Shift Technologies, Inc. (NASDAQ:SFT) Q4 2022 Earnings Call Transcript

Marvin Fong: I guess just kind of a macro question. I mean, I think in recent weeks, we’ve seen wholesale prices up, retail prices may be ticking up as well. And I appreciate you guys derive most of your inventory from trade-ins. But just — is this the environment that you’re sort of basing your comments on about improvement quarter-to-quarter, or what kind of assumptions are you making about the — about the car industry in general when you’re kind of providing that sequential guidance?

Jeffrey Clementz: Yes. Certainly, we’re in a seasonally strong period right now, and we’re seeing those same trends, but we actually believe that the fundamentals that we’ve built into the business in terms of our conversion rates, our sell-through, the funnel that we’re optimizing from customers coming in and making its way to a purchase or coming to our stores, are really the underlying foundation. As you know and as you mentioned, the cellular car flow or our trading capability where we acquire the vast majority of our units from direct from customers is the strength of ours, and we’re continuing to lean into that. So we actually are basing most of our sequential improvement on the capabilities. And certainly, as the market kind of moves, we are well positioned to navigate within that.

Marvin Fong: Great. And I guess my follow-up question is, I think you mentioned that first quarter looking better. I think you mentioned from a conversion standpoint also, but is that entirely occurring in the core shift.com business? Or is some of that being influenced by the new omnichannel strategy? Is it possible to break things down that way? Or is it too early to say?

Jeffrey Clementz: We look at our business as — is kind of — we look at our business as an omnichannel business. So it’s hard to pull the 2 apart, and we’re seeing strength in consumers that want to buy fully online and those that want to come in person and for a test drive and to stage the purchase online in advance. So it’s really across the board. We’re seeing the model working well for us right now.

Marvin Fong: Okay. Great. And maybe one last question. I think you didn’t say any change, so I’m assuming it’s about the same. But the new strategy, I think, is a little more emphasis on value cars. I think your mix you had said in the past, you want over 50%. Is that still true? Or is that — might that change in response to sort of what you’re seeing in the market?