Q3 2021 Enjoy Technology Inc Earnings Call
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Hello, Thank you for joining us for the enjoy technology third quarter of 2021 financial results conference call and webcast. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session I will now turn the call over to Scott.
Anderson, Vice President of Investor Relations at enjoy thank you. Please go ahead.
Thank you operator, and good afternoon, everyone. Today's call will include remarks by enjoys Chief Executive Officer, Ron Johnson, and enjoys chief financial officer for Recon and address.
I should know this debate enjoys chief growth officer will join the question and answer session and on this call enjoyed issued its third quarter 2021 earnings press release, you can access our earnings release on our Investor Relations section of our website.
During the call we will use non-GAAP financial measures and performance metrics you should refer to the information contained in the company's third quarter 2021 earnings press release for Definitional information and reconciliation of historical non-GAAP measures to the comparable GAAP financial measures. We will also make forward looking statements, including projections and <unk>.
Commit to future events business or industry trends or business or financial results are subject to risks and uncertainties.
Actual events or results could differ materially from those projected in our forward looking statements. Please refer to our filings with the Securities and Exchange Commission, which contain important factors that could cause actual results to differ materially from the forward looking statements. These documents can be found on our website at investors <unk> <unk>.
Joey Dot com, we do not undertake any duty to update any forward looking statements due to the veterans day holiday our form 8-K will be filed before market open on Friday November 12.
And now I'd like to turn the call over to Ron Johnson CEO of enjoy technology Ron.
Thank you Scott and thanks to each of you for joining us for our first earnings call.
We're thrilled that on October 15, 2021 are combination of marquee rain acquisition Corp was successfully completed raising more than $250 million in growth capital to help accelerate our strategy of reinventing commerce at home.
And fuel continued expansion with key partners.
Since this is our first call and many of you who may be new to our story I am going to briefly introduce you to enjoy.
Then I'll discuss recent initiatives provide context around the current business environment and.
And share where we are headed from a strategic perspective.
Fred will then review our financial results for the quarter and 2021 revenue outlook before opening up the call for Q&A.
Enjoy started with a simple question.
What is the best of the store could come to you.
Over the last seven years, we have worked tirelessly to answer that question in banking our mobile stores.
A new channel that pairs the convenience of shopping online with the best of our retail experience brought together in the comfort of the home.
When we began this journey I was confident that we can create a great customer experience.
But what I didn't imagine because that we have simultaneously create a game changing disruptive logistics network as well.
We all know the world is filled with tired stores. This is also true with the logistics network that power online shopping.
Vast majority of online orders are fulfilled from regional distribution centers, where inventory stored which third party has been transferred to customer store strips.
A matter of days.
Our partners forward deploy consigned inventory to our local warehouses, which we further deploy into our mobile stores to deliver a product with an experienced in a matter of hours.
In the years ahead, we believe this will become minutes as our network of mobile stores utilizing our proprietary technology platform will deliver retail.
Demand.
Quick commerce is the leading category in disruptive retail right now and it depends on inventory being located within minutes of the customer.
While our doors is located within Nast as a customer as well and can be deployed on demand for our partners.
Every mobile store is a warehouse on wells operated by a full time employee training to deliver a product or an experienced at the home while turning in delivery into a profit center for our partners.
And we believe the best way to complete an online purchase for a premium product is to bring the full store experience through the door.
Once in the home we can do everything you can store can do that better.
Our highly trained experts deliver setup and activate devices and can take trade ins providing value on the spot.
But we don't stop there.
Already with the.
Merchandize, our extra thoughts for hardware software and subscription services.
The spot saving customers the trip to the store.
Importantly, our experts provide the deep engagements our partners' desire.
Our lifetime net promoter score of 88 validates the value variance to shoppers.
Enjoys partners in some of the world's largest companies, including AT&T and Apple in the United States right.
Rogers in Canada, and <unk> in the UK.
Each of these partnerships is deep and enduring.
We have been working with our longest serving partner AT&T for nearly seven years.
And our newest partner Apple for two years to bring it enjoyed a life in the United States.
UK based partners <unk>, and Canada based Rogers, not only our great business partners, but have invested and enjoy as well.
Our partners drive customers to enjoy a near zero.
Costs from their online platforms call centers and physical stores.
Our mobile stores, then bring products services and subscriptions to customers.
Our modernization strategy provides win win win dynamics, where the revenue enjoy generics during our visits is there a predominantly from the incremental solutions, we sell to partner customers.
And while new customers love shopping at home.
As evidenced by the fact that our NPS goes up as more solutions are purchased.
Today, we operate in location serving over 50% of the population.
The United States, United Kingdom, and Canada, combined representing over 200 million addressable consumers.
Our proprietary technology platform enables deep integration with our partners <unk>.
Our systems use real time data to optimize productivity.
And sophisticated inventory management tools deliver on demand retail experiences with the providing precise inventory a customer needs.
