Enjoy Technology, Inc.

Hello. Thank you for joining us for the Enjoy Technology third quarter of 2021 financial results conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. I will now turn the call over to Scott Anderson, Vice President of Investor Relations at Enjoy. Thank you. Please go ahead.

Thank you, operator, and good afternoon, everyone. Today's call will include remarks by ENJOY's Chief Executive Officer, Ron Johnson, and ENJOY's Chief Financial Officer, Fareed Khan. In addition, Melissa Bates, ENJOY's Chief Growth Officer, will join the question and answer session. Ahead of this call, ENJOY issued its third quarter 2021 earnings press release. You can access our earnings release on our investor relations section of our website, During the call, we will use non-GAAP financial measures and performance metrics. You should refer to the information contained in the company's third quarter 2021 earnings press release for definitional information and reconciliation of historical non-GAAP measures to the comparable GAAP financial measures. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends, or business or financial results which are subject to risks and uncertainties. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our filings with the Securities and Exchange Commission, which contain important factors that could cause actual results to differ materially from the forward-looking statements. These documents can be found on our website at investors.enjoy.com. We do not undertake any duty to update any forward-looking statements. Due to the Veterans Day holiday, our Form 8K will be filed before market open on Friday, November 12th. And now I'd like to turn the call over to Ron Johnson, CEO of Enjoy Technology. Ron?

Thank you, Scott, and thanks to each of you for joining us for our first earnings call. We are thrilled that on October 15th, 2021, Our combination with Marquee Rain Acquisition Corp. was successfully completed, raising more than $250 million in gross capital to help accelerate our strategy of reinventing commerce at home and fuel continued expansion with key partners. Since this is our first call, and many of you may be new to our story, I'm going to briefly introduce you to Enjoy. Then I'll discuss recent initiatives, provide context around the current business environment, and share where we're headed from a strategic perspective. Fareed will then review our financial results for the quarter and 2021 revenue outlook before opening up the call for Q&A. And Joy started with a simple question. What if the best of the store could come to you? Over the last seven years, we have worked tirelessly to answer that question, inventing our mobile stores, a new channel that pairs the convenience of shopping online with the best of a retail experience brought together in the comfort of a home. When we began this journey, I was confident that we could create a great customer experience. But what I didn't imagine is that we would simultaneously create a game-changing, disruptive logistics network as well. We all know the world is filled with tired stores. This is also true with the logistics networks that power online shopping. The vast majority of online orders are filled from regional distribution centers where inventory is stored, which third parties then transport to customers' doorsteps in a matter of days. Our partners forward deploy consigned inventory to our local warehouses, which we further deploy into our mobile stores to deliver a product with an experience in a matter of hours. In the years ahead, we believe this will become minutes as our network of mobile stores utilized on proprietary technology platform will deliver retail on demand. Quick commerce is the leading category in disruptive retail right now. And it depends on inventory being located within minutes of the customer. Well, our doors is located within minutes of the customer as well, and can be deployed on demand for our partners. Every mobile store is a warehouse on wheels operated by a full-time employee trained to deliver a product or an experience at the home while turning delivery into a profit center for our partners. We believe the best way to complete an online purchase for a premium product is to bring the full store experience through the door. Once in the home, we can do everything a store can do, but better. Our highly trained experts deliver, set up and activate devices, and can take trade-ins providing value on the spot. But we don't stop there. Ready with merchandise, our experts offer hardware, software, and subscription services on the spot, saving customers a trip to the store. Importantly, our experts provide the deep engagements our partners desire. Our lifetime net promoter score of 88 validates the value of the experience to shoppers. Enjoy's partners are some of the world's largest companies, including AT&T and Apple in the United States, Rogers in Canada, and BT and EEN in the UK. Each of these partnerships is deep and enduring. We have been working with our longest-serving partner, AT&T, for nearly seven years, and our newest partner, Apple, for two years, to bring enjoy to life in the United States. UK-based partners BT&EE and Canada-based Rogers not only are great business partners, but have invested in enjoy as well. Our partners drive customers to enjoy at near zero cost from their online platforms, call centers, and physical stores. Our mobile stores then bring products, services, and subscriptions to customers. Our monetization strategy provides win-win-win dynamics where the revenue and joy generated