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Vroom Announces Third Quarter 2023 Results

Continued Progress on Long-Term Roadmap Driving Unit Growth, GPPU Improvement and Cost Reductions

Vroom, Inc. (Nasdaq:VRM), a leading ecommerce platform for buying and selling used vehicles, today announced financial results for the third quarter ended September 30, 2023.

HIGHLIGHTS OF THIRD QUARTER 2023 VERSUS SECOND QUARTER 2023

  • 11% sequential growth in Ecommerce units
  • $3,144 Ecommerce gross profit per unit (GPPU) as compared to $2,954
  • Continued reductions in fixed costs per unit as well as per unit costs across marketing, logistics, and titling and registrations and support
  • $(82.9) million net loss as compared to $(66.3) million
  • $(64.5) million Adjusted EBITDA as compared to $(56.3) million

Tom Shortt, Chief Executive Officer of Vroom, said, “In the third quarter of 2023, consistent with our Long-Term Roadmap, we continued to make progress on our three key objectives and four strategic initiatives. Our ecommerce unit growth rate doubled sequentially to 11%, while we also sequentially improved GPPU and reduced SG&A spend. Ecommerce GPPU increased to $3,144 in Q3 2023 from $2,954 in Q2 2023, benefiting from an improved mix of unaged vehicles sold within the quarter. During the third quarter of 2023, 34% of our units sold were aged units, or units held greater than 180 days. Adjusted EBITDA declined sequentially, driven by headwinds in the loan portfolio performance at UACC due to higher delinquencies and realized net losses, partially offset by improved unit economics. We continue to drive process improvements across titling and registration, pricing, marketing, sales, reconditioning and logistics.”

Bob Krakowiak, Vroom’s Chief Financial Officer, commented, “We succeeded in reducing per-unit costs across 1) marketing, 2) logistics, 3) titling, registration and support, and 4) fixed costs. We further strengthened our balance sheet by recovering $48 million of cash trapped on the balance sheet as we sold through aged inventory, and ended the quarter with cash and cash equivalents of approximately $209 million. We will continue to pursue opportunities to reduce costs, strengthen our balance sheet and enhance our liquidity and intend to seek additional capital through equity or debt financing.”

THIRD QUARTER 2023 FINANCIAL DISCUSSION

All financial comparisons are on a year-over-year basis unless otherwise noted.

Ecommerce Results

 

 

Three Months Ended

September 30,

 

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

 

 

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

Change

 

 

% Change

 

 

2023

 

 

2022

 

 

 

Change

 

 

% Change

 

 

 

(in thousands, except unit

data and average days to sale)

 

 

 

 

 

 

 

 

 

(in thousands, except unit

data and average days to sale)

 

 

 

 

 

 

 

 

Ecommerce units sold

 

 

 

4,561

 

 

 

 

6,428

 

 

 

 

(1,867

)

 

 

(29.0

)%

 

 

 

12,621

 

 

 

 

35,134

 

 

 

 

(22,513

)

 

 

(64.1

)%

Ecommerce revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vehicle revenue

 

$

 

136,949

 

 

$

 

212,980

 

 

$

 

(76,031

)

 

 

(35.7

)%

 

$

 

387,585

 

 

$

 

1,173,727

 

 

$

 

(786,142

)

 

 

(67.0

)%

Product revenue

 

 

 

12,902

 

 

 

 

12,461

 

 

 

 

441

 

 

 

3.5

%

 

 

 

36,128

 

 

 

 

48,709

 

 

 

 

(12,581

)

 

 

(25.8

)%

Total ecommerce revenue

 

$

 

149,851

 

 

$

 

225,441

 

 

$

 

(75,590

)

 

 

(33.5

)%

 

$

 

423,713

 

 

$

 

1,222,436

��

 

$

 

(798,723

)

 

 

(65.3

)%

Ecommerce gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vehicle gross profit

 

$

 

2,354

 

 

$

 

14,573

 

 

$

 

(12,219

)

 

 

(83.8

)%

 

$

 

2,956

 

 

$

 

46,153

 

 

$

 

(43,197

)

 

 

(93.6

)%

Product gross profit

 

 

 

11,985

 

 

 

 

12,461

 

 

 

 

(476

)

 

 

(3.8

)%

 

 

 

33,610

 

 

 

 

48,709

 

 

 

 

(15,099

)

 

 

(31.0

)%

Total ecommerce gross profit

 

$

 

14,339

 

 

$

 

27,034

 

 

$

 

(12,695

)

 

 

(47.0

)%

 

$

 

36,566

 

 

$

 

94,862

 

 

$

 

(58,296

)

 

 

(61.5

)%

Average vehicle selling price per ecommerce unit

 

