Good afternoon, and welcome to Lulu's Third Quarter 2021 Earnings Conference Call. Today's call is being recorded, and we have allocated 1 hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Alexa Pisczak, Associate General Counsel at Lulu's. Thank you. You may begin.

Good afternoon, everyone, and thanks for joining us to discuss Lulu's third quarter results. Before we begin, we would like to remind you that this conference call will include forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including, but not limited to, statements regarding management's expectations, plans, strategies, goals and objectives, including our plans to invest in a third logistics facility and a mobile app; our future expectations regarding financial results; outlook for the quarter and year ending January 2, 2022; market opportunities; product launches and other initiatives; and our growth, including with respect to our customer community. These statements, which are subject to various risks, uncertainties, assumptions and other important factors, could cause our actual results, performance or achievements to differ materially from results, performance or achievements expressed or implied by these statements. These risks, uncertainties, and assumptions are detailed in this afternoon's press release, as well as our filings with the SEC, including our final prospectus filed with the SEC pursuant to Rule 424(b)(4) on November 12, 2021, all of which can be found on our website at investor.lulus.com. Any such forward-looking statements represent management's estimates as of the date of this call. While we may elect to update such forward-looking statements at some point in the future, we undertake no obligation to revise or update any forward-looking statements or information, except as required by law. During our call today, we will also reference certain non-GAAP financial information, including adjusted EBITDA and adjusted EBITDA margin. We use non-GAAP measures in some of our financial discussions, as we believe they more accurately represent the true operational performance and underlying results of our business. The presentation of this non-GAAP financial information is not intended to be considered in isolation, or as a substitute for, or superior to the financial information prepared and presented in accordance with GAAP. Our non-GAAP measures may be different from non-GAAP measures used by other companies. Reconciliations of GAAP to non-GAAP measures, as well as the description, limitations, and rationale for using each measure can be found in this afternoon's press release and in our SEC filings. Joining me on the call today is our CEO, David McCreight; Co-President and CFO, Crystal Landsem; and Co-President and CIO, Mark Vos. Following our prepared remarks, we'll open the call for your questions.

