SFT - Earnings call transcript Q2 2021 | Shift Technologies, Inc.

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Henry Bird

Good afternoon and welcome to the Shift Technologies Second Quarter 2021 Earnings Call.

Joining me on the call today are Co-CEOs, Toby Russell and George Arison, and CFO Oded Shein.

During our remarks, we'll make some Forward-looking statements that represent our current judgment on what the future may hold. And while we believe these judgments are reasonable, these Forward-looking statements are not guarantees of future performance and involve certain assumptions, risks, and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. publicly filings factors SEC Forward-looking of that undertake obligation our discussion a statements new to statements, call. no the forward-looking or of may to this information, refer future with a otherwise for the full We whether events, Please as any after result conference update affect any

said, turn. in be measures as non-GAAP the the of our material. to During earnings to Toby. course now the referring call, I With over call that and And we reconciled will will defined

Toby Russell

X,XXX about and These and will detail. long-term COVID Oded remarks over our into for XX% Thanks, significant first Henry, originally raising exceptional performance and on will everyone. GPU in We're goals. of In gave environment operating the These about financial service last revenue in and and quarter, that very growth Xx prepared this the customers XXX the second At momentum nearly mid e-commerce our results, our all rest our the a the exceeded and drive strong had revenue XXX%, a $X,XXX by to the We improvement strong results unusual revenue key anticipated work brought than which strategic across continuing exceeded QX. over today expectations. units and year, good guidance we achieved and in leverage. sold. between hard incredible XXXX. afternoon, greatly to of provide our our year-over-year to discuss XXX million midpoint, the guidance core business more adjusted my XXX greater delivered for these represents metrics, while increase team, results we we representing million. full-year of to now continuing Through our quarter achieving toward be call in of goals guidance focus afterward,

and investment Vegas, expanding Once existing again, quarter areas, awareness, deepening Coast set growth up strategic building we our several our These along what brand newer the quarter. footprint, XXX% shift Diego by the we These Legacy before, the geographic the be have such Texas up had XXXX, discussed markets driving prior in into we've for and in for markets, unit year-over-year we which which driven Markets long-term we're our contributors in we're operated same And key seeing the as focus was but within As to At efficiencies while accounted include mature newest improving most growth all this penetration of sustained beyond. nearly our growth by markets. encouraged in to yet lasting XXXX time, and success. X are of will of Las valuable strength our our Seattle markets West The cars. operations in economics. regions will buying, full-stack our San primarily where Portland. not to market this selling time

quarter-over-quarter, this to accelerating the the for decreasing unit growth. length in has by call, with strategy set the at while also long achieved calls. spend sequentially, campaign to sales mid-term we've One total QX. all In prior drivers the be of efforts, highly our across also reduce our of in been we talked supporting term. growth proven new immediate We XX% with impressions effective half of despite a This brand building has non-perishable May marketing that in expectation roughly geographies decrease marketing durable, CAC and about key sales CAC

will investment continue in to Given our brand. some the campaign, in our we're momentum, of accelerate building and, business cases, our branding effort and seeing the in effectiveness prioritize we

do shifts despite drive marketing growth, the faster impact we X awareness environment. the lower a aided now next earliest third-party front-end awareness marketing can and with data efforts on customers. deeper help total at brand COVID quarters. so As to growth, believe over set among tools with a utilize turn support their driven to ramp a level, markets our environment. in position expensive when spend quarters, turn and we're more measure QX, a X We faster investments That powerful in drive and they in penetration, will than new That to market the GPU, will on growth of branding that grow late drive has peer right of embarked deeper in and our

business Turning to functions. across operations, strength see continue we to

our supply, to Shift QX find While cars grow by many sourced of XX% industry the the consumers nearly coming and quarter, to from partners. inventory directly with able was sellable in struggled throughout XX% in

