Q1 2021 Carlotz Inc Earnings Call
Thank you for standing by and welcome to the car lots of first quarter 2021 earnings call. At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your Touchtone telephone.
Please be advised that today's conference maybe recorded share do you require any additional assistance. Please press star zero and I wouldn't.
And I'd like to hand, the conference over to your host Dawn Frankfurt Investor Relations. Please go ahead.
Thank you good afternoon, everyone with me on the call is Michael bore co founder and Chief Executive Officer of Carla and Tom Staab, Chief Financial Officer before we get started I would like to remind you of the Companys Safe Harbor language, which I'm sure you're all familiar with.
The statements contained in this conference call, which are not historical facts may be deemed to constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Actual future results may differ materially from the suggestion and such statements each of the number of risks and uncertainties all of which are described in the company's filings with the SEC, which includes today's press release.
Any non-GAAP financial measure is used on this call and presentation of the most directly comparable GAAP financial measure to the non-GAAP financial measure will be provided a supplemental financial information and our press release.
Now I would like to turn the call over to Michael bore co founder and Chief Executive Officer of Carla.
Thanks, Don and good afternoon, everyone. Thanks for joining us today before discussing our results. This afternoon, let me start by saying how excited we are to have our first successful quarter as a public company in the books, we began our journey of the public company of 109 days ago, and we've made the most of every day.
With the capital that we raised through our merger with ACA more partners. We have brought on some new highly talented teammates and teammates and launched several new hubs and dynamic fast growing markets, while filling out our pipeline of new markets through 'twenty, and 'twenty, one and beyond and embarked on our technology and marketing transformation initiatives.
That we believe will position us well for our future growth plans.
I'll begin today's call by discussing the highlights of our first quarter and then update you on the progress we're making against our key growth initiatives and then Tom will review, our first quarter financial results in more detail and provide thoughts on the remainder of 2021.
As you can tell we're very pleased with our first quarter performance, which which exceeded our expectations on the top line and was at the high end of our guidance with respect to gross profit.
For the quarter, we sold a record 2000, and 554 units growth of 76% over last year and 28% above our guidance.
We delivered net revenue of $56 6 million, representing a 123% growth over the last year.
Our gross profit was $2 million at the top end of our guidance range and retail GPU was 11 82.
And we've communicated in the past that we thought our retail GPU challenge may bleed into Q2, we've seen strong retail GPU growth so far this quarter.
Before discussing our strategic priorities I want to take a moment to discuss the unique dynamics of wholesale and retail pricing that we're currently seeing as well as address the inventory shortage of across the industry.
Wholesale prices are on and unprecedented rise due to strong demand driven by tax refunds and stimulus checks and the lack of new car supply, resulting from the broad from the broadly discussed chip shortage impacting new vehicle manufacturing.
During times when the wholesale prices push retail prices up the wholesale retail price GAAP narrows for a period of time before prices adjust and normalize. However, when prices are moving up it can cause some inventory headwinds consignor.
And signers, where sellers of vehicles are able to take their cars to the auction and get closer of retail prices since retail prices haven't yet caught up and we're currently and the transition stage, resulting in inventory constraints for us and the industry. We've seen of time like this once and the last 10 years and it was Q2 of last year during the depths of.
Of the initial pandemic.
To be clear of the inventory challenge we face are during periods. When the wholesale prices are increasing not simply of wholesale prices are high and once we see wholesale prices stabilize which we believe we're being the beginning to see the GAAP between wholesale and retail will return and Fortunately for us our core inventory needs are and the second half of the year.
And we remain confident and our ability to secure that inventory to drive our growth.
I'll now discuss the progress we made in Q1 on advancing the five key drivers of our growth.
As a reminder of these are one growing our hub count significantly to increasing the number of and expanding our corporate vehicles sourcing partner relationships three executing our new marketing strategy to drive demand and create brand affinity.
And for expanding our team to support our rapid growth and five transforming our technology to enhance and support the guest experience.
And with our first priority of expanding our national hub presence during the first quarter. We opened three hubs in Seattle, Orlando and Nashville, We've received great guest response from all three locations as we continue to reach new and existing guests.
Our Seattle and Orlando hubs for example are the fastest opening fastest ramping and most successful hubs, we've opened and the history of the company.
We're excited about continuing to improve our hub of opening processes and breaking new records throughout the year.
