Casper Sleep Inc.

Good morning and welcome to CASPER Sleep's fourth quarter 2020 conference call. Today's call is being recorded. I would like to turn the conference over to Nobertu Aja, investor relations for CASPER. Mr. Aja, you may begin. Nobertu Aja, investor relations for CASPER. Mr. Aja, you may begin. Nobertu Aja, investor relations for CASPER. Mr. Aja, you may begin.

Thank you, operator, and good morning, everyone. Thank you for joining the CASPER Sleep 2020 fourth quarter and full year conference call. We'll get started in just a minute with management's comments and your questions. But before doing so, let me take a minute to read the safe harbor language. This call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call do not relate to matters of historical fact, should be considered forward-looking statements, including statements regarding management's plans, strategies, goals, and objectives. our anticipated financial performance, and the expected impact of a novel coronavirus on our business. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements spread or implied by the forward-looking statements. Factors discussed are an annual report on performance 10-K for the year ended December 31, 2020, and other filings with the Securities and Exchange Commission, could cause actual results to differ materially from those indicated by the forward-looking statements made on this call. Any such forward-looking statements represent management's estimates as of the date of this call. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. In addition, we may also reference certain non-GAAP metrics, which are reconciled to the nearest GAAP metric in the company's earnings release, which can be found on our investor relations website at ir.casper.com. With me on the call today is Philip Krim, co-founder and chief executive officer of Casper, Emily Arell, president and chief commercial officer, and Mike Monaghan, chief financial officer. Following their prepared remarks, we will open the call for a question and answer session. With that, I would now like to turn the call over to Philip Krim, Casper's Chief Executive Officer. Please go ahead, Philip. Philip Krim, Chief Executive Officer, Casper Financial Services, Thank you, Norberto, and good morning, everyone.

Welcome to Casper's fourth quarter conference call. Casper's outstanding fourth quarter financial performance marks a strong finish to 2020 as we established new records for revenue, grew market share, and significantly improved our bottom line results. In the fourth quarter, our North American revenue grew 26%. Gross margins were above 50%, representing a period-over-period improvement of over 250 basis points. And adjusted EBITDA improved 80% period-over-period. During the quarter, we addressed the supply chain challenges we experienced earlier in the year, and with our product in stock, we were able to successfully meet the strong demand for our innovative sleep products. This April will mark our seventh birthday since launching Casper back in 2014, and I could not be more excited about our future. Since the beginning, we have remained steadfast in our vision to become a sleep destination within the broader sleep economy. At our core, we strive to provide solutions that improve people's overall wellness through better sleep. Changes in consumer behavior accelerated by the pandemic, including increased suburbanization and a heightened focus on health and wellness, are only strengthening the demand for our products. In a large market, Casper is ideally positioned to continue to take share. We have built a powerful brand around our innovative mattress designs and sleep products and have created a seamless shopping experience that inspires loyalty among our growing customer base. As a result, we have a solid foundation for accelerated growth in 2021. In 2021, we will be focused on three core strategic priorities. Continuing to increase our brand awareness, expanding our product offerings, and growing our points of distribution. Starting with brand awareness. Since founding Casper, we have invested over a half a billion dollars to drive awareness of our brand and build a loyal customer base. We started with subway ads in New York City, which have grown into national targeted online and offline campaigns that leverage detailed data and analytics for decision making. As we continue to grow and extend our reach, we are gaining marketing efficiency. For the full year 2020 versus 2019, we increased our overall marketing investment while lowering marketing as a percentage of revenue by over 360 basis points. With favorable and growing awareness, we believe we will continue to gain leverage on our marketing spend while capturing greater market share into 2021. Second, we are expanding our product portfolio. Since the launch of the original Casper mattress in 2014, we've continuously improved and expanded our selection and now offer a full line of mattresses that appeal to consumers with different preferences at different price points. Additionally, we continue to diversify our revenue streams with the successful introduction of sleep products such as pillows, sheets, and other accessories. We are particularly pleased with the success of our pillow line. The North America pillow revenue up with North America pillow revenue up 35% year over year in 2020, further highlighting our ability to leverage our brand beyond mattresses. In 2021, you should expect us to continue to help our customers sleep better with the introduction of new and innovative products. Finally, growing our points of distribution. Despite the impact of the pandemic, we saw growth across our multi-channel distribution network in 2020. In the fourth quarter, our North America direct-to-consumer channel grew 19.1% year-over-year, with significant traffic to our website, and our North America retail partnership channel grew 42.8% year-over-year, reflecting healthy performance across our growing network. During 2020, we made significant progress in expanding our distribution through new partnerships, including Sam's Club, Ashley Home Store, Denver Mattress, Mathis Brothers, and Nordstrom. To support the success of these partnerships, we also added a professional sales team responsible for ensuring the differentiated Casper experience is represented in our partner stores and drive increased customer conversions. In 2021, you should expect to see us expand our reach through our multi-channel distribution network, positioning us for accelerated, profitable growth. In closing, I would like to thank the entire Casper team for their hard work and determination during 2020. Together, we took significant steps towards achieving our long-term vision. However, we are still in the early stages of growing Casper into a world-class platform. The experience of our team and the strength of our products and brand, combined with the steps we have taken to improve operating efficiencies, position Casper well for near and long-term profitable growth and the creation of significant shareholder value. I will now turn the call over to Emily. Emily?