the broader the Our sufficient rather our confluence industry excellent the currently sees the keeping decades. job and A tailwinds year-over-year all of called with normally the factors which XXXX in and X.X and multi-week market said, in-house an operation. across the will of of additional industry without did Shift significantly industry growing that that GPU used reconditioning meet our Market more growth than been Oded drivers inventory car that has to per benefited the than pace over steep in most XXX $X,XXX since process nearly certainly, pricing in appreciation, helped additional QX needs. can seen saw car us has the on unusual cars facilities is XX unit revenue over-performance. cohorts. of overall And supply years week depreciation behavior achieve market. the outpaced That provide economics. the used color staffing, some

on Given in and all in the I regardless and the the our and employees for to operational their year hard delivering well-positioned at make for on trustworthy beyond growth simple drive new and the and work this rest great car these Shift long technology, of of the positioning pricing thank share our market market respond how Regardless based results possible. ownership our term. appropriately and excellence existing market making we're dynamics. significant are markets to short to moves branding dedication to to while like making, continue growth for we're of strategy, the mission of of investments purchase and term, operational would momentum,

Our results. exceptional to and in the growth great I now over delivered our and for We financial go over stepped as excited ahead a turn had XXXX, up Oded guidance. will quarter we're results, provide people call to second-quarter well as the

Oded Shein

afternoon. Toby, Thank you, and good

was record second a quarter and quarter second-quarter throughout an increase long-term Total million, metrics sequential then saw to quarter. and financial second X.X and units we were versus to revenue changes. E-commerce price XXX% to prior-year Shift, sold goals. an X,XXX, the of than profit the results the was to gross demonstrating million guidance in the XXX.X million commentary I quarter. prior for review average period, to third The quarter XX% my quarter QX. progress across towards Total grew and the our very channel meaningful the for share and e-commerce pricing last increase board selling will XX.X increased X,XXX Fiscal X.X remaining up on the in year-over-year prior-year to of first period the providing year. to strong part quarter, units growing our for XX% Adjusted I'll XXX%. higher in appreciation focus XXX% with XX,XXX, the due million

XX% QX. from unit Profit Gross X,XXX per up the in quarter, Adjusted reached Our

approximately elevated Toby unique many A were dynamics in incremental that the X and in car significant took in price large to profits. second hold estimate contributed this dynamic purchased before of QX. QX we As unusual market we at saw sold portion GPU quarter, in that with cars XXX mentioned sold appreciation the really was prices. appreciation We appreciation

Looking very were peak order in in first half to of at at adequate to the our the we're cars QX, the growing price of appreciation most the QX ensure supply of quarter demand. meet purchased selling in

half for of would we than expect be more year in a the lower margins be As they GPU environment. to result, normal second a the

XX.X was per year, in revenue marketing unit for results. in yielded same the unusual encouraged strategy this F&I the to as expense performance mostly with million helped changes around of reserve QX. took QX, market opportunities to quarter in was quarters in Other hurt fully down million F&I this XXX, X GPU the the XXX After after business. delivering QX. consistently QX, space. and the conditions to revenue combined F&I appreciation accounting our section. the new see QX half these I'll over million volatility. in from adjusting X.X guidance in QX of swings we compared helped at continue by of impressive for hold Market Given and discuss as unit QX marketing two emphasizing XX.X to average but the million in in fundamental short-term pricing in remain We balance in QX is expected F&I, the looking brand Total and per meaningful between QX. first this

QX. As operating Toby or loss or down to or mentioned, demonstrating quarter, in in a XX.X XX.X revenue previous was leverage. XX.X% for quarter loss cost XX.X% in XX.X% was compared revenue acquisition significant million of of or was the XX% EBITDA the from revenue quarter million QX. million customer the of XX.X million XX.X% of compared XX.X Total QX X,XXX to SG&A

the Turning million. compared equivalents ended QX with million This sheet to XXX.X flow, we cash balance a to balance. XX the of represents and cash QX increase cash

utilization issuance of XX were our million XXX.X facility, balance for when million outflows and offsetting of our funding convertible for capped supporting and the net full normalization inventory marketing QX. floor cash fees, of them quarter cash second XXXX were to purchases -- and these balance from our both QX notes, uses Our receivable accounts accelerated purchase. May Partially a call the of investments includes of plan compared cash in Primary quarter and origination year-to-date the growth.