$

 

30,026

 

 

$

 

33,133

 

 

$

 

(3,107

)

 

 

(9.4

)%

 

$

 

30,710

 

 

$

 

33,407

 

 

$

 

(2,697

)

 

 

(8.1

)%

Product revenue per ecommerce unit

 

 

 

2,829

 

 

 

 

1,939

 

 

 

 

890

 

 

 

45.9

%

 

 

 

2,863

 

 

 

 

1,386

 

 

 

 

1,477

 

 

 

106.5

%

Gross profit per ecommerce unit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vehicle gross profit per ecommerce unit

 

$

 

516

 

 

$

 

2,267

 

 

$

 

(1,751

)

 

 

(77.2

)%

 

$

 

234

 

 

$

 

1,314

 

 

$

 

(1,080

)

 

 

(82.2

)%

Product gross profit per ecommerce unit

 

 

 

2,628

 

 

 

 

1,939

 

 

 

 

689

 

 

 

35.5

%

 

 

 

2,663

 

 

 

 

1,386

 

 

 

 

1,277

 

 

 

92.1

%

Total gross profit per ecommerce unit

 

$

 

3,144

 

 

$

 

4,206

 

 

$

 

(1,062

)

 

 

(25.2

)%

 

$

 

2,897

 

 

$

 

2,700

 

 

$

 

197

 

 

 

7.3

%

Ecommerce average days to sale

 

 

 

202

 

 

 

 

186

 

 

 

 

16

 

 

 

8.6

%

 

 

 

266

 

 

 

 

118

 

 

 

 

148

 

 

 

125.4

%

Results by Segment

 

 

Three Months Ended

September 30,

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

 

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

Change

 

 

% Change

 

 

2023

 

 

2022

 

 

Change

 

 

% Change

 

 

 

(in thousands, except unit data)

 

 

 

 

 

 

 

 

(in thousands, except unit data)

 

 

 

 

 

 

 

Units:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ecommerce

 

 

4,561

 

 

 

6,428

 

 

 

(1,867

)

 

 

(29.0

)%

 

 

12,621

 

 

 

35,134

 

 

 

(22,513

)

 

 

(64.1

)%

Wholesale

 

 

2,270

 

 

 

3,128

 

 

 

(858

)

 

 

(27.4

)%

 

 

5,273

 

 

 

19,108

 

 

 

(13,835

)

 

 

(72.4

)%

All Other (1)

 

 

357

 

 

 

662

 

 

 

(305

)

 

 

(46.1

)%

 

 

1,022

 

 

 

3,408

 

 

 

(2,386

)

 

 

(70.0

)%

Total units

 

 

7,188

 

 

 

10,218

 

 

 

(3,030

)

 

 

(29.7

)%

 

 

18,916

 

 

 

57,650

 

 

 

(38,734

)

 

 

(67.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ecommerce

 

$

149,851

 

 

$

225,441

 

 

$

(75,590

)

 

 

(33.5

)%

 

$

423,713

 

 

$

1,222,436

 

 

$

(798,723

)

 

 

(65.3

)%

Wholesale

 

 

30,898

 

 

 

47,604

 

 

 

(16,706

)

 

 

(35.1

)%

 

 

75,593

 

 

 

270,489

 

 

 

(194,896

)

 

 

(72.1

)%

Retail Financing (2)

 

 

40,823

 

 

 

40,654

 

 

 

169

 

 

 

0.4

%

 

 

114,939

 

 

 

120,005

 

 

 

(5,066

)

 

 

(4.2

)%

All Other (3)

 

 

14,062

 

 

 

27,098

 

 

 

(13,036

)

 

 

(48.1

)%

 

 

43,034

 

 

 

126,622

 

 

 

(83,588

)

 

 

(66.0

)%

Total revenue

 

$

235,634

 

 

$

340,797

 

 

$

(105,163

)

 

 

(30.9

)%

 

$

657,279

 

 

$

1,739,552

 

 

$

(1,082,273

)

 

 

(62.2

)%

Gross profit (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ecommerce

 

$

14,339

 

 

$

27,034

 

 

$

(12,695

)

 

 

(47.0

)%

 

$

36,566

 

 

$

94,862

 

 

$

(58,296

)

 

 

(61.5

)%

Wholesale

 

 

(1,495

)

 

 

(1,574

)

 

 

79

 

 

 

5.0

%

 

 

(5,426

)

 

 

(6,260

)

 

 

834

 

 

 

13.3

%

Retail Financing (2)

 

 

32,341

 

 

 

35,954

 

 

 

(3,613

)

 

 

(10.0

)%

 

 

92,184

 

 

 

109,637

 

