Q3 2020 Vroom Inc Earnings Call

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Dan The conference over to your speaker.

Hey, Alan Miller head of Investor Relations. Thank you. Please go ahead Sir.

Thank you Chris Good afternoon, ladies ladies and gentleman and thank you for joining us on French third quarter 2020 earnings Conference call. Joining me on the joining me on this call today are Paul Guinnessey, She Chief Executive Officer, and Dave Jones, Chief Financial Officer.

<unk> discussion today may include forward looking statements about future events, including the expected impacts related to cope with Nike.

Also the company May make some forward looking statements about their operations earnings potential liquidity an outlook on the call today. These and other forward looking statements speak only as of the date of this call and are subject to a number of important.

Factors that cause actual results to differ material from those in the forward looking statements, including the risks and uncertainties outlined in today's press release, we direct you to the company company's most recent SEC filings, including its quarterly report on form 10-Q for additional discussion and factors that could cause actual results.

Could differ materially from those in the forward looking statements. The company May also discuss certain non-GAAP financial measures measures. During today's call you may find a presentation of the most.

Directly comparable GAAP measures and a reconciliation of those measures in today's press release with that ill now turn call over to Paul Paul.

Thanks, Alan and thanks, everyone for joining groups third quarter earnings call.

I'd like to start by thanking all of our employees investors and board members for all their hard work and support building a great customer centric public company.

Looking back on the third quarter I'm very pleased with our performance from delivered a record.

Number of ecommerce units and achieved record gross profit.

Commerce units were up 59% year over year in the third quarter, and 31% sequentially and gross profit was up 120% year over year and 167% sequentially.

As we look at what drove our significant growth.

Nice and gross profit first and foremost we see that our teams across the company executed against our playbook extremely well.

We leveraged our advanced data science to grow are lifted inventory to over 12000 units at the end of the quarter a record high even compared to pre pandemic levels offering our customers outstanding.

The unending selection and great prices.

He was able to generate a significant increase in E. Commerce gross profit per unit to $2188 up 39% year over year and 104% over the second quarter.

We've seen demand during the pandemic shift towards lower price.

I used vehicles and we've responded to that demand.

In doing so we have demonstrated that we can deliver very strong unit economics over average selling prices in the mid 20000 dollar range.

This supports our long range thesis that as we offer a lower price vehicles will be expanding our demand and.

Conversion, while at the same time, expanding our unit economics.

We continue to add capacity in our reconditioning operation throughout the quarter by adding an additional third party reconditioning center to our footprint and increasing capacity within our existing locations we.

We will continue to add capacity to our network EPS.

As we scale our business and we are confident that our reconditioning capacity is in excess of our sales plan in the current quarter and throughout next year.

Consistent with our hybrid asset light strategy, we were able to successfully expand our reconditioning capacity and our geographic footprint without incurring any.

Any debt or Capex.

The demand for room model broadly and the demand for our products and service services, specifically remains very strong there are a number of contributing factors first.

First we continue to experience what we believe are structural changes in demand for our E commerce and delivery.

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Second increased inventory drives increased demand and increased conversion, which spins our growth flywheel as demonstrated by our performance in unit sales growth and improving unit economics.

Finally, we've begun to see the early results of our new brand campaign.

We launched new spots that show.

Showcase rooms, better way to buy and better way to sell a used vehicle.

Our message is clear with room, you never have to go to a dealership again.

Consumers are not only engaging with the brand, but theyre also transacting with the brand on both the buy side and the sell side.

Our.

Our overall customer experience continues to improve we've made a series of product developments in our ecommerce experience that streamline the transaction process reduce friction for our customers and enhance their overall experience as they engage with a broom brand to purchase a vehicle.

At the same time when customers are.

Our selling us their car, we continue to improve the service by offering them faster automated appraisals reduce time in the selling process and a great free driveway pickup service.

Our customers love selling us their car to feedback from customers, who sells their car is simply extraordinary.

When you think about all of the operational executions I just mentioned increased inventory driven by improved data science expanded capacity and reconditioning increased brand marketing strong consumer demand to both buy and sell.

