Good afternoon, and welcome to the Shift Technologies third quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Cheryl Liu, Manager of Corporate Strategy. Please go ahead. Good afternoon, and welcome to the Shift Technologies third quarter 2022 earnings call. Joining me on the call today is CEO Jeff Clementz and CFO Oded Shein. During our remarks, we will make some forward-looking statements which represent our current judgment on what the future may hold. While we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions, risks, and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statement. Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise after this conference call. During the course of the call, we'll be referring to non-GAAP measures as defined and reconciled in our earnings materials. With that said, I will now turn the call over to Jeff. Thank you, Cheryl, and good afternoon, everyone. I'd like to start out by thanking the Shift employees for their hard work and execution during the third quarter. It was no easy task to rapidly pivot to our new operating plan, but the team did a great job meeting the challenge. I'm incredibly inspired by the way our team pulled together and immediately set out to the task at hand, giving our customers a simple, fair way to buy used cars. As we talked about on our last call, the third quarter was a transition period for the company as we pursued our new strategy. The new operating plan prioritizes accelerated profitability and lower cash burns, though at lower unit volumes. As a reminder, the actions we took during the third quarter include the following. Streamlining sales through our online checkout channel and eliminating test drives. Optimizing our inventory mix and assortment to favor value vehicles, which have a more favorable front-end GPUs and overall profitability. Refocusing our physical footprint to our West Coast markets, thereby rationalizing from 10 hubs to three. Reducing frontline roles and corporate positions by about 60% across remote and hub locations, and reducing corporate overhead costs. After tireless work during the quarter, our new operating plan is now in place and we have the foundation to execute. The third quarter transition does impact the financial results we're reporting today, but we expect the benefits to be evident in the fourth quarter results and beyond. Oded will discuss the third quarter results and guidance shortly. Turning to our strategic priorities. First, we prioritized achieving positive unit economics from GPU expansion and from leverage in selling and marketing while tightly controlling G&A expenses. As stated earlier, we have shifted our inventory mix to skew towards value vehicles. Now, over half our vehicles are considered value, which we define as vehicles older than 8 years old or over 80,000 miles. As we've talked about, sell-through on those vehicles are consistently higher and have greater front-end and total margins. In this environment with rising interest rates and consumer affordability headwinds, we believe that consumers will naturally be drawn to more value-oriented vehicles when making a car purchase in the coming months. Second, increase our penetration in West Coast markets to grow e-commerce units sold. As you know, we eliminated test drives in the third quarter and moved our focus to an online checkout channel. Not only does the move improve profitability, but as expected, we've seen strong consumer response as more and more people are opting for a true e-commerce offering. We successfully rationalized our hubs down to three to focus on our West Coast markets, although we're still selling and fulfilling cars to anywhere in the US. The team continues to focus on product innovation as we advance our mission of making car purchase and ownership simple. We rolled out several exciting product updates throughout the third quarter, including a new buyer checkout and dashboard experience that allows the customer to see what needs to happen next to complete their purchase and undergo those actions themselves, such as uploading required documents. We also made a number of other improvements to the online shopping and checkout experience, including substantial modernization of the vehicle detail page, new personalized shopping experiences, and a more interactive price, payment, and shipping calculator. Our third priority was to scale our marketplace business. In Q2, we launched a beta version of the Shift Marketplace powered by Fair, with a number of inventory listings from our dealer partners in the Greater Los Angeles area. We learned a tremendous amount from the beta test and plan to relaunch in the first half of 2023 as we optimize and improve the platform. The team continues to build out the shopping experience, and we will add additional F&I partners and customer shopping options. Additionally, over the past year, we've heard from many dealers that have been very impressed with Shift's Sell Your Car flow, which enables Shift to source greater than 95% of our inventory directly from consumers. We do this by providing instant quotes and by enabling the customer to conveniently sell their car to Shift at their home or by bringing it to our hub. Given this dealer interest, we've created and are launching the AutoAcquire platform that allows dealers to embed Shift's Sell Your Car flow into their website. We are also pleased to announce a significant partnership with Off Lease Only, a terrific dealership group based in Florida. We will initially focus on optimizing our platform for Off Lease Only's Sell Your Car flow, which will launch in Q4, and then open up the platform for additional dealer partnerships. We believe the combined value proposition of the AutoAcquire platform and the Shift Marketplace will provide significant value to dealer partners across the U.S. Finally, we're looking forward to integrating the Shift and CarLotz businesses upon the close of the merger to create a profitable, leading omni-channel used auto retailer. The executive team and board of directors remain excited by the pending merger and believe that it will