Vroom, Inc. (NASDAQ:VRM) Q3 2022 Earnings Call Transcript

Vroom, Inc. (NASDAQ:VRM) Q3 2022 Earnings Call Transcript November 8, 2022

Vroom, Inc. misses on earnings expectations. Reported EPS is $-0.76 EPS, expectations were $-0.62.

Operator: Thank you for standing by, and welcome to Vroom’s Third Quarter 2022 Earnings Call. I would now like to hand the call over to Liam Harrington, Vice President of Investor Relations. Please go ahead.

Photo by Peter Broomfield on Unsplash

Liam Harrington: Thank you, operator. Good morning, everyone, and welcome to Vroom’s Third Quarter 2022 Earnings Call. Joining us on the call today are Tom Shortt, Chief Executive Officer; and Bob Krakowiak, Chief Financial Officer. Please note, this call will be simultaneously webcast on the Investor Relations section of the company’s corporate website at ir.vroom.com. The Third Quarter 2022 Earnings Release and Earnings Presentation are also posted to the Investor Relations website. Before we begin, please note that the discussion today includes forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements about Vroom’s operations and future financial performance. These and other forward-looking statements are based on management’s current assumptions and are neither promises nor guarantees and are subject to a number of risks, uncertainties and other important factors that may cause actual results to differ materially.

We direct you to the company’s most recent SEC filings, including the Risk Factors section of Vroom’s most recent Form 10-K for the year ended December 31, 2021, as updated by our quarterly report on Form 10-Q for the 3 months ending September 30, 2022, for additional discussion of factors that could cause actual results to differ materially. Please note further that today’s discussion, including the forward-looking statements, speak only as of the date of this call, and Vroom assumes no obligation to update such statements. The company may also discuss certain non-GAAP financial measures during today’s call. You can find a presentation of the most directly comparable GAAP measures and a reconciliation of those measures in the third quarter 2022 earnings release and management presentation.

I’d like to now hand the conference over to Tom Shortt, Chief Executive Officer. Tom?

Thomas Shortt: Thank you, Liam, and thank you to all the investors, analysts, Vroommates, UACC colleague and third-party partners who are joining us today to discuss Vroom’s Third Quarter Earnings. Starting on Slide 3. We introduced our long-term roadmap in our May 26 Investor Day where we highlighted our mid-term goal, which is a breakeven business and our long-term goal of a 5% to 10% adjusted EBITDA margin business. As we mentioned on Investor Day, we’ve made the choice to slow down. We slowed down with the intent to continue improving our customer experience. We plan to live within our means, while we prioritize unit economics, profitability and liquidity over growth. As previously announced, our roadmap relies on 4 focused strategic initiatives.

First, build a well-oiled transaction machine. Our transaction machine includes titling and registration, selling, e-commerce and marketing. During Q3, we made improvements toward our goal of building a well-oiled titling and registration machine, and we began building a well-oiled sales machine. Second, build a well-oiled metal machine. How we buy, move, recondition, sell, deliver and price vehicles. Our goal is to optimize the end-to-end supply chain by synchronizing how we buy, move, recondition and deliver vehicles to reduce cycle times, reduce supply chain costs, improve inventory turns and improve customer delivery times. During Q3, we continue to make improvements in building our well-oiled metal machine, and we began transitioning our Stafford reconditioning center to the TDA service center location.

Third, build a regional operating model, leveraging our national brand. We intend to sell nationally, but operate more regionally around our reconditioning centers and transportation hubs. We expect to build density in regions to drive marketing and supply chain economics, while improving customer delivery time. We have a significant opportunity to reduce the number of miles of vehicle travel and reduce inbound and outbound transportation costs. From Q1 to Q3, we have reduced the average number of miles or vehicles travel by 18%. Fourth, build our captive finance offering. We intend to expand our captive finance offering for Vroom customers which we believe will improve conversion rates and improve unit economics, while also improving the customer experience.

We also intend to continue to grow the UACC third-party dealer business, which contributes to our consolidated EBITDA. On Slide 4, our third quarter highlights. We improved adjusted EBITDA, excluding non-recurring expenses, by $20 million or 26% sequentially. Our Ecommerce gross profit per unit or GPPU was $4,206, reflecting progress toward our long-term goal. We reduced adjusted SG&A by $21 million sequentially as we continue to reduce variable and fixed costs. We realized a $16 million securitization gain at UACC despite a challenging market. We reduced our restricted cash by $59 million, primarily driven by the improvements in titling and registration. We are making progress on our long-term roadmap and our 4 strategic initiatives. We continue to make improvements in transaction processing, including titling and registration.