For the year, we remain on track to open 14 to 16 hubs, including the Charlottesville, Virginia of Bakersfield, California, Highland Park, Illinois, and and Clearwater, Florida locations that we've announced over the last several weeks.
As we look towards the back half of the year of the overall hub of opening picture is becoming clearer and we have already secured about the dozen locations and feel confident in our second half hub opening plan based on the momentum we're seeing today.
As we've said before we review and we view the opening of the new hubs is the most exciting and critical aspect of our growth strategy given the drive such a significant portion of our growth plan.
[noise] provides additional capacity increases our brand awareness and new markets across the country and allows us to showcase our talent with new guest interactions.
Our second key initiative is commercial account growth through both existing and new accounts with.
With continued hub expansion. It is critical that we have the right suppliers and a robust inventory pipeline to that and we continue to onboard several new sourcing relationships with prospective clients across verticals, including banking rental wholesale fleet management and others.
We remain confident that as the wholesale market normalizes, we will maintain a consistent flow of the best vehicles and our markets given our multiple and diverse sources of.
Additionally, as we expand our unique consumer consignments of retail model through hub growth and marketing initiatives, we expect to see continued growth and consumer consignment volumes, we expect.
The ability of the consumer to consign of car along with the security of of sell it now option. We will continue to drive the consumer seller of car lots as we are the only used vehicle business of scale in the country that offers this attractive option.
Turning to marketing our marketing efforts continue to be focused on driving leads and increasing web traffic and introducing our unique business model and brand to new markets across the country.
We have invested and new data platforms deployed market specific conquesting and prospecting efforts as well as increased investments and digital channels radio out of home and P. R to fuel our hyper local communication strategy.
As a result of these efforts and more we've seen of 236% increase in leads generated year over year and over 137% increase and leads per unit.
We've seen strong results from our social marketing across all primary channels, including Twitter, and Instagram, which saw an increase and followers of over 69% and 37% respectively. Since January.
We continue to see triple digit increases and our unique users sessions and page views on our website car lots of dot com as compared to last year.
We're on track the launch of New brand campaign, and the second half of this year focused on driving awareness and consideration inviting people to experience, our unique buying and selling model and introducing new guests to the concept of auto consignment. This effort will include multiple channels and Activations as we continue to grow across the U S.
And.
As a company the cares as much about what drives people as what they drive we are particularly proud of our partnership with the Kelly Clarkson show last month that allowed us to help Jason Sutton replace this car to help them get the work as he finishes up high school and give them a scholarship to college. So we can continue to succeed and the future.
It's the amplification of stories like these that will continue to propel our brand forward, we look forward to our broader brand rollout over the course of the year and the results that it will generate.
Which brings me to our next initiative of teen growth in Q1, we grew our team by nearly 50% as we continue to add professionals to support our growth more specifically during the quarter. We added of senior Vice President of technology of senior director of revenue of senior director of operations of senior director of growth and development several highly experienced.
Managers and financial planning and analysis and dozens of hub managers and staff since.
Since the end of Q1, we've also brought on additional leadership and real estate finance and in the hubs and we'll continue to add depth with VP and director level hires and public relations Investor Relations strategy and other key areas.
This new and diverse pool of talent is not only helping us achieve our growth, but also bringing new experience and perspectives that will certainly be incremental to our story.
From a technology perspective, we continue to make great progress on our technology transformation plan.
We will be enhancing our entire guest experience with a fully redesigned online experience and mobile gateway that will more tightly integrate shipping and logistics financing and warranty products and make the online car buying experience easier and more enjoyable and.
Is the line between online and in the hub transactions are blurred. This new technology will provide additional comfort to the guests who previously skewed more in hub to transact more of the journey online and a very seamless way.
We believe this new technology will also drive incremental traffic from those guests who have already made the transition to online only.
We expect the initial rollout of our enhanced web platform and mobile App to begin in June of this year and continue as we drive improvements throughout the year.
In summary, we're pleased with our first quarter results and the strong progress we've made against our five growth priorities as.
As we look to the remainder of the year, we will continue to focus on our strategy of expanding our national hub footprint growing the team investing in technology executing our marketing plan and adding commercial accounts in order to strengthen our competitive position and fuel market share gains over the near and long term.
I want to again, thank our awesome team of lots of <unk> for their hard work and dedication that contributed to this successful first quarter. Many have been with us for several years and many have been with us for just several days, but they're all and the boat pulling on the oars together as we execute our path forward.
