Shift Technologies, Inc. (NASDAQ:SFT) Q1 2023 Earnings Call Transcript May 11, 2023

Shift Technologies, Inc. beats earnings expectations. Reported EPS is $-2.15, expectations were $-2.53.

Operator: Good afternoon and welcome to the Shift First Quarter of 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] I’d now like to turn the conference call over to Susan Lewis, Vice President of Investor Relations. Ma’am please go ahead.

Susan Lewis: Good afternoon and welcome to the Shift Technologies first quarter 2023 earnings call. Joining me on the call today is CEO, Jeff Clementz; and CFO, Oded Shein. During our remarks, we will make some forward-looking statements, which 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 statement. Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward-looking statement. We undertake no obligation to publicly update any forward-looking statement whether as a result of new information, future events, or otherwise after this conference call.

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

Jeff Clementz: Thank you, Susan and good afternoon everyone. Thank you for joining us in our first quarter 2023 earnings call. During our fourth quarter call just six weeks ago, we gave a comprehensive update on our strategy and operations. Today, we have a few key updates to provide. First, our quarterly results came in near the top end of the guidance ranges we provided. The first quarter was still a transition period as we integrated the CarLotz transaction, executed strategic decisions regarding our footprint, and evolved to our technology-forward omnichannel sales model, which allows our customers to choose how and when they want to shop. We have made changes to our sales organization as well as optimized our marketing strategy and reconditioning processes to improve performance and increase efficiency.

We continue to refine the model and as operations have begun to normalize we are encouraged by the sequential improvement in our GPU in Q1 and second quarter to-date. With these changes behind us, we believe we are positioned to expand GPU especially F&I and leverage SG&A going forward, which should translate into lower cash usage in future quarters. Second, our tech and op teams continue to work together to build and optimize our dealer marketplace platform, which we expect to relaunch in Q3 of this year. We see a future where Shift is the platform for customers to shop and purchase the greatest selection of used and new cars with the same customer satisfaction and seamless e-commerce experience that we’ve been delivering over the past 10 years.

Our partner dealers will be able to reach millions of digital customers with no upfront fees and build new lifetime customer relationships. For Shift, the marketplace not only introduces a high-margin asset-light revenue stream, but will also expand our inventory assortment and organically drive more traffic to the site while providing further leverage on marketing and G&A costs. Finally, our Board of Directors and management team are committed to doing what’s best for all of our stakeholders, including our customers, employees, business partners, debt-holders and shareholders. In that spirit, as stated in our press release, the company is evaluating a wide range of strategic alternatives to maximize shareholder value. I will now hand the call over to Oded to review our first quarter financial results.

Oded?

Oded Shein: Thank you, Jeff, and good afternoon, everyone. Total revenue was $57.7 million in the first quarter. We sold 2,396 retail units and 344 wholesale units. Adjusted GPU was $1,777. F&I and other adjusted GPU, was $846 per unit sold, primarily impacted by a difficult financing environment and high interest rates. In our continuing effort to drive higher F&I attachment rates, we have recently added additional subprime financing partners and continue to train our in-store associates to offer the best experience for customers. Adjusted SG&A was $28.3 million, approximately flat with previous quarter while adjusted EBITDA loss was $24 million. We ended the quarter with $67.7 million of total cash and cash equivalents. Other uses of cash during the quarter not included in adjusted EBITDA were transaction costs, costs associated with hub closures and timing of accounts payable. I will now turn the call back to Jeff for closing comments. Jeff?

Jeff Clementz: Thank you, Oded. We have an incredible team, who is focused on driving significant operational and financial improvement across the business. I would like to thank them for their continued hard work and focus. Thank you for joining us today and for your interest in Shift. We look forward to speaking to you again soon. Due to our strategic alternatives review process, there will not be a Q&A session following this call. Have a good evening.

Operator: Ladies and gentlemen, the conference and presentation has now concluded. We thank you for joining. You may now disconnect your lines.

End of Q&A: