Vroom Reports Third Quarter 2020 Results

November 11, 2020

Vroom Delivers Record Ecommerce Units and Gross Profit

Ecommerce Unit Sales Up 59% YoY

Ecommerce Gross Profit Up 120% YoY

NEW YORK–(BUSINESS WIRE)–Vroom, Inc. (NASDAQ:VRM), a leading e-commerce platform for buying and selling used vehicles, today announced financial results for the third quarter ended September 30, 2020 (“Q3 2020”).

HIGHLIGHTS OF THIRD QUARTER 2020

8,823 ecommerce units sold, up 59% YoY
Ecommerce revenue of $221.8 million, up 25% YoY
Ecommerce gross profit of $19.3 million, up 120% YoY

Paul Hennessy, Chief Executive Officer of Vroom, commented:

“I am very pleased with our results for the third quarter, in which we successfully managed the challenges presented by the COVID-19 pandemic, outperformed our plan, demonstrated the strength of our business model, and hit the accelerator on significantly scaling our business. By doing the things we said we would do — adding vehicle inventory, increasing marketing, relying on data to drive decision making, and enhancing our customer experience — we increased the velocity of the Vroom flywheel, drove conversion and increased GPPU. We will continue to execute our plan and invest in the growth of our business as we transform the market for buying and selling used vehicles.”

COVID-19 Update

Note: All sequential comparisons are on a current quarter over prior quarter basis.

After the initial disruption in our ecommerce operations due to the COVID-19 pandemic, consumer demand for used vehicles has returned to pre-COVID-19 levels and, in the three months ended September 30, 2020, we experienced continued strong consumer demand for our ecommerce solutions and contact-free delivery. Ecommerce units sold increased sequentially 31.4% to 8,823 units driven by increased consumer demand, higher inventory levels and increased marketing spend, and ecommerce revenue increased sequentially 26.3% to $221.8 million.

Ecommerce gross profit and gross profit per unit experienced strong sequential growth of 167.4% to $19.3 million and 103.5% to $2,188 per unit, respectively.

THIRD QUARTER 2020 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,
	2019		2020			Change			% Change			2019		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		5,563		8,823			3,260			58.6	%		12,606		23,466			10,860			86.1	%
Ecommerce revenue:
Vehicle revenue	$	174,510	$	213,943	$		39,433			22.6	%	$	381,709	$	610,008	$		228,299			59.8	%
Product revenue		3,603		7,818			4,215			117.0	%		7,212		20,493			13,281			184.2	%
Total ecommerce revenue	$	178,113	$	221,761	$		43,648			24.5	%	$	388,921	$	630,501	$		241,580			62.1	%
Ecommerce gross profit:
Vehicle gross profit	$	5,171	$	11,486	$		6,315			122.1	%	$	14,611	$	20,296	$		5,685			38.9	%
Product gross profit		3,603		7,818			4,215			117.0	%		7,212		20,493			13,281			184.2	%
Total ecommerce gross profit	$	8,774	$	19,304	$		10,530			120.0	%	$	21,823	$	40,789	$		18,966			86.9	%
Average vehicle selling price per ecommerce unit	$	31,370	$	24,248	$		(7,122	)		(22.7	)%	$	30,280	$	25,995	$		(4,285	)		(14.2	)%
Gross profit per ecommerce unit:
Vehicle gross profit per ecommerce unit	$	929	$	1,302	$		373			40.2	%	$	1,159	$	865	$		(294	)		(25.4	)%
Product gross profit per ecommerce unit		648		886			238			36.7	%		572		873			301			52.6	%
Total gross profit per ecommerce unit	$	1,577	$	2,188	$		611			38.7	%	$	1,731	$	1,738	$		7			0.4	%
Ecommerce average days to sale		71		52			(19	)		(26.8	)%		67		62			(5	)		(7.5	)%

Ecommerce Units

Ecommerce units sold increased 58.6% to 8,823 driven by increased consumer demand, higher inventory levels and increased marketing spend. Average monthly unique visitors to our platform increased 19.4% to 928,277.

Ecommerce Revenue

Ecommerce revenue increased 24.5% to $221.8 million.

