Vroom Announces Record Ecommerce Gross Profit Per Unit of $4,206

November 7, 2022

Continued Progress on Long-Term Roadmap

NEW YORK–(BUSINESS WIRE)–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

Contacts

Investor Relations:
Vroom

Liam Harrington

investors@vroom.com

Media Contact:
Current Global

Danny Finlay

dfinlay@currentglobal.com

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