After years of serving our partners. We have earned the right to expand the number of customers, we serve with our smart last mile.
Our partners recognize the value of our disruptive logistics network and are expanding their engagement with us.
Beginning this quarter, we are serving online customers who pick an experience.
And those who pick a simple delivery.
Our partners recognize how our advanced logistics platform can improve speed and reliability, while offering experiences to as many customers as possible.
Our long term ambition is to serve as many of our partners customers as we can.
As we provide a differentiated profit generating last mile for the world's leading companies.
While most logistics networks are tired.
Ours is inspired.
And our partners. So they can gain a sustainable competitive advantage by going deep with our company enjoy technology.
Today, we measure our partnerships in years in the future.
Okay.
With that overview.
Our third quarter results, we've had a busy quarter accomplishing several important strategic initiatives that will drive our growth for years to come.
As I referenced earlier, we announce and Joy smart last mile solution and are on track to expand to all U S markets in time for the holiday season.
This is a game changing opportunity for enjoy as we will provide both in home retail experiences and <unk> deliveries gaining access to a much larger share of our partners' customer base.
This expands demand <unk>.
The increase in inventory.
Significantly deepen the partnerships, we have and accelerates our scale.
Importantly, we believe this will enable us to operate our mobile stores at optimal capacity throughout the year.
We also expanded our strategic partnership with Apple to a total of 14 markets more than tripling enjoys coverage with Apple to reach 67 million addressable consumers.
And thrilled with how our relationship with the world's most admired company is scaling.
We have expanded our mobile stores for Apple, while continuing to deliver engaging customer experiences paving the way for even more growth in the quarters ahead.
We also launched cross partner selling of Apple services across all U S markets, providing a new revenue source for Apple and in July.
Ross partner selling is off to a great start.
Customers Love the action you learn and explore the full potential that subscription services can bring to their lives.
And the NPS any visits that includes solutions for multiple partners are the highest of any visits we perform.
During the quarter at the recast of our North American partners. We also announced plans to expand to approximately 100 markets in North America by the end of 2022.
Once completed this will expand <unk> global population coverage from 200 million to about $235 million for consumers.
We've expanded life catalog between additional North American partner following the success of.
Technology earlier in the year.
Live catalog enhances the Congress at home retail experience as a smart merchandising tool enables people to shop at home.
They wouldn't have store.
And finally, we have successfully hired many new experts in a difficult labor market and expanded our mobile store capacity significantly.
We are thrilled with how these initiatives position us for future growth.
Q3 was a strong quarter for us on everything within our control.
We have excelled at attracting talent.
We have delivered visits with record duration.
All time high solutions per visit attach rates.
Excellent on time performance and earned continued industry, leading customer service scores.
A harder business challenge has been industry wide supply constraints.
We rely on a steady stream of inventory from our partners.
While late in the third quarter, we had lower inventory levels and expected.
These inventory issues are customary as manufacturers wind down inventory in preparation for a new product launch.
We believe that the key for a launch we would likely have better supplies the normal.
Unfortunately, the supply of key smartphones has been significantly lower than planned during the fourth quarter and will negatively impact our fourth quarter financial results.
Covid related component issues and a worldwide chip charters, you are having an industry wide impact.
We believe we are being treated fairly by our partners and are in discussions about these issues and building solutions to mitigate inventory constraints in the future.
The cornerstone is our smart last mile.
We are also now developing the capability to take orders prior to the possession of inventory.
I couldnt be more excited about 2022, and the long term prospect for in July and we continue to invest in our mobile stores to support our partners into 'twenty two and beyond.
The future of Commerce is moving to the home and we believe we are well positioned to capitalize on this opportunity.
With that I'll turn it over to free to discuss our financial performance.
<unk>.
Thank you Ron and good afternoon, everyone I will start with a quick summary of our year to date results.
Then I'll cover the current quarter in more detail.
For the nine months ended September 32021, we generated $58 $8 million in revenue, representing a 39% year over year growth.
North America segment revenue grew over 49%.
Europe segment revenues grew four 2%.
We added over 180 daily mobile stores during the period for an increase of 45% year over year as we continued to add capacity to meet future demand.
We averaged 587 daily mobile stores globally.
Daily revenue per mobile store was $367 during the period.
<unk> loss attributable to mobile stores was $18 3 million.
Total net loss was $149 8 million.
Our nine month, adjusted EBITDA was a loss of $112 million.
Turning to Q3, we generated $18 $6 million in revenue in the quarter, representing an increase of 13% from the prior year.
We added 134 daily mobile stores for an increase of 29% year over year, driven by our North American markets, which expanded stores by over 47% sequentially.
Sequentially, our daily revenue per mobile store declined modestly.
I'd like to call out three important factors influencing our topline and mobile store revenue performance.