An improvement in our overall customer experience it becomes apparent wire.

Our model is so compelling and we performed beyond our expectations in the third quarter.

As we look ahead towards another quarter of significant growth, we will continue to invest in our business to scale, our operations and enhance our customer experience are.

Our outlook for ecommerce unit sales reflects progression.

Over the fourth quarter of the ongoing expansion of our customer experience team as we ramp up our sales support in anticipation of continued escalating sales growth in the new year.

We're also making investments in our proprietary logistics operations to expand and enhance our last mile delivery service for our customers.

Customers.

We will continue to optimize our hybrid asset light approach by leveraging both our third party partners and our room owned operations to rapidly scale, our business maintain our operating flexibility.

Calibrate our capital expenditures and position us for substantial growth.

And with that I'll hand over to Dave for further remarks on our financials and our guidance Dave.

Thanks, Paul Good afternoon, everyone.

Let me unpack the quarter or that.

E Commerce units sold in the third quarter increased 59% year over year, which was a new quarterly record.

Good for room, driven by increased inventory.

And quality demand generation.

As Paul mentioned ecommerce units were up 31% sequentially again due to an increase inventory offerings.

Lucid vehicles increase to about 12300 at the end of Q3.

From 57 hundreds.

Andrew at the end of Q2 and are currently over 13000.

Of the 13 plus thousand vehicles listed today, excluding pending vehicle sales approximately 72% are available for sale and the remainder coming soon inventories.

We are estimating 10500.

To 11500 E Commerce units sold for Q4 to.

The mid range of our guidance would imply 25% sequential growth quarter to quarter, and accelerating 74% year over year growth compared to the 59% we experienced in Q3.

Our Formula is simple provided data driven selection of inventory world class marketing to create demand and then we convert that to me.

We currently have ample recondition and capacity, we can create plentiful demand as Paul mentioned and we are currently expanding our sales platform to a fixed.

Additionally, convert that demand.

That's our focus in Q4.

Through the third quarter, our year to date E. Commerce units sold has grown 86% year over year and with our strong sequential growth quarter to quarter. We are on track for continued strong growth in 2021.

At the end of the quarter, we had 18 groom reconditioning centers around the country, including our proprietary room Reconditioning center in Houston.

These 18 facilities provide us with capability to recondition approximately 1900 vehicles per week, we're confident that we currently have the capacity to meet our Q4.

In 2021 targets and we're continuing to work with our reconditioning partners on expanding the number of reconditioning facilities.

Which obviously gives us all the benefits of a widely distributed reconditioning network.

In Q3 E Commerce revenue grew 25% year over year.

Sources, the 59% growth in units driven by average selling price per unit, which decreased from $31370 in Q3 of last year.

$24248 this year.

As we've mentioned many times, we are data driven and therefore, we.

Higher inventory based on demand that we see in our data analytics and buying opportunities that we see in the market.

That data is moving us towards lower price vehicles, consistent with our long term goals.

In Q4, we're forecasting an average selling price of 24500 to.

$25500 per unit.

Note that we previously provided guidance on total revenue per unit. We are now guiding on average selling price, which is the typical capex.

Industry.

Moving on to E Commerce gross profit we set a record in Q3 at 19 point.

$3 million up 120% year over year.

E Commerce gross profit per unit was $2188 in Q3.

Well ahead of last year's 15, 77, and last quarter's 10 75.

Remember that we measure gross profit per unit in two pieces.

Vehicle and product vehicle gross profit per unit improved $373 per unit year over year, as we gained efficiencies in inbound logistics and reconditioning costs.

Our products gross profit per unit increased year over year from $648 per unit to 886.

The dollars per unit.

Despite the reduction in average selling price per vehicle.

This increase was driven primarily by higher attachment rates across most products offered.

We believe that the very strong used vehicle pricing that we've seen in the industry since around may will moderate in Q4, but we continue to be.

Pick on track towards our long term goal of approximately $3000 of gross profit per unit.

In Q4 will be selling the inventory that we purchased in Q3 during a 25 year high pricing environment.

As such we believe that E commerce gross profit per unit will be in a range of 2052.

The $2150 per unit in Q4.

Our wholesale business increased about 14% year over year to a record 606166 units primarily due to an increase in wholesale grade units purchased directly from consumers.

To the wholesale market continued to be strong in Q3, although we do see that market returning to historical pricing levels in Q4.

The strong market resulted in wholesale gross profit per unit of $542 in Q3.

We expect to see wholesale units of six to 7000 in.

Before and gross profit per unit of breakeven to $100 per unit.

PVA, our sole physical location experienced a 55% decrease in units sold in the quarter, but only a 7% decrease in gross profit per unit.

TDMA is based in Houston, which.

Q continues to be a relative cobot hotspot in the country, which has impacted foot traffic.

In addition, although we've dramatically expanded our total inventory in excess of pre coded levels. The supply of used vehicles in Houston has not returned to pre covance levels.

We believe that CBVA will rebound.

Sound with an eventual recovery in the area, but we can't predict at this time when that will be.

As we've said in the past, we expect Ta to continue to be a decreasing contributor to our future results as our E commerce business grows.

Turning to operating expenses, our compensation and.

Benefits expense was up approximately 20% year over year from 19.1 million to $22.9 million.

Including helping benefit.

Included in comp and benefits is approximately 4.2 million of stock based comp in the current quarter versus only about 600000.

But in 2019.

We expect a more significantly invest in our people in Q4 in particular around technology logistics and support functions that need to scale with the business.

Outbound logistics increased 100% year over year as ecommerce volume increased almost 60.

Sense and pricing in the logistics industry remains high.

Our outbound logistics cost per unit was $963 in Q3 versus $765 in Q3 2019.

We hope and expect this trend is temporary but we do expect it will continue through.

At least Q4 and this dynamic is factored into our guidance guidance. As you would expect this is a variable expense and will continue to increase with volume and.

Given that we are hard at work on our hybrid approach to logistics, improving and expanding our proprietary logistics network to achieve opera.

Putting leverage on this line item, while also enhancing our customer experience.

Total operating costs per retail unit was $5943 in Q3 versus 6124 in Q2, we expect that maybe up in Q4 as we invest ahead of future growth.

We've provided comprehensive Q4 guidance in today's earnings announcement.

And we'd now like to open up the call for questions Chris.

Thank you.

And as a reminder, ladies and gentlemen, if you would like to ask a question you will need to press Star then one key on your Touchtone telephone.

We are into will join your question, we need to press the pound key.

Please stand by and composite culinary roster.

And our first question comes from the line of Collin Sebastian with Baird. Your line is now open.

Great. Thanks, good afternoon.

Two questions. If I may the first is on the on the hybrid logistics rollout.

I was wondering if you could provide a little more detail on the timeline for that is that something that for example, we can assume will drive leverage.

As early as Q1 or next year and then secondly, just following up I think on the comments regarding growth next year. I think you mentioned escalating sales growth if you could just clarify.

If that means accelerating sequential or year over year growth or something else. Thank you.

Yes happy to take that both of those on the the hybrid logistics I think and as everyone knows we've been we've been doing our own last mile and in a couple of markets and.

And we'll continue now to expand those markets.

Going forward quarter to quarter, and so I would I would think about that as a as a a slow and steady rollout of of last mile and that's the way to think about that and then.

As far as us.

Yeah.

Getting ahead of and building our plan for growth, we're not we're not guiding out into 2021, but we understand that our growth is accelerating coming out of third quarter going into fourth quarter, and we expect to continue to have strong growth trends.

2021, and that's really what I was referencing so thats, hence why we're putting these investments in the customer experience now in anticipation of that growth.

Got it and maybe John.

Yes, sorry.

Sorry, Collyn I would just add to that in terms of leverage I think.

Yeah.

We wouldn't expect to get any cost leverage on that in the short term.

Finally, we use our own solution, we're not using a third party but.

But I think with scale would would come cost leverage.

