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Casper Sleep (CSPR)

Participants
Norberto Aja IR
Philip Krim Co-Founder and CEO
Emilie Arel President and Chief Commercial Officer
Mike Monahan CFO
Peter Keith Piper Sandler
Matt Koranda ROTH Capital
Seth Basham Wedbush Securities
Atul Maheswari UBS
Bob Drbul Guggenheim Securities
Brooke Roach Goldman Sachs
Curtis Nagle Bank of America
Nick Jones Citi
Lauren Schenk Morgan Stanley
Call transcript
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Operator

Good morning, and welcome to Casper Sleep’s Second Quarter 2021 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 Conference Call. you joining the Quarter Second XXXX Sleep Casper Thank We’ll in your questions. get comments management’s started just a with minute and before minute take harbor But let the language. read safe a so, doing to me call of Private meaning XXXX. Securities within of the Act will contain Reform This statements the forward-looking Litigation anticipated should supply call plans, statements, forward-looking including and regarding management’s on All not impact on to considered statements this of made industry-wide matters our be relate goals financial and the inspected business. objectives, strategies, do constraints that of performance, historical fact COVID-XX statements but These other known or implied statements performance are cause or neither promises forward-looking that different the factors by be unknown nor our and results, guarantees, from uncertainties to achievements results, future performance involve achievements or risks, expressed may statements. actual and important materially any in year the made those with could call Factors materially to XX-K report other ended today. on Securities differ December annual cause and discussed Form filings forward-looking XXXX, statements Exchange by Commission the and results the on for this our actual indicated XX, from estimates forward-looking of such management’s call. as represent statements this the date Any of

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

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

please like to the will we call Executive I’d With questions-and-answer Officer. go Casper’s Chief call Philip over ahead. remarks, Philip, the that, turn for prepared their to session. Krim, open Following now

Philip Krim

Thank everyone. second and call. good Welcome conference Norberto, morning, Casper’s quarter to you,

and the as that of distribution from Casper’s trial across all-time to drive quarter XX% revenue our remains for increasing scale shows performance success continues momentum are further key strategy Casper’s revenue channels. share to represented and XX% sleep partnerships our sales points quarterly Strong well Casper’s partners. premium products as priced increased increasing with reflects early ability accelerating retail to of revenue all to growth of we our solid This our business products trial quarter new grow gaining our North year-over-year. year-over-year This revenue channel our opportunities. second an diversify brand mix of market Second America towards in through America efficiently record, demand North America North innovative

Our distribution. DTC second we channel over awareness revenue we offerings, Throughout to X operating delivered combined actions These the its taking core of the of the our year-over-year quarter, increasing our pandemic best quarter with efficiencies, of including product to make our progress XX%. positive points are delivering growing on since our our spend to the strategic priorities: further continued and increase results. are growth leverage expanding and brand initiatives, beginning with marketing

and manufacturing demand continue products, second results. although impacted quarter We for very industry-wide well-publicized chain supply see our solid to disruptions the our

second took supply challenges these XXXX, the of in of XXXX conditions half the the largely quarter in While actions we enabled quarter. side inputs us immediate and the certain to step XXXX throughout worsened and first early second chain

believe will goods our receive originally labor this increasingly across sold. the been of and despite orders third of in critical $XX our of and due in as We in to factors significant would to to EBITDA to have pressures impact adjusted year, million is and inflationary in and capacity of Specifically, cost this of a had due raw in ability a we materials of creating the of disrupted inflationary These unfulfilled highly revenue the later our had second as the pressures call. persistent our that base earlier quarter mattress greater-than-expected revenue anticipated factors well $XX profitable constraints we chain these much across resulted had shortages a shortage during margin speak which third and approximately the the supply currently to we than anticipate all that demand million challenges, that forecasted on shipping reflected stronger of half suppliers second Casper approximately expanding a quarter. less second the XXXX. well, loss combination quarter, deterioration. a revenue are components of guidance on estimate supply conditions production these of impact chain and the due than third-party Absent meet as these The manufacturers Mike impact to quarter

is current a along year. to shortages remainder and material pressures Our with the expectation supply that environment will industry of the continue the face tight for inflationary

us manufacturing environment few back very ramp fulfill next the issues the we for material resume confident we the historically over year, these our model healthy higher demand through Casper will our expanding that goal pushed gross we remains of these margins period anticipated manufacturing to across as expect industry this While as later enable our and strong. challenges our our in overall to time In costs, to significant spite With has growing of in help footprint and up capacity this products third-party profitability manage constraints us time quarters, achieve XXXX. ability a resolve. remain line over supply

taking are base, pressures. product expanding increases and across we to right to These continue this competitive. and we will challenges, price certain further rates measures offset shipping these institute share remain will are various take implementing diversifying and a pricing price the inflationary these taking points year ongoing additional lines, help we between later balance maintaining need represent adjustments supplier that level and price increases at plan to to and further feel renegotiating We to aggressive offset our including

address to on, but price relates for internal Mike briefly strength detail, that cost are brand, to the leverage. Casper One of willing will a given solutions. is premium work products, branded our of proposition our cost attractive Given will value our area been our operating consumers the touch pay data shows we have that I more as structure achieve that our greater to aligning which with in better management, business it and undertaking the sleep

footprint our functions working including and adapt hybrid real are diligently We we in and a more G&A to as our and work find cost-cutting across opportunities line, efficiencies and environment. sales estate to procurement marketing reductions

are to moving consolidating foster operations integrated we Francisco costs, and a and our York area Labs metro more fully overhead and example, collaboration. Casper For create resources San the to added team New York reduce New to

subside, market the These As these products to our with our are shortages when we times Casper in on get ability the with the strong capture and confidence based is the stronger, more that a demand sleep starting of brand. award-winning Casper. brands seeing for can number key case are in drivers, of our been business increased has

have We have continued with nurture grow our invested and along to to it our in brand always business.

& most clearly to all, we Bed over to in sleep our customers growth showrooms continued and just products few with line Casper try value top For through us, and, national brand our announced partners Beyond that to perhaps available will continue this The appeal demonstrated of year. place taking our quality, ability and partnership additional Bath weeks signifies and In product brand we stores. mattress for June, later a XX of Bath warehouse to award-winning our trust. announced retail is Bed customers, our select rollout to Casper the mobile that brings app offerings our of in grow showrooms innovation, important Beyond website ago, and by Casper’s retail And strong consistent for a and their partners. & be suite

this designed York Bed its & shop-in Casper from of one-of-a-kind first partnership, and part far New are shop branded being flagship As done. we newly store Bath Beyond’s City, opened at in

We expect us further additional brand opportunities. in number new partners the that Casper and heighten a trial coming to afford the will announce months of

and to our recurring to retail our we continue we’ve engage to trial of sell-through, partners the been increase nature. drive to with wholesale we the more and proactive more As number taking approach become doors in revenue leverage expect

trial of both our a and a increasing working at clip. peers, we are still number towards compared While partners small we fast operating to very are with retail doors

grows, base number our greater confident a are that potential effectively, and with or creating of for again new first products provide time. engage to to this opportunities it experience reach we customers As additional current will door for a to both us easily and customers and with existing the revolving more customers

believe to for look opportunity share we market the to ahead is XXXX, take As significant. we us

strategy and our growth confident in long-term are We our outlook.

to home years mattress as as the line, gross single-digit rates. us profitability. We drive powerful top continue. path seeing adjusted drive and new remains while return which focus the for margins north EBITDA to tailwind our a operational healthy Casper line coming wellness discussed enter combination remain we growth playing expect to In regarding outlook We is our growth robust is the that beyond bottom on XX% and help include sleep And we towards create of we in of supply of the existing on remain a are growing structural on XXXX industry the the down extremely to and consumer designed added powerful wellness. and and importance to home supply products increasing remains host role subside long-term over sustainable position and and efficiencies at strategically drive growth. us focus an to the thoughtfully tight, we to constructive the health the expanding expected home, are construction, should headwinds for mattresses summary, and chain high

with and the ability of to QX future our XX% see added a of QX growth versus by versus we better of build and for momentum Casper XXXX excited create and XXXX, value line our continue shareholders. We’re for to XX% in top

take merely market goal Our to share. isn’t

over entire to will now also the to Our is Emilie. goal turn grow call market. the I

Emilie Arel

points the continue I prepared you, be our across and ability platforms. you, to everyone, with brand with touch few to today. for our during take expand our and opportunity made of Casper’s against thank joining product opportunities result compelling expanding us provide on and a customer his want connect digital why and will innovation points on Thank our you physical driving and Philip, greatest consumers been through experiences, to has growth to remarks thoughts Philip this growth

the doing and thank want so, foremost I to Casper team. Before entire first

lot have of months, challenges past disruptions, other and our number We a through customers And and XX for level. team partners. personal a throughout on closures, all, delivered supply store our all including including chain XX has to these a been temporary it

and reason demonstrated You’ve are the you for resilience creativity, Casper’s success. dedication and

you. thank So

are we brand we best retail example brand than the leverage that the to the The it. and Casper having XX reflected of $XX have start We how our in how talking Let’s with our by now retail over quarter. of more growing, second to leveraging success million and strengthening about we’re continue is revenue partners contributed partners.

retail mentioned, revenue into us and their strategic continue in Philip in reason most number and a to our product of to Retailers grow, both offering see partnerships our bring As our brand stores. partners. both across

bringing also higher We’re a market products that ROI. to have

higher-priced We mattresses. and continue with success Wave see Casper such our the Nova Casper products to as

trade We and lower-priced AOV, and floor also secure to to are margins increase beds for able profit. beds more higher-priced on the slots out

across of very job team value elements and bedding our clearly a trial we we to and the team features our quality are are more proposition, our more doing of into unique The terrific and our the helping doors. us communicate mattresses, see results opportunity partners research, partner pleased unlock consumers, in retail showcasing Casper design with help field innovation, the go helping We who seeing continued the benefits is from accessories. that to rep products products differentiate our and to effectively

our engagement focus have we will the touch see changed all all technical effective increased across continue and on focus strategy our retail more see we for with our We over and have shop. consumption been factors We past those long-term time sure of partner consistent on experienced, We’ve on convenience, that also forward. and growing e-commerce multichannel footprint we’re our omnichannel shop Flexibility, of our we the impacts. highlighting in way creating the focused related making aspects supporting how the potential more messaging the Casper of year our and many leading distribution our has home, network remain experience, going at relevance points home timing As towards products. changes shifted in stores. and and

goes themselves While the for alignment, and other our into as R&D key touch, messaging our better light Casper the a that from and in talking centered the around have offering in consumer help sleep. It’s important shifted the that about differentiate highlighting to prior ergonomics, really the the itself, control, products our brand for have brand factors truly years, much about such and understand that better the we products temperature brand of to talking you benefits tomorrow. market focus

the our of consumers behind One to products. things we experience of many want the technology is

