Vroom, Inc. (Nasdaq:VRM), a leading ecommerce platform for buying and selling used vehicles, today announced financial results for the second quarter ended June 30, 2021 (“Q2 2021”).
HIGHLIGHTS OF SECOND QUARTER 2021
- 18,268 ecommerce units sold, up 172% YoY
- Ecommerce revenue of $579.7 million, up 230% YoY
- Ecommerce gross profit of $49.6 million, up 588% YoY
- Convertible Note offering provided over $600.0 million of additional liquidity
Paul Hennessy, Chief Executive Officer of Vroom, commented:
“Vroom had an outstanding second quarter. We drove strong expansion in units and gross profit per unit. Ecommerce gross profit per unit continued its upward trajectory, growing $664 (+32%) quarter over quarter, as we continue to execute against our expansion plans in a favorable yet dynamic pricing environment. Our ecommerce units accelerated as our offering to consumers continues to resonate. Moving forward, we intend to continue to scale our capacity and efficiency ahead of growing demand with investments across our business, particularly in logistics, where we are ahead of schedule compared to our initial targets. We will also continue to strive for a frictionless ecommerce checkout experience to drive a compelling customer proposition and improved unit economics over time.”
SECOND QUARTER 2021 FINANCIAL DISCUSSION
All financial comparisons are on a year-over-year basis unless otherwise noted.
Ecommerce Units
Ecommerce units sold increased 172.1% to 18,268 driven by higher inventory levels, increased marketing spend, increased consumer demand as a result of the popularity of our business model, strong market demand for used vehicles, and further process improvements in our ecommerce platform. Average monthly unique visitors to our platform increased 75.0% to 1,749,480.
Ecommerce Revenue
Ecommerce revenue increased 230.2% to $579.7 million.
- Ecommerce Vehicle revenue increased 227.9% to $559.0 million. The increase in ecommerce Vehicle revenue was primarily attributable to the increase in ecommerce units sold as well as an increase in the average selling price per unit, which increased from $25,393 to $30,601.
- Ecommerce Product revenue increased 304.3% to $20.7 million. The increase in ecommerce Product revenue was primarily attributable to the increase in ecommerce units sold as well as an increase in ecommerce Product revenue per unit, which increased from $761 to $1,131 per unit.
Ecommerce Gross Profit
Ecommerce gross profit increased 587.6% to $49.6 million.
- Ecommerce Vehicle gross profit increased to $28.9 million. The increase in ecommerce Vehicle gross profit was primarily due to a $1,273 increase in ecommerce Vehicle gross profit per unit to $1,587 as well as an increase in ecommerce units sold.
- Ecommerce Product gross profit increased 304.3% to $ 20.7 million. The increase in ecommerce Product gross profit was primarily attributable to the increase in ecommerce units sold as well as an increase in ecommerce Product gross profit per unit, which increased from $761 to $1,131 per unit.
Ecommerce Gross Profit per Unit
Ecommerce gross profit per unit increased 152.8% to $2,718.
- Ecommerce Vehicle gross profit per unit increased 405.4% to $1,587, primarily driven by higher sales margins and improvements in reconditioning and inbound logistics costs, partially offset by a higher inventory reserve as a result of an increase in inventory levels. Strong sales margin per unit was partially driven by a record retail pricing environment during the second quarter of 2021 as well as an increase in vehicles sourced directly from consumers and further improvements in our pricing methodologies. Additionally, in the second quarter of 2020, our sales margin was negatively impacted by a strategic decision to reduce vehicle pricing in order to sell pre-COVID-19 inventory. Based on data from Cox Automotive, retail prices are expected to peak in the third quarter and begin to gradually return to normal market conditions and vehicle depreciation during the second half of 2021.
- Ecommerce Product gross profit per unit increased 48.6% to $1,131, primarily driven by higher attachment rates and an increase in the average loan size as a result of higher ASP.
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(1) We reclassified other revenue and gross profit related to the vehicle repair service at TDA from the TDA reportable segment to the “All Other” category to conform to current year presentation.
(2) All Other revenues and gross profit consist of the CarStory business and vehicle repair services at TDA.
(3) Gross profit per unit metrics exclude the CarStory business and vehicle repair services at TDA.