Thank you, Alexa, and good afternoon, everyone. Thank you for joining us on our first earnings call as a public company. Our IPO in gaining access to the capital market is an important and exciting milestone for the team. But we recognize it's merely one proud step in our journey to reaching our future potential as a company. And now, we are delighted to share our exceptional third quarter results with you all today in our first earnings call. As a reminder, for those who met us recently on the IPO road shows, this serves as an introduction for those who are new to our business model. Lulu's is a customer-driven, digitally native fashion brand, primarily serving millennial and Gen Z women. We focus relentlessly on meeting our customers' needs. We do this by using data, coupled with human insight to deliver a curated and continuously evolving assortment of on-point affordable luxury fashion. We aim to build authentic personal relationships with our customers and offer them coveted quality products, most of which they cannot purchase elsewhere. We tap into the pulse of the customer by engaging with her where she is online, through digital channels and social media, as well as on our own platforms through reviews, feedback surveys, and one-on-one interactions with our style advisers, fit experts, and bridal concierge team. Our team, the LuCrew, works to make our customer touch points special, which ultimately leads to strong customer engagement and loyalty within our growing community of brand fans. A key differentiator of our model is our use of data to optimize almost all elements of our business. The use of data and technology guides much of the decision-making throughout the company, from logistics planning to marketing placement, but nowhere is this more pronounced than in our product creation and curation cycle. Traditional merchandising approaches are risk and capital intensive, characterized by extended in-house design cycles, seasonal assortment decisions, deep buys made with limited customer feedback, and often high markdowns. Unlike traditional retailers, we leverage our test, learn, and reorder strategy to bring hundreds of new products to market every week. We test products informed by our attribution system in small batches. We use our algorithms to gauge customer demand and then quickly reorder winning products in higher volume to optimize revenue and profitability. This strategy and use of test information enable us to consistently convert new products into profitable sales with a high degree of accuracy, while minimizing fashion and trend risk. Our overarching vision is to be the most beloved women's brand for affordable luxury fashion, through curated exclusive products at reasonable prices, with superior customer service, and a personalized shopping experience. We want to be the category-defining apparel brand for millennial and Gen Z women. A few key points about Lulu that I'd like to highlight. We remain focused on strengthening and deepening our relationships with customers, aspiring to dress them for more occasions and every day of the week to expand our space in their closet and thereby grow our wallet share. By increasing Lulu's brand awareness over the next quarters and years, we expect more customers to join the Lulu's community. We launched our first-ever brand awareness campaign in late Q3, focused entirely on acquiring new customers, or as we like to say, bringing more new friends to the party. Over the next quarters, we will be laying a stronger foundation for potential international marketing that international customers are already showing their interest by visiting and purchasing at Lulu's, as well as following and engaging with us on social media, even while we are not actively marketing to them. As a digitally native brand, we continue to accelerate our competitive advantages in data-driven merchandising, profitable marketing, and operational efficiency, leading us down the path of future market share gain. Turning to a few of our third quarter highlights. We had another excellent quarter, delivering growth in net sales and profitability, achieving record results for any third quarter in our history. Comparable net sales increased 95% year-over-year and adjusted EBITDA increased 126% year-over-year. Crystal will walk you through the finer points shortly. We are also thrilled by our growth in active customers with sequential year-on-year double AOV growth in both new and repeat customers, with appreciably more efficient performance marketing spend as a percentage of gross sales versus last year and double AOV. Clearly, our affordable luxury brand experience, combined with the reach of our marketing efforts, is bringing new fans to the brand. From a merchandising perspective, we are encouraged by the broad-based response to our product offerings, with both event and non-event categories delivering double-digit demand growth as compared to 2019. We saw maintained momentum in dresses and even faster growth in separate sales compared to 2019. Our operating results reflect our disciplined approach to spend and efficiency. It's a testament to our model and team that we're able to achieve meaningful revenue growth, with inventory turnover at a rate north of 8x. Mark's team has been busy implementing plans to not only expand our logistical capabilities to facilitate our fast growth, but also to find new ways to optimize an already efficient logistics system. Finally, before Crystal walks you through our financial performance for the quarter, I wanted to provide commentary on COVID and supply chain issues. We can all witness how our daily lives have been disrupted, and our product supply chain endured some delays, but it was not to the degree you read about daily in the business headlines. Where we have been affected, mostly, is our reduced ability to chase in-season, not being able to maximize the upside in periods of exceptional demand. And while few can confidently speculate on how variants might impact the economy, what we can say is that Lulu's is better prepared for disruption. Our balance sheet is now healthy, our product offering is increasingly balanced with fastest revenue growth coming from our non-event segment. And with approximately 70% of our revenue coming from algorithmically driven purchasing, we can confidently take positions in future orders with low risk. Again, thank you for your time. We are thrilled about our future prospects and look forward to executing on our vision. I'd like to take a moment to thank the LuCrew for finding new ways daily to efficiently delight our brand fans. Without you all, none of this would be possible. And now let me introduce my colleague, Crystal Landsem, Co-President and CFO.

Thanks, David, and good afternoon, everyone. Before we dive into our results, I would just like to say how grateful I am to be part of such an amazing company and team that continues to execute on a daily basis. As David mentioned, we delivered a very strong quarter, highlighted by growth on all fronts, including net revenue, gross margins, profitability, and cash flows. We had a record number for third quarter active customers engaging with us, as our customers returned to their social calendars and continue to come back to us for their everyday fashion needs. With that said, we're very pleased with our third quarter financial results, so let's dive right in. During Q3, we grew our net revenue by 95% to $106.3 million, a $51.8 million increase over the same period in the prior year, and Q3 year-to-date net revenues were up 43.6%, an $84.7 million increase over the same period in the prior year. Our top-line growth continues to be driven by the combination of new customers acquired and increasing loyalty from our existing customer base, with an all-time high number of repeat customers engaging with us during the third quarter. We're very proud of our large diverse community of loyal customers. In the 12 months ended October 3, 2021, we served 2.5 million active customers compared to 2.3 million active customers in the 12 months ended September 27, 2020. In spite of the industry-wide supply chain challenges, our business model has enabled us to continue our path of strong growth and profitability, as you can see from our successes in Q3. Gross margins for the third quarter increased 290 basis points to 47.7%, driven by lower markdowns and discounts compared to last year, as well as a shift in sales mix to higher gross margin products. Strong customer demand drove faster inventory turns and a high level of net sales at full price. The reacceleration of event dressing demand, coupled with accelerated demand in non-event dressing drove year-on-year improvements in gross product margins across nearly all product classes. Our AOV reached an all-time high of $125, driven by increased items per cart, as well as lower discounts and markdowns due to lower promotional activity, with AOV increasing 22% over 2020 and 12% over 2019. Moving down to P&L to give some insights into our expense line items. Selling and marketing expenses consist primarily of online performance marketing, payment processing fees, and other advertising. Q3 selling and marketing expenses were $20.5 million, up $11 million from the same period in the prior year due to the return of online performance marketing spend to a more normalized state. Spend was suppressed in 2020 in response to lower customer demand due to the pandemic and an increased focus towards liquidity and cash flows. Towards the end of Q3 this year, we also launched our first-ever brand awareness campaign. Our free organic and low-cost initiatives, coupled with profitable performance media drive traffic to our platform, which is custom-built to allow for continuous updating and personalization for each customer. Our unified cross-platform strategy consistently reinforces the same brand values, with our marketing approach resulting in an attractive customer acquisition and strong retention. General and administrative expenses amounted to $21.2 million for the quarter, an increase of $10.3 million compared to 2020. It reflects increases in payroll and benefits in line with higher sales volumes, higher bonus expenses due to improved business results, and higher fixed headcount costs as the previous year's costs were suppressed due to furloughs related to the pandemic. It also includes a $1.7 million increase in equity-based compensation related to stock options and special awards. We reported earnings per share of $0.13, up from $0.01 in the third quarter of 2020, which is the result of our top-line growth, combined with efficiently managed costs and operations. Finally, adjusted EBITDA for the third quarter was $11.9 million, up from $5.2 million in the same period in 2020. Our Q3 adjusted EBITDA margin was 11.2%, up from 9.6% in the same period in 2020. We believe these non-GAAP metrics are important supplemental measures for understanding our results. We refer you to our 10-Q and earnings release issued earlier today for the required disclosures and reconciliations. Moving to the balance sheet, our cash and equivalents amounted to $40.9 million as of October 3. For inventory, we ended the quarter with $23.4 million, an increase of $9.9 million and 73% higher compared to $13.5 million at the end of Q3 2020. We completed our IPO on November 15, 2021, with net proceeds of $85.6 million. We repaid the long-term debt balance and borrowed $25 million against the new revolving facility. Just as a reminder, we operate a highly capital-efficient business that positions us to generate positive free cash flow. In the third quarter, we generated $12.7 million in cash flow from operations. As it relates to guidance, since this is our first earnings call as a public company, I wanted to provide a framework for our key performance metrics and how we will evaluate the business. Outside of the core financial statements, we will provide annual guidance to be updated quarterly on revenue, adjusted EBITDA, average order value, and active customers. We will also provide annual updates on CapEx. Just as a quick reminder, we're not a Q4-dependent business, and Q4 typically represents a smaller quarter compared to the rest of the year. Historically, our net revenue is highest in our second and third quarters due to higher demand for event apparel in spring and summer fashion. Our guidance range for 2021 is net revenues between $370 million and $372 million, which represents growth of 49% and 50%. Adjusted EBITDA is expected to be between $38 million and $39 million, which represents growth of 101% and 106% over 2020. This equates to an adjusted EBITDA margin of 10.3% and 10.5% compared to 7.6% in 2020. As a result of paying down our long-term debt following the IPO, we expect interest expense of $4 million in Q4, which includes the amortization and write-off of loan fees related to the term loan payoff versus $4.1 million in last year's Q4. On an as-adjusted basis for the paydown of the debt, interest expense would amount to approximately $1.5 million versus $3.5 million in Q4 of 2020. We expect that the impact of nonrecurring amortization and write-off of loan fees captured in interest expense for Q4 2021 will be $2.5 million.

Our first question comes from Brooke Roach at Goldman Sachs.

David, Crystal, I was wondering if you could talk a little bit about the sequential trends that you've seen in customer engagement and purchase activity throughout the third quarter and into the holiday period. How are the newly acquired customers engaging with the brand today? And have you seen any impact from these results as COVID trends have started to shift nationwide?

Crystal, why don't you take the COVID trends portion and Mark, maybe you could talk about the customer sequential.

