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Casper Sleep (CSPR)

Participants
Norberto Aja Investor Relations, JCIR
Philip Krim Co-founder & Chief Executive Officer
Emilie Arel President & Chief Commercial Officer
Mike Monahan Chief Financial Officer
Peter Keith Piper Sandler
Randy Konik Jefferies
Atul Maheswari UBS
Bob Drbul Guggenheim Securities
Matt Koranda ROTH Capital
Curtis Nagle Bank of America
Nick Jones Citi
Lauren Schenk Morgan Stanley
Seth Basham Wedbush Securities
Call transcript
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Operator

Good morning, and welcome to Casper Sleep's Fourth Quarter 2020 Conference Call. Today's call is being recorded. I would like to turn the conference over to Norberto Aja, Investor Relations for Casper. Mr. Aja, you may begin.

Norberto Aja

good and operator, you, morning, everyone. Thank for and Full you joining the Quarter Fourth XXXX Sleep Year Casper Thank Conference Call. We'll a your get minute with management's just started comments questions. in and to so, take let But safe before a doing minute language. harbor read me the forward-looking XXXX. call of meaning of Reform within the This statements the Securities Private contain Litigation will Act anticipated statements of should be our considered All statements that performance call and fact this financial plans, do not goals statements, expected historical novel including regarding the made on relate management's strategies, to business. impact matters on coronavirus and forward-looking objectives of our These but results future implied or achievements risks that unknown statements materially or promises by are important cause results performance the may neither be nor any performance involve known factors from or other and guarantees, expressed achievements and statements. actual forward-looking our to uncertainties different actual Form Factors for Commission other with discussed this the XX-K Securities XXXX statements call. from made the the on forward-looking year cause to report our Exchange and annual December XX, those indicated filings results in and by differ materially on ended could management's as Any statements represent this estimates such of of the call. forward-looking date

even disclaim While obligation some point we statements we to update at to elect the cause future, do may forward-looking in our events to such if so views subsequent any change.

Financial Chief at Chief reference In Mike be me Arel, Executive can With which Krim, are Officer; reconciled Investor addition, found metric and Philip today and metrics, ir.casper.com. non-GAAP Chief company's call Casper; on also we release website Officer earnings to Emilie Relations in may Cofounder Monahan, and which certain on President the Officer. the is nearest our of the Commercial GAAP

Officer. would call the we will call Casper's that, session. a Chief Please Philip Krim, turn over the go Following ahead Executive to With like Philip. for their prepared now question-and-answer to open remarks, I

Philip Krim

established American new Thank points, to quarter results. revenue, improved performance a improved records and financial XX%, our line basis call. significantly we Norberto, margins gross strong bottom XXXX, period-over-period North above representing share outstanding over marks and In fourth finish a were improvement everyone. XXX of adjusted fourth EBITDA Welcome Casper's grew quarter, revenue conference period-over-period. XX% market grew good our to fourth as and morning, the XX%, you, Casper's quarter for

and a become economy. that Changes in within core, demand our sleep and ideally wellness the solutions chain continue positioned wellness earlier During the the improve we consumer the health addressed focus by stock were suburbanization to our market, In our innovative we destination increased overall provide the we able and large through supply to experienced product quarter, with strong in our challenges demand we meet sleep successfully for year in seventh we a future. I vision broader on better for be birthday to products. people's XXXX, our only have to sleep share. Casper beginning, and not heightened since strive the back This accelerated strengthening a steadfast Since could the to in pandemic, remained April, our about products. excited including are sleep. the will in behavior Casper is our mark launching more take At

powerful a our mattress products, innovative seamless that inspires experience a brand built have We customer have loyalty and around designs created and growing sleep shopping base. our among

have New targeted detailed to Casper, over awareness, $X.X for York drive priorities: decision of and awareness be build into and points data our leverage loyal of offerings, our and invested a billion City, national XXXX. campaigns have and will making. we Since result, analytics three ads started that our founding brand we a on XXXX, increase for Starting expanding with focused continuing As solid brand product to a our grown which in growth offline strategic subway with brand have customer foundation online We in we base. In awareness. accelerated distribution. core growing

As marketing efficiency. our reach, to are gaining extend grow and we we continue

versus increased year marketing on points. the we to growing by awareness, continue XXXX, while share marketing With investment, we revenue greater our XXXX XXX our favorable full we while a lowering overall and over believe basis For capturing market percentage gain into will XXXX. marketing of leverage spend, as

different we different Second, of improved and in points. product are our of full price line offer consumers our portfolio. we've Since Casper mattresses selection launch appeal the original to XXXX, now continuously expanded a expanding mattress preferences with at the that and

continue with successful other introduction we and our as of sheets products to Additionally, the streams accessories. pillows, diversify sleep revenue such

of XXXX, further success continue brand with American with sleep to to of products. XX% you the our leverage ability North pillow with particularly and XXXX, innovative beyond revenue to are In up We us mattresses. customers highlighting better our our pillow help should line introduction new in the pleased expect year-over-year our

the grew Despite of significant the across impact in In XX.X% Finally, saw distribution. the of grew to channel our website North XX.X% fourth direct-to-consumer channel network. North growing our retail year-over-year and year-over-year, performance network reflecting healthy growing quarter, America our points America our XXXX. pandemic, our multichannel distribution with partnership traffic we growth our across

