Thank you for standing by. Welcome to the Aterian, Inc. Q4 and full year 2021 earnings report conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one on your telephone. Please be advised today's conference may be recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your host today, Ilya Grozovsky. Your line is open. Please go ahead. Thank you for joining us today to discuss Aterian's Q4 and full year 2021 earnings results. On today's call are Yaniv Sarig, Co-Founder and CEO, and Arturo Rodriguez, our Chief Financial Officer. A copy of today's press release is available on the investor relations section of Aterian's website at aterian.io. I would like to remind you that certain statements we will make in this presentation are forward-looking statements, and these forward-looking statements reflect Aterian's judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Aterian's business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included in our Q4 earnings release, as well as our filings with the SEC. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, the company may refer to non-GAAP metrics on this call. Explanation of these metrics can be found in the earnings release filed earlier today. With that, I will turn the call over to Yaniv. Thank you, Ilya, and thank you everyone for joining us today. I want to start by taking a minute to express Aterian's condemnation towards the unjustified violence and bloodshed in Ukraine. Our international team includes four employees based in Ukraine currently. To Natalie, Taras, Ruslan, and Maxim, our hearts are with you and your family during these difficult times, and Aterian will continue to offer any support we can provide to help. The company and many employees, including myself, have made modest donations to humanitarian efforts on the ground. On the call today, I'd like to go over the following topics. I'll start with a quick intro to Aterian for those who are newer to the story. I will then review key takeaways from Q4. I'll go over some of the temporary challenges we're facing due to macro-level events, and I'll summarize the long-term prospects for Aterian. For those who are newer to the story, here's what you need to know about our company. Aterian is part of a new breed of technology-enabled consumer product companies. We focus on building, acquiring, and partnering with e-commerce brands online. Aterian owns and operates 14 consumer brands selling products across various categories on channels such as Amazon, Walmart, Shopify, eBay, and more. To allow us to scale, we've invested in building our own proprietary software platform called AIMEE. AIMEE enables our team to manage our business more efficiently by injecting technology into processes that would otherwise have to be executed manually and would require hiring an unscalable and unsustainable workforce. Through its ability to analyze vast amounts of data and automate daily recurring tasks, AIMEE allows our team to find new product opportunities we can launch under our brand, manage those products at scale effectively across various channels, and automate certain marketing and fulfillment tasks, and much more. Our goal in the long term is to become one of the most efficient consumer product companies in the world, expanding our footprint globally while continuing to invest in technology and agile supply chain to drive scale and profitability. Moving now to our key takeaways from Q4. In the Q4 of 2021, our net revenue grew 52.5% to $63.3 million, but our contribution margin declined to 7.9%, mainly due to global supply chain disruption and related inflation. As a reminder, our target contribution margin in normal environment is 16% on average across product categories. Our efforts to reorganize our international shipping strategy and negotiate preferred rates with partners such as Amazon and XPO have shown success. After getting through a few operational issues that surfaced early, our entire team did a great job at adapting to new paradigms imposed by us by the supply chain pressures. We were able to save several thousand dollars per container versus average spot rates for that period, and this continued into Q1. However, we're still on average paying prices that are approximately 300% higher than our cost of shipping in 2019 for the same period. Regardless, our focus is in the long term here. We're long-term believers in this company's vision, so while our contribution margins remain compressed, we're laser focused on retaining market share with the expectation that eventually shipping costs will ease. These efforts continue to succeed across our portfolio, and I'm happy to report that on average, our most critical SKUs continue to maintain a strong market share position in their categories. Our thesis until a few weeks ago was that international shipping rates would start declining after Chinese New Year and return over time to a more sustainable cost. The war in Ukraine is putting that thesis in question, and several transportation analysts are predicting that price of shipping might go up in the short term. While we believe that our logistics partner will still give us preferred rates, spot rates potentially going above $20,000, and other inflationary pressures are not favorable to our business. Given this challenging environment and to be cautious, we're not providing guidance at this time. We're working hard to generate growth organically this year, potentially through M&A and various other strategic initiatives. Despite the relative uncertainty we're facing, I want to point out a few decisions that we made correctly in Q4, which could positively impact 2022. Our team had anticipated that around the Western holidays period, there would be a window to bring in goods at a slightly lower cost. Given that in 2021, we suffered from several out-of-stock products due to unreliable container shipping schedules, we opted this time to bring in as much of our critical inventory for the next two quarters early. If our competitors did not pursue the same strategy, the outcome could be very favorable to us from both a short-term revenue and long-term