What we do gain obviously as leverage over that consumers experience, which is.

A big part of what we're after there.

Okay and is there any.

Are you already acquiring the vehicle fleet now or is that something that is planned on beginning next year in other words when did the capex and Opex from that initiative starts at the top.

The income statement.

Yes, Collyn we.

We are acquiring those vehicles now we think capex.

Primarily related to that effort will be probably about $4 million in Q4.

And then we'll obviously.

I think more about that into 2021.

As we.

As.

We put the plan together and ultimately provide guidance there, but we think about that effort.

Over the long term as investment of think tens of millions not hundreds of millions.

We're not building any facilities around that we think we've got leverage with our partners there and.

So you know it's it's a.

Modest capex investment.

Okay, great. Thank you.

Thank you and our next question comes from the line of Daniel Powell with Goldman Sachs. Your line is now.

Great. Thank you taking the question just wanted to ask a little bit about the vehicle.

So GPU improvement you saw on E commerce.

I understand there was improved inbound logistics in reconditioning in claims were more interested on the reconditioning side were those improvements in your own network down in Houston or were these.

Is this your partner network scaling up.

Go aggressively or getting back to a more normalized rate just just curious to sort of hear where those reconditioning improvements are coming from and that's where how you're pulling those levers. Thanks.

Yeah, I think the answer is is broadly rather in any particular location you know where we're we're buying better.

We're buying with enable data science.

We're optimizing reconditioning and so the short answer is that it's not a single location, but but rather the entire organization is executing well both on the buy side and the reconditioning side and then we see that in the gross profit per unit numbers.

Great. Thank you.

Yep.

Thank you and our next question comes from the line of Alex Potter with Piper Sam Your line open.

Okay, great. Thanks.

Was wondering if you could talk through some of the strategies that you're using to increase the size of your inventory and all that.

Has to do with customer Star thing any comment you can you can provide there would be helpful. And then I guess just broadly you know the degree to which you're in control of your own destiny. When it comes to increasing inventories size, because I know right now it's a supply constrained environment. So any comments you can provide on inventory.

Yeah happy to do that.

Got it and I think if you look at.

Our overall growth in the quarter.

From second quarter to third quarter to where we're sitting today and you hear that we're scaling inventory.

Appropriately to match the demand so we're we're not feeling those.

Strains and also in my opening remarks, I mentioned, we're starting to see real traction in our advertising offering customers a outstanding.

Model to sell their car to AWS and consumers are taking advantage of that and selling us.

Their car and also as I mentioned.

Really valuing that experience and so our strategy is to continue to.

Grow our purchases from consumers.

We continue to buy outs from auctions where appropriate.

Two I'm just filling inventory and then continue to leverage other third party buying opportunities. So that we're looking at.

At our inventory not only to match consumer demand.

To drive conversion, but also to optimize.

The gross profit as of.

It it would that so we'll be opportunistic in the where and when and how we buy across the broad spectrum of channels.

Okay great.

Then I know you mentioned you had good attach rates on a lot of different products and that's why product revenue was up despite the lower.

But I was wondering if you could maybe elaborate a little specifically on what where you're seeing the strength what types of products and the extent to which you expect that success to last into the current quarter. Thanks.

Hey, Alex.

The yeah, I think it was pretty broad based in Europe.

Every year, we saw generally we offer today, obviously financing product to customers.

In all of our products are third party, we don't.

We don't take balance sheet risk on any of those.

We offer financing we offer warranty we offer gap, we offer tire and wheel.

In.

And so we saw some pretty good improvements in attach rate year over year, I think as we look forward though.

We'll always look to optimize attach rate.

But I think theres other other initiatives that are in the works in terms of.

New products take.

Taking friction out of the E commerce.

Process to improve attach rate.

Okay.

Yeah.

And those are the areas that we look to to help us continue to.

To build on that I think you know as we go into Q4.

It's historically a.

First time of increased depreciation in the market and so.

We will try and balance that with with product gross profit per unit.

Well, yes, that's how we think about products going forward.

Okay. Thanks very much.

