Greetings, and welcome to the a.k.a. Brands Holding Corp. third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you would like the opportunity to ask a question, please press star one on your telephone keypad. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Emily Schwartz. Thank you. Please go ahead. Good afternoon. Thank you for joining a.k.a. Brands third quarter 2022 conference call to discuss the results released this afternoon, which can be found on our website at ir.aka-brands.com. With me on the call today are Jill Ramsey, Chief Executive Officer; and Ciaran Long, Chief Financial Officer. Before we get started, I'd like to remind you of the company's safe harbor language. Management may make forward-looking statements which refer to expectations, projections, and other characterizations of future events, including guidance and underlying assumptions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed. For further discussion of risks related to our business, please see our filings with the SEC. Please note, we assume no obligation to update any such forward-looking statements. This call will contain non-GAAP financial measures such as Adjusted EBITDA and Adjusted EBITDA margin. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC and available on our website. With that, I'll turn the call over to Jill. Thank you, Emily, and thanks everyone for joining our call this afternoon. I'd like to start by congratulating the Culture Kings team on the grand opening of their first U.S. store this past weekend and appreciating all of our teams for their ongoing hard work, agility, and grit in what continues to be a dynamic and challenging macro environment. As we discussed last quarter, during this time of less predictable demand, we are focused on improving profitability while building great brands for the long term. Demand remains impacted by inflationary pressures on consumers, shifts in customer spending, and a competitive marketing landscape. Despite these headwinds, I'm pleased that the U.S. region, our largest, had solid net sales growth of 8% in the quarter, on top of very strong 84% growth last year. However, net sales overall decreased 4% to $156 million, or were flat when adjusted for foreign exchange impact. Australia declined 9% or -2% in constant currency. Like the U.S., Australia is experiencing macro effects from consumer inflationary pressure and a shift back to stores post-pandemic. Additionally, we were impacted by significant FX headwinds, which Ciaran Long will discuss further when he takes you through our financials and revised outlook. Thanks to the agility and swift work of our teams, we increased our gross margin rate 50 basis points and improved EBITDA margin 220 basis points on a sequential basis while continuing to make progress on our inventory position. We took a number of actions during the quarter. Marketing spend reallocations, inventory optimization, and team and resource rightsizing. We anticipate another challenging quarter and will be prudent about identifying efficiencies in our operation and managing inventory while balancing our long-term focus on growth. a.k.a. Brands is the next generation of fashion, and our flexible asset-light model enables us to adapt quickly during dynamic market conditions. Our data-driven approach to merchandising combines test and repeat buying with short lead times and a high mix of exclusives. This allows us to efficiently manage our inventory and deliver strong gross margins while navigating shifts in consumer demand and supply chain dynamics. We have a modern approach to marketing, combining a social-first strategy with performance and in-house channels to attract and retain customers at low cost. Our ability to quickly shift spend across channels and geographies ensures we optimize our marketing yield during dynamic times. We have a unique mix of talent, with veteran e-commerce leaders and operators who have experienced multiple economic cycles, combined with innovative next gen talent. Importantly, we continue to build our brand's awareness and expand our customer base, as evidenced by 23% growth in active customers compared to the same period last year, led by growth in the U.S. We are still in the early days of our U.S. market awareness and have significant opportunity ahead of us. We made great progress on our growth initiatives this quarter, and I'm pleased to share some highlights. While I usually start with the women's brands, what I'm most excited to talk about today is the Culture Kings grand opening. Our first Culture Kings U.S. flagship store opened on Saturday, November 5th, in the iconic Forum Shops at Caesars, Las Vegas. It's an unrivaled retail experience unlike any store out there. With 14,000 sq ft of selling space, an LED staircase, the largest hat wall in the world, live in-store DJs spinning daily, a half basketball court, a bar, a secret room with rare and exclusive merchandise, an on-site customizer for sneakers and apparel, a recording studio, and more. In addition to some Vegas-only features, the