Good day and welcome to Vroom's First Quarter 2022 Earnings Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star then one on your touch tone telephone. If anyone should require assistance during the call, please press star then zero to reach an operator. As a reminder, this call may be recorded. I would now like to turn the call over to Liam Harrington, Vice President of Investor Relations. You may begin. Good morning, everyone and welcome to Vroom's first quarter 2022 earnings call. Joining us on the call today are Bob Mylod, Executive Chairman, Tom Shortt, Chief Executive Officer, and Bob Krakowiak, Chief Financial Officer. Please note that this call will be simultaneously webcast on the investor relations section of the company's corporate website at ir.vroom.com. The first quarter 2022 earnings release and earnings presentation are also posted to the IR website. Before we begin, please note that the discussion today includes forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements about Vroom's operations and future financial performance. These and other forward-looking statements are subject to a number of risks, uncertainties, and other important factors that may cause actual results to differ materially from those in such statements. We direct you to the company's most recent SEC filings, including the Risk Factors section of Vroom's most recent Form 10-K for the year ended December 31, 2021, as updated by our quarterly report on Form 10-Q for the three months ended March 31, 2022, for additional discussion of factors that could cause actual results to differ materially from those in the forward-looking statements. Please note further that today's discussion, including the forward-looking statements, speak only as of the date of this call, and Vroom assumes no obligation to update such statements based upon future developments or otherwise. The company may also discuss certain non-GAAP financial measures during today's call. You can find a presentation of the most directly comparable GAAP measures and a reconciliation of those measures in the first quarter 2022 earnings release and management presentation. I'd like to now hand the conference call over to Bob Mylod, Executive Chairman. The floor is yours. Thank you, Liam and thank you to all the investors, analysts, and Vroommates who are joining us for today's first quarter earnings release. We have quite a lot to cover today, one of the most important of which is today's announcement of executive leader changes. Specifically, I'm very pleased to announce the promotion of Tom Shortt from Chief Operating Officer to Chief Executive Officer. At the end of today's call, I hope you'll understand and appreciate why our board of directors is supremely confident that Tom is exactly the right person at the right time for Vroom. I could not be more excited about his ascension to CEO, and I and my fellow board members are committed to doing everything in our power to help Tom and Vroom succeed. Speaking of our board, we continue to be very engaged with management in shaping the direction of the business and have been having a number of discussions over the last few months about how to improve our operations and results. As you saw in our press release today, we have added the title of Independent Executive to my existing title of Chair of the Board. As Independent Executive Chair, my job will be to counsel and advise Tom and help him with any of the critical decisions that he will be making in the coming year. My title is also meant to make clear that I and the board are eager to be by management's side, closely monitoring the results of today's actions and also being at the ready to continue to oversee any further course corrections that are necessary from here so that Vroom is in a position to win. I'd like to acknowledge that the past several months have not looked very much like winning. We know we fall into an ever-increasing bucket of companies that had attracted significant investor interest despite large losses because the markets were less focused on the pursuit of profit in exchange for delivering fast growth and large market share gains. Valuations of companies with that business profile have been decimated this year and the market is very clearly demanding much near-term visibility to profitability. We know full well that Vroom is squarely in this bucket. To be clear, while we know that much of our valuation has to do with these macro market forces, we also know we have a lot of work to do on improving our operational execution, as in recent months we have come up short in delivering a delightful experience to each and every one of our customers. Many of our challenges have revolved around the titling and registration of the cars that we buy and sell to and from our customers. We have always known that this is a tedious process, one which requires a symphony of well-orchestrated handoffs from the many participants involved. The buyers, the sellers, the many consumer finance companies that lend to our customers, our floor plan lender, and of course, state DMVs, each with their own local rules and procedures that continue to evolve throughout the pandemic. It is manual and time consuming. In the past several months, with the hypergrowth of our business putting more and more strain on this important operational motion and recent developments in the way our partners handle this paperwork, we fell behind. The result has been too many customers that have bought cars from us and who have not been able to register their cars in a timely manner prior to their temporary license plates expiring. When this occurs, those customers are left with a car that they bought from us but which they might not be able to drive. That is an unacceptable outcome for even one single customer, let alone the many that this has happened to. It has also put a strain on our relationships with the various states' DMVs on who we and our customers rely to process our title and registration requests. Of course, it impacts our financial performance. It lowers inventory turns and increases the likelihood of markdowns. It increases customer returns or customer make-good payments, which are harmful to gross margins. It also increases operating expenses associated with customer service calls or our employees making repeated efforts to obtain titles and tags. In the last few months, we have been incurring excess customer make-goods and legal expenses as we seek to remediate customer issues and address the concerns of certain state DMVs or regulatory bodies on whose doorsteps many of our customer complaints have arrived. From a balance sheet perspective, it has resulted at times over the last few months in