Good morning. Welcome to Casper Sleep's second quarter 2021 conference call. Today's call is being recorded. I would like to turn the conference over to Norberto Aja, Investor Relations for Casper. Mr. Aja, you may begin. Thank you, operator, good morning, everyone. Thank you for joining the Casper Sleep 2021 second quarter conference call. We'll get started in just a minute with management's comments and your questions. Before doing so, let me take a minute to read the safe harbor language. This call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding management's plans, strategies, goals, and objectives, anticipated financial performance, industry-wide supply constraints, and the expected impact of COVID-19 on our business. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Factors discussed in annual report on Form 10-K for the year ended December 1st, 2020, and other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made on this call today. Any such forward-looking statements represent management's estimates as of the date of this call. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause reviews to change. In addition, we may also reference certain non-GAAP metrics, including adjusted EBITDA, which is reconciled to the nearest GAAP metric in the company's earnings release, which can be found on our investor relations website at ir.casper.com. With me on the call today is Philip Krim, Co-founder and Chief Executive Officer of Casper, Emilie Arel, President and Chief Commercial Officer, and Michael Monahan, Chief Financial Officer. Following their prepared remarks, we will open the call for questions and answer session. With that, I'd now like to turn the call over to Philip Krim, Casper's Chief Executive Officer. Philip, please go ahead. Thank you, Norberto, good morning, everyone. Welcome to Casper's second quarter conference call. Second quarter revenue represented an all-time quarterly record, with Casper's North America revenue increasing 45% year-over-year. This shows we are gaining market share and that Casper's increasing brand momentum continues to drive accelerating demand for innovative sleep products across all of our sales channels. Strong second quarter North America retail partnerships revenue growth of 79% year-over-year reflects the early success of our strategy to grow our points of distribution as well as solid performance from our new trial partners. This channel remains key in our ability to efficiently scale Casper's North America business and to further diversify our revenue mix towards premium priced products through increased trial opportunities. Our DTC channel delivered its best quarter since the beginning of the pandemic with year-over-year revenue growth of over 31%. Throughout the second quarter, we continued to make progress on our three core strategic priorities, including expanding our product offerings, increasing our brand awareness, and growing our points of distribution. These initiatives, combined with the actions we are taking to further leverage our marketing spend and to increase operating efficiencies, are delivering positive results. We continue to see very solid demand for our products, although the well-publicized industry-wide manufacturing and supply chain disruptions impacted our second quarter results. While the immediate actions we took in the second half of 2020 and early 2021 enabled us to largely sidestep these challenges in the first quarter of 2021, certain supply chain inputs and conditions worsened throughout the second quarter. Specifically, despite expanding our base of third-party manufacturers earlier this year, our suppliers had less capacity than originally anticipated due to the persistent shortage of raw materials and components critical to mattress production, as well as increasingly significant labor shortages and shipping constraints across the supply chain during the second quarter. These conditions had a greater than expected impact on our ability to meet all of the demand we received and are creating stronger than forecasted inflationary pressures across much of our cost of goods sold. Absent these challenges, we believe that Casper would've been adjusted EBITDA profitable in the second half of 2021. The combination of a highly disrupted supply chain and inflationary pressures resulted in a loss of revenue due to unfulfilled orders and margin deterioration. We estimate that these factors had a revenue impact of approximately $10 million in the second quarter, and we currently anticipate a revenue impact of approximately $20 million in the third quarter due to these factors as well, which is reflected in the third quarter guidance that Mike will speak to later on this call. Our current expectation is that the industry will continue to face a tight supply environment and material shortages along with inflationary pressures for the remainder of the year. While our profitability timeline has pushed back as we manage through these challenges over the next few quarters, we remain confident in our ability to achieve this goal over a period of time as these issues resolve. In spite of significant supply constraints and higher material costs, the overall industry environment remains very strong. With manufacturing capacity anticipated to ramp up later this year, we expect that our third-party manufacturing model will help us fulfill the growing demand for Casper products across our expanding footprint and enable us to resume our historically healthy gross margins in 2022.We are taking and will continue to take aggressive measures to offset these various challenges, including further diversifying and expanding our supplier base, renegotiating shipping rates, and implementing price increases across certain product lines. We will plan to institute additional pricing adjustments later this year to help further offset these ongoing inflationary pressures. These price increases are at a level we feel represent the right balance between taking share and maintaining price points that we need to remain competitive. Given the strength of our brand, our internal data shows that consumers are willing to pay a premium price for Casper-branded products, given the attractive value proposition of our sleep solutions. One area that Michael Monahan will address in more detail, but which I briefly will touch on, is the work that we have been undertaking as it relates to cost management and better aligning our cost structure with our business to achieve greater operating leverage. We are working diligently to find efficiencies and cost-cutting opportunities across our sales and marketing and G&A lines, including procurement functions and reductions in our real estate footprint as we adapt to a more hybrid work environment. For example, we are consolidating operations to the New York Metro area and moving Casper Labs and our San