Vroom Reports Strong Third Quarter 2021 Results

November 9, 2021

Vroom Delivers Record Ecommerce Units and Gross Profit

Ecommerce Unit Sales Up 123% YoY

Ecommerce Gross Profit Up 161% YoY

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, 2021 (“Q3 2021”).

HIGHLIGHTS OF THIRD QUARTER 2021

19,683 ecommerce units sold, up 123% YoY

Ecommerce revenue of $701.7 million, up 216% YoY

Ecommerce gross profit of $50.4 million, up 161% YoY

Vroom enters into definitive agreement to acquire United Auto Credit Corporation (“UACC”)

Vroom appoints new Chief Financial Officer

Paul Hennessy, Chief Executive Officer of Vroom, commented:

“Vroom had yet another strong quarter that continued the momentum that has been building all year. By executing well across our organization, we delivered triple digit year-over-year growth in both ecommerce units and gross profit, as well as improvement in unit economics. We also continued to optimize our mix of inventory sources throughout the quarter, with approximately 81% of our retail inventory sold sourced from consumers, enabling us to scale our inventory while maintaining strong unit economics. Looking ahead, we intend to continue to focus on strong execution and maintain the momentum in our business to drive continued growth in unit sales and on improving unit economics. We also are excited to move forward with our acquisition of United Auto Credit Corporation, which will accelerate our strategic objective to establish a captive financing arm.”

THIRD QUARTER 2021 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,
	2021		2020			Change		% Change			2021		2020			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		19,683		8,823			10,860		123.1	%		53,455		23,466			29,989		127.8	%
Ecommerce revenue:
Vehicle revenue	$	677,170	$	213,943	$		463,227		216.5	%	$	1,644,494	$	610,008	$		1,034,486		169.6	%
Product revenue		24,508		7,818			16,690		213.5	%		59,155		20,493			38,662		188.7	%
Total ecommerce revenue	$	701,678	$	221,761	$		479,917		216.4	%	$	1,703,649	$	630,501	$		1,073,148		170.2	%
Ecommerce gross profit:
Vehicle gross profit	$	25,875	$	11,486	$		14,389		125.3	%	$	72,704	$	20,296	$		52,408		258.2	%
Product gross profit		24,508		7,818			16,690		213.5	%		59,155		20,493			38,662		188.7	%
Total ecommerce gross profit	$	50,383	$	19,304	$		31,079		161.0	%	$	131,859	$	40,789	$		91,070		223.3	%
Average vehicle selling price per ecommerce unit	$	34,404	$	24,248	$		10,156		41.9	%	$	30,764	$	25,995	$		4,769		18.3	%
Gross profit per ecommerce unit:
Vehicle gross profit per ecommerce unit	$	1,315	$	1,302	$		13		1.0	%	$	1,360	$	865	$		495		57.2	%
Product gross profit per ecommerce unit		1,245		886			359		40.5	%		1,107		873			234		26.8	%
Total gross profit per ecommerce unit	$	2,560	$	2,188	$		372		17.0	%	$	2,467	$	1,738	$		729		41.9	%
Ecommerce average days to sale		68		52			16		30.8	%		73		62			11		17.7	%

Ecommerce Units

Ecommerce units sold increased 123.1% to 19,683 driven by higher inventory levels, strong national brand recognition driven by our national advertising campaign and increased marketing spend, and increased demand due to growing consumer acceptance of our business model. The increase was also attributable to strong market demand generally for used vehicles, caused in part by the shortage of microchips and delays in new car manufacturing. Average monthly unique visitors to our platform increased 140.9% to 2,236,168.

Ecommerce Revenue

Ecommerce revenue increased 216.4% to $701.7 million.

Ecommerce Vehicle revenue increased 216.5% to $677.2 million. The increase in ecommerce Vehicle revenue was primarily attributable to the increase in ecommerce units sold as well as an increase in the average selling price per unit, which increased from $24,248 to $34,404, primarily attributable to market appreciation.

Ecommerce Product revenue increased 213.5% to $24.5 million. The increase in ecommerce Product revenue was primarily attributable to the increase in ecommerce units sold as well as an increase in ecommerce Product revenue per unit, which increased from $886 to $1,245 per unit.