our cash being inefficiently used to finance too much inventory, too many receivables, and too much restricted cash. All of this activity has added up to losses that are too high and negative cash flows that are in excess of those losses. I'm going to leave it up to Tom and Bob to talk in detail about what we are doing and in fact have already done in many of these areas, to dramatically change this unacceptable dynamic. I'm going to summarize it very succinctly. We are choosing to slow down until we get this right. Our goal is to take what is currently a challenge for us, title and registration processing, and fix it to a point that it becomes a towering strength and a source of competitive advantage. At this moment, with these operational challenges I just described, and with this stock market as a backdrop, we're pretty sure that investors are less interested in hypergrowth and far more interested in understanding how we are going to marshal our resources. As Bob will explain, if we do this right, and we strongly believe that we will, we expect to get to the moment when we are more nimble and ready to resume our growth. We look forward to getting there because when we do, we'll be doing so with what I think is an extraordinary set of assets. First and foremost, I believe that we have built an incredible brand that has tapped into a mega trend that is not ever going away. The desire of customers to purchase their cars in a way that is consistent with what they have come to expect from the likes of Amazon or DoorDash. They want to transact digitally and they want their purchase delivered to their doorstep. I've been at this e-commerce game long enough to know that this trend is only heading in one direction as newer digitally demanding generations grow up and have the means to buy cars. As we have reiterated over and over again, the market is absolutely enormous and still largely unpenetrated. Thus, we are not overly concerned about a temporary pause in our growth because we expect the lion's share of digital commerce market share gains won't happen until 2023 and well beyond. Another asset that we have is our ability to source, recondition, and price our cars. Despite our challenges, our customers are in large part in love with their Vroom cars. When that red Vroom delivery truck rolls into a residential driveway with a shiny car, it is a magical customer moment. We know we are already good at delivering those magic moments, and we are going to get better at it as we reduce delivery times and increase the percentage of our customers who experience this last-mile magic. If we do it consistently without incurring the back-end registration challenges that reduce NPS, we will gain loyalty and take a whole lot of market share. Yet another valuable asset is the newest addition to the Vroom family, United Auto Credit Corporation. We completed that acquisition in Q1 and it is of enormous strategic importance to Vroom as it will ultimately allow us to earn the full economics associated with car loans on a very substantial percentage of our transactions. This is the type of asset that our bigger competitors, Carvana and CarMax, have benefited from for years. We now have that arrow in our quiver too, and it will make Vroom a better, more profitable company. As we scale this important cross-sell activity, the resulting financial benefits should show up in a meaningful way over time. As Tom and Bob will explain, UACC's earnings for the remainder of 2022 will still largely emanate from a strong business that it has built on its own. These earnings are substantial, and they immediately contribute to Vroom's consolidated financial results, as illustrated in today's first quarter announcement. We hope that by giving you this visibility on UACC's capabilities and earnings power today, you will gain increased confidence that Vroom's strategic and financial position has been dramatically bolstered. Lastly, I believe that our greatest asset is the management team that is going to go after this vision to become a large, profitable business. It starts with Tom here, and it goes from him to every member of the Vroom management team. As I get ready to hand the call over to Tom, I want to give him a proper introduction by pointing you to our first slide of our earnings presentation. When you examine Tom's domain knowledge in the areas where we need management expertise and when you appreciate that Tom knows what great looks like because he has been a leader at some of the greatest consumer-branded companies that depend on world-class logistics and operations to succeed. I hope you will join me in concluding that we could not have found ourselves a person that is more out of central casting for what Vroom needs now. I'd like to close my remarks on one final note. I want to thank Paul Hennessy for his six years of service at Vroom. He is responsible for cultivating each and every one of those assets that I just recounted and he leaves a team behind, every one of which, including Tom, that he recruited, mentored, and put in a position to take the baton from him. I know I speak for Tom and Bob in wishing him well in his next endeavors. With that, please allow me to hand it over to Vroom's new CEO, Tom Shortt. Thank you, Bob for that warm introduction. Good morning, everyone and welcome to our first quarter earnings call. Before we dive in, I'd like to thank Paul for building one of the largest used automotive dealers in the country and for recruiting me to Vroom. I'd also like to thank all of our Vroommates and our third-party partners for their support in serving our customers. Now, let's start on slide four. I'm very excited that we completed our acquisition of United Auto Credit Corporation or UACC in February. I'd like to welcome all of our associates at UACC to Vroom. At UACC, we've already completed our first securitization during the quarter, resulting in a gain of $30 million and we expect to complete another securitization in 2022 and anticipate a similar size gain. Our expectation is that UACC will generate total securitization gains of $65 million-$75 million in fiscal year 2022. Our integration of UACC into our business is on track and UACC is already originating loans for Vroom customers. We exceeded our expectations in the first quarter, coming in ahead of our guidance. We delivered a higher level of e-commerce units than we forecasted. Our e-commerce gross profit per unit, or GPPU, was more than $250 ahead of guidance and much more than our fourth quarter exit rate. We expect to further improve e-commerce GPPU for the full year versus the first quarter. Our adjusted EBITDA loss of $107 million was ahead of our expectation, thanks to our e-commerce