Francisco resources to New York to reduce overhead costs, create a more fully integrated team, and foster added collaboration. As these shortages subside, our confidence in our ability to capture more of the increased demand we are seeing in the market for our award-winning sleep products is based on a number of key business drivers, starting with the Casper brand. These are times when strong brands can get stronger, and that has been the case with Casper. We have always invested in our brand and have continued to nurture it to grow along with our business. For us, for our retail partners, and for our customers, the Casper brand signifies quality, innovation, value, and perhaps most important of all, trust. The continued strong appeal of our brand and our products is clearly demonstrated by our consistent top-line growth and ability to continue to grow our retail partners. In June, we announced that Casper products will be available to try in over 60 Mattress Warehouse showrooms, with rollout to additional showrooms taking place later this year. Just a few weeks ago, we announced a national partnership that brings Casper's award-winning suite of sleep offerings to Bed Bath & Beyond customers through their website and mobile app and in select Bed Bath & Beyond stores. As part of this partnership, Casper opened its first one-of-a-kind branded shop-in-shop at Bed Bath & Beyond's newly designed flagship store in New York City. We are far from being done. We expect to announce a number of new partners in the coming months that will further heighten the Casper brand and afford us additional trial opportunities. As we continue to increase the number of trial doors and leverage the proactive approach we've been taking to engage with our retail partners to drive sell-through, we expect our wholesale revenue to become more and more recurring in nature. While we are still operating with a small number of retail partners and trial doors to our peers, we are working towards increasing both at a very fast clip. As this base grows, we are confident that it will provide us with additional opportunities to engage with a greater number of potential customers and to reach current customers more easily and effectively, creating a revolving door for both existing and new customers to experience our products again or for the first time. As we look ahead to 2022, we believe the opportunity for us to take market share is significant. We are confident in our long-term strategy and our growth outlook. We expect the structural headwinds we discussed regarding supply chain to subside, while the importance and focus on sleep and wellness to continue. We remain constructive on the outlook for new home construction, which should remain robust over the coming years as existing home supply remains extremely tight, and the mattress industry remains healthy and growing at high single-digit rates. In summary, the combination of top-line growth and added operational efficiencies is expected to create a powerful tailwind for us as we enter 2022 and help drive the growth we are seeing down to the bottom line, return our gross margins to north of 50%, and drive our path towards adjusted EBITDA profitability. Casper is playing an increasing role in the powerful consumer focus on home, health, and wellness, and we are expanding beyond mattresses to include a host of thoughtfully designed products that strategically position us to drive sustainable long-term growth. We are excited by the momentum we continue to see with top-line growth of 38% versus Q2 2020 and 59% versus Q2 2019, and in our ability to build a better future for Casper and create added value for our shareholders. Our goal isn't merely to take market share. Our goal is to also grow the entire market. I will now turn the call over to Emilie. Thank you, Philip, and thank you, everyone, for joining us today. I want to take this opportunity to expand on a few points Philip made during his prepared remarks and provide you with our thoughts on why Casper's growth has been and will continue to be the result of our ability to connect with consumers through compelling brand experiences, driving product innovation against our greatest growth opportunities, and expanding our customer touchpoints across physical and digital platforms. Before doing so, I want to first and foremost thank the entire Casper team. We have all been through a lot these past 12 to 18 months, including temporary store closures, supply chain challenges, and a number of other disruptions, including on a personal level. Throughout it all, our team has delivered for our customers and partners. You've demonstrated creativity, dedication, and resilience. You are the reason for Casper's success. Thank you. Let's start by talking about the Casper brand and how we're growing, strengthening, and leveraging it. The best example of how we continue to leverage our brand is reflected in the success we are having with our retail partners. We now have more than 25 retail partners that contributed over $50 million of revenue to the second quarter. As Philip mentioned, retail partnerships continue to grow both in number and in revenue across most of our partners. Retailers see a strategic reason, both our brand and our product offering, to bring us into their stores. We are also bringing products to market that have a higher ROI. We continue to see success with our higher priced products, such as the Casper Nova and Casper Wave mattresses. We are also able to secure more slots on the floor and trade out lower priced beds for higher priced beds to increase AOV, margins, and profit. We are very pleased with the continued results we are seeing from our field rep team, who help us unlock the opportunity we see across our partner trial doors. The team is doing a terrific job in helping our retail partners to communicate the value proposition, benefits, and unique features of our products more effectively to consumer, helping to differentiate Casper products and more clearly showcasing the elements of innovation, research, quality, and design that go into our mattresses, bedding, and accessories. As we've all experienced, the way we shop has changed, and many of those changes will continue going forward. Flexibility, convenience, engagement, and timing have all been leading factors in how we shop. We remain focused on supporting our multi-channel distribution network and making sure that we're creating consistent and effective touch points across our e-commerce experience, our retail partner footprint, and in our Casper stores. We see the relevance of our omni-channel strategy growing and see the potential for long-term increased focus on home, more time at home, with related consumption impacts. We've also shifted our focus and messaging over the past year towards highlighting the more technical aspects of our products. While