Total Units
Total units sold increased 169.5% to 29,871.
- Ecommerce units sold increased 172.1% to 18,268, as discussed above.
- Wholesale units sold increased 207.5% to 10,020, primarily driven by an increase of wholesale grade units purchased from consumers, an increase in the number of trade-in vehicles as a result of the increase in number of ecommerce units sold and strong wholesale market demand for used vehicles.
- TDA units sold increased 42.6% to 1,583. Despite strong market demand for used vehicles, TDA unit sales continue to be negatively impacted by reduced inventory at the TDA location as the ecommerce business continues to scale. TDA units sold were negatively impacted during the second quarter of 2020 as a result of a significant reduction in foot traffic due to the COVID-19 pandemic.
Total Revenue
Total revenue increased 201.0% to $761.9 million.
- Ecommerce revenue increased 230.2% to $579.7 million, as discussed above.
- Wholesale revenue increased 151.6% to $128.1 million. The increase in wholesale revenue was primarily attributable to the increase in wholesale units sold, partially offset by a lower average selling price per unit, which decreased from $15,625 to $12,785. The higher average selling price per unit in the second quarter of 2020 was primarily driven by the sale of retail vehicles through wholesale channels to reduce our inventory levels at the start of the COVID-19 pandemic.
- TDA revenue increased 92.9% to $50.8 million, primarily due to a higher average selling price per unit, which increased from $23,144 to $31,021 as well as the increase in TDA units sold.
Total Gross Profit (Loss)
Total gross profit increased 729.9% to $63.1 million.
- Ecommerce gross profit increased 588% to $49.6 million, as discussed above.
- Wholesale gross profit increased to $8.5 million. Wholesale gross profit increased primarily due to a higher gross profit per unit, which increased from gross loss per unit of $(167) to gross profit per unit of $850.
- TDA gross profit increased 264.4% to $3.1 million. TDA gross profit increased primarily due to an increase in TDA gross profit per unit of $1,210 as well as an increase in TDA units sold.
Gross Profit (Loss) per Unit
- Ecommerce gross profit per unit increased 152.8% to $2,718, as discussed above.
- Wholesale gross profit per unit increased 609.0% to $850 as a result of favorable wholesale market conditions. Additionally, in the second quarter of 2020, our sales margin was negatively impacted by the sale of retail vehicles through wholesale channels to reduce our inventory levels at the start of the COVID-19 pandemic. Based on data from Cox Automotive, wholesale prices appear to have reached their peak in June and are expected to begin to gradually return to normal market conditions and vehicle depreciation during the second half of 2021.
- TDA gross profit per unit increased 155.5% to $1,988 driven primarily by higher sales margin and improvements in reconditioning and inbound logistics costs, partially offset by a higher inventory reserve as a result of an increase in inventory levels. Strong sales margin per unit was partially driven by a record retail pricing environment during the second quarter of 2021 as well as an increase in vehicles sourced directly from consumers and further improvements in our pricing methodologies. Additionally, in the second quarter of 2020, our sales margin was negatively impacted by a strategic decision to reduce vehicle pricing in order to sell pre-COVID-19 inventory. Based on data from Cox Automotive, retail prices are expected to peak in the third quarter and begin to gradually return to normal market conditions and vehicle depreciation during the second half of 2021.
Selling, general and administrative expenses increased 158.6% to $123.9 million. The increase was primarily due to:
- $31.2 million increase in compensation and benefits due to an increase in headcount, an increase in variable fees for third-party sales and sales support providers as a result of an increase in units sold, as well as a $1.3 million increase in stock-based compensation to $5.4 million;
- $14.7 million increase in outbound logistics costs partially attributable to the growth in ecommerce units sold, which increased outbound logistics costs by $9.4 million, and increases in market rates of logistics providers, which increased outbound logistics costs by $5.3 million;
- $13.6 million increase in other selling, general and administrative expenses primarily related to volume-based fees for software licenses and other variable expenses as our business continues to scale as well as additional insurance costs associated with being a publicly traded company and growing inventory; and
- $11.9 million increase in marketing expense as we expanded our national broad-reach brand advertising and increased performance and online marketing as we continue to grow our listed inventory.
