ID - Earnings call transcript Q3 2021

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Operator

Thank you for joining us today to discuss PARTS iD's Third Quarter 2021 Financial Results. On today's call are Nino Ciappina, Chief Executive Officer; and Kailas Agrawal, Chief Financial Officer. I would like to point out that certain statements made during this presentation are forward-looking statements. These forward-looking statements reflect management's judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting PARTS iD's business. Accordingly, you should not place undue reliance on these forward-looking statements.

you discussion statements risks this to and XXXX report quarter was which we and thorough with with uncertainties conference more other on regarding on Form release, SEC the company's the furnished webcast, forward-looking disclaimer well filings the X-K, XX-K be refer a of as included and earnings the as associated call the SEC. forward-looking most For statements today the in to made third our to Form recent annual its in The company any new obligation a or update information, statements, to of forward-looking whether does not result otherwise. undertake alter any or future events as

of Chief on issued press to With I'll earlier company this those non-GAAP turn GAAP non-GAAP plans the the the in to at iD. refer metrics releases metrics page can Ciappina, addition, Officer be call. also certain earnings which over those www.partsidinc.com. is on our of website found release Nino? adjusted reconciliations metrics that, Executive In Explanation today, the call to to of and PARTS metrics posted of Nino

Antonino Ciappina

Thank you, afternoon operator and good everyone.

driving the weaker the shortages, Following strategic and has in traditionally year-over-year excess supply XXXX site year. and first half sales cancellations, times. Despite trends which profitable margins longer shipping led top which plans achieved the last costs, during our product for in sales pullback Like and our as order long-term QX, of on progressed quarters, businesses On impacted growth. and also disruption we delivery the to we our being revenue chain strong levels year-over-year have difficult this third through grew seen traffic inventory higher by are third from one record increased with XX% quarter. in global the a of year-over-year of quarter comparison we is the many remain digital period, line a moderated of challenges in focused nine-month

vision of short current expectations, temporary remain fell environment is performance we quarter third strategic and economic long-term the we our While and believe plan. our in optimistic

PARTS positioned be well environment the grow normalizes for we believe reasons. As revenue iD several will to

technology in has accurate high successful auto continued maintained a enables value average the demonstrated been This been several parts that order First, fitment the data provides our consumer. experience over have quarters. our distinctive which last for levels

catalogue active Second, brands XXXX than our SKUs over product of million is and unrivaled. more XX.X

platform RV certain Repair, range digital and a onboarding and fifth, This for and our and Boating to a ease data-driven for place Powersports, leaders highly I’m data, and the increasing to the in discovery capital. resulted Marine, and content, this trained Boating Marine Powersports, superior are net customer model us additional us proprietary with headwinds. in the Motorcycle we advance even and has to progress making our score And various and XX us and inspiration. promoter specific and fitment new create Camper product too. these improving and RV vendors, verticals portfolio have in customer say by to to superior now we and our Original wide verticals expanding to that without enabled rich happy experience. supply of providing proprietary fitment This capital product data is engagement Third, expand and deepen Motorcycle selection, efficient Campers. expand fulfillment customer service, the Equipment, like of need product has Fourth, departments a network on our allows chain result experience for

to it’s not as XX data platform easy building years already invested our and best in we the you business our have heavily believe as is over replicate. the We platform know,

ship allows enables and our inventory us a us positions and and into to experience. growth. allowed verticals inventory an us extensive without continue from a the and high to our new additional to offer to our In businesses, data it strong model leveraging substantially grow investment efficient capital consumer model long-term and flow model stock deliver technology competitive fact us ROI is also arguably any business capital generate and the with selection around in deepest moat capital associated profitable to expand Unlike has conventional just-in-time mass infusion. This transportation with efficient better and us costs shields to inventory cash ROI

We quarter several to I’ll our detail which growth results. initiatives have call but review to drive over expansion, underway and third to now the shortly, Kailas I’ll margin turn

Kailas Agrawal

Nino. Thanks

lower For the price order which third X% applying [indiscernible] year-over-year in by such quarter improvements, conversion XX%. compared decreased We cancellations. resulted up took increases site in business to traffic and when quarter increase XX.X% XX.X% by due The experience value rate led was XX% as of index revenue by operating to to revenue steps making adjustments the XXXX the and average XX.X%. order more in in third and

between the customers XXXX total of over number Another The third to quarter XX% repeat XXXX. third was represented positive of XX% from quarter purchase of prior in XXXX in repeat a XXXX. defined increase of customers quarter as customers made the the who customers

As the supply shortages, the disruptions costs. cancellations, higher in seen resulting and increased progressed product chain third shipping quarter global were

million have In source third multisource fulfillment environment the proprietary sources. surcharges from higher in typical to portion last year able in customer from a typically cost. This XX% us compared higher supplier quarter second with the $X the less in and at discussed associated of or approximately public it substantially X quarter us XX.X% and Our EBITDA company primarily were year model and product a sources. quarter some The from the sales to were expenses reflects this third throughout cases currently shipping Gross to margins has to for prices, way our quarter XXXX. combined we help XXXX secondary We vendor helped decrease and third XXXX quarter the the pressure real costs compensation of almost based allowed closest mitigate of including algorithm the tertiary being quarter the inventory breakeven several to shipping XX% operating business on share some of third we XX.X% retail carried negotiations and the backup challenging large meet than partners. though customer also operating initiatives growth been with from time vendor Despite an our the exploring inventory this source basis. on adjusted in margin managed have increase chain of products able Total favorable expenses. product evaluating identify with more expected, demand increased finished pricing. as environment we new

balance the back to Turning model puts in strong of our term as over us XXXX. review I designed initiatives Nino in initiative XX, for long position balance as XXXX efficient of will we closing XX, positions our compared of to $XX.X call profit our capital continue our cash a business objectives. I to investing and December cash remarks. September growth million to grew million our to $XX.X to now our sheet, With strategic now turn Nino? will achieve

Antonino Ciappina

Thank you, Kailas.

we’ve calls, performance long-term. our working to As Repair Year-over-year categories the -- we focus and within this from our and and initiatives drive parts going lines which on several Equipment seen growth expansion. expansions in on shared on of XX%. Starting core with I’m our positively Repair the for has previous Today, to business, the on the initiatives topline core relationships, the value orders are and margin impact are within our working developing category year. near especially first increased verticals, developing we to strategic Original product strong additional vendor new automotive growth designed

and the experience We are aftermarket continue parts for, for find faster are customer to excited on catalogue, work in easier and looking they at by customer billion competitive the improving prices enriching superior growth product and $XXX offering opportunity the them the to plus and what it customers auto service. making expanding

similar Boating Camper in verticals market and Marine, Powersports, and together the annually. also strategies which nearly and and $XX Motorcycle opportunity billion are We pursuing represent of RV

artificial our intelligence, lead and marketing customer more driving in at to targeting and can increasingly long-term to Also personalization which traffic improve lower we retention. our efficient are customer acquisition site, Second, are to automation acquisition advancing strategies of cost. data-driven qualified use

This our our software and marketing digital will relationships customer being higher and our In data relationship these customer to rich retention procured lead now activations channels, software platform media. our customer further with is website initiatives implemented customer to capabilities. customer other through strengthen personalized new believe addition, new in long-term. We across leverage management we data automation the

customers of in brand presence In quarter repeat revenue advertising. of fact, to compared to increased from initiatives funnel X% digital increase new an XXXX. nearly revenue integral to in quarter third These improvements investing of the our our ongoing through total XX.X% third the upper are part

utilizing enhancements and Third, on-site in we discovery upsell, are data cross-sell, to product improve further conversion. also experience

is average by end-to-end developing significant order third quarter we the offering the through in Fourth, we and believe here. and services there earlier, XX% discussed experience X% channel by year-over-year the value conversion As partners. opportunity by uniformity an rate improved

is tire installation Our the initiative goal. step this first towards

there the gross adding to increase margin vendors and primary gross which two due cost higher with of which are new at address cost, based vendors. completed led to shipping are many renegotiating products margin, inflation factors as volume margin. we To of we U.S. with gross shortage pass promotions has a alternate are sales partner on an chose well materials this integration a to recently costs the product increased entire our of rebates Moving not shortage as the pressure across customer. to pricing, the a Cost sourcing and pressure in LTL we our discounts, primary available to to Two, incremental we the of shipping one,

this and grills. reduce be we as specific such to As on costs suppliers to able partner items large will bumpers onboard we shipping

customers. competitive. shipping to accessories the remain intent are in applied procurement our the strategic the that reduce increase with our Four, to cost As vendors plan create changes three shipping and to Accessories prices one-stop-shop Repair we we changes for us we and optimize points algorithm part and in and routes remain categories. large of continuing parts for market, profitably. geo-sourcing our and further proprietary this to confident resale thereby premier to yet pilot onboarded in and already do applied Three, to We

questions, thank our both I’d to like commitment domestically hard and and our iD customers. open I the work for PARTS internationally to Before team, entire dedication, call their to serving

Joining ready us open the to Operator, now Operating Officer we is for for call Roy. are Chief Q&A Ajay questions. our