in prior years, much of our brand messaging centered around the Casper brand itself, we have shifted that focus from talking about the brand to talking about the products themselves and highlighting the R&D that goes into our products for better sleep. It's important for the consumer to really understand the key benefits, such as temperature control, alignment, ergonomics, touch, light, and other factors that truly differentiate our offerings in the market and help you have a better tomorrow. One of the things we want consumers to experience is the technology behind many of our products. For example, seeing the design, feeling the curated materials, and immersing themselves in our full suite of products in our Cooling Collection. With daily use products such as mattresses, sheets, and pillows, and many other at-home products, performance plays a significant role in brand choice, and showcasing what drives that performance in a product is critical to consumer adoption. The Love Your Tomorrow campaign is a great example of that. The campaign focuses on elevating the visibility and appreciation for our mission of helping people achieve their best night's sleep for a better tomorrow by bringing the importance of temperature control front and center. This not only supports our Cooling Collection and the benefits it brings. It helps us to differentiate our products and more clearly and succinctly communicate a more compelling value proposition to our customers. While early, the campaign has been met with great enthusiasm by both customers and our retail partners. Its impact is just beginning to make a mark on sales of our premium mattresses and suite of cooling products. Almost half of our Nova and Wave mattress buyers are choosing to upgrade to Snow at a $500 higher price point. Our Hyperlite sheets continue to be our best-selling sheet set. These initiatives are helping us continue our strong conversion rates and to leverage our growing trial opportunities. They are also key in our ability to both upsell and cross-sell our products and thus achieve higher AOVs. To further this trend, we have taken the strategy deployed across our retail stores, where we routinely see higher AOVs and began to implement a version of it with some of our retail partners. For example, in our recently announced partnership with Bed Bath & Beyond, we opened the first branded shop-in-shop at their flagship store in New York City. The ability to bring both our products as well as our unique Casper shopping experience is critical to creating the overall shopping experience we look for and to increase conversion, AOVs, and customer satisfaction. As we mentioned in the past, trial opportunities are key and elevating them by allowing consumers to submerge themselves in the Casper Sleep experience, including mattresses, sheets, pillows, blankets, and accessories, is even more powerful and yields even more favorable metrics. While we continue to bring new retail partners on board to join the recent additions of Sam's Club, Denver Mattress, Mathis Brothers, Nordstrom, Sit'n Sleep, City Mattress, and others, our focus will be on increasing our trial doors and reduce the difference between us and our competitors, some of which have multiple times the number of trial opportunities. Regarding direct-to-consumer, this segment continued to be driven by strong e-commerce demand, both in terms of traffic as well as AOV. We saw robust organic traffic to our website, reflecting efficiency and strong brand proposition. Casper retail stores are seeing a return to more normalized foot traffic, and we expect that trend to continue, though like many other businesses, we are closely monitoring the Delta variant and evolving public health guidance in response. To date, we are seeing week-over-week improvements on foot traffic and sales, and we are seeing these improvements across the country as opposed to more regionally focused, as was the case earlier this year. While foot traffic is not back to pre-pandemic levels just yet, Casper-owned stores are growing nicely. Looking ahead, we have a clear vision for our brand. Long-term future, we are focused on what it will take to get there. Our innovation continues to enable us to bring world-class products to market, and our growing customer base is responding enthusiastically. Our product pipeline is strong. We are even more deeply connected to consumers than before the pandemic through our brand, our retail partners, our Casper retail stores, our e-commerce platform, and through the macro shift in consumer preferences. With that, I would like to turn the call over to Mike. Thank you, Emilie. We reported second quarter revenue of $151.8 million, a 37.7% increase compared to Q2 2020, and an almost 60% increase versus Q2 of 2019. It's important to remember that we did not have any revenue outside of North America this year, while we had approximately $5.2 million in revenue from our now-discontinued European operations in the second quarter of last year, and approximately $5.9 million in the second quarter of 2019. Q2 2021, North American revenue grew by approximately 45% versus Q2 2020. Our North America direct-to-consumer channel revenue was $99.5 million, or a 31.3% increase versus the prior year period, while retail partnership revenue for Q2 2021 was $52.2 million, a 78.9% increase as compared to Q2 2020. The launch of our Snow mattress line and Cooling Collection resulted in an increased average order value quarter-over-quarter in our e-commerce channel, as consumers opted for the premium product. Within the DTC channel, we continue to see consumers return to our retail stores. All 72 of our retail-owned stores remained open throughout the quarter, with significantly increased foot traffic year-over-year, highlighting the importance of our multi-channel approach. Additionally, we continue to see increasing demand from our retail partners, and we are focused on meeting our commitments within that channel. Gross profit was $72.5 million, a 27% improvement compared to the prior year period, and resulted in gross margins for the quarter of 47.8%, a 399 basis point decrease. Supply chain constraints, resulting in large part from challenging raw materials, logistics, and labor supply conditions in the second quarter, increased our unit costs and required us to pay premiums to our manufacturers in order to meet demand. We believe we will continue to see cost pressure through Q3 and into Q4 due to these increased costs, but expect to see lower cost per units towards the end of 2021 as we expect capacity constraints to start to ease. We will continue to be focused on recovering our margins to over 50% in 2022 as we manage our supply chain, cost of goods, and overall operations as strategically as possible. Sales and marketing expenses increased 20.2% year-over-year in the second quarter. We deployed