LightInTheBox Reports Third Quarter 2019 Financial Results

BEIJING,Dec.10,2019 -- LightInTheBox Holding Co.,Ltd. (NYSE: LITB) ("LightInTheBox" or the "Company"),a cross-border e-commerce platform that delivers products directly to consumers around the world,today announced its unaudited financial results for the third quarter ended September30,2019.

Third Quarter 2019 Highlights

Total revenues regained significant growth momentum increasing 34.6% year-over-year to $59.9 million.

Gross margin improved to 42.3% from 15.1% in the same quarter of 2018.

Net income was $10.0 million,compared with a net loss of $17.8 million in the same quarter of 2018.

Adjusted EBITDA[1] improved significantly,increasing to earnings of $0.5 million,compared with a loss of $17.3 million in the same quarter of 2018.

[1]For a discussion of the use of non-GAAP financial measures,see "Non-GAAP Financial Measures."

Mr. Jian He,Chief Executive Officer of LightInTheBox,commented,"Our results this quarter are a strong reflection of the significant progress we have made since we began implementing our strategy to turn the business around last year. I am pleased to report that we are beginning to see the tangible benefits of the changes we have been making to improve operational efficiency,product optimization,and cost controls which resulted in our first quarter of GAAP profitability since 2014. In particular,our focus on improving product optimization,driving customer engagement and expanding our market scale have been critical to the success we have seen so far. Adjusted EBITDA was also positive for the second consecutive quarter,increasing to earnings of $0.5 million from a loss of $17.3 million during the same period last year,which I believe demonstrates the growth trajectory we are on. We remain focused on executing our strategy to generate sustainable long-term growth and are very encouraged by our improvements to date. We will continue to implement our strategies in order to maintain the trend of improvement."

Third Quarter 2019 Financial Results

Total revenues increased by 34.6% year-over-year to $59.9 million from $44.5 million in the same quarter of 2018. Revenues generated from product sales were $58.1 million,compared with $42.9 million in the same quarter of 2018. Revenues from service and others were $1.8 million,compared with $1.6 million in the same quarter of 2018.

The number of orders for product sales was 1.4 million in the third quarter of 2019,compared with 0.8 million in the same quarter of 2018. The number of customers for product sales was 0.8 million for the third quarter of 2019,compared with 0.7 million in the same quarter of 2018.

Revenues generated from product sales in the apparel category were $20.3 million in the third quarter of 2019,compared with $14.4 million in the same quarter of 2018. As a percentage of product sales,apparel revenues accounted for 34.9% in the third quarter of 2019,compared with 33.6% in the same quarter of 2018. Revenues generated from product sales from other general merchandise were $37.8 million in the third quarter of 2019.

Total cost of revenues was $34.6 million in the third quarter of 2019,compared with $37.8 million in the same quarter of 2018. Cost for product sales was $33.8 million in the third quarter of 2019,compared with $36.3 million in the same quarter of 2018. Cost for service and others was $0.8 million in the third quarter of 2019,compared with $1.4 million in the same quarter of 2018.

Gross profit in the third quarter of 2019 was $25.3 million,compared with $6.7 million in the same quarter of 2018. Gross margin was 42.3% in the third quarter of 2019,compared with 15.1% in the same quarter of 2018. The increase in gross margin was a result of our continuous efforts to drive revenues from categories with high margin.

Total operating expenses in the third quarter of 2019 were $25.7 million,compared with $24.8 million in the same quarter of 2018.

Fulfillment expenses in the third quarter of 2019 were $6.8 million,compared with $3.4 million in the same quarter of 2018. As a percentage of total revenues,fulfillment expenses were 11.3% in the third quarter of 2019,compared to 7.6% in the same quarter of 2018 and 8.4% in the second quarter of 2019.

Selling and marketing expenses in the third quarter of 2019 were $12.4 million,compared with $11.3 million in the same quarter of 2018. As a percentage of total revenues,selling and marketing expenses were 20.8% for the third quarter of 2019,compared to 25.4% in the same quarter of 2018 and 19.8% in the second quarter of 2019.