 

 

(17,453

)

 

 

(15.9

)%

All Other (3)

 

 

2,909

 

 

 

5,917

 

 

 

(3,008

)

 

 

(50.8

)%

 

 

9,576

 

 

 

17,089

 

 

 

(7,513

)

 

 

(44.0

)%

Total gross profit

 

$

48,094

 

 

$

67,331

 

 

$

(19,237

)

 

 

(28.6

)%

 

$

132,900

 

 

$

215,328

 

 

$

(82,428

)

 

 

(38.3

)%

Gross profit (loss) per unit (4):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ecommerce

 

$

3,144

 

 

$

4,206

 

 

$

(1,062

)

 

 

(25.2

)%

 

$

2,897

 

 

$

2,700

 

 

$

197

 

 

 

7.3

%

Wholesale

 

$

(659

)

 

$

(503

)

 

$

(156

)

 

 

31.0

%

 

$

(1,029

)

 

$

(328

)

 

$

(701

)

 

 

213.7

%

(1)

All Other units consist of retail sales of used vehicles from TDA.

(2)

The Retail Financing segment represents UACC’s operations with its network of third-party dealership customers as of the closing of the UACC acquisition in February 2022.

(3)

All Other revenues and gross profit consist of retail sales of used vehicles from TDA and fees earned on sales of value-added products associated with those vehicles sales and the CarStory business.

(4)

Gross profit per unit metrics exclude the Retail Financing gross profit and All Other gross profit.

SG&A

 

 

Three Months Ended

September 30,

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

 

 

 

 

 

 

 

 

 

2023

 

 

2022

 

 

Change

 

 

% Change

 

 

2023

 

 

2022

 

 

Change

 

 

% Change

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

Compensation & benefits

 

$

 

37,695

 

 

$

 

55,694

 

 

$

(17,999

)

 

 

(32.3

)%

 

$

 

130,318

 

 

$

 

199,111

 

 

$

(68,793

)

 

 

(34.6

)%

Marketing expense

 

 

 

13,429

 

 

 

 

14,945

 

 

 

(1,516

)

 

 

(10.1

)%

 

 

 

39,871

 

 

 

 

69,818

 

 

 

(29,947

)

 

 

(42.9

)%

Outbound logistics

 

 

 

2,209

 

 

 

 

4,945

 

 

 

(2,736

)

 

 

(55.3

)%

 

 

 

6,251

 

 

 

 

39,925

 

 

 

(33,674

)

 

 

(84.3

)%

Occupancy and related costs

 

 

 

4,575

 

 

 

 

6,041

 

 

 

(1,466

)

 

 

(24.3

)%

 

 

 

13,600

 

 

 

 

17,408

 

 

 

(3,808

)

 

 

(21.9

)%

Professional fees

 

 

 

5,277

 

 

 

 

6,459

 

 

 

(1,182

)

 

 

(18.3

)%

 

 

 

15,504

 

 

 

 

26,585

 

 

 

(11,081

)

 

 

(41.7

)%

Software and IT costs

 

 

 

9,227

 

 

 

 

11,277

 

 

 

(2,050

)

 

 

(18.2

)%

 

 

 

27,555

 

 

 

 

33,406

 

 

 

(5,851

)

 

 

(17.5

)%

Other

 

 

 

7,174

 

 

 

 

35,282

 

 

 

(28,108

)

 

 

(79.7

)%

 

 

 

29,979

 

 

 

 

89,374

 

 

 

(59,395

)

 

 

(66.5

)%

Total selling, general & administrative expenses

 

$

 

79,586

 

 

$

 

134,643

 

 

$

(55,057

)

 

 

(40.9

)%

 

$

 

263,078

 

 

$

 

475,627

 

 

$

(212,549

)

 

 

(44.7

)%

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance:

  • EBITDA;
  • Adjusted EBITDA;
  • Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues;
  • Adjusted EBITDA excluding securitization gain;
  • Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues;

These non-GAAP financial measures have limitations as analytical tools in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP. Because of these limitations, these non-GAAP financial measures should be considered along with other operating and financial performance measures presented in accordance with U.S. GAAP. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with U.S. GAAP. We have reconciled all non-GAAP financial measures with the most directly comparable U.S. GAAP financial measures.

EBITDA, Adjusted EBITDA, Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues, Adjusted EBITDA excluding securitization gain, and Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues are supplemental performance measures that our management uses to assess our operating performance and the operating leverage in our business. Because each of these non-GAAP financial measures facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes.

EBITDA

We calculate EBITDA as net loss before interest expense, interest income, income tax expense and depreciation and amortization expense.