For products achieve people the by control the a at-home to sleep on example, full campaign their front products, and is immersing our and only elevating significant us more This for proposition consumer Tomorrow" And and performance Your but succinctly seeing and temperature differentiate of and for what many night and campaign our tomorrow compelling product better brings, is to performance center. such best and Collection themselves helping the sheets that. of "Love a design, use focuses materials helps value in importance feeling plays customers. it the pillows it Cooling in products other visibility not our of example our suite in bringing curated supports drives more The Cooling communicate choice. a great role brand that appreciation adoption. mission the critical daily and showcasing The of products, Collection. mattresses, With our as benefits clearly to our our in a

implement While retail is great our and conversion a and growing achieve upgrade our continue to our price partners, have it These thus Wave on initiatives our the and key we point, cross-sell of of sheet customers with a mattresses early, begin enthusiasm ability strategy our AOVs. AOVs some with to and $XXX To both opportunities. to Snow both trend, met best-selling are been continue deployed the by and a further our our our to higher mattress They are cooling impact leverage of Hyperlite stores, us our our Almost and suite premium and helping make sales just its and higher strong taken of campaign in we mark rates beginning of Sheets to this higher see where products. set. and across retail to at to products our be are has upsell routinely also partners. half trial choosing Nova retail buyers version

For flagship unique increase branded recently our customer and ability Casper in is partnership we to New example, look shop-in well opened Bed & our York first satisfaction. with in as creating shop at Bath their shopping The both and our products announced Beyond, conversion, our critical experience store to we the City. AOVs experience as bring to overall shopping for

including mentioned As sheets, accessories, and the themselves powerful by metrics. we allowing Sleep elevating in experience, and even trial and yields are opportunities them to favorable in even consumers the submerge mattresses, blankets is Casper key more more pillows, past,

will while of us number our Denver trial between competitors, our doors new focus the and So join bring multiple Club, times and on others, Sleep, on be partners to City we to trial Mattress reduce Sam’s our continue of board difference recent Mattress, some which retail Brothers, have Nordstrom, of the Sit’n opportunities. additions Mathis and the increasing

foot and demand, traffic, to earlier be businesses, return Regarding was across and that foot Casper many strong we are more well traffic health this country direct-to-consumer, sales, and are as as To and by organic strong Delta as expect focused seeing as year. to reflecting and regionally on AOV. to are the trend normalized we traffic driven to this these other like week-over-week We to both saw stores more though improvements our a proposition. terms continue, brand in improvements we segment efficiency date, the the website, opposed seeing robust case retail closely seeing continued and we response. e-commerce monitoring public guidance evolving variant are traffic of

pre-pandemic So stores foot back while nicely. are yet, to traffic is Casper-owned just not levels growing

have for Looking brand, vision long-term clear ahead, we a our future.

on focused are get take to there. what We it will

products world-class base growing to responding enable us to Our innovation enthusiastically. market continues and our bring is to customer

before e-commerce retail is Casper that, product our preferences. call even are strong, to and through to would brand, consumer macro retail our deeply partners, shifts I stores, the turn With connected our pipeline the our Our to the consumers to in more and we over platform Mike. pandemic like than

Mike Monahan

quarter now this grew North XX% second XXXX a versus the We XXXX. XXXX. year, discontinued to operations $XXX.X you, in of second almost that while revenue increase $X.X we Thank revenue in and and million increase American important quarter North versus QX reported million, revenue revenue in of last million of XX% compared second our Emilie. remember have we by QX of America from had quarter an of It’s XXXX. not did $X.X year XX.X% XXXX QX outside QX any European approximately the approximately approximately to

XX.X% as for quarter-over-quarter revenue retail or versus a $XX.X QX to Our year resulted product. Cooling launch as while North opted line e-commerce Snow QX increased Collection in period average the increase mattress consumers million, of prior an was in compared direct-to-consumer America The $XX.X the our order million XXXX. was channel value revenue XX.X% our a increase and partnership XXXX channel premium for

Within see remained our stores. All significantly quarter our importance channel, highlighting owned with multichannel consumers the continue return approach. increased XX year-over-year, foot the open of throughout we DTC traffic of stores to the our retail to retail

margins for resulting continue in labor Supply XXX from quarter part raw logistics year the materials, XX.X%, of compared constraints to our demand pay increasing $XX.X from meet QX was to to per units We as Additionally, we and profit cost conditions order premiums to increased a us due capacity demand. will through our XXXX we the the commitments within partners, to continue Gross end channel. our improvement a manufacturers to period we meeting start ease. towards large but costs, second see challenging supply focused to these into are retail our and and prior in and in see million, see decrease. cost the that resulted to chain expect to and expect believe gross point on in pressure XX% basis of we costs QX to unit lower constraints required quarter, increased

continue as increased on our reach, channels. extend possible. chain, significantly but increased XX% more be XX.X% our and will marketing quarter. recovering online media our of overall offline in expenses as both of in second to and cost we Sales margins and deployed the operations We as manage XXXX seeing focused rates strategically We our over goods are across year-over-year to media supply

As of XX.X% a expanded to marketing XXXX, remain high. Throughout rates reflecting sales we and the revenue, declined media XX.X% in compared overall percentage distribution strategy. and QX expenses leverage from XXXX, to remainder of improved multichannel will anticipate our

versus adjust However, to continue reach General maximize of or we million our QX revenue of cost. million to increased the $XX.X and XXXX. our or XX.X% will lowest expenses XX.X% available $XX administrative media to in revenue XX.X% by at mix

to initiatives going We expense have underway this reduce forward.

