Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Vroom Announces Record Ecommerce Gross Profit Per Unit of $4,206 By: Vroom, Inc. via Business Wire November 07, 2022 at 16:35 PM EST Continued Progress on Long-Term Roadmap 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, 2022. HIGHLIGHTS OF THIRD QUARTER 2022 VERSUS SECOND QUARTER 2022 Ecommerce gross profit per unit of $4,206, up 16% SG&A expenses decreased $18.3 million Net loss improved from $(115.1) million to $(51.1) million Adjusted EBITDA improved from $(85.6) million to $(73.3) million Adjusted EBITDA excluding non-recurring costs improved from $(77.3) million to $(57.5) million Tom Shortt, Chief Executive Officer of Vroom, commented: “We continued to make progress on our three key objectives and four strategic initiatives as outlined during our Investor Day in May. We are intensely focused on improving the customer experience. For the month of October, 98% of our customers received their completed registrations before the expiration of their initial temporary tags. We will continue this focus as we work to achieve our goal of becoming best-in-class in titling and registration. We achieved Ecommerce gross profit per unit of $4,206, improved our Adjusted EBITDA excluding non-recurring costs to $(57.5) million and reduced our leverage by $56 million. I would like to thank all of our Vroommates, UACC Colleagues and third-party partners for their contributions in transforming our business and improving our customer experience." Bob Krakowiak, Vroom’s Chief Financial Officer, commented: “I am pleased with our financial and operational performance in the third quarter. We took several actions to maximize liquidity and strengthen our balance sheet, including unlocking $59 million of restricted cash, repurchasing a portion of our convertible notes and completing our second securitization since the acquisition of UACC. Based on our progress, we are forecasting year-end cash liquidity near the midpoint of our previous guidance of $450 to $565 million.” THIRD QUARTER 2022 FINANCIAL RESULTS 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, 2022 2021 Change % Change 2022 2021 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 6,428 19,683 (13,255 ) (67.3 )% 35,134 53,455 (18,321 ) (34.3 )% Ecommerce revenue: Vehicle revenue $ 212,980 $ 677,170 $ (464,190 ) (68.5 )% $ 1,173,727 $ 1,644,494 $ (470,767 ) (28.6 )% Product revenue 12,461 24,508 (12,047 ) (49.2 )% 48,709 59,155 (10,446 ) (17.7 )% Total ecommerce revenue $ 225,441 $ 701,678 $ (476,237 ) (67.9 )% $ 1,222,436 $ 1,703,649 $ (481,213 ) (28.2 )% Ecommerce gross profit: Vehicle gross profit $ 14,573 $ 25,875 $ (11,302 ) (43.7 )% $ 46,153 $ 72,704 $ (26,551 ) (36.5 )% Product gross profit 12,461 24,508 (12,047 ) (49.2 )% 48,709 59,155 (10,446 ) (17.7 )% Total ecommerce gross profit $ 27,034 $ 50,383 $ (23,349 ) (46.3 )% $ 94,862 $ 131,859 $ (36,997 ) (28.1 )% Average vehicle selling price per ecommerce unit $ 33,133 $ 34,404 $ (1,271 ) (3.7 )% $ 33,407 $ 30,764 $ 2,643 8.6 % Gross profit per ecommerce unit: Vehicle gross profit per ecommerce unit $ 2,267 $ 1,315 $ 952 72.4 % $ 1,314 $ 1,360 $ (46 ) (3.4 )% Product gross profit per ecommerce unit 1,939 1,245 694 55.7 % 1,386 1,107 279 25.2 % Total gross profit per ecommerce unit $ 4,206 $ 2,560 $ 1,646 64.3 % $ 2,700 $ 2,467 $ 233 9.4 % Ecommerce average days to sale 186 68 118 173.5 % 118 73 45 61.6 % Results by Segment Three Months Ended September 30, Nine Months Ended September 30, 2022 2021(1) Change % Change 2022 2021(1) Change % Change (in thousands, except unit data) (in thousands, except unit data) Units: Ecommerce 6,428 19,683 (13,255 ) (67.3 )% 35,134 53,455 (18,321 ) (34.3 )% Wholesale 3,128 9,760 (6,632 ) (68.0 )% 19,108 28,421 (9,313 ) (32.8 )% All Other (2) 662 1,583 (921 ) (58.2 )% 3,408 3,358 50 1.5 % Total units 10,218 31,026 (20,808 ) (67.1 )% 57,650 85,234 (27,584 ) (32.4 )% Revenue: Ecommerce $ 225,441 $ 701,678 $ (476,237 ) (67.9 )% $ 1,222,436 $ 1,703,649 $ (481,213 ) (28.2 )% Wholesale 47,604 131,306 (83,702 ) (63.7 )% 270,489 377,438 (106,949 ) (28.3 )% Retail Financing (3) 40,654 — 40,654 100.0 % 120,005 — 120,005 100.0 % All Other (4) 27,098 63,772 (36,674 ) (57.5 )% 126,622 168,677 (42,055 ) (24.9 )% Total revenue $ 340,797 $ 896,756 $ (555,959 ) (62.0 )% $ 1,739,552 $ 2,249,764 $ (510,212 ) (22.7 )% Gross profit (loss): Ecommerce $ 27,034 $ 50,383 $ (23,349 ) (46.3 )% $ 94,862 $ 131,859 $ (36,997 ) (28.1 )% Wholesale (1,574 ) 2,103 (3,677 ) (174.8 )% (6,260 ) 10,337 (16,597 ) (160.6 )% Retail Financing (3) 35,954 — 35,954 100.0 % 109,637 — 109,637 100.0 % All Other (4) 5,917 5,603 314 5.6 % 17,089 15,197 1,892 12.4 % Total gross profit $ 67,331 $ 58,089 $ 9,242 15.9 % $ 215,328 $ 157,393 $ 57,935 36.8 % Gross profit (loss) per unit (5): Ecommerce $ 4,206 $ 2,560 $ 1,646 64.3 % $ 2,700 $ 2,467 $ 233 9.4 % Wholesale $ (503 ) $ 215 $ (718 ) (334.0 )% $ (328 ) $ 364 $ (692 ) (190.1 )% (1) In the second quarter of 2022, we reevaluated our reporting segments based on relative revenue and gross profit and significance in our long term strategy. As a result of that analysis, we determined to no longer report TDA as a separate operating segment. As of June 30, 2022, we are organized into three reportable segments: Ecommerce, Wholesale, and Retail Financing. We reclassified TDA revenue and TDA gross profit from the TDA reportable segment to the “All Other” category to conform to current year presentation. (2) All Other units consist of retail sales of used vehicles from TDA. (3) 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. (4) 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. (5) 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, 2022 2021 Change % Change 2022 2021 Change % Change (in thousands) (in thousands) Compensation & benefits $ 55,694 $ 53,900 $ 1,794 3.3 % $ 199,111 $ 145,580 $ 53,531 36.8 % Marketing expense 14,945 35,214 (20,269 ) (57.6 )% 69,818 88,267 (18,449 ) (20.9 )% Outbound logistics 4,945 22,717 (17,772 ) (78.2 )% 39,925 57,987 (18,062 ) (31.1 )% Occupancy and related costs 6,041 4,635 1,406 30.3 % 17,408 12,599 4,809 38.2 % Professional fees 6,459 7,694 (1,235 ) (16.1 )% 26,585 15,951 10,634 66.7 % Software and IT costs 11,277 7,232 4,045 55.9 % 33,406 19,367 14,039 72.5 % Other 35,282 17,326 17,956 103.6 % 89,374 41,731 47,643 114.2 % Total selling, general & administrative expenses $ 134,643 $ 148,718 $ (14,075 ) (9.5 )% $ 475,627 $ 381,482 $ 94,145 24.7 % 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; Non-GAAP net loss; Non-GAAP net loss per share; Non-GAAP net loss excluding securitization gain; and Non-GAAP net loss per share excluding securitization gain. 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, Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues, Non-GAAP net loss, Non-GAAP net loss per share, Non-GAAP net loss excluding securitization gain, and Non-GAAP net loss per share excluding securitization gain 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 realignment costs, acquisition related costs, change in fair value of finance receivables, gain on debt extinguishment, goodwill impairment charge and other costs, which relate to the write off of the upfront shares issued as part of the Rocket Auto agreement and previously recognized within "Other assets". Changes in fair value of finance receivables can fluctuate significantly from period to period and relate 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. Therefore, these historical finance receivables acquired, which are accounted for under the fair value option, will experience fluctuations in value from period to period. We believe it is appropriate to remove this temporary volatility from our Adjusted EBITDA results to better reflect our ongoing business model. Additionally, these historical finance receivables acquired from UACC are expected to run-off within approximately 12 months. 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 do not expect these costs to continue to be incurred once our operational issues have been resolved. 