VRM - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Vroom Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Thank you. I’ll now turn the conference over to Allen Miller.

begin. may You

Allen Miller

Good on Senedra. earnings thank for you call. Thank fourth afternoon quarter us Vroom’s XXXX and joining you, and full conference year

IR Joining Investor note ir.vroom.com. earnings that Hennessy, call will website are website. Dave call at webcast The Chief of this me release on the simultaneously posted Officer; corporate the Jones, Please quarter Executive on section is and Paul Officer. Financial be on the Relations fourth the Chief also today company’s

of Vroom’s assumes such call. or of XX-K as of only financial discussion and results today’s during please cause laws, begin, discussion may statements. non-GAAP of that actual from most Form in to section including the to statements from are includes not we statements. today’s future those direct the measures Before upon note statements factors including discussion further SEC most note of forward today other materially We those otherwise. results and statements actual to forward-looking statements also differ of subject risks future may materially to date forward-looking that looking meaning financial company differ such Vroom speak Please that the to number call risk could the filings, limited The and performance. no about recent operations a the this statements based including the within update to obligation Vroom’s the for you developments the federal company’s factors These forward-looking securities and but that discuss cause additional in certain uncertainties recent

Hennessy, release. most reconciliation today’s those of measures GAAP and Paul now call our can measures press a I’ll comparable CEO. Paul? You directly that, the to presentation turn the over in find of With a

Paul Hennessy

members public I earnings of for all employees, year by Thanks, Allen. board and fourth hard be their work investors, of thanking all that in all our everyone like building XXXX thanks our for company. XXXX. accomplished to start Vroom’s could I’d great and and and we call. support in customer-centric not full joining team quarter And of to a prouder

First foremost, to sheet our Ally we so to company. build extended raise, an Financial, balance and with very follow-on can we supply meet and successful increasing and had We capital doubled initial our us continue offering financing demand. that adding floor public to a enabling scale our outstanding our plan and

customers partner JPMorgan reconditioning lending lending and of Ally facilities reconditioning capacity We attractive and also a added to providing with Financial, reconditioning in for beyond. new credit expand year, strategic total Vroom our spectrum. agreements Operationally, added we with the a alternatives resources, to launched across of series and XX quality diversify our Chase, XXXX also providing preferred the Santander Bank, and a

started by to data removing operating technology of national We our our our in our XXXX also we We and company of resources ended CarStory ability third-party business. scale the all to enhance our and to customers. expanded customer buy the our with areas to price customer XXXX our better, to critical delivery and providers scaling platform acquisition add the those while achievements we’re capabilities. groundwork in drive our friction and investing realized operation while overall better also enhancing in all of painfully of as digital all We optimize a to develop experience. our improving global and network. middle the And aware, better pandemic. last we retailing our laid And our own in long-haul to mile our speed efficiency experience, for enhance services brought and quality, to enhancing e-commerce experience to the logistics end-to-end We workforce science grew

data are many I and accomplished. be improvements said, customers, for could to accomplishments I financing capacity for science foundational built year we’re logistics Technology our the in that’s that a drive very for prouder point reconditioning And a business scale. into nature, e-commerce doing. of what conversion team we I XXXX the out and quality enhancements and stable deliver not and vehicles because to and platform experience. As company, which our improve exactly scales. in customer what and was

We’re e-commerce full for units XXXX, was were for full and profit XX% scaling. E-commerce up XXXX. year-over-year year year-over-year XX% year gross up

record back number achieved quarter year-over-year. E-commerce gross year-over-year. the up also quarter, was very fourth units our and gross delivered Vroom pleased specifically, fourth I’m the record of profit. units up Looking profit on In with performance. XX% XX% e-commerce e-commerce were a

Vroom customers. of Demand took And for of large model here’s deliver the you ahead in towards is we and headed as making profit, evidenced XXXX. our year direct brand. move business as our the nationwide of strong, where growing There of across Bowl. logistics, about aware and I’ll think we and each areas As the how by sales a well that structure we year’s unprecedented key areas participation Brand demand four commentary four as of are our much single have by our cost where and are supply for we’re market. the on demand know, XXXX, after impact I currently business experienced is reconditioning, we that broad-based the marketing, in gross performance business, and in in on Super brand as and this integrated the country unit provide these our record-breaking revenue sales and operations. Vroom the awareness Vroom These is to our terms step transparent highly experience of sales continued the both our we and of e-commerce key are areas.

with decision, make term the does brand, but we’re and from one early longer pleased benefits. not very Now a building advertisement brand has XX-second that read results which

Vroom very are convert and in them the confident ability buyers into bring customers, engage sellers. them our and We into to business

at auction cars, from and I As buying both Supply said, has is in been demand strong. consumers. strong

