Earnings call transcript Q2 2023

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Operator

Thank you for standing by and welcome to Vroom’s Second Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions].

I would now like to hand the call over to Jon Sandison, Vice President, Investor Relations. ahead. go Please

Jon Sandison

Good quarter operator. and to welcome Thank earnings morning, call. second XXXX Vroom's you, everyone,

Joining the Officer. Officer; the website and call us at Chief be Investor Bob Shortt, on will the Krakowiak, call Relations today ir.vroom.com. section Chief company's webcast Financial simultaneously Please of this Tom note on are corporate Executive

The XXXX earnings also investor the to second release are quarter relations posted and earnings website. presentation

that Federal financial that note the we discussion based laws, forward-looking cause differ includes to to are promises forward-looking not please number actual nor within assumptions to operations the and and Before statements about materially. on statements meaning of factors limited and a today are and the neither Securities may management's but performance. including current uncertainties of Vroom’s results subject are begin, other risks, statements guarantees and important These other future

SEC section for XX-K We year by most months to the XXXX, as XX-Q report recent company's our Form XX, June ended recent three including most updated quarterly Factors direct on the for December Vroom's XX, Form filings, Risk the ended you XXXX. the of

of discussion differ from could in cause factors actual materially statements. results the to forward-looking that those additional For

discuss on further based as future today's statements update developments assumes non-GAAP Vroom note otherwise. of measures certain the this and financial call. statements speak including or of company forward-looking Please that discussion, only call date during to also may the no such today's The obligation

earnings earnings of measures the measures a those and find and in a GAAP presentation. presentation XXXX quarter reconciliation You most the comparable directly can second of release

Tom? Tom now Shortt, to hand over like the Chief Executive to Officer, I'd conference

Tom Shortt

and Vroommates, who to investors, analysts, third-party joining today. thank all Thank us you, UACC and you partners Jon, are the colleagues

EBITDA EBITDA business. progress XX Let's start work I'm breakeven committed introduced we've made highlighted We XX% goal adjusted to goal we our X% our our We with midterm three. goals. and long-term Investor margin long-term these of May as our a the and of on a business our to roadmap, where at Day, XXXX, toward we long-term roadmap Slide remain pleased

we across reconditioning, slowed down As processes sales registration, improved we on the pricing, titling our our XXXX, primary business logistics, we experience, and function during customer and improved insourced third-party marketing, Day indicated while our and from resource. our strategically Investor

our through converting As proving and aged selling XXXX, variable to we resuming per continuing growth, execute into items unit, strategy are inventory sheet responsible and in fixed cost cash. reduce we costs balance

unchanged. remains roadmap long-term Our

focused on During XXXX to four initiatives. key and continuing we're focus objectives strategic our three

quarter highlights. Slide our second On four,

second the million $XX.X within improvement recognized EBITDA adjusted the was approximately grew we’ve sequential of X% of sequentially. an units During expectation. quarter loss million, or our $X.X range E-commerce which an XX%

first long-term the the business quarter we XXXX. in quarter sequential realigned of with introduced roadmap is quarter the growth This our and since second

the business and we while we mix on costs growth, right rate fixed As towards growth responsible of per unit remain driving investment unit pivot focused marketing and reducing GPPU. variable the

from from which sequentially, excess of GPPU units, E-commerce $X,XXX. GPPU in was benefiting on to increased $X,XXX $X,XXX aged

issues title XX% fourth our XXXX and of compared third XXXX. quarter held in quarter than days, the quarter, second the greater of of first XXX a the legacy XX% XX% in sold quarter of the as XX% units During in result were to

fourth aged the to be than better We expect to be with expect mix than the mix sequential less reduction we aged quarter. quarter expected units, units, and next quarter aged third from our the of third XX% sequentially

levels normalized As expect aged produce through expect higher we GPPU. which inventory to work have the inventory, overall remaining we we to aged

roadmap We are four making strategic long-term progress on our and our initiatives.

higher unit million volume. SG&A adjusted $X.X our We on reduced sequentially

our million reduced face notes value substantial $X million of our million, adjusted we sequentially. reducing discount. marketing increased for We’ve convertible at $XX Excluding SG&A investment, $X.X repurchased a leverage

the improving adjusting full equivalents to and range to cash reflect year our adjusted XXXX and to million loss and the midpoint narrowing convertible $XXX an of the million are guidance of $XXX repurchases. cash EBITDA our We note

On Slide five.

Investor strategic that quarter business progress key a driver. providing by unaged are driven each our update behind $XXX and to our This is believe an four unit. on outlined slide we have initiatives During GPPU unit GPPU a to building the sequential our by we improvement updates on economic Day, drivers been quarterly was economic driver. second primarily progress $X,XXX strong on profitable we

XX% quarter of aged. were units the second sold in

I GPPU of in $X,XXX. for was our mentioned, excess unaged As units

improvement. GPPU expect We improved our in the units mix expect and with sequential reduction aged mix of

third XX% quarter fourth our be units, and the quarter quarter. sequentially third to than we We be mix than from aged mix the aged less to expect expect better

product see grow as our to capability. captive and develop financing strong continue We GPPU we

reduced all-in [ph] unit per sequentially. We our costs by logistics XX%

support and costs in selling Our our per sequentially. per reduced turns processes XX% improved resulted titling registration and costs registration a unit XX% titling XX% in We improvement sequentially. sequentially. We our inventory reduced unit

year. million sequentially order facilitate growth by grow spend acquisitions up second the marketing $X.X of our in half increased We the ramping in to to unit unit inventory

unidle Our quarter business we essentially been the XXXX. unit since pivoted of acquisitions have second in the

spend required acquisition restart to marketing the was engine. unit increased Our

We continue consumers. to source from primarily

We our cost unit XX% per reduced sequentially. fixed

tech teams competitive and analytical provide to the costs. in our teams functional that analytics and Lastly, assets chain conversion a and and registration, believe tech build titling assets, advanced team, across business assets supply product continue margin pricing, will we unit advantage long-term and data

pressure of significant excluding our have proud year, very delivered our and despite the XXXX. issues non-recurring Vroommates and caused continue legacy over our registration in I'm costs, UACC past what by reduce gain colleagues and we to titling securitization absorbing six, GPPU Slide losses

aged three the we inventory. last quarters We e-commerce sell GPPUs improved through as have our

make continue to on long roadmap. progress term our We

while down where the fixed at and and turn costs. are operations We reducing improving are of our road beginning responsible variable growth resume we the to we continue our

unaged vehicles. GPPU the on to be back majority half of of year expected We in the are sales the to expect our normalize when

results to it turn to over in quarter I'll detail. Now discuss Bob? second Bob greater

Bob Krakowiak

as performance a are financial comparisons increased our increased $XXX e-commerce units with otherwise I'll on of noted. summary of All eight. revenue the Slide X%. Tom. XX% Total against quarter unless prior million Thanks, start

first the quarter in remaining in economics. the unit are business of stages the early positive ramping up focused mentioned we on while As call,

increased XX% $X,XXX. GPPU to E-commerce

we realized expected This of offset was during unaged of the negative discussed As quarter vehicles, call, impact million. first earnings GPPU through impact excess was in and units. $XX we aged selling $X,XXX on the which approximately by

by XX% costs, million loss EBITDA to operating The was reduced or growth Adjusted improvement and unit driven higher $X.X GPPU. million. $XX.X improved

reduced unit expense the further higher our On fixed we variable volume. costs, despite side, operating and

key four pursue continue to and three objectives As we our strategic focus initiatives.

second our face million In convertible further liquidity repurchased the $X our of XX balance million, sheet. reducing quarter, strengthening we maximizing on focused remain We value our leverage. for and our notes

notes approximately the at the related end financing XXXX-X completed the securitization, $XX UACC on secured interests the UACC. at at repo also non-investment completed of sale quarter. and million We liquidity credit to Improving securitization to of available

As inventory quarter-over-quarter, we remaining cash impacting the position. continue we to our and sell-through our ramp cash to begin inventory aged acquisitions, up negatively increased unit

us expect a our inventory remaining half of balance allowing reduce and in inventory of floor percentage our sell-through cash units, aged as balance. We to of the we normalize in majority year, to the higher the second

bridge approximately with adjusted strong drove $X as a growth, units Let's from gross move XXXX which as Sequential on along EBITDA provides well and this second quarter sequentially million. unit Slide cash nine, E-commerce GPPU profit of XXXX first by to unaged to increase. liquidity. quarter improved

adjusted to the as by addition and to improvements approximately profit, EBITDA quarter, total our structure the gross improved In in variable continue reduce drive efficiencies we fixed we for throughout e-commerce our million. cost In $X.X we organization.

primary the Moving expense to liquidity, within of second quarter. utilization EBITDA loss adjusted quarter are the drivers net and cash interest

Additionally, requirements related increased due to our certain cash acquisition inventory ramp floorplan and million $XX to sequentially. up,

to third quarter. during cash this expect recovered We the be

reduce value market availability. time million, XX our was $XXX reducing face expectations. million to notes leverage. factors These of the of we end, notes our of convertible may balance and range time $X repurchase within which continue outstanding repurchased subject the on discount, a at cash indebtedness resulted cash at conditions and quarter to from equivalents sheet our in million to our Next, We opportunistically for to

Additionally, a cash earnings focused on remain was second of of At UACC at to the to have used there Which, lines. quarter, combined the draw our sheet of UACC. We end understand business with We than when could from that balance liquidity source it paydown greater resulting warehouse $XXX liquidity. liquidity. against as lines to approximately balance, is available important the liquidity. $XX been capturing improve million available total available opportunities of million our these

our to year cash and on Slide turn full equivalents Next, liquidity and XX. cash let's outlook,

of the cash million repurchases completed million of We balance consistent million, of previous were guidance the $XXX equivalents ending $XX our XXXX first which cash to the in half expect that is adjusted for convert and with approximately year. $XXX

previously, of a of during inventory cash as XX June mentioned year. our portion in the to expect As second recover the we XXXX, balance half of significant

to to this them as occur expect continue replace aged units with inventory. We fresh and sell-through we the

available UACC Additionally, the $XX approximately we million at at quarter. the end fourth liquidity expect of of

associated to contribute We proceeds those earlier this we securitization If transaction an $XX year, our up the the certificates from additional sell of second to residual the with of completed hold continue could in to decide year. certificates half million liquidity. the

liquidity a of be $XXX or up million. As midpoint could yearend result, to

you closing time it and turn few With back a I'll to this morning. that, Thank attention for for your Tom? Tom, remarks.

Tom Shortt

Bob. Thanks,

what of has accomplished I'm XX. quarter. Slide to our Turning this proud team incredibly

every of virtually business cash improve the convertible customer costs, our and operational our and reduce improve decrease transform We experience, our variable efficiencies, continue to aspect processes, rate fixed reduce to our drive debt. burn

well resume pursue we responsible long-term of still roadmap goals. are continue a our work mid long and our believe transformation While I lot business to we and growth positioned execute term to have we and do, as our

are today ready operator, questions. time your and for you we Thank for

Operator

first [Operator Instructions] Zackfia William Sharon from the line Our of Blair. question of comes

Sharon Zackfia

Thanks that's can rate for there's, you I responsible call. that mean, taking feel you I'm I like a on sure growth good Hi, of growth. satisfy morning. question guess outside, year in the back But as we from manner. kind know, the profitable the half of this enter in of what to hard that XXXX. a understand it's translate to might you the

rate us context the the on any you can that I company if So be you would think at give that support of think period, growth of this helpful? kind

Tom Shortt

balance, morning, cash Yes, work good out objective as like our the number We're goal. is focused figuring right towards long-term our one Sharon. burn very we on

we're know, cash to additional so, you at going hurting excessively, the And grow know, we're or burning of risk unit you economics. not

driver working now, right through What's GPPU? our this things, right time. and going as unit which we're yield and not is And that's of those growth market what's on what three those our providing rate be based unit on why the really to burn, at we're our And through right growth that's guidance primary level the will investment? cash growth. the work right rate So we

Sharon Zackfia

more some to functions there's needs that the anything to and us around performance give Okay. to happen still if how get And function? kind expectations, meaningfully to kind of you then is color in the else house can a there optimized that fully sales of you've relative brought sales your

Tom Shortt

Yes.

been year. And So the pretty pleased as sourcing we've partner, third-party I would exactly our it's team our primary in much met with expectations sales from we that earlier in expected. our say

our As we longer it term, make to continue digital make site to more look a the we in to significant experience. investments

And main we're be team, see have efficient. lever well do provide more our tools the additional within really we so towards that's the as look sales as to several to as long initiatives them to going we run, that

Sharon Zackfia

that. Thanks for

Tom Shortt

basically as say expected. I'd it's plan on and we

Sharon Zackfia

to fair it is in won't that plan of about the inventory? hopefully, we then aged year minimal XXXX? be And with say to this, And that you kind talking Okay. end

Tom Shortt

out. Yes. were bought interesting, may running meaning algorithms rates, any the said that where future, of essentially had the quarter, And fourth very car, stunning we we to sophisticated longer, and inventory kind the since will And our based call as we're think do deminimis all result would very And be that's just we've on thought and this issues. it me, to sense extent hold pricing have to it would I aged it's remarkably to comment make it we this depreciation all as embedded and it in on be of algorithm, we're to -- these of it the math unplanned market quarter our that, wouldn't each based, aged, pricing it's to been we would the so when all be of have legacy be. be titling but and car a inventory, in plan something

guess next I it may very the probably for -- end registrations. Having amount said talking think think small and quarter, will still related it. that, be after about calculated really the at of be the I we a we haven't my year, would but title year, And have deminimis and I pretty we fourth

Sharon Zackfia

thank you. Great,

Operator

queue, appear conference no [Operator now Sir. for shortt closing questions further be to to Instructions] As remarks. in the would like Tom there turn back to I

Tom Shortt

and Thank day. you everyone fantastic for your have time today a

Operator

This you participating. concludes Thank conference call. for today's

now may disconnect. You

Vroom (VRMMQ) 9 Aug 232023 Q2 Earnings call transcript