EBITDA as reduced York In As allows expect resulted hybrid employees estate deliver million corporate our in work $X to over operations a over home. $XX.X a our an of from adjusted savings that that metro of example, million will we New we which consolidate costs onetime estate, charge model we we in and subleased portions implement QX, in area XX% XXXX. our the real by annual real partially of work

from while of overall XXXX increased in within due this $X.X believe to the of organization. and the million. million second amortization decreased million second improve million $X.X to $X.X of quarter technology investments, we expense store-related our efficiency and costs, saving $X.X from to interest addition In quarter Depreciation will previous XXXX for

loss an an the was operating quarter XXXX. prior quarter to loss in $XX.X to QX net net period. $X.XX per million an Earnings share second compared $X.XX of $XX.X operating compared loss of of share second the earnings a per The generated loss year of million in in

quarter adjusted XXXX. quarter year-over-year loss versus the a of narrowed Our EBITDA XX.X% second the million representing to $X.X improvement XXXX, second in of

and Moving our balance liquidity position. to sheet the

of had XX, June as health $XX.X $XX.X ended with XX, comfortable where expect our on second we to ability sheet cash compared balance support our million liquidity of and and feel equivalents in cash March hand. We XXXX. position adequately As $XX.X million and the We our of company. quarter of cash we million -- equivalents with of and cash to the the inventory

increases non-mattress for of quarter-over-quarter was largely and to both This increase stock items. committed safety due

the aligned We of and expect inventory to inventory more in reduce with upcoming balanced that quarters a in upcoming achieve is and non-mattress our months. non-mattress products mattress the customer stock demand

$XXX For $XX.X lead adjusted of net million. would the to midpoint, XX% million third revenue $XX.X period. loss of a million represents loss million prior growth approximately revenue. the At quarter quarter, deliver we over year third $XXX to this EBITDA the to million comparable This and range to expect $X.X of approximately million to $XX.X

the million previous growth reiterating XX.X% guidance are XXXX. and For this year At $XXX $XXX to range of the full our the be XX.X% million. XXXX, we range North to revenue for revenue within midpoint, growth represents America

our XXXX also We and into capital investments in to million we to expect million $XX be replatforming our are chain supply $XX expenditures as website. making

We conditions through manage retail support dynamic meet customer continue to the to partners growing market these our demand. effectively and to business

of labor now are As it our achieving and improving share, increases; anticipated. like anticipate our adjusted would capacity we to the shortages, that that our to profitability, EBITDA trial input back relates inflation successfully our resources. expanding and profitability strategically and the footprint to lessen; gaining and XXXX, on goals path doors, assuming during Philip. making shipping operations and closing, chain remain supply constraints leveraging as material our In market retail partnership I goal subside manufacturing and towards call we turn towards progress more

Philip Krim

and pandemic, our potential. and, strength macroeconomic people. results unwavering their demonstrated been facet strong because of that the its importantly, our upon Casper full our products, talent commitment by again power brand. you, improve the grateful our of able Mike. every the and uncertainty In disruptions, brand, quarter partners, help most to dedication To of of we’ve and desire them, performance deliver conclusion, the is chain the to business and Thank reach In a difficult I’m them and our this once of showcases our COVID-XX it environment supply marked for

period a in we progress We of making have growing, our are encouraged mistakes, and our by are short from continued time, long and a goals. against improving maturing, very come the learning way

billion total alone, see the upside. the $XX estimated States market United nearly we in tremendous With addressable to be

As we are we would for leading move now are one forward, have making confident what questions. brands. over that us. times best on of laser-focused we to world’s and the the sleep I the of call operator Casper of Operator? ahead I’m wellness envisioned, always like to turn the

Operator

Your Instructions] Sandler. line [Operator from Peter from of question first Keith comes Piper the

Peter Keith

just wanted ask margin I to gross about the trend.

guess So the industry. magnitude But the the pressure guys that stands is are out certainly, well known inflationary of facing. you what are pressures in margin gross I

So through pretty It quickly. to seem through. quarters competitors putting like seems And like it’s what’s passing delay price are here increases pricing? that in a you causing guys pass couple the through taking of

Philip Krim

X. earlier increase this a and we a price increase of price doing were October larger So small year, as did we

moving we So inflationary period, margin our we’re seeing channel. increase robust there’s been pressure pressure the price have the the also the mix reflected part would retail the margin in growth channel but say that on given partnership is in gross shift front. I

So blended a on channel that pressure very does little margins. that’s gross obviously strong been the a incremental put

to contributing gross factors multiple it’s So margin position. the

Peter Keith

is what could wholesale magnitude apart was us that so break to that that just point for on Okay. see can shift Mike, of And versus we the with I Is wholesale follow the that you up inflationary pressures? going margins. something,

Mike Monahan

Sure.