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, 2022 2021 2022 2021 (in thousands) (in thousands) Net loss $ (51,127 ) $ (98,122 ) $ (476,675 ) $ (241,118 ) Adjusted to exclude the following: — — — — Interest expense 9,704 7,028 28,617 14,720 Interest income (5,104 ) (2,930 ) (12,991 ) (7,288 ) (Benefit) provision for income taxes 899 29 (22,085 ) 379 Depreciation and amortization 9,995 3,469 28,005 9,497 EBITDA $ (35,633 ) $ (90,526 ) $ (455,129 ) $ (223,810 ) Realignment costs $ 3,243 $ — $ 12,772 $ — Acquisition related costs — 3,412 5,653 3,412 Change in fair value of finance receivables (3,012 ) — 4,455 — Goodwill impairment charge — — 201,703 — Gain on debt extinguishment (37,917 ) — (37,917 ) — Other — — 2,127 — Adjusted EBITDA $ (73,319 ) $ (87,114 ) $ (266,336 ) $ (220,398 ) Non-recurring costs to address operational and customer experience issues 15,785 — 25,059 — Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues $ (57,534 ) $ (87,114 ) $ (241,277 ) $ (220,398 ) Securitization gain (15,972 ) — (45,589 ) — Adjusted EBITDA excluding securitization gain $ (89,291 ) $ (87,114 ) $ (311,925 ) $ (220,398 ) Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues $ (73,506 ) $ (87,114 ) $ (286,866 ) $ (220,398 ) Non-GAAP net loss We calculate Non-GAAP net loss as net loss adjusted to exclude realignment costs, acquisition related costs, change in fair value of finance receivables, goodwill impairment charge, gain on debt extinguishment, and other costs, which relate to the write off of the upfront shares issued as part of the Rocket Auto agreement and previously recognized within "Other assets". Non-GAAP net loss per share We calculate Non-GAAP net loss per share as Non-GAAP net loss divided by weighted average number of shares outstanding. Non-GAAP net loss excluding securitization gain We calculate Non-GAAP net loss excluding securitization gain as Non-GAAP net loss adjusted to exclude the securitization gain from the sale of UACC's finance receivables. Non-GAAP net loss per share excluding securitization gain We calculate Non-GAAP net loss per share excluding securitization gain as Non-GAAP net loss excluding securitization gain divided by weighted average number of shares outstanding. The following table presents a reconciliation of the foregoing non-GAAP financial measures to net loss and net loss per share, which are the most directly comparable U.S. GAAP measures: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (in thousands, except share and per share amounts) Net loss $ (51,127 ) $ (98,122 ) $ (476,675 ) $ (241,118 ) Net loss attributable to common stockholders $ (51,127 ) $ (98,122 ) $ (476,675 ) $ (241,118 ) Add: Realignment costs 3,243 — 12,772 — Add: Acquisition related costs — 3,412 5,653 3,412 Add: Change in fair value of finance receivables (3,012 ) — 4,455 — Add: Goodwill impairment charge — — 201,703 — Subtract: Gain on debt extinguishment (37,917 ) — (37,917 ) — Add: Other — — 2,127 — Non-GAAP net loss $ (88,813 ) $ (94,710 ) $ (287,882 ) $ (237,706 ) Subtract: Securitization gain (15,972 ) — (45,589 ) — Non-GAAP net loss excluding securitization gain $ (104,785 ) $ (94,710 ) $ (333,471 ) $ (237,706 ) — — — — Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted 138,118,679 136,766,015 137,817,839 136,256,901 Net loss per share, basic and diluted $ (0.37 ) $ (0.72 ) $ (3.46 ) $ (1.77 ) Impact of realignment costs 0.02 — 0.09 — Impact of acquisition related costs — 0.02 0.04 0.03 Impact of change in fair value of finance receivables (0.02 ) — 0.03 — Impact of goodwill impairment charge — — 1.46 — Impact of gain on debt extinguishment (0.27 ) — (0.28 ) — Impact of other — — 0.02 — Non-GAAP net loss per share, basic and diluted $ (0.64 ) $ (0.70 ) $ (2.10 ) $ (1.74 ) Impact of securitization gain (0.12 ) — (0.33 ) — Non-GAAP net loss per share excluding securitization gain and non-recurring costs to address operational and customer experience issues, basic and diluted $ (0.76 ) $ (0.70 ) $ (2.43 ) $ (1.74 ) THIRD QUARTER 2022 AS COMPARED TO SECOND QUARTER 2022 Three Months Ended September 30, Three Months Ended June 30, 2022 2022 Change % Change (in thousands, except unit data) Total revenues $ 340,797 $ 475,437 $ (134,640 ) (28.3 )% Total gross profit $ 67,331 $ 66,357 $ 974 1.5 % Ecommerce units sold 6,428 9,233 (2,805 ) (30.4 )% Ecommerce revenue $ 225,441 $ 321,632 $ (96,191 ) (29.9 )% Ecommerce gross profit $ 27,034 $ 33,509 $ (6,475 ) (19.3 )% Vehicle gross profit per ecommerce unit $ 2,267 $ 2,166 $ 101 4.7 % Product gross profit per ecommerce unit 1,939 1,463 476 32.5 % Total gross profit per ecommerce unit $ 4,206 $ 3,629 $ 577 15.9 % Wholesale units sold 3,128 5,867 (2,739 ) (46.7 )% Wholesale revenue $ 47,604 $ 82,901 $ (35,297 ) (42.6 )% Wholesale gross loss $ (1,574 ) $ (1,934 ) $ 360 18.6 % Wholesale gross loss per unit $ (503 ) $ (330 ) $ (173 ) (52.4 )% Retail Financing revenue $ 40,654 $ 32,121 $ 8,533 26.6 % Retail Financing gross profit $ 35,954 $ 28,720 $ 7,234 25.2 % Total selling, general, and administrative expenses $ 134,643 $ 152,990 $ (18,347 ) (12.0 )% Three Months Ended September 30, Three Months Ended June 30, 2022 2022 Change % Change (in thousands) Net loss $ (51,127 ) $ (115,089 ) $ 63,962 55.6 % Adjusted to exclude the following: Interest expense 9,704 9,533 171 1.8 % Interest income (5,104 ) (3,935 ) (1,169 ) 29.7 % (Benefit) provision for income taxes 899 256 643 251.2 % Depreciation and amortization 9,995 10,115 (120 ) (1.2 )% EBITDA $ (35,633 ) $ (99,120 ) $ 63,487 64.1 % Realignment costs $ 3,243 $ 9,529 $ (6,286 ) (66.0 )% Change in fair value of finance receivables (3,012 ) 1,846 (4,858 ) (263.2 )% Gain on debt extinguishment (37,917 ) — (37,917 ) 100.0 % Other — 2,127 (2,127 ) (100.0 )% Adjusted EBITDA $ (73,319 ) $ (85,618 ) $ 12,299 14.4 % Non-recurring costs to address operational and customer experience issues 15,785 8,274 7,511 90.8 % Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues $ (57,534 ) $ (77,344 ) $ 19,810 25.6 % Securitization gain (15,972 ) — (15,972 ) 100.0 % Adjusted EBITDA excluding securitization gain $ (89,291 ) $ (85,618 ) $ (3,673 ) (4.3 )% Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues $ (73,506 ) $ (77,344 ) $ 3,838 5.0 % Conference Call & Webcast Information Vroom management will discuss these results and other information regarding the Company during a conference call and audio webcast Tuesday, November 8, 2022 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, our execution of and the expected benefits from our business realignment plan and cost-saving initiatives, including our ability to improve our transaction processes and customer service experience, our expectations regarding our business strategy and plans, including our ongoing ability to integrate and develop United Auto Credit Corporation into a captive finance operation, and, for future results of operations and financial position, including our ability to improve our unit economics and our outlook for the full year ended December 31, 2022, including with respect to our liquidity. 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, 2021, as updated by our Quarterly report on Form 10-Q for the quarter ended September 30, 2022, each of 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 As of September 30, December 31, 2022 2021 ASSETS Current Assets: Cash and cash equivalents $ 509,660 $ 1,132,325 Restricted cash (including restricted cash of consolidated VIEs of $19.5 million and $0 million, respectively) 94,305 82,450 Accounts receivable, net of allowance of $26.7 million and $8.9 million, respectively 23,733 105,433 Finance receivables at fair value (including finance receivables of consolidated VIEs of $10.9 million and $0 million, respectively) 13,644 — Finance receivables held for sale, net (including finance receivables of consolidated VIEs of $137.1 million and $0 million, respectively) 210,729 — Inventory 437,828 726,384 Beneficial interests in securitizations 23,984 — Prepaid expenses and other current assets 58,576 55,700 Total current assets 1,372,459 2,102,292 Finance receivables at fair value (including finance receivables of consolidated VIEs of $135.8 million and $0 million, respectively) 166,382 — Property and equipment, net 50,520 37,042 Intangible assets, net 165,668 28,207 Goodwill — 158,817 Operating lease right-of-use assets 24,392 15,359 Other assets 29,539 25,033 Total assets $ 1,808,960 $ 2,366,750 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 36,800 $ 52,651 Accrued expenses 103,903 121,508 Vehicle floorplan 345,272 512,801 Warehouse credit facilities of consolidated VIEs 135,453 — Current portion of securitization debt of consolidated VIEs at fair value 54,652 — Deferred revenue 16,313 75,803 Operating lease liabilities, current 8,268 6,889 Other current liabilities 19,061 57,604 Total current liabilities 719,722 827,256 Long term debt, net of current portion (including