Operator

First question ahead. Genuity. Instructions] is [Operator go Canaccord Maria with Ripps Please from

Unidentified Analyst

followup. to for about, wondering gradually Thanks Yes, to Kailas and return noted question Matt competitors experienced I taking work performance if in one is all really a was as Maria. one this you’ve under and compared mix wanted for shift oriented this to increased? and of has in categories. on been categories as it miles I for just uptick Nino thanks or and the an helpful. part noticing was you’ve increase the color, your quarter car Hi, people then if more appearance an accessory consumption [ph] similar I parts and have driven ask

Antonino Ciappina

more Matt, consumption here. more question. you, in parts experienced an equipment restrictions the and which to returned We in we Thank as categories, our parts. work original travel are for Yes, and demand Repair strong eased Hey, people traveling. Nino saw includes uptick performance-oriented

value the year-over-year. increased Repair of categories, During including quarter, the orders equipment, again XX% original in

category quarter, to third the In Accessories new we terms approximately from contributed XX%. in combined of increased contributed Repair. mix, progress categories XX%. in excited Repair about verticals contribution and We're very the the the approximately approximately made XX%

Jeep, to already parts XX data data, categories. original fitment of be have with the manufacturers. we've there's platform manufacturers. recently pricing we brands, equipment able also We having and equipment secured now from major customer believe including meet we a Lexus. example, obtained on and we're our And to million original direct We Dodge, the these through the finished X onboarding further needs. exclusive original competitive relationships the over For better the opportunity equipment direct to grow substantial By going Hyundai

Unidentified Analyst

and closer which within terms kind segues then, the product line could of talk to you’re of my do very original feel and parts sort cultivation, about plan more of within the bit get what you're Boating little going inning expansion are are original strategic there? up, initiatives ball about, sort that's equipment, into Thanks, RV rolling in equipment helpful, to the implement Camper And Thanks. the nicely two the what Marine you specifically some again, maybe What then that of you the a and sort first they talk and the verticals of maybe like of follow I finish in in could you be and to of to there? just sort was guess, charge executive verticals? broadly, hires of

Antonino Ciappina

Matt. question Great

in strong are hires a significant on in innings business. part new additional confident categories, as have from strategic Let experienced terms to of context of the the original revenue then me Ajay, that, I'll what earlier, address we them and strategic on categories of Repair Ajay do key equipment cover and larger contribution these to cover very our feel very some over to small growing want the first area. repair percentage hand of I demand you overall, become today. We're working and contribution We two of our early in that continue it the to our parts some mentioned initiatives? plan and in in

Ajay Roy

Yes, so I prospects these new long-term on remain on new the we think verticals, bullish of verticals.

an at also extensive addressable Panasonic. Michael Nino Auto years we is product and and to the bring As the Teddy, with the in Sears, The nearly vendor hand Camping he then and expertise market growing management assortment significant on Parts $XX Brunswick for prior total billion. hired, was and relationships that other verticals pointed Michael, the Teddy, purchasing he new focusing two supply the on spent eight years experience industry. And and that, background Advance the where from World, a at improving XX worked and and out, comes base. executives

So, there have we strategic I that are initiatives a focused on; new the overall specific from on perspective, think verticals.

around improving feat first profile on the is verticals. improving The overall our margin and fitment the new data gross

want the are things same new that to on we we at CARiD. level bring as of want to verticals One the at also; the we

are all of offered at the want of the offering, the to in in comprehensive available in have in would XX% that we next way products to up we current really are platform, it marketplace are I that the be terms the to one say, catalogue. our versus the So years, product overall a state would be we’ll ones on and XX%. two focused taking In

on strategic overall our very so motors with are that, to on that but enriches piece about excited we piece manufacturers. is built relationships And trolling also other catalogue direct and be actually propellers, going we large want from relationships The product help focusing recently, to some profile develop us our standalone relationship, direct verticals of manufacturer from these is perspective. Management product to overall strategy the three course, continue businesses. to also build actually into will, which availability, but margin definitely overall we

be the will We leveraging we that have from CARiD. all synergies

we extend on the opportunities So, we and that great verticals want we CARiD, years. coming the technology have really use as fungible we growth the actually in for to to built platform secondary that will and us see these

Unidentified Analyst

Thank you helpful. very guys,

Operator

[Operator Davidson. with instructions] question is Next from Michael Baker D.A. Please go ahead.