First as Ron mentioned, we expanded with Apple through the quarter tripling the number of markets to a total of 14 to reach 67 million potential customers by quarter end, our efforts to recruit and train highly talented knowledgeable experts, who very successfully the challenging labor market to ensure success.
We start slowly and build our visit volume over time, focusing on the fundamentals my content performance visit duration.
And operational excellence, while we tripled our daily mobile stores supporting the Apple partnership.
<unk> visits per day assigned per mobile store during the launch period reduced average daily revenue per mobile store in the third quarter.
The second factor influencing the quarter was our investment in additional mobile stores to be ready for the holiday shopping season from the beginning of the third quarter to the end we added over 100 daily mobile stores in North America and that number nearly doubled again by the end of October.
The incremental investment in mobile stores occurred during our seasonally lowest volume quarter of the year.
The investment reduced our visits per day per mobile store and revenue per mobile store and increased cost of revenues, we timed the ramp up late in the quarter to minimize the impact of this growth.
As Ron mentioned in his remarks, the third factor was product availability at the end of the quarter, which is typical during the transition to new product introductions product availability impacts our operating results in several ways. We estimate these supply issues impact to revenue in Q3 by approximately $4 million.
Largely at the end of the quarter incident with the new product introductions.
Lower product availability reduced visits per mobile store per day, which in turn reduced average daily revenue per mobile store, we have the capacity, but with lower product inventory many potential visitors opportunities limit or.
Our existing capacity could have absorbed these visits and revenue would have flowed through to mobile store margin and EBITDA at a very high rate.
We remain pleased with our revenue per visit performance our COO.
Cost part of the selling initiative continues to scale nicely and we're seeing a steady increase in the number of subscription services being attached during telco partner visits were also very pleased with our operating performance on key metrics, we control such as on time performance visit duration and of course, our strong customer satisfaction results.
As you know daily revenue per mobile store as a function of revenue per visit and visits per day taken together. The factors. We've previously discussed reduced our mobile store revenue sequentially from Q2, principally from lower visits per day. Furthermore versus the prior year Q3 results are not directly comparable as during <unk>.
<unk> thousand 20, we will provide supplemental onetime fees earned from several partners to offset COVID-19 related expenses.
Cost of revenue, which reflects the direct operating cost of our mobile stores principally extra compensation in vehicle costs was $27 million. During the quarter. This result was 52% higher than the prior year period, and 5% higher than Q2, reflecting additional experts in vehicle additions to support the growth and mobility mobile stores.
Our mobile store loss was $8 4 million for the quarter, reflecting softer than expected revenues, which will flow directly to mobile store profit.
Total operating expenses were $64 7 million for the quarter operations and technology expenses, which reflect activities that support our mobile stores increased 12% sequentially from Q2 and 30% from the prior year period.
The increases were driven by higher recruiting and onboarding costs from our successful hiring activities.
General and administrative costs were $13 5 million in the quarter and included $1 1 million and higher professional fees related to the business combination as compared to Q2 and approximately $800000 in additional stock based compensation.
Net loss for the quarter was $54 4 million.
Versus $56 million in Q2, and $28 7 million in the prior year comparable period.
Net loss per share basic and diluted was <unk> 83.
At the end of it.
There were $65 9 million shares outstanding.
Adjusted EBITDA was a loss of $43 2 million.
Let me briefly touch on our segment results.
We operate two geographic segments, North America, consistent with the U S, Canada, and Europe, which captures our UK operations North American revenue of $16.
<unk> increased 29% year over year, driven by growth with AT&T and Rogers in existing markets and expansion of our Apple partnership we increased daily mobile stores by 150 year over year as mentioned.
100 stores during the quarter with an acceleration plan during Q4 data.
Daily revenue per mobile store averaged $379 down sequentially from the previous quarter's result of $431 and impacted by the lower number of visits.
Stemming from three factors discussed earlier.
North America segment loss was $26 9 million for the quarter.
Year to date, North America total revenues increased 49%.
Year to date, North America segment loss was $66 $9 million.
Compared to $45 9 million in the prior year period.
Europe revenue was $2 4 million for Q3 down from $3 8 million in the prior year period segment, largely Europe was $8 1 million as compared to $5 4 million in Q3 2020.
Year to date, Europe revenues of $9 $9 million increased 4%.
Year to date Europe segment loss was $21 4 million.
Compared to $12 9 million from the prior year.
Q3 was a rebuilding quarter for enjoying the UK as.
As we did in North America, we shifted to a win win win economic model that generates a higher variable fee on solutions attached during our customer visits.
Transition to this model reduces our revenue per visit in the short term with office more upside potential over time.
During the transition we reduced our mobile store footprint until we experienced measurable improvement.
Now, let me briefly comment on the sources of funds from our recently completed transaction.
Enjoy raised more than $250 million in growth capital. This includes a total of $75 million in convertible notes that converted to equity at the close of the transaction.
$80 million through a pipe facility and a combined $110 million in gross proceeds from both the cash and trust and the backstop agreement proceeds from the transaction were used to retire approximately $49 million in debt.