securitization debt of consolidated VIEs of $40.8 million and $0 million at fair value, respectively) 607,790 610,618 Operating lease liabilities, excluding current portion 20,620 9,592 Other long-term liabilities 15,696 4,090 Total liabilities 1,363,828 1,451,556 Commitments and contingencies (Note 13) Stockholders’ equity: Common stock, $0.001 par value; 500,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 138,154,063 and 137,092,891 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively 135 135 Additional paid-in-capital 2,070,454 2,063,841 Accumulated deficit (1,625,457 ) (1,148,782 ) Total stockholders’ equity 445,132 915,194 Total liabilities and stockholders’ equity $ 1,808,960 $ 2,366,750 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, 2022 2021 2022 2021 Revenue: Retail vehicle, net $ 234,353 $ 735,716 $ 1,283,263 $ 1,798,155 Wholesale vehicle 47,604 131,306 270,489 377,438 Product, net 13,181 26,544 51,954 64,422 Finance 40,654 — 120,005 — Other 5,005 3,190 13,841 9,749 Total revenue 340,797 896,756 1,739,552 2,249,764 Cost of sales: Retail vehicle 218,726 708,071 1,234,138 1,720,974 Wholesale vehicle 49,178 129,203 276,749 367,101 Finance 4,699 — 10,368 — Other 863 1,393 2,969 4,296 Total cost of sales 273,466 838,667 1,524,224 2,092,371 Total gross profit 67,331 58,089 215,328 157,393 Selling, general and administrative expenses 134,643 148,718 475,627 381,482 Depreciation and amortization 9,833 3,376 27,728 9,276 Impairment charges 1,017 — 206,127 — Loss from operations (78,162 ) (94,005 ) (494,154 ) (233,365 ) Gain on debt extinguishment (37,917 ) — (37,917 ) — Interest expense 9,704 7,028 28,617 14,720 Interest income (5,104 ) (2,930 ) (12,991 ) (7,288 ) Other loss (income), net 5,383 (10 ) 26,897 (58 ) Loss before provision for income taxes (50,228 ) (98,093 ) (498,760 ) (240,739 ) Provision (benefit) for income taxes 899 29 (22,085 ) 379 Net loss $ (51,127 ) $ (98,122 ) $ (476,675 ) $ (241,118 ) Net loss per share attributable to common stockholders, basic and diluted $ (0.37 ) $ (0.72 ) $ (3.46 ) $ (1.77 ) Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted 138,118,679 136,766,015 137,817,839 136,256,901 VROOM, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended September 30, 2022 2021 Operating activities Net loss $ (476,675 ) $ (241,118 ) Adjustments to reconcile net loss to net cash used in operating activities: Impairment charges 206,127 — Gain on debt extinguishment (37,917 ) — Depreciation and amortization 28,005 9,497 Amortization of debt issuance costs 3,777 1,784 Realized gains on securitization transactions (45,589 ) — Deferred taxes (23,855 ) — Losses on finance receivables and securitization debt, net 39,464 — Stock-based compensation expense 6,613 9,754 Provision to record inventory at lower of cost or net realizable value (5,033 ) 5,625 Other, net 4,717 4,874 Changes in operating assets and liabilities: Finance receivables, held for sale Originations of finance receivables held for sale (483,167 ) — Principal payments received on finance receivables held for sale 38,297 — Proceeds from sale of finance receivables held for sale, net 509,612 — Other (5,924 ) — Accounts receivable 63,252 (32,936 ) Inventory 293,589 (183,731 ) Prepaid expenses and other current assets 12,420 (39,356 ) Other assets (2,678 ) (7,390 ) Accounts payable (22,183 ) 26,144 Accrued expenses (27,020 ) 43,512 Deferred revenue (59,490 ) 39,227 Other liabilities (39,444 ) 38,655 Net cash used in operating activities (23,102 ) (325,459 ) Investing activities Finance receivables at fair value Originations of finance receivables at fair value (49,475 ) — Principal payments received on finance receivables at fair value 106,829 — Proceeds from sale of finance receivables at fair value, net 43,262 — Principal payments received on beneficial interests 5,571 — Purchase of property and equipment (19,968 ) (18,786 ) Acquisition of business, net of cash acquired of $47.9 million (267,488 ) (75,875 ) Net cash used in investing activities (181,269 ) (94,661 ) Financing activities Principal repayment under secured financing agreements (176,909 ) — Proceeds from vehicle floorplan 1,286,000 1,901,457 Repayments of vehicle floorplan (1,453,529 ) (1,789,215 ) Proceeds from warehouse credit facilities 419,000 — Repayments of warehouse credit facilities (460,566 ) — Other financing activities (1,977 ) — Repayments of convertible senior notes (18,458 ) — Proceeds from issuance of convertible senior notes — 625,000 Issuance costs paid for convertible senior notes — (16,129 ) Proceeds from exercise of stock options — 5,085 Net cash (used in) provided by financing activities (406,439 ) 726,198 Net (decrease) increase in cash, cash equivalents and restricted cash (610,810 ) 306,078 Cash, cash equivalents and restricted cash at the beginning of period 1,214,775 1,090,039 Cash, cash equivalents and restricted cash at the end of period $ 603,965 $ 1,396,117 VROOM, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (in thousands) (unaudited) Supplemental disclosure of cash flow information: Cash paid for interest $ 24,619 $ 11,116 Cash paid for income taxes $ 2,062 $ 329 Supplemental disclosure of non-cash investing and financing activities: Fair value of beneficial interests received in securitization transactions $ 30,082 $ — Accrued property and equipment expenditures $ 538 $ 1,652 Issuance of common stock for CarStory acquisition $ — $ 38,811 Fair value of unvested stock options assumed for acquisition of business $ — $ 1,017 View source version on businesswire.com: https://www.businesswire.com/news/home/20221107005758/en/Contacts Investor Relations: Vroom Liam Harrington investors@vroom.com Media Contact: Current Global Danny Finlay dfinlay@currentglobal.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Vroom Announces Record Ecommerce Gross Profit Per Unit of $4,206 By: Vroom, Inc. via Business Wire November 07, 2022 at 16:35 PM EST Continued Progress on Long-Term Roadmap 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, 2022. HIGHLIGHTS OF THIRD QUARTER 2022 VERSUS SECOND QUARTER 2022 Ecommerce gross profit per unit of $4,206, up 16% SG&A expenses decreased $18.3 million Net loss improved from $(115.1) million to $(51.1) million Adjusted EBITDA improved from $(85.6) million to $(73.3) million Adjusted EBITDA excluding non-recurring costs improved from $(77.3) million to $(57.5) million Tom Shortt, Chief Executive Officer of Vroom, commented: “We continued to make progress on our three key objectives and four strategic initiatives as outlined during our Investor Day in May. We are intensely focused on improving the customer experience. For the month of October, 98% of our customers received their completed registrations before the expiration of their initial temporary tags. We will continue this focus as we work to achieve our goal of becoming best-in-class in titling and registration. We achieved Ecommerce gross profit per unit of $4,206, improved our Adjusted EBITDA excluding non-recurring costs to $(57.5) million and reduced our leverage by $56 million. I would like to thank all of our Vroommates, UACC Colleagues and third-party partners for their contributions in transforming our business and improving our customer experience." Bob Krakowiak, Vroom’s Chief Financial Officer, commented: “I am pleased with our financial and operational performance in the third quarter. We took several actions to maximize liquidity and strengthen our balance sheet, including unlocking $59 million of restricted cash, repurchasing a portion of our convertible notes and completing our second securitization since the acquisition of UACC. Based on our progress, we are forecasting year-end cash liquidity near the midpoint of our previous guidance of $450 to $565 million.” THIRD QUARTER 2022 FINANCIAL RESULTS 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, 2022 2021 Change % Change 2022 2021 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 6,428 19,683 (13,255 ) (67.3 )% 35,134 53,455 (18,321 ) (34.3 )% Ecommerce revenue: Vehicle revenue $ 212,980 $ 677,170 $ (464,190 ) (68.5 )% $ 1,173,727 $ 1,644,494 $ (470,767 ) (28.6 )% Product revenue 12,461 24,508 (12,047 ) (49.2 )% 48,709 59,155 (10,446 ) (17.7 )% Total ecommerce revenue $ 225,441 $ 701,678 $ (476,237 ) (67.9 )% $ 1,222,436 $ 1,703,649 $ (481,213 ) (28.2 )% Ecommerce gross profit: Vehicle gross profit $ 14,573 $ 25,875 $ (11,302 ) (43.7 )% $ 46,153 $ 72,704 $ (26,551 ) (36.5 )% Product gross profit 12,461 24,508 (12,047 ) (49.2 )% 48,709 59,155 (10,446 ) (17.7 )% Total ecommerce gross profit $ 27,034 $ 50,383 $ (23,349 ) (46.3 )% $ 94,862 $ 131,859 $ (36,997 ) (28.1 )% Average vehicle selling price per ecommerce unit $ 33,133 $ 34,404 $ (1,271 ) (3.7 )% $ 33,407 $ 30,764 $ 2,643 8.6 % Gross profit per ecommerce unit: Vehicle gross profit per ecommerce unit $ 2,267 $ 1,315 $ 952 72.4 % $ 1,314 $ 1,360 $ (46 ) (3.4 )% Product gross profit per ecommerce unit 1,939 1,245 694 55.7 % 1,386 1,107 279 25.2 % Total gross profit per ecommerce unit $ 4,206 $ 2,560 $ 1,646 64.3 % $ 2,700 $ 2,467 $ 233 9.4 % Ecommerce average days to sale 186 68 118 173.5 % 118 73 45 61.6 % Results by Segment Three Months Ended September 30, Nine Months Ended September 30, 2022 2021(1) Change % Change 2022 2021(1) Change % Change (in thousands, except unit data) (in thousands, except unit data) Units: Ecommerce 6,428 19,683 (13,255 ) (67.3 )% 35,134 53,455 (18,321 ) (34.3 )% Wholesale 3,128 9,760 (6,632 ) (68.0 )% 19,108 28,421 (9,313 ) (32.8 )% All Other (2) 662 1,583 (921 ) (58.2 )% 3,408 3,358 50 1.5 % Total units 10,218 31,026 (20,808 ) (67.1 )% 57,650 85,234 (27,584 ) (32.4 )% Revenue: Ecommerce $ 225,441 $ 701,678 $ (476,237 ) (67.9 )% $ 1,222,436 $ 1,703,649 $ (481,213 ) (28.2 )% Wholesale 47,604 131,306 (83,702 ) (63.7 )% 270,489 377,438 (106,949 ) (28.3 )% Retail Financing (3) 40,654 — 40,654 100.0 % 120,005 — 120,005 100.0 % All Other (4) 27,098 63,772 (36,674 ) (57.5 )% 126,622 168,677 (42,055 ) (24.9 )% Total revenue $ 340,797 $ 896,756 $ (555,959 ) (62.0 )% $ 1,739,552 $ 2,249,764 $ (510,212 ) (22.7 )% Gross profit (loss): Ecommerce $ 27,034 $ 50,383 $ (23,349 ) (46.3 )% $ 94,862 $ 131,859 $ (36,997 ) (28.1 )% Wholesale (1,574 ) 2,103 (3,677 ) (174.8 )% (6,260 ) 10,337 (16,597 ) (160.6 )% Retail Financing (3) 35,954 — 35,954 100.0 % 109,637 — 109,637 100.0 % All Other (4) 5,917 5,603 314 5.6 % 17,089 15,197 1,892 12.4 % Total gross profit $ 67,331 $ 58,089 $ 9,242 15.9 % $ 215,328 $ 157,393 $ 57,935 36.8 % Gross profit (loss) per unit (5): Ecommerce $ 4,206 $ 2,560 $ 1,646 64.3 % $ 2,700 $ 2,467 $ 233 9.4 % Wholesale $ (503 ) $ 215 $ (718 ) (334.0 )% $ (328 ) $ 364 $ (692 ) (190.1 )% (1) In the second quarter of 2022, we reevaluated our reporting segments based on relative revenue and gross profit and significance in our long term strategy. As a result of that analysis, we determined to no longer report TDA as a separate operating segment. As of June 30, 2022, we are organized into three reportable segments: Ecommerce, Wholesale, and Retail Financing. We reclassified TDA revenue and TDA gross profit from the TDA reportable segment to the “All Other” category to conform to current year presentation. (2) All Other units consist of retail sales of used vehicles from TDA. (3) 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. (4) 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. (5) 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, 2022 2021 Change % Change 2022 2021 Change % Change (in thousands) (in thousands) Compensation & benefits $ 55,694 $ 53,900 $ 1,794 3.3 % $ 199,111 $ 145,580 $ 53,531 36.8 % Marketing expense 14,945 35,214 (20,269 ) (57.6 )% 69,818 88,267 (18,449 ) (20.9 )% Outbound logistics 4,945 22,717 (17,772 ) (78.2 )% 39,925 57,987 (18,062 ) (31.1 )% Occupancy and related costs 6,041 4,635 1,406 30.3 % 17,408 12,599 4,809 38.2 % Professional fees 6,459 7,694 (1,235 ) (16.1 )% 26,585 15,951 10,634 66.7 % Software and IT costs 11,277 7,232 4,045 55.9 % 33,406 19,367 14,039 72.5 % Other 35,282 17,326 17,956 103.6 % 89,374 41,731 47,643 114.2 % Total selling, general & administrative expenses $ 134,643 $ 148,718 $ (14,075 ) (9.5 )% $ 475,627 $ 381,482 $ 94,145 24.7 % 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; Non-GAAP net loss; Non-GAAP net loss per share; Non-GAAP net loss excluding securitization gain; and Non-GAAP net loss per share excluding securitization gain. 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, Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues, Non-GAAP net loss, Non-GAAP net loss per share, Non-GAAP net loss excluding securitization gain, and Non-GAAP net loss per share excluding securitization gain 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 realignment costs, acquisition related costs, change in fair value of finance receivables, gain on debt extinguishment, goodwill impairment charge and other costs, which relate to the write off of the upfront shares issued as part of the Rocket Auto agreement and previously recognized within "Other assets". Changes in fair value of finance receivables can fluctuate significantly from period to period and relate 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. Therefore, these historical finance receivables acquired, which are accounted for under the fair value option, will experience fluctuations in value from period to period. We believe it is appropriate to remove this temporary volatility from our Adjusted EBITDA results to better reflect our ongoing business model. Additionally, these historical finance receivables acquired from UACC are expected to run-off within approximately 12 months. 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 do not expect these costs to continue to be incurred once our operational issues have been resolved. 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, 2022 2021 2022 2021 (in thousands) (in thousands) Net loss $ (51,127 ) $ (98,122 ) $ (476,675 ) $ (241,118 ) Adjusted to exclude the following: — — — — Interest expense 9,704 7,028 28,617 14,720 Interest income (5,104 ) (2,930 ) (12,991 ) (7,288 ) (Benefit) provision for income taxes 899 29 (22,085 ) 379 Depreciation and amortization 9,995 3,469 28,005 9,497 EBITDA $ (35,633 ) $ (90,526 ) $ (455,129 ) $ (223,810 ) Realignment costs $ 3,243 $ — $ 12,772 $ — Acquisition related costs — 3,412 5,653 3,412 Change in fair value of finance receivables (3,012 ) — 4,455 — Goodwill impairment charge — — 201,703 — Gain on debt extinguishment (37,917 ) — (37,917 ) — Other — — 2,127 — Adjusted EBITDA $ (73,319 ) $ (87,114 ) $ (266,336 ) $ (220,398 ) Non-recurring costs to address operational and customer experience issues 15,785 — 25,059 — Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues $ (57,534 ) $ (87,114 ) $ (241,277 ) $ (220,398 ) Securitization gain (15,972 ) — (45,589 ) — Adjusted EBITDA excluding securitization gain $ (89,291 ) $ (87,114 ) $ (311,925 ) $ (220,398 ) Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues $ (73,506 ) $ (87,114 ) $ (286,866 ) $ (220,398 ) Non-GAAP net loss We calculate Non-GAAP net loss as net loss adjusted to exclude realignment costs, acquisition related costs, change in fair value of finance receivables, goodwill impairment charge, gain on debt extinguishment, and other costs, which relate to the write off of the upfront shares issued as part of the Rocket Auto agreement and previously recognized within "Other assets". Non-GAAP net loss per share We calculate Non-GAAP net loss per share as Non-GAAP net loss divided by weighted average number of shares outstanding. Non-GAAP net loss excluding securitization gain We calculate Non-GAAP net loss excluding securitization gain as Non-GAAP net loss adjusted to exclude the securitization gain from the sale of UACC's finance receivables. Non-GAAP net loss per share excluding securitization gain We calculate Non-GAAP net loss per share excluding securitization gain as Non-GAAP net loss excluding securitization gain divided by weighted average number of shares outstanding. The following table presents a reconciliation of the foregoing non-GAAP financial measures to net loss and net loss per share, which are the most directly comparable U.S. GAAP measures: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (in thousands, except share and per share amounts) Net loss $ (51,127 ) $ (98,122 ) $ (476,675 ) $ (241,118 ) Net loss attributable to common stockholders $ (51,127 ) $ (98,122 ) $ (476,675 ) $ (241,118 ) Add: Realignment costs 3,243 — 12,772 — Add: Acquisition related costs — 3,412 5,653 3,412 Add: Change in fair value of finance receivables (3,012 ) — 4,455 — Add: Goodwill impairment charge — — 201,703 — Subtract: Gain on debt extinguishment (37,917 ) — (37,917 ) — Add: Other — — 2,127 — Non-GAAP net loss $ (88,813 ) $ (94,710 ) $ (287,882 ) $ (237,706 ) Subtract: Securitization gain (15,972 ) — (45,589 ) — Non-GAAP net loss excluding securitization gain $ (104,785 ) $ (94,710 ) $ (333,471 ) $ (237,706 ) — — — — Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted 138,118,679 136,766,015 137,817,839 136,256,901 Net loss per share, basic and diluted $ (0.37 ) $ (0.72 ) $ (3.46 ) $ (1.77 ) Impact of realignment costs 0.02 — 0.09 — Impact of acquisition related costs — 0.02 0.04 0.03 Impact of change in fair value of finance receivables (0.02 ) — 0.03 — Impact of goodwill impairment charge — — 1.46 — Impact of gain on debt extinguishment (0.27 ) — (0.28 ) — Impact of other — — 0.02 — Non-GAAP net loss per share, basic and diluted $ (0.64 ) $ (0.70 ) $ (2.10 ) $ (1.74 ) Impact of securitization gain (0.12 ) — (0.33 ) — Non-GAAP net loss per share excluding securitization gain and non-recurring costs to address operational and customer experience issues, basic and diluted $ (0.76 ) $ (0.70 ) $ (2.43 ) $ (1.74 ) THIRD QUARTER 2022 AS COMPARED TO SECOND QUARTER 2022 Three Months Ended September 30, Three Months Ended June 30, 2022 2022 Change % Change (in thousands, except unit data) Total revenues $ 340,797 $ 475,437 $ (134,640 ) (28.3 )% Total gross profit $ 67,331 $ 66,357 $ 974 1.5 % Ecommerce units sold 6,428 9,233 (2,805 ) (30.4 )% Ecommerce revenue $ 225,441 $ 321,632 $ (96,191 ) (29.9 )% Ecommerce gross profit $ 27,034 $ 33,509 $ (6,475 ) (19.3 )% Vehicle gross profit per ecommerce unit $ 2,267 $ 2,166 $ 101 4.7 % Product gross profit per ecommerce unit 1,939 1,463 476 32.5 % Total gross profit per ecommerce unit $ 4,206 $ 3,629 $ 577 15.9 % Wholesale units sold 3,128 5,867 (2,739 ) (46.7 )% Wholesale revenue $ 47,604 $ 82,901 $ (35,297 ) (42.6 )% Wholesale gross loss $ (1,574 ) $ (1,934 ) $ 360 18.6 % Wholesale gross loss per unit $ (503 ) $ (330 ) $ (173 ) (52.4 )% Retail Financing revenue $ 40,654 $ 32,121 $ 8,533 26.6 % Retail Financing gross profit $ 35,954 $ 28,720 $ 7,234 25.2 % Total selling, general, and administrative expenses $ 134,643 $ 152,990 $ (18,347 ) (12.0 )% Three Months Ended September 30, Three Months Ended June 30, 2022 2022 Change % Change (in thousands) Net loss $ (51,127 ) $ (115,089 ) $ 63,962 55.6 % Adjusted to exclude the following: Interest expense 9,704 9,533 171 1.8 % Interest income (5,104 ) (3,935 ) (1,169 ) 29.7 % (Benefit) provision for income taxes 899 256 643 251.2 % Depreciation and amortization 9,995 10,115 (120 ) (1.2 )% EBITDA $ (35,633 ) $ (99,120 ) $ 63,487 64.1 % Realignment costs $ 3,243 $ 9,529 $ (6,286 ) (66.0 )% Change in fair value of finance receivables (3,012 ) 1,846 (4,858 ) (263.2 )% Gain on debt extinguishment (37,917 ) — (37,917 ) 100.0 % Other — 2,127 (2,127 ) (100.0 )% Adjusted EBITDA $ (73,319 ) $ (85,618 ) $ 12,299 14.4 % Non-recurring costs to address operational and customer experience issues 15,785 8,274 7,511 90.8 % Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues $ (57,534 ) $ (77,344 ) $ 19,810 25.6 % Securitization gain (15,972 ) — (15,972 ) 100.0 % Adjusted EBITDA excluding securitization gain $ (89,291 ) $ (85,618 ) $ (3,673 ) (4.3 )% Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues $ (73,506 ) $ (77,344 ) $ 3,838 5.0 % Conference Call & Webcast Information Vroom management will discuss these results and other information regarding the Company during a conference call and audio webcast Tuesday, November 8, 2022 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, our execution of and the expected benefits from our business realignment plan and cost-saving initiatives, including our ability to improve our transaction processes and customer service experience, our expectations regarding our business strategy and plans, including our ongoing ability to integrate and develop United Auto Credit Corporation into a captive finance operation, and, for future results of operations and financial position, including our ability to improve our unit economics and our outlook for the full year ended December 31, 2022, including with respect to our liquidity. 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, 2021, as updated by our Quarterly report on Form 10-Q for the quarter ended September 30, 2022, each of 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 As of September 30, December 31, 2022 2021 ASSETS Current Assets: Cash and cash equivalents $ 509,660 $ 1,132,325 Restricted cash (including restricted cash of consolidated VIEs of $19.5 million and $0 million, respectively) 94,305 82,450 Accounts receivable, net of allowance of $26.7 million and $8.9 million, respectively 23,733 105,433 Finance receivables at fair value (including finance receivables of consolidated VIEs of $10.9 million and $0 million, respectively) 13,644 — Finance receivables held for sale, net (including finance receivables of consolidated VIEs of $137.1 million and $0 million, respectively) 210,729 — Inventory 437,828 726,384 Beneficial interests in securitizations 23,984 — Prepaid expenses and other current assets 58,576 55,700 Total current assets 1,372,459 2,102,292 Finance receivables at fair value (including finance receivables of consolidated VIEs of $135.8 million and $0 million, respectively) 166,382 — Property and equipment, net 50,520 37,042 Intangible assets, net 165,668 28,207 Goodwill — 158,817 Operating lease right-of-use assets 24,392 15,359 Other assets 29,539 25,033 Total assets $ 1,808,960 $ 2,366,750 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 36,800 $ 52,651 Accrued expenses 103,903 121,508 Vehicle floorplan 345,272 512,801 Warehouse credit facilities of consolidated VIEs 135,453 — Current portion of securitization debt of consolidated VIEs at fair value 54,652 — Deferred revenue 16,313 75,803 Operating lease liabilities, current 8,268 6,889 Other current liabilities 19,061 57,604 Total current liabilities 719,722 827,256 Long term debt, net of current portion (including securitization debt of consolidated VIEs of $40.8 million and $0 million at fair value, respectively) 607,790 610,618 Operating lease liabilities, excluding current portion 20,620 9,592 Other long-term liabilities 15,696 4,090 Total liabilities 1,363,828 1,451,556 Commitments and contingencies (Note 13) Stockholders’ equity: Common stock, $0.001 par value; 500,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 138,154,063 and 137,092,891 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively 135 135 Additional paid-in-capital 2,070,454 2,063,841 Accumulated deficit (1,625,457 ) (1,148,782 ) Total stockholders’ equity 445,132 915,194 Total liabilities and stockholders’ equity $ 1,808,960 $ 2,366,750 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, 2022 2021 2022 2021 Revenue: Retail vehicle, net $ 234,353 $ 735,716 $ 1,283,263 $ 1,798,155 Wholesale vehicle 47,604 131,306 270,489 377,438 Product, net 13,181 26,544 51,954 64,422 Finance 40,654 — 120,005 — Other 5,005 3,190 13,841 9,749 Total revenue 340,797 896,756 1,739,552 2,249,764 Cost of sales: Retail vehicle 218,726 708,071 1,234,138 1,720,974 Wholesale vehicle 49,178 129,203 276,749 367,101 Finance 4,699 — 10,368 — Other 863 1,393 2,969 4,296 Total cost of sales 273,466 838,667 1,524,224 2,092,371 Total gross profit 67,331 58,089 215,328 157,393 Selling, general and administrative expenses 134,643 148,718 475,627 381,482 Depreciation and amortization 9,833 3,376 27,728 9,276 Impairment charges 1,017 — 206,127 — Loss from operations (78,162 ) (94,005 ) (494,154 ) (233,365 ) Gain on debt extinguishment (37,917 ) — (37,917 ) — Interest expense 9,704 7,028 28,617 14,720 Interest income (5,104 ) (2,930 ) (12,991 ) (7,288 ) Other loss (income), net 5,383 (10 ) 26,897 (58 ) Loss before provision for income taxes (50,228 ) (98,093 ) (498,760 ) (240,739 ) Provision (benefit) for income taxes 899 29 (22,085 ) 379 Net loss $ (51,127 ) $ (98,122 ) $ (476,675 ) $ (241,118 ) Net loss per share attributable to common stockholders, basic and diluted $ (0.37 ) $ (0.72 ) $ (3.46 ) $ (1.77 ) Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted 138,118,679 136,766,015 137,817,839 136,256,901 VROOM, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended September 30, 2022 2021 Operating activities Net loss $ (476,675 ) $ (241,118 ) Adjustments to reconcile net loss to net cash used in operating activities: Impairment charges 206,127 — Gain on debt extinguishment (37,917 ) — Depreciation and amortization 28,005 9,497 Amortization of debt issuance costs 3,777 1,784 Realized gains on securitization transactions (45,589 ) — Deferred taxes (23,855 ) — Losses on finance receivables and securitization debt, net 39,464 — Stock-based compensation expense 6,613 9,754 Provision