segment results and the benefit from the gain of our first securitization by UACC. Our reconditioning network transition out of ADESA is on track as we allocate throughput to other sites. We intend to transition our remaining logistics hubs from ADESA locations by the end of the third quarter. We reached record e-commerce last mile hub delivery in the first quarter at 76% and maintained a high level of consumer sourcing. Yesterday, we announced our realignment plan. As we look forward, our plan is to prioritize unit economics over growth, reduce operating costs, and maximize our liquidity. Our outlook for 2022 reflects this realignment plan. As we focus on these three objectives, we will scale back the business while we focus on improving GPPU, improving our operating processes, reducing operating costs, and dramatically improving our customer experience. Compared to Q1 annualized, we expect to end the year with higher e-commerce GPPU, lower operating costs, and year-end liquidity of $450 million-$565 million. The high end of our estimated liquidity range is approximately $35 million less than our cash on hand at the end of Q1. Announcing our realignment plan. Let's go over the foundation of our realignment plan on slide five. As part of our realignment plan, we intend to live within our means while accelerating our path to profitability and dramatically improving our customer experience. First, we intend to prioritize unit economics over growth. We intend to leverage our national brand while we focus on regional operations that drive density. As we drive density, we expect our operating costs to reduce and we'll be able to provide faster delivery times to our customers. We believe we have significant opportunity to optimize our pricing engine when we buy and sell vehicles. We intend to maximize the power of UACC. Second, we are focused on reducing our operating expenses. Reducing marketing costs by focusing on our highest ROI marketing channels and aligning spend with reduced volumes. Resizing the organization to focus on profitability over growth. Refocusing our technology spend to drive cost efficiency and productivity. Third, we will focus on maximizing our liquidity and preserving cash while we position the business for profitability. We intend to reduce and convert major balance sheet items into unrestricted cash. We are focused on dramatically improving our customer experience, including our titling and registration process, while we improve our liquidity by freeing up restricted cash. We expect to end the quarter with approximately $500 million of liquidity at the midpoint of the range. Turning to slide six. As we look to the future, our goal is to build a profitable business model and then accelerate growth. We believe four very focused initiatives will position the company for a profitable business model. First, and most importantly, in the short term, we are investing in building a well-oiled titling and registration machine. As Bob indicated earlier, as we've scaled the business, our processes, systems, and infrastructure have struggled to keep up with the growth. We are focused on leveraging technology to improve our current manual titling and registration process. We expect to improve our cycle time, minimize manual steps and resources, add significant automation to the process, improve our unit economics, and most importantly, improve our customer experience. Second, we intend to build a well-oiled metal machine. How we buy, move, recondition, sell, deliver, and price vehicles. We are rationalizing our near-term reconditioning capacity following the ADESA exit and our expected unit volume. We intend to maintain third-party partners while also pursuing low capital in-house opportunities in reconditioning line haul and last mile. Our goal is to optimize the end-to-end supply chain by synchronizing how we buy, move, and recondition units to reduce cycle times, reduce supply chain costs, and improve customer delivery times. We intend to build into our pricing engine our end-to-end supply chain and UACC captive finance model to improve the customer value proposition while optimizing our unit economics. Third, we'll build a regional operating model leveraging our national brand. We intend to sell nationally, but operate more regionally around our reconditioning centers and transportation hubs. We expect to build density in regions to drive marketing and supply chain economics while improving customer delivery times. We have a significant opportunity to reduce the number of miles our vehicles travel, which will reduce inbound and outbound shipping costs. Fourth, we will build a captive finance offering with our recent acquisition of UACC. We are very pleased with our acquisition of UACC and intend to continue to grow their core business, as well as grow our captive financing for Vroom customers. We believe we can improve conversion rates and improve unit economics while improving the customer experience. The U.S. automotive market is massive, highly fragmented, with low e-commerce penetration compared to other retail categories. We offer a broad assortment of thousands of vehicles with no haggle pricing purchased on your favorite device from anywhere our customers choose, delivering their vehicle right to their driveway. We believe e-commerce penetration will continue as it has in other retail categories. Like other e-commerce retailers, we believe key to delivering a compelling e-commerce value proposition and a profitable business model is a seamless buying experience, a seamless, efficient, and predictable supply chain with density as a key driver of supply chain economics, and the ability to make credit available to our customers. We believe our four focused initiatives will position us to capitalize on the significant market opportunity. Turning to slide seven. I look forward to providing everyone more detail on our forward outlook at our upcoming investor event on May 26th. We will provide more detail on our three key objectives, prioritizing unit economics over growth, reducing operating expenses, and maximizing liquidity, as well as our four focused strategic initiatives. Most importantly, build a well-oiled titling and registration machine. Build a well-oiled metal machine b uild a regional operating model that drives density, b uild a captive financing offering. I'll turn it over to Bob now to go through our financial performance in the first quarter and give you more detail on the forward outlook. Bob? Thank you, Tom. I'll start with the highlights of our financial performance during the first quarter on slide nine. I am pleased to report that we exceeded all of our key financial guidance targets for the first