Ecommerce Gross Profit

Ecommerce gross profit increased 161.0% to $50.4 million.

Ecommerce Vehicle gross profit increased 125.3% to $25.9 million. The increase in ecommerce Vehicle gross profit was primarily due to an increase in ecommerce units sold.

Ecommerce Product gross profit increased 213.5% to $ 24.5 million. The increase in ecommerce Product gross profit was primarily attributable to the increase in ecommerce units sold as well as an increase in ecommerce Product gross profit per unit, which increased from $886 to $1,245 per unit.

Ecommerce Gross Profit per Unit

Ecommerce gross profit per unit increased 17.0% to $2,560.

Ecommerce Vehicle gross profit per unit increased slightly to $1,315, primarily driven by improvements in reconditioning costs, partially offset by lower sales margins as a result of higher purchase prices of vehicle acquisitions.

Ecommerce Product gross profit per unit increased 40.5% to $1,245, primarily driven by higher attachment rates and an increase in the average loan size as a result of a higher average selling price per unit.

Results by Segment

	Three Months Ended September 30,										Nine Months Ended September 30,
	2021		2020 ⁽¹⁾		Change			% Change			2021		2020 ⁽¹⁾		Change			% Change
	(in thousands, except unit data)										(in thousands, except unit data)
Units:
Ecommerce		19,683		8,823		10,860			123.1	%		53,455		23,466		29,989			127.8	%
Wholesale		9,760		6,166		3,594			58.3	%		28,421		14,110		14,311			101.4	%
TDA		1,749		1,463		286			19.5	%		5,107		5,608		(501	)		(8.9	)%
Total units		31,192		16,452		14,740			89.6	%		86,983		43,184		43,799			101.4	%

Revenue:
Ecommerce	$	701,678	$	221,761	$	479,917			216.4	%	$	1,703,649	$	630,501	$	1,073,148			170.2	%
Wholesale		131,306		63,972		67,334			105.3	%		377,438		170,469		206,969			121.4	%
TDA		60,582		36,955		23,627			63.9	%		158,928		149,858		9,070			6.1	%
All Other ⁽²⁾		3,190		317		2,873			906.3	%		9,749		1,043		8,706			834.7	%
Total revenue	$	896,756	$	323,005	$	573,751			177.6	%	$	2,249,764	$	951,871	$	1,297,893			136.4	%
Gross profit:
Ecommerce	$	50,383	$	19,304	$	31,079			161.0	%	$	131,859	$	40,789	$	91,070			223.3	%
Wholesale		2,103		3,343		(1,240	)		(37.1	)%		10,337		1,506		8,831			586.4	%
TDA		3,805		2,675		1,130			42.2	%		9,743		8,799		944			10.7	%
All Other ⁽²⁾		1,798		123		1,675			1,361.8	%		5,454		345		5,109			1,480.9	%
Total gross profit	$	58,089	$	25,445	$	32,644			128.3	%	$	157,393	$	51,439	$	105,954			206.0	%
Gross profit per unit ⁽³⁾:
Ecommerce	$	2,560	$	2,188	$	372			17.0	%	$	2,467	$	1,738	$	729			41.9	%
Wholesale	$	215	$	542	$	(327	)		(60.3	)%	$	364	$	107	$	257			240.2	%
TDA	$	2,175	$	1,828	$	347			19.0	%	$	1,907	$	1,569	$	338			21.5	%

(1)		We reclassified other revenue and gross profit related to the vehicle repair service at TDA from the TDA reportable segment to the “All Other” category to conform to current year presentation.
(2)		All Other revenues and gross profit consist of the CarStory business and vehicle repair services at TDA.
(3)		Gross profit per unit metrics exclude the CarStory business and vehicle repair services at TDA.

Total Units

Total units sold increased 89.6% to 31,192.

Ecommerce units sold increased 123.1% to 19,683, as discussed above.

Wholesale units sold increased 58.3% to 9,760, primarily driven by an increase in wholesale units purchased from consumers, a higher number of trade-in vehicles associated with the increase in the number of ecommerce units sold and strong wholesale market demand for used vehicles.