Jeff Walker

to Jeff Good gross test should hoping Thank get of we on for last And was there’s if we Michael kind about been Walker afternoon. This coming on update more the is then Baker. I information quarter? a since little price think and impact margins any get over the the quarters? optimization could around tests just price how you. also optimization

Ajay Roy

Sure, so yes, question. great

focused progress, good on brands. we impact were margins price optimization made been areas one really From our is, policies I was across our positive We the on repair on price of made XXX we perspective, progress the business. few where have at the OE and basis categories. overall overall we’ve would various major share initiative think I so, overall on thing like of points lot by to to able a a improve looking

from year progress optimization this So margin made we overall a just improving initiative. on lot to whole our definitely profile pricing our of in have would --

are think finding emerging opportunities other further our pricing we improve I categories strategies. to

the positive overall profile. on pricing optimization about our very remain very gross margin initiative excited we a positive having So and having whole impact

at the key pricing something to right dynamic two yet this is I the pricing constantly it's cost the of that on. And something product optimize is, also the do also to costs, at customer. and something looking from we pricing not buckets, we cost a started are opportunities offer for day-out. And to we the is really and competitive day-in lowest remain shipping on working point product we to and perspective that pass our that Working just we that on -- customer. the want One those things out look and

Jeff Walker

much. very you Thank Perfect.

Operator

Capital from Adam last comes ahead. Wilk from our Please question go And Greystone Management.

Adam Wilk

wondering regarding the taking Hey prepared I questions. not apologize, guys, that. may quickly that it I'm customer for can you repeat rate? and remarks going? if in a how's I customers I sure or have I'm Thanks repeat caught my repeat statistic question around centred that,

Antonino Ciappina

Hey Adam, Nino over XX% of here. XXXX. Yes, increased third repeat customers the quarter

Adam Wilk

Okay, great thanks.

revenues impact So, that cancellations for on guess, yes, I so the or having quarter? quantify the able had you are to is first

Antonino Ciappina

I first didn’t of repeat? get the that Adam, part you can

Adam Wilk

you I yes get did just, that Kailas? Sure, was

Kailas Agrawal

and months, quarter The is Adam. that increased million, for $XX the and three, that’s nine million. around cancellation the got I $X.X Yes, entire it’s for

Adam Wilk

you, got of And a really this actually appreciate. you second, you. helpful. thank addressed was I lot Okay, which

up got also as this of with have you've once ability piece seems the in there's your but but value, trend sessions, with converting obviously to but speaks Meaning, it So, conversion rises kind traffic about, match and them, get clearly sort to talk site, site overall. And continuing continued or a declining we like this your pretty average weird, they I positive, I guess missing customers to order mix a exact think, part QX. need. of from somewhat accessory it some chance you is other which good just of you of

sort on figure that forward, to to you do sort continue So can a of so your have algorithm? this with brand can increase we moving I'm you about just out, metric I growth back guess little to get and talk else site session anything track bit trying awareness add, maybe or more plans of

Antonino Ciappina

Adam, Nino here. Great question.

the Let traffic me address first.

primarily programs. saw and in we per a the decline click cost search to said, quarter, advertising third the This we in was increase average our during an So, due as traffic.

due average an mentioned, chain partially we in disruptions. supply experienced rate just cancellations to and value. increase -- offset partially order order As these increases in We we also offset conversion Kailas,

our been. finding conversion invest always on focusing Everything current we quantifiable that. our reflects created focus all want So that's implementing site improve subscribers been and rates CAC. warming marketing, we the initiatives, among our and experience LTV tools, invested other of launched We've year. marketing marketing of working social In new marketing deliver on to sending improvements, increasing campaigns year Most new begin kind new we address and where the migrated series overall the in we system. had we’ve been new now a impact legacy of which We up IP the we in We are we from for verticals. templates media automation software. can the a recently, the new so in the email email software to

got we've site getting to So that's qualified rate, kind and of I converting out want we due the conversion traffic a of and year. we improving to to of lot made traffic underscore. the shed order the lot A continue initiatives bidding driving to average of, the really poor last the year and this value of part to was automated traffic into part migration expanding first

focused and remain site traffic getting possible. as that the converted traffic to on qualified we So, driving

Adam Wilk

Thanks it great. just click Okay, to inflation, and me. cost covered that, that's Yes, Thanks. you and inflation it my care. digital from last take per again. with I question so appreciate and and deal had so advertising

Kailas Agrawal

you. Thank

Operator

And now presenters back remarks. turn to for I'll closing it the

Antonino Ciappina

in new updating you in so everyone year. on forward much. Thank progress We you look our Thank for the to for today. everyone dialling

Operator

and everyone That for you may disconnect. participating now for today does we thank conclude and our call

PARTS iD (ID) 13 Nov 212021 Q3 Earnings call transcript