create value for both Shift and CarLotz shareholders. At Shift, we are building a powerful ecosystem. Car sellers and buyers love our ever-evolving e-commerce capabilities. In the coming months, we will continue to expand our ecosystem by becoming a leading e-commerce platform that enables our dealer partners to build deeper, more engaging relationship with their customers, and in doing so, will increase the access to high quality inventory to buyer leads and sales. We will then further build out our platform by adding the CarLotz stores and capabilities to create a leading omni-channel retail customer experience. I will now hand it over to Oded to review our financials. Thank you, Jeff, and good afternoon. I'll start with our third quarter results. Our team continued to perform very well in pivoting to the new strategy while executing the restructuring and inventory liquidation required by the change. Our third quarter adjusted results met or exceeded our expectations despite facing macro headwinds in a slowing economy, including rising interest rates and elevated gas prices. We were also able to successfully manage the mix into higher demand value vehicles. Total revenue for the third quarter was $161.9 million, a decrease of 10% versus the prior year period. Total units sold was 6,709, compared to 8,111 last year, a decrease of 17%, mostly due to the closure of several hubs in August 2022 as part of the transition to the new operating plan. The mix between retail and wholesale was unusual due to increased use of the wholesale channel to liquidate inventory as we adjust to a smaller geographic footprint. Wholesale was 28% of units sold in Q3 versus 20% last year. Adjusted gross profit per retail unit was $1,925 in the quarter versus $2,056 last year. Our F&I income, or other gross profit per retail unit, was $1,243, 26.6% higher than last year. As we transition to a higher penetration of value vehicles with lower ASP, we expect our F&I performance to moderate. However, the increased front-end margin on value cars is expected to offset the reduced F&I, resulting in higher total retail GPU. Adjusted SG&A expenses were $39.4 million, which compares favorably to adjusted SG&A expenses of $46.6 million last year. The decrease was primarily due to a lower operating cost and marketing expenses as a result of the restructuring. Lower SG&A this quarter also contributed to improving our adjusted EBITDA loss. Adjusted EBITDA loss for the quarter was $30 million, compared to $33.3 million in the prior year period. We ended Q3 with total cash of $56 million, which includes cash and cash equivalents of $44 million and restricted cash of approximately $12 million. Cash balance declined against the second quarter, primarily due to the cost of restructuring, liquidating inventory and operating loss. Our debt outstanding under the floor plan facility decreased by $52 million from $94 million in Q2 to $42 million at the end of Q3. The decrease was a function of our lower inventory as a result of the liquidation of inventory in closing hubs. Now turning to guidance. For 2022, we now expect revenue in the range of $665 million-$675 million. This implies Q4 revenue to be in the range of $60 million-$70 million. The totals for the fourth quarter and the year are lower than previously provided as we adjust to the new strategy with lower e-commerce units and also lower ASP due to the focus on lower priced value segment. We expect 2022 adjusted GPU to be in the range of $1,700-$1,800, higher than our prior guidance of $1,600-$1,700. The implied fourth quarter adjusted GPU guidance is $1,800-$1,900. The GPU benefit is a result of pivoting towards the value segment with higher front end and total margin. We still expect 2022 adjusted EBITDA loss to be in the range of $133 million-$138 million. This implies fourth quarter adjusted EBITDA loss of $20 million-$25 million. With that, I would now like to turn it over to the operator for Q&A. Operator? We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question will come from Sam Reid of Wells Fargo. Please go ahead. Awesome. Thanks so much for taking my question. Maybe something high level to start out here. You know, you've essentially cut your business down to three markets, you know, and you prioritize those geographies. You know, what are you doing differently to build scale at this hyperlocal level, you know, versus what you were doing across your 10 markets prior? Maybe just to kind of dig a little bit deeper here, you know, do you have a sense as to how your market share in those three core markets compares to where you might have been, say, a year ago on a like-for-like basis? Hi, Sam. Thanks for the question. On the first question, we addressed this last quarter, and it remains our strategy that by operating three hubs along L.A., we're able to talk to or serve customers across the West Coast from Seattle to San Diego. We can do that because we're able to enable the customer to pick the car up at our hub or to ship the car to them. We are finding that there is customer demand for Shift's inventory and assortment across all of those markets. In terms of the market share, I do not have the market share top of mind or top of head at this time, but we can follow up on that. Awesome. No, that's super helpful. I guess, you know, one more question about the strategy shift now that we're a quarter in here. You know, can you give us any guideposts around conversion now that you've shifted to the fully e-commerce model, you know, versus the hybrid model that included test drives before? Just curious kind of what you're seeing sort of on a like-for-like basis there as well. Thanks. You bet. We're continuing to work hard on conversion. As I mentioned in the opening remarks, both in terms of our product experience and our selling process, we have continued to innovate. I will say that we are still aiming to get to kind of a normalized steady state as we had a significant amount of transition throughout the quarter as we were shifting our inventory and also selling through the inventory that was excess from the hubs we were