SAN FRANCISCO, Aug. 31, 2020 /PRNewswire/ -- Shift
Technologies Inc. ("Shift" or the "Company"), a leading end-to-end
ecommerce platform on a mission to make buying or selling a used
car fun, fair, and accessible for everyone, today announced it is
raising its third quarter outlook for adjusted gross profit and
adjusted gross profit per unit ("GPU"). The Company also announced
that its senior management team will offer a deeper dive into
certain business operations as well as provide a financial update.
On June 29, 2020, Shift and Insurance
Acquisition Corp. (Nasdaq: INSU), a publicly traded special
purpose acquisition company, announced a business combination that
will bring the newest pure-play in used car ecommerce to the public
markets. Upon closing, the newly combined company will be listed on
NASDAQ under a new ticker symbol, SFT. Additional information about
the transaction can be found at the end of this press release.
Toby Russell, Shift Co-CEO,
commented, "We are pleased to report strong second quarter results,
with units and revenue in line with our prior guidance, and 41%
outperformance in GPU, relative to our original expectations.
Despite the near-term macroeconomic uncertainty, we are increasing
our Q3 adjusted gross profit and GPU guidance by 10%. We believe
our results are evidence of the strength of our model and our
ability to execute on our growth strategy. We took a conservative
approach to inventory acquisition during the lockdowns from March
through May which drove strong GPU for July, ahead of our prior
expectations, and were able to significantly grow our inventory
throughout the summer to meet consumer demand."
George Arison, Shift Co-CEO
added, "We are delivering on our mission to offer an easy,
convenient car ownership experience for our customers. In the
near-term, our strategy is to increase penetration in our existing
markets, execute on our geographic expansion plans, and offer
high-quality ancillary products while delivering an exceptional
customer experience. The macroeconomic environment is accelerating
a digital transformation in the car industry and we are benefitting
from secular tailwinds. We have a massive market opportunity ahead
of us and will continue to execute on our strategy to drive
long-term growth."
Q2 2020 Financial Results Commentary
Shift's Q2 2020 business strategy was to focus on maintaining
strong unit economics coming out of the initial COVID
shelter-in-place ordinances, while continuing to position the
Company well for sustained long-term growth.
As a result of this strategy, GPU was 41% ahead of the Company's
prior expectations, while unit sales and revenue were in-line with
its prior expectations. Second quarter and year to date results
demonstrate the Company's ability to successfully execute on
acquiring highly sought after inventory that delivers higher
margins.
Total unit sales in Q2 were 2,296 units, generating revenue of
$32.4 million, down from 2,761 units
and revenue of $42.5 million in Q2
2019. The decrease in unit sales and revenue was primarily driven
by its strategy to focus on selective inventory acquisitions during
the shelter-in-place ordinances to optimize margin and reduce
risk. Weekly sales volumes returned to pre-COVID levels five
weeks following the ordinances and since late May, the Company has
been accelerating its acquisitions to rebuild inventory and meet
the growing consumer demand, with August unit sales projected to be
double April's volume.
Total Q2 Gross Profit was $3.5
million or 11.0% of total revenue, up from (0.9)% in Q2
2019. GPU was $2,306, up from
$1,467 in Q2 2019. The outperformance
on gross margin and GPU was driven primarily by smart, diligent
acquisitions through the COVID lockdowns and strong performance in
its wholesale business.
The Company has continued to benefit from increased demand for
lower cost vehicles, with ecommerce unit sales increasing to 834
units in July at a GPU of $2,1481. The increase in demand is
evidenced by the performance in the Company's "value" segment.
Shift is unique among ecommerce retailers in offering value cars,
and this segment has represented 29% of total ecommerce unit sales
year-to-date through the end of July.
1July GPU of $2,148 is calculated as GAAP Total Gross Profit
(unaudited) of $1,604 thousand
adjusted by $187 thousand of
non-repair labor for an Adjusted Total Gross Profit of $1,791 thousand and 834 ecommerce units
sold. Adjusted Gross Profit per Unit ("GPU") is calculated as
Adjusted Total Gross Profit divided by the number of ecommerce
units.
