Boxed, Inc.

Good afternoon. Thank you for attending today's Fox Inc. Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. My name is Bethany and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Anna Kate Heller, from Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us on BOC's fourth quarter and fiscal year 2021 earnings conference call. On the call today are Che Huang, co-founder and chief executive officer, and Mark Zemowski, chief financial officer. During the course of this call, management and make forward-looking statements within the meaning 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's 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. This call is being webcast, and an archive of it will also be available on Buck's investor relations website. Now, I'd like to turn the call over to Che.

Thanks, Anna Kate, and hi, everyone. I couldn't be more pleased to be speaking with you on our first earnings call as a public company. As you'll soon hear, we're proud to have delivered results in line with the forecast we released in October of 2021. Before we get there, though, I'm going to first spend time sharing the Box story and tell you more about why we're so excited about what we've created. Following my remarks, Mark is going to discuss our Q4 financial results in greater detail, as well as provide our outlook for 2022. After that, we'll open that call up for questions. Now, for those who aren't familiar with our company, first off, welcome. Box is an e-commerce retailer and an e-commerce enabler, and our mission is to help the world stock up through our technology, and as you'll hear later without losing sight of our ESG mission. So what does that mean, practically speaking? Well, it means that our business can be split into two primary operating segments. First, we operate an e-commerce retail service that provides bulk groceries to both businesses and households. Back in 2013, we had a simple idea. Make shopping for household essentials easy, convenient, and fun so customers can focus their time and energy on things that really matter. instead of spending their time traveling to and from traditional brick-and-mortar wholesale clubs. From that initial concept in 2013, Bach threw into the e-commerce technology company that we are today, with purpose-built proprietary storefronts, analytics, data science, fulfillment, advertising, and even robotic technologies. Now, you might ask, why did you build all that technology yourself? The simple answer is this. From those early days, we knew high average order values and basket building would be important to our business. Yes, to us. There wasn't a lot of compelling basket building e-commerce technology out there. So with technology being core to who we were as a founding team, we decided to solve many of those problems in-house, from the recommendation engine to the data model, all the way to how we handled packing a high amount of items in a box. So that brings us to our second business segment, where we've checked all that technology I just spoke about, and allow others to enable their online businesses. We call this our software and services business. On this side of the house, customers in need of an enterprise-level e-commerce platform can find an end-to-end solution built by actual e-commerce operators. To put it simply, it's e-commerce technology built by e-commerce operators. Okay, so we've discussed the two main business units at Formbox. So how did it all fit together? Well, what we've created at Box over the last eight years can be visualized as a funnel. At the top of the funnel, customer traffic is driven by a need to stock up and save on bulk essentials. These customers aren't just looking for a single item or even a single bulk item. Rather, they're customers, many of whom live in rural areas and small towns, who are looking to stock up their pantries. It may not surprise you that this is a $100 billion online grocery market we're attacking. And it's expected to grow at approximately 20% CAGR over the next five years, so almost $250 billion. It's also important to note right here at the top of the funnel that we not only service household consumers, but we're also servicing many small, midsize, and Fortune 500 businesses as well. In fact, our B2B customer segment was growing at a 50% CAGR from 2015 to 2019. And we believe we're well positioned to capture significant demand for businesses as they reopen their offices after two long years of remote and hybrid work. So we talked about who that customer is at that top of the funnel. Now, the second step under that showcases and leverages the beauty of the Vox experience. The simplicity of the user-friendly experience coupled with our data models allows our customers to browse and discover items with ease. yielding those important large order values I mentioned before. Our average B2C consumer is buying over $100 worth of goods and eight items per month in a single shop, while our average B2B order is more than double that. In the next and third step of the funnel, our technology continues to shine. We've built a proprietary, cost-per-click, programmatic ad platform that allows our suppliers and partners to bid on web and ad placements that drive real return on ad spend. These clients can set up their accounts with a budget of their own choosing, then bid on the exact slots to deploy that budget, and see the resulting return on ad spend in real time, providing a fully closed-loop advertising attribution model. We've received great feedback as this allows our partners to spend high-impact ad dollars at the point of customer conversion, and we see meaningful runways to increase this high-margin business as a percentage of total revenue over the next several years. For step four of the funnel, in adjacent categories like health and beauty care, pets, baby, home and organic, our platform is also open to third-party sellers now. We're currently selling approximately 1,000 items through those third-party sellers, which we expect to continue to expand throughout 2022 and beyond. These sellers have access to our loyal Fox customer