market share perspective. The decision will be even more impactful in our favor if shipping costs increase in the short and medium term, but come down towards the latter part of the year. While we're grappling with continuous challenges driven by the macro-level environment, it's important to say clearly to those who follow us that we are more optimistic than ever and continuing to pursue our long-term vision. While waiting for the storm to pass is taking longer than expected, we're convinced that the world will see companies like us thrive in the future. As I mentioned previously, we are not the only ones believing this outcome. We're witnessing continuous investment by private equity into Amazon and Shopify aggregators looking to compete in the same space. Over $12 billion were invested in 2021 in early-stage companies pursuing a similar mission of building the consumer product platform of the future. All of these companies are private, yet we're hearing through the industry that most of them are navigating similar challenges. We believe that we continue to be ahead of the pack in terms of our ability to execute on the model. Managing e-commerce brands on marketplace is tedious and requires constant optimization and attention to detail. While Aterian has yet to achieve all our goals in this domain, we intend to remain at the forefront of what technology can do to give us an advantage and remain on top of ever-changing marketplace dynamics. Technology has been a key advantage for us over time as we manage to scale our organization while keeping sustainable fixed costs due to our investment in systems and automation. During the pandemic, our fulfillment capability, powered by AIMEE, allowed us to overcome critical shipping limitations imposed by Amazon and other partners. We also recently raised $27.5 million in equity financing, and we intend to use this capital to drive growth, further invest in infrastructure on the tech and supply chain fronts, and relaunch our M&A strategy. However, we intend to be patient in the short term as we evaluate different opportunities in the context of the macro environment. Our category-agnostic model is going to allow us to look at a wide variety of product categories that are potentially less affected by supply chain pressures. We're also going to invest in our team and bring in more talent and senior leadership into the organization. We're currently recruiting across various roles, including a new president role, who will step in to take over for our Chief Revenue Officer, Tomer Pascal. I want to thank Tomer for his leadership in the last four and a half years. We're grateful for his contribution to Aterian's success, and we will proudly follow his progress with a new venture that he's founding. As 2022 unfolds, we believe that we will be ready for any challenge, just like we've been in the past. Our company has shown resilience and fortitude and will continue to do so. The immediate world events might bring pause to those considering investing in us, but for long-term thinkers who believe in the future of e-commerce should pay close attention to how we execute on our strategy in the coming year. I believe that if we can protect market share and even grow it while we navigate through the supply chain and inflationary pressures ahead, we can once again become one of the fastest-growing, profitable consumer product companies in the world. With that, I'll pass it on to Ari to discuss the quarter and year-end financial results. Thank you, Yaniv, and good day, everyone. Here are the financial performance details of our Q4. For the Q4 of 2021, net revenue increased 52.6% to $63.3 million from $41.5 million in the year-ago quarter, primarily from an increase in net revenue from our acquisitions and our organic business. The Q4 net revenue of $63.3 million is comprised primarily of $31.3 million of our organic business, which I note includes revenue from our built brands and acquired brand, brands starting one year after purchase, $27.6 million of our net revenue from our acquisitions, and $4.3 million of wholesale. The year-ago quarter net revenue of $41.5 million was comprised primarily of $22 million of our organic business, $14.9 million of net revenue from our acquisitions, and $4.4 million of wholesale. As a reminder, the acquisition of Smash closed on December 1st, 2020, and as a result, moved into our organic category starting December 1st, 2021. The year-over-year growth in our organic business of $9.3 million is related to an increase in our sustained phase products of approximately $5.9 million- $25.8 million from $19.9 million due to the inclusion of Smash products into organic for the month of December, offset by increased pricing of our products affected by global supply chain disruptions, which has led to the reduced sales velocity and an impact of stopping the stimulus support from government and the initial impact from inflation affecting consumers. Our organic business also saw a slight year-over-year increase in launch phase revenue of $0.9 million- $2.6 million. As planned, due to supply chain volatility, we have launched zero products this quarter compared to five in last year's quarter. Overall, in 2021, we launched 40 products compared to 32 in 2020. Even though the rate of our products launched in 2021 grew, we did not have the same success as previous years as market conditions result in us needing to raise pricing due to supply chain disruptions, which led to decrease in demand and performance of certain recently launched products. This has also led to products staying longer than the launch phase than originally planned. As mentioned previously, we have and will continue to hold off launching new products until we believe that the time is right and the supply chain situation is more predictable. Our M&A revenue of $27.6 million increased from $14.9 million the prior year due to our acquisitions Healing Solutions, Squatty Potty, and Photo Paper Direct. Our M&A revenue is in line with expectations for Smash, Photo Paper Direct, and Squatty outside of seasonality and timing of the closing of the