are the in margins Our the mid-XX% wholesale, roughly. DTC in than pressure seeing and we’re And mid-XX% range margins range. for seen, overall we’ve those they’re typically historically in some

Operator

from next Capital. Matt Your of ROTH the comes line from Koranda question

Matt Koranda

equation? the the the magnitude then of I especially increases. I Just quickly wondering from through flow offset P&L, be fair are caught speak a price it commentary just QX timing helpful. trend those supply And wholesale to those headwinds? would Philip. how little of say the you going if XX/X through thought gross on margin around basically the chain you to could of side and maybe to just Is And bit do then just

Philip Krim

than did flow-through Mike much the the we year. earlier significant the this to but more increase magnitude of price let Yes. I’ll comment the on increases price is P&L, the

So number than we’ll the step a price have more more offset chain SKUs, some bigger SKUs of of up and on supply headwinds. a in it’s

We already, those come more maintain taking. the down chain -- expect supply and to And also we’re expect to the expect costs we prices we’ve down. seen some of we that some come of

term, we that’s price back that There’ll increase be XX% get how gross number plus The gross why into looking margins. that long about So will believe talked expansion. margin XXXX we factors drive to of around could we supplier is using and to you one. expanding margin? Mike, through negotiate kind But better We of highlighted talk the the do then our others the and scale base our flow to to pricing. continue want QX about a

Mike Monahan

Sure.

we’re volumes couple First, lower events that partnership I’ll start higher move with at will price. of a the where to have -- third expecting quarter. In we the third retail quarter, slightly

would the that saw quarter to in I overall, third so with be And channel what because margins of in mix. the we quarter expect second consistent relatively

more prices As quarter. fourth Philip mentioned, the beginning we expect towards to of increase the

quarter, impact quarter the of retail of terms in fourth to we’ll mix fourth higher the through channel so of start that. our Typically, has flow And slightly during partnerships. that percentage see a

And margins this I year. still so, but to overall, remainder anticipate up be price factoring during range quarter-over-quarter of for would QX, the increases gross more in to some the below QX from the of XX% go the year

Matt Koranda

of of adding like couple sort quarters And a what’s timing probably Okay. then to onboard. the sounds that takes It suppliers? additional for

back can mark? or of back the of a of as XXXX. to more sort to path at gross north of XX% looking part of sort kind help to you of north likely us occur margins we’re So understand path XX% early But in the timing XX% the

Philip Krim

Sure.

this supply comment the chain side, on year. the I’ll on margin. side on chain supply let the been suppliers we’ve So adding But -- Mike

that not this it’s something at point. we’re So starting just

available very low-cost materials labor of large up another -- of because we as online additional despite suppliers, having raw ended capacity speak. as well our all having of supplier suppliers have constraint The up suppliers ended as that’s chain We of coming less a shortage those shortages. supply a adding both factor was

suppliers working additional the strategy most are well, suppliers and adding And as the within is So adding lines increase footprint those. our within their add capacity capacity manufacturing to manufacturing additional facilities. of or

you demand So But our suppliers, the we chain capacity some within the and happened of supply us bigger of more much want chain into think do a shift XXXX. margin let year. to lower opposite moving going cost of there’s has be implications supply about that? And the this our that Mike, industry the which to will within to talk

Mike Monahan

Sure. some These a our overall we to in of into we’re why improve that going are good heading margins. feel be the position reasons to XXXX,

So talked about, new of are ramping suppliers bringing the them during half and this up as Philip year. second on we

doors, heading the piece as that the to material retail generate within anticipate partners labor that lot selling supply partnership cost higher will to trial partners, them, experiencing overall the products come it are our raw channel, new down. We we expect the ease. we’re per which unit of within within chain overall And a premium those gross channel. start on as should that as we then and XXXX, margins challenges more through we’re third into and which And then -- our new is suppliers bringing bringing of more tend on

position cost to start perspective expect within we’re we which our just overall, about retail be products, should average towards premium think XXXX. the you about as forward. excited partnership good from shift a And standpoint, to an pricing that more going unit mix into So channel, those per in heading

Philip Krim

our relationships that. because to chain to partners. product and launching focus we to on seeing. add constraints supply trial some could we’re much Just more of And we on we these ultimately opportunities had one as as that of really current pushed our delivering existing the that We point out

that’s supply point, another so because And Mike’s thing pushed still a constraints. the distribution -- of that’s expansion out but of to was chain another some product and the still that’s out online, coming pushed bit premium

Operator

Securities. from Your is next from question Basham Seth Wedbush

Seth Basham

a your gross really relative cost your Just for experiencing peers, traded publicly margin like it your comparing trends you’re relative pressures more some peers. to seems price them than of to

Do be. more helpful. to If understanding you you could a manufacturing? pricing that be have that, use less you get on as shed to trying do pressure might I’m because power? light that Now Or better you cost why some third-party would have

Philip Krim

partnership multiple cost I was pressure rapid think expansion on pressure in as inflation. the the retail It Again, the factors seeing of putting just channel it driving it’s the on well you’re goods as margin QX. margins. margin of

show position. think faster I we see given price perhaps of inventory players were up increases vertically some our just-in-time integrated the nature the

need So may vendors stock might hit. had supply than of from our faster that raw if we increases it materials cost some a hit the of to, the we would

same So material just-in-time. business we’re even would in a that’s do there timing buying being all of raw but there integrated, third-party going it vertically as, the be peer. drop, show price differences of I produced P&L definitely a means is difference were up it’s some impacting how the you if increases integrated some that also raw to timing again, materials overall, our could chemicals But think the vertically implications. versus it’s hit way It in that given our faster, business the as our