Adjusted EBITDA

We calculate Adjusted EBITDA as EBITDA adjusted to exclude severance costs, gain on debt extinguishment, severe weather-related costs, goodwill impairment charge, realignment costs, acquisition related costs, and other costs which relate to impairment of long-lived assets. Changes in fair value of financial instruments can fluctuate significantly from period to period and previously related primarily to historical loans and debt which have been securitized, and acquired on February 1, 2022 from UACC. Our ongoing business model is to originate or purchase finance receivables with the intent to sell which we recognize at the lower of cost or fair value. As a result of current market conditions, the financial instruments related to the 2022-2 and 2023-1 securitization transactions are recognized on balance-sheet and accounted for under the fair value option. See Note 16 — Financial Instruments and Fair Value Measurements to our condensed consolidated financial statements included in our Quarterly Report on Form 10-Q for the three months ended September 30, 2023. As a result, the majority of our finance receivables are now carried at fair value and a significant portion of the risk of loss associated with these finance receivables have been retained by UACC. We therefore have determined we will no longer make any adjustments for such fluctuations in fair value to our Adjusted EBITDA results. We have recast the prior period presented to conform to current period presentation. We may account for future securitizations as on balance sheet transactions depending on the market conditions.

Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues

We calculate Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues as Adjusted EBITDA adjusted to exclude the non-recurring costs incurred to address operational and customer experience issues, including rental cars for our customers and legal settlements with customers and state DMVs. While we expect to continue to incur these costs over the next few quarterly periods, we expect such costs to continue to decline due to the improvements across our operations.

Adjusted EBITDA excluding securitization gain

We calculate Adjusted EBITDA excluding securitization gain as Adjusted EBITDA adjusted to exclude the securitization gain from the sale of UACC's finance receivables, and believe that it provides a useful perspective on the underlying operating results and trends and a means to compare our period-over-period results.

Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues

We calculate Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues as Adjusted EBITDA adjusted to exclude the securitization gain from the sale of UACC’s finance receivables and the non-recurring costs incurred to address operational and customer experience issues.

The following table presents a reconciliation of the foregoing non-GAAP financial measures to net loss, which is the most directly comparable U.S. GAAP measure:

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

 

(in thousands)

 

Net loss

 

$

(82,857

)

 

$

(51,127

)

 

$

(224,219

)

 

$

(476,675

)

Adjusted to exclude the following:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

12,058

 

 

 

9,704

 

 

 

30,915

 

 

 

28,617

 

Interest income

 

 

(5,506

)

 

 

(5,104

)

 

 

(16,369

)

 

 

(12,991

)

Provision (benefit) for income taxes

 

 

260

 

 

 

899

 

 

 

918

 

 

 

(22,085

)

Depreciation and amortization

 

 

11,248

 

 

 

9,995

 

 

 

32,421

 

 

 

28,005

 

EBITDA

 

$

(64,797

)

 

$

(35,633

)

 

$

(176,334

)

 

$

(455,129

)

Severance costs

 

$

274

 

 

$

 

 

$

6,655

 

 

$

 

Gain on debt extinguishment

 

 

 

 

 

(37,917

)

 

 

(19,640

)

 

 

(37,917

)

Hail storm costs

 

 

 

 

 

 

 

 

2,353

 

 

 

 

Goodwill impairment charge

 

 

 

 

 

 

 

 

 

 

 

201,703

 

Realignment costs

 

 

 

 

 

3,243

 

 

 

 

 

 

12,772

 

Acquisition related costs

 

 

 

 

 

 

 

 

 

 

 

5,653

 

Other

 

 

 

 

 

 

 

 

1,352

 

 

 

2,127

 

Adjusted EBITDA

 

$

(64,523

)

 

$

(70,307

)

 

$

(185,614

)

 

$

(270,791

)

Non-recurring costs to address operational and customer experience issues

 

 

32

 

 

 

15,785

 

 

 

818

 

 

 

25,059

 

Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues

 

$

(64,491

)

 

$

(54,522

)

 

$

(184,796

)

 

$

(245,732

)

Securitization gain

 

 

 

 

 

(15,972

)

 

 

 

 

 

(45,589

)

Adjusted EBITDA excluding securitization gain

 

$

(64,523

)

 

$

(86,279

)

 

$

(185,614

)

 

$

(316,380

)

Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues

 

$

(64,491

)

 

$

(70,494

)

 

$

(184,796

)

 

$

(291,321

)

THIRD QUARTER 2023 AS COMPARED TO SECOND QUARTER 2023

 

 

Three Months

Ended

September 30,

 

 

Three Months

Ended

June 30,

 

 

 

 

 

 

 

 

 

2023

 

 

2023

 

 

Change

 

 

