Vroom, Inc. (NASDAQ:VRM) Q4 2022 Earnings Conference Call March 1, 2023 8:30 AM ET Company Participants Liam Harrington - Vice President of Investor Relations Tom Shortt - Chief Executive Officer Bob Krakowiak - Chief Financial Officer Conference Call Participants Rajat Gupta - JPMorgan Sharon Zackfia - William Blair Operator Good day, and thank you for standing by. Welcome to the Vroom Fourth Quarter and Full-Year 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speak ...

Part I [Business](index=8&type=section&id=Item%201.%20Business) Vroom, Inc. is an end-to-end e-commerce platform for buying and selling used vehicles, implementing a Business Realignment Plan in 2022 to prioritize unit economics and maximize liquidity - Vroom is an e-commerce platform for buying and selling used vehicles, operating through its Vroom, Texas Direct Auto (TDA), and CarStory brands It also owns United Auto Credit Corporation (UACC) for vehicle financing[23](index=23&type=chunk)[25](index=25&type=chunk) - In May 2022, the company adopted a Business Realignment Plan to slow unit sales growth and focus on improving unit economics, reducing costs, and maximizing liquidity and profitability[32](index=32&type=chunk) - The company's long-term strategy focuses on four key initiatives: building efficient transaction processes, optimizing vehicle pricing and supply chain, establishing a regional operating model, and developing a captive finance offering through UACC[34](index=34&type=chunk)[35](index=35&type=chunk) - The acquisition of UACC in February 2022 is a critical component of the strategy to create a captive financing arm, Vroom Financial Services, to serve customers across the credit spectrum and improve unit economics[50](index=50&type=chunk) Employee Distribution as of December 31, 2022 | Company | Total Employees | Full-Time Employees | Notes | | :--- | :--- | :--- | :--- | | Vroom | 1,323 | 1,322 | 1,157 in the US, 166 in Serbia. Excludes UACC. | | UACC | 683 | 671 | Acquired on Feb 1, 2022. | - The company is subject to extensive U.S. federal, state, and local regulations governing vehicle sales, financing, transportation, titling, and e-commerce operations UACC's financing operations are also regulated by agencies like the CFPB[77](index=77&type=chunk)[82](index=82&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks, including a history of significant net losses (**$451.9 million** in 2022) and the potential need for additional capital, alongside operational challenges from UACC integration, supply chain reliance, and extensive regulation - The company has a history of losses, with an accumulated deficit of approximately **$1.6 billion** as of December 31, 2022, and may not achieve profitability in the future[95](index=95&type=chunk) - Vroom may need to raise additional capital to achieve its business objectives, and there is no assurance that financing will be available on acceptable terms, if at all[94](index=94&type=chunk) - The integration of the UACC business and its development into a captive lending operation presents significant challenges and may not yield the anticipated benefits[154](index=154&type=chunk)[155](index=155&type=chunk) - Operational challenges from prior rapid growth have led to backlogs and delays in titling and registering vehicles, adversely affecting customer experience and brand reputation[118](index=118&type=chunk)[152](index=152&type=chunk) - The business is highly dependent on access to desirable vehicle inventory and its ability to correctly appraise and price vehicles Obstacles to acquiring inventory could materially harm operations[182](index=182&type=chunk)[221](index=221&type=chunk) - The company operates in a highly competitive and regulated industry Failure to comply with the wide range of federal, state, and local laws could result in material adverse effects[188](index=188&type=chunk)[203](index=203&type=chunk) - A goodwill impairment charge of **$201.7 million** was recorded in 2022 due to a decline in the company's stock price and other factors[100](index=100&type=chunk) [Unresolved Staff Comments](index=56&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) Not applicable The company reports no unresolved staff comments - Not Applicable[307](index=307&type=chunk) [Properties](index=57&type=section&id=Item%202.