To differentiated for us determination customer we drive in profitable distribution increased significant expanding we accelerated these through our Together work partnerships, our our added represented HomeStore, support also the a is team achieving network to the conversions. took us responsible During experience progress I distribution vision. see Ashley thank positioning partner XXXX. XXXX, expect hard Casper our would in towards In for steps Club, significant sales Casper through long-term Mattress, the Brothers Denver ensuring including; like reach Mathis to stores Sam's In during made multichannel we our closing, success growth. for and and new should XXXX, partnerships professional expand Nordstrom. of and you team their entire

near value. I the Casper the position steps shareholder significant with turn still combined creation the are to of platform. strength the now world-class products and we team a our Emilie? over stages taken in and Emilie. experience growing early However, to operating will improve and our The for the have sleep of profitable into brand call we of and Casper growth well efficiencies, of long-term

Emilie Arel

good and morning, than made This year consumers build to introductions more that just significant reached XXXX getting XXXX, and progress momentum. Philip through we and we in exciting marketing, past our are our new history. Thanks, plans product year, in started. any have We distribution everyone. we In on

that market is ago, seven we a goal products in near-term and we Almost strides Our casper.com. years sold goal. to one sleep one focused making to accessible on our continue towards make mattress larger place,

sleep our of products Now all we with trial hundreds than sell channels of across XX locations. more

retail both channel a and wider our direct-to-consumer partnerships. leveraging We will continue to reach audience

national regional on remains the important brands. year trial with As call, retail quarter's adding aspect and the We mentioned we ended last partnerships, XX of an purchase new decision. over

As a over specifically the focused XX.X% try drive consistently on to result, and conversion. our ability shows the mattress that opportunities are and trial retail increasing a revenue America XXXX at low relatively Consumers partnerships we differentiated comfort channel, data designs love Casper's North of consumers' cost. of the products. higher this grew Within quality rates

Casper strengthening we and time and effort the addition value of is We important purchase spending further with that our product thus in retail In doors relationships have of own deal strategy. proposition. the education a with education a at of key component remains our Casper we're of and new to point sleep know their how partners, great partners education to the adding understanding

are to new products have we to partners field staff and mentioned, actively to the Philip key merchandised in products a consistent place brand. our alongside As educate joyful sleep our working sales team approach our ensure benefits our manner are and with our of a who uniquely the retail about and differentiators in

and onboarding direct-to-consumer more in portfolio channel You should us and in American drive customers. Casper partners Through our leading by expect Casper and strong new acquire we products to media with delivered e-commerce our in Leveraging revenue to fourth sales record retail sales. optimize Sleep analytics, spend doors XXXX. more primarily continue driven the quarter across markets product North data more

of increased value. Our the with average result along growth year-over-year increased e-commerce traffic both order sales was

non-mattress broadening report nearly in am with diversify By mattress North public all open and portfolio, XX are while remaining now local in throughout segments year-end As our located we of strategically are continue business, across both to Sleep we line locations XXXX, appeal operated shops America. pleased our for to our health Casper that product we categories. consumer I guidelines.

still However, pandemic in areas, the improvement remain, generated many we a in related quarter. quarterly sequential although, fourth to restrictions traffic during the sales

in our driven decline our stores supported appointments, and revenue adapt maximizing retail pandemic as can placement, an ultimately strategy The any we focus Casper to are our outreach, our overwhelmingly launch be also customer foot have continue people, portfolio with to Broadening customer and XXXX. like positive led and We and our the brand, our and visit and design, our and the performing experience store, products. the will product design pickup so overall navigate a Casper Things new and traffic. individual accessibility through product research, Labs. development product curbside process by our is comprehensive safely in of well store customers in from by per

Our the with new consumer. products always start

of sheets brand. throws, product night's home focus room the that your keeping into sleep. night products one a we you a we and a XXXX, will exciting designed designed as the in of know all including blankets, been better supports an This During wellness mattresses suite of temperature the comprehensive a all launch first pillows, authority help XXXX. sleep. singular key have around to continued more the sleep this we including long, additional that because from half favorite and of bedroom products you be will cool further in year, points night's are new year In destination in provides to launching entry shift development good of our a and new plan be your get your over is XXXX make new and strategy a course to specifically factors items sleep on

products like with comfort, to the a I wellness continue mattress tomorrow. as home call and night's to to within evolve be sleep into company. order to industry as would and We well that we provide are better are innovation with provide you our initiatives Casper with share consumers will that and in design, over best that, network the new sleep quality the getting With market Mike. will searching confident Mike? distribution to the the that turn a brand obsessed us both you for continue multi-channel capture to a as help space, in combined continues