We look forward to building on our success to date is and enhanced team.
I'll now turn the call over to Tom to discuss the first quarter results and our thoughts around the remainder of fiscal 2021.
Thank you, Mike and good afternoon, everyone.
Today I'll focus on the highlights of our first quarter performance and then.
And I will discuss how we are approaching our outlook for the remainder of 2020 one.
For details regarding our financial results. Please refer to our earnings release available on the Investor Relations section of our website.
We had a strong first quarter on top line with revenue growth of 123% to $56 $6 million.
Substantially exceeding our previously provided guidance range of $42 million to $46 million unit sales were 2000, and 554 significantly ahead of our expectations of 19 of hundreds of 'twenty 100.
And up 76% year over year, primarily driven and existing hubs with three new of openings and the quarter.
Our revenue growth for the quarter was driven by increases in our retail and <unk>.
Net sales, a 37% increase and our average selling price due mostly to a mix shift and the clients. We are serving and the types of vehicles, we're selling for those clients.
And a 74 per cent increase and financing and product service contract revenue.
With respect of gross profit and retail GPU, both decreased year over year as a result of the carryover of Q4 excess inventories related to our profit share count.
Gross profit was $2 million for the quarter and retail GPU was 1182.
We successfully cleared substantially all of this aged inventory in the quarter ahead of schedule with aggressive pricing rather than absorbing shipping and reconditioning costs on vehicles returns of the client.
While this negatively impacted our retail GPU and the quarter, we did achieve the high end of our gross profit and guidance by selling more of these units late in the quarter.
And as Mike mentioned, our inventories of current now and retail Gpus have improved.
Excluding the noncash stock based compensation charge, primarily related to performance share is triggered by the completion of the merger totaling $42 million total SG&A expenses were $18 8 million compared to $4 million and the prior year quarter of the increase driven by hiring management and support staff to really.
For the ramp and hub and growth in 2020, one initial planning and scope of work on our technology transformation.
And compliance costs associated with public company filings post merger.
As a result, our net loss was $15 million compared to the net loss of $1 5 million last year and adjusted EBITDA was the loss of $16 9 million compared to a loss of $1 4 million a year ago.
Now turning to our balance sheet, we ended the quarter with cash and marketable securities of $293 million compared to $3 million a year ago and.
As you are aware during the quarter, we completed a merger transaction with Akamai partners in January.
As a result of the transaction, we believe our net cash position will fund our growth plans for the foreseeable future.
And as many of you may be aware the SEC recently sent out of the communication of all of the accounting treatment for warrants issued during ice pack process by the acquisition Corp. The SEC and determined that most of these warrants were structured in a way that requires them to be accounted for as a liability versus equity instruments.
And as Carla did not complete its reverse merger with Akamai until January of this year car lots 12, 31, 'twenty results filed with the SEC on March 15, 2021 did not include the Akamai and warrants.
Therefore, the first requirement to handle these warrants as liabilities occurred and our Q1 2021 results and the subsequent filing now on May 10, and 20 to 21.
We have issued and 8-K to communicate that the previously issued financial statements for Akamai for their 12, 31, 'twenty year and should not be relied upon based on the treatment of warrants as equity.
Now to discuss our outlook for the balance of 2021 and some of the factors that may impact our expected results.
We're excited to have already announced the expected new openings of our hubs and Charlottesville, Virginia.
Bakersville, California, Highland Park, Illinois and <unk>.
Clearwater, Florida over the coming months consistent with our previous guidance, we plan to open and 14 to 16 hubs in 2020 one.
Based on the timing of new of openings, we expect the following related to our outlook for the remainder of 2021 remember that our results. This year are back half weighted in terms of the new hub openings, and therefore unit sold and total revenue as well.
Likewise, we expect gross profit and retail GPU will accelerate and our third and fourth quarters. This year.
Q2 expectations are the C unit sold and total revenue similar to Q1.
Gross profit dollars and retail GPU should improve from Q1 to Q2 with a more current inventory position.
And as Mike mentioned, the sourcing vehicles will continue to be a challenge for the industry and for us.
We are seeing good progress with our sourcing partners on commitments they can make to us over the next several months, however, and the near term during Q2, we expect lighter than ideal levels of inventory, resulting in our tempered expectations for units sold this quarter.
Now moving to the full year 2020 one outlook, we expect retail units sold between 18020 thousand up more than 180% over 2020.
