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 Third Quarter 2023 Results By: Vroom, Inc. via Business Wire November 07, 2023 at 16:05 PM EST 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 View source version on businesswire.com: https://www.businesswire.com/news/home/20231107135758/en/Contacts Investor Relations: Vroom Jon Sandison investors@vroom.com Media: Vroom Chris Hayes chris.hayes@vroom.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 Third Quarter 2023 Results By: Vroom, Inc. via Business Wire November 07, 2023 at 16:05 PM EST 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 View source version on businesswire.com: https://www.businesswire.com/news/home/20231107135758/en/Contacts Investor Relations: Vroom Jon Sandison investors@vroom.com Media: Vroom Chris Hayes chris.hayes@vroom.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, 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 View source version on businesswire.com: https://www.businesswire.com/news/home/20231107135758/en/
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