spotlight a increase inventory. a QX inventory, the ended XXX.X on the we to million, Quarter XX with our Turning million

bought the speak in in ability sales second GPU cars, vast directly strong desirable the to majority of to are continued customers. performance our procure Our which from quarter

accelerated guidance Looking in with only modest of forward achieve growth half investment. year, our to to the expect embedded the we inventory second the

strive to our favorable to full. growth more able Inventory prices replenish year, plan and As we to have conditions, become this demand utilizing we're in in to our the when changing fuel we QX and inventory demonstrated market quarter are increase quickly current

Turning to guidance.

a create of XXX% to expect third than the for periods. for of the XXX% This of For will the quarter, range adjusted QX third to in QX higher million range to X,XXX approximately expected QX quarter. be XXX or the to GPU average of XXXX. and XXX revenue the an is be to we X,XXX in X,XXX

loss of our across seeing million. business. to be range positive Our EBITDA for the XX on momentum is in the Based to we're and XX results Adjusted quarter expected Year-to-date,

our We XXXX. Annual again for are raising Revenue Guidance

three approximately XXXX. million, revenue in million be range expect We to XXX our total revenue of times for the XXX to

We expect e-commerce to sell XX,XXX CAC. XX,XXX to

quarters, grow As us growth demonstrated excess allows market. in we've our of prior strategy the to well in

GPU. sustainable expect growth, I our to at on the will XXXX, loss market call track to turn slow now XXXX. dynamics GPU previous abundance impact price the the down reach to in versus our While of volatile later XX% better better they our negative well our Due GPU of our be for visibility EBITDA over limited XX%. to year, greater do now guidance caution, closing and margin not remarks. of for than George target with We an than expectation full-year remains do than

George Arison

and Toby Thank you, Oded.

to not that drive scale areas exponential growth? past, growth we I Over could is in growth, public we was to were if the were but drive what we the be often asked, the Company needed invest and Shift's say that a Company, years much position I capital constraint a governing capital have would constraints bring that we'd the regularly faster. we in on we in to we the needed, this before

respectively, with for coming the is and year. operating is almost our constraint and It XXX%, growth operating drive possible see of year, XXXX positioned our a model inventory of removing it deliver that growth gain leverage broadest for and accelerating of XXX%, providing team test QX QX year-over-year also growth exciting went exciting aggressively been existing that us each consumers all very further markets, share its in X driving subsequent in while on XXXX, point significant proof providing quarters, market this public is we this markets after XXX%, delivery. once Now, the last QX to a by XXXX, has with to Capital for

team in our newly the revenue, to these in growth looking increased QX Given full results invest expectations. forward to in a our our scale mission. our those to improvements and strong now year, leverage this all and Especially to midst profit, are up to and We're as in the Shareholders, Q&A. on are please expecting in QX you significantly questions. working sustained our areas the answering while pandemic, ahead the profitability. who drive supported on continued the efforts improving Thank for lines and you. as front We hit a of gross billion quarters operating well of line helping forward deliver industry-leading X look Operator, members. and for in driving your open that guidance customers, few original our Thank towards trajectory Shift we run-rate have on

Operator

gentlemen, reminder, compile by stand Please a the as Instructions]. Thank you. while [Operator Ladies roster. we and Q&A

Potter the question line Alex of line Sandler, from Our first Piper is comes with open. your

Alexander Potter

quarter. Great guys. much, very Thanks Excellent.

find looks on there's used falling this as as normalize obviously, First focus so vehicles, quarters line that the a Is couple are the or down down for and a demand right trying could the of market now vehicles because marketing that customers just possible the of it clear. all CAC unprecedented does the themselves it couple to just settles good years used down? is line once all, over of that

George Arison

to to you the for Great talk Alex. thanks Hi, and question.