during our visits is earned predominantly from the incremental solutions we sell to partner customers. And wow, do customers love shopping at home, as evidenced by the fact that our NPS goes up as more solutions are purchased. Today we operate in locations serving over 50% of the population of the United States, United Kingdom, and Canada combined, representing over 200 million addressable consumers. Our proprietary technology platform enables deep integration with our partners, smart systems use real-time data to optimize productivity, and sophisticated inventory management tools deliver on-demand retail experiences with the precise inventory a customer needs. After years of serving our partners, we have earned the right to expand the number of customers we serve with our Smart Last Mile. Our partners recognize the value of our disruptive logistics network and are expanding their engagement with us. Beginning this quarter, we are serving online customers who pick an experience and those who pick a simple delivery. Our partners recognize how our advanced logistics platform can improve speed and reliability while offering experiences to as many customers as possible. Our long-term ambition is to serve as many of our partners' customers as we can as we provide a differentiated, profit-generating last mile for the world's leading companies. While most logistics networks are tired, ours is inspired. And our partners know they can gain a sustainable competitive advantage by going deep with our company in Joy Technology. Today we measure our partnerships in years. In the future, decades. With that overview, here are our third quarter results. We've had a busy quarter accomplishing several important strategic initiatives that will drive our growth for years to come. As I referenced earlier, we announced Enjoy's Smart Last Mile solution and are on track to expand to all U.S. markets in time for the holiday season. This is a game-changing opportunity for Enjoy as we will provide both in-home retail experiences and to-the-door deliveries, gaining access to a much larger share of our partner's customer base. This expands demand, increases inventory, significantly deepens the partnerships we have, and accelerates our scale. Importantly, we believe this will enable us to operate our mobile stores at optimal capacity throughout the year. We also expanded our strategic partnership with Apple to a total of 14 markets. More than tripling enjoys coverage with Apple to reach 67 million addressable consumers. I'm thrilled with how our relationship with the world's most admired company is scaling. We have expanded our mobile stores for Apple while continuing to deliver engaging customer experiences, paving the way for even more growth in the quarters ahead. We also launched cross-partner selling of Apple services across all U.S. markets, providing a new revenue source for Apple and Enjoy. Cross-partner selling is off to a great start. Customers love the opportunity to learn and explore the full potential that subscription services can bring to their lives. And the NPS and visits that include solutions for multiple partners are the highest of any visits we perform. During the quarter, at the request of our North American partners, we also announced plans to expand to approximately 100 markets in North America by the end of 2022. Once completed, this will expand Enjoy's global population coverage from 200 million to about 235 million addressable consumers. We've expanded Live Catalog to an additional North American partner following the success of this technology earlier in the year. Live Catalog enhances the commerce at home retail experience as this smart merchandising tool enables people to shop at home as they would in a store. And finally, we have successfully hired many new experts in a difficult labor market and expanded our mobile store capacity significantly. We are thrilled with how these initiatives position us for future growth. Q3 was a strong quarter for us on everything within our control. We have excelled at attracting talent. We have delivered visits with record duration, all-time high solutions per visit attach rates, excellent on-time performance, and earn continued industry-leading customer service scores. A higher business challenge has been industry-wide supply constraints. We rely on a steady stream of inventory from our partners. While late in the third quarter we have lower inventory levels than expected, these inventory issues are customary as manufacturers wind down inventory in preparation for a new product launch. We believe that the Q4 launch would likely have better supplies than normal. Unfortunately, the supply of key smartphones has been significantly lower than planned during the fourth quarter and will negatively impact our fourth quarter financial results. COVID-related component issues and a worldwide chip shortage are having an industry-wide impact. We believe we are being treated fairly by our partners and are in discussions about these issues and building solutions to mitigate inventory constraints in the future. The cornerstone is our smart last mile. We are also now developing the capability to take orders prior to the possession of inventory. I couldn't be more excited about 2022 and the long-term prospects we're enjoying, and we continue to invest in our mobile stores to support our partners in 2022 and beyond. The future of commerce is moving to the home, and we believe we are well-positioned to capitalize on this opportunity. With that, I'll turn it over to Fareed to discuss our financial performance.