%20Properties) The company leases all its primary facilities, including its corporate headquarters and TDA dealership near Houston, Texas, as well as UACC's headquarters in Newport Beach, California, and its servicing center in Fort Worth, Texas Key Leased Properties | Facility | Location | Size (sq. ft.) | Lease Expiration | | :--- | :--- | :--- | :--- | | Vroom HQ | Houston, TX | ~102,492 | Nov 2024 | | TDA Dealership / Vroom VRC | Houston, TX | ~58,000 | Sep 2024 | | UACC HQ | Newport Beach, CA | ~20,058 | Mar 2024 | | UACC Servicing Center | Fort Worth, TX | ~106,500 | Sep 2031 | [Legal Proceedings](index=57&type=section&id=Item%203.%20Legal%20Proceedings) Vroom is involved in several significant legal matters, including a consolidated securities class action lawsuit, multiple shareholder derivative lawsuits, and a lawsuit filed by the Attorney General of Texas regarding vehicle marketing, titling, and registration - A consolidated securities class action lawsuit alleges violations of the Exchange Act and Securities Act against the company, certain officers, directors, and underwriters The company has filed a motion to dismiss[314](index=314&type=chunk) - Multiple shareholder derivative lawsuits have been filed based on similar allegations as the securities class action These cases are currently stayed pending the resolution of the main securities litigation[315](index=315&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk) - In April 2022, the Attorney General of Texas filed a lawsuit alleging violations of the Texas Deceptive Trade Practices Act, citing deficiencies in marketing, titling, and registration of vehicles Vroom is working cooperatively towards a resolution[318](index=318&type=chunk) [Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable The company has no mine safety disclosures - Not applicable[320](index=320&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=62&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Vroom's common stock has been trading on the Nasdaq Global Select Market under the ticker symbol "VRM" since its IPO on June 9, 2020, with no cash dividends paid or anticipated as earnings are retained for business growth - The company's common stock began trading on the Nasdaq Global Select Market under the ticker "VRM" on June 9, 2020[338](index=338&type=chunk) - The company has not declared or paid any cash dividends and does not anticipate paying any in the foreseeable future[340](index=340&type=chunk) [Reserved](index=63&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=64&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, Vroom's total revenue decreased by **38.8%** to **$1.95 billion** from **$3.18 billion** in 2021, driven by a **47.4%** decline in e-commerce units sold, while total gross profit increased by **21.1%** to **$244.8 million** and total gross profit per e-commerce unit rose **15.4%** to **$2,545**, resulting in a net loss of **$451.9 million** including a **$201.7 million** goodwill impairment charge Key Financial Results (2022 vs. 2021) | Metric | 2022 (in millions) | 2021 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,948.9 million | $3,184.3 million | (38.8)% | | Total Gross Profit | $244.8 million | $202.1 million | 21.1% | | Net Loss | ($451.9 million) | ($370.9 million) | 21.8% | | Ecommerce Units Sold | 39,278 | 74,698 | (47.4)% | | Total GPPU | **$2,545** | $2,206 | 15.4% | - The company implemented a Business Realignment Plan in May 2022, resulting in approximately **$8.5 million** in severance costs and **$6.5 million** in lease impairment charges for the year[355](index=355&type=chunk)[356](index=356&type=chunk) - In 2022, the company repurchased **$254.3 million** of its convertible notes for **$90.2 million**, recognizing a gain on debt extinguishment of **$164.7 million**[365](index=365&type=chunk)[481](index=481&type=chunk) - The acquisition of UACC on February 1, 2022, established a new Retail Financing segment, which generated **$152.5 million** in revenue and **$138.4 million** in gross profit in 2022[368](index=368&type=chunk)[472](index=472&type=chunk)[473](index=473&type=chunk) - As of December 31, 2022, the company had **$398.9 million** in cash and cash equivalents and believes it has sufficient liquidity to support operations for at least the next twelve months[490](index=490&type=chunk)[491](index=491&type=chunk) [Results of Operations](index=80&type=section&id=Results%20of%20Operations) Ecommerce Segment Performance (2022 vs. 2021) | Metric | 2022 (in millions) | 2021 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Units Sold | 39,278 | 74,698 | (47.4)% | | Total Revenue | $1,364.2 million | $2,442.4 million | (44.1)% | | Total Gross Profit | $99.97 million | $164.75 million | (39.3)% | | Vehicle GPPU | **$1,033** | $1,108 | (6.8)% | | Product GPPU | **$1,512** | $1,098 | 37.7% | | Total GPPU | **$2,545** | $2,206 | 15.4% | Wholesale Segment