closing. I think we are still working towards getting to a steady state, but we're feeling very good about where conversion's at and our product pipeline for the remainder of the year is quite strong as well. That's super helpful. I'll pass it along. Thanks. Thank you. The next question comes from Rajat Gupta of J.P. Morgan. Please go ahead. Great. Thanks for taking the question. On the fourth quarter, looks like, you know, the volume outlook is much lower than, you know, what was previously expected, you know, given your focus on, you know, unit economics, especially on the gross margins. I mean, the SG&A cost per unit, you know, at that low level of volume is still going to look very bloated. I mean, when should we expect you to ramp back volumes or refocus on volumes? Or if you wanna, like, continue to maintain this level of volumes in order to maintain gross margins, I mean, has there been enough restructuring done or is there opportunity for more cost actions in order to lower that SG&A per unit? I have a follow-up. Thanks. Thank you, Rajat. I would say that the third quarter was a quarter of transition, where we executed the transition from the old strategy to the new and included, of course, the hub restructure, the liquidation of the inventory, so a lot of heavy lifting. As we're thinking going forward, we have a model that, yes, we'll have lower volume. You know, we are in less markets than we used to be. We also narrowed our channels to the online channel. It's gonna be a different operation. What we have seen is that with inventory being highly reduced, volume was reduced as well, especially I would say in the September-October period, and it's already rebounding at this point. We think that as we go into next year and we're gonna provide next year, you know, guidance and information on future calls, you're gonna see improving volumes and better unit economics, definitely on the SG&A side. Just to answer your question, we don't see further restructuring from this point going forward. Got it. Any color on your latest SG&A base, what's the fixed versus variable component? We haven't shared exactly what is the split between fixed and variable, and you know, it's pretty straightforward. We think about our lease cost and some of our facilities and you know, some of the staffing, of course, is fixed. There is some variable components as well. Got it. Maybe just like lastly on the cash balance. You know, despite the restructuring, you know, I thought like the cash came in a little higher or the cash drag was a little higher than what we had expected in the third quarter. I believe, you know, at the announcement of the merger, you had mentioned that you expect the combined entity, you know, CarLotz and yours to have roughly $125 million in cash, and $50 million of that would be coming from Shift. Is that equation still correct? It looks like CarLotz cash actually might have come a little better, you know, looking at their press release. I'm just curious, like if you can update us on that and, you know, if we should still be expecting the $125 million and what's the split between yours and CarLotz. Thanks. Yeah. You know, we did anticipate that this is gonna be an expensive process for us because the restructuring, all the human resource expense that had to go into it, also the liquidation of the inventory, especially in a tough wholesale market. When we think going forward, you know, assuming that the merger will occur at its allotted date with the vote in early December, we believe that we're gonna have at least $125 million combined between the two entities. I'm not gonna go which is gonna bring how much, but I think in total, we're gonna have at least $125 million at the close. Got it. All right. Great. Thanks for the color and good luck. Thank you. Once again, if you would like to ask a question, please press star then one. Our next question comes from Brett Knoblauch of Cantor Fitzgerald. Please go ahead. Hi, guys. Thanks for taking my question. Maybe just another one on SG&A of $50 million in the quarter. I know you're not going to kinda tell us how much is fixed versus variable. But I guess even if we assume, say, gross margins are like 5% this quarter on the GAAP basis, you know, SG&A has to come down quite considerably to kind of back into that adjusted EBITDA range that you're talking about. I guess where should we expect SG&A to come down to this quarter? What we shared was SG&A in the third quarter was on an adjusted basis was about $39 million. Just remember that when we think about that, we include July, that was before the restructuring and then two of the restructuring months. I would anticipate the fourth quarter to be even lower than that. We didn't give give specific guidance of what SG&A is gonna be, but I'm sure you can imply it from the other components of gross margin and EBITDA. Got it. Makes sense. It seems like you talked about volumes are picking up kind of at the, you know, in October or start of 4Q. I guess do you attribute that to maybe the mix shift of your inventory being more skewed towards value? I would say that it's a combination of having the right assortment, having the right mix of assortment, so the assortment levels, as well as the improvement in our e-commerce selling process that we're continuing to drive and the conversion rate. All of those have helped us as we've started off into Q4 and give us confidence in the guidance that we've put forward. Yeah. I think there is also a seasonality factor in here. As you know, September and most of October are among the lowest months in the year, and then it picks up towards the holiday season. I think that's part of it. Perfect. Thank you, guys. Appreciate it. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Jeff Clementz for any closing remarks. Thank you. I just wanna take an opportunity to again thank the entire Shift team for all the hard work to transform the business in Q3 and to continue innovating and executing in Q4 and as well as to thank everyone on the call today for their time. Thank you. The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.