We expect selling, general and administrative expenses to increase in the future as we scale our business and sell more ecommerce units. We also expect to incur increased selling, general and administrative expenses as we continue to invest in and improve our customer experience, invest in expanding our proprietary logistics and reconditioning networks, and explore a variety of strategies for a proprietary lending operation.
Loss from Operations and Net Loss
Loss from operations increased 54.2% to $ 63.8 million. Net loss increased 4.1% to $ 65.8 million.
Non-GAAP Financial Measures
In addition to our results determined in accordance with U.S. GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance: EBITDA, Adjusted EBITDA, Adjusted loss from operations, Non-GAAP net loss, Non-GAAP net loss per share and Non-GAAP net loss per share, as adjusted. These non-GAAP financial measures have limitations as analytical tools in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP. Because of these limitations, these non-GAAP financial measures should be considered along with other operating and financial performance measures presented in accordance with U.S. GAAP. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with U.S. GAAP. We have reconciled all non-GAAP financial measures with the most directly comparable U.S. GAAP financial measures.
EBITDA, Adjusted EBITDA, Adjusted loss from operations, Non-GAAP net loss, Non-GAAP net loss per share and Non-GAAP net loss per share, as adjusted are supplemental performance measures that our management uses to assess our operating performance and the operating leverage in our business. Because EBITDA, Adjusted EBITDA, Adjusted loss from operations, Non-GAAP net loss, Non-GAAP net loss per share and Non-GAAP net loss per share, as adjusted, facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes.
EBITDA and Adjusted EBITDA
We calculate EBITDA as net loss before interest expense, interest income, income tax expense and depreciation and amortization expense and we calculate Adjusted EBITDA as EBITDA adjusted to exclude the one-time, IPO related acceleration of non-cash stock-based compensation expense and the one-time, IPO related non-cash revaluation of a preferred stock warrant. The following table presents a reconciliation of EBITDA and Adjusted EBITDA to net loss, which is the most directly comparable U.S. GAAP measure:
Financial Outlook
For the full year 2021, we continue to expect triple digit year-over-year growth in ecommerce unit sales and more than 200% year-over-year growth in aggregate gross profit. For the third quarter 2021, we expect the following results:
- Ecommerce unit sales of 20,000 to 20,500, implying year over year growth of 130% at the mid-point of the guidance range.
- Average ecommerce selling price per unit of $32,000 to $33,000 and average ecommerce gross profit per unit of $2,350 to $2,450.
- Wholesale unit sales of 9,500 to 10,500, average selling price per unit of $12,000 to $13,000 and average gross profit per unit of $50 to $100.
- TDA unit sales of 1,550 to 1,650, average selling price per unit of $32,000 to $33,000 and average gross profit per unit of $1,650 to $1,750.
- Total revenue of $858 to $891 million.
- Total gross profit of $51 to $56 million.
- EBITDA* of $(100) to $(92) million.
- Stock-based compensation expense of $6.6 million.
- Net loss per share of $(0.78) to $(0.73).
*A reconciliation of non-GAAP guidance measures to corresponding GAAP measures for our third quarter 2021 Financial Outlook is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, these costs and expenses that may be incurred in the future. We have provided a reconciliation of GAAP to non-GAAP financial measures for the second quarter 2021 in the reconciliation table in the Non-GAAP Financial Measures section above.
We expect the following number of GAAP weighted average shares outstanding for the third quarter and the full year 2021:
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Quarter |
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YTD |
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2021 |
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136,717,347 |
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136,359,846 |
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These estimates exclude any shares potentially issuable under stock-based compensation plans.
The foregoing estimates are forward-looking statements that reflect the Company’s expectations as of August 11, 2021 and are subject to substantial uncertainty. See “Forward-Looking Statements” below.
Conference Call & Webcast Information
Vroom management will discuss these results and other information regarding the Company during a conference call and audio webcast Wednesday, August 11, 2021 at 5:00 p.m. ET.
The conference call can be accessed via telephone by dialing 1-833-519-1297 (or 914-800-3868 for international access) and entering the conference ID 1597432. A live audio webcast will also be available at ir.vroom.com. An archived webcast of the conference call will be accessible on the website within 48 hours of its completion.
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