Let me close with our updated 2021 revenue outlook.
As of the end of Q3, we remained on track to meet our prior 2021 guidance. This guidance was predicated on a strong fourth quarter driven by historical seasonality successful hiring to increase mobile stores launch of the smart last mile and ample inventory performance we.
We successfully hired experts to meet our mobile store expansion plans and launched smart last mile on schedule.
We were even encouraged by the initial smartphone launch quantities, which were higher than the prior year and sold through rapidly.
However, starting in October subsequent receipts of inventory inventory was significantly below our expectations due to industry wide supply disruptions affecting our partners cons.
Consequently, this has been reducing our revenue compared to plan by approximately two to $2 5 million per week since the product launch and we have very limited visibility into near term receipts.
Therefore, we are updating our full year revenue outlook for 2021 to a range of $80 million to $90 million to low end of this range assumes no improvement in product availability in the high end assumes improved product availability.
Given that we have relative to the fourth quarter, we no longer expect to be profitable at the mobile store level for the entire quarter as we had planned.
Fortunately because of our successful hiring and launch of smart last mile. We are positioned to immediately translate new inventory into visits and revenue.
Going forward, we're implementing technologies to make enjoy less exposed to inventory fluctuations.
As you heard Ron mentioned smart last mile is a strategic initiative for enjoy what we believe will provide significantly more inventory when available throughout the year in.
Importantly, it also enables the technology change that will allow us to take orders for future visits without inventory on hand, we believe this ability to take back orders will mitigate loss visits during periods of supply constraints such as were experiencing now.
In closing we believe there are tremendous opportunities ahead for enjoy as we pioneer a disruptive new channel for commerce at home there.
There will be challenges along the way because we have to have inventory.
That does not change the large addressable market and first mover advantage enjoy has for its unique business model.
With that I'll turn it over to the operator for questions and I'm joined by Ron will most debates our chief growth officer.
Thank you. Thank you would like to ask a question. Please press star followed by one on your telephone keypad.
Lisa would you like to remove a question. Please press star followed by team again to ask a question press Star as a reminder.
Gary if you are using a speaker phone. Please remember to pick up your handset before asking your question. We will talk to you briefly ask questions registered.
This question comes from Barry Sine with Spartan capital. Please proceed.
Hey, good afternoon folks thanks for taking the call.
Wanted to continue on the supply chain just to understand better how.
In the field that impacts operations. So on the one hand, presumably youre able to schedule fewer visits on that point I would think that your partners would want to prioritize supply of handsets to enjoy because of the greater outcome for you and the partner and then the second impact I wanted to ask.
Without the inventory you carry on the vehicle and then the ability to upsell so customers, taking one phone and they are eligible for upgrades on two more sell the additional phones could you talk.
How.
The supply chain issues are impacting you on a day to day basis.
Hi, Barry This is Ron Johnson I'd love to take a first shot at that question for you.
S trade mentioned on the call we were thrilled with the initial receipt of supply phones.
Smartphones could launch and sold through rapidly.
That was followed subsequently by very limited supply of phones, and we've been missing about 2% to $2 $5 million a week since that time.
The challenge Barry is that our partner and I think our partners are treated us very fairly we're in conversations with them regularly about the issue of the flow of products.
Integrate this going forward, but the challenge uniquely what happens is that people because of limited supply, 10% pace that place their orders online.
A future date, if you go to our partner site Youll have noticed starting around October 1st that key smartphones are being booked four five and six weeks out the partners have to prioritize those orders.
Enjoy and other channel partners, so that limits the inventory that's available to us that would also address your second question that limits the amount of inventory in the vehicles for additional purchases.
It doesn't impact accessories, it doesn't impact subscription services, but it does impact our ability to sell additional key incoming.
<unk> phones.
In the visits during that period.
And Barry this is Melissa just to add to that.
On the second point that Ron was talking about the ability to sell additional found is that we are able to with our partners. We are able to place orders for future deliveries. So though as you can imagine many customers like the immediacy of being able to purchase through our commerce at home.
<unk> platform and getting the phone on the Scott we are able to purchase.
T cell phones for future dates and they just get shipped to the customer. So we can still get revenue per daily mobile store for some of that hot Skus that we don't have in stock at the time.
Okay. That's great on the current long if we think longer term how should investors think about supply chain issues in terms of the ability of enjoy to be a high growth company over the next several years are you optimistic they get worked out are you working on other strategies that you're working on you.
<unk> talked in the past about other verticals luxury products. For example, what's the long term solution for a joy to the current supply chain constraints.
Yes, let me take a shot at this is Ron again.
Around the iPhone launches since the initial one.
No two are the same.
Many things changed the flow of product end of life product the.
The announcement date, the number of products here announced on the announcement date.
The flow of inventory going forward than historically, it's a <unk>.