more media to extend our reach, but are seeing significantly increased media rates across both our online and offline channels. As a percentage of revenue, sales and marketing expenses declined to 26.3% compared to 30.1% in Q2 2020, reflecting improved overall leverage from our expanded distribution and multi-channel strategy. Throughout the remainder of 2021, we anticipate media rates will remain high. However, we will continue to adjust our media mix to maximize our reach at the lowest available cost. General and administrative expenses increased by 14.6% to $48.2 million, or 31.7% of revenue, versus $42 million or 38.1% of revenue in Q2 2020. We have initiatives underway to reduce this expense going forward. As an example, we reduced our corporate real estate costs by over 50% as we consolidate our operations in the metro New York area and implement a hybrid work model that allows employees to partially work from home. In Q2, we subleased portions of our real estate, which resulted in a one-time charge of $17.5 million that we expect will deliver over $4 million of annual adjusted EBITDA savings in 2022. In addition to saving costs, we believe this will improve efficiency within our overall organization. Depreciation and amortization of $4.1 million for the second quarter of 2021 increased from $3.2 million in the second quarter of 2020 due to previous technology and store-related investments, while interest expense decreased to $1.8 million from $2.2 million. The second quarter generated an operating loss of $33.1 million, compared to an operating loss of $22.3 million in Q2 2020. Earnings per share was a net loss of $0.81 in the second quarter, compared to an earnings per share net loss of $0.61 in the prior year period. Our adjusted EBITDA loss narrowed to $6.7 million in the second quarter of 2021, representing a 41.8% year-over-year improvement versus the second quarter of 2020. Moving to the balance sheet and our liquidity position. As of June 30, we had cash and cash equivalents of $49.7 million, compared to $61.6 million as of March 31, 2021. We feel comfortable with our liquidity position and the health of our balance sheet, and in our ability to adequately support the company. We ended the second quarter with $58.1 million of inventory on hand. This quarter-over-quarter increase was largely due to increases of both committed and safety stock for non-mattress items. We expect to reduce our non-mattress inventory stock in the upcoming quarters, and achieve a more balanced inventory of mattress and non-mattress products that is aligned with customer demand in the upcoming months. For the third quarter, we expect to deliver $152 million-$159 million of revenue. At the midpoint, this revenue range represents 26% growth over the comparable prior year period. This would lead to a third quarter net loss of approximately $22.6 million-$19.6 million and adjusted EBITDA loss of approximately $12.5 million-$9.5 million. For the full year 2021, we are reiterating our previous revenue guidance to be within the range of $580 million-$610 million. At the midpoint, this revenue range represents 19.7% growth and 25.8% North America growth for 2021. We also expect capital expenditures to be $10 million to $13 million in 2021, as we are making investments into our supply chain and re-platforming our website. We continue to effectively manage the business through these dynamic market conditions to support our retail partners and to meet growing customer demand. As it relates to profitability, we remain on the path towards adjusted EBITDA profitability and anticipate achieving that goal during 2022, assuming that our manufacturing and supply chain capacity increases, material shortages, labor and shipping constraints lessen, and input inflation subside as anticipated. In closing, we are successfully making progress towards our goals of gaining market share, expanding our retail partnership footprint and trial doors, improving our operations, and more strategically leveraging our resources. I would now like to turn the call back to Philip. Thank you, Mike. In conclusion, our performance this quarter once again showcases the power of our brand, our products, our partners, and most importantly, the talent and dedication of our people. To them, I'm grateful for their unwavering commitment and desire to improve upon every facet of the business and help Casper reach its full potential. In a difficult environment marked by the COVID-19 pandemic, macroeconomic uncertainty, and supply chain disruptions, it is because of them that we've been able to deliver strong results and demonstrated the strength of our brand. We have come a long way in a short period of time, growing, maturing, improving, and learning from our mistakes, and are very encouraged by the continued progress we are making against our goals. With a total addressable market estimated to be nearly $80 billion in the U.S. alone, we see tremendous upside. As we move forward, we are laser-focused on making Casper what we have always envisioned, one of the world's leading sleep and wellness brands. I'm confident that the best of times are ahead of us. I would now like to turn the call over to the operator for questions. Operator? Thank you very much. We will now begin a question and answer session. In order to ask a question, you will need to press star, then the number one on your telephone keypad. Again, that's star, then the number one on your telephone keypad. Your first question comes from the line of Peter Keith from Piper Sandler. Your line is open. Hi. Thanks. Good morning, everyone, and thanks for taking the questions. I wanted just to ask about the gross margin trend. Certainly, the inflationary pressures are well-known in the industry, but I guess what stands out is the magnitude of gross margin pressure that you guys are facing. What's causing the delay in passing through pricing? It seems like competitors are putting through price increases pretty quickly, and you guys seem like it's taking a couple of quarters here to pass that through. Hey, Peter. Good morning. We did a small price increase earlier this year, and we are doing a larger price increase as of October 1st. We have been moving on the price increase front. I would say the margin pressure reflected in the gross margin is part the inflationary period, but there's also channel mix shift pressure given the robust growth that we're seeing in our retail partnership channel. That's obviously been a very strong channel that does put a little incremental pressure on the blended gross margins. It's multiple factors contributing to the gross margin position. Okay. I was going to follow up on that point with wholesale margins. Is that something, Mike, that you could break apart for us so we can just see what the magnitude of that wholesale shift is versus the inflationary