Vroom platform able more cars with data-driven built algorithms, powered are technological with by we we Reconditioning very third-party in combining out artificial our reconditioning, intelligence now technology evaluate and provided scaling to to By significantly buy for I real-time, leverages the our meet our grow own beyond. and facility partners. enthusiastic inventory, capabilities asset-light XXXX nicely. be model them As appropriately our our our is we well-positioned those price about our which to integrated Carstory, acquire plans am to and buying of analytics existing with inventory. expect

that are long-term quality line costs are our with structure. and expected reconditioning delivering cost We in near-term high at

inbound costs. our nodes speed and both constructive is outbound the As network, get customers, to of add and closer shipping which closer to for customers to lower and we we delivery

enables increases our avoid demand to inventory to quickly us models and asset-light respond Our to supply. in gridlock in

attractive expanding confident We our for Vroom and been our costs continue needed that have continue model to deliver scale high and to will are Logistics operations very quality, capacity increased business. logistics is an rapidly. to our area investment reconditioning of

Our initial ensure last focus has outstanding. delivery mile been driveway that to our on experience is

call, to scale mentioned added experience we nationwide retail our at only for will experience not are efficient but relation continue both in As vehicles, more and for customer investments our also and mile, our and to last owned delivery on with network. build leaders automotive out overall specific in cost longer-haul direct-to-consumer last talented structure. We’ve add logistics significantly to These Vroom our the verticals enhance routes. scale

our us deliver second of When efficiency sales wait. transaction formed to note a logistics an complete growth as Sales volume experience. experiences operations place XXXX, vehicle, confident a national in organizations We staffing have backlogs of in at and that transportation our a speed, quarter. and had than car, both customers experienced that are amount capacity investment a we was network the to the or sales a support to the building could to It arrangements, process XXXX. important continue and first for customers their that are area they the of financial there half outstanding our We’ve significantly business in degraded. we QX support is their they that car, The to were our in deliver. be end up to than are more exceptional deliver pick of sales in complete nearly organizations, or better register and tripled wait meant as will our and result an

been business point is the our invested contributed our and that we wholesale sales to objective our in sales continue on believe confident I the also eliminate that and want will our business ability invest We organization exceptional our we’ve in experience. support to are customer mentioned, the and also an as backlogs so negative are in scaling. and tracking economics. I remove make retail to unit outcome deliver a to this As in we any bottlenecks and against backlogs

guidance, quarter levels in we we per lower our than quarter fourth you anticipated. in saw and gross results first our profit unit had As

expected, in process is that buying we per addition our channels to unable demand. to as will support needed be lower were In also through retail than That we that personnel, than in sales with to convert and Said anticipation to demand. more QX. to aligned and inventory another personnel be in the the process or the our we due with of and aged. liquidated expected, gross QX inventory our depreciation constraints The arrived excess we profit result to needed discounted actually The in way, because moved be demand sales in could but is and were that channels. sales move greater bought wholesale aged continue inventory we inventory unit our associated inventory to and moved

that our of both economics faster, as experience improve. turn confident is as our and are inventory investments, our result a increases customer and our We we throughput our unit

quarters while transaction. are for a towards an We But goal. deployed, move and adding ensure human that capital significantly experience. in significantly. process the we to software are our coming from committed And increases deploying need that note capital experience With important the closer customers building as human remove an to of that company, end-to-end each touchless e-commerce have our and friction our to it’s intentionally incremental consumer outstanding decreases world-class we the goal

right-size increasing. place readily sequentially costs but of So and improvements e-commerce quality well and sales here in XXX% was in pressure quarter growth aggregate this we material to Supply expecting consumer and triple under our year. we’re inventory sales inventory and QX profit an year, remaining are QX, we as and deliver digit positioned is growth gross excellent handle implying growth. available over we capacity are the per each turn of is anticipated believe an XXXX, is full and acquisition our key unit takeaways. strong Gross year-over-year, and Demand in for well. Reconditioning access in will is will to profit and be in

areas those sold, improving Sales scaling in is and hand remarks our friction do and network creating financials been but deliver scalable the number remove and for Our with units attractive have continue many, rapidly and and customer to is we’ll platform stable sales that, invested to support record the we’ve profit Dave? our to finally, throughout well and record funnel. gross experience. with revenue many logistics so in another sales and entire I’ll bottlenecks, satisfied heavily positioned Dave customers. And our guidance. to over further And of

Dave Jones

fourth end about demand, XX,XXX we’re vehicles for Thanks, soon the increased about approximately XX% XX% to to in consumer vehicles for increased Paul, Vroom and new quarterly and at inventory, by currently QX units with includes from good of and at of listed year-over-year, increased QX inventory about This QX, available sale. sequentially end coming which and over was Total sales increased afternoon, just inventory spends. the a and everyone. XX,XXX at XX,XXX XX,XXX XX% those increased from at marketing the units. levels E-commerce of pending record sold units higher driven quarter,

provide to in growth quarter sequential estimating centers had accelerating quarter, our growth. of are e-commerce in We country, an XX% Paul recondition quarter-to-quarter unit The sales XX,XXX us VRC. vehicles XX,XXX units facilities mid that with Vroom the expecting the digit X,XXX guidance year-over-year e-commerce These Vroom and triple than of XXXX. Again, would around as to imply range growth first we’re reconditioning including mentioned, week. for we full per of the end At capacity XX year proprietary the the XXXX. of more XX XX%

have to expanding the number us partners our XX currently our meet We we gives XXXX year which And on XXXX. distributed to with VRCs, We’re to we’re a widely continuing VRCs reconditioning of work that full capacity expanding targets. to network. anticipate the benefits reconditioning confident of in the XX