Fareed? Thank you, Ron, and good afternoon, everyone. I'll start with a quick summary of our year-to-date results, then I'll cover the current quarter in more detail. For the nine months ended September 30, 2021, we generated $58.8 million in revenue, representing a 39% year-over-year growth. North America's segment revenues grew over 49%. Europe's segment revenues grew 4.2%. We added over 180 daily mobile stores during the period for an increase of 45% year-over-year as we continue to add capacity to meet future demand. We averaged 587 daily mobile stores globally. Daily revenue per mobile store was $367 during the period, Our loss attributed to mobile stores was $18.3 million. Total net loss was $149.8 million. Our nine-month adjusted EBITDA was a loss of $112 million. Turning to Q3, we generated $18.6 million in revenue in the quarter, representing an increase of 13% from the prior year. We added 134 daily mobile stores for an increase of 29% year-over-year, driven by our North American markets, which expanded stores by over 47%. Sequentially, our daily revenue per mobile store declined modestly. I'd like to call out three important factors influencing our top-line and mobile store revenue performance. First, as Ron mentioned, we expanded with Apple through the quarter. tripling the number of markets to a total of 14 to reach 67 million potential customers by quarter end. Our efforts to recruit and train highly talented and knowledgeable experts were very successful in the challenging labor market. To ensure success, we start slowly and build our visit volumes over time, focusing on the fundamentals like on-time performance, visit duration, NPS, and operational excellence. While we tripled our daily mobile stores supporting the Apple partnership, the reduced visits per day assigned per mobile store during the launch period reduced average daily revenue per mobile store in the third quarter. The second factor influencing the quarter was our investment in additional mobile stores to be ready for the holiday shopping season. From the beginning of the third quarter to the end, we added over 100 daily mobile stores in North America, and that number nearly doubled again by the end of October. Because the incremental investment in mobile stores occurred during our seasonally lowest volume quarter of the year, the investment reduced our visits per day per mobile store and revenue per mobile store and increased cost of revenue. We timed the ramp up late in the quarter to minimize the impact of this growth. As Ron mentioned in his remarks, the third factor was product availability at the end of the quarter, which is typical during the transition to new product introductions. Product availability impacts our operating results in several ways. We estimate supply issues impacted revenue in Q3 by approximately $4 million, largely at the end of the quarter, coincident with the new product introductions. Lower product availability reduced visits per mobile store per day, which in turn reduced average daily revenue per mobile store. We had the capacity, but with lower product inventory, many potential visit opportunities were missed. Our existing capacity could have absorbed these visits, and the revenue would have flowed through to mobile store margin and EBITDA at a very high rate. We remain pleased with our revenues for visit performance. Our cross-partner selling initiative continues to scale nicely, and we are seeing a steady increase in the number of subscription services being attached during telco partner visits. We're also very pleased with our operating performance on key metrics we control, such as on-time performance, visit duration, and, of course, our strong customer satisfaction results. As you know, daily revenue per mobile store is a function of revenue per visit and visits per day. Taken together, the factors we previously discussed reduced our mobile store revenues sequentially from Q2, principally from lower visits per day. Furthermore, versus the prior year, Q3 results are not directly comparable, as during 2020, we were provided supplemental one-time fees earned from several partners to offset COVID-related expenses. Cost of revenue, which reflects the direct operating costs of our mobile stores, principally expert compensation and vehicle costs, was $27 million during the quarter. This result was 52% higher than the prior year period and 5% higher than Q2, reflecting additional experts and vehicle additions to support the growth in our daily mobile stores. Our mobile store loss was $8.4 million for the quarter, reflecting softer than expected revenues, which would have flowed directly to mobile store profit. Total operating expenses were $64.7 million for the quarter. Operations and technology expenses, which reflect activities that support our mobile stores, increased 12% sequentially from Q2 and 30% from the prior year period. Increases were driven by higher recruiting and onboarding costs from our successful hiring activities. General and administrative costs were $13.5 million in the quarter and included $1.1 million in higher professional fees related to the business combination as compared to Q2 and approximately $800,000 in additional stock-based compensation. Net loss for the quarter was $54.4 million versus $56 million in Q2 and $28.7 million in the prior year comparable period. Net loss per share, basic and diluted, was 83 cents At the end of the year, there were 65.9 million shares outstanding. Adjusted EBITDA was a loss of $43.2 million. Let me briefly touch on our segment results. We operate two geographic segments, North America, consisting of the US and Canada, and Europe, which captures our UK operations. North American revenue of $16.2 increased 29% year-over-year driven by growth with AT&T and Rogers in existing markets and expansion of our Apple partnership. We increased daily mobile stores by 150 year-over-year, as mentioned, and added 100 stores during the quarter with an acceleration plan during Q4. Daily revenue per mobile store averaged $379. down sequentially from the previous quarter's results of $431 and impacted by the lower number of visits directly stemming from three factors discussed earlier. North America segment loss was $26.9 million for the quarter. Year to date, North America segment revenues increased 49%. Year to date, North America segment loss was $66.9 million compared to $45.9 million in the prior year period. Europe revenue was $2.4 million for Q3, down from $3.8 million in the prior year period. Segment loss for Europe was $8.1 million as compared to $5.4 million in Q3 2020. Year-to-date Europe revenues of $9.9 million increased 4%. Year-to-date Europe segment loss was $21.4 million compared to $12.9 million in the prior year. Q3 was a rebuilding quarter for Enjoy in the UK. As we did in North America, we shifted to our win-win-win economic model that generates a higher variable fee on solutions attached during our customer visits. The transition to this model reduces our revenue per visit in the short term, but offers more upside potential over time. During the transition, we reduced our mobile store footprint until we experienced measurable improvement. Now let me briefly comment on the sources of funds from our recently completed transaction. Enjoy raised more than $250 million in growth capital. This includes a total of $75 million in convertible notes that converted to equity at the close of the transaction. $80 million from a pipe facility and a combined $110 million in gross proceeds from both the cash and trust and the backstop agreement. Proceeds from the transaction were used to retire approximately $49 million in debt. Let me close with our updated 2021 revenue outlook. As of the end of Q3, we remained on track to meet our prior 2021 guidance. This guidance was predicated on a strong fourth quarter driven by historical seasonality, successful hiring to increase mobile stores, launch of the Smart Last Mile, and ample inventory of smartphones. We successfully hired experts to meet our mobile store expansion plans and launch Smart Last Mile on schedule. We were even encouraged by the initial smartphone launch quantities, which were higher than the prior year and sold through rapidly. However, starting in October, subsequent receipts of inventory were significantly below our expectations due to industry-wide supply disruptions affecting our partners. Consequently, this has been reducing our revenue compared to plan by approximately $2 to $2.5 million per week since the product launch, and we have very limited visibility into near-term receipts. Therefore, we are updating our full-year revenue outlook for 2021 to a range of $80 to $90 million. The low end of this range assumes no improvement in product availability, and the high end assumes improved product availability. Given that we are well into the fourth quarter, we no longer expect to be profitable at the mobile store level for the entire quarter as we had planned. Fortunately, because of our successful hiring and launch of Smart Last Mile, we are positioned to immediately translate new inventory into visits and revenue. Going forward, we're implementing technologies to make Enjoy less exposed to inventory fluctuations. As you heard Ron mention, Smart Last Mile is a strategic initiative for ENJOY that we believe will provide significantly more inventory when available throughout the year. Importantly, it also enables a technology change that will allow us to take orders for future visits without inventory on hand. We believe this ability to take back orders will mitigate lost visits during periods of supply constraints such as we're experiencing now. In closing, we believe there are tremendous opportunities ahead for Enjoy as we pioneer a disruptive new channel for commerce at home. There will be challenges along the way, as we have seen with inventory, but that does not change the large addressable market and first mover advantage Enjoy has for its unique business model. With that, I'll turn it over to the operator for questions, and I'm joined by Ron and Melissa Bates, our Chief Growth Officer.

Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If for any reason you would like to remove that question, please press star followed by 2. Again, to ask a question, press star 1. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. The first question comes from Barry Fine with Spartan Capital. Please proceed.

Hey, good afternoon, folks. Thanks for taking the call. I want to continue on the supply chain and just understand better how in the field that impacts operations. So on the one hand, presumably you're able to schedule fewer visits. On that point, I would think that your partners would want to prioritize supply of handsets to enjoy because of the greater outcome for you and the partner. And then the second impact I wanted to ask about is the inventory you carry on the vehicle and then the ability to upsell. So a customer is taking one phone and they're eligible for upgrades on two more, sell the additional phones. Could you talk about how the supply chain issues are impacting you on a day-to-day basis?

Hi, Barry. This is Ron Johnson. I'd love to take a first shot at that question for you. As Freed mentioned on the call, we were thrilled with the initial receipt of smartphones for the launch and sold too rapidly. That was followed subsequently by very limited supply of phones, and we've been missing about $2 to $2.5 million a week since that time. The challenge, Barry, is that our partners, and I think our partners are treating us very fairly, We're in conversations with them regularly about the issue, the flow of products, you know, going forward. But the challenge uniquely what happens is that people, because of limited supply, tend to place their orders online for a future date. If you go to our partner site, you'll notice starting around October 1st that key smartphones are being booked four, five, and six weeks out. The partners have to prioritize those orders. versus Enjoy and other channel partners. So that limits the inventory that's available to us. That would also address your second question that limits the amount of inventory in the vehicles for additional purchases. It doesn't impact accessories. It doesn't impact subscription services. But it does impact our ability to sell additional e-incoming smartphones in the visits during that period.

And, Barry, this is Melissa. Just to add to that, on the second point that Ron was talking about, the ability to sell additional phones in visits, we are able to, with our partners, we are able to place orders for future deliveries. So though, as you can imagine, many customers like the immediacy of being able to purchase through our Commerce at Home platform and getting the phone on the spot, we are able to purchase, we are able to sell phones for future dates, and they just get shipped to the customer. So we can still get our revenue per daily mobile store for some of the hot SKUs that we don't have in stock at the time.

Okay, that's great on the current. If we think longer term, how should investors think about supply chain issues in terms of the ability of Enjoy to be a high-growth company over the next several years? Are you optimistic they get worked out? Are you working on other strategies? Are you working on – you've talked in the past about other verticals, luxury products, for example. What's the long-term solution for Enjoy to the current supply chain constraints?

Yeah, Barry, let me take a shot. This is Ron again. You know, I've been around the iPhone launches since the initial one, and no two are the same. You know, many things change. The flow of product, end-of-life product, the announcement date, the number of products that are announced on the announcement date, the flow of inventory going forward. But historically, it's a short number of week issue until we get into very high flow of inventory. This is a very unusual one. But the good news, as we look forward, is we can mitigate this through our technology platform. And I'd like Melissa to talk about what we're doing, working with our partners, to address this going forward for future years as quickly as we can.