said was plan previous we've had roughly reduce reduction. our to our in or call, to we XX% tax XX% by as So, got our half. about about And

building expected. customers secondly, So, in brand could among long for the it's our way think is you towards then line we targeting about consumers be in One maybe is that twofold. awareness what to just for And aided with and very approach had the acquiring much targeted today term. think tax we

George Arison

increases we're with there term. believe our is not but long they awareness then doing results, a in I higher-priced which that what increases, on of build focused We've front-end results profit. market -- believe I on peers focused today market marketing which So, over lot our strategy brand immediate as higher-priced better it's the in seen gross to -- results

do lot of with plan. investment So, and to long-term had our of long-term a this strategy kind

long given we if could to right think we today much that term, term. CAC for we I and were it if the targeted for to, wanted approach, the don't be for the trying we we will invest acquisition long but customer think just probably to a growth not over lower drive are

we've to our operational our marketing the the overall. I that reality strategic drive focus think had results connected So, not part to the is and CAC market really for is And reduction in that conditions and efforts. of campaigns

profit. As and primarily we as e-unit very market wanted much accomplish with and own driven about talked in we we're our But results remarks, our majority in our and think to what with prepared growth is condition what definitely line business. we revenue vast impacted a gross by seeing

Alexander Potter

plan to out, stick terms be deliberate in market-by-market, very That's by there model Clearly, to model great. historical region clear. business working. or on other your regions, Is rollout? urgency a your seems you've going a to to got part try expand Okay, to business with region you expedite that are this maybe of

George Arison

Toby, Toby you take might be on that. I'll mute. let

Toby Russell

question, And wanted had about markets our vast to from that you for Alex, prepared per I year-over-year our in-footprint. came mentioned X grow we as referenced, majority growth Thanks the in said remarks, as previously year. of we that

had than that the I to expansion growing delivering volume to, our shift. existing potential continue our But for past. about we large per faster from are talked see or We had in-footprint just market mentioned in tremendous we base that

and reception surrounding immediately we the areas that, seeing see expansion, when markets. excited penumbra moving ahead gauging about footprint campaign of really I to and to within nearby marketing alongside for areas, and cars brand we're the we being of both both continue think target XXXX. shipped in a our that footprint going great footprint and are that the continue We're existing

Alexander Potter

great. Maybe and one, I'll one last then over. Okay, it turn

would I a existing you a your the point footage, -- got also that where that that XXX on have to constrain Coast in-footprint you And growth? anything like CAPEX against foresee of the constraints adding spaces, the week, on mentioned horizon the there. meet vehicles Thanks. or start your potentially you XXXX the deploy Is your adding ability which You markets, what said you near footprint targets. mentioned somewhat to you've in is you that where there parking think capacity need existing West square up could bumping additional

George Arison

Thanks.

I it's think a more question I that good know peers of and with an that's issue. our

a with can So, labor we what remarks process related kind specifically our of to I point this think we today said we the that have. what in on

Our more labor and hire real more. for you to obviously, than the XXX, process estate can train need but force a lot

this don't has us an -- for right now. past, an it's us, we in for not been issue the So, issue

on very facilities, As not we we place launch massive in then assume turn second thinking this the we we kind of there is we've a said, that these Obviously, into building does need are. approached to capabilities that whatever able about needs that's good are and are variable additional given how force, model facilities for labor our we with year. reconditioning reconditioning as markets. And

think I able close being today, organically, with the grow we and have able customer. to to be do are to the we So, to model really we want production that

Alexander Potter

Great.

quarter. Great Okay. lot, Thanks a guys.

Operator

Thank you.

