Yahoo Finance's Alexis Christoforous and Toby Russell, Shift Co-CEO, discuss growth after Shift reported its first earnings as a public company.
ALEXIS CHRISTOFOROUS: Toby, good to see you. The last time we spoke, just a month ago almost to the day, I think, was the day that Shift went public through a reverse merger deal with the blank check firm Insurance Acquisition. Since then, you've come out with your earnings, record revenue up more than 30% year-over-year at $60 million. Net loss, though, a little wider than expected, a little more than $23 million. But talk to me about what drove demand and your results last quarter.
TOBY RUSSELL: Yeah, we're seeing incredible demand. At a high level, this is an $840 billion market, and less than 1% of that is represented by the collective group of e-commerce companies. So we just see a ton of demand out there and a lot of growth opportunity.
And our first publicly issued earnings, we did show, as you mentioned, record growth, Alexis, at north-- around $60 million in quarterly revenue. And that had us selling, on average, over 1,000 units per month over the past quarter. That's great growth for us. We had our earning call yesterday and projected out for next quarter that we're going to see continued growth. We actually expect triple-digit growth year-over-year in terms of our Q4 revenue.
ALEXIS CHRISTOFOROUS: So having said all that, is it a bit of a head-scratcher for you and for other executives in the company to see what's been happening with the stock? Since going public through that SPAC, it's been a bit of a rough go. The stock is down more than 25%. Is Wall Street just not getting Shift's story right now?
TOBY RUSSELL: So we're very much reiterating our long-term projections and goals. We see tremendous growth opportunity. We see long-term GPU growth. And we are investing in growing our marketing, in particular, so that we can build brand and have that long-term shareholder value return. Can't comment on the day-to-day turn in the short run. But what we're seeing is the right long-term trajectory, and we're doubling down on that.
ALEXIS CHRISTOFOROUS: Is this a situation where, you know, for young companies, they'll sacrifice profit as they spend on things like R&D, sales, marketing, is that what's happening with you right now at Shift?
TOBY RUSSELL: If you look at our Q4 guidance, that is precisely what we were talking about, is saying we're seeing demand. We want to fulfill that demand. And we are-- we did-- we did reduce our gross profit per unit guidance in Q4 in line with seeking to continue growing and investing in the long run.
ALEXIS CHRISTOFOROUS: Now, I know you did some expanding last quarter. You're in Seattle now. I think you're blanketing the West Coast. You moved into Austin, Texas. Are you on track? And what other new markets are you going to be entering?
TOBY RUSSELL: Yeah, we're super excited about that, Alexis. We launched Seattle, which gives us an interconnected self-sustaining but connected regional presence up and down the entirety of the West Coast from Canada to Mexico. We believe that allows us to deliver the best customer experience in terms of access to inventory, a broad array of inventory, and is a [AUDIO OUT] digital [AUDIO OUT].
We recently announced the launch of Austin, Texas. We do expect to have a similar interlocking regional structure that we put together, and we are bullish on our growth. We haven't announced the next markets that we're going to be launching, of course, both for competitive reasons, but we're super, super excited about Seattle and Austin, and we feel like the momentum is great there.
ALEXIS CHRISTOFOROUS: You know, you're in a bit of a crowded space right now. You've also got Vroom, Carvana. What separates you guys? You know, when-- I think it becomes somewhat confusing for folks when they go online looking for a used car. What-- what's the great differentiator here?
TOBY RUSSELL: So two things tend to really differentiate the Shift experience from what you might see with the other folks you mentioned. One is a wider array of inventory. We sell cars all the way down to less than $10,000 in cost and all the way up into the 30's, with an average selling price in sort of the $17,000 range, whereas the others tend to sell more expensive cars.
Why is that? We acquire cars from consumers, and we allow test drives to consumers. In order to be able to do that full spectrum [AUDIO OUT] you need to be able to have that local logistical capability.
But zooming out, Alexis, I'd say that one might call it crowded but, in fact, as I was mentioning earlier, this is an $840 billion market. And collectively between Vroom, Carvana, and Shift, we represent less than 1%. Buying shoes or clothes is, like, 30% online. So we see just a huge trend and change going from, like, 1% of cars bottom line to that 20%, 30% relatively quickly over time.
Because if people can buy shoes and clothes online, they definitely want to do it with cars. The problem is they just haven't been able to in the past, because the old retail model doesn't allow for that. And so we just see a lot of growth opportunity there for all of those players.
ALEXIS CHRISTOFOROUS: You know, with all the lockdowns, and now in some places new-- new lockdowns taking place, you'd think that folks wouldn't be going out buying cars. Do you see this trend continuing, even post the pandemic?
TOBY RUSSELL: We do. Before the pandemic, folks would say in the retail auto industry boy, we need an online strategy in the next five years. And now with the pandemic and that realization, moments when we looked around and saw folks like CarMax literally shut down in California, everyone's saying the time for online is now. We are going to see continued growth. And I think what we've seen is a structural pulling forward of consumer preferences to really-- to really want to be able to shop and buy in the online setting.