flagship store includes the best of Culture Kings' signature in-store activities and games, including the legendary Sharp Shooter Basketball Challenge, the Holy Grail machines, and one-of-a-kind giveaways that all adds the excitement and unforgettable atmosphere in store. Similar to Culture Kings' other stores, the U.S. flagship serves as a powerful marketing engine and is a key accelerator of brand awareness in the U.S. Known for their experiential stores and unique retailtainment model, Culture Kings frequently hosts athletes, DJs, and music artists for in-store appearances. DJ Drama was spinning, Ferg stopped by, and a number of other streetwear influencers attended the opening. All of this creates great buzz, brand association, and awareness for Culture Kings. On top of the immersive experience, the flagship officially introduces the U.S. consumer to Culture Kings' 18 exclusive in-house fashion brands, including Carré, Saint Morta, Goat Crew, and Loiter. These in-house design brands make up approximately half of the Culture Kings business today and are a key focus area for the U.S. expansion. No one brings together the elements of streetwear lifestyle quite like Culture Kings. In addition to the popular in-house fashion brands, the store sells thousands of styles from 60 leading third-party brands, including fan gear, footwear, and hats. Online, the customer can find even more great selection. We're confident that Culture Kings will become the new authority in streetwear and capture significant white space in the U.S. market. As Culture Kings expands in the U.S., they continue to build their brand, their penetration of exclusive products with an emphasis on the fast-growing printed tees and hoodies segment. As a reminder, our print-on-demand capability allows Culture Kings to quickly jump on trends and print licensed properties at attractive gross margins. This quarter, Culture Kings had a successful collaboration with Netflix, licensing their Stranger Things property, which exceeded expectations. They continue to ramp the print-on-demand and licensing business and will deliver 30 new collaborations, including Playboy, J. Cole's label Dreamville, and a series of world-exclusive UFC events and talent in the fourth quarter. While Culture Kings' current priority is U.S. expansion, we're pleased that the Australia stores rebounded in the third quarter with the return of live events and in-store activations. Turning to mnml, our streetwear brand specializing in denim and bottoms, I'm excited to share that the synergies between mnml and Culture Kings are coming to fruition. mnml is now the fastest-growing brand on Culture Kings' website, and there is a dedicated section and wide range of mnml assortment at the Culture Kings store in Las Vegas. We were pleased with the performance of mnml during the opening weekend. It was both one of the top-performing brands overall and the best-selling brand in the bottoms category. We're also pleased with mnml's ability to quickly leverage shared learnings and resources from the a.k.a. platform. They're shifting their merchandising strategy to align with our proven test and repeat model, enabling them to drop more new styles on a faster production timeline. Turning to our women's brands, Princess Polly, our largest brand, continues to be a top fashion website for female teens, as ranked once again by the most recent Piper Sandler survey. While we have seen macro impacts on demand this fall in line with the broader market, I remain incredibly confident that we're still in the early innings of expanding this brand, and I'm bullish on its growth potential in the U.S. and globally. Given that roughly 70% of Princess Polly's customers are students, a primary focus this quarter was the homecoming and back-to-school season. Their expanded homecoming collection, which featured new, more formal dresses along with existing favorites, exceeded expectations and gives them confidence to expand their formal wear offering. Princess Polly also expanded their back-to-school assortment focused on casual apparel, which was further amplified on social media by Princess Polly's growing community of college ambassadors who serve as powerful micro-influencers. Princess Polly continues to make headway on their mission to make on-trend fashion sustainable and accessible. They've made great progress expanding their sustainable range made with lower impact materials and will surpass their goal of converting 40% of their new styles to low impact fabric by the end of the year. They continue to transform their supply chain to support this and are committed to maintaining the same gross margins and accessible price points for customers. Princess Polly's extended size collection, Curve, also continues to gain traction and grew nearly 20% quarter-over-quarter while continuing to attract new customers. These initiatives strengthen their position with their Gen Z audience and create a competitive differentiation from other fashion players. As the digital marketing landscape continues to evolve rapidly