to record inventory at lower of cost or net realizable value (5,033 ) 5,625 Other, net 4,717 4,874 Changes in operating assets and liabilities: Finance receivables, held for sale Originations of finance receivables held for sale (483,167 ) — Principal payments received on finance receivables held for sale 38,297 — Proceeds from sale of finance receivables held for sale, net 509,612 — Other (5,924 ) — Accounts receivable 63,252 (32,936 ) Inventory 293,589 (183,731 ) Prepaid expenses and other current assets 12,420 (39,356 ) Other assets (2,678 ) (7,390 ) Accounts payable (22,183 ) 26,144 Accrued expenses (27,020 ) 43,512 Deferred revenue (59,490 ) 39,227 Other liabilities (39,444 ) 38,655 Net cash used in operating activities (23,102 ) (325,459 ) Investing activities Finance receivables at fair value Originations of finance receivables at fair value (49,475 ) — Principal payments received on finance receivables at fair value 106,829 — Proceeds from sale of finance receivables at fair value, net 43,262 — Principal payments received on beneficial interests 5,571 — Purchase of property and equipment (19,968 ) (18,786 ) Acquisition of business, net of cash acquired of $47.9 million (267,488 ) (75,875 ) Net cash used in investing activities (181,269 ) (94,661 ) Financing activities Principal repayment under secured financing agreements (176,909 ) — Proceeds from vehicle floorplan 1,286,000 1,901,457 Repayments of vehicle floorplan (1,453,529 ) (1,789,215 ) Proceeds from warehouse credit facilities 419,000 — Repayments of warehouse credit facilities (460,566 ) — Other financing activities (1,977 ) — Repayments of convertible senior notes (18,458 ) — Proceeds from issuance of convertible senior notes — 625,000 Issuance costs paid for convertible senior notes — (16,129 ) Proceeds from exercise of stock options — 5,085 Net cash (used in) provided by financing activities (406,439 ) 726,198 Net (decrease) increase in cash, cash equivalents and restricted cash (610,810 ) 306,078 Cash, cash equivalents and restricted cash at the beginning of period 1,214,775 1,090,039 Cash, cash equivalents and restricted cash at the end of period $ 603,965 $ 1,396,117 VROOM, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (in thousands) (unaudited) Supplemental disclosure of cash flow information: Cash paid for interest $ 24,619 $ 11,116 Cash paid for income taxes $ 2,062 $ 329 Supplemental disclosure of non-cash investing and financing activities: Fair value of beneficial interests received in securitization transactions $ 30,082 $ — Accrued property and equipment expenditures $ 538 $ 1,652 Issuance of common stock for CarStory acquisition $ — $ 38,811 Fair value of unvested stock options assumed for acquisition of business $ — $ 1,017 View source version on businesswire.com: https://www.businesswire.com/news/home/20221107005758/en/Contacts Investor Relations: Vroom Liam Harrington investors@vroom.com Media Contact: Current Global Danny Finlay dfinlay@currentglobal.com
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, 2022. HIGHLIGHTS OF THIRD QUARTER 2022 VERSUS SECOND QUARTER 2022 Ecommerce gross profit per unit of $4,206, up 16% SG&A expenses decreased $18.3 million Net loss improved from $(115.1) million to $(51.1) million Adjusted EBITDA improved from $(85.6) million to $(73.3) million Adjusted EBITDA excluding non-recurring costs improved from $(77.3) million to $(57.5) million Tom Shortt, Chief Executive Officer of Vroom, commented: “We continued to make progress on our three key objectives and four strategic initiatives as outlined during our Investor Day in May. We are intensely focused on improving the customer experience. For the month of October, 98% of our customers received their completed registrations before the expiration of their initial temporary tags. We will continue this focus as we work to achieve our goal of becoming best-in-class in titling and registration. We achieved Ecommerce gross profit per unit of $4,206, improved our Adjusted EBITDA excluding non-recurring costs to $(57.5) million and reduced our leverage by $56 million. I would like to thank all of our Vroommates, UACC Colleagues and third-party partners for their contributions in transforming our business and improving our customer experience." Bob Krakowiak, Vroom’s Chief Financial Officer, commented: “I am pleased with our financial and operational performance in the third quarter. We took several actions to maximize liquidity and strengthen our balance sheet, including unlocking $59 million of restricted cash, repurchasing a portion of our convertible notes and completing our second securitization since the acquisition of UACC. Based on our progress, we are forecasting year-end cash liquidity near the midpoint of our previous guidance of $450 to $565 million.” THIRD QUARTER 2022 FINANCIAL RESULTS 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, 2022 2021 Change % Change 2022 2021 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 6,428 19,683 (13,255 ) (67.3 )% 35,134 53,455 (18,321 ) (34.3 )% Ecommerce revenue: Vehicle revenue $ 212,980 $ 677,170 $ (464,190 ) (68.5 )% $ 1,173,727 $ 1,644,494 $ (470,767 ) (28.6 )% Product revenue 12,461 24,508 (12,047 ) (49.2 )% 48,709 59,155 (10,446 ) (17.7 )% Total ecommerce revenue $ 225,441 $ 701,678 $ (476,237 ) (67.9 )% $ 1,222,436 $ 1,703,649 $ (481,213 ) (28.2 )% Ecommerce gross profit: Vehicle gross profit $ 14,573 $ 25,875 $ (11,302 ) (43.7 )% $ 46,153 $ 72,704 $ (26,551 ) (36.5 )% Product gross profit 12,461 24,508 (12,047 ) (49.2 )% 48,709 59,155 (10,446 ) (17.7 )% Total ecommerce gross profit $ 27,034 $ 50,383 $ (23,349 ) (46.3 )% $ 94,862 $ 131,859 $ (36,997 ) (28.1 )% Average vehicle selling price per ecommerce unit $ 33,133 $ 34,404 $ (1,271 ) (3.7 )% $ 33,407 $ 30,764 $ 2,643 8.6 % Gross profit per ecommerce unit: Vehicle gross profit per ecommerce unit $ 2,267 $ 1,315 $ 952 72.4 % $ 1,314 $ 1,360 $ (46 ) (3.4 )% Product gross profit per ecommerce unit 1,939 1,245 694 55.7 % 1,386 1,107 279 25.2 % Total gross profit per ecommerce unit $ 4,206 $ 2,560 $ 1,646 64.3 % $ 2,700 $ 2,467 $ 233 9.4 % Ecommerce average days to sale 186 68 118 173.5 % 118 73 45 61.6 % Results by Segment Three Months Ended September 30, Nine Months Ended September 30, 2022 2021(1) Change % Change 2022 2021(1) Change % Change (in thousands, except unit data) (in thousands, except unit data) Units: Ecommerce 6,428 19,683 (13,255 ) (67.3 )% 35,134 53,455 (18,321 ) (34.3 )% Wholesale 3,128 9,760 (6,632 ) (68.0 )% 19,108 28,421 (9,313 ) (32.8 )% All Other (2) 662 1,583 (921 ) (58.2 )% 3,408 3,358 50 1.5 % Total units 10,218 31,026 (20,808 ) (67.1 )% 57,650 85,234 (27,584 ) (32.4 )% Revenue: Ecommerce $ 225,441 $ 701,678 $ (476,237 ) (67.9 )% $ 1,222,436 $ 1,703,649 $ (481,213 ) (28.2 )% Wholesale 47,604 131,306 (83,702 ) (63.7 )% 270,489 377,438 (106,949 ) (28.3 )% Retail Financing (3) 40,654 — 40,654 100.0 % 120,005 — 120,005 100.0 % All Other (4) 27,098 63,772 (36,674 ) (57.5 )% 126,622 168,677 (42,055 ) (24.9 )% Total revenue $ 340,797 $ 896,756 $ (555,959 ) (62.0 )% $ 1,739,552 $ 2,249,764 $ (510,212 ) (22.7 )% Gross profit (loss): Ecommerce $ 27,034 $ 50,383 $ (23,349 ) (46.3 )% $ 94,862 $ 131,859 $ (36,997 ) (28.1 )% Wholesale (1,574 ) 2,103 (3,677 ) (174.8 )% (6,260 ) 10,337 (16,597 ) (160.6 )% Retail Financing (3) 35,954 — 35,954 100.0 % 109,637 — 109,637 100.0 % All Other (4) 5,917 5,603 314 5.6 % 17,089 15,197 1,892 12.4 % Total gross profit $ 67,331 $ 58,089 $ 9,242 15.9 % $ 215,328 $ 157,393 $ 57,935 36.8 % Gross profit (loss) per unit (5): Ecommerce $ 4,206 $ 2,560 $ 1,646 64.3 % $ 2,700 $ 2,467 $ 233 9.4 % Wholesale $ (503 ) $ 215 $ (718 ) (334.0 )% $ (328 ) $ 364 $ (692 ) (190.1 )% (1) In the second quarter of 2022, we reevaluated our reporting segments based on relative revenue and gross profit and significance in our long term strategy. As a result of that analysis, we determined to no longer report TDA as a separate operating segment. As of June 30, 2022, we are organized into three reportable segments: Ecommerce, Wholesale, and Retail Financing. We reclassified TDA revenue and TDA gross profit from the TDA reportable segment to the “All Other” category to conform to current year presentation. (2) All Other units consist of retail sales of used vehicles from TDA. (3) 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. (4) 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. (5) 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, 2022 2021 Change % Change 2022 2021 Change % Change (in thousands) (in thousands) Compensation & benefits $ 55,694 $ 53,900 $ 1,794 3.3 % $ 199,111 $ 145,580 $ 53,531 36.8 % Marketing expense 14,945 35,214 (20,269 ) (57.6 )% 69,818 88,267 (18,449 ) (20.9 )% Outbound logistics 4,945 22,717 (17,772 ) (78.2 )% 39,925 57,987 (18,062 ) (31.1 )% Occupancy and related costs 6,041 4,635 1,406 30.3 % 17,408 12,599 4,809 38.2 % Professional fees 6,459 7,694 (1,235 ) (16.1 )% 26,585 15,951 10,634 66.7 % Software and IT costs 11,277 7,232 4,045 55.9 % 33,406 19,367 14,039 72.5 % Other 35,282 17,326 17,956 103.6 % 89,374 41,731 47,643 114.2 % Total selling, general & administrative expenses $ 134,643 $ 148,718 $ (14,075 ) (9.5 )% $ 475,627 $ 381,482 $ 94,145 24.7 % 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; Non-GAAP net loss; Non-GAAP net loss per share; Non-GAAP net loss excluding securitization gain; and Non-GAAP net loss per share excluding securitization gain. 