Vroom, Inc. Q2 FY2022 earnings call

Strategic Initiatives

• Build a well-oiled transaction machine, focusing on titling and registration in the short-term.
• Build a well-oiled metal machine to optimize the end-to-end supply chain for vehicles.
• Build a regional operating model leveraging national brand for marketing and supply chain economics.
• Build captive finance offering to improve conversion rates and unit economics.

Second Quarter Highlights

• Improved adjusted EBITDA by $51 million sequentially (excluding securitization gain).
• Ecommerce GPPU was $3,629.
• Reduced adjusted SG&A by $52 million sequentially.
• Development of captive financing is on track.
• Pricing initiatives driving GPPU improvements.
• Process and tech improvements in transaction processing, including titling and registration.

Total revenues were $475 million, decreasing 49% sequentially. Ecommerce units decreased 53% q-o-q to 9,233. Ecommerce vehicle GPPU increased 264% q-o-q to $2,166. Ecommerce product GPPU increased 25% q-o-q to $1,463. Adjusted EBITDA excluding securitization gain improved by $51 million sequentially. Non-ecommerce gross profit improved by ~$15 million driven by interest income in the retail financing segment.

Forward-Looking

• Expect to be near the low end of annual ecommerce units guidance (45,000 units or possibly lower).
• Anticipate an $18 million to $20 million securitization gain in Q3.
• Remain focused on unit economics, profitability, and liquidity over growth.

Risks

• Factors that could cause actual results to differ materially from forward-looking statements, including market conditions, operational execution, and uncertainties related to securitization and captive financing.

Q: Dig deeper into SG&A and confidence in reining in line items where per unit cost stepped up.

A: Tom Shortt states it's a short-term timing issue as they're executing cost reductions, and Bob Krakowiak adds on compensation benefits.

Q: First quarter operating at lower unit level, where units not sold may go and unit trajectory.

A: Tom Shortt mentions focus on unit economics, profitability, and liquidity, and will forecast 2023 units at year end.

Q: Sustainability of GPPU and Q3 unit expectations.

A: Tom Shortt says they've just scratched the surface on pricing levers, and Bob Krakowiak mentions an $18-20 million securitization gain in Q3.

Q: Operational objectives around pricing, titling, registration, reconditioning, and balancing unit sales and GPPU.

A: Tom Shortt discusses titling and registration improvements, reconditioning site changes, and focus on customer experience before growing units.

Q: EBITDA losses per unit outlook and UACC outlook.

A: Tom Shortt talks about non-recurring costs and tech deployments, and Bob Krakowiak mentions confidence in UACC EBITDA guidance and securitization strategy.