We VRCs. XXX We At households miles production a to reminder, one our more facility of customer XX% promoter COVID the VRCs XX customers, our within of voice daily level. the of we the scores employees reconditioning quality despite in scores ground the location. of feedback measure As added by at our each and XXXX, from on difficult of measure XX environment. be from at delighted VRCs, of net would all reconditioning the our than VIN utilize each U.S. quality the at scores

with of each pleased the are the current We of XX at VRCs. quality production

Our e-commerce $XXX and the XX% fourth sequentially grew million. XX% quarter revenue year-over-year approximately to in

full the XX% to For $XXX year, grew million. revenue almost

in unit As approximately selling prices outpaces fourth quarter year-over-year. growth to per year. Average prior $XX,XXX revenue growth due the selling vehicle lower average versus the per price planned, $XX,XXX vehicle was in

our in As is selection discussed see the past, signals by we inventory data acquisition driven we’ve demand that opportunities. in our by market and

due at price Vroom the to decreasing our reconditioning are centers inbound expansion strategy. to continued to of costs. logistics long-term and broader average time consistent These with the costs reconditioning decreased $XX,XXX in allows us selling addition, $XX,XXX market participate In moves a

first price an inventory, $XX,XXX unit. $XX,XXX of based to quarter we’re selling the per average For current on XXXX, of forecasting

e-commerce QX environment. Our up set profit XX with that $X,XXX fourth profit quarter company than was from higher caused That in in the in expect those our which seasonal a we We at year-over-year record unit support pricing QX inventory shipping gross E-commerce trends in expectations. unit margin, in our though, XX% fourth up $X,XXX. gross almost within high fact serve year-over-year. saw per were $XX.X shortfall in we to selling and the XX% per accelerating the profit as expected functions QX was a It’s to gross million, year new continue. reconditioning improvements quarter, combined note during purchased sales depreciation to versus important and was costs per vehicle in unit and a vehicle gross QX of year-over-year inability our demand a costs, and inbound

up gross primarily driven the X.X% sold. $XXX in improved year-over-year and of improvements our profit product other sequentially. gross The of QX rates per per unit. XX% gross Products were component Turning and profits to per was total unit per unit profit profits e-commerce in by increased year-over-year attachment

paring Full increased initial profit year of were a our units increased and in that offset the purchases increased in range trade-ins and $X,XXX vehicle purchases driven the somewhat wholesale by full in COVID, units liquidations. the increased reduced XX% during flat units as part believe direct-to-consumer by of and Wholesale we of in total result year-over-year then in stages up inventory in quarter. down expectations. in be QX, new facing the ramp height of Coming Those $X,XXX from out discussed the sold as vehicles in e-commerce will for e-commerce quarter QX sales pandemic. we per sales and of the were we were approximately challenges continued Finally, challenges gross but first our QX exceeded time to unit support. hires Wholesale were for driven the units increases year. trading in in and were QX consumers also the direct from by increased

business capacity which a was discussed to the more the of significant result In created addition, volume deliver, XXXX, the of scaling second to half there in of Paul backlogs. than process as our as

from As a XX was by days simply fast QX had This in inventory result, be needed earlier turn to which aged was year. have not liquidated. up our and XX evidenced the QX, and enough did QX inventory sale in in that our to we in

profit for channel. wholesale profit negative. quarter through line fourth the aged year also results we gross inventory the wholesale full result quarter a As turn slightly as the negative The was moved wholesale gross

we to wholesale negative per be to and we’re But units unit sales X,XXX expect we in to a address expect gross the to of Paul of continue of wholesale unit. those these per curve in be range to bottlenecks. the of steps QX, units profit For to significant ahead as $XXX range $XXX believe taking now support. discussed, We we’re terms in X,XXX

customers, XXX servicing representatives, sales third-party third the primary the effectively of which now operating from quarter. with end up support about about is XXX our Our function at is

up In support nation stay curves. sales one support, making half, accelerating growth in with us intend the our of to as we another customer the we’re turn ahead process function top business Similarly addition, help of in investments. engaged to the we’ve significant in outsourcers second