% Change

 

 

(in thousands, except unit data)

 

 

 

 

 

 

 

Total revenues

 

$

235,634

 

 

$

225,178

 

 

$

10,456

 

 

 

4.6

%

Total gross profit

 

$

48,094

 

 

$

46,001

 

 

$

2,093

 

 

 

4.5

%

Ecommerce units sold

 

 

4,561

 

 

 

4,127

 

 

 

434

 

 

 

10.5

%

Ecommerce revenue

 

$

149,851

 

 

$

138,225

 

 

$

11,626

 

 

 

8.4

%

Ecommerce gross profit

 

$

14,339

 

 

$

12,189

 

 

$

2,150

 

 

 

17.6

%

Vehicle gross profit (loss) per ecommerce unit

 

$

516

 

 

$

290

 

 

$

226

 

 

 

77.9

%

Product gross profit per ecommerce unit

 

 

2,628

 

 

 

2,664

 

 

 

(36

)

 

 

(1.4

)%

Total gross profit per ecommerce unit

 

$

3,144

 

 

$

2,954

 

 

$

190

 

 

 

6.4

%

Wholesale units sold

 

 

2,270

 

 

 

1,834

 

 

 

436

 

 

 

23.8

%

Wholesale revenue

 

$

30,898

 

 

$

30,800

 

 

$

98

 

 

 

0.3

%

Wholesale gross (loss) profit

 

$

(1,495

)

 

$

(3,993

)

 

$

2,498

 

 

 

62.6

%

Wholesale gross (loss) profit per unit

 

$

(659

)

 

$

(2,177

)

 

$

1,518

 

 

 

69.7

%

Retail Financing revenue

 

$

40,823

 

 

$

42,128

 

 

$

(1,305

)

 

 

(3.1

)%

Retail Financing gross profit

 

$

32,341

 

 

$

34,068

 

 

$

(1,727

)

 

 

(5.1

)%

Total selling, general, and administrative expenses

 

$

79,586

 

 

$

86,955

 

 

$

(7,369

)

 

 

(8.5

)%

 

 

Three Months

Ended

September 30,

 

 

Three Months

Ended

June 30,

 

 

 

 

 

 

 

 

 

2023

 

 

2023

 

 

Change

 

 

% Change

 

 

 

(in thousands)

 

 

 

 

Net loss

 

$

(82,857

)

 

$

(66,318

)

 

$

(16,539

)

 

 

24.9

%

Adjusted to exclude the following:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

12,058

 

 

 

8,938

 

 

 

3,120

 

 

 

34.9

%

Interest income

 

 

(5,506

)

 

 

(4,921

)

 

 

(585

)

 

 

11.9

%

Provision for income taxes

 

 

260

 

 

 

385

 

 

 

(125

)

 

 

(32.5

)%

Depreciation and amortization

 

 

11,248

 

 

 

10,536

 

 

 

712

 

 

 

6.8

%

EBITDA

 

$

(64,797

)

 

$

(51,380

)

 

$

(13,417

)

 

 

26.1

%

Severance costs

 

$

274

 

 

$

2,277

 

 

$

(2,003

)

 

 

(88.0

)%

Gain on debt extinguishment

 

 

 

 

 

(10,931

)

 

 

10,931

 

 

 

100.0

%

Hail storm costs

 

 

 

 

 

2,353

 

 

 

(2,353

)

 

 

(100.0

)%

Other

 

 

 

 

 

1,352

 

 

 

(1,352

)

 

 

(100.0

)%

Adjusted EBITDA

 

$

(64,523

)

 

$

(56,329

)

 

$

(8,194

)

 

 

14.5

%

Non-recurring costs to address operational and customer experience issues

 

 

32

 

 

 

126

 

 

 

(94

)

 

 

(74.3

)%

Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues

 

$

(64,491

)

 

$

(56,203

)

 

$

(8,288

)

 

 

(14.7

)%

Securitization gain

 

 

 

 

 

 

 

 

 

 

 

0.0

%

Adjusted EBITDA excluding securitization gain

 

$

(64,523

)

 

$

(56,329

)

 

$

(8,194

)

 

 

14.5

%

Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues

 

$

(64,491

)

 

$

(56,203

)

 

$

(8,288

)

 

 

14.7

%

Financial Outlook

For the full year 2023, we updated our guidance on Adjusted EBITDA performance and year-end cash and cash equivalents:

  • Adjusted EBITDA(1) of $(245.0) to $(225.0) million;
  • Year-end cash and cash equivalents of $137.0 to $162.0 million.