acquisitions. As we have previously discussed, Healing Solutions continues to perform below expectations, largely due to supply chain difficulties from our shift from sellers manufacturing capabilities to new third-party vendors as previously planned. That said, we are still pleased with Healing Solutions acquisition and the long-term strength of its brands and products. Finally, on net revenue, we suffered from inventory shorts in the quarter, which we estimated to be an impact of approximately $2.1 million in the current period, as compared to inventory shorts of approximately $6 million in year-ago period. Overall gross margin for the Q4 increased to 45.6% from 45.2% in a year ago quarter, and decreased from 50.2% in Q3 2021. Our gross margin improvement versus last year is predominantly from favorable product mix and the inclusion of our acquired brands. We believe the increased cost of shipping containers impacted our gross margin by approximately 2% in the Q4 of 2021. We expect to see a slightly larger impact in Q1 2022, as previously purchased inventory at the higher rates continues to clear out. Our overall Q4 2021 contribution margin, as defined in our earnings release, was 7.9%, which decreased compared to prior year CM of 11.2%. Q4 2021 saw our sustained products contribution margin increase to 16.1% versus 15.2% in Q4 2020. Within CM, our sales and distribution expenses were negatively impacted by global supply chain disruptions, which drove higher cost and last mile fulfillment, given inflationary pressures and carrier tightness in the quarter. Our Q4 variable sales and distribution expenses as a percentage of net revenue increased to 40.1% as compared to 35.5% in the year-ago quarter. We expect to see these impacts continue in the current quarter. While we're doing our best to mitigate higher cost dynamics, we believe we'll continue to see CM pressure for 2022, due largely to supply chain disruptions, increased last mile cost. Adjusted EBIT as defined in our earnings release for the Q4 of 2021 was a loss of $3 million compared to a positive $500,000 in the Q4 of 2020. Our $2 million operating loss for the quarter includes $7.7 million of stock-based compensation expense and also includes net income from charges and settlements of contingent earn-out of $14.4 million, which is primarily related to the decrease of share price at December 31st, 2021 versus September 30th, 2021. Our $5.5 million, excuse me, our $5.3 million net loss for the quarter includes $2.1 million net loss on extinguishment of debt from payments related to the completion of our $25 million credit facility with our lender. Turning to the balance sheet, at December 31st, 2021, we had cash of approximately $30.3 million compared to $37.5 million at the end of September 30, 2021. The decrease in cash is predominantly driven from previously reported $27.5 million cash payment to our lender, a $4 million M&A related transition service payment from the purchase of Squatty Potty, and our net loss offset by cash proceeds of our new ABL at $34.1 million and changes in our working capital. As we previously disclosed, in order to navigate through the global supply chain disruptions, we increased our inventory on hand and purchased inventory earlier than initially anticipated. This put pressure on our minimum liquidity as we entered 2022 and as we prepared for our summer 2022 seasonal products, such as A/C and dehumidifiers. In December, we secured our new $50 million asset-backed credit facility, providing us the working capital flexibility and allowing us to complete the repayment of our term loan. Last week, we raised approximately $27.5 million in gross proceeds through a private sale of approximately 6.4 million restricted shares at the then market price, and an additional $3.1 million in pre-funded warrants at the then market price. We anticipate these shares will be registered early during the Q2 and are locked up until then. Further, in connection with this offering, we also issued 7.1 million in warrants at the strike price of 10% premium at close, which may be exercised in the future, and upon exercise, will add up to an additional $20 million in cash on the balance sheet. Given the current market volatility and with the recent conflict in Eastern Europe, there is a continued concern of the unknown in the markets. As such, we seized the opportunity to secure our balance sheet now to allow us to operate our business appropriately, considering the current global supply chain disruption and recent record inflation. Further, this financing allows us to open up the possibility to continue to pursue our accretive M&A strategy. We continue to be impacted by global supply chain disruptions, especially considering the inflationary pressures globally and the uncertainty stemming from the invasion of Ukraine. While we believe these issues are temporary, not permanent, it causes us to have diminished visibility in our ability to forecast our results, and we will not be providing full year guidance at this time. However, as we look at the current Q1 and taking into account the current global environment, rising inflation, and continued difficulty with supply chain, including stockouts for some of our products in Q1, we believe we will see Q1 2022 net revenue lower than Q1 2021, especially considering the difficult comparison demands versus prior year. That said, our confidence does continue to grow as we look at our summer season for 2022. We believe our efforts around supply chain and the investments we made in bringing in inventory early will put us in a much better position than 2021 summer season. In closing, 2021 was a challenging year. The global macroeconomic conditions made it difficult to operate and predict our business, and changes in consumer habits from early pandemic to the current world make comparisons difficult. Despite this, many of our organic and purchased products continue to be some of the best sellers on Amazon. We continue to have very strong brands and product portfolios. We believe the current pressure on the growth and profitability is acutely related to global supply