As we’ve mentioned, our goal is to become best-in-class in titling and registration. 98% of customers received their registrations before the expiration of their initial temporary tag in the month of October. I’m really proud of the improvement our Vroommates and UACC colleagues have made to registration. We began the transition of our Stafford reconditioning center to the TDA service center location, which will lower our fixed costs. Our long-term roadmap plan to slowly insource the sales function over time. In Q2, we started insourcing with a small sales class to build our internal capabilities, and that initial class has met our expectations. In the back half of August, we experienced a large, unexpected staff reduction at one of our third-party sales partners.

We reacted quickly to accelerate hiring additional classes of internal sales staff. It takes time to hire and train new selling resources and additional time for them to reach peak effectiveness. We’ve been successful in hiring additional classes and expect to be fully staffed in Q1 2023. While we had planned a slower and smoother transition to insource our sales function, we believe this transition will reduce our selling cost per unit earlier than initially planned. We have been focused on reducing variable and fixed cost and will continue this focus. We repurchased $56 million base value of our convertible notes for $18 million reducing our leverage. Given our focus on profitability and liquidity over growth, the unexpected reduction in selling resources during the quarter and the macroeconomic environment, we currently expect to be below our forecasted Ecommerce unit range for the year, better than the midpoint of our forecasted adjusted EBITDA loss range and near the midpoint of our previously forecasted liquidity range.

On Slide 5, during Investor Day, we outlined these key unit economic drivers behind our 4 strategic initiatives that we believe will build a profitable business model. This slide is an update to our Q3 operational progress on our 4 strategic initiatives by financial lever. For the Product and Vehicle GPPU, we achieved $4,206 Ecommerce GPPU, driven by our pricing initiatives and captive financing operations. UACC completed its second securitization since our acquisition and UACC’s 14th securitization overall, demonstrating UACC’s ability to leverage its substantial capital market experience to opportunistically deploy securitization transactions and maintain capital flexibility even in a challenging market. Logistics, we reduced our all-in logistics cost by $5 million sequentially.

Inventory. As we continue to improve the titling process, we expect this to increase the number of vehicles we list for sale and reduce the number of vehicles listed as coming soon. We expect this will improve our inventory turns. Sales. We reduced our sales costs by $1.3 million sequentially. We began our sales pilot and launched new Ecommerce initiatives. Titling and registration. We’ve seen significant improvement in our titling and registration process with 98% of customers receiving their registration before the expiration of their initial temporary tag in the month of October. As we continue to improve our titling process, we are receiving titles of aged vehicles that had not been listed for sale due to the delay in obtaining the title.

As we receive these titles of aged vehicles and list them for sale, we expect pressure on Q4 GPPU. We reduced our titling registration and support cost by $5.9 million sequentially. Marketing. We reduced our marketing costs $4 million sequentially and continue to focus on improving marketing return on investment and conversion. Fixed costs. We reduced our fixed cost $4 million sequentially, and we continue to focus on additional fixed cost reductions. These variable and fixed cost sequential changes represent the $21 million sequential reduction in adjusted SG&A mentioned earlier. Lastly, our advanced analytics team, functional business teams and tech teams continue to build data assets, analytical assets and tech assets that we believe in the long term will provide a competitive advantage across titling and registration, pricing, conversion, vehicle and product margin and supply chain costs.

Slide 6, unit trends. While we don’t plan to share monthly unit numbers going forward, we felt it was important to share how the events impacted our monthly unit volume. In July, as registrations and our customer experience continued to improve, we took steps to normalize unit sales, which increased unit sales from July to August by 36%. As mentioned earlier, in the back half of August, we experienced a large unexpected staff reduction at one of our third-party sales partners. Customer contracts were down 32% during the 4 weeks after the sales force reduction compared to the prior 4 weeks. We expect the transition of our sales function as well as challenging economic conditions to impact units in Q4. We expect our sales function to be fully staffed in Q1 2023.

I’ll turn it over to Bob now to go through our financial performance in the third quarter and our forward outlook. Bob?