Seth Basham

it. Got

manufacturing would reduce you in your Did a And that. as remarks? to relates bringing to in that Okay. a costs, that? little of I contract you prepared your challenges over of opportunity some any shipping Is questions you’re consider Two year given your ago. in-house, it catch facing? renegotiate follow-up secondly, your there the to then, One, further

Philip Krim

we for earlier, capacity this this aggressive within and within in that dramatically time, with supply goes which Casper the That how You and verticalize increasing to did. bid good we made within source And But vendors be XXXX be is at for is -- set is to against capacity is we question, and the of this product to business. half our But point to actually on your manufacturing second increasing very the the chain we comment to first use allow year. our I to industry more business. us other capacity that’s opportunity increased the demand have certainly footprint. Casper how each going third-party back so right think in our for up

of have So lot our back chain we for that the when of it up success business we is back to a expanding ‘XX us when move online. us, actually gross manufacturing supply our come into third-party think margins sets footprint in this a see we and and lot right additional model capacity

But point So the at road. enough verticalize we demand we I like look the said, we’ll business. for good more the have certainly the down right position. time, to and about in than obviously feel that could We that, opportunistically do

Seth Basham

And the shipping?

Philip Krim

And cost, yes. the shipping then sorry. on I’m

wins We our and look So shipping lot we still benefit of there’s with are lot to optimize of renegotiating we additional had shipping contracts, a the logistics. we as about to talked to have footprint. optimize but a continuing our

some contracts logistics more to us We’re and warehousing order give our in footprint. partnerships of renegotiating a optimized

part based And improve our room cost structure so within optimizing warehousing there’s margins logistics the our of definitely business. to and on still

Operator

next from Instructions] UBS. [Operator from question Atul Your Maheswari is

Atul Maheswari

fourth to implies Your would revenue mid-single-digit that guidance in revenue quarter. growth the a slow level

have case capacity some later why the that additional would So you manufacturing ramp will be that that this given would year?

Philip Krim

we but still we’ll believe that chain capacity, additional overall that and within have need. the believe the that we’ll full we risk We is manufacturing won’t that capacity have supply there

guidance so there that we’ve the be put on chain. out a the to assumption supply And based choppy continues

that. capacity. are more issue up is things are of in of just out guidance to than seen better much issues different supply we certainly the time the assumes to a Labor it’s had steps chain number become the seen that that that we’re prior popping we’ve to continues XXXX we’re than acute much there’s mitigate that taking had that where the course, put time shape we period a And that one And is anticipating. impacting of there a path from to Now issues. that. in recent be But throughout

is labor burns think as states. in getting different stimulus we Now off better

multiple a are work backdrop about it’s improves QX position, real but in issues this And been now. have a so still like partners we that out we who that a but longer choppy in feel raw industry. We started finding we’ve the in to it’s that good The optimistic manufacturing have for labor manufacturing took talked on materials country right raw time difficult materials.

out providing, in we’re the on don’t chain. half our guidance the think, second gets includes I the happens it our the totally woods. to what is some it year, of view supply better we of do Though we disruption best being So think think and we’re

Atul Maheswari

pricing the to your then makes have peers my That question. strong. circling costs still demand sense. meaningfully. up back October And pricing you’re earlier X. curious just follow-up pricing have taking inflated why taken as on on given it. is it not I Got Several here, just I’m of and up know you’re taking

the of So you I your than power some the pause? a following that’s is increase less giving you believe have price guess pause of pricing you of larger little seen because maybe elasticity Or first shot have peers? some bit you

Philip Krim

retail pricing. partners, like how with and to take flowing I our worked prioritizing, We’ve inventory No. notice. retail about partners said, on, advanced going need we’re our partners with retail them, we’ve both And to worked

weeks So that pricing notice and on we provided worked them with ago. them many, many

And pricing, focused to they Obviously, we’re so work but it’s easier the through. is omnichannel it experience. to would change just the from consumer time very channel our for like that DTC

sure pricing. that retail selling we make get well time pricing, we that that take the when wanted to all coordinated. then take to they’re is summer and we we heard our the when Day work sure from that’s Labor what to with to work So our want period, retail partners, partners right And continue we through make through it’s

time strategic transition to was have a view for higher and it the the for So is on business a partners prices. seamless just the really to what right

Operator

question We Guggenheim from have from Drbul Securities. Bob a

Bob Drbul

couple of questions from a Just me.

bit think and inventory one talked you a the balance I I composition you little have first on non-mattress inventory the the the is think that on sheet.

little marketing think customer your you in And try acquisition and some you non-mattress of little are -- pressure of of what expect sales is you you’re reach you you how much much of sort have about marketing about that pressure to when you ability the about impact, as categories? the just in think, of wondering think perspective? Just that talked in doing I about -- the you question to really get overall from with how customers plans, as could seeing just that just sort business? investment, The of wondering if bit of that talk line you top the the guess you new do I acquisition some as second costs, a -- how environment bit just a various out what to or sort the you’re expect I product, that generally

Philip Krim

kind two, there. So I guess, in of questions

increase very increasing about. inventory our because Beyond. launching We inventory. launching factor XXX explicitly launching every in the of up pillows biggest haven’t specifically commercial took some our is position. Bath pillows into into and the we opportunities really pillows load-ins on that driving pillow talked But into inventory our of And into that’s Walmart our store, ahead Costco & doors Bed First,

to our starting and categories those purposely just pillows. So strategy, part position that’s mattress to up key load grow in distribution, talks of to to with built a that product programs. have other we safety And to business which of very of not distribution first have is support inventory our and but

pillars that footprint for sold great have them. with a that about excited pillows. the We’ve our with the really we’re they’ve are product entry the expanding partners and really So well had seen brand

footprint why expand our within category the position seeing will that’s you’re aggressively, increase. we so And and inventory that

the our On driving marketing at growth. with and generate sales and still leverage marketing side, line to been ability do sales and top we’ve very pleased so

versus a a a kind Our of North in obviously, basis growth marketing business XX% on media basis, On a growing and XX%. despite over spend of American leverage year-over-year from And our X-year on while XX%. standpoint. you saw X-year at sales cost over is grew this the over basis XXXX generating

been has for others. and inflation concern real media for a us So

some seen that obviously media that partners of You’ve Facebook work the and Google. like in reported we with,

inflationary kind to positive. our a the contributing approaching in very our are moderating that EBITDA we’re Overall, talking IPO, by sure of that’s and And flat, cost so since our we diversifying keeping mitigate March making our supply relatively spend, the to that about we’ve been generating relative towards spend chain leverage that our way we constraints. think real-time spend

Bob Drbul

as legacy distribution doors, what some partnerships with a some of your performing this learning question of retail more you partnerships? you out as really is, sort you’re are one your new of little broaden the transpires? versus talk about how partners, And partners can your just bit guess I newer new

Philip Krim

Yes.

a dollar our partners. on basis, is from retail of coming So most partnership growth legacy

business job doing existing growing we’re partners. our our good of with So a

flowing on to them clip. And continues business really grow a priority that basis. We’re healthy inventory to a at

product We’re also focus. growth our with more premium a of new and partner pleased very that’s

and you’re a is price really what strategy strategy so of of bifurcation And of those a kind points partners. on seeing based bifurcation on based

and So are X-year-old I say still -- there X-year, with our more relationships. legacy, legacy

continue the things, business. but new dial these to we So in in relationships grand of that scheme are

see partnership. to We love have love Casper bring They They overall to of partners us the brand. the that continue goodness a lot their business.

to And that those business. so we build partners to work with continue

we trial geographic the us partner more can we footprint We more And and to wanting more sell-through. make premium more look see On new SKUs, in to coming there, partners see a North fill SKUs. opportunities more throughout wanting of to sure front, great offer that we America.

our And earliest so optimizing it’s more fill side partners of much white better. just and because running trial in the the on and space business better so where it’s white space there’s a that of kind versus

Operator

We Brooke with from Sachs. Goldman Roach have question a

Brooke Roach

could of at the a you demand half thinking year what about how current XXXX? this the into you little trial provide Philip, that backlog focus bit delayed you’re rollout trial you that to partners. shaping door the of over of or talked satisfying premium sizing expansion any doors on look Can as on like and back

Philip Krim

It’s a great question.

that partner delayed that we’ve the some openings partners even half bring with announced. store them. of the year Warehouse, online of haven’t we’ll this in a Mattress have We with the large announced we like And that second we

to continue America. selling order to doors drive existing see you’ll mix partners bringing out opportunity in a and as North of throughout product very focused that trial door And new fill more partners so trial market remain that customers premium we to for both on

Brooke Roach

can to at wholesale price you’re Got the talk thinking it. about the versus continue ask chain the at and events, levering follow-up. your point? promotional capacity? And covered How constraints. promotional wondering capacity on strains, and at really But some you just versus ground could one lot been of was of website I select in with both decision a or fulfill on context higher helpful. your that partners That’s spend to of supply There’s also if the I a capacity choosing demand own the comment

Philip Krim

a No, bit. it’s great we Yes. talk quite a about question and internally something

Our us expect expect experience activity going that view to that the kind promotional and is this to us consumers continue to be in to promotional on of right in that’s consumers that need deliver come for category and allow to to market we be competitive.

promotional constrained So the and chain is we critical attention a sale. ultimately being think despite getting capturing environment, even supply so consumers’ to to

be just others industry. we’re and the and I some products And I of job And that chain so inputs. overall we constantly the a I markets. think for demand overall done seen promotional availability business. as kind the speaks the the and different seeing we’ve of of to you’ve brand, think the between it’s good supply just balancing think in And and -- of we’re promotion about growth us balance those right the is power that our talking as think demand what don’t the

to to good promotional, promotion a products or think the try struggle brand extreme as but in by So on playbook drive to we’re are who growth. of their I end order seeing with of don’t not others that any you in means not as relevant move

Operator

Bank from America. Our from is next Nagle Curtis of question

Curtis Nagle

guess quick one relating to I the Just lease a charge.