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, Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues, Non-GAAP net loss, Non-GAAP net loss per share, Non-GAAP net loss excluding securitization gain, and Non-GAAP net loss per share excluding securitization gain 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 realignment costs, acquisition related costs, change in fair value of finance receivables, gain on debt extinguishment, goodwill impairment charge and other costs, which relate to the write off of the upfront shares issued as part of the Rocket Auto agreement and previously recognized within "Other assets". Changes in fair value of finance receivables can fluctuate significantly from period to period and relate 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. Therefore, these historical finance receivables acquired, which are accounted for under the fair value option, will experience fluctuations in value from period to period. We believe it is appropriate to remove this temporary volatility from our Adjusted EBITDA results to better reflect our ongoing business model. Additionally, these historical finance receivables acquired from UACC are expected to run-off within approximately 12 months. 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 do not expect these costs to continue to be incurred once our operational issues have been resolved. 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, 2022 2021 2022 2021 (in thousands) (in thousands) Net loss $ (51,127 ) $ (98,122 ) $ (476,675 ) $ (241,118 ) Adjusted to exclude the following: — — — — Interest expense 9,704 7,028 28,617 14,720 Interest income (5,104 ) (2,930 ) (12,991 ) (7,288 ) (Benefit) provision for income taxes 899 29 (22,085 ) 379 Depreciation and amortization 9,995 3,469 28,005 9,497 EBITDA $ (35,633 ) $ (90,526 ) $ (455,129 ) $ (223,810 ) Realignment costs $ 3,243 $ — $ 12,772 $ — Acquisition related costs — 3,412 5,653 3,412 Change in fair value of finance receivables (3,012 ) — 4,455 — Goodwill impairment charge — — 201,703 — Gain on debt extinguishment (37,917 ) — (37,917 ) — Other — — 2,127 — Adjusted EBITDA $ (73,319 ) $ (87,114 ) $ (266,336 ) $ (220,398 ) Non-recurring costs to address operational and customer experience issues 15,785 — 25,059 — Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues $ (57,534 ) $ (87,114 ) $ (241,277 ) $ (220,398 ) Securitization gain (15,972 ) — (45,589 ) — Adjusted EBITDA excluding securitization gain $ (89,291 ) $ (87,114 ) $ (311,925 ) $ (220,398 ) Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues $ (73,506 ) $ (87,114 ) $ (286,866 ) $ (220,398 ) Non-GAAP net loss We calculate Non-GAAP net loss as net loss adjusted to exclude realignment costs, acquisition related costs, change in fair value of finance receivables, goodwill impairment charge, gain on debt extinguishment, and other costs, which relate to the write off of the upfront shares issued as part of the Rocket Auto agreement and previously recognized within "Other assets". Non-GAAP net loss per share We calculate Non-GAAP net loss per share as Non-GAAP net loss divided by weighted average number of shares outstanding. Non-GAAP net loss excluding securitization gain We calculate Non-GAAP net loss excluding securitization gain as Non-GAAP net loss adjusted to exclude the securitization gain from the sale of UACC's finance receivables. Non-GAAP net loss per share excluding securitization gain We calculate Non-GAAP net loss per share excluding securitization gain as Non-GAAP net loss excluding securitization gain divided by weighted average number of shares outstanding. The following table presents a reconciliation of the foregoing non-GAAP financial measures to net loss and net loss per share, which are the most directly comparable U.S. GAAP measures: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (in thousands, except share and per share amounts) Net loss $ (51,127 ) $ (98,122 ) $ (476,675 ) $ (241,118 ) Net loss attributable to common stockholders $ (51,127 ) $ (98,122 ) $ (476,675 ) $ (241,118 ) Add: Realignment costs 3,243 — 12,772 — Add: Acquisition related costs — 3,412 5,653 3,412 Add: Change in fair value of finance receivables (3,012 ) — 4,455 — Add: Goodwill impairment charge — — 201,703 — Subtract: Gain on debt extinguishment (37,917 ) — (37,917 ) — Add: Other — — 2,127 — Non-GAAP net loss $ (88,813 ) $ (94,710 ) $ (287,882 ) $ (237,706 ) Subtract: Securitization gain (15,972 ) — (45,589 ) — Non-GAAP net loss excluding securitization gain $ (104,785 ) $ (94,710 ) $ (333,471 ) $ (237,706 ) — — — — Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted 138,118,679 136,766,015 137,817,839 136,256,901 Net loss per share, basic and diluted $ (0.37 ) $ (0.72 ) $ (3.46 ) $ (1.77 ) Impact of realignment costs 0.02 — 0.09 — Impact of acquisition related costs — 0.02 0.04 0.03 Impact of change in fair value of finance receivables (0.02 ) — 0.03 — Impact of goodwill impairment charge — — 1.46 — Impact of gain on debt extinguishment (0.27 ) — (0.28 ) — Impact of other — — 0.02 — Non-GAAP net loss per share, basic and diluted $ (0.64 ) $ (0.70 ) $ (2.10 ) $ (1.74 ) Impact of securitization gain (0.12 ) — (0.33 ) — Non-GAAP net loss per share excluding securitization gain and non-recurring costs to address operational and customer experience issues, basic and diluted $ (0.76 ) $ (0.70 ) $ (2.43 ) $ (1.74 ) THIRD QUARTER 2022 AS COMPARED TO SECOND QUARTER 2022 Three Months Ended September 30, Three Months Ended June 30, 2022 2022 Change % Change (in thousands, except unit data) Total revenues $ 340,797 $ 475,437 $ (134,640 ) (28.3 )% Total gross profit $ 67,331 $ 66,357 $ 974 1.5 % Ecommerce units sold 6,428 9,233 (2,805 ) (30.4 )% Ecommerce revenue $ 225,441 $ 321,632 $ (96,191 ) (29.9 )% Ecommerce gross profit $ 27,034 $ 33,509 $ (6,475 ) (19.3 )% Vehicle gross profit per ecommerce unit $ 2,267 $ 2,166 $ 101 4.7 % Product gross profit per ecommerce unit 1,939 1,463 476 32.5 % Total gross profit per ecommerce unit $ 4,206 $ 3,629 $ 577 15.9 % Wholesale units sold 3,128 5,867 (2,739 ) (46.7 )% Wholesale revenue $ 47,604 $ 82,901 $ (35,297 ) (42.6 )% Wholesale gross loss $ (1,574 ) $ (1,934 ) $ 360 18.6 % Wholesale gross loss per unit $ (503 ) $ (330 ) $ (173 ) (52.4 )% Retail Financing revenue $ 40,654 $ 32,121 $ 8,533 26.6 % Retail Financing gross profit $ 35,954 $ 28,720 $ 7,234 25.2 % Total selling, general, and administrative expenses $ 134,643 $ 152,990 $ (18,347 ) (12.0 )% Three Months Ended September 30, Three Months Ended June 30, 2022 2022 Change % Change (in thousands) Net loss $ (51,127 ) $ (115,089 ) $ 63,962 55.6 % Adjusted to exclude the following: Interest expense 9,704 9,533 171 1.8 % Interest income (5,104 ) (3,935 ) (1,169 ) 29.7 % (Benefit) provision for income taxes 899 256 643 251.2 % Depreciation and amortization 9,995 10,115 (120 ) (1.2 )% EBITDA $ (35,633 ) $ (99,120 ) $ 63,487 64.1 % Realignment costs $ 3,243 $ 9,529 $ (6,286 ) (66.0 )% Change in fair value of finance receivables (3,012 ) 1,846 (4,858 ) (263.2 )% Gain on debt extinguishment (37,917 ) — (37,917 ) 100.0 % Other — 2,127 (2,127 ) (100.0 )% Adjusted EBITDA $ (73,319 ) $ (85,618 ) $ 12,299 14.4 % Non-recurring costs to address operational and customer experience issues 15,785 8,274 7,511 90.8 % Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues $ (57,534 ) $ (77,344 ) $ 19,810 25.6 % Securitization gain (15,972 ) — (15,972 ) 100.0 % Adjusted EBITDA excluding securitization gain $ (89,291 ) $ (85,618 ) $ (3,673 ) (4.3 )% Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues $ (73,506 ) $ (77,344 ) $ 3,838 5.0 % Conference Call & Webcast Information Vroom management will discuss these results and other information regarding the Company during a conference call and audio webcast Tuesday, November 8, 2022 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, our execution of and the expected benefits from our business realignment plan and cost-saving initiatives, including our ability to improve our transaction processes and customer service experience, our expectations regarding our business strategy and plans, including our ongoing ability to integrate and develop United Auto Credit Corporation into a captive finance operation, and, for future results of operations and financial position, including our ability to improve our unit economics and our outlook for the full year ended December 31, 2022, including with respect to our liquidity. 