Ecommerce Vehicle revenue increased 22.6% to $214.0 million. The increase in ecommerce Vehicle revenue was primarily attributable to the increase in ecommerce units sold, partially offset by a decrease in the average selling price per unit, which decreased from $31,370 to $24,248. The decrease in average selling price was driven by demand predicted by our data analytics.
Ecommerce Product revenue increased 117.0% to $7.8 million. The increase in ecommerce Product revenue was primarily attributable to the increase in ecommerce units sold, and further increased by an improvement in ecommerce Product revenue per unit, which increased from $648 to $886 per unit. The increase in ecommerce Product revenue per unit was driven by higher attachment rates, improved financing features in our ecommerce platform as well as our strategic partnerships.

Ecommerce Gross Profit

Ecommerce gross profit increased 120.0% to $19.3 million.

Ecommerce Vehicle gross profit increased 122.1% to $11.5 million. The increase in ecommerce Vehicle gross profit was due to a $373 increase in ecommerce Vehicle gross profit per unit, driven primarily by improvements in inbound logistics and reconditioning costs and the increase in ecommerce units sold.
Ecommerce Product gross profit increased 117.0% to $7.8 million. The increase in ecommerce Product gross profit was primarily attributable to the increase in ecommerce units sold, and further increased by an improvement in ecommerce Product gross profit per unit, which increased from $648 to $886 per unit. The increase in Product gross profit per unit was driven by higher attachment rates, improved financing features in our ecommerce platform as well as our strategic partnerships.

Ecommerce Gross Profit per Unit

Ecommerce gross profit per unit increased 38.7% to $2,188.

Ecommerce Vehicle gross profit per unit increased 40.2% to $1,302, driven primarily by improvements in inbound logistics and reconditioning costs.
Ecommerce Product gross profit per unit increased 36.7% to $886. The increase in Product gross profit per unit was driven by higher attachment rates, improved financing features in our ecommerce platform as well as our strategic partnerships.

Results by Segment

	Three Months Ended September 30,										Nine Months Ended September 30,
	2019		2020		Change			% Change			2019		2020		Change			% Change
	(in thousands)										(in thousands)
Units:
Ecommerce		5,563		8,823		3,260			58.6	%		12,606		23,466		10,860			86.1	%
TDA		3,282		1,463		(1,819	)		(55.4	)%		9,444		5,608		(3,836	)		(40.6	)%
Wholesale		5,420		6,166		746			13.8	%		16,046		14,110		(1,936	)		(12.1	)%
Total units		14,265		16,452		2,187			15.3	%		38,096		43,184		5,088			13.4	%

Revenue:
Ecommerce	$	178,113	$	221,761	$	43,648			24.5	%	$	388,921	$	630,501	$	241,580			62.1	%
TDA		103,106		37,272		(65,834	)		(63.9	)%		281,603		150,901		(130,702	)		(46.4	)%
Wholesale		59,054		63,972		4,918			8.3	%		165,705		170,469		4,764			2.9	%
Total revenue	$	340,273	$	323,005	$	(17,268	)		(5.1	)%	$	836,229	$	951,871	$	115,642			13.8	%
Gross profit:
Ecommerce	$	8,774	$	19,304	$	10,530			120.0	%	$	21,823	$	40,789	$	18,966			86.9	%
TDA		6,650		2,798		(3,852	)		(57.9	)%		18,830		9,144		(9,686	)		(51.4	)%
Wholesale		247		3,343		3,096			1,253.4	%		875		1,506		631			72.1	%
Total gross profit	$	15,671	$	25,445	$	9,774			62.4	%	$	41,528	$	51,439	$	9,911			23.9	%
Gross profit per unit:
Ecommerce	$	1,577	$	2,188	$	611			38.7	%	$	1,731	$	1,738	$	7			0.4	%
TDA	$	1,974	$	1,828	$	(146	)		(7.4	)%	$	1,931	$	1,569	$	(362	)		(18.8	)%
Wholesale	$	46	$	542	$	496			1,078.3	%	$	55	$	107	$	52			94.5	%
Total gross profit per unit	$	1,099	$	1,547	$	448			40.8	%	$	1,090	$	1,191	$	101			9.3	%

Total Units

Total units sold increased 15.3% to 16,452.

Ecommerce units sold increased 58.6% to 8,823, as discussed above.
TDA units sold decreased 55.4% to 1,463, primarily due to continued disruptions related to the COVID-19 pandemic in the Houston area.
Wholesale units sold increased 13.8% to 6,166, primarily due to an increase of wholesale grade units purchased from consumers.

Total Revenue

Total revenue decreased 5.1% to $323.0 million.