TDA units sold increased 19.5% to 1,749, primarily due to strong market demand generally for used vehicles and higher inventory levels.

Total Revenue

Total revenue increased 177.6% to $896.8 million.

Ecommerce revenue increased 216.4% to $701.7 million, as discussed above.

Wholesale revenue increased 105.3% to $131.3 million. The increase in wholesale revenue was primarily attributable to the increase in wholesale units sold as well as a higher average selling price per unit, which increased from $10,375 to $13,453, primarily attributable to market appreciation.

TDA revenue increased 63.9% to $60.6 million, primarily due to a higher average selling price per unit, which increased from $24,316 to $33,474 as well as the increase in TDA units sold.

Total Gross Profit

Total gross profit increased 128.3% to $58.1 million.

Ecommerce gross profit increased 161.0% to $50.4 million, as discussed above.

Wholesale gross profit decreased 37.1% to $2.1 million. Wholesale gross profit decreased primarily due to a lower Wholesale gross profit per unit of $327, partially offset by an increase in wholesale units sold.

TDA gross profit increased 42.2% to $3.8 million. TDA gross profit increased primarily due to an increase in TDA gross profit per unit of $347 as well as an increase in TDA units sold.

Gross Profit per Unit

Ecommerce gross profit per unit increased 17.0% to $2,560, as discussed above.

Wholesale gross profit per unit decreased 60.3% to $215 as a result sales margin compression due to unfavorable wholesale price movements, which declined during the first half of the third quarter of 2021.

TDA gross profit per unit increased 19.0% to $2,175 driven by increased TDA product gross profit per unit of $221, primarily due to improvements in inbound logistics costs and increased TDA vehicle gross profit per unit of $126, primarily due to an increase in the average loan size as a result of a higher average selling price per unit.

SG&A

	Three Months Ended September 30,									Nine Months Ended September 30,
	2021		2020		Change		% Change			2021		2020		Change		% Change
	(in thousands)									(in thousands)
Compensation & benefits	$	53,900	$	22,881	$	31,019		135.6	%	$	145,580	$	63,821	$	81,759		128.1	%
Marketing expense		35,214		15,341		19,873		129.5	%		88,267		44,829		43,438		96.9	%
Outbound logistics		22,717		8,500		14,217		167.3	%		57,987		19,762		38,225		193.4	%
Occupancy and related costs		4,635		2,610		2,025		77.6	%		12,599		7,574		5,025		66.3	%
Professional fees		7,694		1,773		5,921		334.0	%		15,951		5,697		10,254		180.0	%
Other		24,558		10,022		14,536		145.0	%		61,098		25,735		35,363		137.4	%
Total selling, general & administrative expenses	$	148,718	$	61,127	$	87,591		143.3	%	$	381,482	$	167,418	$	214,064		127.9	%

Selling, general and administrative expenses increased 143.3% to $148.7 million. The increase was primarily due to:

$31.0 million increase in compensation and benefits due to an increase in headcount and an increase in variable fees for third-party sales and sales support providers as a result of an increase in units sold;

$19.9 million increase in marketing expense as we expanded our national broad-reach brand advertising, produced new commercials, and increased performance and online marketing as we continue to grow our listed inventory;

$14.2 million increase in outbound logistics costs primarily attributable to the growth in ecommerce units sold, which increased outbound logistics costs by $10.5 million, and increases in market rates of logistics providers, which increased outbound logistics costs by $3.7 million;

$5.9 million increase in professional fees primarily related to acquisition related costs incurred in connection with the definitive agreement to acquire UACC, as well as increased consulting expenses in the marketing and engineering departments; and

$14.5 million increase in other selling, general and administrative expenses primarily related to volume-based fees for software licenses and other variable expenses as our business continues to scale as well as additional insurance costs associated with being a publicly traded company and growing inventory.

We expect selling, general and administrative expenses to increase in the future as we continue to scale our business, integrate and invest in UACC, invest in and improve our customer experience, and continue expanding our proprietary logistics and reconditioning networks.

Loss from Operations and Net Loss

Loss from operations increased 154.9% to $94.0 million. Net loss increased 159.2% to $98.1 million.