Thank you and our next question comes from the line of Ron Josey JMP Securities. Your line is now open.

Great. Thanks for taking the question I wanted to ask a little more about supply based on what we're just talking about and I know I think you. Just said we don't you don't believe that room is supply constrained. So maybe can you talk a little bit more about how how rooms.

Physician for the all important first half of the year as we go into 2021 for supply as demand still remains sort of elevated for used cars and and as you talk about that any any insights on.

Just the overall demand from an October perspective to that continued from what you saw for September and insights on inter quarter would be helpful.

Okay, well thank you.

Sure.

Supply as I said, Ron I think I think we're feeling in good shape, where we're positioned ourselves to be selective because we've got great consumer demand to sell us their their their vehicles as well as.

Auction.

Auction market wholesale markets have come down and we see great opportunity to buy cars. There. So again, given our size given our our projected sales and our and our growth rate.

We feel we feel like we're in a great position going forward.

As far as.

How are we doing intra quarter I guess, what I'd say is I stand by our guidance you know, we just put guidance out there to give you really good insight based on everything that we're seeing thus far and.

You know I think feel field.

I feel great about the numbers that Dave talked.

Out in terms of E commerce growth on a year over year basis. It's just it's strong. So we're we're we're feeling really good.

Great maybe I can just ask a follow up with a different way should we expect inventory to build up here as the quarter progressed as understood 72% rate a sale, but as you get ready for Fourq you just.

EBITDA for continued inventory growth.

As we think about you know okay.

Yes, I mean, we're we're scaling business and we're going to continue to add inventories visit portfolio because it it meets our customer's demand. So I think you've seen us scale you know well.

You know coming out of the the lows of coated.

We will continue to have the right amount of inventories to match the right amount of demand.

Great. Thank you very much.

Yes sure.

Thank you. Our next question comes from a lot of Zach Fadem with Wells Fargo. Your line is now open.

Hey, good evening guys. Another one on the GPP U line and.

As you think about all of the long term opportunities here from lower reconditioning costs lower days to sell customer source vehicles et cetera could you talk about what factors are contributing the most upside today and as you think about 2021, how should we size. These buckets are opportunities as we move into the new.

Sure.

Yeah, Zack thanks for the question.

You know I think I think it's a little bit of everything right.

If we think through the whole process.

Paul mentioned acquisitions, we've we've automated.

A majority of our acquiring acquiring effort now.

We do hundreds of thousands of appraisals per week and.

And so thats really opened up the opportunities for us nationally for acquiring inventory and you know as you know those are.

Those are skills that very few companies.

So we're very proud of that.

And so I think that gives us opportunities on sales margin.

As we then continue to expand our were distributed reconditioning network, we've got opportunities on inbound logistics.

You know I mentioned, we've got 18 facilities today.

Which is which is you know puts us at a real.

Vantage for ingesting inbound inventories from consumers and from auction from from different sources. So we think thats it.

Well when.

You know you mentioned reconditioning.

We've been.

Disclosure.

Closing defects now for a while and we continue to hold those skills and continue to work as hard as we can to suck set customer expectations, both for the consumer experience, but it helps us refine our reconditioning efforts.

And so we think there is a little.

Little bit across the board there, we talked about a little bit about product already.

So.

I think it's I think it's a little bit of everything I think when you think about Q4, obviously, we've got guidance out there that but you know were ultimately we've got long term goal to get to 3000.

Some dollars gross profit per unit Thats kind of our first stop.

First station stop on the train and we feel like we're making good progress towards that and we'll continue that effort in 2012.

Got it thanks for that Dave and can you talk a little more about the TV business.

I know, it's going to be less relevant over time, but you called out disruption in Houston due to cove at and with a lot of local dealers starting to rebound in that region can you talk about when you think this business normalizes and then do you think it's fair to suggest that your E. Con units are cannibalizing your TD eight units.

Yes, so look when we think about Texas is unfortunately, the sickest nation state right now and.

And it's definitely affected our foot traffic as you can imagine we track that pretty carefully.

And it is down significantly since cobot hit so so that's certainly a factor for.

