Cazoo Group Ltd

Hello, and welcome to the Kazoo fourth quarter and fiscal year 2022 earnings call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Anna Gavrilova. Anna, please go ahead.

Good morning, everyone. Thank you for joining today's call and webcast to discuss our fourth quarter earnings and fiscal year 2022 results. You will be able to find today's press release and accompanying presentation 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, Paul Whitehead, Chief Operating Officer, and Paul Wolf. 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 risks related to our business, please see the filings of Kazoo Group Limited with the SEC. Now, I will hand the call over to Alex.

Thanks, Anna. Good morning, everyone, and thank you for joining us today. Firstly, I wanted to note how incredibly proud I am of everything the team at Kazoo has achieved since our launch in December 2019. Our growth over the past three years has shown that the Kazoo proposition is resonating very strongly with consumers and that there is a significant appetite for buying and selling cars entirely online. We've now sold over 120,000 cars entirely online in the UK since launch and achieved around a 1% market share last year, something many people doubted was possible when we launched just three years ago. Our focus is now entirely on the UK market, the largest used car market in Europe with approximately 7 million transactions a year worth around £100 billion annually. We've built a world-class platform, team, brand and infrastructure network over the past three years and have developed a powerful brand enjoying over 80% awareness nationwide together with a great consumer experience, as evidenced by our sector-leading Trustpilot rating, where 87% of consumers have given us a five-star rating. Whilst we've achieved significant growth and scale over the past three years, in the current economic climate, our focus is now fully on improving our unit economics. To drive efficiency in our operations, we have consolidated our operational footprint and reduce the number of vehicle reconditioning and customer centers we currently operate. Fast execution against our revised 2023 plan has already started to contribute to significant quarter-on-quarter improvement in our retail gross profit per unit, which we expect to be at a record of around £950 per unit in the first quarter, materially up on previous quarters. 2022 was a very strong year in terms of revenue growth and scaling our operations. Revenue grew approximately 91% to a record one and a quarter billion pounds, despite the challenging macroeconomic environment. We've also driven retail GPU improvement in every quarter since Q1 last year. At the same time, we continue to invest in our in-house reconditioning capabilities and growing our direct car buying channels. Our in-house reconditioning capabilities enable end-to-end refurbishment of the cars we sell, driving efficiency and speed of operations. Last year, we achieved record retail sales of over 65,000 units, an increase of 88% year-on-year. The launch of our direct car buying channel in 2021 has proven incredibly successful, and now around half of all the cars we retail come from this in-house buying channel. This allows us to both diversify our mix and support our retail GPU growth. We're pleased with the operational improvements delivered last year. 2022 was also a year when we made a number of important strategic decisions. In today's tough economic climate, as is only prudent, we are prioritizing improving our unit economics, reducing our fixed cost base, and extending our cash runway. We therefore announced a change in focus from fast-paced growth to focusing on unit economics. We reset our expectations for units and revenue in 2023 and announced several actions in January to right-size our headcount and operational footprint. These changes have been completed at pace, and we're already seeing the benefits in an improving gross profit per unit. In 2022, we also made the decision to exit mainland Europe, which we've now largely completed. The UK used car market is huge, and the penetration of online car buying and selling is still materially below most other retail sectors. We continue to lead disruption in the sector, where over 50% of UK consumers are now open to buying their next car entirely online, a very encouraging statistic given the current low digital penetration rate in the sector. For 2023, we have three key priorities, which are to further improve our unit economics, to optimize our fixed cost base, and to maximize our cash runway. The market opportunity for Kazoo remains enormous, with a goal of growing from around a 1% market share last year to achieving a 5% or greater share of the £100 billion UK market over time. As an illustration, with medium to long-term expectations on market share and retail GPU, the gross profit potential for Kazoo is very significant. Over the past three years, We've laid the foundations to capture profitable growth in the future. I'll now hand over to Paul Whitehead, who's been with me on this journey from day one and will take over from me as CEO from the beginning of April. He'll walk you through the operational results in more detail.