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 loss from operations, Non-GAAP net loss, Non-GAAP net loss per share and Non-GAAP net loss per share, as adjusted. 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 loss from operations, Non-GAAP net loss, Non-GAAP net loss per share and Non-GAAP net loss per share, as adjusted are supplemental performance measures that our management uses to assess our operating performance and the operating leverage in our business. Because EBITDA, Adjusted EBITDA, Adjusted loss from operations, Non-GAAP net loss, Non-GAAP net loss per share and Non-GAAP net loss per share, as adjusted, facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes.

EBITDA and Adjusted EBITDA

We calculate EBITDA as net loss before interest expense, interest income, income tax expense and depreciation and amortization expense and we calculate Adjusted EBITDA as EBITDA adjusted to exclude the one-time, IPO related acceleration of non-cash stock-based compensation expense, the one-time, IPO related non-cash revaluation of a preferred stock warrant and costs related to our acquisition of UACC. The following table presents a reconciliation of EBITDA and Adjusted EBITDA to net loss, which is the most directly comparable U.S. GAAP measure:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(in thousands)						(in thousands)
Net loss	$	(98,122	)	$	(37,850	)	$	(241,118	)	$	(142,137	)
Adjusted to exclude the following:
Interest expense		7,028			2,259			14,720			6,382
Interest income		(2,930	)		(1,289	)		(7,288	)		(3,960	)
Provision for income taxes		29			33			379			138
Depreciation and amortization expense		3,469			1,196			9,497			3,255
EBITDA	$	(90,526	)	$	(35,651	)	$	(223,810	)	$	(136,322	)
One-time IPO related acceleration of non-cash stock-based compensation		—			—			—			1,262
One-time IPO related non-cash revaluation of preferred stock warrant		—			—			—			20,470
Acquisition related costs		3,412			—			3,412			—
Adjusted EBITDA	$	(87,114	)	$	(35,651	)	$	(220,398	)	$	(114,590	)

Adjusted loss from Operations

We calculate Adjusted loss from operations as loss from operations adjusted to exclude the one-time, IPO related acceleration of non-cash stock-based compensation expense and costs related to our acquisition of UACC. The following table presents a reconciliation of Adjusted loss from operations to loss from operations, which is the most directly comparable U.S. GAAP measure:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(in thousands)						(in thousands)
Loss from operations	$	(94,005	)	$	(36,873	)	$	(233,365	)	$	(119,218	)
Add: One-time IPO related acceleration of non-cash stock based compensation		—			—			—			1,262
Add: Acquisition related costs		3,412			—			3,412			—
Adjusted loss from operations	$	(90,593	)	$	(36,873	)	$	(229,953	)	$	(117,956	)

Non-GAAP net loss, Non-GAAP net loss per share and Non-GAAP net loss per share, as adjusted

We calculate Non-GAAP net loss as net loss adjusted to exclude the one-time, IPO related acceleration of non-cash stock-based compensation expense, the one-time, IPO related non-cash revaluation of a preferred stock warrant and costs related to our acquisition of UACC. We calculate Non-GAAP net loss per share as Non-GAAP net loss divided by weighted average number of shares outstanding. The following table presents a reconciliation of Non-GAAP net loss and Non-GAAP net loss per share 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,
		2021			2020			2021			2020
	(in thousands, except share and per share amounts)
Net loss		$	(98,122	)	$	(37,850	)	$	(241,118	)	$	(142,137	)
Net loss attributable to common stockholders		$	(98,122	)	$	(37,850	)	$	(241,118	)	$	(142,137	)
Add: One-time IPO related acceleration of non-cash stock based compensation			—			—			—			1,262
Add: One-time IPO related non-cash revaluation of preferred stock warrant			—			—			—			20,470
Add: Acquisition related costs			3,412			—			3,412			—
Non-GAAP net loss		$	(94,710	)	$	(37,850	)	$	(237,706	)	$	(120,405	)

Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted			136,766,015			121,123,472			136,256,901			53,731,475