G&A expenses in the third quarter of 2019 were $1.6 million,compared with $7.5 million in the same quarter of 2018. As a percentage of total revenues,G&A expenses were 2.6% for the third quarter of 2019,compared with 16.9% in the same quarter of 2018 and 11.0% in the second quarter of 2019.

R&D expenses in the third quarter of 2019 were $4.9 million,compared with $2.5 million in the same quarter of 2018. As a percentage of total revenues,R&D expenses represented 8.2% for the third quarter of 2019,compared with 5.7% in the same quarter of 2018 and 7.1% in the second quarter of 2019.

Loss from operations was $0.4 million in the third quarter of 2019,compared with $18.1 million in the same quarter of 2018.

Net income was $10.0 million in the third quarter of 2019,compared with a net loss of $17.8 million in the same quarter of 2018. The net income as a result of the change in fair value of the convertible promissory notes associated with the acquisition of Ezbuy in the third quarter of 2019 was $10.3 million.

Net income per American Depository Share ("ADS") was $0.15 in the third quarter of 2019,compared with net loss per ADS of $0.27 in the same quarter of 2018. Each ADS represents two ordinary shares. The diluted net loss per ADS in the third quarter of 2019 was $0.00 and $0.27 in the same quarter of 2018.

In the third quarter of 2019,the Company's basic weighted average number of ADSs used in computing the income per ADS was 67,347,087,and 111,788,645 ADSs in diluted weighted average number.

Adjusted EBITDA,which represents gain /(loss) from operations before share-based compensation expense,change in fair value of convertible promissory notes,interest income,interest expense,income tax expense and depreciation and amortization expenses,was $0.5 million of earning in the third quarter of 2019,compared with $17.3 million of loss in the same quarter of 2018.

As of September30,2019,the Company had cash and cash equivalents and restricted cash of $29.7 million,compared with $29.4 million as of June30,2019.

Business Outlook

For the fourth quarter of 2019,based on current information available to the Company and business seasonality,the Company expects net revenues to be between $71 million and $75 million.

Change in Fair Value of Convertible Promissory Notes Associated with the Acquisition of Ezbuy

The Company entered into a share purchase agreement ("SPA") on November8,2018 to acquire Ezbuy in the form of non-interest bearing one-year convertible promissory notes. This SPA took effect on December10,2018 when LITB's closing stock price was $0.64. LITB's closing stock price on December31,2018 and September30,2019 was $1.22 and $1.20,respectively. The Company adopted Monte-Carlo Simulation based on a scenario-weighted average method to estimate the fair value of the convertible promissory notes. The estimate is based on the probability of each scenario and pay-off of the convertible promissory notes under each scenario. The scenarios include different timing and corresponding conversion price of the convertible promissory notes. The key assumptions adopted in the convertible promissory notes valuation include risk-free rate of interest and expected stock price volatility in the conversion period. The Company recorded a non-cash net income arising from change in fair value of the convertible promissory notes of $10.3 million in the third quarter of 2019.

Non-GAAP Financial Measures

To supplement our consolidated financial statements,which are prepared and presented in accordance with U.S. GAAP,we use the following non-GAAP financial measures to help evaluate our operating performance:

"Adjusted EBITDA" represents gain /(loss) from operations before share-based compensation expense,income tax expense and depreciation and amortization expenses. Although other companies may calculate adjusted EBITDA differently or not present it at all,we believe that the adjusted EBITDA helps to identify underlying trends in our operating results,enhancing their understanding of the past performance and future prospects.

Recent Development

The Company received a letter from the New York Stock Exchange ("NYSE"),indicating that the Company is "below criteria" due to the average closing price of the Company's ADSs being less than $1.00 over a consecutive 30-trading-day period pursuant to Section 802.01C of the NYSE Listed Company Manual.

The Company can regain compliance at any time during the six-month cure period if on the last trading day of any calendar month during the cure period the Company has a closing share price of at least $1.00 and an average closing share price of at least $1.00 over the 30 trading-day period ending on the last trading day of that month. In the event that at the expiration of the six-month cure period,both a $1.00 closing share price on the last trading day of the cure period and a $1.00 average closing share price over the 30 trading-day period ending on the last trading day of the cure period are not attained,the NYSE will commence suspension and delisting procedures.

