. Those average order values are so important to us. It’s probably one of our most important KPIs because it’s also — we found a pretty good — it has a pretty good correlation with overall profitability of that particular segment of business as well. So the higher the AOVs, in general, you could think we’re making more money from that box.
So, when you think about us increasing AOBs on B2B, what we can do is change how we sell to these folks and what we sell to these folks. So if there’s a customer that potentially is just self-service, then we should be offering more categories so that when they come into the service, they can buy more items. And we could do so by increasing our first-party SKU count or — and/or increasing our third-party marketplace SKU count as well, both of which we’ve done since we’ve gone public last year.
Now the other way we can kind of change how we engage these folks to increase AOV is for the bigger enterprise customers and the mid-market customers who actually do get a representative to call them, we can help upsell them. So if they’re just buying water then perhaps we can show them a compelling opportunity where if they fund the water with some of the other higher margin items that we sell, it’s good for us because AOBs go up. And it’s good for them because perhaps they’ll be tripping other free shipping thresholds and also consolidating purchasing so they can save a little bit of time and some money as well. So, playbook is very similar with slight modifications. Hopefully, that helps.
Marvin Fong
Yes, that helped a lot. And on espresso, just remind you talk about pipeline and anything about the sales cycle that you might be changing in terms of trying to secure new customers.
Chieh Huang
Yes. So on Espresso vis-à-vis enterprise, I think that’s where we had that end-to-end white label solution, that’s probably where we have the most data at the moment. Those sales cycles have historically been low. They’re really large contracts as we put in the recent earnings announcement. The Vietnam contract we signed is a 9-year 8-figure contract. So those type of partnerships take time to develop and to eventually sign. So nothing out of the ordinary to report there as of now in terms of significantly longer or shorter sales cycles. But in general, as you can imagine, those big contracts do generally take a longer time to sell. What is also very important and what I also want to talk about with regards to the pipeline, is that we’re actively discussing with EON, multiple other projects as well.
So now they’ve entrusted us with Malaysia, one of their largest markets outside of Japan, Vietnam, a market that’s very important for basically every multinational retailer that operates in the Asian region today; so entrusting us with those two. We’ve historically talked about Southeast Asia. And also we’re discussing other projects with them as well at the moment. So from an end-to-end pipeline perspective, we feel like — we feel pretty good about the pipeline as of today.
Marvin Fong
Yes. Thanks for all that color, today. And Mark, really appreciate it.
Mark Zimowski
Thanks.
Operator
The next question comes from the line of Ron Josey with Citi.
Ron Josey
I wanted to follow up on two. Shay, you talked about on the call just priority here is improving profitability. Just talk to us about the time line or the path to overall profitability going forward? Has there been a change in terms of time line, maybe pull forward? And then, Mark, as we think about like customer count, active customer count, understood the mix shift to B2B and sort of what that means to the overall business, higher AOVs, etcetera. But as we think about this mix shift, talk to us about how we might see active customers sort of evolve here over the next couple of quarters and years.
Chieh Huang
Ron, you got Chieh here. Thanks very much for the questions. So perhaps it’s bent to buy start off and then I’ll hand the mic over to Mark. So — in general, I think you probably noticed quite a big jump in gross profit and gross margin with regards to retail business. So I want to stress that. It took a lot of hard work to grow that gross profit line by 88% year-over-year and also the gross margin by over 500 basis points. So we continue on that path, whether it’s additional optimizations with regard to shipping, packaging discounts. — using our own machine learning models via espresso to further optimize price and conversion rates. Those are all things that we have done and we will continue to do — so even with such a large jump like that, I’m not sure if we would feel comfortable about further bringing in profitability at the moment or announce anything with regards to that.
If you can remember last call, we already brought in projected profitability potentially by quite a bit because of some of these changes. What we want to highlight is that these changes are beginning to work. And so growing profits as we did over the last quarter. That’s our first step along that path to profitability. Lots of hard work ahead of us but I think we’re off in the right direction.
For additional context, I’d really like to bring Mark into the conversation.
Mark Zimowski
Thanks, Chieh. Yes. So I totally would echo all of those points. I think as of right now, we’re not communicating any change to our expectations around time line for profitability. So as a reminder, we kind of said as we exit 2024, that’s when we really want to be adjusted EBITDA profitable. And so that is a huge acceleration from what sort of we had previously targeted both internally as well as what we had sort of put out to the Street during our feedback process. Now on the point about active customer accounts, overall, Ron, we’re not specifically guiding to how we should be thinking about that metric on a go-forward basis. But what I would say is that when you look at the quarter in particular, of course, as we brought marketing spend down, that also led to a decrease in the number of the customers acquired, especially on the B2C guys.
Now as we shift that marketing investment and deploy more into B2B, the actual active customers of B2B, of course, we anticipate will continue to grow. What I could say is that for each B2B customer that we do acquire, the value of that customer is so much higher from an LTV perspective, from a profitability perspective, from a revenue perspective as well, that the customers we need to acquire to sort of achieve our targets on the B2B side are much lower than what we would expect and need to acquire if we were focusing that same energy, investing in B2B — or B2C customer acquisition. So that’s really the dynamic you’re seeing unfold within the active customer accounts and that’s kind of the way I would think about things on a go-forward basis as well.
Ron Josey
Thank you, Chieh. Thank you, Mark. Super helpful.
Operator
Thank you. There are no additional questions at this time. I will pass it back to Chieh for closing remarks.
Chieh Huang
Thank you very much, everyone, for joining this important call. We think we’ve made a lot of great progress over the last quarter. We’re looking forward to continuing those trends and to speaking with all of you over the next 90 days. Thanks, everyone.
Operator
That concludes today’s conference call. Thank you. You may now disconnect your lines.