Short number of weeks issue till we get into very high flow of inventory. This is a very unusual one but the good news as we look forward as we can mitigate this through our technology platform and I'd like to Melissa to talk about what were doing work for our partners to address this going forward for future years as COO.
As we can absolutely so as Ron <unk> mentioned earlier and as you have heard we have launched that we successfully launched our smart last mile platform.
And this is a cornerstone to us being able to take inventory or to take orders without inventory on hand.
Because of the smart last mile. We now have the capacity to do.
Both experiences as well as deliveries and because of that we can flex that to support a larger demand.
Therefore, we are we.
We expect to work with our partners to launch something that <unk> mentioned, which is called backward areas are purchased or being able to take a future visit when we don't have the inventory on hand, and this will help with that Ron just mentioned, where the customer has purchased in or purchase the phone.
And the inventory had already committed to them. So that customer gets prioritized enjoy will just be the settlement not bad and our comments at home platform will be able to supply that particular commitment to the customer.
Okay. That's great and then one last quick question, if I might please and freedom, leaving you out so I'll throw this question to you.
As of today do you currently do have a current share count loss for shares outstanding currently.
Yes, Barry I will give you.
A.
Number is also in the <unk>.
Q3, youll see the enjoy share count creep.
Transaction.
We will come out with.
Disclosures with the new share count post the transaction just give me a second here.
So the.
Closing.
Had $119 2 million shares and jewelry common stock.
There is an additional $15 7 million of warrants with that.
Okay.
Most of my questions. Thank you all for taking the mall.
Thank you Mr Stein.
The next question comes from Dana Telsey with Telsey Advisory Group. Please proceed.
Good afternoon, everyone couple of questions. Please.
The mobile story and the timeline to profitability given the changes going on now how do you think about that timeline I know it was originally supposed to be in the fourth quarter.
How do you think about timing and then on inventory availability.
Any insight into do you get.
When you get more goods in the beginning of 'twenty, two any time any timeframe.
Yeah.
Hi, Dana This is Ryan let me take the second question <unk> talked about mobile store profitability.
We are working with our partners on inventory.
But obviously, we can't comment on the partners supply chain and their ability to deliver.
We therefore are taking our guidance and shown two ranges, one which assumes no improvement in supply chain and one that provides improvement to provide a range.
And here a long time I would be surprised if inventory flow didn't improve as we move through the quarter and be pretty.
Pretty darn solid at the beginning of 2022.
However, we don't know these are kind of unprecedented times, but I think the best thing to look at there is the communication. They are hearing from the manufacturers because ultimately the product will start flowing there and then transition to the partners like a carrier and as I said before Dana we feel like we are going to be treated very fairly <unk>.
<unk>, we are strategic long term partners that have a core competitive advantage for them and so we are confident in the inventory flows that it will flow to us at the right level.
And data <unk>. Thanks for the questions just touching will build on what Ron mentioned, so a mobile store profitability is really a function of the revenue per visit in the visits per day.
On the revenue per visit we're very pleased with how things are trending.
On the visits per day, that's where the issue.
Is impacting the mobile store profitability. So we have the capacity that we built that through Q3, and a very difficult labor market. We've got revenue per visit part of the equation.
The key question Mark is the visits per day, and so as inventory comes back that inventory is going to flow into visit volume because we will be able to complete the visits and that will improve visits per day.
We should be able to.
Quickly show mobile store profitability enough for the whole quarter, because we're already halfway and it's going to be challenging, but that's the missing link is the number of visits our stores can do and that part of the equation is challenged by the inventory issuance, we're trying to find the balance of <unk>.
When it comes back we want to still be at scale to still have the overall capacity.
To be able to have the volume in place.
And I think.
As inventory comes back we'll be right on track to to ensure profitability.
Profitability, but not for the quarter.
Got it and two follow ups.
It's three that can be managed until revenue trends improve and then Ron.
Think about the rollout of the mobile store trajectory.
How is this being adjusted as you think about 2022.
Yes, I'll take the second one first I guess I'd like to talk first Dana.
We are not changing our approach to 2022.
One of the highlights for the quarter.
<unk> built the capability, we actually hired 500, new experts in a month.
So we have built that muscle to hire up to 6000 experts in a year that gives us a lot of flexibility because we can be a little more nimble on adding stores, because we had to hire people and train them and bring them up to speed in a number of weeks.
But we do believe the most important thing is we want to be ready when the inventory count.
Last year during the pandemic, we had a shortage of mobile stores for a good part of the time, we did not have the availability if desired for our partners.
And part of being public and the capital raise.
Raised we can leap store counts and so we have we're managing that very carefully this quarter because of our rapid hiring even though the slow down the number of people we brought on two.
To address the issue you talked about in the first question, but we're bullish on 2022 commerce is moving to the home our partners are leaning in the smart last miles can have a huge impact on our volumes overall and we want to be ready for that and so we're not going to let the short term supply chain issues get us on our back foot.