The majority of our growth is expected to come from the opening of 14 to 16, new hubs as we discussed and our assumptions included inventory sell through rates that have been.
And experienced in the past for our new hub supported by an improved processing times and a greater focus on local marketing efforts.
These factors are expected to result in revenue of $335 million to $375 million again.
More than 180% compared to 2020.
Gross profit is expected to be between 30, and 37 million of over 190% compared to the prior year and again back half weighted as new hubs open inventory flow and normalizes and processing times improve which improved sell throughs.
We expect retail GPU at 18, hundreds of 2000 and again given by the improvements just mentioned that will significantly impact in the second half of this year.
We expect SG&A expenses to be and the range of $103 million to $108 million.
Excluding noncash stock based compensation expense estimated at approximately $52 million for the year, we will make significant investments and people systems and marketing to support our rapid growth plan.
Again about a third of these costs of our marketing costs and other third corporate hub level payroll cost and the remaining third of public company expenses technology costs, and other occupancy and overhead cost.
Given these assumptions, we expect adjusted EBITDA and to be and the range of the loss of 79 million to $67 million.
We expect our weighted average share count to be approximately $111 million for the year.
In terms of capital expenses expenditures, we expect our 2021 and spin to be $45 million to $50 million as we invest and new hubs and new systems to support of our rapid growth.
Please refer to our press release for all other items related to our outlook with that I will now turn the call back over to the operator for Q&A.
Thank you as a reminder, task of question you will need to press star one on your telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.
Our first question comes from the line of Sharon Zackfia.
William Blair Your line is open.
Hi, good afternoon.
Yes, a couple of questions on the inventory levels and then well.
We're where would your ideal inventory levels be at this point, because we went through kind of the period in the fourth quarter and mentor I am kind of outpaced your ability to process and and now obviously the pricing environment has created some challenges and corporate consignment and get into the.
The inventories I'm just trying to get.
Get a gauge on what would be and ideal inventory level I think we're looking at like a thousand cars right now across the system, where would you like to be.
Yeah.
Thanks, Sharon good to hear from you.
Fortunately for us the inventory was not a problem and the first quarter in terms of volume of inventory.
And we were able to sell a lot of vehicles and it's a result of that very strong demand that we saw that our inventories sold down to actually below a thousand within the last couple of weeks.
Fortunately for US we have a lot of levers to pull when it comes to inventory and so in addition to the commercial consignments that we can draw from multiple verticals some of which are more impacted than others by what we see and the macro environment.
We also have consumer consignments, we have purchases that we make from consumers and from our accounts.
And we have open buys debt our car buying team can make and so in general you know because the the.
The bulk of our new hubs are opening at the end of this quarter and into the second half of our key inventory needs of really in the second half of the year.
But today I'm going to directly answer the question.
We'd love to be probably another three of 500 units higher than we are today, which history has shown we can.
Pull and within weeks not months so.
We feel generally fortunate that we're in a position where we can pull multiple levers to get that inventory to where it needed to be.
Yes, it should we assume that inventories and then bottomed and that we will see improvement as the quarter progresses.
Yeah, I mean, what you see if you you know several track our inventory levels were down and the low eight hundreds within the last several weeks, we're up over 1000 today <unk>.
Generally it has moved and the upward direction pretty much every day since.
And we're seeing we maintain regular dialogue with our commercial accounts.
And so we've heard of very strong volumes that they expect coming.
Really mostly in the second half, but it's starting to show and also what we're seeing is.
That price is at wholesale which as we mentioned in our remarks.
It motivates our consignor to sell at wholesale when the prices are moving and the upward direction, but we've seen kind of a slowdown and that movement and it's starting to flatten and which is when we see good opportunities and then if it drops and you know who knows but if pricing drops that's when our model real.
It provides a tremendous amount of value to them as they seek to retain more of proceeds on the sale of their vehicles and.
And that's kind of what we saw last fall right in September and October.
That's right that's right and of him.
And then on the you mentioned kind of the multiple levers you could pull have you actually increased consumer of consignment and so far and the second quarter of our open and buys.
Yeah, well as we and.
And certainly opened buys as we opened new locations. We had mentioned in the past that and we typically like the stock the new locations with vehicles that we own because sell through rates are the.
The lowest when we first opened a new hub as.
The local market gets to know us as a auto retailer and <unk>.