quarter. Total revenue of $924 million came in ahead of guidance by 6%. This revenue beat was driven by higher e-commerce revenue as we came in ahead on units and delivered a greater than anticipated contribution from retail financing following the acquisition of UACC. First quarter units increased 26% year-over-year to 19,473 and were ahead of the high end of our guidance. Our performance was driven by stronger seasonal demand. During the first quarter, we focused on stabilizing and expanding e-commerce GPPU from fourth quarter levels and prioritized favorable unit economics over growth. In turn, this drove sequential unit declines coupled with profitability improvement. E-commerce GPPU of $1,763 was 18% ahead of our guidance, with better than anticipated performance across both product and vehicle margins. Adjusted EBITDA loss of $107 million was ahead of our guidance by $23 million. Approximately half of the outperformance was driven by a higher than anticipated gain on sale from our first securitization. The other half can be attributed to our core Vroom business which benefited from better than expected e-commerce performance and improved execution versus our expectations. Before I go into our guidance for the year, I would like to mention a few extraordinary items to keep in mind as you think about normalized earnings. Due to further declines in our share price during the quarter, we conducted a quantitative assessment which resulted in a full impairment of our goodwill. This resulted in a $202 million one-time non-cash charge during the first quarter. As we look ahead, we anticipate total cash charges of approximately $60 million in 2022 related primarily to severance and lease costs associated with the realignment plan. The company expects to achieve at least $25 million in annualized cost savings as a result of these payments. In total, the realignment plan is expected to drive $135 million-$165 million in cost reductions and operating improvements to full year 2022 adjusted EBITDA versus our first quarter 2022 annualized rate. This represents approximately $180 million-$220 million in savings on a fully annualized basis. Finally, we anticipate approximately $17 million-$27 million in non-recurring costs for the year to address operational and customer experience issues. These costs should not be part of our 2023 run rate. Now let me share the components of our annual guidance. For the full year, we expect approximately 45,000-55,000 e-commerce units. This represents a reduction from first quarter levels as we prioritize unit economics over growth. We are expecting remaining units for the year to be spread fairly evenly by quarter with some modest seasonal variance. We anticipate an adjusted EBITDA loss for 2022 of approximately $375 million-$325 million. Within this, we forecast e-commerce GPPU to continue to improve for the second quarter and to be higher in the second half than the first half as we normalize vehicle margins and expand product margins as we scale captive financing. We also anticipate lighter quarterly SG&A spend in Q2 through Q4 versus the first quarter as we realize immediate benefits from the realignment plan. I will go through these savings shortly in more detail. We are also providing guidance on our year-end liquidity position. We anticipate approximately $500 milion of liquidity at the end of the year, which is only a $100 million reduction in liquidity over the next three quarters. Now, let's take a closer look at our e-commerce performance in the first quarter on slide 10. Our first quarter results demonstrated meaningful improvement from fourth quarter levels and came in ahead of our expectations. E-commerce units increased 26% year-over-year to 19,473 units, driven by increased inventory and ongoing demand for used vehicles. Units contracted sequentially as expected as we increased our focus on improved unit economics. E-commerce revenues increased 60% year-over-year to $675 million, driven by a 26% growth in units and a 27% increase in e-commerce average selling prices. Average selling prices decreased slightly sequentially, yet remained elevated on a year-over-year basis. E-commerce vehicle GPPU of $595 declined year-over-year, yet improved 26% sequentially from fourth quarter levels. We have more work to do to fully restore our vehicle GPPU as we move through the year and expect improvement. E-commerce product GPPU of $1,168 increased year-over-year and sequentially. The year-over-year increase was driven by higher attachment rates and higher average loan balances due to higher average selling prices. Next, please turn to slide 11. Before I go through our 2022 guidance in more detail, I wanted to provide some commentary on how our financial statements will be impacted by the acquisition of UACC. First, let's begin with the income statement. In the first quarter, you can see that we added a new retail financing segment. This segment includes UACC loans originated to independent dealership customers. Revenue for this segment includes gains and servicing income related to securitization of UACC originations, as well as interest income for acquired loans that remain on the balance sheet. This segment also has expenses within cost of sales, which are related to historical securitization expense on the balance sheet. Over time, captive finance will impact product revenue and gross profit for the e-commerce segment as we scale UACC originations to finance vehicle sales. Since we completed our acquisition of UACC in February, the impact to e-commerce segment results was insignificant in the first quarter from captive financing. Now a few highlights around loan originations in the balance sheet. In the first quarter, we originated approximately $118 million of new loans. We also have $350 million of unused capacity on warehouse credit lines available as of the end of the first quarter. We will continue to have a portion of legacy dealership loans and related securitization debt acquired from UACC that will unwind over the next 18 months or so. These loans and debt are marked to fair value each quarter. Since this loan portfolio will eventually run off and represents the prior on-balance sheet securitization model, in contrast to the current off-balance sheet securitization model, we are reflecting a $5.6 million fair value adjustment to adjusted EBITDA. I encourage you to review our recently filed 10-Q for more details on the incorporation of UACC's financials into Vroom's consolidated results. Turning to slide 12. I would like to provide some details on our realignment plan and provide more context on its financial impact. The business realignment plan is designed to position the company for