Mike Monahan

by Emilie. grow you and In global and continued our we quarter while meaningful million fourth to Consolidated everyone. the profitability. revenue around achieving the to provide some progress quarter, Thank our on capture Hi the making fourth specifics I'll financial share, market results. in million year. $XXX.X $XXX.X XX.X% towards $XXX of to revenue increased XX.X% compared to path XXXX, million, by for

Our on Despite quarter adjusted year quarter an the ongoing $X.X revenue EBITDA of XXXX, fourth the and year-over-year loss XX.X% XX.X% in of million to a the XXXX. by full and representing by sequentially challenges XXXX. XX% brought XX% the improvement quarter the fourth third narrowed year-over-year grew for of for COVID-XX, North American improvement versus

contributed revenue Our and direct-to-consumer Retail quarter retail the XX.X% for XX.X% year partnership fourth each to grew partnership this and full and growth. channels respectively.

for were full XX.X% important top disrupted. achieved fourth Our X.X% chain It results our despite year line was is supply respectively. period direct-to-consumer a note and grew where to our and channel that quarter the

than $XX XXXX, million revenue European contributed our had revenue from XXXX. in of less $XX.X discontinued in we in which operations, Additionally million

XXXX operational various model. and highlights our performance the Our of initiatives the throughout powerful of we business growth success implemented trajectory the

in As believe early capturing stages its Casper is Philip share. of mentioned, market we

for Our and tailwind partners of the XX.X% increased retail expansion goals. Casper creates as or offering the and well favorable $XXX.X retail Year-over-year our cost and profit powerful via gross year. increase for long-term year-over-year goods. quarter that gross The by $XX.X driven expansion our million as by margin continued to million in to product our grow mix, ability supports XX.X% near our to through by more $XX.X a basis the of terms above XXX quarter for XX.X% year. product stores financial the primarily improving of million the to to management of fourth was improved margin XX% efficient full and full shipping points and Gross XX.X% by be the for

basis. quarter, down for $XX.X by Sales marketing million the $X.X increased to statement. revenue; year to $XXX.X or the increased year-over-year of X.X% income on a XX% million million X.X% $X expense and Moving million and or representing by full

an to the full leverage enable revenue, approximately depreciation year and a the and to operating full XX.X% XXXX an increased and the quarter sales to driven of in XX.X% year and the importantly, XXXX costs in expanded of year fourth represented excluding comparing X.X% excluding decreased quarter XXXX More loss We the fourth from and XXXX expenses QX of by a $X.XX full XXXX XXXX XXXX. a $XXX.X in improvement quarter had marketing QX for XX.X% full year the of adjusted the Depreciation of a $XX.X $X.X marketing were spend G&A expense from an more percentage million XXXX. in million Interest of loss and ability XX.X% to favorably compared of the XXXX, for EBITDA to $XX full a million operations. EBITDA amortization million of and EBITDA increased and customer significant million and or the This XXXX through XXXX. of to of database a touch for success fourth store $X.X the the fourth million of for for from XX.X% $XXX.X million loss compared year full customer exit of our full to including the year total quarter to XX.X% loss to XXXX; increase XXXX XXXX. the the of changes saw was for XXXX. in of but and $X.X to loss loss and year versus adjusted from XX.X% of to as our year million robust EBITDA for points the European adjusted for long-term a our net net was of $XX.X full our compared $XX.X improvement $XX.X share XXXX. reflecting in of $X.X $XX.X loss fourth XXXX quarter and revenue the in million XXXX the a portfolio. fourth XXXX, to of in restructuring compared fourth we million for to an improvement General of year for and fourth to a XXXX, year to expenses $XX increase revenue our of product costs quarter net full million depreciation quarter XXXX. net while of loss for improvement revenue quarter due fourth $X.XX XXXX year or compared led administrative the to net the of $X.X loss full for was $X.XX of per a a net of $XX.X increased compared XX% million the increase $X.X largely on a of basis adjusted QX of of million million loss loss the million quarter The by net for one-time Earnings XX% full to $XX.X XXXX million to $XXX,XXX $X.XX value the million

line growing all trends While across adjusted the efficient we our and effective overall profitability our to business. results laser-focused top facets committed while achieving with become more our are and goals and most we remain doing and we across as of EBITDA, including pleased these lines, so

sheet Moving to liquidity and position. the balance our

in accordion compared feature As an $XX.X we equivalents December million Fargo we of late XXXX. liquidity us strengthen of Wells $XX.X million additional us obtained that XXXX, scale had cash with XX, further million of the $XX a facility enable to December $XX affording and asset-based cash in to XX will our as To million position, future.