So we'd like to have slower sell throughs on our own inventory versus are our.
Clients inventory. So we typically when we open a new hub, it's stocked with our own inventories. So we have.
<unk> beefed up our buying team we brought in some tremendous talent there and we're seeing great results. Both in terms of the volumes that are being bought and also the profitability of the units that they are buying on the consumer consignment side as we expand across the country and our brand.
Becomes better known as the.
And as we're seeing now.
And our marketing efforts.
Continue to increase and enhance awareness of what we do we are starting to see the beginnings of increases and consumer consignments and and we're really excited about that I mean, the when we enter a new market and we can get consumers to consign vehicles and really feel the power of what can Simon can do for the values day.
For the vehicles that not only helps it's kind of a domino effect in that market not only and they tell their friends and more and more people consign cars, but it also brings people to us and they know that they can buy from us as well. So we love the consumer consignment business, it's a great marketing.
The tool that we that we have to just help the business Hum.
Okay and then last question from me I Might've missed this but did you provide and they kind of retail GPU guidance for the second quarter I heard improved from the first quarter. Obviously, you know youre going to need a lot to get to the full year guidance. So I think it'd be helpful to know kind of where you are first half versus the second half.
Yeah, we decided to share and not to give specific guidance. We do believe it will improve we've seen improvement already here early in the second quarter.
And we still expect that we'll make the guidance for the full year for GPU.
Okay. Thank you.
Thank you and our next question comes from Gary <unk> Barrington Research. Your line is open.
Hey, good afternoon, everyone.
And again Mike.
Couple of questions here first of all of did you I looked through all of the documents did you give a number of wholesale vehicles that were sold was that something that you. Eventually do every quarter when you reported.
The reported.
Yes, it's included in our 10-Q.
I think it was for the quarter. So the little over 400, I don't remember the exact number okay, but I went through the queue and I didn't see it but there was a lot and ball go back and look at that alright, So look.
Yes.
Listen to what you were saying, you're saying that this whole issue with the inventory the aged inventory on the the alternative fee arrangement that has been totally cleared out is that correct.
Yes, we're in very good shape.
We were able.
And to work our way through all of that inventory, particularly in March we had a really nice sales in the month of March and we feel good about where we ended the quarter.
Okay. And then you also said something about it and April you were seeing increased retail GPU that has gone into may is that more or less on a weekly sequential basis or is that year over year weekly.
Well the sequential to the first quarter for sure.
The first week.
And we've seen the pretty significant improvements from the first quarter two of the first month of the second quarter.
Okay and.
And then Mike you seem optimistic about the back half of the year with your.
Corporate accounts and all of that.
What are they telling you is that they intend to give you more vehicles because your model is working for them on a return basis versus taking them to auction of the or they're seeing the the auction prices are starting to plateau and and and.
And they put their apex, and they're not going to keep going higher.
Yeah, a little bit of all of that I mean, we maintained very regular dialogue with our top accounts and we're bringing on several new accounts.
US having gone public in January has elevated our.
Reputation and the industry and so.
We're working with a lot of new accounts to onboard them and we're kind of working through the sales funny funnel on several of them.
We've seen.
Like we mentioned when there's a plateau in prices.
It really starts to.
We ended up seeing a lot of good volume when that happens because people are accustomed to getting really good values of the option and then when it starts to fade compared to retail that's when they seek to.
To the alternative channels to keep that retention high so.
We have several accounts that are have mentioned to us that they have a tremendous volumes coming in and the second half.
And so we're excited about what that means, especially as we are able to open in new locations add capacity and some of our existing markets that have had.
It had been capacity constrained at the end of last year and.
So it just it gives us the ability to take good volumes from new accounts, but also take additional volumes from the accounts that have been working with us for years to help us hit.
The hit hard hit our numbers for the full year.
So with this whole thing with with our processing centers, resulting in slower vehicle processing, you had a big and take the cars. There what have you guys learned and one of your improved on your processing side.
So if this happens again, you'll be ready for it.
Yeah. So you know the.
As we ramp up this year, we're focused not only on processing capacity, but also of processing cost and processing speed at the beginning of the year, we were definitely seeing processing time constraints, but by the end of the quarter, we had increased capacity by 50% and now we're a 100% and towards the beginning of the second half of the year, we plan to be up.
An additional 50% from where we are today, which is more than enough capacity to meet our processing needs throughout the year, so between speed cost and capacity.