long-term profitable growth by prioritizing unit economics over growth, reducing operating expenses, and maximizing liquidity. All in, we expect to deliver approximately $135 million-$165 million in cost reductions in the operating improvements versus our first quarter run rate for 2022. The full annualized rate of those savings would be approximately $180 million-$220 million. To achieve these savings, we are executing a number of actions. We are reducing our headcount by approximately 270 positions, which equates to 14% of our workforce. We will also improve unit economics through a more disciplined pricing approach, expanding vehicle and product GPPU. Next, we are focusing our marketing dollars to align with lighter throughput and acquisition expectations and pivoting towards our highest ROI channels. As we look at our core operating model, we will build a more regional approach which will reduce logistics costs over time as we drive speed and shorter distances from node to node and to the customer. Finally, adding more automation into our sales process will reduce our number of manual transactions, improve the customer's experience, and drive further SG&A savings. Slide 13 explains our full year EBITDA guidance, which incorporates the realignment plan. We forecast significant improvement from our first quarter run rate. We begin by comparing an annualized first quarter run rate for Vroom, excluding EBITDA for UACC. We are doing this because we will not be issuing a securitization every quarter in 2022. I will add the first quarter impact of the securitization later in the bridge. Annualizing first quarter adjusted EBITDA results in a loss of $548 million. As I referenced, we expect approximately $135 million-$165 million of cost savings and operating improvements for the remainder of the year from the underlying Vroom business as a result of the realignment plan. Next, we anticipate approximately $65 million-$75 million from UACC Vroom financing for the full year, with $30 million already realized in the first quarter. We anticipate the next securitization to occur in the third or fourth quarter of this year based on market conditions. These benefits are partly offset by $17 million-$27 million of non-recurring costs for the year to address operational and customer experience issues. Taking these adjustments into account, we expect to end the year with a $375 million-$325 million adjusted EBITDA loss. Page 14 contains more information regarding the expected cash and cash equivalents at year-end. As I mentioned, we are forecasting approximately $450-$565 million of liquidity at year-end based on the following bridge. As of March 31, we have approximately $600 million of cash and cash equivalents. Based on the guidance I covered on the prior slide, we expect adjusted EBITDA loss for Q2 to Q4 in total to be between $268 million and $218 million, most of which is expected to be cash. This includes an expected gain on securitization from UACC of $35 million-$45 million in the second half of the year. Next, we expect CapEx to be approximately $35 million-$45 million for the rest of the year as we continue to invest in improving our captive finance processes and anticipate capital for a dedicated Vroom reconditioning facility. We will partially offset those uses of cash with a transfer of $125 million-$150 million of restricted cash to cash and cash equivalents as we improve our transactional processes. In addition, we expect to see improvements in cash flow from UACC and Vroom financing and working capital initiatives net of realignment costs. Approximately $500 million of cash and cash equivalents at year-end will position us well for 2023 and beyond. Turning to slide 15. In addition to the $600 million of cash and cash equivalents at the end of the first quarter, we have $700 million of capacity under our floor plan facility. Going forward, we expect continued incremental sources of liquidity from working capital efficiencies, future ABS and whole-loan transactions, and incremental borrowing availability on UACC's balance sheet. Finally, on slide 16. In summary, during the first quarter, we exceeded our expectations on our first quarter financial guidance metrics. We began to position the business to focus on unit economics and improve profitability. Our 2022 guidance is underpinned by cost and operational improvements from the realignment plan. Our acquisition of UACC will be transformational for our business and will provide an additional source of cash. Finally, improvements in our processes and working capital will position us to optimize our cash usage for the balance of the year. Thank you for your time and attention today. Operator, we are ready for questions. As a reminder, if you'd like to ask a question, please press star then one. If your question has been answered and you'd like to remove yourself from the queue, press the pound key. Our first question comes from Rajat Gupta with JP Morgan. Your line is open. Great. Answering the questions and thanks for all the detail in the slides. Just a question on your first one on unit economics. You know, in 1Q, excluding UACC, the EBITDA per car was, you know, a loss of roughly $6,500. You know, the full year guidance implies, you know, a 2Q-4Q EBITDA loss of roughly $280 million, or roughly $260 million excluding, you know, the non-recurring costs, on maybe like 35,000 units or so for the remainder of the year. You know, that's a loss of roughly $7,000-$7,500 a car. Even assuming rate of roughly $7,000, after cost savings, you know, layering probably, you know, 1,000 from the captive finance integration, you know, when we still get to something like $6,000 of EBITDA loss per car, which would imply a significant degree of cash burn next year as well, you know, roughly $400 million as per my calcs, you know, after accounting for UACC and CapEx, on maybe, you know, 65,000-70,000 units next year. You know, the fixed cost reduction in the realignment plan also seems to be, you know, just 14% workforce, but with units down roughly 50% in the near term. The question here is, sorry for the long question but we're trying to get comfortable with the unit economics progression to a profitable level, and what level of volume will that take, and how do you expect to fund the business in the interim? Thanks. I have a follow-up. Sorry for the long question. Hi, Rajat. This is Tom. Thank you for the question. Before I answer your question, I just wanna clarify something I said on slide five. I believe I said we expected to have liquidity at the end of the quarter of $500 million, and I meant to say at the end of the year. I appreciate your question, Rajat. Here's how we think about it. This year, as you can tell from our initiatives, is really about building the core processes, systems, and infrastructure we need to create a profitable business model. Within that, we are very focused. The actions we've taken are intended to significantly improve variable contribution margin, which we're defining as GPPU less variable operating costs like marketing, customer experience, and logistics. We expect our fixed costs to be reduced in absolute dollars. However, as you point out, our fixed cost per unit will increase in the short term, and we're maintaining our fixed costs because we have strategic assets in those fixed costs that we'll need as we accelerate growth. Got it. So, you know, are you anticipating any color on what level of volume do you anticipate to be profitable with this new realignment plan? Or is that something we will probably look to get at the Investor Day? Yeah. On the Investor Day, we plan to share our long-term economic model, and we believe that the four initiatives that we've laid out today make significant progress not only in 2022 but in the years ahead and really lay the foundation for that continued improvement. When you think about building a well-oiled title and registration machine, well-oiled metal machine and a regional operating model, those things don't happen overnight. As you implement those strategies, we'll expect continued positive unit economic momentum beyond 2022. Yeah. The only thing, Rajat, that I just want to add to that is if you look at the, you know, the actions that we talked about today on the call. I mean, those actions have essentially all been taken. Just in terms of thinking about, you know, the cost reductions and how we're thinking about things, you know, the headcount reductions, those have all been announced, and the actions that we're taking, you know, we're already well down the path on those, on all the items that we referenced. Lastly, I'd be conservative in our guidance given the unknown macroeconomic market for the balance of the year. Got it. Just one more on, you know, the first quarter. You know, is there a way to quantify the pressure of, you know, operational issues or, you know, Omicron or, you know, price mix, you know, in the first quarter on the e-commerce vehicle GPPU? Just asking in order to get a sense of comfort around expectations of higher GPPU exiting the year, in a used car pricing environment that might moderate at some point. Just curious how do you manage that transition. Thanks. Rajat, I'll mention a couple things. We talked about the non-recurring, you know, the non-recurring costs that we're gonna incur, the $17 million-$27 million in non-recurring costs that we're going to be incurring this year. That had an impact for us in the first quarter. With respect to Omicron and reconditioning facilities, which has been an issue for us in prior quarters, you know, it was in January, we, you know, we had some disruptions and some issues in recon as a result of Omicron. But really February, March for us has been. We haven't had any issues as a result of the virus at all. Tom, I don't know if there's anything you wanna add to that. Yeah. The only thing I would add is, and I can't size it for you, but we have brought in additional resources as we work through our titling and registration issues, and we are doing everything that we can to dramatically improve and take care of our customers. That's been our focus in Q1 and in Q2. We'll be investing in those, but I can't size that for you at the moment. Yeah. Maybe like any color on like, you know, when you say higher GPPU exiting the fourth quarter, you know, versus the $1,763. Any way to get a sense of like what kind of magnitude you're looking at there, you know, or where is it coming from? You know, is it primarily, you know, the product GPU, or is it a substantial portion from the UACC GPU? Just trying to get a sense of, you know, what's the run rate here once these operational hurdles have been addressed? Yeah. What I can share with you today, Rajat, is we've made pretty significant changes in the way we think about pricing and the way we go to market. If you think about the market we were in previously, we were really pushing all of our levers to get to triple-digit growth because that's where the market sentiment was. Over the last couple of months, we've made some dramatic changes in how we think about overall unit economics, how we price the acquisition of cars, how we price the sale of cars, and we implemented several changes over the last couple of months, and we are seeing very favorable early results from those changes that have been implemented, and we'll expect to share those, you know, as we announce Q2. We expect them to be north of where we ended Q1. Our next question comes from Zach Fadem with Wells Fargo. Your line is open. Hey, guys. This is Sam Reid pitch hitting for Zach here. Wanted to maybe touch upon your unit guidance a little bit. I know you already talked about this in detail, but, you know, your guidance implies that you're stepping down units from 20,000 this quarter to roughly 10,000 on a run rate going forward. You know, can you talk about why you think this is the right level to balance growth and profitability? You know, what drove that number specifically, and how long do you think we'll need to stay at this run rate before you can once again pivot back to growing units aggressively? Yeah. Hi, Sam. It's Tom, thank you for the question. During the quarter as we implemented new metrics and data structures around titling and registration to really get a better handle on the challenges that we had, we started realizing where we were at and what we needed to do to get caught up. As we began to decide how long it would take us to really improve the customer experience, we didn't wanna continue to sell at high rates when we know that we had those issues. That was one factor. The second factor was we made dramatic changes in the way we price the cars we buy and the price that we sell cars at. Those two things combined led us to believe that this is the right level of units for the balance of the year to enable us to improve our structure around all four of the initiatives and, at the same time, improve our unit economics. No, that's super helpful. I really appreciate the color there. Then one quick follow-up. You know, can you talk about your plans for reconditioning in a bit more detail as you transition away from ADESA? You know, specifically what we're looking for here is a sense as to what the balance is gonna be, maybe going forward between working with additional third parties versus what you're gonna be taking in-house, just that split there? Yeah. I would tell you that, we're