VRM - Vroom Announces First Quarter 2024 Results

May, 10 2024 05:30 PM Vroom Inc.

Successfully Completed UACC Securitization Transaction in April 2024
Continued Progress on UACC Origination Performance

Vroom, Inc. (Nasdaq:VRM) today announced financial results for the first quarter ended March 31, 2024.

HIGHLIGHTS OF FIRST QUARTER 2024

$91.0 million cash and cash equivalents as of March 31, 2024
$(44.7) million net loss from continuing operations
$(32.2) million Adjusted EBITDA
Substantially completed the ecommerce wind-down
Adopted new reporting segments to align with continuing operations at United Auto Credit (UACC) and CarStory

Tom Shortt, the Company’s Chief Executive Officer, said “As we previously announced, our ecommerce wind-down was substantially completed during the first quarter of 2024. I am extremely proud of our team’s timely and orderly execution of the wind-down and continued focus on strengthening UACC’s operations. We have focused on portfolio performance at UACC and currently expect originations since early 2023 to perform at a level that enables UACC to drive toward profitability. We continue to take other actions to maximize stakeholder value by seeking to monetize our ecommerce platform and grow and enhance the profitability of UACC and CarStory.”

Bob Krakowiak, Vroom’s Chief Financial Officer, commented, “We ended the quarter with cash and cash equivalents of approximately $91 million. The cash burn was primarily a result of the ecommerce wind-down, as we paid severance and other personnel-related costs and incurred exit costs associated with early termination or modification of ecommerce contracts and leases. I am pleased with the completion of UACC’s 2024-1 securitization transaction, in which $262.5 million of rated asset-backed securities were sold in April 2024, and $37.5 million of non-investment grade securities initially retained were subsequently sold in early May 2024.”

FIRST QUARTER 2024 FINANCIAL DISCUSSION

All financial comparisons are on a year-over-year basis unless otherwise noted.



Three Months Ended March 31,









2024


2023


$ Change


% Change

Interest income

$
51,077


$
34,368


$
16,709



48.6
%













Interest expense:












Warehouse credit facility


9,471



3,099



6,372



205.6
%
Securitization debt


4,869



4,345



524



12.1
%
Total interest expense


14,340



7,444



6,897



92.6
%
Net interest income


36,737



26,924



9,812



36.4
%













Realized and unrealized losses, net of recoveries


30,819



15,728



15,091



95.9
%
Net interest income after losses and recoveries


5,918



11,196



(5,279
)


(47.1
)%













Noninterest (loss) income:












Servicing income


2,019



2,854



(835
)


(29.3
)%
Warranties and GAP income, net


(9,642
)


2,835



(12,477
)


(440.1
)%
CarStory revenue


2,979



3,170



(191
)


(6.0
)%
Gain on debt extinguishment


—



8,709



(8,709
)


(100.0
)%
Other income


2,784



3,032



(248
)


(8.2
)%
Total noninterest (loss) income


(1,860
)


20,600



(22,460
)


(109.0
)%













Expenses:












Compensation and benefits


24,110



23,221



889



3.8
%
Professional fees


3,343



4,973



(1,630
)


(32.8
)%
Software and IT costs


4,622



5,246



(624
)


(11.9
)%
Depreciation and amortization


7,626



7,232



394



5.4
%
Interest expense on corporate debt


1,391



1,340



51



3.8
%
Impairment charges


2,752



—



2,752



100.0
%
Other expenses


4,454



5,199



(745
)


(14.3
)%
Total expenses


48,298



47,211



1,087



2.3
%













Loss from continuing operations before provision for income taxes


(44,240
)


(15,415
)


(28,825
)


187.0
%
Provision for income taxes from continuing operations


436



54



382



707.4
%
Net loss from continuing operations

$
(44,676
)

$
(15,469
)

$
(29,207
)


188.8
%
Net loss from discontinued operations

$
(22,941
)

$
(59,272
)

$
36,331



61.3
%
Net loss

$
(67,617
)

$
(74,741
)

$
7,124



9.5
%

Results by Segment

UACC



Three Months Ended March 31,









2024


2023


Change


% Change



(in thousands, except unit data and average days to sale)







Interest income

$
51,541


$
35,299


$
16,242



46.0
%













Interest expense:












