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Most notably, in Q4 2022, we achieved our highest average order value of $73.15. When compared to Q3 2022, this was driven primarily by orders from our strong core customer base, who are responding well to our product offering. The added variety of our menu continues to deliver great value to our customers. In 2022, we shipped over 6.5 million orders. Our meals reduce food waste, eliminate meal planning stress, bring variety to people's lives, connect families and help develop healthy and creative habits. We sit at the intersection of the most critical aspects of health, sustainability and community, and we also have the opportunity to provide jobs across multiple disciplines. Our customers rave about the quality of our meals and the unique flavors we bring to their table.

The value of our product is evident in our average orders per customer, which was up as compared to Q3 2022 at 4.9 and average revenue per customer, which climbed to $358, a new company record. Total customers over the 12 months ended December 31, 2022, was approximately 659,000, a slight decline of 3% from the equivalent period a year ago. For the fourth quarter of 2022, total customers were 298,000, down 7.6% sequentially and down 11.2% from the prior year. We believe a portion of the decline can be attributed to the reduction in marketing spend that we began to implement in Q4. We ramped down our brand investment and in preparation for Q1, focused our resources on performance marketing. We are already seeing improved marketing efficiency thus far in Q1, which I will discuss shortly.

Seasonal and macroeconomic pressures on consumer spending due to the inflationary environment also had an impact on Q4 performance. It's important to consider the fourth quarter within the broader context of our strategy of achieving our goal of long-term profitability. This includes our efforts to manage our cash burn. Notably, as of the end of February 2023, we've seen a reduced cash burn of over 50% year-over-year as a result of ongoing expense reduction actions. I will discuss this in greater detail, along with how our work in Q4 is shaping 2023. We continue to execute against three strategic initiatives outlined during our last call that address the key fundamentals of the business. This means: one, taking a more targeted approach to acquiring and retaining more profitable customers, while reducing our marketing spend; two, driving margin improvements; and three, executing disciplined cost management in PTG&A.

Our focus on profitability is expected to put pressure on our top-line revenue and customer numbers in 2023. This is not to say that we are deprioritizing revenue and customer growth, but rather focusing our business objectives to support our path to profitability in the near-term. As part of our efforts, we worked with our lenders to amend our debt agreement to pay down our long-term debt on an accelerated schedule. Mitch will discuss this in detail. What I will share is that this reduces our covenants, and we believe it gives us more flexibility as we continue to pursue other opportunities. We are considering other options at our disposal to plan for the future success of the company. This includes potentially pursuing, evaluating and executing financing opportunities, a business combination or other strategic transactions.

As I have said before, when looking at the industry as a whole, it's highly fragmented and one that we believe is open for more consolidation. Diving deeper into our three initiatives, starting with Marketing. We made significant strides over the past several months in positioning our marketing efforts towards profitability and scale. In the fourth quarter, we reduced marketing spend by 18% year-over-year to $17.1 million, in line with our commitment to a thoughtful and targeted approach to marketing. Throughout 2022, our efforts were geared towards building the foundational elements of brand equity and awareness. Today, we have approximately 81% brand awareness and close to a 99% weekly retention rate for customers who were with us consistently for more than 13 weeks, which is our sweet spot in terms of retention.

Having established a solid baseline, we're now focused on achieving a balanced marketing mix that is designed to propel efficient and sustainable growth. To do so, we're focused on leveraging the channels we know are efficient and investing in our dollars strategically to ensure we get the highest return. Starting in the third quarter of 2022, we began reducing our spend on upper-funnel channels with a shift away from TV and out-of-home. We reallocated some of that spend towards performance-based and digital channels with a focus on delivering a strong cost per acquisition. We're seeing positive progress in the first quarter of 2023. And as of the end of February, we cut our cost per acquisition by half, and increased our conversion rate by more than 25% sequentially.

In the first quarter of 2023, we anticipate customer count will be up sequentially in line with seasonality. We do expect a decline year-over-year in-part due to our progress as we continue to make marketing more efficient throughout 2023 towards profitability. We continue to leverage partnerships to further unlock efficiencies in our marketing efforts. This week, we announced a partnership with Verizon on its new +play hub, which allows consumers to manage their subscriptions all in one place. As part of the platform, we are launching Blue Apron PLUS, a new savings program that unlocks exclusive deals. In addition, we continue to work with DoorDash via their DashMart storefront and have expanded the availability of our Heat & Eat microwavable product to 11 markets in the Northeast, including New York City.

Turning to our second priority, in the fourth quarter, our variable margin was 34.9%, a 2.7% improvement sequentially and roughly flat with the prior year. Variable margin was driven in-part by the receipt of a $1.2 million credit related to a previous ingredient quality issue. Another key factor in the margin improvement is our ability to upsell customers on higher-value products like Premium Recipes, Customization Options and Add-ons. For the full year, variable margin was 33.6% as compared to 35.8% in the prior year. We were able to keep margin levels relatively stable in 2022, despite the ongoing inflationary environment and approximately 40% increase in customer menu options. As mentioned on prior calls, we increased menu options by leveraging our existing ingredient pantry and adding only incremental items that we believe are of value to our customers.

Photo by Louis Hansel on Unsplash

To drive margin improvements in 2023, we are pairing the efficiency learnings and operations from 2022 with the rollout of a new organizational structure in our facilities. This new structure establishes accountability across the entire supply chain to deliver on improved efficiency and quality. It also provides a clearer path for our teams. The initial results are promising. Productivity metrics quarter-to-date are hitting levels we have not seen in the past eight quarters, even with an approximately 170% increase in product variety over the same time period. We plan to build on this momentum and provide you with updates on our progress in the coming months. We are also enhancing and expanding our product offerings with an eye towards profitability.

Our menu now features 84 options that address different meal moments. Notably, our seasonal boxes continue to be a hit. These boxes are created to help our customers bring to life memorable experiences with family and friends. In particular, our holiday boxes performed exceptionally well, with 2022 gross revenue more than double compared to our 2021 offering. This was in-part driven by the optionality to purchase holiday theme to Add-ons. Last week, we added our newest seasonal box, a brunch offering to the menu available through Mother's Day. Our third and final commitment is focused on cost management with an eye towards rightsizing PTG&A. In the fourth quarter, we took action to streamline our cost structure through expense management, with reductions in recruiting fees and consulting spends.

We also absorbed expenses related to severance charges associated with the December 2022 corporate headcount reduction. These initiatives, together with the reductions in marketing spend, are expected to drive up to $50 million in annualized cost savings, resulting in over 50% year-over-year reduction in our cash burn as of the end of February 2023. In all, we continue to manage our operations to set the business on a path to profitability. Additionally, earlier this month, we announced that the New York Stock Exchange has accepted our plan to regain compliance within 18 months with the global market capitalization listing standards. We are committed to maintaining our New York Stock Exchange listing and being in compliance across all listing standards.

Before turning the call over to Mitch, I want to take a moment to thank every Blue Apron employee. From the fulfillment centers to our corporate office, they play a key role in our success, and I'm proud to call them my colleagues. Thank you. With that, let me turn things over to Mitch to walk through our financials. Mitch?

Mitch Cohen: Thank you, Linda, and good morning, everyone. I'll begin with an update on our liquidity position before getting into the fourth quarter and full year results for the year ended December 31, 2022. Our cash balance as of December 31, 2022, was $33.5 million. In January 2023, we completed a $30 million at-the-market offering that launched in November 2022, selling approximately 29 million shares at an average sales price of $1 per share. With the completion of this at-the-market offering, our cash balance at January 31, 2023, was $46.8 million. In February, we launched a new at-the-market offering, giving us the option to sell up to $70 million in new shares to provide us with greater flexibility to access liquidity resources.

