VRM - Vroom Reports Fourth Quarter and FY 2020 Results

Vroom Delivers Record Ecommerce Units and Gross Profit

Quarterly and FY 2020 Ecommerce Unit Sales Up 74% and 82% YoY, respectively

Quarterly and FY 2020 Ecommerce Gross Profit Up 95% and 89% YoY, respectively

Vroom, Inc. (Nasdaq:VRM), a leading ecommerce platform for buying and selling used vehicles, today announced financial results for the fourth quarter and fiscal year ended December 31, 2020.

HIGHLIGHTS OF FOURTH QUARTER 2020

• 11,022 ecommerce units sold, up 74% YoY
• Ecommerce revenue of $285.0 million, up 43% YoY
• Ecommerce gross profit of $20.1 million, up 95% YoY

HIGHLIGHTS OF FISCAL YEAR 2020

• 34,488 ecommerce units sold, up 82% YoY
• Ecommerce revenue of $915.5 million, up 56% YoY
• Ecommerce gross profit of $60.9 million, up 89% YoY

Paul Hennessy, Chief Executive Officer of Vroom, commented:

“Vroom had a strong fourth quarter, with significant year-over-year growth in our ecommerce business. Inventory and marketing are scaling as planned, which is increasing the velocity of the Vroom flywheel, driving conversion and increased sales and revenues. Consistent with our relentless focus on data science, we announced the acquisition of CarStory, a leader in AI-powered analytics and digital services for automotive retail, which closed in January 2021. As the used vehicle market continues to embrace the ecommerce model, we will continue to execute our plan and invest in scaling our business and improving our customer experience as we transform the market for buying and selling used vehicles.”

COVID-19 Update

Note: All sequential comparisons are on a fourth quarter over third quarter basis.

After the initial disruption in our ecommerce operations due to the COVID-19 pandemic, consumer demand for used vehicles now exceeds pre-COVID-19 levels and, in the quarter ended December 31, 2020, we experienced continued strong consumer demand for our ecommerce solutions and contact-free delivery. Ecommerce units sold increased sequentially 24.9% to 11,022 units and ecommerce revenue increased sequentially 28.5% to $285.0 million, both driven by increased consumer demand, higher inventory levels and increased marketing spend.

FOURTH QUARTER FINANCIAL DISCUSSION

All financial comparisons are for the fourth quarter on a year-over-year basis unless otherwise noted.

Ecommerce Results

Fourth Quarter 2020

Ecommerce Units

Ecommerce units sold increased 73.9% to 11,022 driven by increased consumer demand, higher inventory levels and increased marketing spend. Average monthly unique visitors to our platform increased 26.3% to 1,004,368.

Ecommerce Revenue

Ecommerce revenue increased 43.1% to $285.0 million.

• Ecommerce Vehicle revenue increased 40.6% to $274.6 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 $30,808 to $24,909. The decrease in average selling price was primarily driven by demand predicted by our data analytics.
• Ecommerce Product revenue increased 166.3% to $10.4 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 $616 to $943 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 lender partnerships.

Ecommerce Gross Profit

Ecommerce gross profit increased 94.8% to $20.1 million.

• Ecommerce Vehicle gross profit increased 51.2% to $9.7 million. The increase in ecommerce Vehicle gross profit was due to an increase in units sold, partially offset by a $132 decrease in ecommerce Vehicle gross profit per unit, which was driven primarily by lower sales margins, partially offset by improvements in inbound logistics and reconditioning costs.
• Ecommerce Product gross profit increased 166.3% to $10.4 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 $616 to $943 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 lender partnerships.

Ecommerce Gross Profit per Unit

Ecommerce gross profit per unit increased 12.0% to $1,821.

• Ecommerce Vehicle gross profit per unit decreased 13.1% to $878, driven primarily by lower sales margins, partially offset by improvements in inbound logistics and reconditioning costs per unit.
• Ecommerce Product gross profit per unit increased 53.1% to $943. 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 lender partnerships.

Results by Segment

Fourth Quarter 2020

Total Units

Total units sold increased 40.8% to 19,797.

• Ecommerce units sold increased 73.9% to 11,022, primarily driven by the reasons discussed above.
• Wholesale units sold increased 68.6% to 6,998, primarily driven by an increase of wholesale grade units purchased from consumers as well as an increase in the number of trade-in vehicles as a result of the increase in number of ecommerce units sold.
• TDA units sold decreased 50.3% to 1,777, primarily due to reduced inventory at the TDA location as the ecommerce business continues to scale.

Total Revenue

Total revenue increased 14.1% to $405.8 million.

• Ecommerce revenue increased 43.1% to $285.0 million, primarily driven by the reasons discussed above.
• Wholesale revenue increased 57.3% to $75.1 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 $11,505 to $10,733.
• TDA revenue decreased 57.9% to $45.7 million, primarily due to the decrease in TDA units sold and a lower average selling price per unit, which decreased from $29,302 to $24,546.

Total Gross Profit (Loss)

Total gross profit increased 23.1% to $20.1 million.

• Ecommerce gross profit increased 94.8% to $20.1 million, primarily driven by the reasons discussed above.
• Wholesale gross loss increased to $(2.9) million. Wholesale gross loss increased primarily due to an increase in wholesale units sold at a higher gross loss per unit of $(291) as a result of liquidating aged inventory in the fourth quarter.
• TDA gross profit decreased 54.7% to $2.9 million. TDA gross profit decreased primarily due to a decrease in TDA units sold and a decrease in TDA gross profit per unit of $216.

Total Gross Profit (Loss) per Unit

Total gross profit per unit decreased 12.5% to $1,016.

• Ecommerce gross profit per unit increased 12.0% to $1,821.
• Wholesale gross loss per unit increased 225.6% to $(420).
• TDA gross profit per unit decreased 11.8% to $1,620.

SG&A

Fourth Quarter 2020

Selling, general and administrative expenses increased 45.3% to $78.1 million. The increase was primarily due to:

• $7.9 million increase in compensation and benefits due to an increase in headcount, as well as a $3.7 million increase in stock-based compensation to $4.3 million;
• $5.9 million increase in other selling, general and administrative expenses primarily related to additional insurance costs associated with being a publicly traded company and volume-based subscription fees as our business continues to scale;
• $5.7 million increase in outbound logistics costs partially attributable to the growth in ecommerce units sold, which increased outbound logistics costs by $3.5 million, and increases in market rates of logistics providers, which increased outbound logistics costs by $2.2 million;
• $2.7 million increase in professional fees primarily related to $2.1 million in costs related to the CarStory acquisition; and
• $2.1 million increase in marketing expense as we expanded our national broad-reach advertising.

We expect selling, general and administrative expenses to increase in the future as we scale our business and sell more ecommerce units. We also will incur increased selling, general and administrative expenses as we 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

Fourth Quarter 2020

Loss from operations increased 52.6% to $59.4 million. Net loss increased 41.9% to $60.7 million.

Non-GAAP Financial 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, the one-time, IPO related non-cash revaluation of a preferred stock warrant, and acquisition related costs. 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 acquisition related costs 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, the one-time, IPO related non-cash revaluation of a preferred stock warrant, and acquisition related costs. We calculate Non-GAAP net loss per share as Non-GAAP net loss divided by weighted average number of shares outstanding.

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. 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

Adjusted loss from operations

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

^(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: