SHIFT TECHNOLOGIES, INC. (SFTGQ)·Q4 2022 Earnings Summary

Executive Summary

• Q4 2022 revenue was $65.6M with 2,520 retail units; GAAP net income was $13.0M (driven by a $76.7M bargain purchase gain from the CarLotz merger), while Adjusted EBITDA loss was $25.5M and Adjusted GPU was $1,041, below expectations .
• Versus Q3: revenue fell to $65.6M from $161.9M; Adjusted EBITDA loss improved to $25.5M from $30.0M; Adjusted GPU fell sharply to $1,041 from $1,925 on aged inventory sell-through, steeper market depreciation, and under-capacity reconditioning .
• Management closed the CarLotz merger, shifted to an omnichannel selling model, reduced Adjusted SG&A to $28.1M, and guided Q1 2023 revenue to $56–$58M, Adjusted GPU to $1,600–$1,800, and Adjusted EBITDA loss to $24–$26M, with “sequential improvement” expected through 2023 .
• Stock catalysts: execution on omnichannel and cost actions, stabilization of GPU, and marketplace build-out; the company regained Nasdaq minimum bid compliance and exited Downers Grove, IL to focus on West Coast markets .

What Went Well and What Went Wrong

• What Went Well

  • Regained compliance with Nasdaq minimum bid price; corporate overhang reduced .
  • Closed CarLotz merger and completed the omnichannel transition; management expects sequential improvement through 2023 (“we expect sequential improvement in financial performance each quarter in 2023.” – CEO Jeff Clementz) .
  • Adjusted SG&A down to $28.1M from $39.4M in Q3; F&I per unit held relatively flat at ~$1,334, demonstrating discipline in cost and attachment economics .

• What Went Wrong

  • Adjusted GPU ($1,041) missed prior guidance ($1,800–$1,900) due to sell-through of aged inventory, steeper-than-expected depreciation, and below-capacity reconditioning activity .
  • YoY revenue declined 67% ($65.6M vs. $196.2M), with gross profit dropping 81% ($2.3M vs. $12.1M); retail units fell 61% (2,520 vs. 6,441) .
  • Wholesale gross profit per unit negative (−$578) and total GPU down to $895 (from $1,885 YoY), highlighting margin pressure in wholesale and overall unit profitability .

Financial Results

Sequential quarterly trend (oldest → newest):

YoY single-quarter comparison:

Segment revenue and gross profit (trend):

Key KPIs:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO Jeff Clementz: “2022 was a year of significant change… we adjusted our strategy to prioritize balance sheet health, reduce cash burn, and accelerate our path to profitability… we closed our merger with CarLotz and began our transition to an omnichannel selling model… we expect sequential improvement in financial performance each quarter in 2023.”
• CFO Oded Shein: “Adjusted GPU of $1,041 came in below our expectations, primarily due to sell-through of aged inventory, steeper-than-expected market depreciation and below capacity reconditioning activity… F&I remained relatively flat sequentially at $1,334 per unit… Excluding the merger, both revenue and adjusted EBITDA loss came in range of the guidance provided on our third quarter call for Shift standalone.”
• Additional integration detail: CarLotz merger consideration ~$23.0M, net assets acquired ~$99.7M, and bargain purchase gain ~$76.7M .

Q&A Highlights

• Vehicle mix strategy: “We still think that the 50% value car mix and 50% core car mix is a great place for us to be… the 50-50 is an optimal place…” – CEO Jeff Clementz .
• Clarifications on Q4 shortfall: Management emphasized aged inventory sell-down and market depreciation pressures on GPU, with reconditioning below capacity, but reiterated sequential improvement expectations for 2023 .
• Merger impact and guidance context: CFO noted Q4 included ~3 weeks of CarLotz operations and standalone performance was within prior guidance ranges for revenue and Adjusted EBITDA .

Estimates Context

• We attempted to retrieve S&P Global consensus estimates for Q4 2022 (EPS and revenue), but consensus was unavailable due to missing SPGI/CIQ mapping for ticker SFTGQ. As a result, Wall Street consensus comparisons from S&P Global are not available for this quarter [GetEstimates error: SpgiEstimatesError: Missing CIQ mapping for ticker 'SFTGQ'].

Key Takeaways for Investors

• Q4 headline profitability (GAAP net income) was driven by a non-recurring $76.7M bargain purchase gain; underlying operations still reflect negative Adjusted EBITDA and compressed GPU, so focus on non-GAAP trajectory is critical .
• Sequential improvement is expected through 2023 as omnichannel execution, inventory normalization, and reconditioning throughput improve; watch Q1 guidance delivery for confirmation (revenue $56–$58M, Adjusted GPU $1,600–$1,800, Adjusted EBITDA loss $24–$26M) .
• Cost actions are material: Adjusted SG&A fell to $28.1M in Q4 and FY23 Adjusted SG&A targeted at $85–$95M annualized; sustained discipline underpins the path to profitability .
• GPU recovery is the key swing factor: stabilization of depreciation effects, fewer aged units, and throughput normalization should lift margins; monitor F&I per unit stability (~$1,334) as a ballast .
• Wholesale profitability remains challenged (negative GPU); mix management (50/50 value vs. core) and reconditioning capacity utilization will be central to margin repair .
• Near-term trading setup hinges on evidence of sequential GPU improvement and delivery against Q1 guidance; medium-term thesis depends on omnichannel productivity, marketplace execution, and sustained SG&A reductions .
• Corporate risk reduced by regained Nasdaq minimum bid compliance and footprint rationalization (Downers Grove, IL closure); integration of CarLotz assets adds liquidity and platform reach .