Ecommerce revenue increased 24.5% to $221.8 million, as discussed above.
TDA revenue decreased 63.9% to $37.3 million. TDA revenue decreased primarily due to the decrease in TDA units sold and a lower average selling price per unit, which decreased from $30,236 to $24,316.
Wholesale revenue increased 8.3% to $64.0 million. The increase in wholesale revenue was primarily attributable to the increase in wholesale units sold, partially offset by a decrease in wholesale average selling price per unit, which decreased from $10,896 to $10,375.

Total Gross Profit

Total gross profit increased 62.4% to $25.4 million.

Ecommerce gross profit increased 120.0% to $19.3 million, as discussed above.
TDA gross profit decreased 57.9% to $2.8 million. TDA gross profit decreased primarily due to lower TDA units sold and a decrease in TDA gross profit per unit of $146.
Wholesale gross profit increased to $3.3 million. Wholesale gross profit increased primarily due to an increase in wholesale gross profit per unit of $496.

Total Gross Profit per Unit

Total gross profit per unit increased 40.8% to $1,547.

Ecommerce gross profit per unit increased 38.7% to $2,188.
TDA gross profit per unit decreased 7.4% to $1,828.
Wholesale gross profit per unit increased to $542.

SG&A

		Three Months Ended September 30,											Nine Months Ended September 30,
		2019			2020		Change			% Change				2019			2020		Change			% Change
		(in thousands)											(in thousands)
Compensation & benefits	$		19,050	$		22,881	$	3,831			20.1	%	$		52,018	$		63,821	$	11,803			22.7	%
Marketing expense			14,606			15,341		735			5.0	%			34,442			44,829		10,387			30.2	%
Outbound logistics			4,255			8,500		4,245			99.8	%			9,199			19,762		10,563			114.8	%
Occupancy and related costs			2,770			2,610		(160	)		(5.8	)%			8,041			7,574		(467	)		(5.8	)%
Professional fees			3,497			1,773		(1,724	)		(49.3	)%			9,378			5,697		(3,681	)		(39.3	)%
Other			6,756			10,022		3,266			48.3	%			18,131			25,735		7,604			41.9	%
Total selling, general & administrative expenses	$		50,934	$		61,127	$	10,193			20.0	%	$		131,209	$		167,418	$	36,209			27.6	%

Selling, general and administrative expenses increased 20.0% to $61.1 million. The increase was primarily due to a $3.6 million increase in stock-based compensation included within compensation and benefits, a $4.2 million increase in outbound logistics costs partially attributable to the growth in ecommerce units sold, which increased outbound logistics costs by $2.5 million, and increases in market rates of logistics providers, which increased outbound logistics costs by $1.7 million, and a $3.3 million increase in other selling, general and administrative expenses primarily related to additional insurance costs associated with being a publicly traded company. These increases were offset by a $1.7 million decrease in professional fees.

We expect selling, general and administrative expenses to increase in the future as we scale our business and sell more ecommerce units. We will also continue to invest in and improve our customer experience and invest in expanding our proprietary logistics network including our last-mile delivery operations.

Loss from Operations and Net Loss

Loss from operations slightly increased 0.3% to $36.9 million. Net loss decreased 4.8% to $37.9 million.

Non-GAAP Measures

In addition to our results determined in accordance with accounting principles generally accepted in the United States, or 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 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 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 GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

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 and the one-time, IPO related non-cash revaluation of a preferred stock warrant. We calculate Adjusted loss from operations as operating loss adjusted to exclude the one-time, IPO related acceleration of non-cash stock-based compensation expense and 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 and the one-time, IPO related non-cash revaluation of a preferred stock warrant. The following table presents a reconciliation of the Non-GAAP measures to the most directly comparable financial measures prepared in accordance with GAAP, for each of the periods presented.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are supplemental performance measures that our management uses to assess our operating performance and the operating leverage in our business. Because EBITDA and Adjusted EBITDA facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2020			2019			2020
	(in thousands)						(in thousands)
Net loss	$	(39,764	)	$	(37,850	)	$	(100,243	)	$	(142,137	)
Adjusted to exclude the following:
Interest expense		3,797			2,259			9,903			6,382
Interest income		(1,190	)		(1,289	)		(4,454	)		(3,960	)
Provision for income taxes		48			33			122			138
Depreciation and amortization expense		1,537			1,196			4,683			3,255
EBITDA	$	(35,572	)	$	(35,651	)	$	(89,989	)	$	(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
Adjusted EBITDA	$	(35,572	)	$	(35,651	)	$	(89,989	)	$	(114,590	)

