Shift Technologies, Inc.

Good day and thank you for standing by. Welcome to the Shift Technologies first quarter 2021 earnings 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 a session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would like to hand the conference over to your speaker today. Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead.

Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead. Henry Byrd, Vice President of Strategy and Finance. Please go ahead on what the future may hold. And while we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions, risks, and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statement. Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future events, or otherwise after this conference call. During the course of the call, we will be referring to non-GAAP measures as defined and reconciled in our earnings materials. With that said, I will now turn the call over to Doug.

Thank you all for joining us today. I am excited to report today on a fantastic quarter, which has set SHIFT up for an incredibly strong 2021. In Q1, with focused execution on our business plans, We drove record financial results, including revenue of $106 million, up 254% year-over-year, and adjusted GPU of $1,690, up over 3x sequentially from the fourth quarter. Both measures are above the targets we set out on our last call. We achieved this with an adjusted EBITDA margin that was also better than we had previously implied in our guidance. Given Q1 success, our continued confidence in the strategy we previously laid out, and our success in executing our key initiatives, we are raising our full year 2021 guidance across all key metrics, which Oded will outline in detail later on this call. Our previously communicated growth strategy laid out three core drivers for our growth. Deepening penetration within our existing markets, enhancing our ancillary product offerings, and expanding our geographic footprint. This year, we are successfully delivering on all of these. We expanded our reconditioning capabilities, which has enabled us to drive both growth and higher adjusted GPU results. Additionally, our national brand awareness campaign is helping us drive strong growth. I'll take a moment to walk through each driver in more detail. In the first quarter, we delivered extraordinary revenue growth. more than triple last year's level, including strong sequential growth quarter over quarter. We tripled our e-commerce unit sales and nearly all of this growth came from the same six West Coast core markets we had last year. Given our full spectrum inventory capabilities and our unique model of test drives delivered to the consumer's home, we see a significant opportunity to further deepen our penetration and grow sales volume in existing service territories by continuing to capture more share. And as we scale, we continue to invest in our technology platform to support our accelerated growth model and industry-leading customer experience. Our core market growth is complemented by the new marketing strategy we implemented in mid-February. This strategy supports immediate and mid-term sales efforts while also building durable, non-perishable brand impressions, both within these markets and beyond, to benefit shift now and for the long term. The immediate positive results are extremely strong, as evidenced by outperformance on volume and revenue in the latter part of Q1 and our strong guidance for Q2, which Oded will detail in a moment. Given this success, we will continue our investment in consumer brand buildings. And as we've discussed before, the full benefits of this strategy will come in the months and years ahead. As Q1 marked the changeover from our old marketing strategy to our new marketing strategy, it also marked the high point of our 2021 advertising expense due to overlapping spend between our previous strategy and the new one. We expect our total Q2 advertising spend to be substantially lower than Q1. reducing our CAC roughly in half, and we expect continued improvement in CAC through the second half of the year. Q1 saw an historic supply shortage in the new and used car market. One of the core differentiators of our business model that allowed us to grow despite significant lack of supply across the industry is that we source the vast majority of our cars directly and indirectly from consumers, 87% in Q1. This model mitigates our risk related to auction and wholesale market volatility that impacts other industry players. Our tremendous revenue and volume growth was coupled with strong improvement in adjusted GPU, which grew to $1,690 in Q1, a more than 3x improvement over Q4. In November 2020, we outlined actions to improve and expand our in-house reconditioning operations by mid-year 2021. We succeeded in accelerating that timeline significantly and achieved our goal in early Q1. As anticipated, bringing our in-house reconditioning volume back to target levels was the primary driver in our improved front-end GPU in Q1, and that improvement will sustain going forward. Additionally, reconditioning improvements not only supported strong GPU growth, but also enabled us to increase our sellable inventory position 93% from beginning Q1 to beginning Q2, which has allowed us to efficiently meet heightened consumer demand even in a supply-constrained market. Concurrently, with strong improvements on the front end, our back-end GPU also performed strongly in light of our continued strategic focus on expanding our F&I offerings and delivery. F&I GPU reached a record $938 per unit, representing growth of 58% year-over-year on our path to our midterm goal of $1,200 to $1,300 per unit in F&I gross profit. This growth was primarily driven by the continued investments we've made in our consumer experience and product delivery, resulting in improved attach rates across products. there is still significant upside here, and we are excited by the opportunity to have FNI expand our GPU margins over time. Turning to geographic expansion, earlier this week, we announced that Austin and San Antonio, Texas have been converted to our full omnichannel offering, including test drives brought to consumers' homes within 145 miles of each city. Additionally, last week, we launched our car acquisitions in the Las Vegas metropolitan region. This is our first expansion into Nevada, and we are now able to purchase vehicles directly from consumers in 11 super regions across the western half of the United States, in addition to selling cars direct to consumers across the whole of the U.S. Our very strong first quarter results and Q2 guidance are evidence that our strategy is working. Digital adoption in the used car market is still in its infancy, with tremendous opportunity to capture share from offline sales. By executing against our plan, we are positioning Shift to be a leader in the automotive e-commerce transformation. Importantly, I would like to thank our Shift team members for their continued hard work and dedication, especially in overcoming the challenges brought about by the pandemic environment to deliver record results. I will now turn the call over to our CFO, Oded Shine, to review our financial results. As you recall, Oded joined Shift in March and brings extensive public company financial experience, including roles as CFO of both Stage Stores and the Fresh Market. Oded is also a board member and chair of the Audit Committee at Cons Home Plus. Oded?