So we've got concentration there just having the one location.

But but also as we think about inventories you know the supply of inventory in that particular market has not rebounded to two pre covert levels and so.

Thats something that we need to to try and address as well.

And when you think about the expansion of our inventory and our distributed model right now we're expanding inventory nationally.

But but in in particular to Houston.

Supply is just been somewhat constrained so that's a folks.

Yes for US also in Q4.

Got it thanks for the time.

Absolutely.

Thank you.

Our next question comes from the line of Nat Schindler with Bank of America. Your line is now.

Great Hi, guys. Thanks.

I'm wondering fundamentally.

Limits your ecommerce units growth and what I mean, specifically is you grew units by nearly 3300 year over year in Q3.

Carbon rented.

2000.

Obviously, those their cards out there being sold Carvana, though is limited right now.

You cannot move cars through their aligns fast enough to get them out and how they get their supplier you guys say you're not.

So why can't you suddenly grow at substantially higher rates.

Yes, I guess, what I'd say is that where we're certainly working towards.

Towards creating all of the areas that might.

Constrain our business and opening those up and as you sign my my opening remarks.

Yes acquisition of inventory check marketing check reconditioning capacity.

Check out.

Right now we are investing in our sales sales support sales experience sales ops to help facilitate those.

Those sales and that's really the the last bit of investment around this you know this constraint if you will that we're that we're putting forward.

It and we think that that that does open up a continued growth and honestly that's exactly the way I described that in my opening remarks of.

We're really setting the stage for continued growth into 2021 and feel great about that.

Totally get that so let me see if I.

I understand that.

Right now all the pieces for you to grow substantially more units multiple times more units can you were currently growing year over year similar are not maybe government whatever that kind of numbers. It just simply catching up in the sale support.

Is it.

Oh, yes, it's the people on the phone to be able to answer questions.

So I go back.

I would say that's today's bottleneck, but you know our business all all boats need to rise.

Like in unison. This is a highly connected business and so you don't want to have.

Too much inventory and not enough demand. So you need to regulate the relationship between demand and supply which is how we build our brand the amount of dollars we spend to bring in customers are you've got to have the right amount of resources to recondition. So this this whole business looks more like something that you regulate moderate and and Dr.

Our word we use the word flywheel rather than a light switch that suddenly we would be twice the size or fivex. The size of these things really need to move in unison or suddenly you get sideways in either not having enough supply to meet consumer demand, which will obviously upset customers and leave.

With a with an excess of inventory and the opposite we would also be true. So it's much more about I would say.

Controlled.

Scaled growth.

While keeping an eye on profitability, so that the whole business moves moves forward in unison.

That's really the the Dod trick if you will and we've demonstrated that we can do that and we like our we like our trajectory and are working to to increase that trajectory.

Okay, great. Thank you.

Yeah sure. Thanks.

Thank you.

Our next question comes from Amanda Sharon.

Sorry, backfill with William Blair. Your line is now open.

Hi, good afternoon I.

Congratulations on the increase sequentially that you're seeing and expect to see in the fourth quarter I guess I'm curious, whether you're seeing broad based strength across the country. I know you called out Houston with today. So this is really an E com question.

And then secondarily you know are you planning on anything for Black Friday, or cyber Monday that we should be aware of.

Great Great question, Sharon, we're seeing that demand, which is really encouraging broad based the national demand is strong.

And you know.

You heard both in my remarks and days remarks that we're we're feeling great about demand.

I mentioned that we're investing to make sure we've got the sales capacity and so.

So we are we are not planning any.

Anything unique.

Two hotels.

Lower prices to stimulate demand for the fourth quarter, because we feel we feel it really good about the demand that we've got flowing into the business. So we don't think we have to throw any what I would call abnormal levers to try to to drive demand or conversion.

Okay. Thank you.

Builder.

Thank you. Our next question comes from the line of Chris Bottiglieri with Exane. Your line is now open.

Yes, thanks for the question.

So if you could talk about the improvement inbound logistics cost how to reconcile that with higher outbound cost. It seems like most of the outbound cost as well so.