with the rise of new channels, the popularity of new formats, and privacy updates, Princess Polly is agile and well-positioned to quickly react. They constantly test new social platforms, shift content, and reallocate marketing spend to wherever the customer goes. Growing on TikTok has been a huge priority for Princess Polly as their customer shifts from engaging with still imagery to video content. They grew their TikTok followers by over 40% year-over-year and are expertly balancing influencer partnerships and paid ads on the platform. Princess Polly is doubling down where they see the highest return on spend and leaning into their in-house channels even further. Subsequent to quarter end, Princess Polly piloted a live video shopping event on their own website and drew thousands of viewers, exceeding expectations. We look forward to them launching Princess Polly Live, a video series that showcases a live shopping experience combined with authentic and interactive conversations between influencers and customers. This is an exciting initiative that they'll expand upon in the coming quarters and share learnings across our group of brands. Text message marketing, which is one of Princess Polly's highest returning channels, continues to be an outstanding marketing engine with over 1.5 million subscribers and growing. Through surveys, Princess Polly has learned the text is a top channel for customers to learn of new style drops, offers, and promotions. Petal & Pup also continues to scale in the U.S. and was once again our fastest-growing brand this quarter. They are leveraging the proven test and repeat merchandising strategy to quickly expand their assortment into accessories, jumpsuits, and matching sets, which now account for 10% of sales compared to 4% in the third quarter last year, further diversifying their category mix. As they also follow the a.k.a. playbook, they're expanding their penetration of in-house designed exclusive items, which come at higher gross margins. Category expansion is a key area of growth as Petal & Pup bolsters their assortment in the U.S., and they recently launched a dropship program for underpenetrated categories such as jewelry, shoes, and accessories. This initiative allows us to easily expand offerings and test new categories with no inventory risk while still gaining rich consumer insights. Dropship items now account for 20% of sales in these categories, with plans to add highly seasonal categories to the site. Similar to Princess Polly, Petal & Pup is also evolving their marketing approach as the landscape rapidly changes. The brand piloted their first shoppable event in Nashville over three days in July. The event was an incredible brand awareness exercise. Approximately 100 influencers attended, garnering 10 million social media impressions, and 5,000 people passed through the event. Petal & Pup has a large and growing customer base in the South and the middle of the country, and the success of this initial test gives us confidence to roll out more shoppable events in key cities next year. Petal & Pup and Rebdolls are both doubling down on video content through Instagram and TikTok, and Petal & Pup is seeing great traction on Instagram Reels, with some reels generating over 2 million views. Before I turn the call over to Ciaran, I want to emphasize that we're laser-focused on growing our current brands profitably. While we're still committed to our M&A strategy, given the state of the market and the macroeconomic environment, we have no plans to acquire any brands in 2022. However, we remain in active conversations with highly talented founders, and we'll continue to shop the world for the best brands, but we'll only transact when the time is right for our business and our shareholders. As we enter the fourth quarter, the macro environment remains dynamic and is rapidly changing. We are anticipating a highly promotional holiday season and a competitive marketing landscape. We will continue to pull all necessary levers to balance growth and profitability for the remainder of the year. We have an exciting quarter ahead with the opening of the Culture Kings U.S. flagship, and our women's brands are well positioned for the holiday season. While we anticipate the macroeconomic backdrop to remain fluid over the next few quarters, the strength of our brands and our flexible platform gives me full confidence that we'll deliver on our long-term goals. With that, I'll turn it over to Ciaran. Thank you, Jill, and good afternoon, everyone. We are pleased to report third-quarter net sales above our expectations, along with improving profitability metrics and quarter-end inventories, despite a dramatic macro backdrop and evolving consumer environment. For the third quarter, net sales declined 4% to $156 million, compared to $162 million last year. On a constant currency basis, net sales were flat. We continue to see solid active customer growth. On a trailing twelve-month basis, the number of active customers in the third quarter increased 23% to 3.8 million. Total third-quarter