pressures? Sure. Our DTC margins typically are in the mid-50% range, and for wholesale, we're seeing some pressure in those overall margins than we've historically seen, and they're in the mid-30% range, roughly. Okay. Thanks very much, guys. Thanks, Peter. Your next question comes from the line of Matt Koranda from ROTH Capital Partners. Your line is open. Hey, guys. Just wondering if you could speak to the magnitude and timing of the price increases. I thought I caught 10.1 from you, Philip. Then just how quickly did this flow through the P&L, especially on the wholesale side of the equation? Is it fair to say those are basically just going to offset supply chain headwinds? Then just maybe a little bit of commentary around gross margin trends for Q4 would be helpful. Yeah. I'll let Mike comment on the flow through the P&L, but the magnitude of the price increase is much more significant than the price increase we did earlier this year. It'll impact more SKUs, and it's a bigger step-up in price on a number of SKUs. It more than offsets some of the supply chain headwinds. We also expect some of the supply chain costs we've seen some come down already, and we expect more of those to come down. We expect to maintain the prices that we're taking. Long term, that's why we talked about how we believe that we can get back to 50%-plus gross margins. There'll be a number of factors looking into 2022 that will drive gross margin expansion. The price increase is one. We highlighted the others around expanding our supplier base and using our scale to continue to negotiate better pricing. Mike, do you want to talk about the kind of flow through and then the Q4 margin? Sure. First I'll start with the third quarter. In the third quarter, we have a couple of retail partnership events where we're expecting to move higher volumes at a slightly lower price. Overall, I would expect margins in the third quarter to be relatively consistent with what we saw in the second quarter because of that channel mix. As Phil mentioned, we expect to increase prices more towards the beginning of the fourth quarter, and so we'll start to see that flow through during the fourth quarter, the impact of that. Typically, our fourth quarter, in terms of channel mix, has a slightly higher percentage of retail partnerships. Overall, I would anticipate more gross margins for the remainder of the year, factoring in some of the price increases, to go up quarter-over-quarter from Q3 to Q4, but still be below the 50% range during this year. Okay. Then what's the timing for adding additional suppliers? It sounds like that probably takes a couple of quarters to sort of onboard, so we're looking at a path back to sort of north of 50% gross margins as more likely to occur in the early part of 2022. Can you kind of help us understand timing, sort of the path back to the 50% or north of 50% mark? Sure. On the supply chain side, I'll let Mike comment on the margin, but on the supply chain side, we've been adding suppliers this year, so it's not something that we're just starting at this point. We have another very large low-cost supplier that's coming online as we speak. The supply chain constraint was a factor of despite adding additional suppliers, all of our suppliers ended up having less capacity available because of both a shortage of raw materials as well as labor shortages. The strategy is working to add suppliers and increase capacity within those, and most of our suppliers are adding the capacity within their footprint as well, adding additional manufacturing lines or additional manufacturing facilities. We think there's going to be a much bigger capacity within our supply chain, within the industry supply chain, moving into 2022, and that will let us shift more of our demand to some of the lower cost suppliers, which the opposite has happened this year. Mike, do you want to talk about the margin implications of that? Sure. These are some of the reasons why we feel that heading into 2022, we're going to be in a good position to improve our overall margin. As Phil talked about, we are bringing on new suppliers and ramping them up during the second half of this year. We expect, heading into 2022, that the labor and raw material challenges that we're experiencing within the supply chain will start to ease, our overall cost per units should come down. The third piece of it is within the retail partnership channel, as we're bringing on new suppliers and bringing on new partners, a lot of those partners are more trial doors, which we anticipate selling our more premium products through them, which tend to generate higher overall gross margins within that channel. If you think about overall, our cost per units should be in a good position heading into 2022. Just from an average pricing mix perspective standpoint, within the retail partnership channel, we expect that to start to shift more towards those premium products, which we're excited about going forward. Just to add on one more point to that. We ultimately pushed out launching some of these trial opportunities that we had because of the supply chain constraints that we're seeing, and we focused on our existing relationships and really delivering as much product as we could to our current partners. To Mike's point, another thing that's pushed out some of the premium product distribution expansion, that's still coming and still online, but was pushed out a bit because of the supply chain constraints. Got it. I'll leave it there, guys. Thanks. Thanks, Matt. Your next question is from Seth Basham from Wedbush Securities. Your line is open. Morning. Just comparing your gross margin trends relative to some of your peers, it seems like you're experiencing more cost pressures relative to your price for them than your publicly traded peers. I'm trying to get a better understanding as to why that might be. Do you have less pricing power, or do you have more cost pressure because you use third-party manufacturing? If you could shed some light on that would be helpful. Hey, Seth, good morning. I think you're just seeing the margins. Again, it's multiple factors driving pressure on the margin in Q2. It was the rapid expansion of the retail partnership channel, putting margin pressure on it, as well as cost of goods inflation. I think we versus perhaps some vertically integrated players see the price increases show up faster given the just-in-time nature of our inventory position. Some of the cost increases from our vendors might hit faster than it would if we had a stock supply of the raw materials that we need to make it. I do think there is a timing difference of how some of the raw material price increases hit our business versus a vertically integrated peer. Overall, we're buying the same chemicals. It's impacting our business the way that it would even if you were vertically integrated. There definitely