We want to be ready when the deferred inventory to arrive to continue to drive our business and when homes.
The other thing I would add to that to the first part of your question is there's always opportunities for efficiency and productivity. One thing for sure. We are doing is being very focused with.
The areas and the initiatives that we're investing in.
Got a few key drivers of the business to a smart last mile is.
Very exciting opportunity for us.
That has some technology.
Tweaks with it that we're investing behind but overall as you know our.
Feeling is that this.
Challenges in interim challenge.
We need to be ready to scale when that inventory comes back and that's exactly the approach. We're taking at this time closely watching it very closely working with our partners very closely.
We'll continue to be focused on efficiencies. We don't view this as a situation that would need to have sort of some different.
Different cost approach, where we would not invest in some of these growth opportunities that we see ahead of us. So we want to make sure we capture those for the future.
Thank you.
Thank you Ms Telsey.
The next question comes from will power with Baird. Please proceed.
Great. Good afternoon. Thanks for thanks for taking my question I guess, a couple of questions I guess I want to come back to the supply chain.
Commentary and I guess first off just wondering if there are any signs at this point given we're almost in mid November.
The improvement in inventory it sounds like it's still pretty murky.
Near term, but just wondering if youre seeing any green shoots there at all and I guess, then as part of that I guess, where I'm really just trying to understand the confidence in 'twenty. Two at this point, given what seems like low visibility and I guess.
I understand why you would still have supply chain impacts as you lease to enter into 2022 and I guess then as you look at kind of reiterating previous 2022 guidance what are the key elements that give you confidence in being able to hit those targets given the current issues.
Yes, as we look at 2022, there are many growth initiatives that will drive volumes.
That we believe will allow us to hit our forecast or guidance for 2022 on the revenue side, obviously, you've been asked to expand to nearly 100 markets with our partners working on rollout plans for that to get those done as we move through the year.
We're launching smart last mile that has launched they'll be in all markets in time for holiday.
That is a really strategic initiatives, let me explain what it is we built a supply chain puts inventory within minutes of customers as.
As I mentioned earlier in the call most of our partners still ship from regional warehouses.
It takes days to reach the customer.
Everything we do today with forward deploy inventory requires giving to the door.
So our partners have come to us and said, we'll use do our <unk> and <unk> because you have greater speed.
Youll have better reliability and you can turn those into an experience.
That's a really strategic initiative, but also for our partners that were declined.
That whole strategy was not in the original Investor plan.
So that's a growth opportunity on top of that additional headcounts and other things. So we do not have a demand issue. The question that will become we don't believe we have a demand issue. It is a supply issue and having been around this industry a long time the harvest supply chain portion is almost at the launch now.
If you think of Apple <unk> got $1 2 billion users around the world.
People upgrade two or three years, Apple will do about $400 million.
Core products every year a lot of people want those at the launch Thats always an ongoing challenge. This initial period, but then supply and demand catch up.
And I believe that our partners have the ability to manage the supply chain I don't have any better visibility than you do but all of my experience would say this will become a modest issue as we move into spring, but we believe our demand drivers will offset the supply issues that could come up.
And we that remains to be seen but we are confident in our 2022 plants and very excited to get back in stock. So we will continue on our journey.
To profitability.
Okay, Yes.
Helpful.
<unk> at some point I guess, just a question of how.
How long it actually takes.
Yes.
Well I'd like to address too.
The encouraging thing here is it appears like from the early results.
The.
IPhone 13 is a very strongly demanded product.
And as I look into 'twenty, two I am thrilled to have a roadmap ahead of us which is a product that appears to be in strong demand. That's a core product to us. So the fact that it's in high demand is a net positive. The fact that the supply chain is a little tight right now is the negative we'll see how that balances out.
Yes, Okay that's fair.
I may have missed it in.
And some of the earlier commentary on the global store.
Addition, fraud are you also targeting 1000 mobile stores kind of beginning of 'twenty, two and I guess kind.
Tied to that maybe just update us.
What the hiring environment looks like what the retention environment looks like no one knows what a tough labor market. It seems like you've navigated that pretty well overall so over the over the course of the last year, but just maybe an update as to how higher education is going in confidence and some of the prior.
<unk> targets for local hubs.
Thanks for the question so.
We still have a.
Same target for the exit rate for this year.
We're going at a little bit of a slower rate in terms of our expert hiring and that's partly because we proved through Q3 is that we can actually bring on experts in a very challenging environment and the quantities that we need and it didn't happen overnight, but we had a combination of really engaged.
King.
Fields, our field leaders combination of third parties to help with that and when we bring on a lot of number it was a lot of experts the aggregate numbers look large when you really bring it down into an individual market like Chicago and Orlando.
The numbers are very manageable at the local level and so we've been having good success finding quality candidates.
Very quickly.
Seeing them through a process and we find that speed from initial contact to offer fully vetted.