chain and inflationary pressures. We continue to take action in what we believe is the wisest course for us to navigate through this difficult environment and will help direct us back towards profitability. To explain our performance in further context, assuming 2020 normative contribution margin rates, which we still believe can be achieved in the future, and with our typical and previously disclosed adjustments, the company believes its Q4 2021 Adjusted EBIT would have been similar to prior years. Further, as we continue to navigate through this environment, we have taken the opportunity to right-size and secure our balance sheet with our new credit facility and recent equity raise, providing us the strength as we continue to navigate through these difficult macroeconomic conditions. We continue to be very confident and proud of the business we have built, our products, both organic and acquired, our technology, our logistics network, and most importantly, our dedicated and hardworking people across the globe. Together, we believe Aterian will overcome these challenges and continue to be a leader in our industry. With that, I'll turn it back to the operator to open the call up to questions. Thank you. If you have a question at this time, please press star then 1 on your touch tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question comes from the line of Brian Nagel with Oppenheimer. Your line is open. Please go ahead. Hi, good afternoon. Good afternoon. So a couple- Afternoon ... a couple of questions. First off, you know, just I appreciate all the comments around supply chain. I guess the one question is, you know, what has to happen? Where did the supply chain disruptions have to get to? Maybe where shipping costs, shipping rates have to get to in order for Aterian to resume a more offensive stance with regard to, you know, product acquisition or product introductions or even acquisitions? That's my first question. Yeah. Thanks, Brian. You know, it's a great question, and I think that obviously the most simplest answer is whether we're back in 2019, which, if you look at the prices of shipping rates from for containers back then, right, it was a more normalized kind of like you know cost that you could trace back linearly to the previous year. Whereas, you know, the exponential increase in cost that we saw you know as the supply chain crisis kind of unfolded, especially in 2021, right, is very challenging, right? The second part to that, right, I mean, that's the simplest answer. If it goes back to that, obviously amazing, right? The question is, when is that happening and how long will it take? Maybe the floor is a little higher, right? When all that is said and done, I think that it will set us a new floor that is the same for everyone, for all our competitors and for, you know, the entire economy in a way. While at that point in time, I think it should help us, right? I believe that the numbers will be closer to 2019. Again, the really big question is, when does that happen, right? Okay, got it. That's, you know, I guess the follow-up to that is. And then just me on make sure I understand the mechanics. So have you not you know have really not lifted your selling prices? Because you just quoted a hit on gross margins here. So I guess to what extent have you lifted prices to offset some of these costs? And I guess that second part of that would be you know was that a--is that a lever you could pull? I mean, could you start to more strategically lift prices? So yeah, so you know I don't have a - I don't want to across the Board, a number I tell you that, say on our top 50 SKUs, which you know I looked at recently, I'd say that you know approximately we lifted the prices by around 20%. I'd say in average, which remember, would that increase in price, we're still not where we need to be at contribution, from our contribution margin level. But you know with and what we're seeing, if we go well beyond that you know we might start losing market share, right? That's what we talked about when we say protecting market share, it's finding that balancing act between a price that gives us enough margin to be profitable at the product level or the unit economic level, but also doesn't cause us to be in a situation where we have to lose, losing market share and have an impact in the long term, right. And so the other aspect of it is you know consumers I think are seeing those price increases everywhere from their coffee to their gas stations to you know everywhere. So that creates another obviously, challenge when it comes to generating a growth year-on-year, right. But again you know, I don't have an exact number across the Board. But you know I'd say that around 20% increase is still not getting us to the contribution margin that we need to be in a normalized environment. So that gives you a sense I believe, right. That's helpful. I appreciate, Yaniv. Thank you. Thank you, Brian. Thank you. Our next question comes from the line of Matt Koranda with ROTH Capital. Your line is open. Please go ahead. Yeah. Hey, guys. Thank you. Just maybe to start out, I understand and appreciate the difficult environment to give an outlook, but wanted to maybe see if you could break out for the full year in 2021, Artie, what was organic versus acquired versus wholesale revenue for the full year in 2021? Just maybe if you guys could speak to should we expect organic growth, I guess, to continue into 2022? Just qualitatively, it would be helpful to get puts and takes around that so we can start to kinda build a realistic model for 2022. Let me speak for a second to 2022, and I'll pass it on to Artie to answer your first question. Yeah, the answer is, you know, yes, we wanna drive growth in 2022, both organically and potentially, right? Obviously, the world is a little chaotic right now, so we're being a little patient, but potentially also through M&A, right? We're not, you know. We are a growth company. We're also a growth company that doesn't wanna grow with unit economics that are negative, right? We are working very hard across all dimensions of our business to achieve