could be some timing differences given the third-party implications. It also means that as raw materials drop, it's going to show up in our P&L faster. As you know, again, it's all being produced in just in time. Got it. Okay, two follow-up questions to that. One, would you consider bringing any of your manufacturing in-house given some of the challenges you're facing? Secondly, as it relates to your shipping costs, you renegotiated your contract a little over a year ago. Is there opportunity to further reduce that? Did I catch that in your prepared remarks? You did. On your first question, at the right point in time, we certainly have the opportunity to verticalize our business. We actually think 2022 is set up to be very good for Casper and for our third-party manufacturing footprint. This goes back to the comment I made earlier, which is that capacity within this industry and capacity within Casper supply chain is increasing dramatically in the second half of this year. That increased capacity is going to allow us to be more aggressive with how we source products and how we use vendors to bid against each other for the demand that's increasing within our business We actually think that our third-party manufacturing footprint is the right business model for us, and it sets us up to have a lot of success in expanding our gross margins back when we move into 2022 and when we see a lot of this additional supply chain capacity come back online. We feel good about the position, but like I said, at the right point in time, we certainly could verticalize the business. We obviously have more than enough demand for that, and we'll look to do that opportunistically down the road. The shipping? Oh, I'm sorry. On the shipping cost, yes. We are continuing to optimize our shipping and logistics. We talked about a lot of the wins we had with renegotiating shipping contracts, but there's still a lot of additional benefit to have as we look to optimize our footprint. We're renegotiating some of our warehousing contracts and partnerships in order to give us a more optimized logistics footprint, there's definitely still room to improve margins based on optimizing our cost structure within the warehousing and logistics part of our business. Again, for participants, to ask a question, press star then the number one on your telephone keypad. Press star then the number one on your telephone keypad. Your next question is from Atul Maheswari from UBS. Your line is open. Good morning. Thanks a lot for taking my questions. Your revenue guidance, this implies that revenue growth would slow to a mid-single digit level in the fourth quarter. Why would that be the case given that you would have some additional manufacturing capacity that will ramp later this year? We believe that we'll have additional manufacturing capacity, but we believe that there is still risk within the supply chain overall and that we won't have the full capacity that we'll need. We put out the guidance based on the assumption that there continues to be a choppy supply chain. Now, of course, we're taking a number of steps to mitigate that, and there's certainly a path where the supply chain is in much better shape than we're anticipating. The guidance that we put out assumes that there continues to be issues. One of the things that we've seen throughout 2021 is just that it's different issues that are popping up from time to time that are impacting capacity. Labor had become a much more acute issue in the recent period than we had seen prior to that. Now we think labor is getting better as stimulus burns off in different states, we are optimistic that improves. We have multiple manufacturing partners who have a real difficult time finding manufacturing labor in this country right now. The raw materials issues that we've talked about that started in Q1 took longer to work out for the industry. We feel like it's in a good position, but it's still been a choppy backdrop on raw materials. The guidance we're providing, I think, is our best view on what happens, and it includes being some disruption to our supply chain. We do think it gets better in the second half of the year, we don't think we're totally out of the woods. Got it. That makes sense. Just my follow-up, if you're circling back on the pricing question, I know you're taking up pricing on October 1st. I'm just curious as to why you're not taking it earlier given costs have inflated meaningfully, several of your peers have taken up pricing, and demand is still strong. Is the pause because you believe you have less pricing power than some of your larger peers, or have you seen some elasticity following the first round of price increase that's maybe giving you a little bit of pause? No. We've worked with our retail partners both on, like I said, prioritizing flowing inventory to them. We've worked with our retail partners about how we're going to take pricing. Retail partners need advance notice. We provided them that notice and worked with them on pricing many weeks ago. It's just the time that they would like for it to work through. Obviously, the DTC channel is easier to change pricing. We're very omnichannel focused from our consumer experience. When we take pricing, we want to make sure that we continue to work with our retail partners, make sure that they're well coordinated. What we heard from our retail partners is that we all wanted to work through the summer selling period, get through Labor Day. That's when it's the right time to take pricing. It was really just a strategic view on what the right time is for the business and for the partners to have a seamless transition to higher prices. Got it. That makes sense, and good luck with the rest of the year. Thank you. We have a question from Bob Drbul from Guggenheim Securities. Your line is open. Hi. Good morning, guys. Just a couple of questions from me. I think the first one is, I think you talked a little bit on the inventory composition and the non-mattress inventory that you have on the balance sheet. Just wondering if you could talk a little bit about just the sales of what you're seeing, in various non-mattress categories, and just how much pressure, as you try to get out of some of that product, how much pressure do you expect from that perspective? I think the second question that I have is just, in the environment that you are in, you talked a little bit about some of the marketing plans. I guess when you think about your ability to sort of reach new customers or, acquisition, customer acquisition costs, as you think about what you're doing with the marketing investment, just wondering how you expect that to really impact, I think, the top line generally overall in the business. Thanks. Yeah. Good morning, Bob. two, I guess, kind of questions in there. First, on inventory. We took inventory up very specifically because of some commercial opportunities that we really haven't talked explicitly about. the biggest factor driving the increase in inventory is increasing our pillow position, and that's ahead of load-ins into launching our pillows into every Costco store, launching our pillows into 500 Walmart doors, and launching our pillows into Bed Bath & Beyond. we very purposefully built up that position to have inventory to load in and to have safety stocks to support those programs. that's part of a key distribution strategy, which is to grow distribution, not just of our mattress business, but of our other product categories, and first starting with pillows. we're really excited about expanding our footprint with pillows. We've seen that pillows are a great entry product for the brand, and that they've sold really well with the partners that have had them. We will expand our footprint within that category aggressively, and that's why you're seeing the inventory position increase. On the sales and marketing side, we've been very pleased at our ability to generate sales and marketing leverage and do so with still driving top-line growth. Our North American business on the two-year basis versus 2019 grew over 70%. On a one-year basis, obviously you saw the growth of over 40%, and this is while generating leverage in our sales and marketing spend, despite media growing kind of at over 50% on a year-over-year basis from a cost standpoint. Media inflation has been a real concern for us and for others. You've obviously seen that reported in some of the media partners that we work with, like Facebook and Google. We are approaching that in a very kind of real-time way to mitigate that inflationary cost by diversifying our spend, keeping our spend relatively flat, making sure we're moderating our spend relative to the supply chain constraints. Overall, that's generating the leverage that we've been talking about since our IPO, and we've been contributing towards our march to EBITDA positive. Great. Thanks, Philip. I guess just one more question is, as you broaden out your retail partnerships distribution with the new partners, new doors, can you talk a little bit about sort of how some of your legacy partners are performing versus some of your newer partnerships and what you're really learning as this transpires? On a dollar basis, most of our retail partnership growth is coming from legacy partners. We're doing a good job of growing our business with our existing partners. We're flowing inventory to them on a priority basis, and that business continues to grow at a really healthy clip. We're also very pleased with our new partner growth, and that's more of a premium product focus. What you're really seeing is kind of a bifurcation of strategy based on price points and a bifurcation of strategy based on those partners. With our more legacy, and I say legacy, they're still three to four year old relationships, these are new relationships in the grand scheme of things. We continue to dial in that business. We continue to have partners that love the partnership. They love the Casper brand. They see it bring a lot of goodness to their overall business. We continue to work with those partners to build that business. On the new partner front, we see great sell-through. We see partners coming to us wanting more SKUs, wanting more premium SKUs. There, we look to fill in more and more of a geographic footprint to make sure that we can offer more trial opportunities throughout North America. It's more of a kind of fill in the white space because there's so much white space on the trial side versus our earliest partners, where it's just optimizing and running that business better and better. Thank you. Thanks, Bob. We have a question from Brooke Roach with Goldman Sachs. Your line is open. Hi, good morning, and thank you so much for taking our question. Philip, you talked a little bit to delayed rollout of premium trial doors as you focus on satisfying the demand at the current partners. Can you provide any shaping or sizing of that backlog on how you're thinking about what that trial door expansion could look like over the back half of this year and into 2022? Yeah. Good morning, Brooke. It's a great question. We have a large partner, that we'll bring online in the second half of this year that we haven't announced. Even with the partners that we've announced, like Mattress Warehouse, we delayed some of the store openings with them. You'll see a mix of both new partners and existing partners continue to fill out that trial door opportunity as we remain very focused on bringing more trial doors to market, in order to drive that premium product selling for customers throughout North America. Got it. That's really helpful. If I could just ask one follow-up, there's been a lot of ground covered on the supply chain and capacity constraints. I was wondering if in the context of capacity constraints, can you talk or comment on your decision to continue with the promotional events, both at your own website and also at some of the select wholesale partners, versus choosing to fulfill that demand at a higher price point, and how you're thinking about levering that promotional spend versus capacity? Thank you. Yeah, no, it's a great question and something we talk internally about quite a bit. Our view is that consumers expect promotional activity in this category, and for us to deliver on the right kind of experience that consumers come to expect, that we need to be promotional in market, and that's going to allow us to continue to be competitive. Even despite a constrained supply chain environment, we think being promotional is still critical to getting consumers' attention and to ultimately capturing the sale. We're constantly talking about what the right balance is between promotion and supply chain availability and just the overall growth of the business. I think we've done a good job of kind of balancing those different inputs. I don't think you've seen us be as promotional as some others in the industry, and I think that speaks to the power of the brand, the overall demand that we're seeing, and just the demand for our products and markets. We're promotional, but I don't think by any means on the extreme end of promotion that you are seeing others who struggle with not as relevant of a brand or not as good of products move to in their playbook in order to try to drive growth. Thank you. Thanks, Brooke. Our next question is from Curtis Nagle from Bank of America. Your line is open. Good morning. Thanks very much. Just, I guess, a quick one relating to the lease charge. Just wanted to clarify, is that, I guess, entirely related to the corporate leases, I guess, in New York and San Francisco? I guess how should we think about the showroom footprint for the rest of the year, growth plans for 2022? I'll let Mike answer the