It was on a per unit basis was driven by market rate is it just simply because you're.

Moving water sourcing or reconditioning in house too I mean, sorry to third party. So there's just no transport or what's behind that.

Yes, Chris I think I think you're onto it to the inbound is much different animal.

For us than the outbound.

As you know we've we've.

We have a partner in Mannheim and ADESA.

And so the inbound effort in a lot of cases, it's just moving from an auction laying to the reconditioning facility.

And so I would say we have more control.

Over the investment process, and it's a different vendor to tip.

Typically when were thinking about inbound logistics.

It's more it's a shorter trip.

And.

It's a different vendors that we can have a little more influence over there so.

So thats really the difference.

Yes that makes sense and then I.

I apologize if you said this earlier, but can you talk about I mean, you had a nice pop in ESI per unit.

You highlighted some platform changes and some strategic partnerships can you just elaborate what's going on there just walk us through what you've done to accomplish that type of improvement.

Yes so.

You know I think it was in the fourth quarter of last year, we announced our first.

Strategic partnership with Chase and so and then we have done so since with with Santen, there and we have a partner and ally on the financing side and so I think what we're referring to.

Is the maturing of those relationships and.

What we find is.

As we can push more volume into those relationships, it's a better customer experience and helps with attach rate.

And as as a preferred relationship the economics are a little bit better for us. So.

It's really just a matter of maturing of those partnerships.

Okay. Thank you appreciate it.

Thank you and our last question comes from the line, except Basham with Wedbush Securities. Your line is now.

Thanks, a lot and good afternoon. My question is first.

Just around the bottlenecks in the customer experience that you're talking about currently as it relates to sales and customer support can you give us some sense of whether or not you've fallen down in your opinion on the customer experience in those areas and whether it's impacted your NPS scores.

Yes, I certainly would say.

Fallen.

On down I think and Thats when we talked in the third quarter, we talked about some of the the carrier issues and we.

When you think about carriers being either delayed incoming or or having to pay a premium to get them to come anything that caused the customer a delivery delay.

You know has a negative impact on on their experience and so did not surprisingly you've seen our response Oh, we're going to we're going to start taking taking a lot of this on ourselves and when you think about the other impact of co bid one of the things that customers are also concerned about is.

Getting their titles in short order and many of the Dnbi is across the country have you know.

Load or closed, which then created a backlog and so again what are we doing there. We're getting ahead of ahead of that and as the as the Dnbi closures have.

Now reopened as we're working through the backlog so things like titles.

Again, very very focused on getting the customer experience right, whether it's a delivery issue or whether it's a paperwork issue and those investments are underway now and.

We obviously take that very seriously and.

And believe we're going to have that rectified in Q4.

All right Thats Good news and my second question is just regarding TD and surprised that how weak it is and I'm trying to understand a little bit more why as we hear about much better trench and other.

And retailers in that area, I'm wondering whether or not PDH inventories also on berms website and so in the lead comes in through rooms web site.

And TV a piece of into our is sold is accounted as a TD a sale or vroom ecommerce sale.

Yes, so Dave.

Yes, all of the inventories on the site.

And the inventory that is physically local in Houston than is available for TV to sell in store if a unit is shipped.

It's an E commerce unit.

And so the.

It is as you can imagine there's you know there is some pressure on the T.D.A. inventory from the National model as well if someone comes in and they say I like this vehicle.

As we're pulling it up before them someone can buy it on the on the ecommerce model as itself put on hold so it is it is shared and.

The story.

And so what we've done in the past is you know ensured that there is an adequate level of inventory there and as I mentioned in the remarks.

Supply is is not returned.

In our you know at least what we're seeing in that area.

And so we're working on some.

Solutions for that right now.

Understood. Thank you very much.

Thank you.

That concludes today's question and answer session I will now turn the call back to management for any closing remarks.

Great just.

A shout out and thank you to all that room employees for all their hard work in delivering an outstanding Q3, and thanks, thanks, everyone for joining our call.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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Eric.

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