orders were flat to last year at 1.8 million, and the average order value of $85 was also flat to last year on a constant currency basis and down 4% on a reported basis. We are encouraged by the stability of our average order value as it is a reliable indicator of the desirability of our brands and products. Now, I'll provide a few highlights from our three regions. In the U.S., third quarter net sales increased to $82 million, up 8% from the third quarter last year, primarily driven by the addition of mnml, as well as Petal & Pup's growth, which continued to be our fastest-growing brand in the U.S. Australian net sales decreased 9% to $58 million and were down 2% on a constant currency basis. Australia's sales were impacted by the macroeconomic environment, including inflationary pressures, as well as consumers returning to stores post-pandemic. Notably, in the third quarter, Culture Kings stores were the fastest-growing area of the business in Australia. Turning to the rest of world, net sales of $16 million decreased 27% from the third quarter in the prior year. Given the significant appreciation of the U.S. dollar, we made a strategic decision to shift marketing dollars from the U.S. and Europe to our main regions, the U.S. and Australia, that have higher marketing returns. Additionally, our pricing model for markets outside of the U.S. and Australia is tied to the U.S. dollar, so when the dollar strengthens, our products become more expensive for customers in international regions. Moving to profitability. As Jill mentioned, we are pleased with the sequential improvements in profitability driven by the initiatives we highlighted last quarter. Reported gross margins were 55.7% compared to 53.2% last year in the third quarter. The 250 basis points increase in gross margin was due to a $6 million fair value adjustment related to the Culture Kings acquisition, including the prior year. Excluding this impact, gross margins contracted 140 basis points due to increased promotional activity as we balanced capitalizing on demand and maximizing profitability. Sequentially, gross margin improved by 50 basis points over Q2. Selling expenses increased by $0.9 million- $41 million. As a percentage of revenue, selling expenses were 26.6% compared to 25.1% in the third quarter of 2021. The 150 basis points deleverage was primarily due to increased costs for distribution and future store facilities. While we saw a 200 basis point sequential improvement over Q2, we expect 60 basis points of the improvement in selling expenses to continue and carry forward into Q4. Marketing expense increased by $1 million- $17 million. As a percent of revenues, marketing expenses were 10.6%, a 100 basis point increase compared to the third quarter of 2021. This increase was primarily due to the inclusion of mnml, which is a higher rate of advertising spend as well as overall increases in marketing costs. We are actively working to improve marketing efficiencies by reallocating marketing investments to areas with higher returns. Based on these actions, we have seen a sequential improvement of 140 basis points in marketing as a percentage of sales compared to Q2. G&A expenses were $26 million compared to $29 million in the third quarter of 2021. G&A expenses were 16.8% of net sales compared to 17.9% of net sales in the third quarter of 2021. The decrease was primarily due to a reduction in equity-based compensation and other efficiency improvement initiatives. During the quarter, we took action to right-size our team structures to better align resources. These actions will reduce our G&A expenses by approximately $2 million on an annual basis going forward. For the quarter, Adjusted EBITDA was $9 million versus $19 million in the prior year, or Adjusted EBITDA margin of 5.9% compared to 11.9% in the prior year third quarter. On a sequential basis, we delivered improvements of 220 basis points over Q2 2022. Net loss was $0.1 million or $0.00 per share for the third quarter of 2022, compared to a net loss of $9.9 million or $0.11 per share in the third quarter of 2021. Our weighted average shares outstanding were approximately 128.7 million in the third quarter of 2022. Turning to the balance sheet. We ended the quarter with $31 million in cash and cash equivalents and $130 million in debt. At the end of the quarter, we had total liquidity of approximately $56 million, including $25 million available on our credit facility. Subsequent to quarter end, we drew $15 million on our revolver as we entered into the holiday period. Inventory at the end of the quarter was $137 million compared to $96 million at the end of the third quarter of 2021. The increase in inventory was primarily associated with Culture Kings' new fulfillment center, our U.S. store opening and the addition of mnml. Compared to the end of the second quarter, we are flat on inventory on a constant currency basis. We did see a sequential decline in inventory for our women's brands that are more fully on our test and repeat model. Overall, we are comfortable with