$XXX For of XXXX, to expect $XXX of revenue. the million quarter first deliver we to million

to pre-pandemic stronger with QX higher of first a anticipate XXXX the loss the adjusted compared XXXX. fourth will be XXXX EBITDA consistent quarter slowest seasonally the We to quarter quarter our historical expect trends. We of have

QX $XX of EBITDA to for negative loss adjusted million range million. negative We the to in be $XX expect an

For to million. the XXXX, revenue traffic be range continue $XXX foot we full year within trends believe growth be stores over of our in the expect $XXX accelerate retail to XXXX to and will challenged. We million

in channel However, retail with we along our continued e-commerce in growth growth partnerships. expect

XXXX profitability adjusted achieve of we As EBITDA our communicated beginning QX midyear XXXX. earnings on to expect call,

expenditures open in plans XX $XX capital fewer stores. expect to XXXX to than We be million below with

and as right into our world-class in grow public progress we on to year meaningful first confident a made Casper have that platform. the a We path are company are sleep

heading into demand ongoing deliver sentiment and growth. supports we this XXXX the momentum to to wellness differentiated Casper like call back that growing confident for product sleep and operating our positioning Our we now and I would are turn to are Philip.

Philip Krim

point Thank in our time you everyone's for exciting an is Casper morning. at history. this

we continue strategic core awareness. we recap, on public remain of the as sleep first, first fundamentals priorities: During year To focused destination. needed brand on a to becoming three company, remain to focused our achieve a our grow vision

We generational continue share brand and our extend are consumers love and we resonance. that to and building a will reach

convenience innovation by to continue our portfolio. product Second, to bring and consumers expanding

on that lastly, to excited and launch are engineered designed and expand are rigorous curated insights And new products We consumer based feedback. distribution.

and easier distribution. questions. growth to it we can profitability We progress these accelerated take consumers priorities our continue will and of expect make to goals. By points on in I discover, now will to to ultimately operator, making focusing Operator? our products more for the more so the through turn while purchase research we on over call XXXX drive

Operator

Your first Thank Sandler. you. question [Operator Piper from Keith from comes Peter Instructions]

is open. Your line

Peter Keith

acceleration congrats Good the and growth sales morning, fourth Thanks. on quarter. for everyone Hi. the

maybe challenges. sales as in you the had You guiding I those mentioned well play chain rear-view out you're that where QX around chain supply are briefly X%. through the guess And some to Have I acceleration to mirror? confirm gotten to the supply want now issues? for

have in about been strong QX. Some trends peers your continued of talking

call anything QX about specifically to the out So guide?

Philip Krim

say not that chain Peter. Sure. the issues, mirror. squarely rear-view The they're would Good in I morning, supply

chain manufacturing on opinion. talked dynamic our has business stand on taken And strong uniquely capacity. I think we more we to going of capabilities model going that's can will Casper environment we overall responsive bringing in be last mattress in We the more chain. supply can that to steps allow more chain more up the because supply about our what's nature by of to this on to absorb call, remain think a dynamic in supply partners, we've a our expand us

the it's well but to to Casper that. to to I thanks continue positioned business model our think industry for through work an be I is think issue So going potentially,

opinion. QX fairly demand position issues a the and demand to supply to in felt I to think saw became up QX us strong better and were we the acute kind mid-QX, of the by and mix. fix you with on mid-to-late they that's we're to like my fulfill we add we able in more be able which flex why signals more kind chain in suppliers and quickly of remained the much ability And the partners from distribution QX saw in based

seasonally On focus the the out that rest macro year, It of seasonally a the of have reset stronger works said always for products mattress for there's kind highlighted pre-pandemic about. the agree and about which QX some quarter. suburbanization has and slowest we the time good demand, there is we we're been that on continues be it And our up slowest. call excited have demand be coming QX seasonally health some industry. QX us We overall allows way is to the we us trends business of the our to the just and set out in good But and of wellness. QX demand backdrop those of talked and always that kind of in the to last industry earlier around

Peter Keith

you much. Thank very

up you input is that issue just other bring didn't the costs. The rising

with you continuing that's we so progresses? are year some that? How the pretty through price chemical should as inflate. guys know increases expect managing maybe we costs And rampant And to

Philip Krim

the Again, Certain in those. of capacity to shift model us can talking Yes. build to having feedstock the price increases business ability of that horizon can our But we our pretty for this. is allows the think having capacity bid that's supply with think and our vendors the to we environment partners some believe navigate we on giving of light at way. of there And be on of DTC can control in also we way about us, so we pricing costs We've And that closely We our trying supply been substantial do working end navigate that destination, costs. business our just an kind are combat the best input setup given although business. and is one of chain, we're our to some it. rising with I with retail is can there with rising that if demand costs majority that -- we mitigate the very multiple virtues our supplier-to-supplier. And changes think that a and from input successfully. with chain input be, are

Peter Keith

Okay. And coming That’s this helpful. luck Philip. good for Thank year. you,

Philip Krim

Peter. Thanks

Operator

And your Randy question Konik from Jefferies. will come from next

Your line is open.