Net loss per share, basic and diluted		$	(0.72	)	$	(0.31	)	$	(1.77	)	$	(2.65	)
Impact of one-time IPO related acceleration of non-cash stock based compensation			—			—			—			0.02
Impact of one-time IPO related non-cash revaluation of preferred stock warrant			—			—			—			0.38
Impact of acquisition related costs			0.02			—			0.03			—
Non-GAAP net loss per share, basic and diluted		$	(0.70	)	$	(0.31	)	$	(1.74	)	$	(2.25	)
Non-GAAP net loss per share, as adjusted, basic and diluted^(a)		$	(0.70	)	$	(0.29	)	$	(1.74	)	$	(0.93	)

^(a)Non-GAAP net loss per share, as adjusted has been computed to give effect to, as of the beginning of each period presented, (i) the shares of common stock issued in connection with our IPO, (ii) the automatic conversion of all outstanding shares of redeemable convertible preferred stock into shares of common stock that occurred upon the consummation of our IPO and (iii) the shares of common stock issued with our follow-on public offering. The computation of Non-GAAP net loss per share, as adjusted is as follows:

		Three Months Ended September 30,						Nine Months Ended September 30,
		2021			2020			2021			2020
	(in thousands, except share and per share amounts)
Non-GAAP net loss		$	(94,710	)	$	(37,850	)	$	(237,706	)	$	(120,405	)
Non-GAAP net loss, as adjusted		$	(94,710	)	$	(37,850	)	$	(237,706	)	$	(120,405	)

Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted			136,766,015			121,123,472			136,256,901			53,731,475
Add: unweighted adjustment for common stock issued in connection with IPO			—			—			—			24,437,500
Add: unweighted adjustment for conversion of redeemable convertible preferred stock in connection with IPO			—			—			—			85,533,394
Add: unweighted adjustment for common stock issued in connection with follow-on public offering			—			10,800,000			—			10,800,000
Less: Adjustment for the impact of the above items already included in weighted-average number of shares outstanding for the periods presented			—			(1,760,869	)		—			(44,897,573	)
Weighted-average number of shares outstanding used to compute net loss per share, as adjusted, basic and diluted			136,766,015			130,162,603			136,256,901			129,604,796

Non-GAAP net loss per share, as adjusted, basic and diluted		$	(0.70	)	$	(0.29	)	$	(1.74	)	$	(0.93	)

Financial Outlook

For the full year 2021, we continue to expect triple digit year-over-year growth in ecommerce unit sales and more than 200% year-over-year growth in aggregate gross profit. For the fourth quarter 2021, we expect the following results:

Ecommerce unit sales of 20,000 to 20,500, implying year over year growth of 84% at the mid-point of the guidance range.

Average ecommerce selling price per unit of $35,000 to $36,000 and average ecommerce gross profit per unit of $2,100 to $2,300.

Wholesale unit sales of 6,500 to 7,500, average selling price per unit of $13,000 to $14,000 and average gross profit per unit of $550 to $750.

TDA unit sales of 1,500 to 1,600, average selling price per unit of $35,000 to $36,000 and average gross profit per unit of $1,800 to $2,000.

Total revenue of $865 to $900 million.

Total gross profit of $50 to $58 million.

Adjusted EBITDA* of $(104) to $(95) million.

Stock-based compensation expense of $4.2 million.

Net loss per share, as adjusted* of $(0.77) to $(0.70).

*A reconciliation of non-GAAP guidance measures to corresponding GAAP measures for our fourth quarter 2021 Financial Outlook is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, these 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 2021 in the reconciliation table in the Non-GAAP Financial Measures section above.

We expect the following number of GAAP weighted average shares outstanding for the fourth quarter and the full year 2021:

		Quarter		YTD
2021		136,897,954		136,417,164

These estimates exclude any shares potentially issuable under stock-based compensation plans.

The foregoing estimates are forward-looking statements that reflect the Company’s expectations as of November 9, 2021 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 10, 2021 at 8:30 a.m. ET.

The conference call can be accessed via telephone by dialing 1-833-519-1297 (or 914-800-3868 for international access) and entering the conference ID 5685139. A live audio webcast will also be available at ir.vroom.com. An archived webcast of the conference call will be accessible on the website within 48 hours of its completion.

Contacts

Investor Relations:
Vroom

Allen Miller

investors@vroom.com

Media Contact:
Moxie Communications Group

Alyssa Galella

vroom@moxiegrouppr.com
(562) 294-6261

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