<unk> is has been very successful so.
We feel.
No.
It is a challenging environment. There's no question, it's probably the toughest it's Ben.
We've been finding ways to bring on terrific experts and that gives a lot of confidence on being able to.
Inventory.
Comes back.
Being able to hire to whatever store capacity, we need and that's a new muscle rebuilt.
Through Q3.
Okay, and maybe a final question if I can.
Just on cross sell and some of the traction Youre seeing there I mean, I know that lever of global visits overall.
Our below plan, but if you look at the business that have taken place are there any stats trends you can point to in terms of cross sell success to date AT&T business scaled across cell Apple services unit. The iPhone is not available that give you confidence in that becoming a bigger kind of productivity driver going forward.
Yes, as you know well we shared a chart.
In early September that show the initial cross selling from like the first week and second week in July through August week, four where we had week over week increases.
Performance and that continues to do.
Extremely well and we're not disclosing the exact amount at this time, but we're very pleased with that the most important thing as we study our NPS very carefully by visitation, we looked at NPS for <unk> delivery, we look at NPS fair visit without a solution. We look at NPS for a visit with an AT&T only <unk>.
<unk>, we look at NPS for a visit with an Apple on the solution and we look at NPS per visit personally purchased something from AT&T and Paul.
And our highest NPS visits when a customer purchases from both partners.
Ultimately your ability to cross sell is based on it being a win win situation for the customer for the partner who arranges the visit and for the other partner that we offer in this asset so to me that's the most encouraging.
Data point, it's obviously very popular as we showed early was growing rapidly.
Really does seem to enjoy the chance to chat from two partners in our benefit.
Melissa is going to be taking lead as we go forward in our cross partner selling Thats one of her responsibilities as we move through this back and that's a big priority of hers to expand cross partner selling in visits.
Okay. That's great. Thank you alright, good luck as we've kind of workforce supply challenges here.
Thank you.
Thank you Mr powered.
Next question comes from Gene Munster.
Please proceed.
Good afternoon.
Pardon my cold shipped to cold.
I just wanted to step back on and think about the big picture here concepts of commerce through the door the previous question.
<unk> a numerator metric.
Metrics that.
Give you some confidence there, but I wanted to just.
Revisit that and.
As you think about the thesis.
This shift in consumer behavior that happens every decade can you remind me what are the metrics you are seeing in the visits that you are completely.
As confidence that this is APAC rolling out as planned.
Yes, Thank you Jim very much.
Lifeline retail person, having working to answer Richard nearly four decades.
And different types of stores I work to target it worked at the Apple stores right.
The real question is when someone comes in the store what is their propensity to buy.
And retailers tend to look at our conversion rate what percent of customers bought during that visit.
And some stores you look at the percentage of traffic.
But a lot of times you look at if they bought an initial product what is their propensity to buy an additional product to go with it and thats. The number the metric that really matters for enjoy.
We continue as I mentioned earlier to increase the number of visits that have a solution attached to them.
And that was very high as we reported around early September at that time, we said over half the visits involve someone buying a purchase and that continues to improve and.
And so that is a core metric that says people like to shop at home.
Why that's important is each of our partners is trying to navigate a future where more and more shopping is digital.
Whether you or Apple or AT&T or Rogers, you depend on deep engagement when you only get to see that customer once every couple of years.
The upgrade cycle being every two years, our partners invent a lot of things. They in fact, a lot of software. They are convinced subscriptions. They invent new hardware when people buy online they don't tend to shop. They tend to buy a single product. Currently therefore, I believe Jim that the commerce at home initiative is.
Right.
The other thing that gives me is the.
Rapid change and the partners trying to do commerce at home.
I had a tunnel.
Forecasting brought to my home this weekend.
Delivered by improvements setup installed tips and tricks that commerce or at home.
Electric bikes.
As more and more are bringing the product to the customer commerce or at home.
Commerce, you look at companies like Gorilla, and others that will deliver a can affect a grocery or convenience store experience in a matter of minutes. These are the.
Patient customers are building.
And so I think shopping at home is going to continue to accelerate I think the stores will become less important role is going to change this or are you seeing and we're at the forefront of earning that shop at home that Commerce film that online order that call center and do an at home visit with amazing speed.
And the fact that we are now doing to the door and through the door expands the impacts for our partners.
In our retail stores, sometimes people want convenience they come out in a hurry I just want a product great. Thank you for coming.
Most of the time, we're able to get an experience will now in the future with enjoys model.
<unk> will forward deploy more inventory to us we believe so we can be delivered to the door of through the door. So we will be serving their customers, who just want convenience.
We'll be serving the customers who want an experience.
And we will try to turn those asked for convenience by an offer for health and do deep engagement. So I am very bullish on commerce at home team.
A short term inventory issue has no impact on the long term trends towards the home.
And the need for premium companies to engage with their customers.
Do you think.