the composition and quality of our inventory, and we expect to see a sequential decline in inventory dollars at the end of year on a constant currency basis. We believe we're well positioned for fiscal 2023. Touching on cash flows. In the third quarter, we generated $12 million of operating cash flow, marking the first quarter of positive cash flow generation in fiscal 2022. We also invested $8 million in CapEx tied to our new flagship Culture Kings store. We expect capital expenditures to be $20 million for the full year. Turning to our outlook. As we enter the fourth quarter, we are managing our business with a disciplined approach, controlling what we can control while driving efficiencies across our operations. As we did in Q3, in Q4, we plan on optimizing marketing investments, and we'll continue taking actions to reduce costs on non-customer facing activities. As a result of the significant incremental currency headwinds, the company has adjusted its expectations for Q4 net sales and EBITDA. We now expect Q4 net sales in the range of $158 million-$165 million. Our revised outlook contemplates FX to be an additional $10 million headwind year-over-year to our Q4 results. Incremental to the $5 million headwind we projected when we released our results at the end of Q2. We are now expecting Q4 Adjusted EBITDA of $11.2 million-$13 million. This contemplates a $1.7 million headwind from the impacts of the FX, offset by $500,000 of cost saving initiatives. I'll also touch on a couple of points for modeling 2023. We are currently forecasting FX rates to remain at the current levels through fiscal 2023 and to have significant impact on our financial performance in FY 2023. Through the first nine months of 2022, our revenue will be $25 million lower if we had experienced the current exchange rates for that period. With this FX headwind, we expect our first quarter of 2023 will be our most challenging comparison for net sales due to our strong first quarter in 2022. We expect comps to become easier as we go through the remainder of FY 2023. We believe we have differentiated brands and a highly efficient business model that will support long-term growth and profitability. With that, I will turn the call over to the operator for Q&A. Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. We do ask that you please limit yourself to one question and one follow-up. Again, that is star one to register a question at this time. The first question today is coming from Lorraine Hutchinson of Bank of America. Please go ahead. Thank you. Good afternoon. I'm just curious if you're seeing any differences in customer behavior in the U.S. versus Australia. More specifically, maybe how have customers reacted to the strategic price increases that you've added? Hi, Lorraine. Look, we're seeing the demand pressure across our brands and across regions. You know, the benefit of having a portfolio is you're really able to measure that and understand the macroeconomic impact. We're certainly seeing that pressure. You know, I guess one distinction is over in Australia where we do have stores. We have seen that customer shift back into stores as we've reopened the Culture Kings stores and really gotten back into events and in-store activations, seeing nice growth there. Of course, they are lapping some closures from last year. Our focus really is the U.S. market, where we have a lot of continued growth and runway ahead. Just very early days and excited about what's ahead, especially for Culture Kings with that store opening. On the price increases, we had made some price increases earlier back in Q3 and monitored that very closely, and did not see impact. We're able to get a nice 60 basis points increase in gross margin sequentially quarter-over-quarter. We do not plan any additional price increases at this time. Although we're of course constantly always able to optimize our pricing, given our high mix of exclusive and first-party brands, and just very focused on profitability and controlling what we can control. Thank you. Thank you. The next question is coming from Oliver Chen of Cowen. I'm sorry, Cowen. Please go ahead. Hi, Jill and Ciaran. Regarding the promotional activity and the gross margin, what are you forecasting ahead for that, and what are you seeing in the environment there? It sounded like your inventories are under good control and have good freshness. A second follow-up, customer acquisition costs are? Environment, very different inventory position for the whole market. We have certainly factored that into our outlook. You know, our brands are in quite a good inventory position from a composition and quality of our inventory. We feel good going into Q4 and have a very flexible agile model where we can really adjust and pivot as needed in the quarter. Ciaran, anything to add on just how we've forecasted that into the model? Yeah, I think, you know, we assume Q4 will be a little bit lower than we experienced in Q3, just with the level of promotions. I think as we think about gross margin, you know, we are seeing