Our note It’s of is expanding. our with half. is our and approximately titling and team the by to technology. end solution dedicated the manage team at QX us volumes. increasing our registration believe manpower scale, partnered customer we’ve and XXX business of be aspects rapidly outsourcers contract, We XXX. hybrid curve had process it’s also has of service scale all that to approach the to funding help the ahead to important almost second and The beginning to though, ultimate business, members now we ever of Consistent the will not substantially that with

are that on in back administrative guidance. of aggregate aspects continue in product the take are wholesale that customers. We to experience. us end to for the our bring liquidations effects in of customer breakeven XXX% ensure of engineering time the place scale that gross our teams the We year-over-year to QX profit Projects initiatives our of in the will are scale XXXX. invest in gross included out expecting work all per and by operating technology business lingering Any more And without year. and experience incremental process, improve as and profit of unit our to again, parts than allow they believe we the growth our human delightful expenditures our business a to

a full experienced year and XX% the in Units quarter, quarter ended fourth sequentially foot improvements TDA XX%. remained. the the increased on year-over-year inventory down and XX% from units decline up were in to as still Turning traffic TDA. The third hand in

on inventory area constrained foot have business subsided of heavily have somewhat, the VRC scaling each still is we believe we in e-commerce COVID pulls that While from as the traffic the effects location. Houston and

level get We inventory Our as monthly we TDA goal to VRCs reasonable have number local the unit to a of have sales. believe opportunity the TDA to service increase dedicated is allow to to in demand. our of back we network, the

it’s the However, continue the expenses. the a decrease that of as will important with to Operating percentage TDA to of e-commerce business, total. scaling note

a Our approximately operating XXXX first in increased XX% for of the total XX% from XXXX. as revenue quarter to about expenses in percentage

are in continuing compensation discussed of $X.X and logistics approximately were as are XX% logistics the unit increase or our significantly year-over-year carriers Vroom rates The of logistics million approximately was Outbound that begin in Paul functions for $XXX XX% our sold in the build-out growth remaining $X.X network to the the Increases from quarter. XXXX. million driving XXX% units year we technology, logistics areas in we costs in e-commerce results the of per people for year our up the compared around $X.X were brand. our and Total Full were XX% quarter, for million today, the particular, in up and more the $XXX the sold continues year. up from and was similar to e-commerce much support for outbound the quarter. market As to increase. prior I the to proprietary invest year. make XX% across and business of with have quarter scale logistics needed all that the up Marketing expenses benefits Outbound in approximately XX% increase the for building was units business. quarter in

in beginning person end the XXX year. the stages by logistics the of of building organization We’re a

quarter. arriving haul the will first trucks be line second Our in

hybrid this and the also third-party mile up had quarter, of mention XX% delivering of end operations At our have with delivery of last Our year, line our the are proprietary XX half e-commerce last I well we mile hubs function also population we running. covering By in partners the vehicle should includes that fourth hubs eight underway. U.S. the the to approximately expect end approach. and of sales.

of over be our to QX, approximately In demand to to we investments and $X operating XX% year. million approximately expenditures XX% expect as between the QX One experiencing. up expenses business to full capital and revenue our logistics for in like almost our balance total up in total support $XX expect we for of of the earnings QX, on we billion comprehensive regarding cash massive we up be step would the under the provided million we’re sheet And million available in We and now liquidity, announcement. Floorplan open Facility. note, final the sheet our $XXX today’s end QX questions. had call We’ve to $X and balance guidance at

Operator

Zach And Instructions] first Wells from with your comes [Operator Fargo. question Fadem

Zach Fadem

Hey, guys.

outlook me, meaningful step e-comm units question on would the which up XX,XXX gross per First unit about profit the and year, digit for for imply the unit. triple pretty in

expected for unit walk build gross expecting you’re to both how Could to profit you the GPU. in start where particularly units metrics QX cadence per considering through and So for line? us these at the are

Dave Jones

have Yes. got QX inventory Zach, question. these bottlenecks deal we that Dave. some Yes, the right. Thanks for as of to we’ve some aged continuing with and to to more of we’ve we you’re deal importantly, Obviously, that it’s with. said, continue are we in that got

be think that will that throughput inventory confident the gross and but in customer improve. going extent able suppressed economics I of expect will to as faster. we’re we And QX experience a making, our per certain to we’re as, profits of to So a terms we’re obviously investments unit turn result as both increases that unit, be

I would unit you’re traction. think We profit would gross take that right improve those And expect year during sequentially get so initiatives on. per as the

to unit given ascending for guidance year gross we’ve during obviously to why imply $X,XXX the that’s year. so which full $X,XXX the per would And profit

Zach Fadem

it. Got finish? – Dave did Sorry. and you Thanks, sorry,

Dave Jones

Go ahead. Yes. Yes.