In addition to commenting on the Congress piece of this and that's something that is a relatively new makes sense why some consumers.
Once a month to come through the door and to explain things while others. Just wanted fast than you have with your infrastructure of the ability to deliver that if you think out.
123 years do you think quick Congress could be more than half.
The total visits do you how do you think about that mix between through the door versus quickly to the door.
Here's my sense, and I don't know gene, but as you know today. The vast majority of our business is done next day and very few <unk> orders are done more than next day. So we're already faster than the traditional when I called tired regional shipping models, we deliver next day and we do some.
On the same day.
When we move into the to the door that will almost all be starting out next day.
And then we'll move to same day alright.
Alright.
Believe that over time as our network gets more advances our mobiles targets networks. The time to order to visit will go down, but I don't think that will change the mix of experience.
And delivery because all.
All customers seem to want it faster.
When we.
On the website the almost always pick the first available time. So the fact that we're faster I don't think changes the mix of delivery or.
Right because the customer is going to make that choice based on their particular needs.
And the beauty is we're learning rapidly right now we get to see every day now.
A situation, where the inventory playing field is level.
No matter how much inventory, we have every day in and enjoy house pick a house in Minneapolis, like where you are.
Net inventories level, we know what percent are picking experience and what percent are picking delivery. We said every market around the world and so we understand the demand for experience those are our most valuable visits for partners and for ourselves that we want to lean on to but we want our differentiator that we can deliver a retail.
Our on demand and not a product on demand.
That's a really big difference and I believe most of this quick congresses and be concentrated in big cities. Because you need density because you have to have the inventory within minutes of the customer with our multiple store network, we can take products or even less frequently purchased and have those within minutes of customers.
A large percentage of the trade area. So I think.
We're lucky that click commerce is happening because we built an infrastructure to take advantage of that trend.
But the history shows when someone gets an experience in one way for one product and they wonder why kind of habit for another product. They don't understand the supply chain challenges and so I think this is going to be a big advantage for us.
In the years ahead.
Makes sense.
Quick commerce and it's as.
As you are fulfilling those customers.
Long term.
Fulfillment within an hour does that potentially 30, Matt and that's what is the.
For those customers, who want that how fast.
To me, it's going to be on demand will move toward on demand.
Because we'll have that inventory in an area and our systems, which are very intelligent, we know what we've committed to exactly where that is and we know how much time is new schedule at that moment. So.
So it will be as fast as the relationship between our inventory and our availability to the customer places the order and we will be showing that in real time.
So all of the units I can't forecast exactly how many units that will be.
Final question just to follow up on some of the 22 commentary you mentioned confidence in 'twenty, two and would it be do you think just good measure given the supply issues.
As we think about modeling for next year to back off the $2 $45 million revenue outlook is to be conservative or do you feel like that's still within the range.
Sorry could you just repeat that question I do apologize.
No problem I thought you had mentioned, perhaps I misheard.
Our confidence in 2022, and I was curious with the confidence.
Was that.
Reiteration of the $2 45 billion outlook.
Should we be revisiting that just given the supply issues that are likely going to.
Kind of find their way into undoubtedly into 2020 to obtain.
To back up I, just want to make sure I understand the confidence comment.
Some perspective around that.
Yes.
Two things.
So we're confident in the opportunity that.
We have.
Going forward in the business to smaller last mile the additional market additions.
The strength of the Apple relationship.
We don't want to get into the revised guidance for next year in any way today.
What we're saying is we're confident in the plan that we put forward.
We see a lot of opportunities to capture that we believe the inventory challenges are going to be interim and we'll get through that.
We just don't want to put out another number at this time, but if you look at the initiatives that we've talked about in that team.
Up through the quarter I think all of those are.
Strengthening partnerships.
New market opportunities and.
We will certainly give us confidence in the underlying growth in the business.
That's helpful. Thank you.
Okay.
Thank you Mr Mas.
Staring with apparently no further.
Thank you there are no additional questions waiting at this time, so I will pass the conference back over to the management team for closing remarks.
Yeah, Let me just thank you for attending our first.
Earnings call.
And we look forward to talking to you in the weeks ahead to answer further questions and to clarify.
Any questions you may have.
But we look forward to building a great business.
It is hard when you have a supply chain challenge.
But they come we all know that these are industry wide I think the key is what are you building long term you don't want to impact that.
Based on the short term and so we're going to keep building and we're going to be really smart about the pace of growth of stores. As an example, we'll be smart about the rollout of initiatives. We will do things based on what we learn as we are learning everyday now and the smart last mile. But we remain very confident in our long term prospects because I said earlier <unk>.
<unk> is moving to the home.
Very good business structure.
Business strategy to take advantage of that and to help our partners win in the home. So thank you for joining the call and we look forward to talking to you again.
That concludes the enjoy technology third quarter of 2021 financial results conference call and webcast. Thank you for your participation you may now disconnect your line.
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