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Robert Krakowiak: Thanks, Tom. I’ll start with a summary of our financial performance on Slide 8. All comparisons are against the prior quarter, unless otherwise noted. Total revenues of $341 million decreased 28% as Ecommerce units declined 30%. Consistent with our strategy, we intentionally slowed transactions to focus on operational execution and unit economics. As Tom mentioned earlier, unit volumes were also impacted by a reduction in third-party sales resources, beginning in the back half of August as well as overall macroeconomic conditions. Ecommerce GPPU increased 16% to $4,206. During the third quarter, we realized further pricing optimization, which contributed to the increase in vehicle GPPU as well as increased product GPPU as we scale UACC-originated loans.

Adjusted EBITDA loss, excluding non-recurring costs, improved $20 million to $57.5 million. The improvement was driven by higher gross profit dollars and reduced SG&A spending. A $16 million securitization gain was the primary driver of increased gross profit. On the expense side, we further reduced our fixed and variable operating costs as we continue to pursue our 3 key objectives. These costs exclude $16 million of non-recurring costs to address operational and customer experience issues, consisting primarily of $12 million of rental car expense during the quarter. We are expecting a significant reduction in non-recurring rental car expense in the fourth quarter and going forward as a result of our improvements in the titling and registration process.

Our net loss for the quarter of $51 million improved $64 million. The 3 primary drivers of improvement were a $38 million gain on debt extinguishment due to our repurchase of convertible debt, the $16 million securitization gain I referenced earlier and improved operational results. Let’s turn to our financial highlights on Slide 9. Starting with adjusted EBITDA performance. Excluding non-recurring costs, adjusted EBITDA improved $20 million quarter-over-quarter. As discussed earlier, improvements in adjusted EBITDA were driven by higher GPPU, reduced operating costs and the gain on our third quarter securitization at UACC. Ecommerce units decreased 30%. One key driver of our low unit sales volume continues to be a focus on operational improvement, as we intentionally slowed transactions to improve unit economics and the customer experience.

Third quarter unit volumes were also significantly impacted by reduced third-party sales support staffing beginning in the back half of August. While we don’t expect the long-term unit impact from this transition, as we scale lower-cost sales resources, consistent with our long-term roadmap, we do expect an ongoing unit impact in the fourth quarter as our new team members ramp up to full productivity. In addition to the factors previously mentioned, third quarter units were also impacted by current macroeconomic conditions. I would like to provide some additional detail on our Ecommerce gross profit per unit performance, starting with vehicle gross profit. Vehicle gross profit per unit increased 5% to $2,267. This increase was driven primarily by higher sales margin as we further optimized pricing.

As Tom mentioned earlier, we’ve seen significant improvement in our titling and registration process with 98% of customers receiving the registration before the expiration of their temporary tag in October. This process improvement is increasing inventory available for sale on our website from purchases earlier in the year. As a result of this process, we expect a higher portion of our unit sales over the balance of the year to be from aged inventory as we obtain titles for cars, previously not listed for sale. Coupled with declining used vehicle prices across the market, we expect this to negatively impact our sales margin in the fourth quarter. Moving on to product GPPU. Product GPPU increased 33% to $1,939, as UACC-sourced financing continues to perform in line with our expectations.

Our higher vehicle and product GPPU ultimately delivered total Ecommerce GPPU of $4,206, a 16% sequential increase. Let’s move to Slide 10 for second to third quarter comparison of our adjusted EBITDA performance, excluding non-recurring costs. Sequential declines in Ecommerce unit volumes impacted Ecommerce gross profit by approximately $10 million. This was partially offset by a $4 million benefit from higher Ecommerce GPPU. Next, the UACC securitization contributed $16 million of gross profit to the retail finance segment. This was partially offset by a $9 million decrease in non-Ecommerce gross profit, primarily driven by lower interest income from third-party dealership finance receivables. As a reminder, since we are not yet performing securitizations every quarter, we expect quarter-to-quarter volatility in these amounts with a buildup in this interest income in non-securitization quarters and the decrease in quarters we enter into a securitization transaction.

Total expenses, excluding non-recurring costs, decreased approximately $19 million. Approximately half of this decline was driven by lower compensation and benefit expenses as we continue to focus on cost reductions. We delivered an additional $9 million in cost reductions, primarily in marketing and logistics and also decreased variable costs due to lower unit volume. Overall, we improved adjusted EBITDA, excluding non-recurring costs, by approximately $20 million, a 26% improvement. Moving to liquidity on Slide 11. We took a number of actions during the third quarter as we continue to maximize liquidity. First, we reduced restricted cash on the balance sheet by $59 million, sequentially. This cash became available primarily as a result of lower inventory levels and improved transaction processing in titling and registration.

