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Vroom Reports Strong Third Quarter 2021 Results

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  • VRM

Vroom Delivers Record Ecommerce Units and Gross Profit

Ecommerce Unit Sales Up 123% YoY

Ecommerce Gross Profit Up 161% YoY

NEW YORK, November 09, 2021--(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

...