Absolutely. So as Ron and Fareed mentioned earlier, and as you have heard, we successfully launched our Smart Last Mile platform, and this is a cornerstone to us being able to take orders without inventory on hand. So because of the Smart Last Mile, we now have the capacity to do both experiences as well as deliveries. And because of that, we can flex up to support larger demand. Therefore, we expect to work with our partners to launch something that Fareed mentioned, which is called backorders, or being able to take a future visit when we don't have the inventory on hand. And this will help with what Ron just mentioned, where the customer has purchased the phone and the inventory is already committed to them, so that customer gets prioritized. Enjoy will just be the fulfillment method, and our Commerce at Home platform will be able to supply that particular commitment to the customer.

Okay, that's great. And then one last quick question, if I might, please. And, Fareed, I'm leaving you out, so I'll throw this question to you. As of today, do you have a current share count for us for shares outstanding currently?

Yes, Baring. I'll give you a number. In the Q3, you'll see the enjoy share count pre the transaction. We'll come out with disclosures with the new share count post the transaction. Just give me a second here. So at closing, we had 119.2 million shares in Joy Common Stock. There's an additional 15.7 million of warrants with that.

Okay. Those are my questions. Thank you for taking them all.

Thank you, Mr. Tsai. The next question comes from Dana Telsey with Telsey Advisory Group. Please proceed.

Good afternoon, everyone. A couple questions. As you think about the mobile stores and the timeline to profitability, given the changes going on now, How do you think about that timeline? I know it was originally supposed to be in the fourth quarter. How do you think about timing? And then on inventory availability, any insight into do you get more goods in the beginning of 22, any time frame of what you see there?

Dana, this is Ron. Let me take the second question. Then I'll let Fareed talk about mobile store profitability. Okay. We are working with our partners on inventory, but obviously we can't comment on the partner supply chain and their ability to deliver. We've therefore taken our guidance and shown two ranges, one which assumes no improvement in supply chain and one that provides improvement to provide a range. Having been here a long time, I would be surprised if inventory flow didn't improve as it moved through the quarter and be pretty darn solid at the beginning of 2022. However, we don't know. You know, these are kind of unprecedented times. But I think the best thing to look at there is the communication they're hearing from the manufacturers, because ultimately the product will start flowing there and then transition to the partners like a carrier. And as I said before, Dana, we feel like we are going to be treated very fairly by our partners. We are strategic long-term partners that have a core competitive advantage to them, and so we are confident when the inventory flows that it will flow to us at the right level.

And, Dana, thanks for the question. I just actually will build on what Ron mentioned. So a mobile store profitability is really a function of the revenue per visit and the visits per day. On the revenue per visit, we're very pleased with how things are trending. On the visits per day, that's where the issue is impacting the mobile store profitability. So we have the capacity. We built that through Q3 in a very difficult labor market. We've got the revenue per visit part of the equation, and the key question mark is the visits per day. And so as inventory comes back, that inventory is going to flow into visit volume because we'll be able to complete the visits, and that will improve visits per day. And we should be able to, you know, quickly show mobile store profitability enough for the whole quarter because we're already halfway in. It's going to be challenging. But that's the missing link. It's the number of visits our stores can do, and that part of the equation is challenged by the inventory issue. And we're trying to find the balance of, You know, when it comes back, we want to still be at scale to still have the overall capacity to be able to, you know, have the volume in place. And I think, you know, as inventory comes back, we'll be right on track to show profitability, but not for the quarter.

Got it. And two follow-ups. Are there cost buckets free that can be managed until revenue trends improve? And then, Ron, perhaps, as you think about the rollout of the mobile store trajectory, how is this being adjusted as you think about 2022?

Yeah, I'll take the second one first. I guess I'd like to talk first, Dana. We are not changing our approach to 2022. You know, one of the highlights in the quarter is we built the capability. We actually hired 500 new experts in a month. So we have built the muscle to hire up to 6,000 experts in a year. That gives us a lot of flexibility because we can be a little more nimble on adding stores because we know how to hire people and to train them and bring them up to speed in a number of weeks. But we do believe the most important thing is we want to be ready when the inventory comes. You know, last year during the pandemic, we had a shortage of mobile stores for a good part of the time. We did not have the availability we desired for our partners. And part of being public and with capital raised, we can lean store costs. And so we're managing that very carefully this quarter. Because of our rapid hiring, we've been able to slow down the number of people we brought on to address the issue you talked about in the first question and But we're bullish on 2022. Commerce is moving to the home. Our partners are leaning in. The smart last mile is going to have a huge impact on our volumes overall, and we want to be ready for that. And so we're not going to let these short-term supply chain issues get us on our back foot. We want to be ready when the inventory arrives to continue to drive our business and win homes.