I corporate San think guess clarify. footprint Just Francisco? the guess, for for plans showroom entirely that the XXXX? we I wanted should about year, growth related Is how the And and rest York leases, New in to of the to

Philip Krim

Mike specifics, I’ll let the footprint. is it estate corporate real entirely answer related but to

Mike Monahan

to our moving this consolidated We Curtis, That’s is due Mike. Yes. hybrid true. footprint largely model. a to

work seeing that values. we’re that’s So what our and really workforce

then, overall save were is New corporate to us moving, We shrink things. within money. real to York, largely which as will we’re transitioning mentioned, we X Labs bringing as across did the sublease to metro from our not over footprint company. in Francisco the will the still we and Casper some tenants. savings board you functions San And additionally, we’re New within XXXX The increase estate York area, going XXXX, able believe our within So which alignment on come

to and later QX beginning from that adjusted So in year this of see of we’ll some XXXX. start perspective into EBITDA an

Curtis Nagle

how for about showrooms And year? the terms and this footprint growth year to for then in plans just think next of the

Mike Monahan

as a that the at side sitting footprint, optimizing Right of to omnichannel like in our have growth XX starts we’re evaluating strategy. stores, our is come now, currently we really kind and near back main we we’re traffic feel good and retail focused focus We’re term. on

Operator

comes question the from Nick of line Jones next Citi. Your from

Nic Jones

how have I on question. the I potential just thinking are There’s of buying consumers’ guess about, on Delta kind variant? home and frenzy I into then ran of checks ties kind been guess, focus the of the a that And that’s how out. mean distributed, you impact Stimulus of home. largely throughout high-level COVID. think I

back from I we purchases? and kind way and I any Are as things half impact maybe guess kind there next the for head in that lot So deurbanizing may that demand tougher up of and of setting is of rejiggering of into these other here, concerns year? than mean, a people, comps expected making maybe the the

Philip Krim

recently. It’s been more a We’ve good question. certainly talking about

of really stress the COVID infrastructure. omnichannel I an think we’ve test seen benefits

this we’re to DTC it’s we expected deliver to quarter of that channel. consumer at very consumers matter way think than And retail last set are certainly continue the we’re up very were channel I behavior of as we does no growth that up as proud set our delivered Delta shopping. our partnership volatile growth robust. be I different X-year both we think on because And you And that was well that if pre-COVID. growth, dynamic So in well if look those we that generated the where our or the variant

still tell, behavior. what happen obviously, I will on think kind too of to shopping it’s early consumer

footprint there anything in that how are have we’re up say would deliver hope to that closures if I means or like set do store like we the we that. haven’t variations shopping But We that demand are revert even people that don’t And persist. seen or trends I we think certainly think anything to our omnichannel will that.

So for good on health seen industry. from and housing to the a think mattress tailwind rates overall that we coming good don’t that wellness continue remains kind focus data a mattress consumer category bolster that’s also mattress the will within very call think backdrop We’ve industry. of industry, know, secular We standpoint, for down think I I anecdotal kind and replacement a of, to be around guess we it the I’d going the things.

even is demand good the omnichannel guess think Casper. to that that that demand well be I industry And Delta matter is consumer that if for we with of given shopping situated variant focus the very for backdrop changes going capture exist. the and a cause behavior So to does it there’s Delta in and our that all variant, to might infrastructure Casper no say where

Operator

Stanley. Morgan Schenk Your next comes of from from Lauren question the line

Lauren Schenk

to wanted ask. just I

at stock some of in in of the were conferences you later largely issues. think and I had of noted settling inside lot were staying sort industry part and that June a you the

or of so a a And structural confirming that then more sort path in So changed basis weeks that quarterly you’ll full was last one question of on change? of basis, sort that profitability, on something than the X on expectations been there like year ‘XX wholesale get in a has XXXX? just to there clarifying just sort the

Philip Krim

Yes.

X supply we warehousing a less issues logistics expected. it’s is in And had truck where drivers. weeks the But mind, more One it’s it’s now a week, acute have labor that and in expected. week, talking X, change volatile or up -- labor we just think lot over over X, ways. they than last last around expected, the the been our daily forklift than to weeks up partners much footprint. backdrop. than docks because had partners So happened an the big of we’re manufacturing I keep that causing operators a XX our of than we different manufacturing popping on labor such issue ended that was And One

the we’re -- get line some to workers just we using at facilities of make mattresses. Some that production

bit supply when chain. better biggest longer getting it say there, a situation but in We acute than of And labor labor of capacity. The recently raw better. stimulus spot was challenge. to talk across are to hope problem that the So had a emerged the labor QX up the better and And to more we vendors, later kind entire was that’s previously. little this I the year. you the In states those came Mike, then, took is our kind ameliorate seeing what attracting the again, about expected that saw being would we’re linchpin something we materials our than difference somewhat more in we want was much but footprint the burning of real things get that as seen in a kind ended of guidance between to off, question. a real do talking kind But QX where

Mike Monahan

year. we have we’ll the standpoint, to profitability as closer a get From more visibility

year visibility closer that and XXXX, more expectation supply full more on see into we that we’ll we get reach on next we’ll challenges during a for some of is once the year. Our have to chain get year necessarily basis, the profitability not clarity that but

we likely. we’ll of earlier, again, into of a the we’ll that As lot and enter we towards to position year, more of see subside, strength. have, that do But XXXX we will some a from this those challenges mentioned visibility end anticipate start

Operator

turn questions There would to are call Krim. I to the time. at this no back Mr. like further

Philip Krim

Thank and for everyone. support. a you joining today I safe. bye. us Thank continued and have your and you healthy you, operator, hope Bye, and you, thank good day for stay all

Operator

call. for you participation. your concludes Thank This today’s conference

now may You disconnect.