base and, in turn, our customers are provided a deeper, broader, and richer assortment of products that could translate into larger baskets and greater wallet share over time. It's important to mention that because product curation is a core part of our identity, we will continue to create from only high-quality and trusted sellers, differentiating us from other e-commerce marketplace platforms. Our intention has never been to be the everything store, but we do strive to be the everything you need to stock up store. Lastly, for step five of the funnel, because the majority of what we sell are consumables, our AI models learn and predict when a customer might run out of a particular product, which allows us to send a message to our customers to say, hey, come back and shop box again. The customer exits the funnel and returns right back at the very top again. This funnel that I just walked you through is powered by our proprietary end-to-end technology. From the first click, all the way to the automation robotics in our newest fulfillment centers. Yes, we build our own robots. We believe this end-to-end capability is truly rare and a notable differentiator in the market today, allowing us to be more nimble, flexible, and react to both macroeconomic, industry-wide, and business-specific trends in real time. As such, we've extracted that technology for others to use. We think there's significant value in licensing our technology to others across the globe, and we've begun to do so through our unique enterprise-grade software and services offering. So as that retail customer that I mentioned before exits the funnel and reenters at the top, the technology also exits the funnel, is improved through our projects with our software and services customers, and is then also then re-injected at the top. To put it plainly, as we get smarter, better, and faster in the main funnel, those advances inure to the benefit of our software and services clients. As that technology becomes more robust with software and services client work, the main funnel that Fox retail customers go through also gets better through learning the new features. This forms a truly symbiotic relationship. Now that we've had the chance to properly introduce our business to you, I'd like to highlight just a few exciting developments. In February 2021, we executed our first enterprise software licensing agreement with Eon, one of the largest retailers in Asia. By September, E.ON was already using Boston's proprietary e-commerce technology in over 40 locations to power its in-store pickup and on-demand grocery e-commerce offerings. We're currently in discussions to expand the partnership into other agent markets with E.ON, which we believe shows the enterprise-level power and sophistication of the platform we've built. We look forward to executing our growth strategy to expand that relationship in the coming months and years. We also recently announced an exciting expansion of our relationship with Google Cloud as a tremendous partner to support continued long-term growth of our software and services business. In the retail business, our Boxed Up loyalty program continues to be a compelling growth opportunity. In 2021, compared to an average B2C customer, Boxed Up members ordered 2.2 times as frequently and spent approximately 215% more per customer, demonstrating the stickiness of that customer base. During the fourth quarter of 2021, we also completed our first acquisition, Max Delivery, one of New York's first on-demand grocery delivery services. The acquisition broadens our capabilities in fresh grocery and dark store fulfillment. Max Delivery will also become a client of our software and services business, adopting our proprietary commerce technology to help enable scalability of its operations and expansion into additional markets. As we speak today, We're already integrating the Max Delivery operations and team into the Box family. As of January, Max Delivery customers are already able to purchase print and swing products, which is our high-quality product brand, through the Max Delivery platform. We're also actively pursuing and negotiating additional sites for the geographic expansion of the Max Delivery offering. Now, with all that said, I'm proud that we've executed all this without losing sight of our ESG mission. always taking care of our team members, even back in the days when it seemed contrarian to do so. Amongst other benefits, we subsidize life-changing events and provide our frontline team with an emergency fund to cover some of the unexpected costs that life throws at them. We've also taken a stand on the pink tech. We discount feminine care products when, in our view, an unfair tax is levied. Products like tampons and pads are a necessity, not luxury items, and as such, we believe they should be treated as necessities from a tax perspective. Women shouldn't have to pay more for a product simply because it's literally pink or specifically marketed towards them. And lastly, we take care of the environment. We do so through our focus on large orders and shipping those large orders in as few boxes as possible. Further, the proceeds from our recycling program and our fulfillment centers go back to our team members to fund some of the many benefits they enjoy. Doing good. benefits everyone at Boxed. ESG is in our DNA. These principles are not just talking points for us. They're not just posters we hang on the wall. It is a point of pride for all of us here at Boxed. As I wrap up, and as you can probably tell, I didn't do all this by myself. We have a world-class team at Boxed who is laser-focused on maximizing both sides of our business through that symbiotic funnel that I just walked you through. Now the public company will continue to drive additional B2B and B2C growth, enhance loyalty programs, and invest in our unique high margin software and services business. It probably goes without saying, but I'm very excited about what is to come in the years ahead. It's been my pleasure to give you an overview of what we do here at the company. And with that, let me hand it over to Mark.