that. And again, the macro level will probably influence what that growth looks like. Just to be very clear, you know, it is our, I think, goal, right, to do that. In terms of, part of it is also launching new products, which, as we talked about earlier, is also on pause right now because it's very important for us to have predictability when it comes to a product we launch from the moment we plan it to the moment it arrives. If we plan some, you know, product launch at a certain price point with a certain P&L, if by the time it arrives that P&L has changed by 20%-30%, you know, the launch will not be successful. Those are the factors, but we have a lot of initiatives internally to drive growth, and we are intending to drive growth this year. Sorry, Ari, I'll pass it on to you, maybe to answer the other part. Yeah. Thanks. Yeah, Matt, you're looking for organic for the year? That was the number you're looking for? It's roughly $170 million. Correct. Yeah. M&A was roughly about that. I think when you look at last year, keep in mind that, you know, we had a bunch of wholesale and some M&A there. I think the organic number was probably closer to, like, 145. If that's helpful. Okay. Yeah, very helpful. Appreciate it from both you guys. Just in terms of the pricing commentary that you made, Yaniv, I'm curious if we could dig in just a little bit more there. You said, if I heard correctly, maybe on average 20% across the top 50 SKUs. I'm just curious why you see 20% as the ceiling? What is the behavior that you kinda see when you take price across those SKUs? Is it specifically that you start to lose market share as you kinda price above that level? Or is it just that volume declines because demand kinda wanes there? I mean, just maybe if you could unpack that a little bit more so we can understand kinda what happens as you take price on those top SKUs. Sure, yeah. Good, great question, Matt. You know, that 20% is an average, right? Because we're so category agnostic, and we sell things from, you know, a small bottle of essential oils to a commercial ice maker, the profile of our products is all over the place, but that average is, I think, quite close. The answer is that, you know, first of all, the two are related, right? You know, as you know, right, in marketplaces, and in e-commerce in general, market share is a function of sales. The more you sell, you know, the more you get more visibility, the more you have the potential to take on market share. The moment your sales go down, you know, the advertising engine that would promote your product will look at you less and look more at another product, right? There's kind of a little bit of a, you know, circular dependency almost between capturing market share and sales that is not always as obvious. Now, yes, the answer is that, you know, as we up the price, right, obviously we're pressuring the amount of sales, but also opening the door for other products to come in and take market share from us. Now, you might ask me, like, how come your competitors can lower their price and maybe take market share if you open the door to it? The answer is that, you know, a lot of the competitors not necessarily do that out of strength. They do that sometimes even out of hopelessness almost, right? Everyone in the industry is suffering from the same problem. You have a lot of product that sometimes will come in and just throw in the towel, lower their price, and liquidate a significant amount of inventory, which might never come back, right? But during that time, you know, those products might take more visibility. They might show up higher on search. They might appear more appealing to customers because of their liquidation price tag. So it's a chaotic environment a little bit, right? It's not kind of the normal type of competition you expect to see in an e-commerce marketplace where everyone's trying to get sustainable revenue and profits. It's a little bit more of, like, some, you know, smaller competitors that might try to take advantage of the situation, maybe take a risk and try to capture market share because they're seeing that you're trying to protect your margin versus other competitors who are actually distressed and are just trying to liquidate their inventory. By doing so, they're taking revenue from you because they have a very appealing price to customers despite the fact that their product might not be as good, right? That's the kind of challenges that are part of this. Really, it's really about, you know, having the analytics that we have. I think the real-time visibility into the performance of the business is critical to be able to make those decisions, whether automatically, semi-automated or totally manually, right? You have to have the type of real-time analytics that we build to be able to even manage that. I think that's the kind of one of the strengths of our business. Okay. That's helpful, Yaniv. Thank you. Just last one for me, if I could sneak one in on the margin front. You guys mentioned a near-term increase in shipping costs, potentially. When would you expect that to filter through to the P&L? Just how much margin pressure should we be kind of factoring into the Q1 or Q2 of this year? It almost sounds like maybe you know, relative to the Q4, things remain somewhat flattish. Just any directional commentary you can provide on that to help us out would be much appreciated. Thanks. You know, Matt, I'd say we became followers of some of your colleagues who cover shipping companies. You know, I've been avidly reading content online across you know, publishers and analysts on shipping. You know, the comment we made is obviously related to what happened in Ukraine, and obviously gas going up is not gonna help. But what's interesting is that there are you know, really kinda like two opinions out there. You know, one is the obvious one that with the cost of shipping going up and all these other disruptions to supply chain, we might see you know, the cost of shipping going up. But there's actually you know, some analysts who think that there's potentially even an improvement, right? We really are being