Our process improvements also reduced cash and inventory by $21 million during the quarter. Next, we repurchased $56 million face value of our convertible notes for $18 million, reducing our leverage. We may continue to opportunistically repurchase notes from time to time to reduce our outstanding indebtedness at a discount, subject to market conditions and availability. In addition, we recently amended our vehicle floor plan facility, which now extends through the end of March 2024. Finally, at UACC, we completed our third quarter securitization despite more challenging subprime market conditions. Our transition to fully-captive lending remains on track. Please turn to our liquidity guidance update on Slide 12. We ended the third quarter with $510 million in liquidity.

As a reminder, we define liquidity as cash and cash equivalents. The purpose of this chart is to simply show the components of our change in liquidity based on the guidance that we previously provided last quarter. We continue to anticipate our year-end liquidity to be near the midpoint of our $450 million to $565 million range. With that, I’ll turn it back to Tom for a few closing remarks. Tom?

Thomas Shortt: Thanks, Bob. Turning to Slide 13 to summarize the quarter. 98% of the customers received their registrations before the expiration of their initial temporary tag in October, as we continue to focus on becoming best-in-class in titling and registration. We improved adjusted EBITDA, excluding non-recurring costs, by $20 million or 26% sequentially. Our Ecommerce GPPU of $4,206 reflects progress towards our long-term goal. We reduced adjusted SG&A by $21 million sequentially. We reduced restricted cash by $59 million sequentially, driven primarily by titling and registration improvements. We repurchased $56 million face value of our convertible notes for $18 million. We are forecasting year-end liquidity near the midpoint of our guidance. I look forward to updating you on our progress on our 4 strategic initiatives each quarter, as we pursue our long-term roadmap. Thanks for your time today, and operator, we are ready for questions.

Q&A Session

Operator: . Our first question comes from the line of Rajat Gupta of JPMorgan.

Rajat Gupta: Maybe a first one just on vehicle GPPU. Very strong numbers, better than most of your peers. Obviously, you’re being selective. So a couple of questions. How much of the GPPU is just from shipping fee, if you can help clarify that? And then as volumes start to ramp back up when you’re better staffed, what is a good normalized level to think about that you would want to manage that vehicle GPPU around? And I have a follow-up.

Thomas Shortt: I think we’re in the target range of where we want to be long term. I would tell you, quarter-over-quarter, the — our delivery fees were actually down a little bit as we continue to experiment with what the right balance is to optimize the overall GPPU and volume. So I think where we want to be in the long run. I think as we mentioned, in the short term, as we get all these titles for cars that we have not listed for sale, that’s going to cause some pressure in this quarter. But I think once we get through being current on titles, maintaining or staying current on titles, I think around the $4,200 range is kind of what we put in our long-term plan. And we would moderate volume. We’re going to continue to be focused on unit economics over growth.

And that’s why we pointed out in the deck during this quarter, even at $4,200 GPPU, when we made the decision to grow from July to August, and what I would really call normalized demand, we were doing that in the context of still optimizing GPPU. So it’s certainly hard to predict what’s going to happen in 2023, especially with the macroeconomic backdrop. But we think, long term, this is directionally around the range. And I would say we still have several initiatives that we outlined on Investor Day that we’re just scratching the surface on. So of all the numbers, like we feel pretty good about where we’re at in GPPU for the long run.

Rajat Gupta: Got it. And then if you’re managing GPPU with being careful around volumes and selective on that front. I mean how should we think about SG&A leverage? If you can give us a sense of how much is the fixed versus variable component of your SG&A today? And given that focus on GPPU at the expense of volumes, when should we start to see SG&A come down to a level where you can get your business to profitability at that lower volume?

Thomas Shortt: Yes. Thanks, Rajat. So we’re really taking a long-term view of transforming the business. And so in the long run, we definitely need to continue to drive SG&A down, variable and fixed costs. So I’ll just break it down. The way we think about variable cost, our marketing cost per unit is clearly way too high. And we’re making adjustments to that, but we’ve also initiated new projects around how do we drive conversion. You may recall from Investor Day, we have a significant amount of sub-prime traffic that historically, we’ve not been successful in converting into sales. So one of the key levers that we look at in terms of driving marketing cost per unit down is really focused on our conversion. And we have projects that we’re working on that will be happening in Q4 and throughout next year.