Thank you so much, Che. Good afternoon, everyone, and welcome to our first earnings call. We're so excited to be presenting the Box results to our shareholders and to the investment community for the first time. After all the effort that was put into preparing to become a public company over the last year, I'm beyond proud of the Box team and the results we were able to deliver for 2021. I will start off by reviewing our financial results for the fourth quarter. Net revenue was $45 million, an increase of $1.8 million compared to the prior year period. The increase was due to an increase in software and services revenue, which we see as a significant growth opportunity for us as we look forward. Retail net revenue was $39.7 million, a decrease of $3.5 million compared to the prior year period. Our year-over-year trends here continue to be impacted by tough comps resulting from COVID-related customer behavior. as we saw strength in the B2C active user counts and organic new customer acquisition throughout 2020. With that said, we're really encouraged by our underlying customer engagement trends, with fourth quarter net retail revenue per active customer of $266, which was up 14% year-over-year and up 26% since the fourth quarter of 2019, looking at it on a three-year comparable basis. With all the volatility across our B2C and B2B customer bases over the last 24 months related to COVID, in the near term for our retail business, we are focused on quarter-over-quarter growth. Those trends are especially important for us as we scale and maintain more consistent, higher levels of marketing investment throughout 2022. In the fourth quarter of 2021, we spent $7.3 million on advertising, And we expect to scale those investments further into Q1 and over the course of this year. While the full benefits of our increased marketing investments are expected to be realized over the long term, we've already begun to see improvements in our retail net revenue compared to the third quarter of 2021, with fourth quarter results increasing $1.6 million over the third quarter. Finally, in our retail segment, we are pleased that B2B customer demand is strengthening once again as our customers return to office after seven quarters of COVID-related variability. Notably, B2B customer DMV increased 59% in the fourth quarter of 2021 compared to the prior period. And that trend has continued in the quarter to date period this year as well. The return of B2B is exciting for us for a host of reasons. As a reminder, compared to our B2B customer, on average, our B2B customer spends more than two times more per order and is a stickier and more profitable customer as well. The reemergence of the B2B customer base will help support continued improvement across our retail KPIs go forward. As Che discussed earlier, we are extremely pleased with the launch of our software and services business in 2021, which generated $5.3 million in net revenue in the fourth quarter and 20.3 million in net revenue in the fiscal year 2021. This is an incredible testament to the power of the underlying technology platform that was built over the last nine years and is proof of our ability to begin monetizing it. Not surprisingly, the pandemic has accelerated the urgency of e-commerce for retailers across the globe, and we believe we are well positioned to help support that e-commerce enablement and continued optimization. During 2021, we continued our track record of strong gross profit growth and margin expansion and are pleased with the ongoing trajectory we are seeing. Gross profit of $9.2 million in the fourth quarter increased by $3.1 million, or 50% versus the prior year period, and gross margin was 20.3%, a 625 basis point increase from 14.1% in the prior year period. For the full year, gross profit of $31.9 million increased $6 million or 23.1% versus fiscal year 2020, with gross margin expansion of 414 basis points. The margin expansion resulted from the increase of net revenue mix from the higher margin software and services segment. It is worth noting that changes in our revenue mix between retail and software and services will yield some variability in gross margins on a quarter-to-quarter basis, But overall, we anticipate meaningful further expansion as we scale and look forward. Our fourth quarter net loss was $38.9 million compared to the loss of $7.3 million in the prior year period, which was primarily due to one-time transaction costs associated with our business combination, as well as some non-cash expenses resulting from a change in the fair value of our warrants and other derivative liabilities. Adjusted EBITDA was a loss of $13.2 million compared to a loss of $6.2 million in the prior year period, primarily due to those increases in advertising expenses, as well as public company related investments, including staff, insurance costs, and professional services. We are pleased with the continued upward trajectory of our average order values, with fourth quarter AOV of $131, an increase of $13 or 11.5% compared to the prior year period. For the full year results, AOV was $122, up $14 or 12.7% from 2020, and up $28 or 29.3% on a two-year basis since 2019. There are several factors helping support these increases. First, our units per order increased 8% year-over-year. the result of ongoing technology and personalization improvements, and the continued expansion of our product assortment. Further, especially in the fourth quarter, we began seeing an increasing mix of B2B customer orders, which have AOVs more than double that of our B2C customer orders, as I mentioned earlier. Finally, we implemented some price increases over the course of the year in reaction to industry-wide inflationary pressures we saw across the grocery supply chain. So turning to the balance sheet for a moment, we had a cash balance of $105 million at the end of the fourth quarter, which will help support the increased investments in marketing, research and development, and software and services going into 2022. In addition, we had $60.1 million on the balance sheet in the form of a forward purchase receivable, which we hope to be able to collect on over the coming quarters. Our total debt principal was $132.5 million of which $87.5 million is related to convertible debt. And as of March 1st, 2022, we had $68.9 million in fully diluted shares outstanding. Now, let's discuss our outlook for the full year of 2022. We're expecting net revenue in the range of $220 to $245 million, with adjusted EBITDA loss in the range of $70 to $80 million. we see significant growth opportunities across both our business segments with a few key focus areas. For retail, we are continuing to broaden our product assortment through onboarding additional third-party sellers, which will support ongoing AOV increases and improve our conversion rates on the platform. On that front, we are in the process with some key technology integration, such as shift station, and Channel Advisor, which will enable us to onboard vendors and scale our third-party marketplace business more rapidly. We're also focused on increasing and maintaining a consistent level of marketing investment to improve our brand awareness and to support customer acquisition long-term. As part of that effort, in the last week or so, we launched new creative content across our linear and streaming video channels, which is quite exciting for us. Further, with the acquisition of Max Delivery, we've significantly broadened our assortment offering to our customers and we'll look to expand their model to additional markets in 2022. And finally, as I noted previously, we're very pleased by the trend we're seeing for B2B growth after seven quarters of variability. We're capitalizing on this return to work shift by deploying more dedicated sales and marketing efforts toward B2B and focusing on the industry verticals where we've had excellent traction today. Turning to the software and services business for 2022, we are encouraged by a strong pipeline of potential enterprise opportunities, as well as the prospects of further expansion within the $80 billion Eon ecosystem. We are also investing in their scalability and efficiency capability so that we are prepared to broadly implement our software and services offerings worldwide. To provide some general guidance around the quarterly trajectory of our business, as I mentioned earlier, we are focused on delivering quarter-over-quarter growth throughout 2022. As we ramp up our investments, the full benefits of those increases will be realized over a longer time period. And further, we're anticipating B2B customer demand to improve throughout the course of the year as more and more employees return to work after operating in remote work environments throughout COVID. As such, we anticipate the second half growth trends will outpace our first half growth when comparing things on a year-over-year basis. 2022 is an exciting year for us. We're in a position to invest across sales, marketing, technology, and our administrative functions, all of which will be key to achieving our approximately 25% to 40% top-line growth outlook. We are committed and highly motivated to help scale Box for long-term success. Finally, I want to thank the entire Box organization for helping deliver a truly monumental 2021. And I look forward to beginning this next journey together. With that, let me turn the call back over to Che for some final remarks.

