Vroom, Inc. Q3 FY2023 earnings call

• Continued working towards resuming growth, selling aged inventory, and improving variable and fixed costs per unit.
• Third quarter highlights: adjusted EBITDA loss of $64.5 million, e-commerce units up 11% sequentially, e-commerce GPPU increased to $3,144, progress on strategic initiatives including reducing SG&A, improving GPPU through better unit mix, and making progress on long-term roadmap.
• Reduced adjusted SG&A by $3.1 million sequentially with 11% increase in unit volume. Made changes in underwriting criteria at UACC expected to improve delinquency trends.

Total revenue for the third quarter was $236 million, a 5% increase with e-commerce units growing approximately 11% sequentially. E-commerce GPPU increased from $2,954 to $3,144 sequentially. Adjusted EBITDA loss was $64.5 million, an $8.2 million sequential increase. The loss was impacted by higher realized net losses and unfavorable mark-to-market on finance receivables at UACC. Cash and inventory recovered by approximately $48 million during the quarter.

• Updated full-year 2023 adjusted EBITDA loss guidance to $225 million to $245 million, driven by higher realized losses and unfavorable mark-to-market at UACC.
• Year-end cash and cash equivalents guidance revised to $137 million to $162 million.
• Expect potential additional liquidity from securitization proceeds, with year-end midpoint liquidity possibly up to $230 million if securitization proceeds are realized.

• Legacy titling and registration issues causing significant costs, aged inventory, and impact on GPPU.
• Macroeconomic factors like high inflation, higher interest rates, degraded credit performance, and used vehicle valuation volatility affecting UACC portfolio performance.
• Underwriting changes at UACC taking time to materialize in improved portfolio performance.

Q: Asked about UACC losses, progression of other loss item, and breakout between Vroom and UACC portfolios. Also asked about navigating choppy backdrop and recapitalization options.

A: Bob Krakowiak explained the loss was from higher realized and mark-to-market on UACC portfolio, Tom Shortt mentioned pursuing raising capital to scale the business. Bob added UACC made underwriting changes with initial improvement but time needed for results to materialize.

Q: Asked about aged inventory process, progress heading into 2024.

A: Tom Shortt stated aged inventory is down to a few hundred cars or less, with mix improving sequentially, and little material aged inventory left going into 2024