(1) A reconciliation of non-GAAP guidance measures to corresponding GAAP measures for the full year 2023 Financial Outlook is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, the costs and expenses that may be incurred in the future. We have provided a reconciliation of GAAP to non-GAAP financial measures for the third quarter 2023 in the reconciliation table in the Non-GAAP Financial Measures section above.

The foregoing estimates are forward-looking statements that reflect the Company’s expectations as of November 7, 2023 and are subject to substantial uncertainty. See “Forward-Looking Statements” below.

Conference Call & Webcast Information

Vroom management will discuss these results and other information regarding the Company during a conference call and audio webcast Wednesday, November 8, 2023 at 8:30 a.m. ET.

To access the conference call, please register at this embedded link. Registered participants will be sent a unique PIN to access the call. A listen-only webcast will also be available via the same link and at ir.vroom.com. An archived webcast of the conference call will be accessible on the website within 48 hours of its completion.

About Vroom (Nasdaq: VRM)

Vroom is an innovative, end-to-end ecommerce platform that offers a better way to buy and a better way to sell used vehicles. The Company’s scalable, data-driven technology brings all phases of the vehicle buying and selling process to consumers wherever they are and offers an extensive selection of vehicles, transparent pricing, competitive financing, and contact-free, at-home pick-up and delivery. For more information visit www.vroom.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding expected timelines with respect to, our execution of and the expected benefits from our long term roadmap, declining costs due to improvements across our operations, and other cost-saving initiatives; our future results of operations and financial position, including for the full year 2023; our ability to improve our unit economics and future growth, including with respect to our Adjusted EBITDA and liquidity, our ability to improve our transaction processes, increase and optimize our internal sales force, sell through aged vehicles and the potential impacts as we sell through our inventory, improve variable cost per unit, such as logistics costs and marketing costs, and reduce fixed costs; and our plans to enhance liquidity and strengthen our balance sheet, including by seeking additional capital through equity or debt financing. These statements are based on management’s current assumptions and are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. For factors that could cause actual results to differ materially from the forward-looking statements in this press release, please see the risks and uncertainties identified under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022, as updated by our Quarterly report on Form 10-Q for the quarter ended September 30, 2023, which is available on our Investor Relations website at ir.vroom.com and on the SEC website at www.sec.gov. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.

VROOM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

As of

September 30,

 

 

As of

December 31,

 

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

208,562

 

 

$

398,915

 

Restricted cash (including restricted cash of consolidated VIEs of $47.2 million and $24.7 million, respectively)

 

 

80,517

 

 

 

73,095

 

Accounts receivable, net of allowance of $8.9 million and $21.5 million, respectively

 

 

9,022

 

 

 

13,967

 

Finance receivables at fair value (including finance receivables of consolidated VIEs of $12.2 million and $11.5 million, respectively)

 

 

12,901

 

 

 

12,939

 

Finance receivables held for sale, net (including finance receivables of consolidated VIEs of $338.4 million and $305.9 million, respectively)

 

 

399,836

 

 

 

321,626

 

Inventory

 

 

240,676

 

 

 

320,648

 

Beneficial interests in securitizations

 

 

5,287

 

 

 

20,592

 

Prepaid expenses and other current assets (including other current assets of consolidated VIEs of $24.3 million and $11.7 million, respectively)

 

 

56,889

 

 

 

58,327

 

Total current assets

 

 

1,013,690

 

 

 

1,220,109

 

Finance receivables at fair value (including finance receivables of consolidated VIEs of $376.7 million and $119.6 million, respectively)

 

 

387,796

 

 

 

140,235

 

Property and equipment, net

 

 

49,220

 

 

 

50,201

 

Intangible assets, net

 

 

138,644

 

 

 

158,910

 

Operating lease right-of-use assets

 

 

30,836

 

 

 

23,568

 

Other assets (including other assets of consolidated VIEs of $2.0 million and $0 million, respectively)

 

 

26,525

 

 

 

26,004

 

Total assets

 

$

1,646,711

 

 

$

1,619,027

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

27,280

 

 

$

34,702

 

Accrued expenses (including accrued expenses of consolidated VIEs of $3.3 million and $1.5 million, respectively)

 

 

57,435

 

 

 

76,795

 

Vehicle floorplan

 

 

212,486

 

 

 

276,988

 

Warehouse credit facilities of consolidated VIEs

 

 

294,653

 

 

 

229,518

 

Current portion of long term debt (including current portion of securitization debt of consolidated VIEs at fair value of $186.6 million and $47.2 million, respectively)

 

 

197,045

 

 

 

47,239

 

Deferred revenue

 

 

12,487

 

 

 

10,655

 

Operating lease liabilities, current

 

 

9,511

 

 

 

9,730

 

Other current liabilities

 

 

12,284

 

 

 