But we’re really taking a long-term view on how do we drive conversion to get our marketing cost per unit in line directionally around what we outlined on Investor Day. Our next biggest bucket is titling and registration. While we’ve made huge improvements, our cost in titling and registration are still too high. We’re going to keep putting the customer first. We’re going to continue to focus on building this best-in-class titling and registration process. That’s our goal. At the same time, we’ve got tech initiatives that are rolling out in Q4 and in the first half of next year that we expect to bring titling and registration costs down. And right now, when we look at what the assumptions we made in our roadmap that we outlined in May, we believe at this point that we can continue to focus on driving those costs down.

The next bucket is logistics. I would tell you that our logistics cost per unit on the volume that we have today is too high. But we’ve consciously, for the shorter term, we’ve decided, we’ve got a lot of, what I’ll call, semi-fixed costs in our variable costs where we’re keeping hubs open because when we do get things right, get the titles in place and begin to grow in the future. We think we’ve got the right network. And so for the short term, we’re willing to have a little higher logistics cost. I would say I feel real confident that the team has really made huge improvements in the way our linehaul operates and our last-mile hub operates. And we’re being very strategic around how to optimize costs between our internal trucking resources and third party.

And so I’m really focused on how we build that into a well-oiled machine, and I believe that those costs per unit will get in line as we do grow again. And then lastly, fixed cost. I break those down into 2 components. One, clearly, we have headcount in fixed costs. And I’d say that our tech resources are becoming more and more efficient, and we’re focusing them on the highest value-added projects. And in the short term, we really need our tech assets to drive this transformation. So in the shorter term, you’re going to see our tech cost per unit higher than we’d like in the long run, and we’ll expect to normalize that with volume. And then we’ve got other costs like finance, HR and legal. And I would tell you, across all of those, our teams are working to find efficiencies.

And then the last big bucket I’d call out, Rajat, is we have a lot of contracts that we entered into when we were in a very growth mindset oriented company where frankly, our contracts are sized larger than we need them. It’s the size of the company we are now. And we’re going back to all of our partners, and we’re working through trying to rightsize some of those contracts. And I would tell you, we have some really wonderful partners, and we’re trying to work with them in the long run, how do we adjust contracts, and we’re going to remember those that work with us to be favorable. We’re going to have an even longer memory for those that don’t work with us. But kind of holistically, that’s how we look at our entire variable and fixed cost structure, and we’re working on it on a daily basis.

Operator: Our next question comes from the line of Sam Reid of Wells Fargo.

Richard Reid: The quarterly unit commentary was very helpful, especially the monthly breakout. That’s what I was wondering if you guys could unpack the quarter-to-date trends in a bit more detail. And maybe give us a sense kind of as to how much of the sequential unit decline that you called out for October reflected some of the third-party issues you mentioned on the call versus your ongoing efforts to focus on profitability versus the macro? I guess what I’m trying to say is bucketing those 3 drivers there.

Thomas Shortt: Yes, it’s a fantastic question, and it’s something we actually work on, on a daily basis. It’s clear if we look at just the competitive environment and what others in the industry have reported, there is definitely a macroeconomic environment, component that’s happening to demand. It’s very hard for us to tease that out in our numbers because we have so many moving parts in our business that we’re trying to move as we try to transform this business. What I can tell you is — and we — I mentioned it earlier in my opening comments that we had this large sales force reduction and it was very large, and it happened in a single week. And if you look at the 4 weeks before and 4 weeks after that, we had a 32% reduction in contracts.

I’ll give you a couple of other metrics around that. Our contracts per sales rep. So that’s kind of a productivity metric for us. The week before versus the week after, they were basically flat, down 1%. So it was really a matter of having resources to help customers get through the sales transaction process. We have been ramping our sales force, one of the unknowns for us, we had a very experienced third-party partner that’s been with us for a long time that was — that had this reduction in sales force. And we’re realistic and that — it’s going to take us time to reap the benefit. As I mentioned, in our long-term roadmap, we expected to transition this selling cost internally over the long term, like it was not in our radar for this year because it just wasn’t one of our priorities.