Thanks, Mark. In big moments like these, when we're embarking on another incredible chapter for Box, I always go back to thinking about our team. This team managed through a go public process during COVID, during the Delta and Omicron variants, during a litany of other events, and yet they delivered. We would not be a public company without them. We would not have been able to close an acquisition during that process without them. We would not have been able to have such a strong launch of our software and services business without them. And to those listening in from our facilities, we would not have been able to service our customers without you coming in each and every day through this pandemic. There is no other group of hardworking people that I would have wanted to enter this unprecedented time with. And for that, I want to thank each and every one of you for executing on all that we've discussed today. So with that, we're now available to take your questions. Operator?

Thank you. If you would like to ask a question, please press star 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, please press star 1. As a reminder, if you're using a speaker phone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. Our first question comes from the line,

of tom forte with d.a davidson please go ahead great thanks for taking my questions i have one question and one follow-up so you had uh amazing performance at the gross margin line in the fourth quarter and you've talked about a number of initiatives you have to continue to materially increase your gross margin over time um how should we think about your gross margin in 2022 And what additional initiatives do you run in 22 that you didn't do in 21 to increase your gross margin?

Hey, Tom. Thanks so much. It's Mark. I'll go ahead and take that one. So I think as we think about 2022 as a whole, we do expect our gross profit growth to outpace our overall revenue growth. So we will see continued margin expansion as we've been delivering on every year, really since inception. So we're really excited about the prospects for gross profit growth over the next 12 months. When we think about the key initiatives that will help us get there, number one, just scaling the business and continuing to drive more volume through the platform. As we've noted, that's really going to help us negotiate better costing with our vendors, drives more of them to advertise on the platform, and ultimately drives more trade-in rebates from those suppliers themselves. Now, in addition to that, because we're expanding our product disarmament and doing so through our third-party marketplace offering, continuing to scale that over the course of the year is also going to help deliver some of that margin improvement on the retail business. As a reminder, that third-party marketplace business, very important for us, both from an AOD perspective broadening this dormant, a retention perspective, but also a margin perspective as it delivers really high margin revenues without us having to take on, you know, the inventory within our facilities themselves. Third and foremost, you know, we're really, really focused on, you know, obviously the return of B2B. And that's something that we didn't have the benefit of, you know, looking at 2021 results. As B2B comes back, as a reminder, those AOVs are much, much stronger than our B2C customer base. And as a result of that, the profitability of that customer segment is much stronger as well. So as the order mix from our B2B customers increases, obviously the blended AOVs will increase, but that will also drive margin for the bottom line.

Thank you for that, Mark. So for my follow-up, I'm using your software business. $20 million of revenue from Xero in year one. Can you talk about your pipeline for new business and how you're working on growing the business in other geographies beyond Asia, beyond your relationship to AOM? Thanks.

Yeah, so I can take that one, Tom. So it's great to have you on the line in our first earnings call, so thank you very much for the question. As you can probably tell, we're really excited about software and services. And as you just mentioned, from $0... to $20 million in our first year of business. It's something that we're really proud about. But where do we go from here? So when you look at the pipeline today, of course, there's continued work being done with our first appliance when it comes to Eon Malaysia. But on top of that, as you probably just heard from the remarks, we're also actively discussing other regions when it comes to Eon, more specifically within Southeast Asia and potentially Vietnam. Outside of that, there's a whole world that has seen the digital shift go from a nice to have to a need to have. And so you probably kept up with the news that we've also signed, of course, non-binding MOUs, but MOUs or an MOU in the Middle East as well with the Middle Eastern group. So for us, we think the pipeline is strong, and we're confident we can continue to deliver really, really strong results on the software and services side of the business. And as you can tell from our performance last year, a very critical component for gross margin and overall excitement at the company.

Thank you, Mark.

Thank you, Mr. Forte. The next question comes from the line of Marvin Fong with BPID. Please go ahead.

Good afternoon. Thanks so much for taking my questions. Congratulations on your first call. I would like to drill down a little further I guess on the software business. I apologize if I missed it, but in terms of your guidance, what are you embedding in terms of growth in the software segment? And as we think about that revenue component, How much of that is sort of like implementation fees versus like royalty stream type revenue? If you could just maybe give us a broad level breakdown, that'd be very helpful. And then I have a follow-up.

Hey, Marvin. I'll take that one as well. Thanks so much for the question and, yeah, for being on the line. When we look at 2022, you know, we're not guiding specifically to retail versus software and services on the revenue line itself. But what I will say is that, you know, as we scale that business over time, you know, we're very focused on, you know, moving more and more of that revenue stream toward sort of recurring software license and SaaS related revenue. So you're going to see that continue to build throughout the building of that business itself. And going into next year, I would expect to see a higher portion of that revenue stream to be software related compared to this past year as well. So we're not necessarily guiding to the exact breakdown of those revenue streams, but certainly we're very focused on making that a strong recurring revenue base as we move forward.

Great. And my second question, just maybe to double-click on B2B, it's great to see that revenue coming back up 59%, as you said. I'm just curious, are you able to kind of distinguish between regions of the country that are more closer to full reopening than others? Just curious if maybe those areas are much higher than 59% and maybe a sneak peek at the type of growth you guys can deliver going forward, assuming you know, COVID rolls back here as we all hope it does.