Adjusted loss from operations

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2020			2019			2020
	(in thousands)						(in thousands)
Loss from operations	$	(36,780	)	$	(36,873	)	$	(94,232	)	$	(119,218	)
Add: One-time IPO related acceleration of non-cash stock based compensation		—			—			—			1,262
Adjusted loss from operations	$	(36,780	)	$	(36,873	)	$	(94,232	)	$	(117,956	)

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2020			2019			2020
	(in thousands, except share and per share amounts)
Net loss	$	(39,764	)	$	(37,850	)	$	(100,243	)	$	(142,137	)
Accretion of redeemable convertible preferred stock		(65,686	)		—			(109,529	)		—
Net loss attributable to common stockholders	$	(105,450	)	$	(37,850	)	$	(209,772	)	$	(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
Non-GAAP net loss	$	(105,450	)	$	(37,850	)	$	(209,772	)	$	(120,405	)

Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted		8,615,682			121,123,472			8,591,554			53,731,475

Net loss per share, basic and diluted	$	(12.24	)	$	(0.31	)	$	(24.42	)	$	(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
Non-GAAP net loss per share, basic and diluted	$	(12.24	)	$	(0.31	)	$	(24.42	)	$	(2.25	)
Non-GAAP net loss per share, as adjusted, basic and diluted^(a)	$	(0.31	)	$	(0.29	)	$	(0.77	)	$	(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 in connection 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,
	2019			2020			2019			2020
	(in thousands, except share and per share amounts)
Non-GAAP net loss	$	(105,450	)	$	(37,850	)	$	(209,772	)	$	(120,405	)
Add: Accretion of redeemable convertible preferred stock		65,686			—			109,529			—
Non-GAAP net loss, as adjusted	$	(39,764	)	$	(37,850	)	$	(100,243	)	$	(120,405	)

Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted		8,615,682			121,123,472			8,591,554			53,731,475
Add: unweighted adjustment for common stock issued in connection with IPO		24,437,500			—			24,437,500			24,437,500
Add: unweighted adjustment for conversion of redeemable convertible preferred stock in connection with IPO		85,533,394			—			85,533,394			85,533,394
Add: unweighted adjustment for common stock issued in connection with follow-on public offering		10,800,000			10,800,000			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		129,386,576			130,162,603			129,362,448			129,604,796

Non-GAAP net loss per share, as adjusted, basic and diluted	$	(0.31	)	$	(0.29	)	$	(0.77	)	$	(0.93	)

Financial Outlook

We expect another quarter of significant year-over-year growth in ecommerce unit sales and revenue for Q4 2020 and continued strength in total ecommerce gross profit per unit. Through the third quarter, our year-to-date ecommerce units sold has grown 86% over the prior year. Combined with our strong sequential growth quarter to quarter, we believe we are on track for continued growth into 2021. For Q4 2020, we expect the following results:

Ecommerce unit sales of 10,500 to 11,500, implying 25% sequential growth and Q4 year over year growth of 74% at the middle of the guidance range.
Average ecommerce selling price per unit of $24,500 to $25,500 and average ecommerce gross profit per unit of $2,050 to $2,150.
TDA unit sales of 1,400 to 1,600, average selling price per unit of $24,500 to $25,500 and average gross profit per unit of $1,650 to $1,750.
Wholesale unit sales of 6,000 to 7,000, average selling price per unit of $9,500 to $10,500 and average gross profit per unit of breakeven to $100.
Total revenue of $372 to $414 million.
Total gross profit of $24 to $28 million.
EBITDA of ($52) to ($44) million.
Stock-based compensation expense of $4.3 million.
Net loss per share of ($0.41) to ($0.35).

Prior to our IPO, our shares outstanding primarily consisted of shares of redeemable convertible preferred stock, which automatically converted to shares of common stock upon the consummation of our IPO. In addition, all warrants outstanding were exercised upon the IPO or shortly thereafter, and certain stock-based compensation shares were issued or vested upon the IPO. We expect the following number of GAAP weighted average shares outstanding for the remainder of 2020:

		Quarter		YTD
Q4 2020		130,300,000		72,900,000

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 11, 2020 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 11, 2020 at 5:00 p.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 7077759. 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.

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 our expectations for future results of operations. 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

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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