Performance (2022 vs. 2021) | Metric | 2022 (in millions) | 2021 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Units Sold | 20,876 | 37,163 | (43.8)% | | Revenue | $293.5 million | $499.0 million | (41.2)% | | Gross (Loss) Profit | ($10.6 million) | $18.1 million | (158.6)% | | Gross (Loss) Profit per Unit | **($509)** | $488 | (204.3)% | Retail Financing Segment Performance (2022) | Metric | 2022 (in millions) | | :--- | :--- | | Revenue | $152.5 million | | Gross Profit | $138.4 million | - Selling, general and administrative (SG&A) expenses increased by **3.4%** to **$566.4 million** in 2022, primarily due to the inclusion of UACC's SG&A, higher compensation and benefits, and increased legal and IT costs, partially offset by significant reductions in marketing and outbound logistics[476](index=476&type=chunk)[477](index=477&type=chunk)[486](index=486&type=chunk) - The company recorded impairment charges of **$211.9 million** in 2022, consisting of a **$201.7 million** goodwill write-down, **$6.5 million** in lease impairments, and **$3.7 million** for long-lived assets[480](index=480&type=chunk) [Liquidity and Capital Resources](index=87&type=section&id=Liquidity%20and%20Capital%20Resources) - As of December 31, 2022, the company had **$398.9 million** in cash and cash equivalents and **$73.1 million** in restricted cash[490](index=490&type=chunk) - Net cash used in operating activities decreased significantly to **$109.1 million** in 2022 from **$568.7 million** in 2021, mainly due to proceeds from the sale of finance receivables and a decrease in working capital from lower inventory levels[510](index=510&type=chunk)[511](index=511&type=chunk) - The company's vehicle inventory is financed through a 2022 Vehicle Floorplan Facility with a credit line of up to **$500.0 million**, maturing in March 2024 As of year-end 2022, **$277.0 million** was outstanding[499](index=499&type=chunk)[707](index=707&type=chunk) - UACC has four senior secured warehouse credit facilities with an aggregate borrowing limit of **$850.0 million** to fund finance receivables As of year-end 2022, **$229.5 million** was outstanding[507](index=507&type=chunk) [Critical Accounting Policies and Estimates](index=91&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Key estimates include those related to income taxes, inventory realizability, stock-based compensation, revenue reserves, and impairment of goodwill and long-lived assets[516](index=516&type=chunk) - Business combinations are accounted for using the acquisition method, requiring significant estimates for the fair value of assets acquired and liabilities assumed, particularly for intangible assets like technology and customer relationships[519](index=519&type=chunk) - Goodwill is tested for impairment annually or when triggering events occur A quantitative interim test as of March 31, 2022, resulted in a goodwill impairment charge of **$201.7 million** due to a sustained decline in the company's stock price[524](index=524&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=93&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company's primary market risk is interest rate risk associated with its variable-rate debt, including the 2020 Vehicle Floorplan Facility and the UACC Warehouse Credit Facilities, where a hypothetical **10%** change in interest rates during 2022 would have resulted in a **$2.7 million** change in interest expense - The company's primary market risk is interest rate risk from its variable-rate debt facilities used to finance vehicle inventory and finance receivables[527](index=527&type=chunk) - A hypothetical **10%** change in interest rates in 2022 would have changed interest expense by **$2.7 million**[528](index=528&type=chunk) [Financial Statements and Supplementary Data](index=94&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The consolidated financial statements for the year ended December 31, 2022, show total assets of **$1.62 billion**, a decrease from **$2.37 billion** in 2021, and a net loss of **$451.9 million**, with PricewaterhouseCoopers LLP providing an unqualified opinion on the financial statements and internal controls, excluding the newly acquired UACC from the internal control assessment Consolidated Balance Sheet Summary (As of Dec 31) | (in thousands) | 2022 | 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $398,915 | $1,132,325 | | Inventory | $320,648 | $726,384 | | Total Assets | $1,619,027 | $2,366,750 | | **Liabilities & Equity** | | | | Vehicle floorplan | $276,988 | $512,801 | | Long term debt, net | $402,154 | $610,618 | | Total Liabilities | $1,143,786 | $1,451,556 | | Total Stockholders' Equity | $475,241 | $915,194 | Consolidated Statement of Operations Summary (Year Ended Dec 31) | (in thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenue | $1,948,901 | $3,184,255 | | Total Gross Profit | $244,787 | $202,099 | | Loss from Operations | ($571,763) | ($358,615) | | Net Loss | ($451,910) | ($370,911) | - The independent auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion on the financial statements and internal controls over financial reporting as of December 31, 2022[536](index=536&type=chunk) - The auditor's report identified the valuation of purchased technology and customer relationships intangible assets from the UACC acquisition as a critical audit matter due to the significant management judgment involved[544](index=544&type=chunk)[545](index=545&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=145&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) Not applicable The company reports no changes in or disagreements with its accountants - Not applicable[838](index=838&type=chunk) [Controls and Procedures](index=145&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2022, with the assessment excluding the newly acquired UACC business - Management concluded that disclosure controls and procedures were effective as of December 31, 2022[841](index=841&type=chunk) - Management's assessment of internal control over financial reporting concluded that controls were effective as of December 31, 2022[842](index=842&type=chunk) - The assessment of internal controls excluded the newly acquired UACC business, which will be included in the assessment for the year ending December 31, 2023[843](index=843&type=chunk) [Other Information](index=145&type=section&id=Item%209B.%20Other%20Information) Not applicable The company reports no other information - Not applicable[846](index=846&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=145&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) Not applicable - Not applicable[847](index=847&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=146&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) This section provides information about the company's directors and executive officers, incorporating by reference detailed disclosures from the forthcoming 2023 Proxy Statement, and notes the adoption of a Code of Business Conduct and Ethics - Information regarding directors, executive officers, and corporate governance is primarily incorporated by reference from the company's definitive proxy statement for the 2023 annual meeting of stockholders[850](index=850&type=chunk) - The company has adopted a "Code of Business Conduct and Ethics" that applies to all directors, officers, and employees, which is available on its investor relations website[849](index=849&type=chunk) [Executive Compensation](index=146&type=section&id=Item%2011.%20Executive%20Compensation) Information required for this item concerning executive compensation is incorporated by reference from Vroom's Proxy Statement for its 2023 Annual Meeting of Stockholders - The information required by this item is incorporated by reference to Vroom's Proxy Statement for its 2023 Annual Meeting of Stockholders[851](index=851&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=146&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information required for this item concerning security ownership is incorporated by reference from Vroom's Proxy Statement for its 2023 Annual Meeting of Stockholders - The information required by this item is incorporated by reference to Vroom's Proxy Statement for its 2023 Annual Meeting of Stockholders[852](index=852&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=146&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information required for this item concerning related party transactions and director independence is incorporated by reference from Vroom's Proxy Statement for its 2023 Annual Meeting of Stockholders - The information required by this item is incorporated by reference to Vroom's Proxy Statement for its 2023 Annual Meeting of Stockholders[853](index=853&type=chunk) [Principal Accounting Fees and Services](index=146&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information required for this item concerning principal accounting fees and services is incorporated by reference from Vroom's Proxy Statement for its 2023 Annual Meeting of Stockholders - The information required by this item is incorporated by reference to Vroom's Proxy Statement for its 2023 Annual Meeting of