Warehouse credit facility


9,471



3,099



6,372



205.6
%
Securitization debt


4,869



4,345



524



12.1
%
Total interest expense


14,340



7,444



6,896



92.6
%
Net interest income


37,201



27,855



9,346



33.6
%













Realized and unrealized losses, net of recoveries


27,761



12,272



15,489



126.2
%
Net interest income after losses and recoveries


9,439



15,582



(6,143
)


(39.4
)%













Noninterest income:












Servicing income


2,019



2,854



(835
)


(29.3
)%
Warranties and GAP income, net


1,610



2,203



(593
)


(26.9
)%
Other income


2,470



1,054



1,416



134.3
%
Total noninterest income


6,099



6,111



(12
)


(0.2
)%













Expenses:












Compensation and benefits


18,788



18,537



252



1.4
%
Professional fees


876



2,541



(1,664
)


(65.5
)%
Software and IT costs


3,097



2,705



392



14.5
%
Depreciation and amortization


6,021



5,627



394



7.0
%
Interest expense on corporate debt


471



197



274



139.1
%
Impairment charges


2,752



—



2,752



100.0
%
Other expenses


2,523



2,420



103



4.3
%
Total expenses


34,529



32,026



2,503



7.8
%













Adjusted EBITDA

$
(10,147
)

$
(4,467
)

$
(5,680
)


127.1
%













Interest income on cash and cash equivalents

$
(568
)

$
(448
)


(120
)


26.7
%
Stock compensation expense

$
168


$
490



(322
)


(65.8
)%

CarStory



Three Months Ended March 31,









2024


2023


Change


% Change



(in thousands, except unit data and average days to sale)







Noninterest income:












CarStory revenue

$
2,979


$
3,170


$
(191
)


(6.0
)%
Other income


173



48



125



260.4
%
Total noninterest income


3,152



3,218



(66
)


(2.1
)%













Expenses:












Compensation and benefits


2,214



2,401



(187
)


(7.8
)%
Professional fees


122



177



(55
)


(31.1
)%
Software and IT costs


167



174



(7
)


(4.0
)%
Depreciation and amortization


1,605



1,605



-



0.0
%
Other expenses


118



149



(31
)


(20.8
)%
Total expenses


4,225



4,505



(280
)


(6.2
)%













Adjusted EBITDA

$
559


$
567


$
(8
)


(1.4
)%













Interest income on cash and cash equivalents

$
(173
)

$
(46
)


(126
)


272.1
%
Stock compensation expense

$
200


$
296



(95
)


(32.3
)%

Corporate



Three Months Ended March 31,









2024


2023


Change


% Change



(in thousands, except unit data and average days to sale)







Interest income

$
(464
)

$
(931
)

$
467



50.2
%













Realized and unrealized losses, net of recoveries


3,058



3,456



(398
)


(11.5
)%
Net interest income after losses and recoveries


(3,521
)


(4,387
)


865



19.7
%













Noninterest (loss) income:












Warranties and GAP income, net

$
(11,252
)

$
632


$
(11,884
)


(1,880.4
)%
Gain on debt extinguishment


—



8,709



(8,709
)


(100.0
)%
Other income


141



1,930



(1,789
)


(92.7
)%
Total noninterest (loss) income


(11,111
)


11,271



(22,382
)


(198.6
)%













Expenses:












Compensation and benefits


3,109



2,284



824



36.1
%
Professional fees


2,345



2,256



89



3.9
%
Software and IT costs


1,358



2,366



(1,009
)


(42.6
)%
Interest expense on corporate debt


920



1,143



(223
)


(19.5
)%
Other expenses


1,813



2,631



(819
)


(31.1
)%
Total expenses


9,544



10,681



(1,137
)


(10.6
)%













Adjusted EBITDA

$
(22,564
)

$
(12,398
)

$
(10,166
)


82.0
%













Interest income on cash and cash equivalents

$
(264
)

$
(1,930
)


1,666



86.3
%
Stock compensation expense

$
956


$
894



63



7.0
%

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 and Adjusted EBITDA. 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 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.

EBITDA and Adjusted EBITDA

We calculate EBITDA as net loss before interest expense on corporate debt, interest income on cash and cash equivalents, income tax expense and depreciation and amortization expense.

We calculate Adjusted EBITDA as EBITDA adjusted to exclude stock compensation expense, gain on debt extinguishment and long-lived asset impairment charges.

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 March 31,



2024


2023



(in thousands)

Net loss from continuing operations

$
(44,676
)

$
(15,469
)
Adjusted to exclude the following:






Interest expense on corporate debt


1,391



1,340

Interest income on cash and cash equivalents


(1,005
)


(2,425
)
Provision for income taxes


436



54

Depreciation and amortization


7,626



7,232

EBITDA

$
(36,228
)

$
(9,268
)
Stock compensation expense


1,324



1,679

Gain on debt extinguishment


—



(8,709
)
Impairment charges


2,752



—

Adjusted EBITDA

$
(32,152
)

$
(16,298
)

About Vroom (Nasdaq: VRM)

Vroom owns and operates United Auto Credit Corporation (UACC), a leading indirect automotive lender serving the independent and franchise dealer market nationwide, and CarStory, a leader in AI-powered analytics and digital services for automotive retail. During fiscal 2023, Vroom also operated an end-to-end ecommerce platform to buy and sell used vehicles. Pursuant to its previously announced Value Maximization Plan, Vroom discontinued its ecommerce operations and used vehicle dealership business.

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 the potential impacts of the execution of and the expected benefits and cost-savings, if any, from our Value Maximization Plan, including the completion of the wind-down of the ecommerce business, our expectations regarding United Auto Credit Corporation and CarStory, the impact from the UACC’s 2024-1 securitization transaction, and future results of operations and financial position, including our liquidity outlook for 2024. 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, 2023, as updated by our Quarterly report on Form 10-Q for the quarter ended March 31, 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.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)









As of March 31,


As of December 31,



2024


2023

ASSETS






Cash and cash equivalents

$
90,990


$
135,585

Restricted cash (including restricted cash of consolidated VIEs of $48.1 million and $49.1 million, respectively)


49,516



73,234

Finance receivables at fair value (including finance receivables of consolidated VIEs of $381.3 million and $341.4 million, respectively)


421,279



348,670

Finance receivables held for sale, net (including finance receivables of consolidated VIEs of $450.0 million and $457.2 million, respectively)


454,189



503,546

Interest receivable (including interest receivables of consolidated VIEs of $13.4 million and $13.7 million, respectively)


14,142



14,484

Property and equipment, net


2,414



4,982

Intangible assets, net


125,136



131,892

Operating lease right-of-use assets


6,751



7,063

Other assets (including other assets of consolidated VIEs of $11.4 million and $13.3 million, respectively)


39,708



59,429

Assets from discontinued operations


18,142



196,537

Total assets

$
1,222,267


$
1,475,422

LIABILITIES AND STOCKHOLDERS’ EQUITY






Warehouse credit facilities of consolidated VIEs

$
516,276


$
421,268

Long-term debt (including securitization debt of consolidated VIEs of $238.0 million and $314.1 million at fair value, respectively)


548,142



626,583

Operating lease liabilities


9,809



10,459

Other liabilities (including other liabilities of consolidated VIEs of $16.0 million and $14.3 million, respectively)


61,260



61,321

Liabilities from discontinued operations


25,293



228,120

Total liabilities


1,160,780



1,347,751

Commitments and contingencies (Note 11)






Stockholders’ equity:






Common stock, $0.001 par value; 500,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 1,795,626 and 1,791,286 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively


2



2

Additional paid-in-capital


2,089,814



2,088,381

Accumulated deficit


(2,028,329
)


(1,960,712
)
Total stockholders’ equity


61,487



127,671

Total liabilities and stockholders’ equity

$
1,222,267


$
1,475,422

VROOM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)






Three Months Ended March 31,



2024


2023

Interest income

$
51,077


$
34,368








Interest expense:






Warehouse credit facility


9,471



3,099

Securitization debt


4,869



4,345

Total interest expense


14,340



7,444

Net interest income


36,737



26,924








Realized and unrealized losses, net of recoveries


30,819



15,728

Net interest income after losses and recoveries


5,918



11,196








Noninterest (loss) income:






Servicing income


2,019



2,854

Warranties and GAP income, net


(9,642
)