Randy Konik

guess Thanks Philip, good Yeah. and I just want Philip morning the retail I everybody. about more segment. partner to ask

with Costco, partners that you've are about, in job thinking penetration success over increasing you. segment? of these do from of think to quarters couple that points partners different whether very it's And gone basis that type So, talk how XX% it's looking are you over here? you expand kind base. at of traffic success then, X,XXX incremental up sit some of How -- about or had a Sam's good you've revenue of eight What of about what about should about early the And the have next looks winners, segment. penetration last the where good the years? done like to It -- you Club

Philip Krim

out. Yeah. retail in Good good we've of with building thank success morning, I had partner And earliest believe agree we our Randy. business. the days And that we're you.

years an are been far it over the of that the partnerships to that Casper standpoint, market at couple up retail on And biggest focused last we've has standing look by from addressable only in. addressable you market If you as play highlighted.

think that also way much long base to it very growth the over with than strong of our growth and looks reasons And us. partners our navigated a So XXXX And And to growth our QX. any et Target successfully different for has like that to one we in it's and would peers. in And clip. Costco it XX% pretty of highlight retail a partners at cetera. continue we I pretty a because Amazon that rapid believe XXXX was that benefit partnership drove and XX.X% such the had year grow

As we've focused going talked the about end share mattress trial key within into year kind and of this side more towards think in the of for things. be we last things the of expanding very of presence. bringing market I trial opportunities on year are And side on and our more is capturing to our mattress of to the consumers particular high-end

on we see we overall the on sales standing to delivering brand the lay you'll continue in differentiated make our to key right can in consumers. an to compare on sure trial share channel. those think emphasis highlighted that we and a team with our unique we're experience work online more opportunities capture brought partners And way trial products. products, focus a where that's And So us that on with us why bringing up that's to partners consumers that to professional for

Randy Konik

on channel pretty -- is of of where kind have do also because or in, team a normally you've is is the fair at partners retail? areas to then, to And those with all it it retail that, is below partners of say mean inventories upon the maybe do seen it retail rates mentioned say you been think increase you meaningful then, that you hired. just -- across around on inventories that, to that? how that partners? top of about expand And lean sales I you How sell-through that just hand that fair

Philip Krim

Sure.

team sell-through. sales conversion immediate, the and say had side, on rates which impact mentioned would I fairly a team has we sales and thus So, meaningful the measurable on

So it's think unlock And channel. within a by a part great been and for really key pleased that I we're that. of operating us

them retail what partners, are understand that can levels. our of DTC But work business kind And you'll them. to our part with again, like have to normal our we of because is on our don't we in So is do very quickly. understanding our track partners. and were of I think that. heritage that the And keeping recently. drop inventory partners some a partners invest can we looks inventory about these ship levels, up We most us stood flow long nice goods continue model lean fairly with for then, record this of We see

We have a very retail place, think provide why can why some one moving consumer dynamic a infrastructure they however nimble us landscape. inventory. partner their through that's that partners, of we we in a see our to And with really of want partners us and manage reasons the so the to they omni-channel are excited flexible as sign-up

Randy Konik

question Thanks. My last is stores. on your retail

improved on basis. said You that like a business was down, sounded it sequential it but

do you business? sales more, to potential channel the return about guess, But think that in or traffic a a little in talking could subdued bit of about patterns traffic. when occur I how are expecting and/or inflection You --

Philip Krim

about Emilie, what Sure. we're do channel? store you our talk retail to seeing want within

Emilie Arel

morning. Hi. Yes. Good

open and more today relaxed COVID we with we higher of are markets having as restrictions nearly markets see foot really all our So said traffic.

know to the begin think So traffic we continue challenge will to are environment and make and the we're that, as most to foot to like pickup this curbside through proud within year really innovating that retail. widespread we to of appointments distribution when as happens. traffic customer mentioned things but back of comes the a We traditional virtual and return is normal we optimistic our vaccine to predict it every for really walks half levels the about of do team And door.

Randy Konik

you. Thanks. Thank guys. Helpful, Got it.