Zach Fadem

retail to process extent gross willing And to CarStory your maximize in? improved through sold this you’re to in what that sourcing is how both the operationally, order retail And whether and from then cars wholesale wholesale car trade decide you customers, how channel the you’re and will on with the that a informs you a or Okay. the prices profit per channel pay then talk could side? for when unit be about

Dave Jones

more guess, it very is And is of answers of to there’s Yes. part simple and it two part that. complicated. I

retail vehicles have that less and right? We are years example, And typically as six we older, have so we retail miles XX,XXX criteria, sell an than younger.

kind of retail is first through decide terms of gates a to or that’s we wholesale. vehicle So whether in the get how

done kind much And the vehicles more expansive criteria we then list more are enough so appraise buy majority us we there, main that, acquiring AI and a And right, of the from of so are it through number We technology, items. the have are to one gating year. business. appraise really scale and that of allows to that than that a to those through have we obviously, we buyers complicated but substantial every vehicles the because couldn’t appraising gets ever

And technology They’ve industry. the comes industry into the the best They’re CarStory of got point exactly, really data. the play. experts So really acquisition. that’s the in

can And much imagine, use the us past. data that as so you we to we have can buy help better than in

engineers and engineers and that data science We of to the than data more now. we have – doubled scientists think number also that us we’ve available

an a had everything we’ve think lot acceleration been list you improving buying on we addicted around data, inventory, managing we that process, So always to of the there’s know. of the as the projects

so pluses us. for that – was CarStory think And we this

Zach Fadem

the color. it. Got Really appreciate

Operator

question comes Powell from next Sachs. with your And Goldman Daniel

Daniel Powell

Great. Thank you.

coming have And in XQ the imagine a guidance been the than in depreciation you around fourth of unit channel there’s GPU more a understand with guidance in gave the dig would the about severe bit to were sort all thinking a coming the softer bit wanted little of into takes versus at quarter. expecting, that the terms sort the just I seasonal of first the and bit in on that that into of puts bottlenecks, that not surprise. quarter, midpoint coming may of GPU Just but for some you of depreciation in e-commerce seasonal then dynamics good and

to that So sort the just of sales those you’re putting so in hear you Don’t what again. up are, solutions functions, bottlenecks? on of what place sneak curious sort and

Dave Jones

functions, sales into about Yes, if separated support you and Yes, Daniel, think you thanks. right. – if sales

So the coming our around just the range had talked exiting amount sheer some staffing of we in middle we on decent as and top in support. we in challenges the line QX, a about sales were

arms got around drastically. pretty And as in we our that so that QX improved

ahead I have allowed hit further more so there was guidance literally quarter I the number and that quarter. people processed we to mentioned, our have Paul the it the I tripled And of in think there have if unit that. Like for But we demands could that that organization. still think us of during we were we

turning separate organization year. in a up We’re half of second the completely the

So But so line top we that’s a it we issues have from don’t those about think again. how perspective.

inventory QX really having QX almost unit. I got confident in top we I the at But depreciation think, we’ve data, funnel. that in of seasonal were we’re there was that solution it, probably to lower look bottlenecks, it And our We you the us that it to think, have in gross to at double we think per depreciation it the about per then, the XX. really to XX. of talked on from the of bit. of gross was our there wholesale it auction. profits that, when which inventory move profit in a And to unit significant And call X.X% the seasonal some causes QX age to to said I on more get take expected prices impact or caused

gross in pressure found on where per the unit profit So downward that’s really the quarter. we

Daniel Powell

stage curious, you from all Got sort have and any maybe coming converting out just comments improvements peers? through your to historically we sites, you. brand conversion sites there listing efforts you. those season as and seen of participating to as And earning in well as branding that’s passed, listing the coming of early get superbowl some as started the what look Have then your the have you third-party where the maybe start was at you? not notice Got

Paul Hennessy

I And websites, as third-party as right, – start to our also choose better. you’re to and we think Daniel. third-party our as surprisingly thinking consumers of. on which people but And improvements website, as one, your that of tend on, heard are brands, see brands spot academically significantly brand take sites I’ll that build Yes. know, convert in selections is not we only listing you to traffic they’ve making direct not

we So an ongoing talking that’s was a brand that around a decision specifically what not trend event. time advertising Bowl our do the to related Super I’d is, Bowl and the – on since Super exactly basis we from started but what we nationwide you’re expect from to about. say turning that on

offer indirect As exactly three, we position traffic our them what that direct we and in starting triple-digit puts predict to two, that’s exist; offer; us traffic people that, and we we’re in what converts is yes, business. understand the better. And e-commerce one that actually growth see what appealing to to very

Daniel Powell

Great. Thank the color. both. Appreciate you,

Paul Hennessy

Yes.

Operator

from And your with next Blair. Sharon question comes William Zackfia

Sharon Zackfia

hoping good that I afternoon. in talk good model. in I what agility the as on you if could kind have I’m embedded particular, it read that And function thinking guess seems the sales with is about Hi, ramping. of a was you would the support how was

how can And I’m so I new off quickly you turn vehicle acquisition. guess, wondering

deal? sending there’s analyzed of benefit profit just seen offering some on it to the thoughts good mitigate consumer of that to understand really And a as in But hit this we’ve a have you learnings there. some the if that potential liquidation, gross I just wholesale. So, secondarily, quarter, then

Paul Hennessy

I’ll Yes. start off.

Dave Jones

Yes, go ahead.

Paul Hennessy

was like that. going of focus the terms of and output to just and individuals laser agile getting here is now and the prediction of of I say ahead in model,

in think, in aggregate side, sales requirements to and convert on we we’re confidence get being dollars, sales of year. gross good operation the to convert human more which again adjusting our on we understanding, the our profit the about XXX% the As grow too very we have that informs requirements been side and/or than more truly to able make business through shape mentioned, to that the than sure which – right our human

so expansion, So, you permanent then lower that hence we all kind incremental live able answer being a the ultimately – in follow the And the we we’d fast the demand on is fixing of the like. disappointment through problem basis capital and the the like the focused on experience both are think having, output having to get perpetual that quick, of can laser humans. gosh, we need, technical that human of investment not we and need, need I for that inventory having

giving very we’ll And about So, that’s lever something we intensely as great a been retail as think good that as appropriate. and utilize customers I our and think in business that about, that’s we we’ll deal, a feel far that. yes, have – we will

at So, wholesale. we’re liquidating not just

Dave Jones

I week vehicle our a it Sharon. we – a days then to use listed if mentioned recondition it, know, get The numbers, a and six takes cycle add acquisitions. just right? you a, it. would long, random just, vehicle for fairly off time. And facility, gets time, into as it’s period call it of reconditioning to you that. it’s And listed turning Yes, then to – So is you

sell, the to days days. is, in normal you quarter, entire into which days our we XX saw So, account XX days. takes about the And call it, were to cycle time XX at

acquisitions off turn it’s I think, time, because to the of difficult it quickly. So, that manage to cycle

too, the longer curve – than I that said dramatic vehicle having times usually think, cycle we much in a and industry longer during saw much what are pricing very not of XXXX. terms in Now,

I and in QX, was would QX So, dramatic sell that there and pricing in we changes in as the environment. pretty recondition mentioned, bought we inventory

it environment I’ve dramatic high so cycles obviously, the softer that of in And selling not equation the usually industry. QX. what year. Again, a then was pricing seen But in was a dramatic it buying as and are those unfortunate pretty into

us story and I analyze as improvements pluses make to strategy in enhanced management think, just as the well. with inventory probably again, anyway, data here our So abilities car well

Sharon Zackfia

Thanks.

Operator

question next Josey JMP from Ron your And with Securities. comes

Ron Josey

Two Thanks Great. please. question. taking call the to questions, the for

decision, ask hauls hearing, as with long-haul just just the so just to there? the about can that support benefits the just and NPS we’re sales long-haul as talk last investments about And on in Paul, you and I the get logistics around sales well, and that to O&O well. still we bring in-house to the about you. in-house, thoughts meaning the hearing side. this out wondering ahead decision definitely saw support, Thank I but mile. like higher think of bring see scores you us the talk about and then bringing So you you’re curve, want as I maybe, that house building to long

Paul Hennessy

Sure.

a are with treat satisfied well. very been our they have customers team. like was convert sales We They third-party our they existing their natural, scaling and that so own.

and with – customers experience. love that our by level that so and way, And the

don’t we So, have and any say better. to burning blow up that that desire would that we do

sales ourselves. do the vast the that transactions processing of of itself, terms In we support majority role,

Dave majority continue help we do ourselves to get scale. and articulated, vast as of the to and We will

provide will e-commerce that I for model the that need ultimately, an right agility something platform side. sales lot the less side both with our so sales And a the on need think hybrid of and support we

great and – again, Vroom approach tight over with like we of our our service. So, delivery hybrid management

long-haul When think last our trucks, from go more experience, it. come how the question, and entire the call, they customer. about we with we are the to mile and because hub then our predictability the take hub, they to It delivers control, network. For better hub back-end on at to we here’s get from and in journey

is predictability so great that for in cars drive it trucks, and and long-haul for efficiency. predictability to on starts more And own and customer great our company.

of So headed putting scale efficiencies that to one off, and cars being by a instead region. eight are truck a of six, single all the get seven, we particular every five, vehicle on economies

for love we efficiency again, So, and customer business. and experience anything economics drives better better the that unit

follow the scale last again, natural at on customer that long-haul experience. And And to a was outstanding combinations so of efficiencies mile.

Ron Josey

Appreciate Thank it. you, Paul.

Paul Hennessy

pleasure. My Yes.