Our of Blair. with question comes Zackfia from next Sharon William line the

line is open. Your

Sharon Zackfia

us you of when lower spending Congratulations what quarter. to growing afternoon. guess And like average your that brand that I if Can monthly you you means in what's sold Are you how sold brand and visitors, Is units about conversion getting separately, relative I unique metric. like mentioned better wanted curious we do leads? about look the faster what really on talking unique than understand awareness visitors, help it your your Could it good there? monthly ties previously. on Hi, average peers did tactically talk unpack your about the your then at were that? into something some at looks you units I'm quarter. that up looks going to went it strategy? relative your are to the you your just

George Arison

previously with data share we that. What We we us a or so, have lot allows over details more access to through our too you brand of this that gotten fact having. spend partners. in to can access quarter have I'll last agencies the is a to on information to not And really Sure. that measure other can't impact the result been money first is many available get you campaign and is question. now as right you start what that more probably aggregate say that might the

that our our so us effectiveness to allowing is branded also well. goals really the as of far for to Team of to what as set track And And in terms branding accomplish, want our awareness. we efforts mid-term

[Indiscernible] what hopefully goals of where future, which thinking over awareness useful I so past And coming we the total versus turn will it'll has the what Can't Toby that. drive the believe leaning. eight that your And we in growth to reshuffled and we've to so, we that go next about, second with months to folks able we're talk been really but question, are more strong what I the the to investments about detail now, have that, then right gotten to. really with in questions more how do Hopefully, with results other hopefully, we conversion. able to wanted in of quiet right our over be an indicate can quarters, we at be will in about but part than and six for be achieve into would hey, are do know the it spends. folks this and can directionally to a the quarters, less point, we in faster know

Toby Russell

got that features targeting in make strides question marketing up technology in you easier helped match Better -- experiences. as is It's a of we removing finally, continuing and and find great improving making having that's our inventory customers more been and which web conversion. some technology Inventory Inventory, for with cars (ph) when mobile Actually, a cars to actively to great connect invest folks Multiple people our factors easier match experience. drive to for we course, and Investing our of which it do, we're additionally, cars with our easier do improving means the with. We're those more to people. larger And cars. mentioned, and the that Oded pool on thing conversion. we've going to fiction in (ph) to grew

that we're multiple focus seeing really combined ongoing activity for to And us. levels So, remains of improve an conversion. that

Sharon Zackfia

helpful. And one question. That's really last then

On pricing there GPU, therefrom F&I was environment? any the the benefit

George Arison

will believe one. I take that Toby

Toby Russell

at that allude. incredible that their our terms high business a business around as line, in we and just In the like -- $XX,XXX have people pocket. is an add don't you level, it's of a F&I value great found area walk with Most

the the certified for I And questions ship, are so, car, I of buyers based core F&I, period in one etc. continuing saw segment. yes, buyers value that. this what as do get top described But that past we I can we we build that We've like about early and are in what the versus combination from ASP There experience, particular vehicle things We're on financing and technology the critical. financing entire from or talked offer some cars is cars and and of cars, The days a love warranty the financial We both intangibles, hey, to product have offering ISD. we in technology -- wouldn't the variations say the out we offer offering, the wild able in you say, between to of our build with love do said, to variation that? to keep offering, improving variations customers. a being

Sharon Zackfia

you. Thank

Operator

Thank you.

comes with Fargo. question Fadem of Our from Wells line Zack next the

is line open. Your

Zachary Fadem

afternoon. good Hey,

the then price unit a land this the and outperformance about thousand flowing to in unit outlook, of talk ASPs at you in your you the the the the as for to as where the to retail expectations to the So, describe end little half? end we QX extent would today? excuse And about full-year as second at on me, unit raising increase bit expect your what in your assumption XX,XXX think versus opposed top-line, of the year could -- level total you the

Oded Shein

for question. the Thanks

you for million As Revenue Total raised the know, just $XX Guidance we year. by

our by X,XXX raised also We Guidance cars. Unit Volume

and So, than originally trajectory very But the ASP combination each end one now. faster it's visibility being a we our towards anticipated. year, quarters the have right specifically, of good don't of the of we

math, So, by of may if ASP be you thousand do remains there some really year. end XX+ be may the the range, there if at -- revenue upside for the total the