improvements or reductions in the cost of air freight and bringing in product. I think that will kind of allow us to counteract any kind of increased promotional activity we've seen on top of that. So kind of feeling good about the gross margins that we've modeled in for Q4. As it relates to inventory, you know, we are really happy with the composition and the quality of the inventory that we have. As we mentioned, you know, we're flat on dollars in Q3 versus Q4, or sorry, versus Q2. You know, down in units. I think within our women's brands, we are down in dollars. So really kind of shows the strength of that test and repeat model. I think on the men's brands, we still have some work to do, just they have more third-party vendors, and kind of not able to adjust as quickly there. I think we'll see more of that in Q4 and as we go into next year. Overall, just very happy with the quality of the inventory. On your question about the CACs, we have seen CAC stabilize as we have lapped the That is really related to that change of $10 million. That really is all related to FX. When we gave Q2 guidance, we were modeling U.S. to Australian dollar rate at about the 0.7. We saw it all through October at about 0.63. It's obviously moving every day at the moment, but we've modeled that 0.63 through the rest of the year. Then just as it relates to the trajectory in Q3, I would say it was stronger going through July and August. As we went through September, it certainly, late in the month, late in the quarter, started to soften. Obviously, you know, we did see some FX impact, particularly high in that period as well, and that does impact our international customers. You know, as we've modeled out Q4, we're kind of taking that run rate that we've seen out of Q3 into Q4, and that's kind of what we're using to project those for the rest of the year. Thank you. Just a note that the operator machine is broken, so if we could all just be patient for a minute or two, and we'll work through it. Thank you for your patience. My apologies for that. Our next question is coming from Noah Zatzkin of KeyBanc Capital Markets. Please go ahead. Hi. Thanks for taking my questions. You know, just on the Culture Kings opening, if you could provide any color on just how you're thinking about the store opportunity there in the U.S. over time, and just any color on the economics of the four walls, that would be really helpful. Thank you. Yeah. Hey, Noah, thanks for your question and thanks for coming out to see the grand opening. We are incredibly excited about the store, and, you know, just a huge congratulations and appreciation out to the founders, Simon and Tahnee. They have an incredible vision for these stores, really like nothing else out there. Feel very pleased with the early. It's very early days. We just opened last weekend, but pleased with the out of the gates, feel that we really nailed the location, the format, the merch mix, and the marketing and content. You know, we will continue to look at other markets and opportunities. We'll take a real test and learn approach. You know, not necessarily all. The stores are not all going to be that big. That is certainly a large flagship model. Vegas is an incredible tourist location where you get just a ton of foot traffic, and we nailed that. Traffic is really back in Vegas. As we look to roll out to a broader market, we will look for other high tourist markets. It's a great way to scale your brand fast. You can reach a lot of unique customers that are changing quickly. Just really excited about the potential here, and we're just getting started and, you know, it has incredible awareness element to grow and scale this brand in the U.S. I'll let Ciaran jump in and comment on the four-wall economics. Yeah. Hey, Noah. We're certainly expecting the store to be four-wall profitable. Obviously, it'll take a little bit of time to ramp up. You know, for us, kind of expecting payback on a I would say kind of between four and five years on just that four-wall basis, not counting obviously the kind of the broad benefit we'll get from the store. You know, the store is about 13,500 sq ft of retail space. You know, rent's about $1.9 million on a GAAP basis. You know, you can kind of I would say AOV is a little bit higher usually than what you see online. You know, we feel the economics will be very strong from an EBITDA perspective as well once the store kinda gets over that initial ramp. Thank you. Thank you. The next question is coming from Dana Telsey of Telsey Advisory Group. Please go ahead. Good afternoon, everyone. As you think about the regions, the U.S. and Australia, obviously a moderation in the U.S., but it seemed like the deceleration in Australia improved a little bit. What are you seeing and how does it differ by brand? How are you planning North America, the U.S. going forward? Thank you. Yeah. I will say in general, we have seen a bit of that demand pressure across brands and across regions. In Australia, though, we uniquely have stores over in Australia and really saw that