Yes, sure. It's a good question, Brooke. So, from a COVID impact perspective, I would say that we've not really experienced any noticeable changes. And just to highlight, our performance through Q2 and even into Q3, we had 69% and 95% growth, respectively. So, what's really great about our buying model and our business model in general is that we've been able to mitigate some of those risks and still put up some really strong numbers. And that's been largely driven by new and repeat customer engagement, where we've seen an acceleration sequentially for both.

Great. That's really helpful. And as we think about the initial learnings that you've had so far from your brand awareness campaign, and I think, I heard in the prepared remarks, plans for maybe some new international marketing. Can you talk to us a little bit about how you're thinking about marketing going forward and engaging that new customer?

Sure. Mark, do you want to start with international? And then, I'll address the general marketing questions.

So in the near-term revenue outlook, we did not contemplate any material increases in revenue from international sources. Based on our platform traffic and social following data, we do see interest in Lulu's from international consumers. Therefore, in the near term, we are focusing on improving the international visitor experience to bring this up to par with our domestic brand experience. From there on, we will look into possibly expanding marketing activities in select territories and/or possible international partnerships in order to increase our ability to test and learn what works for us in the international markets.

Right. And following on Mark's comments, internationally, that will then set us up to explore our potential in foreign markets with some potential, most likely, initially, some third-party partnerships using their platforms and traffic to learn and test our product appeal, test pricing, and several other factors before we consider whether we're going to do it on our own and build actual infrastructure in the country. As it relates to the brand awareness campaign, as we've talked about in the past, we really are a culture built on testing and learning. Whether it's our test on the reorder model or how we approach marketing, we're very, very good at advancing with performance marketing. We know that we have this large addressable market, and we're always looking for new ways to introduce new people to the brand and make new brand fans. So, brand awareness is a different discipline, and we've been working with social media platforms for quite a while. We think we're going to learn quite a bit from this and will continue to test it in the near future, finding the best way to bring our message to new audiences.

Our next question comes from the line of Lorraine Hutchinson with Bank of America.

I want to follow up on your comments around the success in the non-event outpacing success and event dressing. Can you talk about what categories have been working, and then how that informs your buying decision on a go-forward basis?

Crystal, did you want to speak to the product performance and category performance?

Sure. So, we won't drill into specific product classes, but what we can say is that not only did we see a reacceleration in our events business, but there's definitely been continued momentum in our non-events business, especially in the separate classes. Our buying model has driven our investment into what our customer tells us that she wants, our assortment will continue to evolve to support that, and we are seeing this nice acceleration and even outperformance of our dress classes and our non-events product categories, even more so pronounced in Q3.

Our next question comes from the line of Randy Konik with Jefferies.

I wanted to kind of unpack AOV growth. It's been growing nicely. Can you just give us some perspective on the drivers of that, perhaps mix, UPT, etc.? And how do you think about AOV opportunity over the next few years and the drivers of that?

Sure. David, do you want me to take that one?

Absolutely.

Our AOV growth has been a combination of an increase in units per transaction, as well as less markdowns and discounts and promotional activity over time. On a go-forward basis, we expect that to be a balance of increasing units over time, of course, pricing related to inflation, but only as our price value generates that. It would be more so driven from her increasing her cart size, especially as we grow in our non-events classes in the separate categories as well.

Understood. And then, I want to ask a follow-up around systems and technology and talk about where the company may have been a few years ago, where you've kind of got to today and how you've been able to improve your productivity and efficiency in the business? And any kind of systems and technology items you're sitting on over the next year or so to continue to enhance those productivity measures and efficiencies within the organization.

Mark, do you want to jump in there?

Cool. That's a broad question. I would say that in all aspects, especially in the last couple of years, I think in all aspects of our business, whether that is from a data-driven decision-making perspective or making sure that we empower and inform ourselves with the insights we need to make the right decisions. We have continuously invested in that over the last several years. We have optimized, from a logistics perspective, how we allocate our orders over the multiple fulfillment centers, both from an inventory balancing perspective, as well as reducing shipping zones and shipping costs. On our product creation cycle, as we've discussed in several ways, it's really about how can we reduce fashion risk and ensure that we get products in on time. From a tech stack perspective, we switched to a more advanced technical platform to engage with our customers and increase conversions. Lastly, we have started robotics in our fulfillment centers to increase future units per hour efficiency.

Our next question comes from the line of Mark Altschwager with Baird.

You sound very pleased with a lot of the marketing initiatives. I'm curious, are you seeing any impact from some of the iOS changes? And more generally, what are you seeing in terms of customer acquisition cost trends as we head into the holiday period?