So we had to quickly move on that. So that definitely had a material impact. And then, of course, we continue to test different levers around what the right mix of volume versus GPPU. So it’s very hard to tease out, but we wanted to acknowledge it, certainly some element of it is the macroeconomic environment. But when we initially looked at it like the drastic reduction in our sales force definitely had a significant impact. So I think for us, it’s such a fragmented market, and we have such a small share in the market. Our question as we go into next year is how much market share can we gain when we have a selling staff that can actually manage the inbound traffic that’s coming through. And we’re going to learn that as we go through 2023.

Richard Reid: No, that’s helpful color. And you basically answered my follow-up question. So maybe if I could just slip another one in here on a slightly different topic. Kind of what a healthy run rate per vehicle GPPU as some of the older vehicles that might not have been live on your site due to titling issues through — flow-through? It sounds like there’s going to be a sequential step down in GPPU, but any sense of the magnitude there in Q4 versus Q3?

Thomas Shortt: Yes. So let me give you some color on that, Sam. So we’ve been selling — it’s actually a metric we track. We started tracking in Q2 and Q3 aged vehicle sales. And as we really drastically changed the way we think about pricing vehicles, I’ve been quite surprised by, we have cars that, frankly, we’ve had greater than 180 days, even greater than a year that we’re producing very strong GPPUs on. So we’re being very — been level focused on optimizing profitability on every vehicle, regardless of its age. It’s clearly our long-term goal to drastically reduce our inventory and get inventory down to something more reasonable. And whether that’s 60 days, 90 days, 120 days, I can’t tell you that yet. But we’re going to see when we get there.

So during Q2 and Q3, we have been selling a mix of vehicles that are aged. As we’ve worked throughout the year and really got to where we want to get to on registration, we’ve been working on titles all along. But now that we’re getting registrations where we think we want them, we’re doubling down on titles. So what we’re expecting to see is an influx of these titles coming in on vehicles that have been sitting for quite some time. We expect that those will still be profitable sales, just lower profits. So to get to your answer, if we were to end the quarter right now, I would expect GPPU for Q4 to be somewhere in the low 3s. It’s early in the quarter. I wouldn’t be surprised if that number could go as low as $2,500 or as high as $3,500, depending on how things go the rest of the quarter.

We do see this as a short-term issue, solely related to the delay in the titling process, especially as the depreciation rates of used cars have increased a bit lately. So we see this as a transitory issue that once we get this behind us, we will not recur.

Operator: . Our next question comes from the line of Colin Sebastian of Baird.

Unidentified Analyst: This is Colin Lee on for Colin Sebastian. Could you please talk about the impact on the model from the transition of the Stafford IRC to TDA?

Thomas Shortt: Yes. Thanks for the question. We don’t see that as a significant impact. It’s going to reduce our fixed cost by several million dollars once we exit the current facility, it’s going to provide a much better environment for Vroommates that work in that reconditioning center. So it’s really about creating a better environment. We’re going to remove the fixed cost of the current Stafford location, but we don’t see it as something significantly material.

Operator: Our next question comes from Vincent Kardos of Jefferies.

Vincent Kardos: This is Vincent Kardos on for John. Curious to know what have you guys seen, thus far, in Q4 in terms of retail demand for used cars? And the trend seem to be kind of the same across the consumer credit spectrum and for higher and lower-end cars or more like what we’ve seen earlier in the year? And then as a follow-up, if you could talk about your outlook for used car demand in 2023, that would be great as well. Anything to sort of help us get some insight into pricing expectations and expectations for demand going forward would be helpful.

Thomas Shortt: Yes. Thanks, Vincent. Given the transformation we’ve been doing this year, it’s really hard for us to tell what’s happening in used car demand, given all the various levers we’re pulling to improve the business. Clearly, we know — we actually think our other competitors are probably a better proxy for what’s going on in the industry. And clearly, there’s some softness. I think that’s a $64,000 question, what — how are things going to play out next year as the Fed continues to raise rates and depends on what happens with inflation. So unfortunately, we don’t have a lot of great color to share on next year’s demand. We do think at this point, the majority of the things that are happening, internally, are related to us just not having sales resources.

We’re also very curious to see how Q1 plays out when we are fully staffed on sales resources. And I’d say we probably have a better view at the end of Q1 in terms of what we’re seeing in just used car demand.

Operator: At this time, I’d like to turn the call back over to CEO, Tom Shortt, for closing remarks. Sir?

Thomas Shortt: Great. Thank you, everyone, for your time today, and have a fantastic day.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.