specifics, but it is entirely related to corporate real estate footprint. Yeah, Curtis, this is Mike. That's true. We consolidated our footprint largely due to moving to a hybrid model. We're seeing that work, and that's what our workforce really values. We did two things. We were able to shrink our footprint within our corporate real estate within New York, which is going to save us some money. Additionally, we're moving, as you mentioned, Casper Labs from San Francisco over to the metro New York area, which we believe will increase overall alignment across functions within the company. The savings largely will come in 2022, not 2021, as we're still transitioning and bringing on board the sublease tenants. We'll start to see some of that from an adjusted EBITDA perspective beginning later in Q4 of this year and into 2022. Just how to think about the showrooms in terms of the footprint for this year and its plans for growth next year. We're currently sitting at 72 retail stores, and we're evaluating kind of growth on that side in the near term. Right now, our main focus is we feel like we have a good footprint, and we're focused as traffic starts to come back, really optimizing our omnichannel strategy. Okay. Thanks very much. Your next question comes from the line of Nick Jones from Citi. Your line is open. Great. Thanks. I guess just kind of a high-level question. How are you thinking about the potential impact of the Delta variant and then how that ties into consumers' focus on home? There's kind of a frenzy of buying around the home throughout COVID. Stimulus checks have been distributed, and I think that's largely ran out. I guess from here, is there any concerns that things kind of ebb the other way and that may impact demand as kind of the rejiggering of people deurbanizing and maybe making a lot of these purchases? Are we setting up for maybe tougher comps than expected in the back half into next year? Thanks. Yeah. Hey, Nick. A good question we've certainly been talking about more recently. I think we've seen COVID really stress test the benefits of an omnichannel infrastructure. We were very proud of the growth that we delivered in both our DTC channel this last quarter as well as our retail partnership channel. If you look at our two-year growth, it's very robust, and I think the way we generated that growth was certainly different than we expected pre-COVID. I think we're well set up that if consumer behavior does continue to be volatile or dynamic because of the Delta variant, that we're set up to deliver on that no matter where those consumers are shopping. I think it's still too early to tell, obviously, what will happen on kind of consumer shopping behavior. We haven't seen store closures or anything like that. We certainly hope we don't have to do anything like that. I would say our omni-channel footprint means that I think that even if there are variations in how people are shopping or if trends revert, that we're set up to deliver the demand that we think will persist. From a category standpoint, we think that housing remains a very good backdrop for the mattress industry. We think that the overall consumer focus on health and wellness will continue to bolster the mattress industry. We've also seen kind of, I don't know, I guess I'd call it anecdotal data around replacement rates coming down within the mattress industry, and we think that's going to be a kind of good secular tailwind for things. I guess all of that's to say is, even with the Delta variant, we think that there's going to be a very good demand backdrop for the industry and for Casper, and that if the Delta variant does cause changes in consumer shopping behavior, that Casper is well-situated given our omni-channel infrastructure and focus to capture that demand no matter where it might exist. Great. Thank you. Awesome. Thank you. Your next question comes from the line of Florence Shen from Morgan Stanley. Your line is open. Great. Thanks. I just wanted to ask, I think, you were at some industry conferences in the later part of June and had noted that you were sort of largely staying in stock and inside sitting a lot of the issues. Was there something sort of structural that changed in the last six weeks or so, that has sort of been a wholesale change? Just one clarifying question on path to profitability. Just confirming the expectations that you'll get there in 2022 on sort of a quarterly basis, and then on a full year basis, more like 2023. Thanks much. Yeah. The big change that happened over the last six weeks, and keep in mind, we're talking to our manufacturing partners now daily, because it's been such a volatile backdrop. I think labor was much more of an acute issue over the last six, eight, ten weeks, than our manufacturing partners or than we had expected, and that labor ended up causing a lot less supply than they had expected, than we had expected. That labor's popping up in just different ways. One week it's logistics issues around truck drivers. One week it's forklift operators on the docks of where we have a warehousing footprint. Some week it's just line workers at some of the production facilities that we're using to make mattresses. Labor ended up being a much more acute problem than we had seen previously. In talking to those vendors, we're seeing things get somewhat better in the states where stimulus is burning off. Attracting labor across our entire footprint was a real challenge. We hope that that's in a better spot later this year. I would say that was the biggest difference between kind of Q1 and Q2, when it came to the supply chain. The raw materials were something that we saw getting better, and again, that took a little bit longer than we expected to ameliorate the situation there. The labor was kind of what emerged more recently as kind of the real linchpin in our capacity. Mike, do you want to talk about kind of the guidance question? From a profitability standpoint, we'll have more visibility as we get closer to the year. Our expectation is that we'll reach profitability during 2022, not necessarily on a full year basis, but we'll have more clarity on that once we get closer to the year and get more visibility into some of the supply chain challenges that we see for next year. As we mentioned earlier, we do anticipate that we'll start to see some of those challenges subside, and we'll enter 2022 from a position of strength. Again, we'll have more visibility into that towards the end of this year, likely. Okay. Thank you. There are no further questions at this time. I would like to turn the call back to Mr. Krim. Thank you, operator, and thank you all for joining us today and for your continued support. I hope you have a good day and stay healthy and safe. Thank you everyone. Bye-bye. This concludes today's conference call. Thank you for your participation. You may now disconnect.