cautious here and not necessarily saying that we know 100% that it's gonna get worse before it's gonna get better. I would bet that it's likely. How much is a great question. I think that you know, honestly, I don't think that anyone out there, including the shipping companies, can comprehend the ripple effect of what's happening in Europe, the effect that it has on so many businesses and commodities price and oil price. Is it gonna get much worse than it's been in the past? I hope not. I think it might just take longer for it to come down. I think that's kind of like the probably more likely scenario. The world we live in, I think, you know, everything's possible at this point, so, very hard to tell. Sorry if I don't have any more clear answer there, but I don't think that anyone really does, so. Sure, seems fair. I'll leave it there, guys. Thank you. Thank you. Thank you. Our next question comes from the line of Brian Kinstlinger with Alliance Global Partners. Your line is open. Please go ahead. Great. Thanks so much. I'm curious, you mentioned some benefits by several thousand dollars per container through your new partnerships with Amazon and others. When is the Q1 you expect the P&L to get the full benefit, and how much of your containers are run through that program do you expect maybe first half of the year of your total? Hey, Brian. Good to hear from you. So, you know, the benefits of those shipping rates are always, you know, call it like a quarter later, right, in average. That doesn't even include some of the delays in shipping. It's not just about the cost, it's also how long it takes to clear the port of origin, the port of arrival, and many other obstacles in between, including the lengthy lines at both sides. You know, in a way, we're already seeing the benefit of it, right? It's not like, you know, we're back in 2019 where, you know, we'd really be in great shape if we were. I'd say that, you know, it's more like it could have been absolutely horrible without it, right? I can't even imagine where our business would be if we weren't able to to navigate that situation and secure preferred rates. Again, it's still not anywhere where we can necessarily you know, high five each other and say you know, we're back to where we were before, right? I think there's more patience that need to happen before we get there. Relatively speaking to what would have happened if we didn't secure this, I think we're overall in good shape, if that makes sense. Yeah. Can you talk about how you guys are thinking about expenses? Are you thinking about cutting costs to preserve capital and weather the storm? Does the recent capital raise lead you to hold the line in expenses in the near term, be making investments? Just maybe some sense on some of the fixed overhead. Ari, I'll let you take that one. I think you hit us with two. Listen, with the $27.5 million equity raise in our credit facility, we think we're well capitalized, right? We secured a balance sheet that's gonna allow us to weather the storm. That said, we're constantly looking at supply chain. We're constantly looking at our warehouse partners, our last mile partners to sort of optimize and make sure we're driving you know a much you know best margin as possible considering the circumstances. From a fixed cost perspective, we're always looking, right? Now, at the same time, you know, we still have a lot of anticipated growth long term, like we've always talked about. We think we're gonna be once we weather this. We're not necessarily looking to cut costs. We're just always gonna be optimizing as we can from automation and other investments in systems. Okay. Thank you. Thank you. Our next question comes from the line of Thomas Forte with D.A. Davidson. Your line is open. Please go ahead. Great. I had three sets of questions, two company specific and one industry. I'll go one set at a time. On the first one, Yaniv, if you were pitching this business today, March 8, 2022, I wanna know what the realistic expectations are for long-term success. If the e-commerce industry grows at a 15% CAGR on a very long-term basis, how do you expect to fare versus the 15%? And then how should we think about your long-term contribution margin? Thanks, Tom, and good to hear from you. Obviously, you know, we've had a challenging, you know, 6-8 months, let's say, with everything that's happening in the world. As I mentioned also in my remarks before, right, you know, I could be more excited about the future. I think that, you know, everything we're doing is the future of consumer product companies online. I think that, you know, like us, there's now a lot of other groups who are seeing the potential, and all of them, including us, are just kind of focusing on weathering the storm. Really, as I mentioned also earlier, right, as the dust settles and as the storm passes by, those who are sitting with a strong balance sheet and strong operational capabilities, I think we'll have enormous opportunity to scale, right? Yes, e-commerce is growing, you know, in the U.S., at the category you mentioned, but we definitely have, over time, the ambition to be a global company, and I don't think we're even close to scratching the surface of our ambitions. I think that we've built a very strong foundation, from a team perspective, from a culture perspective, from a systems and just expertise that we've built. The resiliency too, right? I think a lot of companies, at the end of the day, don't make it through because the moment they have one crisis, you know, things kind of fall apart. I have to say that, you know, for us, we've navigated so many challenges recently that it's part of what gives me enormous confidence in our ability to really crush it when things align better, right? We wanna go back to hypergrowth. Tom, you know me well enough to know that my ambitions are huge and that I am, I can't wait to go back and, you know, put the pedal to the metal here to scale this company. At the same time, I think there is an element of patience that needs to happen here. There is an element of protecting what we have, allowing the storm to pass by. Again, I think the excitement around what we do and around e-commerce should come back, and with that, I think we'll have enormous opportunities to scale. That's how I think of it. Great. Second one was, I think you talked about resuming M&A. Today, March 2022, what gives you confidence in your ability to earn an appropriate return on capital from resuming M&A, given your current cost of capital? You know, the resuming M&A is going to happen, right? The opportunity continues to be incredible. As I mentioned again in my comments, we're not the only one seeing it. There's a lot of capital that entered this arena, smart capital that's going after it, and we're the only one on the public side so far, to my knowledge, that's pursuing this. You know, in the immediate, I think that before the war in Ukraine, I think that one of the things that I would have pointed out to say that I feel confident about reigniting M&A and there's, again, a lot of opportunities out there, was the fact that because we're category agnostic, you know, we can start looking at targets that are in categories that are not affected by the international supply chain, especially, you know, companies that are in the food and beverage and other consumables that are manufactured in the U.S. or in the Americas, right? With everything that's happening in the Ukraine, you know, we're going to again be patient, right? Do the right thing because obviously now we're talking about other, you know, commodities that are affected like wheat and other aspects of the economy that could affect even these categories, right? I think patience and tracking closely what's going on at the macro level is critical. But again, the opportunity is there and we just need to be, again, very clearly focused on making sure that we know when the timing is right. All right. Thank you for that. Last one. I think, Yaniv, you're the one who talked about the pendulum. The idea was, this is the industry-wide question, that at the beginning of the pandemic, the pendulum swung heavy toward e-commerce. Everyone was essentially, you know, shelter in place. Then, as things started to ease, the pendulum swung back to physical stores. Can you give your current thoughts on where the pendulum lies today? There have been other e-commerce players who've reported their December quarter and have talked, you know, their comments suggest that it's still leaning toward physical stores, Wayfair being a good example. Yeah. Thanks, Tom. I definitely saw the Wayfair results and the comments that were made there. Yeah. I think the pendulum has not yet stabilized itself. It's still kinda trying to find the middle ground. I think the middle ground is growth of e-commerce will continue linearly like the way it used to before the pandemic. I think we've seen this almost sine wave, as you said, or a pendulum, right? With this incredible uptick in e-commerce, then strong downtick as consumers were almost kind of excited to go back to stores. You know, my best estimation right now is, you know, if you keep tracing a straight line on the, you know, past growth of e-commerce versus retail, you'll see a very, you know, a normalized kind of of growth there. As I mentioned earlier, right, I think that's exciting. There's a massive amount of business out there. We're not even scratching the surface of the opportunity. Beyond that, I think in other countries, you might see e-commerce growing faster just because of, you know, I mean, for example, in China, right, I think e-commerce is growing much faster because of access to stores that is not as, you know, clear as in the U.S., right? There's a lot more people who have really no other choice than to use e-commerce to access certain things. Around the world, I think that in countries like that, you'll see that growth happening faster. But there's no doubt in my mind that over time, e-commerce will again continue to become a very big part of retail, and it's very exciting for us obviously to see that happening. Hopefully that makes sense. Thank you, Yaniv. Yes, it does. Yep. Thank you. Thank you. Thank you. Our next question comes from the line of Marvin Fong with BTIG. Your line is open. Please go ahead. Great. Thanks everyone for taking my questions. Two questions if I may. Just the first one, you know, I appreciate that a lot of discussion on the shipping and obviously you guys are doing a lot on that front. Are there any other commodity exposures that we should be thinking about? I know you have a pretty broad product set, you know, perhaps steel or anything like that. I know that you also said, you know, you secured a lot of your spring and summer inventory. Just in the long run, what sort of material and commodity exposure do you guys have, if anything that we should be thinking about? Then I have a follow-up. Hey, Marvin. Good to hear from you. Yeah. You know, I think our manufacturers obviously are reaching out and pointing out the commodities, you know, prices going up. I think, you know, copper is probably one of the ones that you wanna think about, right? A lot of the products that we sell that have sort of electronics in them, right, are affected by that. But across the board, even plastic, right, has certain kind of pressure on it. You know, that definitely does trickle into the pressure that we're seeing. You know, it comes from the manufacturers. They bubble it up. I think one of the things that we're doing is being very careful to track those comments of manufacturers and their reasons that they you know justify certain increases in cost of goods. Our goal is obviously to, when hopefully things stabilize, go back to them and request that those get dialed back down, right? Yeah, I mean, it's again, it's across the board, right? You got commodities, you got shipping internationally. You know, you still have the tariffs of course that started in 2019, and then you have last mile shipping, which also is going up given that price of gas going up. You know, in the P&L of the product across the board, there's that pressure on the cost upwards. Again, we're keeping strong track of it and looking to renegotiate those down when the environment allows us to, right. Gotcha. Perfect. Then just to revisit the M&A, you know, I totally appreciate you said you'd be very patient. Just to expand a little more on that, I mean, what are you seeing now? Obviously we're seeing, you know, some of the air coming out of valuations in the public markets. Are you seeing something similar in the aggregator space, or is there just so much capital floating around that, you know, multiples are still, you know, up from where they were a couple of years ago, perhaps? Just maybe as a second part of that question, I mean, do you think we could, you know, over time or is your discipline to kind of, you know, revisit and acquire things at 3x to 4x EBITDA versus maybe the couple of turns higher that we saw kind of towards the end of last year? Yeah, thank you. It's a great question. Again, you know, from what we know about our competitors in the private space, they're all dealing with the same challenges and, you know, none of them is immune to it, right? I think that, again, with our experience and better infrastructure, I think we'll navigate it better. You know, my hope is that a lot of our competitors do really well. I think it would be good for the industry, and it would create more comps for us and just solidify the model, right? I definitely think that some of them might not be able to get through this. You know, just like we were sitting in front of a lot of debt, that was designed to kind of like, you know, live with the cash flows of the businesses. Once the cash flows of the businesses have been contracted because of the temporary pressure on supply chain, right? That became a problem and it's true for them as well. I do think that, you know, although I'd say that the multiples on the acquisitions are still holding on, I do foresee that in the next few months we'll see a little bit of downward pressure on those multiples because of, again, some of these players that are in a situation where they can't, you know, can't move forward and might even have to divest assets, right? Which is part of the reason to be patient is that there's a possibility that although we believe we navigated the challenges really, as again, not as well as we could in a way, right? Some might not be able to do it at all. There might be some great opportunities there. I think at the end of the day, again, it's hard to predict exactly. The world is obviously complex today, but I think that we'll see my opinion, we'll see those valuations of the businesses that are getting aggregated, quote-unquote, right? I believe they'll stabilize around 5x to 6x. And with potentially, again, especially strong assets that could go even as high as 6x to 7x, right? That's why it doesn't make sense necessarily to run out and do those deals yet. The next few months are gonna be really important to understand where the industry is going, where the valuations are gonna land and you know, who's gonna be standing tall and driving this forward versus who's not, right? That's why I think the patience is important. That's great. Thanks so much, Yaniv. Thank you, Marvin. Thank you. I'm showing no further questions. I'd like to turn the conference back over to Mr. Grozovsky for any further remarks. Thanks, Michelle. As part of our shareholder perks program, which, as a reminder, investors can sign up for at aterian.io/perks. Participants have the option to ask management questions on our earnings call. I wanted to thank all the shareholder perks participants for their loyalty and their participation. I've picked a few relevant questions that they have asked. Can you provide an update for the effort to stop the naked shorting of Aterian? Yaniv here. You know, thanks. Thank you. We're working really hard to make sure that all the trading in our shares and compliance and, you know, with all the rules and laws out there. The process takes a long time. We're definitely active in investing in that. You know, it's gonna take time to see that through. When we have further results, we'll report on them. Okay. Thank you. Another question we had was, please update the progress on platforms other than Amazon. Yeah. I think, you know, one of the things that we really wanted to push forward on last year is international. You know, again, the supply chain crisis has slowed that down. It's still moving forward. The big effort we're doing now is on Walmart. I think we've made a lot of progress there. Still a lot to do. You know, Walmart is a platform that's investing heavily in their e-commerce, but they're still behind Amazon. The good news is that they seem to be making faster progress recently, which allows us to obviously, you know, leverage the tools and the analytics that they're providing us and integrate them into AIMEE. We're cautiously optimistic about that becoming more valuable. The other aspect is, you know, we wanna invest more in growth organically through D2C. Everything, you know, our brands have obviously Shopify stores, and we're starting to slowly uptick the investment on scaling that correctly. Those I would say are the two kinda like biggest efforts right now given that, again, due to supply chain, international is gonna take a little longer. The shipping to Europe, for example, is actually even worse than to the U.S., because carriers prefer the U.S. line, so they make it even more expensive. We don't wanna show up in Europe with products that are overpriced compared to the competition. There again, I think a little bit more patience, but again, Walmart is a big focus for us. Great. Thank you, Yaniv. Thank you for participating on today's call. In terms of the upcoming calendar, Aterian management will be participating in the fifth annual D.A. Davidson Consumer Growth Conference on March 10th. The fireside chat will be at 1:15 P.M. and will be webcast. The 34th annual ROTH Conference on March 13th through 15th. We look forward to speaking with you on future calls. This ends our call. You may now disconnect. This concludes today's conference call. Thank you for participating. You may now disconnect everyone. Have a great day.