Thanks, Robert. I'll take that one as well. I think, you know, it's not that we've necessarily seen any specific region where we're seeing outside growth compared to, you know, a different region. But what I would say is that, you know, a large portion of our B2B customer base, due to the way sort of that we initially, you know, brought the organic growth in that segment upward, is really based in these sort of urban dense areas, right? So, you know, some of your coastal cities, New York, obviously, San Francisco, Bay Area, you know, a lot of that revenue stream has been, you know, technology-focused, education-focused, and, you know, specific verticals that tend to be in some of these more urban areas. And so, you know, obviously that had a huge hit to us. You know, when we look back at Q1, going to Q2 of 2020. But the good thing is that, you know, that sort of segment has been a little bit more delayed when we think about the regional breakdown compared to maybe the middle of the country where, you know, a larger portion of our B2C customer base sits. So I actually think, you know, in a way we've lagged what the overall U.S. in terms of return to office would have looked like just due to the fact that we are sort of more urban centers on the B2C side of the house specifically.

Great. Thanks, Mark. And if you wouldn't mind, maybe just one last question, just macro level maybe for you, Che. Just, you know, obviously the consumer is getting a little pinched here. Inflation is pretty rampant. You know, it's seen the play into, you know, a good value-oriented site such as yourselves and also with your great private label. Just curious what your thoughts are. Is this a a backdrop that favors you guys and what type of levers can you pull to maybe take advantage of broader inflation?

Yeah. Thank you, Marvin. So when it comes to inflation, of course, everyone's seeing it across the entire industry and across the entire economy. We do feel like, to your point before, that it could be a tailwind for us as a business. Because as folks begin to feel the pinch in their wallet, probably one of the first things that they'll think about is how do I save money on essentials and filling out my pantry? Well, for now, many, many decades in America, probably one of the easiest ways to do so is to buy in bulk. And so when they look at buying in bulk, if they still want that convenience and that experience, then we are one of the few players out there that specialize in online bulk delivery. So we do feel like it could end up being a tailwind for us throughout 2022 and beyond. Of course, we're very mindful of where inflation is going, but we do think, again, it could be a gallon for us, as you mentioned.

Great. Thanks so much. Thanks, Shane, Mark.

Thank you, Mr. Fong. Our next question comes from the line of Brian Fitzgerald with Wells Fargo. Please go ahead.

uh thank you thanks guys uh we wanted to ask about the esg story that thank you for the color and we know those highlights really resonate with well with investors um just wondering if you could talk a little bit about how you communicate that to customers and potential customers and how that might be resonating with younger customer cohorts especially and then i got a couple more thanks Hey, Chris, thanks for that one, and that is a really great question.

I'm really glad you asked it because, as you probably heard, ESG is not something that we're checking the box on just because it's become really salient in the mind of big investors. When you look at the history of bots, it's been core to our DNA for many, many, many years now, not just in terms of press releases, but in terms of actual action. I do think that younger shopper, as they begin to, I guess, come of age when it comes to shopping for their own consumer packaged goods, for their own groceries, what we're seeing is that that younger consumer is more conscious about how they spend their money, and they're beginning to vote with their wallet. So ESG is certainly in that top bracket of things that they consider as they spend their money. So when it comes to our track record, if you look at stuff online, I like to say anecdotally, almost half of what comes up is how we do business versus what we do. And I think that will be good because, again, to your credit and to what you just said before, we do feel like that will resonate in an increasing degree with that younger consumer. I do think, and this is totally anecdotal, that when you look at how we're progressing across the country when it comes to ESG, we're probably several years behind even some of the other continents around the world, where some of the other continents it is top of mind for that consumer. It is one of the most salient things when they think about a team that they root for or a place where they shop at. Perhaps we're not there yet in terms of being the number one driver in the U.S., but certainly I think we'll see us going up that podium over the coming quarters and years.

Great. Thanks, Shea. And then maybe a two-part question as you As you think about software and services and the opportunity it presents today, just wondering if you could first give us a sense of how you're stacking up against maybe some other competitors who may also be offering to operate facilities on behalf of their retail partners. Second part of the question is, with the rise of ultra-fast local delivery, is that causing any of your customer prospects to rethink how they want to go to market, whether it's from a dedicated e-commerce facilities or they want to focus on maybe a more labor-intensive delivery from a store model to prioritize delivery speeds. Anything you can opine about with how you are positioned, how the competition is positioned with this rising battlefront of ultra-fast local delivery?