customer shifting back into stores, as we started back to events and in-store activation. That really helped improve the Culture Kings part of the business. Certainly helped offset some of the online demand pressure. You know, really we are focused on the U.S. We're most excited about the potential for these brands to keep scaling and growing in the U.S. market. Culture Kings is just getting started, and it's a perfect time to be opening this store and leaning in, and really excited about what we're seeing ahead here. Just as the marketing spend, and Jill, you mentioned the reallocation of marketing, what are you doing on the marketing side and the reallocation, and what is the spend, what do you see as the spend as a result of that? Well, between Q2 and Q3, we did make some adjustments in our marketing mix and reallocated into higher returning marketing channels, shifting more of our focus into in-house, like SMS text, where we see really great returns and efficiency, as well. Starting to shift more into TikTok, where we've also tuned the business to have a higher return. Shifting out of rest of world. We had put some marketing spend into Europe, but we've shifted that out, and so we've made some regional adjustments, shifting more of that into the U.S. It's not an ideal time to push into Europe right now given the strength of the U.S. dollar. So ensuring that we are focused on profitability and getting our most efficient marketing return. We are committed to that marketing spend at around 10% going forward, and that is all factored into the model. Thank you. Thank you. The next question is coming from Youssef Squali of Truist Securities. Please go ahead. All right. Thank you very much. Hi, guys. So couple questions. The first is around just the Q4 guide and what's implied in terms of growth of the U.S. business. Arguably, I think there's probably gonna be some deceleration just based on the numbers, but I'd love for you to maybe quantify that for us. Then also, can you address the balance sheet liquidity? I know you've decided that 2022 you will not make any M&A, but just as you look at the business and the ongoing trends through 2023, kind of any idea about one whether ultimately you have enough free cash flow generation to kind of get you to the other side of it without the need for capital? Yeah, maybe those two, and I have a quick follow-up. Sure. Yeah, I think as we think about you know, the guidance for Q4, I think we do kind of expect. I would say the same level of organic growth or organic little deceleration that we've seen in Q3, Youssef, if you adjust for mnml. In Q3, we had a full quarter mnml. You know, this year or last year, we had mnml in there for 10 weeks of the 12-week period. There'll be a little bit of headwind from that. You know, I think as we unpack it, we are seeing certainly pressure from an AOV perspective is where we're seeing most of the pressure as we model that out. I think we might be a little bit kind of flat again in order volume. I think from an active customer perspective, I think there'll be, you know, low single digit growth. We are kind of dropping off some really big quarters where we acquired customers. If you think of Q2, Q3 last year, where the kind of U.S. was coming out, that will impact that. From a balance sheet perspective, I think, you know, it's really good for us to see in Q3 that we got back to operating, generating strong operating cash flow. You know, $12 million in the quarter was really good to see. You know, we did draw down some of the revolver, and I think in particular, you know, early in Q3 or sorry, early in Q4, we had a couple of big payments. You know, obviously the Culture Kings capital spend for the store. We also had some legacy payments for the mnml acquisition and for some old sales tax at Princess Polly. There's kinda some one-off stuff there. I think, you know, we feel that we'll be positive cash flow again from an operating perspective in Q4 and back generating cash, and I think we'll continue to do that as we go forward into FY 2023. You know, I think we're still looking to do acquisitions. We're very committed first to drive the organic growth and support the growth of the brands that we have. I think we'll kind of focus on that first. Any earn-outs? Any big earn-outs next year? No, no earn outs at all. All right. Jill, you talked a number of times about SMS or text message marketing. Can you maybe expand on that? Is that relatively new channel for you? Seems like you're pretty excited about that. Maybe which channels are operating, you know, the best for you at this point, and for which brands? Thank you. Yeah. SMS marketing or text, you know, where you collect the customer's cell phone and, you know, reach them via text is really replacing email, as one of the most efficient in-house channels. We've been able to really grow our subscriber base and our customers. We did focus groups recently, and the customer was very clear that was their favorite way to hear from us and learn about new product drops and new promotions. We've