17,693

 

Total current liabilities

 

 

823,181

 

 

 

703,320

 

Long term debt, net of current portion (including securitization debt of consolidated VIEs of $175.3 million and $32.6 million at fair value, respectively)

 

 

521,353

 

 

 

402,154

 

Operating lease liabilities, excluding current portion

 

 

26,938

 

 

 

20,129

 

Other long-term liabilities (including other long-term liabilities of consolidated VIEs of $9.5 million and $7.4 million, respectively)

 

 

16,969

 

 

 

18,183

 

Total liabilities

 

 

1,388,441

 

 

 

1,143,786

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.001 par value; 500,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 139,752,858 and 138,201,903 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

 

135

 

 

 

135

 

Additional paid-in-capital

 

 

2,083,046

 

 

 

2,075,798

 

Accumulated deficit

 

 

(1,824,911

)

 

 

(1,600,692

)

Total stockholders’ equity

 

 

258,270

 

 

 

475,241

 

Total liabilities and stockholders’ equity

 

$

1,646,711

 

 

$

1,619,027

 

VROOM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Retail vehicle, net

 

$

147,710

 

 

$

234,353

 

 

$

419,548

 

 

$

1,283,263

 

Wholesale vehicle

 

 

30,898

 

 

 

47,604

 

 

 

75,593

 

 

 

270,489

 

Product, net

 

 

13,075

 

 

 

13,181

 

 

 

36,499

 

 

 

51,954

 

Finance

 

 

40,823

 

 

 

40,654

 

 

 

114,939

 

 

 

120,005

 

Other

 

 

3,128

 

 

 

5,005

 

 

 

10,700

 

 

 

13,841

 

Total revenue

 

 

235,634

 

 

 

340,797

 

 

 

657,279

 

 

 

1,739,552

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

Retail vehicle

 

 

144,654

 

 

 

218,726

 

 

 

414,917

 

 

 

1,234,138

 

Wholesale vehicle

 

 

32,393

 

 

 

49,178

 

 

 

81,019

 

 

 

276,749

 

Product

 

 

917

 

 

 

 

 

 

2,518

 

 

 

 

Finance

 

 

8,481

 

 

 

4,699

 

 

 

22,755

 

 

 

10,368

 

Other

 

 

1,095

 

 

 

863

 

 

 

3,170

 

 

 

2,969

 

Total cost of sales

 

 

187,540

 

 

 

273,466

 

 

 

524,379

 

 

 

1,524,224

 

Total gross profit

 

 

48,094

 

 

 

67,331

 

 

 

132,900

 

 

 

215,328

 

Selling, general and administrative expenses

 

 

79,586

 

 

 

134,643

 

 

 

263,078

 

 

 

475,627

 

Depreciation and amortization

 

 

11,010

 

 

 

9,833

 

 

 

31,845

 

 

 

27,728

 

Impairment charges

 

 

 

 

 

1,017

 

 

 

1,353

 

 

 

206,127

 

Loss from operations

 

 

(42,502

)

 

 

(78,162

)

 

 

(163,376

)

 

 

(494,154

)

Gain on debt extinguishment

 

 

 

 

 

(37,917

)

 

 

(19,640

)

 

 

(37,917

)

Interest expense

 

 

12,058

 

 

 

9,704

 

 

 

30,915

 

 

 

28,617

 

Interest income

 

 

(5,506

)

 

 

(5,104

)

 

 

(16,369

)

 

 

(12,991

)

Other loss, net

 

 

33,543

 

 

 

5,383

 

 

 

65,019

 

 

 

26,897

 

Income (loss) before provision for income taxes

 

 

(82,597

)

 

 

(50,228

)

 

 

(223,301

)

 

 

(498,760

)

Provision (benefit) for income taxes

 

 

260

 

 

 

899

 

 

 

918

 

 

 

(22,085

)

Net loss

 

$

(82,857

)

 

$

(51,127

)

 

$

(224,219

)

 

$

(476,675

)

Net loss per share attributable to common stockholders, basic

 

$

(0.59

)

 

$

(0.37

)

 

$

(1.61

)

 

$

(3.46

)

Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic

 

 

139,692,323

 

 

 

138,118,679

 

 

 

139,123,352

 

 

 

137,817,839

 

VROOM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Nine Months Ended

September 30,

 

 

 

2023

 

 

2022

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(224,219

)

 

$

(476,675

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Impairment charges

 

 

1,353

 

 

 

206,127

 

Gain on debt extinguishment

 

 

(19,640

)

 

 

(37,917

)

Depreciation and amortization

 

 

32,421

 

 

 

28,005

 

Amortization of debt issuance costs

 

 

3,418

 

 