looking at that. The way we think about that is we still have opportunities in our own reconditioning network in Houston, and we're gonna continue to improve our own network. At the same time, we'll always partner with our third-party partners and we're gonna take a very careful look at really what makes the most economic sense. If it makes economic sense, we will look to potentially stand up a second VRC, later this year, early next year if it makes sense. It's really gonna come down to the return on the investment after we go ahead and implement the opportunities that we think we have in our own reconditioning center. Oh, that's super helpful. I really appreciate it. I'll pass it on. Thank you. Our next question comes from Colin Sebastian with Baird. Your line is open. All right, thanks, and good morning, everyone. A couple of follow-ups for me, please. I guess first on the rationalizing the footprint beyond the ADESA transition. I'm curious, you know, where you're focusing from a regional perspective and how we reconcile that with improving customer delivery times, you know, given the national sales effort. Then maybe as a follow-up to the first question on the call, as we look ahead a few quarters and potentially some of these liquidity issues extending into 2023, just curious on when you'd expect to potentially need to raise more capital in context of the realignment plan working out? Thank you. Thank you for the question, Colin. On the first part, we are actively looking at where we want to be regionally. If you think about the way our business was built, we scaled nationally, which meant we were buying and selling cars nationally, and we had built regional reconditioning, a regional reconditioning network and logistics hub, but we didn't have our supply chain synchronized in a way that dramatically reduces the miles our vehicles travel. For example, you could buy a car in southeast of the United States that may come from the northwest of the United States. Our intent going forward is we still wanna offer customers that potential if they desire and really want the car in Seattle. Well, we're gonna push more towards trying to buy and sell cars more regionally. If you think about, you know, the three largest states in the country by population, California, Texas, Florida, those obviously be key regions for us. But we're gonna continue to work through what makes sense based upon the assets that we have, the customer base that we have, and really the assortment density that we have in each region. Bob, do you wanna take the second- Mark, on your second question, I think it's just important to point out. I know we mentioned it on the call today, but, you know, we're executing on $200 million of annualized cost reductions, and, you know, giving a line of sight to half a billion dollars of liquidity at the end of the year. But really for us, this is, you know, really about living within our means and managing the business that way. You know, there's obviously lots of things moving around right now with interest rates and the used vehicle market. You know, what we're committed to as you know, as a leadership team and as a company is to live within our means to get to that $ 500 million of cash at the end of the year. We'll see where the market is, and we'll continue to course-correct and make the appropriate adjustments given the amount of resources that we have. Yeah. Sam, I'd add one more thing to your first question, which is so an example of something we've already implemented. When you go on our site today, based upon your ZIP Code, which we added recently, you're gonna see cars in your search criteria that are sorted closest to you with the cars farthest away from you being at the last search page. Small things like that are things that we're just beginning to do, and I see this as a multi-year effort as we implement this. If you think of other large supply chain transformations that I've been a part of in the past, you lay out the strategy, you build the data and the analytics, and then you begin implementing. We've begun implementing, but I believe the path ahead is significant that we can achieve when this initiative is fully executed. All right. That's all helpful. Thank you. Thanks, Colin. Our next question comes from Seth Basham with Wedbush. Your line is open. Thanks a lot and good morning. My question first is around the titling and registration issues. Can you give us some perspective on the timeline for normalization, on those issues, please? What I can share with you is that we began making significant progress in Q1 towards improving our processes. We've already implemented a couple of systems that are dramatically improving our process. I'll tell you, there is a daily call every day we are making progress on improving the process. Right now we're focused on ensuring that all our customers have vehicles that they can drive where we failed them. We are building and have a strategy in place that we're working on that we think, as Bob mentioned in his remarks, could ultimately be a long-term competitive advantage for us. We're not prepared to share an exact timing other than to tell you it is truly our number one priority. There is a tremendous amount of focus on it. Got it. Okay. Thank you. You don't think that there are any long-lasting impact to your brand, or relationships with DMVs, from the issues you've experienced? We certainly believe that we have some repairs to do there and we're actively working on that, but our first step is to ensure we take care of all our existing customers and ensure that all customers and purchases that are happening now, we deliver titles and registrations in a. Got it. Okay. My follow-up question is on pricing inventory management. You are changing some of your pricing tools, and it also seems like you're shifting your inventory a little bit based on the market environment. Are you first thinking about focusing on certain areas of the market from a consumer income standpoint, moving up or downstream? Then secondly, from a pricing standpoint, you know, what's your goal in terms of pricing relative to the market? Yeah. We definitely. Our goal holistically on pricing is to be competitive in the market and those are analytics that we're looking more and more at, especially over the last couple of months. We have begun tapering the number of units that we purchase to begin to right-size our inventory. It really takes two things. It takes the metal supply chain and the title and registration supply chain to work. Because for our cars to be listed for sale, we need to get the title. We have initiatives in place to speed up the entire process. If you think about how it works, we wanna