Cazoo Group Ltd

Greetings and welcome to the Kazoo first quarter 2022 earnings call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Robert Berg, Director of Investor Relations and Corporate Finance. Thank you. You may begin.

Good morning, everyone. Thank you for joining today's call and webcast to discuss our first quarter 2022 results. You'll be able to find today's press release on our investor relations website at investors.kazu.co.uk. We appreciate everyone joining us today. With me on the call is Alex Chesterman, founder and chief executive officer, and Stephen Marana, chief financial officer. Before we get started, I would like to remind you of the company's safe harbor language, which I'm sure you're all familiar with. Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially. For a further discussion of the risks related to our business, please see the filings of CREZU Group Limited with the SEC. Now, I will hand over the call to Alex.

Thanks, Rob. Good morning, everyone, and thank you for joining us today. I'd like to start by discussing our Q1 performance, which was a very encouraging quarter in many respects and why we continue to expect strong sequential quarterly growth throughout the rest of the year, despite an uncertain macroeconomic backdrop. Then I'll spend some time discussing why we remain highly confident in achieving our long-term targets. Starting with the first quarter, I'm extremely pleased with our record Q1 revenues and unit sales. Having bought UK reconditioning in-house during the second half of last year, we are now really starting to see the benefits of this strategic decision, which has material, long-term operational and financial advantages. Despite a rapidly changing macroeconomic climate, we achieved over 50% sequential quarterly growth in retail units sold during the period. Driven by increased inventory available on our website and strongly supporting our thesis that increased reconditioning output and available inventory leads to greater sales. We believe that our UK retail unit growth going forward will be primarily driven by our ability to continue to ramp up our reconditioning capacity. We now have 10 in-house vehicle preparation sites in the UK, which can recondition over 120,000 cars per year currently, with the potential to double that capacity over time. In October, we had just over 2,000 vehicles available for sale on our UK website. And despite record sales in Q1, we've managed not only to replace the inventory sold over the period, but also more than treble our available inventory to over 6,000 vehicles as a result of having ramped up our reconditioning output. We've always stated that the principal constraint to our growth is the ability to recondition cars quickly enough, as opposed to consumer demand. Our customers love the Kazoo proposition, and this is reflected in consistent customer feedback and our market-leading Trustpilot rating of 4.8 stars, and gives us increased high confidence in our strategy and growth opportunity. In Q1, we saw the clear benefit of having more inventory available for sale, selling over 50% more cars than in the previous quarter. As we advance through this year, we aim to continue to ramp up our reconditioning capabilities by adding incremental resources, and continuing to improve all of our processes. We expect these initiatives to lead to further growth and allow us to continue our progress towards our long-term market share ambitions. Our growth in 2022, however, will not just come from the UK. We continue to make good progress in mainland Europe since our launches in France and Germany late last year and expect to see a positive impact to our unit sales in those markets once we begin our brand marketing campaigns there in the coming weeks. We also expect to launch in Spain and Italy in the coming months and have strong local teams, infrastructure, and partnerships in place already in those markets. This will see us grow our presence from one country at the start of Q4 last year to five countries by Q4 at the end of this with a combined addressable market of over 300 billion pounds annually. And we expect these markets to contribute to our growth in unit sales and revenues over the remainder of this year and to become a key contributor to our long-term growth targets. Before I remind you of our long-term ambitions, I think it's important to touch on the macroeconomic backdrop our markets and industry are facing. Our solid Q1 momentum comes despite a rapidly changing macroeconomic climate as we navigate our way through a number of headwinds such as supply chain issues and weaker consumer confidence. Whilst we're very mindful of the wider macro environment and continue to keep a close eye on any potential impact, we remain laser focused on the execution of our strategy as we continue to make progress against our previously detailed expectations for the year. What is most important, however, is that we expect any macro uncertainties to be transitory in nature and to have little bearing on the huge market opportunity and exciting structural growth in front of us, or the confidence we have in achieving our long-term growth and margin targets, which I'll remind you of now. As I said a few weeks ago at our full year results, Whilst we've accomplished a huge amount in a little over two years since launch, we're still just at the start of this very exciting journey. We're addressing a massive market opportunity with the UK market worth over £100 billion annually and the big four EU markets worth more than £200 billion on top. Our addressable market is now over 26 million used car transactions annually. The market opportunity is so large that with just low single-digit market shares and prudent medium-term GPU targets of 1,500 to 2,000 pounds, we would have an enormous business which we expect to generate meaningful free cash flows over time. Our long-term target is to capture a 5% or greater market share with a 3,000 pounds GPU, which is why we're so excited by our future growth opportunities. I'll now pass over to Stephen, who will run through the details of our Q1 performance in more detail.