Mark, you want to jump in?

Yes. Okay, thanks. As it relates to iOS changes, we have been able to recalibrate the impacts on how things are being viewed. Together with the platforms, we have continued finding efficiencies that are reflected in our numbers. While we've had to change our email impact and machine-assisted opens, we are currently assessing that impact in triangulating the performance of our email in various ways. Even though open rates for a subset of email have been impacted, key metrics like traffic, clicks, and revenue per email remain visible, allowing us to optimize our email program. In summary, we are adapting to the new realities and feel we have what we need in order to be successful.

Okay. And then, separately here, can you give us a brief history on how stimulus affected the business earlier this year and just your thoughts on some of the puts and takes of lapping stimulus as we look into early 2022?

I think it's safe to say that we experienced a rapid reacceleration earlier in 2021 related to the stimulus. However, we were also turning inventory so quickly that it's difficult to say how much of that affected our business versus having further upside due to a return to normal business growth rates. Our internal view is that we certainly had a benefit early on from a stimulus perspective, but when those funds started coming in, our business continued to grow and, in some cases, accelerated. It's difficult to pinpoint the actual impact, but we're optimistic we could have seen further upside if we had more inventory as the stimulus was less impactful or noticeable within our financials.

Yes, we could say that, that upside in not only Q1, Q2, and Q3.

Our next question comes from the line of Oliver Chen with Cowen.

The merchandise margins and the momentum there were also very impressive. What do you see ahead in terms of maintaining the merchandise margins, and also, you have low levels of clearance and markdowns, so wondering about that? Also, the mobile app innovations sound quite positive. Would love your take on what some of the key changes you'll make there, especially as you pursue more context and personalization? Then lastly, on the net promoter score frontier, you have a high net promoter score relative to competitors, but there could be opportunity for upside here. What would you articulate as key drivers to improve your net promoter score?

Oliver, why don't we unpack those three questions. And Mark, do you want to start with the app, and then Crystal, you can talk about the margins.

Yes. We relaunched our app on a new platform primarily because the previous one had limitations in terms of what we could offer from a brand and personalization experience. Where we are today is that step one was essentially a lift and shift to retain functionality, and now we can work on improving brand experience and more real-time personalization moving forward.

And Oliver, I will jump in on the net promoter score before we get to Crystal addressing some of your margin questions. We've had terrific net promoter scores, particularly when we compare ourselves to our core market set, and we score well for value, style, and wonderful customer service. We know there are opportunities for improvement. The major feedback tends to be about the availability of stock and the size range offering. We recognize the need to improve our service levels with inventory as we're growing quickly. We're excited about our pace and sell-through, but we have to balance that with the on-site shopping experience for our customers. We plan to find ways to address this in 2022.

As it relates to margins and the sustainability of the margins we've been experiencing, I would say that our affordable luxury price points, fast inventory turns, and buying model approach allow us to maintain consistent margins. The caveat would be that as we expand into less mature markets and focus on growth, there could be some fluctuation, but we remain optimistic about our ability to deliver consistent margins over time.

That's all very helpful. On the interplay between inflation and pricing, what are you seeing in terms of your product cost inflation in labor and materials overall? How does that interplay with how you're thinking about pricing to maintain clear value for your customers?

We take a very surgical approach to pricing across all products and find that there is quite a bit of elasticity. We've been less affected than others in our space, likely due to our already affordable luxury price points. Where we do experience price pressures, we've managed to adjust our pricing with minimal impact on our customer’s perceived product value. I don’t want to suggest we’ll raise prices across the board, as it's really a SKU-by-SKU demand and price value analysis we conduct in real-time.

Our next question comes from the line of Ed Yruma with KeyBanc.

I guess, first, on the product delays, you guys navigated a difficult environment pretty well. What are the knock-on effects? Are you having to briefly change to test and react? Are you seeing certain classifications where you're seeing lighter-than-expected inventory for the next quarter or two? And then, just as a housekeeping question, how should we think about share count for the fourth quarter?

David, I can jump in on the timelines. Just as a reminder to everybody, for the first half of 2021, we actually saw our best on-time delivery rates as a company. It's been a unique year for us compared to others in the space. We did see some modest impacts on timelines and deliveries in Q3, mostly driven by smaller product classes where the impact to revenue would be smaller and less noticeable on the P&L. Due to our buying approach, we've been able to navigate through delivery issues by padding in-house states with our vendors, who have been great partners in optimizing our inventory flows. We consistently received most of our product during the desired selling windows. We've contemplated there might be more delays than we've been experiencing, but we are hopeful that will not be the case.