Philip Krim

Randy. Thanks,

Operator

will question UBS. next your And from Atul come from Maheswari

Your is open. line

Atul Maheswari

in my slowdown this back Good it I have quarter the you limiting morning. on taking to growth considering call-out there supportive? Thanks any question. sequential – growth going see quarter? the quarter. fourth to specific backdrop Phil, a the revenue a that first revenue lot to Why is pretty especially, compared wanted of that's circle that Is still industry is

Philip Krim

this on the always us. this last how call And is with be some If to step reset it seen on a to with the we're we and in slower. reacceleration last QX to do just business. QX was that basis rest chance it for well going we a to seasonally of quarterly And managing manage kind has product for gives be Atul, us on success is back order partners we we as from slower something of XXXX. that have growth, sequential is throughout mentioned the just set our you have recall And talked works we the quarter with business call we've how but of known a the that it's our how understand our that distribution up a we about as opportunities

Atul Maheswari

then revenue as quarter would look you that guidance. need around suggest math And first XX% past you sales like to our achieve growth XX% forward it. Got the to your

given home? what's share this entertainment this back will you and some as So shifts the could travel there revenues and year that at of confidence point half wallet in quarter second away accelerate to that giving be from first the following probably challenges

Philip Krim

Yes.

But XXXX still look played if when stepping as year data in zoom of at distribution And the building for especially look versus certainly you working and That than about days we're out year. we business we XXXX, the out, North is XX.X% the well. different very growth previous distribution. at American we we talked our delivered out early expected. So when we back

saw with when growth other overall like and see as our we work we the partners will to take year. our dot-com we which we do out, as last opportunity XX% that beyond be to continue year partners in of we amazon.com deliver believe accelerated XXXX in that fashion to an And e-commerce were even business over and digital well proud growth we able have how play at look what to in share grow the with. We

to-date So did came in of the we've just front we bottoms-up performance based build together. opportunities that's that us on a and the the forecasts how on seen

Atul Maheswari

half helpful luck Very Got coming and you. year. it. good – Thank first for

Philip Krim

Thank you, Atul.

Operator

question from Bob Securities. from And your will next come Guggenheim Drbul

open. is line Your

Bob Drbul

Good of couple Hey. for A morning. questions me.

for your then first on second in either expense on XXXX giving And fourth product is bit quarter, like of, has the just one a specifically -- even you're in this or XXXX the business, outlook outlook expense can you return topics a talk XXXX how would casper.com year? sort two partners you helpful. rates versus little but and and question shipping bit embedded that -- that talk be is the Those first The rates in guidance in influenced expectations can this about of the us? the return delivery shipping the -- half little

Philip Krim

expense? do Mike, talk want a bit shipping about more you to Bob. and returns little Sure,

Mike Monahan

Bob. morning, Good Sure.

we On prior -- the what in we're seeing are we're consistent seeing. with returns years piece,

talked So we're about believe industry we the in we've general, lower than overall average.

to We we've that haven't haven't changes in seen out the specifics percentage, seen material around what but we given past.

we On as at our rebid gross of XXXX. margins the going remember, forward, about shipping shipping, contract of April you you think the beginning

QX to And improvement result so, specifically a in expect improvements QX basis, on as we we that contract year-over-year well. and a in as saw see of renegotiated

comp over improvement to there a we from to continued contract. expect show and bit new as on next the that little would that just year-over-year basis -- over improvement a So less I QX

Bob Drbul

you. thank Great,

Operator

next your from comes question Matt Koranda And Capital. ROTH from

open. Your line is

Matt Koranda

Hey, guys. Thanks.

margins guidance. could bit flow little a if very Just year, how about about near thinking would into wanted the talk you gross then, improvement we're how remainder to of that's sequentially be that through understand quarter and first how the built first of the the cadence the on into And margin gross the term, helpful. I maybe quarter

Philip Krim

question? you the to do want Mike, morning. margin good Matt, take Hey,

Mike Monahan

Yeah. margins are XXXX, gross we look in Hello. XX.X%. QX -- year-over-year you were our There -- did roughly if

seeing would I a meaningful driven two that things. largely in by year-over-year. It's improvement So anticipate

that talked the about. we first terms is shipping The

product thing overall the mix. The second is

in to pricing portfolio product the improvements mix see year. been of continue the some push throughout to and That our of we've would terms help gross margins We able through.

a versus think full for give you as didn't the of quarter I it we through So year, specifics about the improvement a year year-over-year XXXX. first of see and expect full to decent both basis, the on amount but would

Matt Koranda

EBITDA Okay, but helpful. XXXX? for And the table I the wanted clarifying question. positive other that don't guidance saw Is reiterated, half still for I the second know one just to then, on if clarify.