Stockholders[854](index=854&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=147&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K, including consolidated financial statements and an index of exhibits, noting the omission of all financial statement schedules as not applicable - This item includes the Consolidated Financial Statements of Vroom, Inc. as set forth in Part II, Item 8[858](index=858&type=chunk) - All financial statement schedules have been omitted because they are not applicable, not material, or the required information is included elsewhere in the report[858](index=858&type=chunk) - An index of exhibits is provided, listing documents such as the merger agreement for UACC, corporate governance documents, debt indentures, and various material contracts[857](index=857&type=chunk) [Form 10-K Summary](index=155&type=section&id=Item%2016.%20Form%2010-K%20Summary) None The company has not provided a summary for its Form 10-K - None[867](index=867&type=chunk)

Financial Performance & Objectives - The company aims to prioritize unit economics and growth, improve costs per unit, and maximize liquidity[5] - Q4 2022 Adjusted EBITDA was -$709 million, within the prior outlook range[6] - Q4 2022 saw a $65 million / 48% improvement in Adjusted EBITDA (excluding securitization gain and non-recurring costs) compared to Q1 2022[6] - Ecommerce Gross Profit Per Unit (GPPU) was $1,233 in Q4 2022[6,9] Cost Reduction & Efficiency - Adjusted SG&A expenses decreased by $31 million sequentially, driven by lower variable and fixed costs[6] - The company unlocked approximately $70 million of cash in inventory and restricted cash[6] - The company expects ~$27 million of annualized variable and fixed cost reductions implemented in January 2023[9] - Logistics costs saw a reduction of approximately $6 million[9] Inventory & Sales - 36% of units sold in Q4 were aged units (>270 days) due to earlier titling delays[6,9] - 87% of units were available for sale or pending sale at the end of Q4 2022, compared to 52% at the end of Q3 2022[6,9] Strategic Initiatives & Outlook - The company repurchased $198 million of convertible notes for $72 million[6] - FY2023 Adjusted EBITDA guidance is between -$250 million and -$200 million[10,23]

Third Quarter 2022 Earnings November 2022 Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation, statements regarding the expected timeline, our execution of and the expected benefits from our business Realignment Plan and cost-saving i ...

Vroom, Inc. (NASDAQ:VRM) Q3 2022 Earnings Conference Call November 8, 2022 8:30 AM ET Company Participants Liam Harrington - VP, IR Thomas Shortt - CEO & Director Robert Krakowiak - CFO & Treasurer Conference Call Participants Rajat Gupta - JPMorgan Chase & Co. Richard Reid - Wells Fargo Securities Vincent Kardos - Jefferies Operator Thank you for standing by, and welcome to Vroom's Third Quarter 2022 Earnings Call. [Operator Instructions]. I would now like to hand the call over to Liam Harrington, Vice Pre ...

Vroom, Inc. (NASDAQ:VRM) Q2 2022 Earnings Conference Call August 9, 2022 8:30 AM ET Company Participants Liam Harrington - Vice President of Investor Relations Tom Shortt - Chief Executive Officer Bob Krakowiak - Chief Financial Officer Conference Call Participants Sam Reid - Wells Fargo Scott David - Stifel Colin Sebastian - Baird Seth Basham - Wedbush Sharon Zackfia - William Blair & Company John Colantuoni - Jefferies Operator Good day, and welcome to Vroom's Second Quarter 2022 Earnings Call. At this ti ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39315 VROOM, INC. (Exact name of registrant as specified in its charter) Delaware 90-1112566 (State or other jurisdiction ...

Vroom, Inc. (NASDAQ:VRM) Q1 2022 Earnings Conference Call May 10, 2022 8:30 AM ET Company Participants Liam Harrington - Vice President, Investor Relations Bob Mylod - Executive Chairman Tom Shortt - Chief Executive Officer Bob Krakowiak - Chief Financial Officer Conference Call Participants Rajat Gupta - JPMorgan Sam Reid - Wells Fargo Colin Sebastian - Baird Seth Basham - Wedbush John Colantuoni - Jefferies Naved Khan - Truist Operator Good day, and welcome to Vroom's First Quarter 2022 Earnings Call. At ...

First Quarter 2022 Earnings May 2022 Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation, statements regarding the expected timeline, our execution of and the expected benefits from our business realignment plan and cost-saving initia ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or Table of Contents ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39315 VROOM, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation o ...