Zachary Fadem

you. Got

I you on these from here, the another the couple about question about what external your car items over sourced should think line And attribute you we So, environment over wholesale Customers XXX%. to quarters? out up then up coming how modeling and the XX% just Quarter. over talk in guess the to -- units Can

George Arison

at want than that? auction auction. Oded, buying that, about the So, other cars take we've given at do opportunistically that. pricing really you to I'll not very The we take been environment think way

want of vast as the the from needs. much we think coming is lean we inventory driving I that into It has So, our and very majority as consumers. that are far to inventory historically getting

made in we that Obviously, prices we that. do. And like are high, really haven't we'll I option to way too think do prefer to but, can this it sense if continue get able assume be to that's felt what environment, would more the folks to where covered just so, actually should we

George Arison

where in into historically of other But cars us about a (ph) because are given not number our speaking, a the that to auction, were past again, auction prices do enough conversations from actually be were as talked place. we this now, are F&I in But that as to they in we the larger numbers be F&I auction. really needed of bid not good I able numbers been to to think for auction the much if better did capable

that would bit come as auction prices add And a to [Indiscernible] long so more. down, term, I wouldn't we expect little

purchasing. Toby terms about inventories, And talk of wholesale. So think that's let inventory our about in kind how disposition I'll we of

Toby Russell

to large normalized and think there's at In of other wholesale point. really the side, wholesale the our in real of the past at thing etc. of massive how early out what your terms is that little opportunity to we yet we're of seeing wholesale There what scale, wholesale. that, primary that year. business, a in ways, standalone may disposition are for terms at do going future consumer but have wholesale while we of to On captured been this as supports cars a unit, acquiring bit of players model terms the us and auctions the core part our mission, there hosting latter business. out offshoot back on consumer we that a was difference own built is of about this focus in this the or that. are built on big quarter, focused that, next And is large But the valuable what opportunity that in a not of in question, of not year Increasingly We're lot shortage sell focus consumers. this it there of putting have which out cars have on, our is a really an and is for a wholesale

next. Our indications return more the but of year. a the taxes, early we're the I the super to of chip to (ph) new are, if in that latter supply returning can't of car normalized unusual wouldn't following online to shortages wholesale extraordinary a modeling view, about the particularly part on think and specific and either a point earlier market in is be of expect supply, anything in comes supply environment or pricing normal through date back From this terms or we year

Zachary Fadem

then the reasons there is in Got F&I way of to say are just question, upside it. back there fair XXX-ish could the believe item lastly, to term, about level near on year? think the or is this half the be That makes a the sense. that right in it the And to some follow-up here

Oded Shein

in to So, F&I for mid-term goal to our X,XXX as be you is somewhere range. the know, X,XXX

improve productive, again now, about to job but is XXX They to better we we go. we hiring on. still and thinking and continue the still we So, ways another training do progress, of our have, are if go. making they and ways And way, have staff. are so become think that in but a it, about to in we're more the product We good

will our So, talk higher us growth that; about it's up may -- area we take been to talk How get our area in several ramp to fast range. growth in Time from to this it promise to that tell. to higher that doing always level that been quarters strategies that do a to level. effort about has level? can to We're every strategy

Zachary Fadem

Got the it. time. Thanks for

George Arison

Thank you.

Operator

you. Thank

next of Our Fong with the line from Marvin comes question BTIG.

Your line open. is

Marvin Fong

you questions Thank improvement thought evening. with congratulations the pricing still I quarter. like question start you thank leaves a [Indiscernible] that contributed my on GPU about, number putting thought would minus to on just or GPU. environment expansion, the the on, and Good you I quarter-over-quarter. but of for something a taking plus $XXX what for

much overall second going -- seeing on on pricing what's gains us could maybe sourcing? you from Thank of much on isolate that getting And any you then are you. companies seeing you might terms elevated can more to the power. you is and pricing just or just pricing consumer sourcing. Anything Are that. the between in a into help you be environment able price question, unpack that. if was How reconditioning? curious expand How again Just structural else impact