Yeah, it's a great question. I mean, the market is dynamic and it's evolving. So what we feel like, you know, the way we feel like we have an advantage is very simple. When we go into these meetings, we tell folks that, hey, we're not just here selling software. We're e-commerce operators selling e-commerce technology that we've used and proven ourselves. So right off the bat, I think that brings us a lot of credibility to other operators to say, hey, we're not just out here just thinking about what you might be going through. we're going through that same exact fight ourselves just on the other side of the ocean. And so when you think about end-to-end technology capabilities built by operators, you start to really get few and far between in terms of who else is in those RFPs, especially when we're going at the ultra enterprise. You look at Eon. Eon is an $83 billion company, one of the largest in Asia, the largest in Japan. you know, they're probably not going to use an off-the-shelf software that, you know, both you and I could use by the end of the day to begin an e-commerce site. So they're going to look at the ultra enterprise. And when they want to speak with someone that has the same technology built by the trials and tribulations that, you know, we've also gone through throughout the years, their choices become very, very slim. And I think that's why we landed that contract. And I think that's why we're very confident in the roadmap. The second part of your question is also very salient today. So, you know, anywhere in New York City or some of the other major cities across the U.S., you're going to see them blanketed by these ultra-quick delivery services. But anecdotally, what we've heard is that the economics just aren't as sharp when it comes to small basket delivery in 15 minutes or less. And so you're starting to see that shake out, right? Here in New York, we've had a few go under even just in the last few weeks. You know, with that said, though, it is a great service for consumers. And so it's the reason why we feel very thankful that we completed the max delivery acquisition when we did, because that allows us more capabilities, more know-how when it comes to not only dark store fulfillment, but also fresh groceries. And so you can think over time, as we begin to usurp that know-how, as we learn by osmosis, that will promulgate into our technology stack and inure to the benefits of our software and services clients. So that's why we think of it as that symbiotic funnel I discussed before. or a flywheel.

Got it. Very clear. Maybe a quick follow-up to those last two questions on kind of SKU counts. When you look at Amazon with Whole Foods, you know, one to two-hour grocery, 170,000 SKUs in 5,000 cities. Then you look at GoPuff and DoorDash, you know, 4,000 to 5,000 SKUs in 600 cities. Do you need to be that broad? Are you thinking more about with max delivery, a smaller subset of that broader assortment and maybe a fresher assortment that you can extend into your core customers? Any thoughts on how you want an optimal SKU count for that ultra-fast local delivery?

Yeah, I can definitely take that question as well. So when you look at the box core business today, we have about 2,000 plus items for sale. It's been about that number for the last several years. But as you've probably heard from Mark's remarks, marketplace, you know, we've added 1,000 unique SKUs sold on the marketplace just in 2021 alone. So we're certainly offering a broader assortment to that box core customer. Now, the other side of the field, on the other goalposts, you have max deliveries. Part of the reason why we did the max delivery acquisition is because we think the ethos when it comes to maximizing basket values is very aligned. So max delivery has very high basket values, just like us, but also driven because of the fact that they have fresh groceries and assortment that lingers more around 10,000. And so that's where you see the goalposts today. And so you're definitely going to see some cross pollination of that. will, over time, you can imagine, begin to sell more and more fresh or offer fresh foods to more and more box core customers. And in reverse, already today, if you go on max delivery, you can buy Prince and Spring products in bulk today, our private brand. And so that's going to come together over time. But today, that's where the goalposts are. So 10,000 with max delivery, 2,500 with box. And so everywhere in between is where I think the data science and the customer feedback is going to lead us.

Awesome. Thanks, Che. Thanks, Mark. Appreciate it. Thank you. Thanks.

Thank you, Mr. Fitzgerald. There are no additional questions waiting at this time. I would like to pass the conference back over to Che Wang for any closing remarks.

Awesome. Thank you very much. Thank you very much for the questions. We enjoyed them all. This is our first earnings call, so hopefully everyone out there enjoyed dialing in as well. So first, obviously, thank you for all your participation. I want to thank our customers, our team members, our board, our investors, and the people who supported us throughout this entire journey. It's been enormously gratifying, you can imagine, to lead Fox through this journey. But we're actually thrilled about what we've created so far. With that said, though, as you can imagine, through our excitement, both from me and Mark and our entire team, we're confident that the best is yet to come. Thank you.

That concludes the Boxed, Inc. Fourth Quarter and Fiscal Year 2021 Earnings Call. I hope you all enjoyed the rest of your day. You may now disconnect your lines.