The only thing I would add to that, to the first part of your question, is there's always opportunities for efficiency and productivity. One thing for sure we're doing is being very focused with the areas and the initiatives that we're investing in. We've got a few key drivers of the business. Smart Last Mile is a very exciting opportunity for us. That has some technology, you know, tweaks with it that we're investing behind. But overall, you know, our feeling is that, you know, this investment challenge is an interim challenge, and we need to be ready to scale when that inventory comes back, and that's exactly the approach we're taking at this time. We're obviously watching it very closely, working with our partners very closely, and we'll continue to be focused on efficiencies. We don't view this as a situation that would need to have some different cost approach where we would not invest in some of these growth opportunities that we see ahead of us. So we want to make sure we capture those for the future.

Thank you. Thank you, Ms. Telsey. The next question comes from Will Power with Bayard. Please proceed.

Great. Good afternoon. Thanks for taking the question. I guess a couple of questions. I guess I want to come back to the supply chain commentary. And I guess first off, just wondering if there are any signs at this point, given we're almost in mid-November of improvement in inventory. It sounds like it's still pretty murky, I guess, near term. But just wondering if you're seeing any green shoots there at all. And I guess then as part of that, I guess, Ron, really just trying to understand the confidence and 22 at this point, given what seems like low visibility, and I guess, understand why you wouldn't still have supply chain impacts as you at least enter into 2022. And I guess that as you look at kind of reiterating previous 2022 guidance, you know, what are the key elements that give you confidence and being able to hit those targets given the current issues?

Yeah, as we look at 2022, there are many growth initiatives that will drive volumes that we believe will allow us to hit our forecast, our guidance for 2022 on the revenue side. You know, obviously, we've been asked to expand to nearly 100 markets with our partners, working on rollout plans for that to get those done as we move through the year. We're launching Smart Last Mile. That has launched. That will be in all markets in time for holiday. That is a really strategic initiative, and let me explain what it is. You know, we built this supply chain that puts inventory within minutes of customers. As I mentioned earlier on the call, most of our partners still ship from regional warehouses, and it takes days to reach the customer. Everything we do today with forward deploy inventory requires getting to the door. So our partners have come to us and said, will you do our to the door and through the door because you have greater speed? you'll have better reliability, and you can turn those into an experience. That's a really strategic initiative for us, but also for our partners that we're deploying. That whole strategy was not in the original investor plan, so that's a growth opportunity on top of that. Additionally, it has another thing. So we do not have a demand issue. The question that will become, we don't believe we have a demand issue, it is a supply issue. And having, you know, been around this industry a long time, the hardest supply chain portion is always at the launch. Now, if you think of Apple, they've got 1.2 billion users around the world. People upgrade in two or three years. Apple will do about 400 million, you know, core products every year. A lot of people want those at the launch. You know, that's always an ongoing challenge this initial period. But then supply and demand catch up. You know, and I believe that our partners have the ability to manage the supply chain. I don't have any better visibility than you do, but all of my experience would say this will become a modest issue as we move into spring. But we believe our demand drivers will offset the supply issues that could come up. And that remains to be seen. But we're confident in our 2022 plans and very excited to get back in stock so we can continue on our journey to profitability.

Okay, yeah, that's helpful, and I agree. I mean, supply is bound to come into balance at some point. I guess it's just a question of how long it actually takes.

Well, I'd like to add this, too. The encouraging thing here is it appears like from the early results, the iPhone 13 is a very strongly demanded product. And as I look into 22, I'm thrilled to have a roadmap ahead of us which has a product that appears to be in strong demand. That's a core product to us. So the fact that it's in high demand is a net positive. The fact that the supply chain is a little tight right now is a negative. We'll see how that balances out.

Yeah, okay. That's fair. And I may have missed this in some of the earlier commentary. On the mobile store market, addition front, are you all still targeting 1,000 mobile stores kind of in the beginning of 22? And I guess kind of tied to that, maybe just update us on, you know, what the hiring environment looks like, what the retention environment looks like. I know we know it's been a tough labor market. It seems like you've navigated that pretty well overall over the course of the last year. But just maybe an update as to how hiring retention is going and confidence in hitting some of the prior targets for mobile accounts.

Thanks for the question, Will. So we still have the same target for the exit rate for this year. We're going at a little bit of a slower rate in terms of our expert hiring, and that's partly because we're What we proved through Q3 is that we can actually bring on experts in a very challenging environment in the quantities that we need. And it didn't happen overnight, but we had a combination of really engaging our field, our field leaders, a combination of third parties to help with that. And when we bring on a lot of experts, the aggregate numbers look large. When you really bring it down into an individual market like Chicago or Orlando, The numbers are very manageable at the local level. And so we've been having good success finding, you know, quality candidates very quickly through a process. And we find that speed from, you know, initial contact to offer, you know, fully vetted has been very successful. So we feel, you know, it is a challenging environment. There's no question it's probably the toughest it's been. but we've been finding ways to bring on terrific experts, and that gives a lot of confidence on, you know, being able to, when inventory comes back, being able to hire to whatever store capacity we need, and that's a new muscle we built through Q3.