2,835

CarStory revenue


2,979



3,170

Gain on debt extinguishment


—



8,709

Other income


2,784



3,032

Total noninterest (loss) income


(1,860
)


20,600








Expenses:






Compensation and benefits


24,110



23,221

Professional fees


3,343



4,973

Software and IT costs


4,622



5,246

Depreciation and amortization


7,626



7,232

Interest expense on corporate debt


1,391



1,340

Impairment charges


2,752



—

Other expenses


4,454



5,199

Total expenses


48,298



47,211








Loss from continuing operations before provision for income taxes


(44,240
)


(15,415
)
Provision for income taxes from continuing operations


436



54

Net loss from continuing operations

$
(44,676
)

$
(15,469
)
Net loss from discontinued operations

$
(22,941
)

$
(59,272
)
Net loss

$
(67,617
)

$
(74,741
)







Net loss per share attributable to common stockholders, continuing operations

$
(24.90
)

$
(8.93
)
Net loss per share attributable to common stockholders, discontinued operations

$
(12.79
)

$
(34.23
)
Total net loss per share attributable to common stockholders, basic and diluted

$
(37.68
)

$
(43.16
)
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted


1,794,303



1,731,636

VROOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)






Three Months Ended March 31,



2024


2023

Operating activities






Net loss from continuing operations

$
(44,676
)

$
(15,469
)
Adjustments to reconcile net loss to net cash used in operating activities:






Impairment charges


2,752



—

Profit share receivable


9,642



—

Gain on debt extinguishment


—



(8,709
)
Depreciation and amortization


7,626



7,224

Amortization of debt issuance costs


843



802

Losses on finance receivables and securitization debt, net


40,163



16,603

Stock-based compensation expense


1,324



1,679

Provision to record finance receivables held for sale at lower of cost or fair value


306



(1,251
)
Amortization of unearned discounts on finance receivables at fair value


(4,792
)


(5,320
)
Other, net


(1,921
)


(3,256
)
Changes in operating assets and liabilities:






Finance receivables, held for sale






Originations of finance receivables held for sale


(130,404
)


(143,174
)
Principal payments received on finance receivables held for sale


40,387



20,731

Other


404



1,850

Interest receivable


342



(3,737
)
Other assets


3,022



7,069

Other liabilities


(61
)


(6,740
)
Net cash used in operating activities from continuing operations


(75,043
)


(131,698
)
Net cash provided by operating activities from discontinued operations


98,167



46,677

Net cash provided by (used in) operating activities


23,124



(85,021
)
Investing activities






Finance receivables at fair value






Originations of finance receivables at fair value


—



(3,392
)
Principal payments received on finance receivables at fair value


35,195



41,850

Consolidation of VIEs


—



11,409

Principal payments received on beneficial interests


773



2,144

Purchase of property and equipment


(644
)


(814
)
Net cash provided by investing activities from continuing operations


35,324



51,197

Net cash provided by (used in) investing activities from discontinued operations


5,747



(4,379
)
Net cash provided by investing activities


41,071



46,818

Financing activities






Proceeds from borrowings under secured financing agreements


—



238,735

Principal repayment under secured financing agreements


(73,647
)


(42,784
)
Principal repayments of financing of beneficial interests in securitizations


(2,651
)


—

Proceeds from warehouse credit facilities


125,100



135,900

Repayments of warehouse credit facilities


(30,092
)


(241,351
)
Repurchases of convertible senior notes


—



(5,883
)
Other financing activities


(40
)


(156
)
Net cash provided by financing activities from continuing operations


18,670



84,461

Net cash used in financing activities from discontinued operations


(151,178
)


(129,560
)
Net cash used in financing activities


(132,508
)


(45,099
)
Net decrease in cash, cash equivalents and restricted cash


(68,313
)


(83,302
)
Cash, cash equivalents and restricted cash at the beginning of period


208,819



472,010

Cash, cash equivalents and restricted cash at the end of period

$
140,506


$
388,708

VROOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
(unaudited)







Supplemental disclosure of cash flow information:






Cash paid for interest

$
13,497


$
6,347

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20240510890980/en/

Investor Relations:
Vroom
Jon Sandison
investors@vroom.com

Company Name:	Vroom Inc.
Stock Symbol:	VRM
Market:	NASDAQ

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