We will continue.
To focus on the at the processing center, because if we can if we can do a great job there we get cars to market faster, we sell cars faster, which translates to lift for our clients and GPU for us so the internet and processing and the ops back and of what we do is critical it's where we're putting a lot of energy.
Okay. Thank you.
Thank you.
Thank you. Our next question comes from Seth Basham Wedbush Securities.
<unk> please.
And.
Thanks, a lot and good afternoon, and my first question is on GPU and thinking about the implied ramp and retail GPU for the balance of the year with you maintaining your guidance for the full year and missing the first quarter expectations and Theres now a steeper ramp implied if you could just give us some more color on what gives you the competency of the al to overachieve and.
The next three quarters relative to your plan a month ago that would be helpful.
Yeah really most of the.
Decrease and GPU and the first quarter was really all related to the aged inventory carryover. If you take that away we had much more normalized GPU for the other cars, we sold during the quarter. So now we've worked through that.
Used inventory, we're seeing more and more historical sort of levels of the GPU and we feel real good about where we're headed for the balance of the year.
Yes, just a follow up Tom just to make sure you understand my question and I understand that dynamic, but the implication of that you're now expecting to achieve higher gpus and the balance of the year relative to your prior expectations. What gives you the confidence that you can do that.
Yes, so I mean.
You know.
We.
GPU comes from many sources, so we've seen great.
Progress on the F&I side of things.
We've seen better vehicle selection, which leads to faster sale of vehicles and the.
That helps us.
The increase GPU with several of our accounts, where we share and the upside when the vehicles sell sell quickly.
And.
And our car buying efforts, which.
Our and important part of stocking our new locations.
<unk> locations.
Have been producing results that are.
Very attractive compared to what they've been in the past so we.
Put all of that together and we've seen.
Very positive signs on GPU that give us the confidence to maintain.
And maintain our guidance for the rest of the year.
Got it and then thinking about the profit or should I say loss on the foreign and somewhat vehicles all of the wholesale and the quarter.
And you have ballooned to over $2500 and loss for each of those vehicles.
Understanding that you wanted to get rid of them, but why not a retail them or send them back of the consignor, rather and books at huge wholesale losses.
Yeah. So most of that wholesale loss did come from the profit share account that we have and after 90 days, we have the return of those vehicles to them and we've put some reconditioning cost and we have shipping costs to get it back to them and that's where the wholesale loss occurred from now.
The most of that occurred in the months of <unk>.
January and February and the in March we decided to be more aggressive with pricing and we were able to clear of that aged inventory and also had benefit when we sell of the unit from from <unk>.
Back and profit profit on being able to finance the units or sale of product services, so that helped us.
Improve our total GP dollars, but it did impact our GPU and that's the reason of our GPU is down some and the first quarter.
Got it and number of those units actually had some reconditioning costs of you put into the vehicles that.
You had to eat the cost of.
Yes, that's correct.
Understood Alright, thank you very much.
Thank you. Our next question comes from Karen short of Barclays. Your line is open.
Thank you very much.
I mean you.
Obviously, and I don't mean to beat a dead horse here, but.
You know what people care about GPU and you don't want to give us any color on the GPU and the two Q to date, but I guess I'm wondering if you could give a little cadence on the GPU and.
During the quarter.
Given the comments that it did improve during the quarter and then I had a couple of other questions.
Yeah, one of the clear about in the first quarter. It did not improve I mean and in the month of March that's when we cleared a lot of this age inventory and that's when the GPU decreased in March and now that we've worked through that aged inventory by the end of March we are seeing significant improvement and GPU and the month of April.
And the quarter so far.
But you're not willing to give that number and the quarter to date.
No I think we'll just stick with the fact that.
Based on where we are now and what we're seeing we believe the guidance for the full year is achievable.
Okay and then.
And as it relates to the supply versus demand question I guess I guess.
Maybe a little color on your thoughts on as the country Reopens and people go back to work I guess, what I'm wondering is won't demand just keep increasing meaning one there'll be more of the supply demand kind of imbalance going forward and I mean, I think that's the philosophical question as it relates to other people use.
Public transport or drive, but I guess I'm not clear on why that balance would improve and the second half of the year.
And Tonight.
Well.
So we're not really commenting necessarily on broad market supply and demand were more commenting on is what we see and the wholesale market which drives.
You know pricing, which ultimately drives the relative.