really seen that be a very effective way to quickly communicate with the customer. It does tend to drive more repeat and returning customers, but it's a great retention tool. For new customer acquisition, we're certainly still very focused on social media and our wide influencer program. We, you know, of course, go after a much broader, wider network of smaller influencers and have grown that with college ambassadors and really scaled that out. Ultimately, our brands are very innovative and out ahead of a lot of others on the marketing front and constantly testing and learning and tuning their marketing channels. The one I'm also really excited about is the live video. Live streaming shopping is certainly going to be a new platform for us, that we are leaning into and super excited about. Great. Thank you both. Thank you. The next question is coming from Ike Boruchow of Wells Fargo. Please go ahead. Hey, guys. This is Jesse on for Ike. Thanks for taking my question here. I was just wondering there were some comments that included that women's inventory sounded down year-over-year right now, while men's remains a little elevated due to third-party inventory. It sounds like liquidations are actually the inverse of what prior expectations were for men's to be clean now and women's by end of year. I'm just curious what happened there. Looking forward, if there are any differentiated dynamics to consider by gender heading into what's anticipated to be a heavy promotional holiday environment this year. Thank you. Hey, Jesse, this is Ciaran. Let me just be super clear on the inventory. We haven't been doing any particular liquidations. I would say because of the test and repeat model, the women's brands are just, you know, they're not buying out and committing to inventory, you know, they're doing that very short periods. They're able to adjust their inventory buys and their inventory dollars much quicker. That's why we saw in, you know, in Q3, where the inventory dollars are down versus Q2, right? They're sequentially down, and that was very much our women's brands that are on those test and repeat models. They're still slightly up year-over-year, but much, you know, closer. The men's brands, because they are buying third-party from third-party vendors, you know, they're not able to adjust their inventory as quick, and so that's why it will take longer for us to, you know, adjust their inventory. I'd say, like I said, very happy with what we have, you know, stays much more relevant for a longer period with men's inventory, so really like the composition that we have going into holiday. The men's will take just a longer period, I would say, to adjust down the dollars. Yeah, I'd just add that the majority of our inventory is bought on that test and repeat model. All of our women's brands are buying on that, which really de-risks your inventory, and we are now expanding that over into our men's and streetwear businesses and adding more of our mix onto that short lead time buying. You know, eager to have even more control in inventory management as we expand upon that into next year. All right. Cool. Thanks for elucidating that for investors. Thank you. The next question is coming from Michael Binetti of Credit Suisse. Please go ahead. Hey, guys. This is Carson on for Michael. First off, congrats on a nice quarter, and thanks for taking our question here. We've heard some instances of consumers starting to trade down on lower price point categories and brands. Are you guys seeing that within your banners? If so, how are you positioning inventory for the spring? Another one. Did we hear you correctly that you used the September exit rate for forecasting fourth quarter? Did October perform in line with September, or was there a change in the trend there? Thanks. Yeah. Hey, Carson. Thanks for your question. Look, we are seeing as we guided in August, you know, anticipated demand pressured back half. We are seeing that across the brands and regions. As far as, like, clear signals of trade down, I'd say we have seen a little bit of an uptick in our mix of markdown versus reg sales. So where we have put some things on markdown, we are seeing a little bit more of customer shifting into that. I think just reflecting, you know, that deal-seeking mindset and the customer being a little bit more frugal with the macro backdrop. As far as how we trended out the business and the outlook, I'll let Ciaran comment on that. Yeah. Hey, Carson. We been using the most recent trends, right? What we've been seeing for October and the first kind of 10 days of November is what we've used to model out Q4 from a sales perspective. Makes sense. Thanks. Thank you. At this time, I'd like to turn the floor back over to management for any additional or closing comments. Yeah, just thank you all for joining. If you haven't had a chance yet to get out to Vegas and see the new store, we invite you to come check it out. It's unlike anything you've ever seen. It's incredible. Thank you all. Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.