Operator

comes question Nat with from Schindler next of America. your And Bank

Nat Schindler

Yes. Hi, guys.

doing customer said, parties. for would to delivery you’re questions sales it’s it’s be. as support. everybody, you Just because I up a down, clear very the everything this sales, not comfortable this actually function with what is of that I’ve actually third because not it’s that couple through is And multiple that think going you’re investors, just gotten questions. from One, And

a stimulus kind a year, don’t doing of XXXX, for the how and what were are of bit market exact have just COVID I is XQ on about walk of At seems effect. is compare about see units they you. do through, that is would growth? same if this as know telling that the we sales and look the that start And about and have them the XXXX, changed order really will different it’s that there’s benefit think with lot and little you years walk XXX% going a they differences and are you How how go same much because looks competition about still. over the slowly there would what triple-digit in now, quarter GPU. the the then in growing has number then the from and of of the how what you I the those projection point, which to in comp – they of difficult things year. if differently one could and you could too What e-commerce same at Carvana that actually are your check doing were a midst So, you units. and much out I But is the likely following you changed what and processes affects then? hard to Finally, that something your much in get look see inside that were growth through closest know we And you at a likely roughly it I through want secondly, can you in to are next projecting this – comp think gotten? – to well, And then one,

Paul Hennessy

think, I’ll Okay. you rather And here’s let you walk process through understand. But time. detailed, – going a what’s than give will one a those support. at very sense for sales to a me end-to-end take I’m what I

customers – vehicle. a vehicle, a put interested I lending deposit the vehicle, got that of in complete a as Then – transaction. move on you’ve for we from I’m that actually to qualified I’m As

where let rather contexts things and interaction There to more and a in than requires, in consumers that’s instances, intensive our There of signatures as car. signatures the cases that There deal add deals complete a manual of documentation. a connectivity wet transaction. are verification any like amount DMVs into of manual involved, are lease are from some trading space, human loans. me button the of is well in is payoffs And anything high as lease kind touch a press of lot steps And as get So, that manual there some that, the because that’s required process need arrangements procedures process. this involved of proof slows and and if in of business. verification in someone’s a are well. There human are

that a wet our and consumer so, amount of paying of we’ve significantly say loans, from work paperwork, et et cetera, in banks, would doing off of signatures, same purchases requires cetera, manual As as increased cars, the sale. I calling work,

terms as working total when on. such So business, of those our full go gone a those both doing whether that in you or we’re buying need both we’re transactions of mentioned, significantly north of folks automation, in time sales lot as until selling north, support of and I have which

you’ve doing area. tripled invest are as to we’re that’s good in we we the very where continue people we’ve that amount think That’s heard, that is. So and the where that – that’s like bottleneck of shape in that

with a different was Carvana, four to on. one what that’s tough years second, the On ago, take approaching

– you place. what pre-COVID, as We were growing are time, are of XXX%. were we were They – I’ll growing, you think at in you’ve remind they XXX% different said, I an we entirely said is at that

So, this to growth growth. and our triple-digit we’re think will that projecting why we’re happen. year very think with our world as as I that normalizes, our ability scale that’s that inventory faster pleased And I normalizes,

car season, when an themselves. take opportunity of secure, stimulus checks, often or whether to treat have whether just cars used they as transportation, tax a to checks, they’re use advantage consumers it’s important far a as either have money, more stimulus As of way turned

normalized maybe, now time because or a So, folks and checks, of say events is, stimulus stability important growing one market, much two as growth to building through in seasons steady we we growing like will that our is what time slow tax would that’s really believe to do be relates again, it more positive broadly macro through rate, COVID, growth triple-digit very what’s and should and are a having environment stimulus checks world And well. business. And our the jobs more I business.

deep about broad think that’s and So your question. we how

Nat Schindler

just stimulus kind of in little rebates a tax Should we check creates QX come stimulus if you time. the for that QX, look Okay. And check early just a seasonality, a at a similar kind finally, period mega seasonality? of on bit obviously, that in coming thing,

Paul Hennessy

guide we tried Well, the going think also immediate those on timing the events. to of an annual basis. to of We all again, our but happen the is to ability I don’t in what quarter, both of know on best

the our QX those that contemplated show show in QX whether whether contemplated that’s guidance so up end that’s guidance. annual or QX those for and in up of both And in early our

Nat Schindler

Great. Thank you.

Paul Hennessy

Sure.

Operator

And Gupta your with question next comes Rajat JPMorgan. from

Rajat Gupta

and thanks taking Hi, questions. for Good evening good afternoon. my

a And $XXX seasonal versus Just to guidance due how of much expected Thanks. guide higher couple follow-ups. fourth the GPU XQ have much embedded environment original it a that versus And going just in us impact quarter was versus bridge to could like liquidating back due disconnect how roughly I depreciation was same just to help liquidation? than that your inventory? guidance, you is of due to for much how the

Paul Hennessy

Yes, sure.