 

3,777

 

Realized gains on securitization transactions

 

 

 

 

 

(45,589

)

Deferred taxes

 

 

 

 

 

(23,855

)

Losses on finance receivables and securitization debt, net

 

 

80,246

 

 

 

39,464

 

Stock-based compensation expense

 

 

7,248

 

 

 

6,613

 

Provision to record inventory at lower of cost or net realizable value

 

 

(15,867

)

 

 

(5,033

)

Provision for bad debt

 

 

995

 

 

 

18,448

 

Provision to record finance receivables held for sale at lower of cost or fair value

 

 

4,375

 

 

 

3,831

 

Amortization of unearned discounts on finance receivables at fair value

 

 

(20,273

)

 

 

(12,121

)

Other, net

 

 

(11,792

)

 

 

(5,441

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Finance receivables, held for sale

 

 

 

 

 

 

Originations of finance receivables held for sale

 

 

(420,793

)

 

 

(483,167

)

Principal payments received on finance receivables held for sale

 

 

71,906

 

 

 

38,297

 

Proceeds from sale of finance receivables held for sale, net

 

 

 

 

 

509,612

 

Other

 

 

(868

)

 

 

(5,924

)

Accounts receivable

 

 

3,950

 

 

 

63,252

 

Inventory

 

 

95,839

 

 

 

293,589

 

Prepaid expenses and other current assets

 

 

17,316

 

 

 

12,420

 

Other assets

 

 

2,097

 

 

 

(2,678

)

Accounts payable

 

 

(7,422

)

 

 

(22,183

)

Accrued expenses

 

 

(19,914

)

 

 

(27,020

)

Deferred revenue

 

 

1,832

 

 

 

(59,490

)

Other liabilities

 

 

(7,839

)

 

 

(39,444

)

Net cash used in operating activities

 

 

(425,631

)

 

 

(23,102

)

Investing activities

 

 

 

 

 

 

Finance receivables at fair value

 

 

 

 

 

 

Purchases of finance receivables at fair value

 

 

(3,392

)

 

 

(49,475

)

Principal payments received on finance receivables at fair value

 

 

136,644

 

 

 

106,829

 

Proceeds from sale of finance receivables at fair value, net

 

 

 

 

 

43,262

 

Consolidation of VIEs

 

 

11,409

 

 

 

 

Principal payments received on beneficial interests

 

 

4,334

 

 

 

5,571

 

Purchase of property and equipment

 

 

(11,553

)

 

 

(19,968

)

Acquisition of business, net of cash acquired of $47.9 million

 

 

 

 

 

(267,488

)

Net cash provided by (used in) investing activities

 

 

137,442

 

 

 

(181,269

)

Financing activities

 

 

 

 

 

 

Proceeds from borrowings under secured financing agreements

 

 

261,991

 

 

 

 

Principal repayment under secured financing agreements

 

 

(159,384

)

 

 

(176,909

)

Proceeds from financing of beneficial interests in securitizations

 

 

24,506

 

 

 

 

Principal repayments of financing of beneficial interests in securitizations

 

 

(5,699

)

 

 

 

Proceeds from vehicle floorplan

 

 

436,586

 

 

 

1,286,000

 

Repayments of vehicle floorplan

 

 

(501,088

)

 

 

(1,453,529

)

Proceeds from warehouse credit facilities

 

 

332,700

 

 

 

419,000

 

Repayments of warehouse credit facilities

 

 

(269,698

)

 

 

(460,566

)

Repurchases of convertible senior notes

 

 

(13,194

)

 

 

(18,458

)

Other financing activities

 

 

(1,462

)

 

 

(1,977

)

Net cash provided by (used in) financing activities

 

 

105,258

 

 

 

(406,439

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(182,931

)

 

 

(610,810

)

Cash, cash equivalents and restricted cash at the beginning of period

 

 

472,010

 

 

 

1,214,775

 

Cash, cash equivalents and restricted cash at the end of period

 

$

289,079

 

 

$

603,965

 

VROOM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

(unaudited)

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

40,424

 

 

$

24,619

 

Cash paid for income taxes

 

$

5,153

 

 

$

2,062

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Finance receivables from consolidation of 2022-2 securitization transaction

 

$

180,706

 

 

$

 

Elimination of beneficial interest from the consolidation of 2022-2 securitization transaction

 

$

9,811

 

 

$

 

Securitization debt from consolidation of 2022-2 securitization transaction

 

$

186,386

 

 

$

 

Reclassification of finance receivables held for sale to finance receivables at fair value, net

 

$

248,081

 

 

$

 

Fair value of beneficial interests received in securitization transactions

 

$

 

 

$

30,082

 

 

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