Aterian, Inc.

Good day, thank you for standing by, and welcome to the Ethereum Inc. Q3 Earnings Report Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 1 on your telephone keypad. If you require any further assistance, please press star 0. Thank you. I would now like to hand the conference over to your speaker today, Mr. Ilya Gazovsky, Director of Investor Relations and Corporate Development. The floor is yours.

Thank you for joining us today to discuss Atarian's third quarter 2021 earnings results. On today's call are Yaniv Sarig, co-founder and CEO, and Arturo Rodriguez, our Chief Financial Officer. Copy of today's press release is available on the investor relations section of Atarian's website at atarian.io. I would like to remind you that certain statements we will make in this presentation are forward-looking statements, and these forward-looking statements reflect Atarian's judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Atarian's business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made on this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included on our third quarter earnings release as well as our filings with the SEC. Thank you. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, the company may refer to certain non-GAAP metrics on this call. Explanation of these metrics can be found in the earnings release filed earlier today. With that, I will turn the call over to Yannick.

Thank you. and thank you everyone for joining us today. Our third quarter was marked by continued global supply chain disruptions and pressure on our business due to soaring costs of everything from raw material to international shipping rates. At Ethereum, we take on many challenges daily, including supply chain infrastructure, product and brand launches, M&A integration, global expansion, and software development. But above all the things we build, we cultivate a relentless culture of growth and adaptability that will comes obstacles and views failures as stepping stones on our path to building a leading consumer product platform. We welcome challenges as opportunities to strengthen our business and adapt properly to reap the benefits often left in the wake of a crisis. In this past quarter, it brought an opportunity to improve our supply chain resilience by adapting how we move shipping containers from our manufacturers to our fulfillment centers. I want to thank our logistics teams for their perseverance, their ability to create strategic relationships with our logistics partners, I'm glad to share that we've specifically seen Amazon stepping in to assist us and its ecosystem of third-party sellers in general, and we're very grateful for their help to Ethereum. Thanks to various programs provided to us by Amazon Global Logistics, we've been able to secure very competitive shipping rates for approximately 50% of our projected revenue in the next 12 months. We also secured reduced rates with Flexport and XPO, two other partners on the logistics side, as well as some other manufacturing partners in China, which have helped us leverage their relationships with Chinese shipping companies. In addition to securing better rates for shipping, we ran an intense three-month process to rebuild our internal plan around an optimized manufacturing and shipping strategy designed to mitigate additional disruptions going into next year. In parallel, we reached an agreement with our lender to reduce our debt facility from $92 million to $25 million. These important processes were left directly by myself under an all hands on deck mentality and overseen by the board of directors. I want to take the opportunity to thank our entire team for all the hard work that went into mitigating the impact of the global supply chain disruptions on our company. We presented to our board a strong yet conservative base internal plan that we feel can drive sustainable growth for the company. It's important to emphasize that while some aspects of the plan are still being worked on and not yet finalized, we believe that the most challenging parts are behind us. We're closely following the impact of the supply chain crisis on our competitors. While we consider ourselves to have a high degree of sportsmanship, and we wish many of our competitors a lot of success with navigating the current shipping crisis, we're also excited by our belief that there will be ample consolidation opportunities on the other side of this crisis. We believe that excluding any kind of black swan events we can foresee, we should soon be in a strong position to reignite our M&A strategy. As of today, Approximately $10 billion in total have been invested into aggregators looking to build a leading e-commerce platform for consumer brands and marketplaces. In the third quarter alone, aggregator raised approximately $1.2 billion. We're really excited to see that the investment community is paying attention to a vision we pioneered in 2014. And we continue to believe that our years of investment in infrastructure, technology, and expertise put us ahead of the pack with regards to execution. Most of our competitors have financially engineered access to abundant low-cost capital, but have not treated the efficiency required for long-term sustainable execution at scale. One data point that investors should pay close attention to when evaluating the execution of companies in the space is revenue per employee. Ethereum's revenue per employee is approximately $1 million based on our current TTM results, and that is a direct result of our investment in our software platform and agile supply chain infrastructure. In the long term, we believe that proprietary technology to automate the tedious manual processes performed by target SMB brands being aggregated is critical for the model to succeed. As the macro environment around supply chain normalizes and the dust settles, it will become important for us to continue to push our M&A strategy forward in 2022 and beyond. We'll speak in more detail about our strategy for 2022, and we'll have some exciting new initiatives to share with our shareholders in the next few months. Directionally, our priorities include diversifying our own and operated brands by looking at launching more products and leveraging supply chains based in the U.S., South America, and Eastern Europe. We're also going to put a lot of focus on organic growth through additional channels, direct-to-consumer sales through our websites and international expansion. We've heard concerns from certain investors regarding the organic growth for our core business. It's important to remind those who started to follow us more recently that before we started investing in our M&A strategy, we grew the business organically through launching products at a CAGR of 50% between 2017 and 2020. Like many other e-commerce companies, our sales were boosted in 2020 by the COVID-19 pandemic. Likewise, we've suffered from a decline in the growth of our organic business in 2021 as compared to 2020. Amazon itself saw a similar disappointing effect this year as a combination of reopening the traditional brick-and-mortar retail, increasing shipping costs, inflation, and tapering of government assistance created a perfect storm for e-commerce when comparing sales year-over-year results. It's been very challenging to generate growth organically in 2021, especially when compared to the previous year and the dramatic shift in the macro-level environment. At the same time, it's important to realize that most of our competitors are dealing with similar issues. Although our core organic businesses are uniquely impacted because it is led by several oversized items who have been more adversely impacted by the shipping costs and smaller products, in the long term, we strongly believe that our investment in our proprietary fulfillment network gives us a strategic advantage in categories dominated by oversized goods. Our organic business, as well as our recent acquisitions, have a strong baseline of products that will allow us to continue to build and grow our brand over many years through continuous investment in challenge expansion and additional products. This past quarter, we also made a decision to open to the seller community our internal affiliate platform called DealMojo. In the past few years, we've seen web publishers take a bigger role in the e-commerce ecosystem as they invest in content designed to promote products and channels such as Amazon and Walmart. Typically, these publishers benefit from affiliate marketing revenue paid by the online retail platforms directly. As a large seller ourselves, we felt that streamlining collaboration with publishers around discovering opportunities to promote products was an important part of our holistic e-commerce strategy. DealModule was designed to allow us to promote our product to publishers and offer them potential leads additional revenue share for creating content that drives sales for our products. Today, we're already working through the platform with several publishers with a total aggregate monthly traffic of more than 300 million monthly visitors. We believe that making the platform available to other third-party sellers will allow us to further scale the number of publishers and influencers using it and benefit ourselves by generating additional revenue stream for us. In the short term, most of the revenue driven by Dealmojo will be reflected in the sales of our own products. Ethereum continues to push forward our ambitious vision, and we have a lot more work to do. This is a marathon, not a sprint, and we believe we're turning another corner on our way to become the leading consumer product platform in e-commerce. With that, I'll pass it on to Ari to walk you through the financial results of the quarter.