Mike Monahan

said reiterating the We're third call. quarter Yeah. we on what

Matt Koranda

a terms covered a quantifiable It's is existing put expect expectations retail number for of little in sell-in on sort could just in that's terms lastly front at of a on retail should XXXX? want talk sell-through you XXXX about in new maybe anything XXXX. partners going the and how kind we outlook. to bit it. then Maybe little retail the And partners I of of relative to just but of finer great. bit partnership Okay, there retail sales been point The

Philip Krim

Sure. want that talk about Emilie, you do one? to

Emilie Arel

hi. Yeah,

the as Philip the mentioned about we which consumers us don't team say role in and to time their onboarded I store our to more excited be today, point really the North spend onboarded that sales fall. that is with in mentioned number retail to on I them And professional Casper help QX understand what in So make want work And I partner about to across mentioned, in partners had to the brands partners think but the We, really have we as with bed we our to sure to exact talk sleep and proposition consumer off best starting how partners just see would we're with how sleep. for bring differentiator night's key the products the to really an and a directly we're get understand the to in America. those are about. best the and would they that finer new we continue earlier going we of about of can had put take some Philip brand very value

with the as this to year. And partners so relationships strengthen excited go we we those to throughout we -- continue are can

Matt Koranda

back jump I’ll queue. guys. thanks, in Great,

Operator

Nagle Bank Your comes Curtis next question from America. of from

Your line open. is

Curtis Nagle

plans Wondering about you from just much. very it if think Thanks the could how morning. about I basis. your for and talk Good guess to rate year, advertising a a dollar

at thinking Just the about large. guess I industry

larger of good more. a bit are investing your competitors Some

So, into how fit do you that? yeah, guys

Philip Krim

Good Yeah. morning.

organization we our to of expand data-driven we we also for to data drive the let marketing continue kind driving marketing business. for sales what there's Going overall believe how and we marketing do so very and back year, mentioned, to be more we focus the the leverage that a but think on budget about room And it.

us, continue in our that's but be part a And because drive So can presence using the will for XXXX. to dollars trend e-commerce we believe of we into think robust also business. that our omni-channel that channel

Curtis Nagle

Makes any And guess Okay. touched but sense. I performance from existing yeah, – wholesale? I of new don't on partners commentary contribution on within revenue think versus your we this,

Philip Krim

to our very revenue that growth that don't with the existing we're specifically, we partners in that's break driving channel. continues and pleased So of and out build majority but the dollars

which So that nicely. business then continues business when those with a stand with new ramp very pleased partners, to we're And comp there's building we up. new

nicely So as those we are well. ramping think

Curtis Nagle

last quick Okay. And then maybe one one. just

not invest building sales in year gave think your seems understand I I looking stores X%, more light generally little So amount dollar XX. the CapEx? company. many I up you're this not don't too putting about only to it's at At least, or relative for Why you just a just know which

this capital think how So of do allocation yeah, just kind you year going about forward? of kind I mean, and

Philip Krim

question. kind large the to it distribution our informed data-driven is we're on but be good vaccines Yeah. build we just out which how change COVID to out going of stores, by It's And what a for year. timing, believe in part desire long-term plays doesn't

believe core obviously partnership through drive part we're in strategy. stand our to a of CapEx our pretty doors, year it's in it's new going growth big add retail channel but up long not is be channel. and drive to stores. needed But a e-commerce this our So slow to to not that's growth needed term way we to needed And

get how just a how of really we come how and the of we the retail it's and So pandemic evolves question out vaccines distributed.

store we'll to increases we the foot traffic, that opening retail get that, drive down and is Our that happen, see back doors when in and up sales view will road.

Curtis Nagle

very it. much. Appreciate Thanks Okay.

Philip Krim

you. Thank

Operator

And your will come Nick question next Jones from from Citi.

open. Your line is

Nick Jones

Great.

Just two questions.

of second launches marketing are some in largely by today, some the to how that I question – the cookie these channel. going upgrades that performance to of are already? DXC the might Can on guess the they you product or out color First on the are driven products expected us much there kind is be third-party how of are by this And new Thanks. conversions be and and what's the on offerings Chrome? aren't then deprecation year give products IDFA looming deprecation impacted the on

Philip Krim

Hey, Nick both great questions.

our going we're of So, we in side category. increase categories to things, including on the continue in, that mattress to product products operate

market of in excited market taking bring that about the really and and that, as to new new to well. we're So we'll categories products be also innovation some we'll

on So fronts. more come to both those

direct we a as different and on going platforms multi-touch to working take to And bigger platforms, and we've have some modeling attribution data deprecation to been rely to lifts that a includes have media I about and we're that going in different we're data just on material time year. like hit. and kind front, going definitely going of drive tools see of quantify to we drive large the from talking have for large well cetera. channels. good media On in have we optimization. think think points to and some that we've mix an traffic that those is our don't as conversions to et at impact that on been privacy we changes having where other think, is and ways marketing that different performance this the is impact it's been on end real advanced industry the and notice had We core performance marketing standpoint, do expertise. ways at some the marketing but on and the can This the And later area, measure user working competencies do engagement driving we think it think we now

a there will think we actually of to so, kind having play strength landscape And term. long our dynamic

Nick Jones

Thank you. Great.

Operator

Morgan come from Stanley. from your question Lauren Schenk next will And

line Your is open.

Lauren Schenk

term, the about real Great. strategy. Thanks. but are is in I thinking has stores XX estate fleet Obviously, of over of the that sort just about longer-term months stores prudent, evolved think XXX-plus ask XX past I or to which still store a you wanted long so? or XXXX,

Philip Krim

think morning. easily stores. we still good No, support Lauren Hey XXX-plus can we

the to big way we how several the is them Casper on experience e-commerce industry big consumer try the and be you lure matter really a have no of for that goes expectation away. and bullish how is store. view, over And going offline of an think of scales this industry, retail out to products the part best a we part think don't years a our and in So, in Casper next

for go XXX we I And And to we we think stores bring the so term so, stores, a Number us. more very something can peers think with traffic our despite to of those with large geographies COVID. we're offer of foot ballpark, long profitable way when doors fill that out America. long we like some a can Sleep that how have distribution our kind channel to North declines have performed to that that And pleased more due see, think in be experience and consumers throughout best we

Lauren Schenk

And Great. launches. just Okay. then on one new follow-up product the

long to the sort right mattress number from a perspective, over what of is think curious you the count Just SKU medium term.

talked you having consumer. the I past, maybe overwhelming think many too in the to about had was choices

for So, count specifically. just you kind think is mattresses right wondering the SKU of what

Philip Krim

and for don't kind SKUs of SKU different which proliferation, legacy proliferation sake of different we points. is price thinking just kind a believe think in a SKU of of in question. the And great It's you different way Yes. mattresses industry, this definitely for we launch where

innovative approach products bring to satisfy of more market. and we we lens how to on more how launch an preferences new more take can an to us, more do For people's of we solutions

see about next-level a opportunity are reason some that the mix. higher and a compelling side end market the really part of the In a be these mattress to we We're excited think We these of overall line comes particular, for products there's overall of real to quality. it to really our mattress it's you'll category. when So within kind to going with for us, take innovation think that. we're our sleep on

new there's judicious be within And very plenty and that lineup over we'll So, preferences fill to we how do think, out we consumer to our with room bring still market. additional we'll time. products of

Lauren Schenk

much. so Thanks

Philip Krim

Thanks, Lauren.

Operator

Securities. question your And come from Basham will Seth from Wedbush next

Your line is open.

Seth Basham

growth sell-through? driven partners' some is sell-in quarter. Can Thanks around My first provide fourth a how morning. question retail good lot much color on the that revenue by is and of you versus growth in

Philip Krim

earlier of retail The retail end There's partners the Sure. lean the quarter. on talked overall, category sell-through. at vast inventory majority about some industry pretty the this of always positions. partnerships take in with we call, was this timing as it in But

So sell-in the but some majority versus is of around there timing it is sell-through. sell-through,

Seth Basham

you're the retail And as some you. are DTC partner color as expecting about we growth channel think or channel? Got in can relative to guidance around, QX provide for the the you growth XXXX, how as much what well rates the

Philip Krim

Mike, Sure. want we've do one? that you thought to talk how about about

Mike Monahan

Sure.

two between specifics given I around a can channels, the haven't color We little but that. give

will we've As stores one back channel, we the us think when difficult up. That's is of the judge that open DTC about retail the for that for to largely half year. the the stores modeled in modest factor in growth our

little So, to foot we And our leaned to bit faster if the stores. e-com that back traffic have ability channel. the will a certainly, come the -- see grow retail be is than helpful we DTC that into would expectation

and existing retail been of we've partners with the to in improvement continue side see different excited talks with partners On really number -- from as partnership our sell-through a also we we're about. potential that

the we're combination drivers. year the of And back the in so, to expecting see half from growth those two of

Seth Basham

it. Got

retail partner will you would expect first So the channel? full outgrow channel quarter for year, the and the that DTC the

Mike Monahan

not more Where we that. channel year give than where sit, as would this we correct. around the see to we from little partnerships I -- I'd DTC grow rather retail bit But a anticipate today, sit specifics

Seth Basham

it Thanks. the or it. more last just be we some relates it advertising XXXX? as guidance, Where and to within going in first of in of about operating should the to SG&A. thinking expecting the the And Got be thing, Is leverage? the quarter components G&A

Mike Monahan

on more G&A just the first side, in on for than would the marketing. -- modeled We've it sales and quarter, be expect I to the

Seth Basham

And for year? the full

Mike Monahan

the between expect two, as on I lines leverage those we full contribution would see full year, year. year-over-year it both expect specifics -- the to give don't but we to basis the relates For on a

Seth Basham

Thank you, much. very

Operator

in questions remarks. call further for over I the back Krim, closing have queue. I to Philip no turn

Philip Krim

for and and you. Thank families you good time interest We Casper. the your today all a your day. and and you, Thank you, hope in thank Have healthy safe. operator, for stay

Operator

everyone. you Thank conference conclude call. will This today's

disconnect. now may You