The Company has notified the NYSE on November 28,2019 of its intention to cure the deficiency. The Company's ADSs will continue to be listed and traded on the NYSE,subject to compliance with other NYSE continued listing standards and other rights of the NYSE to delist the ADSs. The Company is currently in compliance with all other NYSE continued listing standards. The NYSE notification does not affect the Company's business operations or its Securities and Exchange Commission reporting requirements.

Conference Call

The Company will hold a conference call at 8:00 a.m.Eastern Time on December10,2019 to discuss its financial results and operating performance for the third quarter of 2019. To participate in the call,please dial the following numbers:

US Toll Free:

1-866-519-4004

Hong Kong Toll Free:

800-906-601

Mainland China:

400-620-8038

International:

+65-6713-5090

Passcode:

8998868

A telephone replay will be available two hours after the conclusion of the conference call through December17,2019. The dial-in details are:

US:

+1-646-254-3697

Hong Kong:

+852-3051-2780

International:

+61-2-8199-0299

Passcode:

8998868

A live and archived webcast of the conference call will be available on the Investor Relations section of LightInTheBox's website at http://ir.lightinthebox.com.

About LightInTheBox Holding Co.,Ltd.

LightInTheBox is a cross-border e-commerce platform that delivers products directly to consumers around the world. The Company offers customers a convenient way to shop for a wide selection of products at attractive prices through its www.lightinthebox.com,www.miniinthebox.com,www.ezbuy.comand other websites and mobile applications,which are available in 25 major languages and cover more than 140 countries.

For more information,please visit www.lightinthebox.com.

Investor Relations Contact

Christensen

Ms.Xiaoyan Su

Tel: +86 (10)5900 3429

Email:ir@lightinthebox.com

OR

Christensen

Ms.Linda Bergkamp

Tel: +1-480-614-3004

Email: lbergkamp@ChristensenIR.com

Forward-Looking Statements

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "potential," "continue," "ongoing," "targets" and similar statements. Among other things,statements that are not historical facts,including statements about LightInTheBox's beliefs and expectations,the business outlook and quotations from management in this announcement,as well as LightInTheBox's strategic and operational plans,are or contain forward-looking statements.

LightInTheBox may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"),in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward- looking statement,including but not limited to the following: LightInTheBox's goals and strategies; LightInTheBox's future business development,results of operations and financial condition; the expected growth of the global online retail market; LightInTheBox's ability to attract customers and further enhance customer experience and product offerings; LightInTheBox's ability to strengthen its supply chain efficiency and optimize its logistics network; LightInTheBox's expectations regarding demand for and market acceptance of its products; competition; fluctuations in general economic and business conditions and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in LightInTheBox's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release,and LightInTheBox does not undertake any obligation to update any forward-looking statement,except as required under applicable law.

LightInTheBox Holding Co.,Ltd.

Unaudited Condensed Consolidated Balance Sheets

(U.S. dollars in thousands,or otherwise noted)

AsofDecember31,

AsofSeptember30,

2018

2019

ASSETS

Current Assets

Cash and cash equivalents

38,808

29,054

Restricted cash

994

642

Accounts receivable,net of allowance for doubtful accounts

1,463

1,721

Amounts due from related parties

—

4,113

Inventories

8,481

6,584

Prepaid expenses and other current assets

5,811

4,920

Total current assets

55,557

47,034

Property and equipment,net

3,652

2,936

Intangible assets,net

9,890

8,973

Goodwill

28,169

28,169

Operating lease right-of-use assets,net

—

6,923

Long-term rental deposits

1,131

913

Long-term investments

5,188

2,798

TOTAL ASSETS

103,587

97,746

LIABILITIES AND DEFICIT

Current Liabilities

Accounts payable

12,941

12,640

Amounts due to related parties

4,953

—

Convertible promissory notes

51,922

53,517

Advance from customers

17,732

17,185

Current operating lease liabilities

—

3,124

Income tax payable

26

147

Accrued expenses and other current liabilities

22,662

25,326

Total current liabilities

110,236

111,939

Non-current operating lease liabilities

—

3,757

Non-current finance lease liabilities

1,156

900

TOTAL LIABILITIES

111,392

116,596

DEFICIT

Ordinary shares

11

11

Additional paid-in capital

239,269

240,530

Treasury shares,at cost

(27,261)