Our next question comes from the line of Dana Telsey with the Telsey Advisory Group.

Nice to see the progress. Just touching on pricing again, have you taken prices? For how much, and how do you think about price? Does it differ by category and the percentage you would take? Also, you mentioned in the opening remarks that you're not as affected by supply chain. Can you expand on that a little bit and how you're thinking about supply chain for the first half of the new calendar year?

From a pricing perspective, it certainly varies by product classes, and it's difficult to quantify how much we've changed overall. We've raised prices on some products and lowered them on others, evaluating each based on sell-through and overall margin targets. Our strategy is driven by the maturity of the business; for instance, dresses, where we've been a leader in the space for a while, may have a higher markup than a newer category we're trying to expand. Thus, it’s complex and requires regular real-time assessment.

Our next question comes from the line of Oliver Chen with Cowen.

On your inventory composition, as you think about international and non-event, what are your thoughts on breadth versus depth of the assortment, and how it should manifest to generate consistent attractive growth? Additionally, regarding your earlier comments on categories that you're unable to chase, could you be more specific about which categories or was it broad-based?

Sure. Thank you, Oliver. Regarding assortments, internationally, as we discussed, it will be a completely test environment. Our customers will dictate the assortment, and we’ll start with an edit based on attributes and learnings from other customers, avoiding taking deep positions. In my experience, international assortments can vary widely by season, making our test, learn, and reorder model ideal for entering new markets. As for non-event dressing, the test, learn, and reorder model encourages finding new styles purchased in small batches, with the goal of quickly chasing and reordering successful products. Success in this area is the leading indicator of future growth for those categories, indicating that progress is a lagging indicator of the success we've observed earlier. In terms of the categories in which we struggle to chase, that has been broad-based. Typically, we can get quick adjustments to seasonal products, like moving from spring to summer, but due to current market conditions, we haven't been able to maximize that upside. With current demand and inventory turnover, it’s challenging to access that additional upside, although we’re still achieving 95% year-over-year growth. We are predicting a quick turn-around in categories as we prepare for the Chinese New Year and place orders in anticipation of potential delays in deliveries.

Our next question comes from the line of Erinn Murphy with Piper Sandler.

A couple of thoughts for me. First, I was curious if you could speak to what you're seeing in terms of return rates now versus pre-COVID levels? Secondly, just on the promotional backdrop, as we head into the holiday season, what are you seeing from your competition versus the lower markdown levels that you've talked about within your own business?

We see, from the...

I think I can take it. On the returns front, I would say we've seen return rates normalize back to levels consistent with pre-COVID. So, nothing significant to report there, either upwards or downwards.

And then, on the promotional landscape, what are you seeing in terms of competition during the holiday season?

Thank you for the question. Interestingly, as we went into Black Friday and Cyber Monday, we observed that many competitors continued to pull promotions forward. Notably, Lulu's chose to reduce promotional days during this period compared to previous years. This compelled us to reevaluate how we approach promotions. Whether this preparation to pull promotions was due to concern over market share or logistic challenges remains unclear, but we anticipate seeing stronger players offering fewer promotions than last year.

Could you share the traffic metrics for the third quarter?

I can speak to that. In general terms, both traffic and conversion rates were up compared to last year.

Our next question comes from the line of Dana Telsey with the Telsey Advisory Group.

I would like to follow up on the supply chain. It seems that you are facing fewer challenges compared to others based on your opening remarks. Could you elaborate on that, please?

It's really not that we don't have headwinds; it's just that our buying model and the way we approach merchandising is different. Our data-driven methodology allows us to strategically pull inventory forward or add buffer around delivery timelines. We do face delays, but we've managed to mitigate them effectively, so we're not as affected in our ability to meet our plans.

At this time, we have reached the end of the question-and-answer session. And I will now turn the call back over to David for any closing remarks.

Well, thank you all for joining us on our first quarterly call. I know many of you will be spending time with follow-up questions in the coming hours and look forward to presenting our Q4 results in the next few months and also giving insight into our goals and strategies for FY '22. Have a great holiday season. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.