speed up how fast we pick up the car because then we can put it in inventory faster. We have to pick it up faster, we have to pay off the lien faster, we have to get the title faster, and then we can make it available for sale faster. The same thing with just traditional supply chain elements that you would do to improve inventory terms. We have initiatives that we're focused on in both of those processes to improve inventories over time. Thank you. Thank you. Our next question comes from John Colantuoni with Jefferies. Your line is open. Thanks for taking my questions. I wanted to start with the cost savings program. You know, given your business relies on third parties for reconditioning customer service and a fair amount of delivery, along with the fact that, you know, you said you need to improve the user experience, which presumably requires some investments in technology? You know, I was curious if you could walk through kind of the key cost buckets or buckets of cost savings opportunities. You know, also maybe help give us a sense for how much of the realignment or cost savings are coming from improved GPU or unit economics versus pure cost reductions? Yeah, sure. Thanks for that question. John, this is Tom. The way we think about it is really driving productivity on all levers of the P&L. We think we have opportunities across our costs, actually really across the board. What you're seeing in the realignment plan is largely driven by contribution margin improvements by improving our gross profit per unit, as well as improving, for example, our marketing efficiency. We're very focused on and have already made several changes to only spend marketing on our highest ROI channels. We believe that we're just at the beginning of making those, and we'll share with you in our Investor Day later in the month how we think those levers will change in the long term to build a profitable business. Great. Maybe just talk about at least. It sounds like you're gonna be saving quite a bit of this for the Investor Day but just talk about from a high level, you know, how you're going to approach realizing the improvements in GPU and in per unit economics in light of macro headwinds like, you know, wage and parts and fuel inflation, higher levels of depreciation and, you know, other cost headwinds that are a bit out of your control? Yeah, t hanks for that. We believe that the opportunities we have in just improving our basic business operations are significant, particularly relative to the likely transitory economic things we're seeing, like fuel surcharges and other items. For example, our goal is to improve our marketing cost per unit by focusing on our highest ROI marketing channels. Our goal is to improve our transportation costs per unit by having our vehicles travel fewer miles. Our goal in the longer run is to have our customer experience cost per unit go down as we automate and improve the processes in titling and registration. Our goal is to make sure we optimize our pricing and GPPU profitability while being competitive but also taking into account all the elements and the levers that we have. That's what I mean where we think we have opportunities really across all line items on the P&L as we start to build out the foundation and the infrastructure to drive true productivity improvements, per unit cost basis as well as in GPPU. Thanks. Appreciate the color. Thank you. Our next question comes from Naved Khan with Truist. Your line is open. Great. Thanks a lot. A couple of questions. On this, sort of year-end cash position, I'm curious, what are you thinking, in terms of the exit cash burn rate versus where we are right? You're gonna implement these strategies as we progress toward the year-end wondering how we end the year? In terms of the sort of unit guide for the full year, should we think about the-h ow should we think about the curve? Should we expect to kind of see a drop somewhere in the middle and then coming back up at the other end, or should we kind of model it kind of more evenly? Maybe just on the GPPU sort of dynamics from here on, the pricing environment continues to be pretty volatile, so just wondering what gives you the confidence and sort of the, you know, the bridge you laid out for end year, cash position and EBITDA? Yeah. Thank you for the question. I'll take the last two and then turn over to Bob for the first one. We expect the units to be relatively consistent over the next three quarters with possibly some seasonality downward pressure in Q4. Back to the GPPU, as I mentioned earlier, we implemented several changes already that we are seeing positive GPPU momentum from Q1 rates. We believe that from the items that we've implemented already and the trajectory that we're seeing in units, that those two will look better than Q1 or the GPPU will look better in Q1 the rest of the year. Really the way I think about that is there's just the significant shift we made in the entire business driven towards triple digit unit growth to more focus on profitability. We had some pricing levers that we were able to change to make that change and the changes are relatively significant. With respect to the exit cash burn, I mean, really the way to think about it, you know, the actions that we're taking, you know, we began those actions during the second quarter. You can, you know, look at our existing run rate and then adjust for, you know, for the actions that we've taken. I think one of the things that's really important to understand in terms of exit run rate as well is just I also mentioned there's a third or fourth quarter securitization with UACC, which, you know, is another, you know, from an overall, from an EBITDA perspective, another $35 million-$40 million in terms of improving the exit rate, depending upon market conditions and when we execute. You know, as we continue to improve on the transactional processes, and kind of talked about productivity and improve our overall productivity, you know, we are continuing to expect improvement in our EBITDA run rate as we go through the year. Yeah. To just add one last thing. Your point is well taken, which is why we've built a large range in our forward guidance. We recognize that we're not operating in a vacuum, and there are macroeconomic forces that could impact our GPPU. Thank you. Again, if you'd like to ask a question, please press star then one. There are no further questions. I'd like to turn the call back over to Tom Shortt for any closing remarks. Thank you everyone for your time today, and we look forward to sharing, more additional details at our meeting later this month. Thank you and have a great day. Thank you. This concludes today's call. You may now disconnect.