Outlook
Due to outperformance in July, primarily driven by attractive
pricing conditions in the market and its conservative acquisition
strategy amid the initial COVID downturn, Shift is increasing its
prior adjusted gross profit and GPU guidance for the third quarter
of 2020, and reiterating its prior unit sales and revenue
outlook.
Cindy Hanford, Shift CFO,
commented, "We are making decisions to optimize our business and
will continue investing to drive long-term growth. We expect supply
and demand in the industry to begin to normalize, and as such, we
anticipate accelerated revenue growth of over 70% year-over-year in
the second half of 2020, with adjusted gross profit margin in the
mid- to high-single digits for 2H20."
Business and Operational Presentation
Shift's senior management team will provide a comprehensive
business overview, including a deep dive into its business
operations, technology platform, marketing strategy and financial
performance today, August 31, 2020.
The presentation will be made available on Shift's website at
https://shift.com/about, and will be filed by Insurance Acquisition
Corp. (NASDAQ: INSU) with the SEC .
About Shift
Shift is an e-commerce platform on a mission to make car-buying
convenient, fair, and accessible for everyone. With instant quotes
and at-home pickup, Shift saves sellers time and money. Buyers have
access to Shift's bookable at-home test drives and white glove
service. Shift's 150+-point inspection and seven-day return
guarantee help consumers buy and sell with confidence. For more
information please visit https://shift.com/.
About Insurance Acquisition Corp.
Insurance Acquisition Corp. is a special purpose
acquisition company formed for the purpose of effecting a
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination. Insurance
Acquisition Corp. raised $150.6M in its initial public
offering in March 2019. Insurance Acquisition Corp.'s
securities are quoted on the NASDAQ stock exchange under the ticker
symbols INSU, INSUW and INSUU.
Caution Regarding Forward Looking Statements
This document includes "forward looking statements" within the
meaning of the "safe harbor" provisions of the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as
"forecast," "intend," "seek," "target," "anticipate," "believe,"
"expect," "estimate," "plan," "outlook," and "project" and other
similar expressions that predict or indicate future events or
trends or that are not statements of historical matters. Such
forward looking statements include estimated and projected
financial information. Such forward looking statements with respect
to revenues, earnings, performance, strategies, prospects and other
aspects of the businesses of Insurance Acquisition Corp. ("INSU"),
Shift or the combined company after completion of the business
combination are based on current expectations that are subject to
risks and uncertainties. A number of factors could cause actual
results or outcomes to differ materially from those indicated by
such forward looking statements. These factors include, but are not
limited to: (1) the occurrence of any event, change or other
circumstances that could give rise to the termination of the
Agreement and Plan of Merger and the proposed business combination
contemplated thereby; (2) the inability to complete the
transactions contemplated by the Agreement and Plan of Merger due
to the failure to obtain approval of the stockholders of Insurance
Acquisition Corp. or other conditions to closing in the Agreement
and Plan of Merger; (3) the ability to meet Nasdaq's listing
standards following the consummation of the transactions
contemplated by the Agreement and Plan of Merger; (4) the risk that
the proposed transaction disrupts current plans and operations of
Shift as a result of the announcement and consummation of the
transactions contemplated by the Agreement and Plan of Merger; (5)
the ability to recognize the anticipated benefits of the proposed
business combination, which may be affected by, among other things,
competition, the ability of the combined company to grow and manage
growth profitably, maintain relationships with customers and
suppliers and retain its management and key employees; (6) costs
related to the proposed business combination; (7) changes in
applicable laws or regulations; (8) the possibility that Shift may
be adversely affected by other economic, business, and/or
competitive factors; (9) the operational and financial outlook of
Shift; (10) the ability for Shift to execute its growth strategy;
and (11) other risks and uncertainties indicated from time to time
in other documents filed or to be filed with the Securities and
Exchange Commission ("SEC") by Insurance Acquisition Corp. You are
cautioned not to place undue reliance upon any forward-looking
statements, which speak only as of the date made. Insurance
Acquisition Corp. and Shift undertake no commitment to update or
revise the forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required
by law.
Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures
that are not prepared in accordance with accounting principles
generally accepted in the United
States ("GAAP") and that may be different from non-GAAP
financial measures used by other companies. Insurance Acquisition
Corp. and Shift believe that the use of these non-GAAP financial
measures provides an additional tool for investors to use in
evaluating ongoing operating results and trends of Shift. These
non-GAAP financial measures should not be considered in isolation
from, or as an alternative to, financial measures determined in
accordance with GAAP. See the Investor Presentation filed with the
SEC today by Insurance Acquisition Corp., including the footnotes
on the slides contained therein where these measures are discussed
and page 57 of such presentation for a description of these
non-GAAP financial measures and reconciliations of such non-GAAP
financial measures to the most comparable GAAP numbers.
Additionally, to the extent that forward-looking non-GAAP financial
measures are provided in this press release, they are presented on
a non-GAAP basis without reconciliations of such forward-looking
non-GAAP measures due to the inherent difficulty in forecasting and
quantifying certain amounts that are necessary for such
reconciliation.
This press release provides outlook for both Adjusted Gross
Profit and Adjusted Gross Profit per Unit. These non-GAAP financial
measures are provided because Shift uses such measures in
evaluating its financial results and trends and as an indicator of
business performance. Insurance Acquisition Corp. and Shift are not
providing a quantitative reconciliation with respect to these
forward-looking non-GAAP measures in reliance on the "unreasonable
efforts" exception set forth in SEC rules because certain financial
information, the probable significance of which cannot be
determined, is not available and cannot be reasonably
estimated.
Additional Information About the Transaction and Where to
Find It
INSU has filed with the SEC a Registration Statement on Form
S-4, which includes a preliminary proxy statement/prospectus in
connection with the merger and will mail a definitive proxy
statement/prospectus and other relevant documents to its
stockholders. INSU's stockholders and other interested persons are
advised to read the preliminary proxy statement/prospectus, and
amendments thereto, and to read, when available, the definitive
proxy statement/prospectus in connection with INSU's solicitation
of proxies for its stockholders' meeting to be held to approve the
merger because the proxy statement/prospectus contains important
information about INSU, Shift and the merger. The definitive proxy
statement/prospectus will be mailed to stockholders of INSU as of a
record date to be established for voting on the merger.
Stockholders will also be able to obtain copies of the Registration
Statement on Form S-4 and the definitive proxy
statement/prospectus, without charge, once available, at the SEC's
website at www.sec.gov or by directing a request to: Insurance
Acquisition Corp., 2929 Arch Street, Suite 1703, Philadelphia, PA 19104, Attn: Joseph Pooler.
Participants in Solicitation
INSU, Shift and certain of their respective directors and
officers may be deemed participants in the solicitation of proxies
of INSU's stockholders with respect to the approval of the merger.
Information regarding INSU's directors and officers and a
description of their interests in INSU is contained in the
preliminary proxy statement/prospectus for the merger. Additional
information regarding the participants in the proxy solicitation,
including Shift's directors and officers, and a description of
their direct and indirect interests, by security holdings or
otherwise, is included in the preliminary proxy
statement/prospectus for the merger and will be included in the
definitive proxy statement/prospectus for the merger when
available. Each of these documents is, or will be, available at the
SEC's website or by directing a request to INSU as described above
under "Additional Information About the Transaction and Where to
Find It."
In connection with the merger, at any time prior to the special
meeting to approve the merger, certain existing INSU stockholders,
which may include certain of INSU's officers, directors and other
affiliates, may enter into transactions with stockholders and other
persons with respect to INSU's securities to provide such investors
or other persons with incentives in connection with the approval
and consummation of the merger. While the exact nature of such
incentives has not yet been determined, they might include, without
limitation, arrangements to purchase shares from or sell shares to
such investors and persons at nominal prices or prices other than
fair market value. These stockholders will only effect such
transactions when they are not then aware of any material nonpublic
information regarding INSU, Shift or their respective
securities.
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SOURCE Shift