I expectations thought So, versus here’s guess, performance. what I about QX QX actual

gross to to $X,XXX profits about $X,XXX vehicle expected So, QX. in QX from go we about

would difficult well. which therefore QX, to significant seasonal I QX QX you it much – in And quantify, depreciation were appreciation as somewhat was terms to say in on imagine in was have our expectation, think QX for end depreciation there. it’s of is, that’s per how unit. What lighter had I I the consistent, we as So, we seasonal affects $XX call may you actually can expectation the let’s depreciation think

wound per of $X,XXX gross expected per $XXX gross we vehicle up profit we with anyway, So vehicle unit, of unit. profit

it So about a difference. was $XXX

that piece left balances you’re depreciation result than aged $XXX and as And normal of that the was the a of expected, $XX say what more then inventory. some depreciation but we was we – about with per accelerated, expected of unit. if moving So is

anyways. breakout get, of that we kind so, to it tough how quantify but And is that’s

don’t really the it So because we extra QX you tell depreciation. it in would majority the is call that think $XXX to though I was is think from depreciation liquidations, extra the the somewhat related I bit And as how terribly – tell, we aged versus then difficult are to a to de-price we much at it’s it’s units going little I again that like look are units think, significant. fresh. QX, be of

we’re expecting we it’s gross to a QX the saw wholesale similar unit through get loss I see, that. as easier think per in much in that we profit

similar be as probably would well, retail another said the you think hopefully, question. I you So so helpful, had that’s and

Rajat Gupta

Yes.

retail but strong like just demand And of raised that. it also surprised so roughly understand fee really I $XXX. Thanks seems the I’m Just just your clarification, same time that for by is the shipping much mean, that side, inventory is on even having because to it related just you’re you’ve to here. that aging. mean, some I liquidate I at

much curious like, out, the So cars as the in clearly XX,XXX the because XX,XXX order cars cut you in so just ship to inventory have or to pricing XQ. to capacity to need get the why the

significantly pricing so so GPU? that is the what if So is first we demand strong, impacting the – cut – why is are is need to why quarter

Dave Jones

Yes.

the So obviously think depreciating – about way a it’s – it’s the I asset, think to right. it is,

in have is there – we competition and market. the – So

purchased it becomes was at if inventory So to fresher got that for difficult just work. and we’re selling we’ve that against economics times, those has aged inventory different

a price. when mill of a vehicles quarter, run of sell you’re inventory. all them the demand it’s they’re unique, XX,XXX, easier But unique are higher lot think XX,XXX, I retailing the to XX,XXX not – on units

dealers and online players. so And competing you’re other against

great And into have demand, that QX so, environment. But you guidance. of that environment dumped we it the so, in it when have got to inventory adjust to purchased to and we’ve you ages the a strong, think current I the price is and decrease different price a that demand

fee, of terms shipping in In that $XXX changed to we mid-February. the

couple And that’s expensive, business, just now has as the quarters rationale. shipping so, we’re carriers nationally. the of shipping in We’re the and for and from about industry a talked the nationwide charges we’ve so gotten more

that way on shipping to at that away forward a at it’s closer we to price. shipping. charge bit a to We a we now about scale, where the them, if it, smaller that’s far can have if shipping can charge, have vehicle for it from shipping, just any we’ll to is conversion a little they start we think be to and about vehicle variable them raising haven’t offer then seen impact think happens going pricing more then And look greater consumers

it going we how that’s think So, about forward.

Rajat Gupta

it. Got

is inventory like. ask more I lower percentage I me. you costs stands that that Just costs the of a increased what I so, than backlog would time I issue underlying you today where of as than one for is sourcing you’ve by there to the mean, one inbound because, your in of are positives the are mean, mean, before. than I of that terms are resolve? reconditioning mean year I mean reason today, what say lower you aged And what last this expecting – from consumers, lot your before, your logistics are would

backlog I are underlined mean, you issues tailwind a GPU these on So, your like just significant level. it see looks mean, clear, should once I

you doesn’t So XXX% year, going entitled with even it – are you be like for look to and should guidance the to get what the to.

going are these be out? care issue long to take Thanks. does all. So, to how – this backlog like is That’ll

Paul Hennessy

up wrap this question. have to Yes. with think And I we’ll then,

we’ve well import after quarters QX. material QX I in in at as within prepared profit think sequential remarks, in the got are shared. my that improvement of inventory in situation, I backlog the gross hand issues in And look, terms

dots. you’re to but QX, allow think situation, us for is top both and e-commerce QX both which This going for the issue I line a connecting So unit also all economics inventory sales. what’s the backlog, is unit accelerate right to the

Rajat Gupta

it. color good luck. Thanks for and Got all the

Paul Hennessy

Thanks. Yes.

Operator

And questions Hennessy for the to now remarks. time conference is over the for have all we turn closing back that today. Paul I’ll

Paul Hennessy

to running talk call and you; thanks everyone that we’ll time. and that, yes, on for special and all thanks Thank to Great. the the Thanks, employees soon. joining the keep room continue trains

Operator

conference This call. today’s concludes

disconnect. You now may

Vroom (VRMMQ) 4 Mar 212020 Q4 Earnings call transcript