Okay, and maybe a final question if I can. Just on Q3, you know, cross-sell and some of the traction you're seeing there. I mean, I know the number of mobile visits overall are below plan, but if you look at the business that have taken place, are there any stats, trends you can point to in terms of, you know, cross-sell success, particularly, you know, AT&T business being able to cross-sell, you know, Apple services, you know, if the iPhone is not available, they give you, you know, confidence in that becoming a bigger kind of productivity driver going forward?

Yeah, as you know, Will, we shared a chart in early September that showed the initial cross-selling from like the first week and second week in July through August week four where we had week-over-week increases in performance. And that continues to do extremely well. And we're not disclosing the exact amount at this time, but we're very pleased with it. The most important thing is we study our NPS very carefully by visit type. We look at NPS for a delivery. We look at NPS for a visit without a solution. We look at NPS for a visit with an AT&T-only solution. We look at NPS for a visit with an Apple-only solution. And we look at NPS for a visit where someone purchased something from AT&T and Apple. And our highest NPS visits when a customer purchases from both partners. Ultimately, your ability to cross-sell is based on it being a win-win situation for the customer, for the partner who arranges the visit, and for the other partner that we offer in the visit. So to me, that's the most encouraging data point. It's obviously very popular. As we showed earlier, it was growing rapidly. And really does seem to enjoy the chance to start the shop from two partners in a visit. So Melissa is going to be taking the lead as we go forward in our cross-partner selling. That's one of her responsibilities as we move through this back. And that's a big priority of hers to expand cross-partner selling in visits.

Okay, that's great. Thank you. All right. Yeah, good luck as we kind of work through the supply challenges here.

Thank you.

Thank you, Mr. Power. The next question comes from Jane Munster with The Loop. Please proceed.

Good afternoon. Pardon my cold. It's just a cold. I just want to step back, Ron, and think about the big picture here, the concept of commerce through the door. The previous question, you enumerated the metrics that give you some confidence there, but I wanted to just revisit that. And as you think about the thesis, the shift in consumer behavior that happens every decade, Can you remind me what are the metrics you've seen in the visits that you are completing that give us confidence that this is, in fact, rolling out as planned?

Yeah, thank you, Gene, very much. As you know, I'm a lifelong retail person having worked in the industry for nearly four decades. You know, I've worked in different types of stores. I worked at Target. I worked at the Apple stores, right? And the real question is when someone comes in a store, what is their propensity to buy? And retailers tend to look at a conversion rate, what percent of customers bought during that visit. In some stores, you look at the percentage of traffic. But a lot of times you look at if they bought an initial product, what is their propensity to buy an additional product to go with it? And that's the number, the metric that really matters for Enjoy. We continue, as I mentioned earlier, to increase the number of visits that have a solution attached to them. And that was very high as we reported around early September. At that time, we said over half the visits involved someone buying a purchase, and that continues to improve. And so that is a core metric that says people like to shop at home. Why that's important is each of our partners is trying to navigate a future where more and more shopping is digital. Whether you're Apple or AT&T or Rogers, you depend on deep engagement when you only get to see that customer once every couple years. You know, with the operating cycle being every two years, our partners invent a lot of things. They invent a lot of software. They invent subscriptions. They invent new hardware. When people buy online, they don't tend to shop. They tend to buy a single product only. Therefore, I believe, Gene, that the Commerce at Home initiative is accelerating. But the other thing that gives me hope is the rapid change and the partners trying to do commerce at home. You know, I had a tonal workout thing brought to my home this weekend, delivered by a person, set up, installed, tips and tricks. That's commerce at home. Electric bikes, companies more and more are bringing the product to the customer, commerce at home. Quick commerce, you look at companies like Gorilla and others that will deliver, in effect, a grocery or convenience store experience in a matter of minutes, these are the expectations customers are building. And so I think shopping at home is going to continue to accelerate. I think the stores will become less important. Their roles are going to change, as we're already seeing. And we're at the forefront of turning that shop at home or that commerce home, that online order, that call center, into an at-home visit with amazing speed. And the fact that we are now doing to-the-door and through-the-door shopping expands the impact for our partners. You know, in a retail store, sometimes people want convenience. They come and they're, hurry, I just want a product. Great, thank you for coming. Most of the time we're able to get an experience. Well, now in the future with Enjoy's model, partners will forward deploy more inventory to us, we believe, so we can do delivery to the door or through the door. So we'll be serving our customers who just want convenience. We'll be serving the customers who want an experience. And we will try to turn those that ask for convenience by an offer for help into deep engagement. So I am very bullish on commerce at home, Gene. A short-term inventory issue has no impact on the long-term trends toward the home and the need for premium companies to engage with their customers.

Do you think just in addition to commerce at home, the quick commerce piece of this, and that's something that is relatively new, it makes sense why some consumers want someone to come through the door and to kind of explain things while others just want it fast. And you have, with your infrastructure, have the ability to deliver that. If you think out one, two, three years, do you think quick commerce could be more than half of the total visits? How do you think about that mix between through the door versus quickly to the door?

Here's my sense, and I don't know, Gene, but as you know, today the vast majority of our business is done next day. Very few orders are done more than next day. So we're already faster than the traditional, what I call, tired regional shipping models. We deliver next day, and we do some same day. When we move into the tuber door, that will almost all be starting out next day, and then we'll move to same day, right? I believe that over time, as our network gets more dense, as our mobile store gets networks, the time to order to visit will go down. But I don't think that will change the mix of experience and delivery, because all customers seem to want it faster. You know, when we, on the website, they almost always pick the first available time. So the fact that we're faster... I don't think change is the mix of delivery, right, because the customer is going to make that choice based on their particular needs. And the beauty is we're learning rapidly right now. You know, we get to see every day now, you know, in a situation where the inventory playing field is level, you know, like no matter how much inventory we have, every day in an enjoy house, pick a house in Minneapolis like where you are, you know, that inventory is level. We know what percent are picking experience. and what percent are picking delivery. We've said every market around the world. And so we understand the demand for experience. Those are our most valuable visits for partners and for ourselves. That's what we want to lean into. But we want to differentiate that we can deliver a retail store on demand and not a product on demand. That's a really big difference. And I believe most of this quick commerce is going to be concentrated in big cities and because you need density because you have to have the inventory within minutes of the customer. With our mobile store network, we can take products that are even less frequently purchased and have those within minutes of customers in a large percentage of the trade area. So I think it's, you know, we're lucky that QuickCommerce is happening because we built an infrastructure to take advantage of that trend. But the history shows when someone gets an experience in one way for one product and They wonder, why can't I have it for another product? They don't understand the supply chain challenges. And so I think this is going to be a big advantage for us in the years ahead.

Makes sense, Mike. Quick commerce, and as you're fulfilling those customers, long-term fulfillment within an hour, is that potentially 30 minutes? I mean, what is the – for those customers who want that, how fast is that?

Gene, to me it's going to be on demand. You know, we'll move toward on demand because we'll have an inventory in an area in our systems which are very intelligent. We know what we've committed to exactly where that is, and we know how much time is in the schedule at that moment. So it will be as fast as the relationship between our inventory and our availability to the customer placing the order, and we'll be showing that in real time. So I know it will be minutes. I can't forecast exactly how many minutes that will be.

Final question, just to follow up on some of the 22 commentary, you mentioned confidence in 22. And would it be, do you think just good measure given the supply issues as we think about modeling for next year to back off the $245 million revenue outlook as to be conservative or do you feel like that's still within the range?

Sorry, Gene. Could you just repeat that question? I do apologize.

No problem. I thought you had mentioned, perhaps I misheard, about confidence in 2022. And I was curious with the confidence, was that a reiteration of the $245 million outlook? Should we be revisiting that just given the supply issues they're likely going to face? you know, kind of find their way into undoubtedly into 2022, it seemed to back off. I just want to make sure I understand the confidence comment, uh, some perspective around that.

Yeah. I mean, let's say two things. The, um, you know, we're confident in the opportunities that, um, we have going forward in the business, you know, the smart last mile, the additional market additions, We don't want to get into revised guidance for next year in any way today. I think what we're saying is we're confident in the plan that we put forward. We see a lot of opportunities to capture that. We believe the inventory challenges are going to be interim, and we'll get through that. We just don't want to put out another number at this time. But if you look at the initiatives that we've talked about and that came up through the quarter, I think all of those are strengthening partnerships, new market opportunities, and certainly give us confidence in the underlying growth in business. That's helpful. Thank you.

Thank you, Mr. Munster. There are currently no further questions. Thank you. There are no additional questions waiting at this time, so I'll pass the conference back over to the Enjoy Management team for closing remarks.

Yeah, let me just thank you for attending our first earnings call, and we look forward to talking with you in the weeks ahead to answer further questions and to clarify any questions you may have. But we look forward to building a great business. You know, it is hard when you have a supply chain challenge. But they come. We all know that. These are industry-wide. I think the key is what are you building long-term? You don't want to impact that, you know, based on a short term. So we're going to keep building. Enjoy. We're going to be really smart about the pace of growth of stores, as an example. We'll be smart about the rollout of initiatives. We will do things based on what we learn, as we're learning every day now on the Smart Last Mile. But we remain very confident in our long-term prospects, because as I said earlier, commerce is moving to the home, and we have a very good business structure, a business strategy to take advantage of that and to help our partners win in the home. So thank you for joining the call, and we look forward to talking to you soon.

That concludes the Enjoy Technology third quarter of 2021 financial results conference call and webcast. Thank you for your participation. You may now disconnect your line.