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, 2021, as updated by our Quarterly report on Form 10-Q for the quarter ended September 30, 2022, each of 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 As of September 30, December 31, 2022 2021 ASSETS Current Assets: Cash and cash equivalents $ 509,660 $ 1,132,325 Restricted cash (including restricted cash of consolidated VIEs of $19.5 million and $0 million, respectively) 94,305 82,450 Accounts receivable, net of allowance of $26.7 million and $8.9 million, respectively 23,733 105,433 Finance receivables at fair value (including finance receivables of consolidated VIEs of $10.9 million and $0 million, respectively) 13,644 — Finance receivables held for sale, net (including finance receivables of consolidated VIEs of $137.1 million and $0 million, respectively) 210,729 — Inventory 437,828 726,384 Beneficial interests in securitizations 23,984 — Prepaid expenses and other current assets 58,576 55,700 Total current assets 1,372,459 2,102,292 Finance receivables at fair value (including finance receivables of consolidated VIEs of $135.8 million and $0 million, respectively) 166,382 — Property and equipment, net 50,520 37,042 Intangible assets, net 165,668 28,207 Goodwill — 158,817 Operating lease right-of-use assets 24,392 15,359 Other assets 29,539 25,033 Total assets $ 1,808,960 $ 2,366,750 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 36,800 $ 52,651 Accrued expenses 103,903 121,508 Vehicle floorplan 345,272 512,801 Warehouse credit facilities of consolidated VIEs 135,453 — Current portion of securitization debt of consolidated VIEs at fair value 54,652 — Deferred revenue 16,313 75,803 Operating lease liabilities, current 8,268 6,889 Other current liabilities 19,061 57,604 Total current liabilities 719,722 827,256 Long term debt, net of current portion (including securitization debt of consolidated VIEs of $40.8 million and $0 million at fair value, respectively) 607,790 610,618 Operating lease liabilities, excluding current portion 20,620 9,592 Other long-term liabilities 15,696 4,090 Total liabilities 1,363,828 1,451,556 Commitments and contingencies (Note 13) Stockholders’ equity: Common stock, $0.001 par value; 500,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 138,154,063 and 137,092,891 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively 135 135 Additional paid-in-capital 2,070,454 2,063,841 Accumulated deficit (1,625,457 ) (1,148,782 ) Total stockholders’ equity 445,132 915,194 Total liabilities and stockholders’ equity $ 1,808,960 $ 2,366,750 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, 2022 2021 2022 2021 Revenue: Retail vehicle, net $ 234,353 $ 735,716 $ 1,283,263 $ 1,798,155 Wholesale vehicle 47,604 131,306 270,489 377,438 Product, net 13,181 26,544 51,954 64,422 Finance 40,654 — 120,005 — Other 5,005 3,190 13,841 9,749 Total revenue 340,797 896,756 1,739,552 2,249,764 Cost of sales: Retail vehicle 218,726 708,071 1,234,138 1,720,974 Wholesale vehicle 49,178 129,203 276,749 367,101 Finance 4,699 — 10,368 — Other 863 1,393 2,969 4,296 Total cost of sales 273,466 838,667 1,524,224 2,092,371 Total gross profit 67,331 58,089 215,328 157,393 Selling, general and administrative expenses 134,643 148,718 475,627 381,482 Depreciation and amortization 9,833 3,376 27,728 9,276 Impairment charges 1,017 — 206,127 — Loss from operations (78,162 ) (94,005 ) (494,154 ) (233,365 ) Gain on debt extinguishment (37,917 ) — (37,917 ) — Interest expense 9,704 7,028 28,617 14,720 Interest income (5,104 ) (2,930 ) (12,991 ) (7,288 ) Other loss (income), net 5,383 (10 ) 26,897 (58 ) Loss before provision for income taxes (50,228 ) (98,093 ) (498,760 ) (240,739 ) Provision (benefit) for income taxes 899 29 (22,085 ) 379 Net loss $ (51,127 ) $ (98,122 ) $ (476,675 ) $ (241,118 ) Net loss per share attributable to common stockholders, basic and diluted $ (0.37 ) $ (0.72 ) $ (3.46 ) $ (1.77 ) Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted 138,118,679 136,766,015 137,817,839 136,256,901 VROOM, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended September 30, 2022 2021 Operating activities Net loss $ (476,675 ) $ (241,118 ) Adjustments to reconcile net loss to net cash used in operating activities: Impairment charges 206,127 — Gain on debt extinguishment (37,917 ) — Depreciation and amortization 28,005 9,497 Amortization of debt issuance costs 3,777 1,784 Realized gains on securitization transactions (45,589 ) — Deferred taxes (23,855 ) — Losses on finance receivables and securitization debt, net 39,464 — Stock-based compensation expense 6,613 9,754 Provision to record inventory at lower of cost or net realizable value (5,033 ) 5,625 Other, net 4,717 4,874 Changes in operating assets and liabilities: Finance receivables, held for sale Originations of finance receivables held for sale (483,167 ) — Principal payments received on finance receivables held for sale 38,297 — Proceeds from sale of finance receivables held for sale, net 509,612 — Other (5,924 ) — Accounts receivable 63,252 (32,936 ) Inventory 293,589 (183,731 ) Prepaid expenses and other current assets 12,420 (39,356 ) Other assets (2,678 ) (7,390 ) Accounts payable (22,183 ) 26,144 Accrued expenses (27,020 ) 43,512 Deferred revenue (59,490 ) 39,227 Other liabilities (39,444 ) 38,655 Net cash used in operating activities (23,102 ) (325,459 ) Investing activities Finance receivables at fair value Originations of finance receivables at fair value (49,475 ) — Principal payments received on finance receivables at fair value 106,829 — Proceeds from sale of finance receivables at fair value, net 43,262 — Principal payments received on beneficial interests 5,571 — Purchase of property and equipment (19,968 ) (18,786 ) Acquisition of business, net of cash acquired of $47.9 million (267,488 ) (75,875 ) Net cash used in investing activities (181,269 ) (94,661 ) Financing activities Principal repayment under secured financing agreements (176,909 ) — Proceeds from vehicle floorplan 1,286,000 1,901,457 Repayments of vehicle floorplan (1,453,529 ) (1,789,215 ) Proceeds from warehouse credit facilities 419,000 — Repayments of warehouse credit facilities (460,566 ) — Other financing activities (1,977 ) — Repayments of convertible senior notes (18,458 ) — Proceeds from issuance of convertible senior notes — 625,000 Issuance costs paid for convertible senior notes — (16,129 ) Proceeds from exercise of stock options — 5,085 Net cash (used in) provided by financing activities (406,439 ) 726,198 Net (decrease) increase in cash, cash equivalents and restricted cash (610,810 ) 306,078 Cash, cash equivalents and restricted cash at the beginning of period 1,214,775 1,090,039 Cash, cash equivalents and restricted cash at the end of period $ 603,965 $ 1,396,117 VROOM, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (in thousands) (unaudited) Supplemental disclosure of cash flow information: Cash paid for interest $ 24,619 $ 11,116 Cash paid for income taxes $ 2,062 $ 329 Supplemental disclosure of non-cash investing and financing activities: Fair value of beneficial interests received in securitization transactions $ 30,082 $ — Accrued property and equipment expenditures $ 538 $ 1,652 Issuance of common stock for CarStory acquisition $ — $ 38,811 Fair value of unvested stock options assumed for acquisition of business $ — $ 1,017 View source version on businesswire.com: https://www.businesswire.com/news/home/20221107005758/en/
Investor Relations: Vroom Liam Harrington investors@vroom.com Media Contact: Current Global Danny Finlay dfinlay@currentglobal.com