Attractiveness of alternative remarketing channels, so retail versus wholesale and we know we have seen very strong consumer demand for vehicles and the first quarter.
As you know that's largely a result of a combination of the standard tax refund season exacerbated by the stimulus checks that hit the market.
Further exacerbated by a lack of new vehicles, which drove people to.
To used as we move away from that we are obviously moving away from tax refund season, we're not expecting any mass stimulus to continue to drive the market and we are seeing.
Manufacturers.
Building cars and selling cars and new vehicles are starting to flow, albeit slower than we'd like so.
Think there is going to demand consumer demand for vehicles is a great thing for us, whereas we're a seller of vehicles. So we love consumer demand what we what we want to see is normalization of wholesale prices, which is when consumer demand and supply of vehicles through the wholesale market.
It.
The start to.
Match up better than they had when there were these external shocks of the system that we're driving wholesale prices up so you know we.
We agree with you we can we think that there will be.
Continued consumer and consumer demand for vehicles and that's of Great thing, what we think we'll plateau is the.
And of onetime shocks to the wholesale market created by <unk>.
The lack of supply.
As it relates to the man.
Sorry, just on that point, so how exactly.
<unk>.
Gauge, whether or not they will have higher volumes of supply and the second half of the year.
Based on what data I guess is what I'm asking.
Yeah, I mean, I don't know exactly what data they look at the hard for me to comment on the App, but my guess is you know our clients are very large buyers of new vehicles and they have.
And my guess is they have a.
Pretty strong relationships with the Oems and the communicate with the Oems. So they know when the new vehicles will begin to show up or will pick up in the deliveries and day gauge their remarketing needs based on what they think.
And when they think that new vehicles will start to get delivered so yeah.
And I don't know exactly what day, they are looking at but I know that they have.
They have conversations with the backwards into the supply chain for when these vehicles will be delivered because they need to know and advance of that they can notify the drivers of these vehicles to return their lease vehicles and pick up the new ones.
Okay. That's helpful. And then sorry last question just in terms of the new E Com interface that you're rolling out and June can you just talk a little bit about that and what.
Maybe some risks just to think about in terms of the execution. If there are any.
Yeah, the new the tech platform pretty exciting I mean, we do believe that this will help people get further down the curve of online buying.
Right now because we're essentially and omni channel marketplace, and our guests can kind of enter and exit the online portion of the journey wherever they like.
It's not necessarily.
Where we are from a tech perspective isn't necessarily a negative but as we get more sophisticated with our tech enhancements and our tech rollout. We do believe people who are more accustomed to the and hub experience will begin we will begin to gain additional comfort in doing the due and the process online.
And those who have already made that shift to online will view our online capabilities.
Favorably as compared to the other solely online.
Auto sellers and so as we think about where we're going with technology. It's really our plan is to make it as easy as possible for the car shopper to do as much or as little of the process online as they would like and for it to be seamless if they want to.
Combined the online portion of their journey with the and hub experience.
And so what youll see as of mobile App, you'll see and enhanced website and then a whole bunch of tech on the backend.
That debt makes.
The pricing your trade and the financing your vehicle and getting the vehicle delivered to your home and all the other aspects of the online the car purchase it will make it slicker and easier.
And and that's going to be a benefit to those who want to who kind of seek to do more of it online and.
So we believe that that will be incremental to.
And two two or the ability to sell online.
Great. Thank you very much.
Yeah.
Thank you at this time I would like to turn the call back over to <unk> co founder and CEO, Michael Moore for closing remarks.
Thank you and thanks to everyone, who dialed in today I do want to highlight the car lots of his 10th birthday Party is coming up and early summer. Our first birthday Party was in 2012. It was in my backyard of the handful of us rejoiced and making it one year into our journey and and to the launch of our second hub.
Michel the wife of our first higher teammate Ricky who is still with US today baked the birthday cake with and Orange car and top of it that was more than enough for our small group to eat and I'm thrilled debt, while Michelle still bakes amazing cakes, our growth has outpaced our ability to feed the team. This 10th birthday Party will be a special one for us it'll be our first as a public company and it'll be our first.
As a coast to coast company and the team will be eating several case around the country and is thrilled to be executing on our vision to be the greatest automotive retail experience and with that we.
Look forward to speaking to all of you again, shortly thanks and have a great evening.
And this concludes today's conference call. Thank you for participating you may now disconnect.
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