(27,261)

Accumulated other comprehensive loss

(932)

(1,812)

Accumulated deficit

(218,887)

(230,279)

Non-controlling interests

(5)

(39)

TOTAL DEFICIT

(7,805)

(18,850)

TOTAL LIABILITIES AND DEFICIT

103,746

LightInTheBox Holding Co.,Ltd.

Unaudited Condensed Consolidated Statements of Operations

(U.S. dollars in thousands,except per share data,or otherwise noted)

Three-monthPeriodEnded

Nine-monthPeriodEnded

September30,

September30,

2018

2019

2018

2019

Revenues

Product sales

42,910

58,139

160,942

165,039

Services and others

1,593

1,752

9,058

3,867

Total revenues

44,503

59,891

170,000

168,906

Cost of revenues

Product sales

(36,336)

(33,790)

(120,386)

(100,193)

Services and others

(1,442)

(794)

(8,330)

(1,313)

Total cost of revenues

(37,778)

(34,584)

(128,716)

(101,506)

Gross profit

6,725

25,307

41,284

67,400

Operating expenses

Fulfillment

(3,400)

(6,763)

(11,580)

(16,934)

Selling and marketing

(11,316)

(12,440)

(38,712)

(33,232)

General and administrative

(7,541)

(1,559)

(18,415)

(15,734)

Research and development

(2,546)

(4,915)

(8,382)

(13,223)

Total operating expenses

(24,803)

(25,677)

(77,089)

(79,123)

Loss from operations

(18,078)

(370)

(35,805)

(11,723)

Exchange loss on offshore bank accounts

20

—

(23)

—

Interest income

205

49

432

246

Interest expense

—

(13)

—

(51)

Change in fair value of convertible promissory notes

—

10,347

—

(1,595)

Total other income/(loss)

225

10,383

409

(1,400)

Income/(loss) before income taxes and gain from

equity method investment

(17,853)

10,013

(35,396)

(13,123)

Income tax expense

(3)

(19)

(6)

(439)

Gain/(loss) from equity method investment

46

(20)

197

2,136

Net income/(loss)

(17,810)

9,974

(35,205)

(11,426)

Less: Net income/(loss) attributable to non-controlling

interests

(138)

—

(34)

Net income/(loss) attributable to LightInTheBox

Holding Co.,Ltd.

(17,810)

10,112

(35,392)

Weighted average numbers of shares used in

calculating income/(loss) per ordinary share

—Basic

133,278,934

134,694,173

134,070,694

134,586,488

—Diluted

133,934

223,577,289

134,488

Net income/(loss) per ordinary share

—Basic

(0.13)

0.08

(0.26)

(0.08)

—Diluted

(0.13)

(0.00)

(0.26)

(0.08)

Net income/(loss) per ADS (2 ordinary shares equal to

1 ADS)

—Basic

(0.27)

0.15

(0.53)

(0.17)

—Diluted

(0.27)

(0.00)

(0.53)

(0.17)

LightInTheBox Holding Co.,Ltd.

Unaudited Reconciliations of GAAP and Non-GAAP Results

(U.S. dollars in thousands,

2018

2019

2018

2019

Net income/(loss)

(17,426)

Less: Interest income

205

49

432

246

Interest expense

—

(13)

—

(51)

Income tax expense

(3)

(19)

(6)

(439)

Depreciation and amortization

(133)

(598)

(438)

(1,860)

EBITDA

(17,879)

10,555

(35,193)

(9,322)

Less: Share-based compensation

(532)

(305)

(1,551)

(1,261)

Change in fair value of convertible promissory

notes

—

10,595)

Adjusted EBITDA*

(17,347)

513

(33,642)

(6,466)

* Adjusted EBITDA represents gain/(loss) from operations before share-based compensation expense,change in fair value of

convertible promissory notes,income tax expense and depreciation and amortization expenses.

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