Oded Shein

were on little we right? Thanks from couple well. the bit compared costs some last to GPU going on. had for said bit we start quarter So reconditioning QX, a things time, there of QX the hangover especially this had I'll little in of with we a elevated the a and side, as improvement as So, the QX as question.

would QX, we the at equalized of was the and say looking QX. get of I two be QX dynamics why in So, -- of normalized what two in going and part the to it's that balance and number. bigger suggest quarters, average a more to you the That's market combination that about course, of we big the those rise. market plus talked the contributed comments, to those what the factors Obviously, said conditioning,

Toby Russell

And and and saw focusing anomaly of rapid you question saw that the part was we XX% a and is important shortage of the lot one. order Marvin, think that second well. very sourcing, January around and April With of something your was in a it valuable market, What the a true appreciation on on used appreciation, vehicles. of that environment, between like I

an to pay you're having very source If source auction that if were buyer, to primarily high able auction, to through be prices you auction. you

a a And our on consumer sourcing be to from able as real able of we for want. And our great core is and consumers. see that Auction sourcing, people part, building we source competitive to and cars. But capability. we XX% validation key past say have elsewhere. Shift we there, the strategy. are no a to that that rely we way concern that's that of our came we is say going in Shift, the mentioned to And while on years always we've out that great tend Quarter, environment, see Those that to instead, spent moving advantage Fortunately, a has were this diversify the not sourcing There real cars we do advantage that others making best been get direction, the to about the competitive past, area. in Channel

for package And slightly a very nicely will core proved it's Shift's continue and think accident, strong options because this always that true. relatively that's what to You out lower are That done really, bread that looking older butter in the that the well. of be one we and quarter price been no car. really past owner,

consumer been key be spectrum you of example, our advantages. position. is key is capability we've on focus on that wouldn't Additionally, sell. a is is ever we've that differentiator. then a auction advantage puts It us sourcing, wider consumer vehicle so vehicles Shift in just unique The offering, an outgrowth those and because of merchandise the and for a seen value another we We're think find and that And to the We that able have an buy at them. about recondition that of years we excited really set. source, what experience vehicles that strong focused to a to and

George Arison

QX. assumptions spoke tend be we Oded remarks. in to in our general, conservative in the quite prepared that so, about And about

he int, the board remarks. across And prepared so,

gone, down, QX part And so, are potentially normal Obviously or upside will our does of assumption as you than we've will that our QX, -- about of here QX an if not curve we be were and pretty have how and XX XX across about QX. to will come concerned are if even back board, assumptions to ASP they seasonality steeper stronger is and the in obviously, if conservative a come or there in levels a that what days. normal have we XX QX result So been than of right? because

see we're that is second prices And in another of that's -- some year. assumptions there for indication future And why the into in that being an reduction will half so us our the coming to you months. reason will conservative

As far [Unclear]. as

Marvin Fong

come the up. quarter you of And on within sense. expense it you have of Marketing you Did SG&A, portion I XQ do marketing QX; the SG&A? Makes in big were first where -- down had doubling a kind back think the in spend

Oded Shein

Yes, $XX marketing in QX. million more than less went from in than XX down QX million to

Marvin Fong

million. XX

Oded Shein

a clearly So, dollar decline. total

Marvin Fong

a Getting normalized to more rate. back

Oded Shein

Yeah.

Marvin Fong

Great.

Oded Shein

seen the increase a of not in SG&A, But really the effect you as obviously, nice and at look much costs. whole in you've if revenue, increase leverage

Marvin Fong

Thank Perfect. very Thank you you. much.

Operator

you. Thank

comes question Securities. next Our with Mike Grondahl from line of Northland the

is Your line open.

Owen Holm

one quick Owen on one. have just Hi, I Mike. guys. is for This

marketing, out buyers of terms areas sellers? major both and are In updates resonating any call there you that with or can here are

Oded Shein

details doing XX%, it us data really which from is. the Well, we of the I doing to been the brand. making but a about investment see And CAC of very that had a the much campaign what more the by said think more we've a what said, a line questions kind we X not -- impact. reduced that that, medium-term we've a positive really you on and for underline hard outcome. is in go that our we quarters X we're say to I would positive with case. the time, so and benefits into But is we've gross which seeing how the far, it’s or in perspective that long be one that, want we than to is business, on can't from multi-quarter profit will that's is long-term We access acquisition that this having have really time build positive to that middle think momentum We're is what perspective. from what think that marketing the we're have that's so now and do very And terms using in the reaction allowing to consumers, marketing a customer in both sides. more obviously, This really excited

Owen Holm

Got for my taking it. Thanks question.

Operator

you. Thank

of Our next line Oppenheimer. Nagel the comes Brian question from with

open. is line Your

Brian Nagel

afternoon. Good

Oded Shein

Brian. Hi,

Brian Nagel

Congratulations on quarter. the great

Oded Shein

you. Thank

Brian Nagel

continue questions, talked of needle about with well, more more to just in become these U.S. mean, stay follow-ups? But Company? respect Western point what markets, a volume a more your they lot particularly push -- So, markets you new the the it. saying strength those do point Coast have couple for be the as off, the to in or just total at they growth, markets for Shift? what to first But be in -- really a matter the from a mover do growth But really into become new start volume at to could you East of were market now, existing become we you what West such a of the I perspective

Toby Russell

is each over which is existing a It's markets. those -- strategy the they're you the substantial market, likely XXXX newest that. Seattle into we so timeframe. have the pretty next in markets, year, to the going the for means deeper we Brian. of our saying a reason existing What question, we're see pursued Thank And make markets, Texas that the markets a is bigger time, difference in market great presence

And little a market bit, XX sort like start It and launch more one deeper, as a to a significant we've leverage stride strategy, a that each volume. our said, so, than up little year marketing ecosystem but its so, takes different X strategy create super-regional to little about while. takes more like makes our difference, of hey, articulated in go little bit, markets a presence brand that months, regional wanted bit, get if locally new of as in not and new to a to it that well lot and total or strategy we an adds then terms we're happen and for a a we strategy. That's in a catches it doesn't hitting going

talked each you the kind becoming we support see brand why -- of interlocking and a We've see And point-of-view. an other that little those markets might those a from interlocking about of for both a so incubating system. longer presence and part inventory lot that's total region,

Brian Nagel

now That's second with very helpful, appreciate I And the on respect marketing to brand it. helpful. Very then and building. focus question, the

shift few lot So, about the the last quarters, questions that you prior I you talked two a happened discussed. think the over

to [Indiscernible] now QX the the of more campaign? you unfold marketing in branding will QX. where to balance XX -- new over be marketing dollar continue Is of left what Now, dollar or that come the there say, see watch market, the that we it us as [Indiscernible] lowered is this you helped same lowered we here, should expect? efforts

George Arison

say, we're for that best what is can right doing think to doing. we I going the continue now, we're

think dollar X acquisition impact prepared our that on can hand spoken costs And our in customer how that as but in really to that implications we we we volume where at aid CAC investments I X and Toby can say we're it than we amount be increase, doing we over long if announce might to some the do of has total more quarters. tangible the the term. I in that think investment, is very obviously think now our positive what the this for good we but much place. few has is kind a continue for have. think quarter the the next that we believe obviously, have remarks GPU we brand that be minimum point, don't the then grows, And will over on much that right case

Brian Nagel

much, again. you and thank congrats Okay, very

George Arison

you. Thank

Operator

now like to would queue. I remarks. turn further the for call to back in closing George of the any sure not I'm over questions

George Arison

forward to coming the Thank you, joining And everybody, days. in your really speaking us, questions. appreciate to for you and one-on-one look we

Operator

you. Thank Call. Thank Conference This for participation. your concludes Ladies Gentlemen. today's and you

disconnect. now may You

Shift (SFTGQ) 11 Aug 212021 Q2 Earnings call transcript