The proceeds from this offering will be used for general corporate purposes, including paying down some or all of our debt and providing us with greater flexibility to pursue, evaluate or execute on other potential financing or strategic opportunities. Substantially all of the $70 million remains available. As of the end of February, our cash balance was $46.3 million. In addition, on March 15, we amended our note purchase receivable in a move that we believe can provide us with further financial flexibility. The amendment accelerates the pay down of our $30 million senior secured notes as well as accrued and unpaid interest into four monthly installments of $7.5 million. The first installment was paid in connection with the signing of the amendment.

The amendment also reduces minimum liquidity covenant on a dollar per dollar basis corresponding to our payments up to $10 million until the full payment of the debt. We expect to fully pay down this obligation to be free of covenants by the end of the second quarter. We view this as an effective use of our cash at this time as it reduces or removed covenants that previously restricted our ability to access the full amount of our cash on our balance sheet. Finally, we continue to have discussions with Joseph -- Mr. Sandberg and it's affiliates regarding the outstanding $56.5 million private placement -- of which we received $1 million in December of 2022 and the $12.7 million gift card fundings owed to us. As you recall, in November 2022, we entered into a pledge agreement with an affiliate of Mr. Sandberg, which provides us with securities of privately held companies as collateral to secure the equity funding obligation.

These efforts reflect our commitment to diversifying our potential sources of liquidity and removing our debt as we work to resolve the Sandberg funding delays. Our ultimate goal is to get on a path to a stabilized balance sheet and long-term profitability. Turning to the fourth quarter. Net revenue was $106.8 and roughly flat year-over-year. The sequential decline was driven by a reduction in our customer base and a reduction in total orders, partially offset by an improvement in AOV. As Linda mentioned, average order value was $73.15, and orders per customer increased to 4.9. Price increases introduced in 2022 as well as ongoing efforts to add variety and customization to our menu drove the solid performance in key customer metrics. These efforts have served to improve the stickiness of our product with our customers while also preserving the value of our product relative to out-the-food options.

Turning to expenses. Variable margin was 34.9% in the fourth quarter. This is a 2.7 percentage point increase sequentially and a 0.4 percentage point decline over the prior year period. The sequential improvement was in part a $1.2 million supply of credit. In the fourth quarter, PTG&A costs were $34.3 million, an 8.8% sequential decrease and a 6.9% decrease year-over-year. For the full year, PTG&A costs were $155.1 million, a 7% increase from the prior year. The fourth quarter decline year-over-year was primarily driven by a reduction in the accrual for corporate bonuses to be paid in the first quarter of 2023. The sequential decline was in part the result of corporate head count reductions in 2022. As part of our other management initiatives, we implemented a reduction in corporate overhead and administrative expenses, such as consulting and recruiting fees and travel and entertainment expenses.

We continue to look for further efficiencies and are making a portion of our Linden, New Jersey, and Austin, Texas, spaces to sublease out unused square footage. Other expense for the fourth quarter was 1.5%, representing severance-related expenses associated with the corporate workforce reduction announced in December of 2022. Looking at the bottom line, we reported a net loss of $21.8 million for the fourth quarter compared to $26.4 million in the same quarter last year. In the fourth quarter, adjusted EBITDA was a loss of $13.5 million in the fourth quarter versus a loss of $17.9 million in the same quarter last year. For the full year, we reported a net loss of $109.7 million compared to $88.4 million for the fiscal 2021. Our full year adjusted EBITDA loss was $79.3 million compared to $39.2 million in the prior year.

As Linda mentioned, our Q1 results to-date are an early indication that our efforts are showing solid progress. We expect customer count to be sequentially -- up sequentially following seasonal patterns and efforts to drive efficiency and improve our cost structure have already allowed us to realize more than 50% annualized reduction in cash burn by the end of February or through the end of February. Our productivity metrics are also hitting their highest levels in the past eight quarters, and we have substantially lowered our cost per acquisition. Before I turn it over to Q&A, I'd like to quickly discuss our outlook. In line with our comments last quarter, we are not providing any forward guidance at this time. As a business, we remain focused on achieving EBITDA profitability and stabilizing our overall balance sheet and liquidity position.

With that, let me turn the call over back to the operator to take your questions. Operator?

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