8-K
false000158086400015808642022-11-072022-11-07

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 7, 2022

 

 

VROOM, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

 

 

Delaware

 

001-39315

 

90-1112566

(State or other jurisdiction

of incorporation or organization)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

3600 W Sam Houston Pkwy S, Floor 4
Houston, Texas 77042

(Address of principal executive offices) (Zip Code)

 

(518) 535-9125

(Registrant’s telephone number, include area code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

VRM

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 


 

Item 2.02. Results of Operations and Financial Condition.

On November 7, 2022, Vroom, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

Item 7.01. Regulation FD Disclosure.

On November 8, 2022, members of the Company’s management will hold an earnings conference call to discuss the Company’s financial results for the quarter ended September 30, 2022, and the presentation furnished as Exhibit 99.2 to this Current Report on Form 8-K will accompany management’s comments.

 

The information contained in Item 2.02, including Exhibit 99.1 hereto and in Item 7.01, including Exhibit 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filings, unless expressly incorporated by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits relating to Item 2.02 and Item 7.01 shall be deemed to be furnished, and not filed:

 

Exhibit No.

 

Description

 

 

99.1

 

Press Release dated November 7, 2022.

99.2

 

Earnings Conference Call Presentation for the Quarter Ended September 30, 2022.

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

VROOM, INC.

 

 

 

Date: November 7, 2022

 

By:

 

/s/ Robert R. Krakowiak

 

 

 

 

Robert R. Krakowiak

 

 

 

 

Chief Financial Officer

 

 


EX-99.1

https://cdn.kscope.io/3028bc007a1550bd4f4a81b87c6f8c2c-img63169428_0.jpg  

Exhibit 99.1

 

Vroom Announces Record Ecommerce Gross Profit Per Unit of $4,206

Continued Progress on Long-Term Roadmap

 

NEW YORK – November 7, 2022 – Vroom, Inc. (Nasdaq:VRM), a leading ecommerce platform for buying and selling used vehicles, today announced financial results for the third quarter ended September 30, 2022.

 

HIGHLIGHTS OF THIRD QUARTER 2022 VERSUS SECOND QUARTER 2022

 

Ecommerce gross profit per unit of $4,206, up 16%

 

SG&A expenses decreased $18.3 million

 

Net loss improved from $(115.1) million to $(51.1) million

 

Adjusted EBITDA improved from $(85.6) million to $(73.3) million

 

Adjusted EBITDA excluding non-recurring costs improved from $(77.3) million to $(57.5) million

 

Tom Shortt, Chief Executive Officer of Vroom, commented: “We continued to make progress on our three key objectives and four strategic initiatives as outlined during our Investor Day in May. We are intensely focused on improving the customer experience. For the month of October, 98% of our customers received their completed registrations before the expiration of their initial temporary tags. We will continue this focus as we work to achieve our goal of becoming best-in-class in titling and registration. We achieved Ecommerce gross profit per unit of $4,206, improved our Adjusted EBITDA excluding non-recurring costs to $(57.5) million and reduced our leverage by $56 million. I would like to thank all of our Vroommates, UACC Colleagues and third-party partners for their contributions in transforming our business and improving our customer experience."

 

Bob Krakowiak, Vroom’s Chief Financial Officer, commented: “I am pleased with our financial and operational performance in the third quarter. We took several actions to maximize liquidity and strengthen our balance sheet, including unlocking $59 million of restricted cash, repurchasing a portion of our convertible notes and completing our second securitization since the acquisition of UACC. Based on our progress, we are forecasting year-end cash liquidity near the midpoint of our previous guidance of $450 to $565 million.”


 

 

 


 

THIRD QUARTER 2022 FINANCIAL RESULTS

 

All financial comparisons are on a year-over-year basis unless otherwise noted.

 

Ecommerce Results

 

 

 

Three Months Ended
September 30,

 

 

 

 

 

 

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

 

Change

 

 

% Change

 

 

2022

 

 

2021

 

 

 

Change

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except unit
data and average days to sale)

 

 

 

 

 

 

 

 

 

(in thousands, except unit
data and average days to sale)

 

 

 

 

 

 

 

 

Ecommerce units sold

 

 

 

6,428

 

 

 

 

19,683

 

 

 

 

(13,255

)

 

 

(67.3

)%

 

 

 

35,134

 

 

 

 

53,455

 

 

 

 

(18,321

)

 

 

(34.3

)%

Ecommerce revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vehicle revenue

 

$

 

212,980

 

 

$

 

677,170

 

 

$

 

(464,190

)

 

 

(68.5

)%

 

$

 

1,173,727

 

 

$

 

1,644,494

 

 

$

 

(470,767

)

 

 

(28.6

)%

Product revenue

 

 

 

12,461

 

 

 

 

24,508

 

 

 

 

(12,047

)

 

 

(49.2

)%

 

 

 

48,709

 

 

 

 

59,155

 

 

 

 

(10,446

)

 

 

(17.7

)%

Total ecommerce revenue

 

$

 

225,441

 

 

$

 

701,678

 

 

$

 

(476,237

)

 

 

(67.9

)%

 

$

 

1,222,436

 

 

$

 

1,703,649

 

 

$

 

(481,213

)

 

 

(28.2

)%

Ecommerce gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vehicle gross profit

 

$

 

14,573

 

 

$

 

25,875

 

 

$

 

(11,302

)

 

 

(43.7

)%

 

$

 

46,153

 

 

$

 

72,704

 

 

$

 

(26,551

)

 

 

(36.5

)%

Product gross profit

 

 

 

12,461

 

 

 

 

24,508

 

 

 

 

(12,047

)

 

 

(49.2

)%

 

 

 

48,709

 

 

 

 

59,155

 

 

 

 

(10,446

)

 

 

(17.7

)%

Total ecommerce gross profit

 

$

 

27,034

 

 

$

 

50,383

 

 

$

 

(23,349

)

 

 

(46.3

)%

 

$

 

94,862

 

 

$

 

131,859

 

 

$

 

(36,997

)

 

 

(28.1

)%

Average vehicle selling price per ecommerce unit

 

$

 

33,133

 

 

$

 

34,404

 

 

$

 

(1,271

)

 

 

(3.7

)%

 

$

 

33,407

 

 

$

 

30,764

 

 

$

 

2,643

 

 

 

8.6

%

Gross profit per ecommerce unit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vehicle gross profit per ecommerce unit

 

$

 

2,267

 

 

$

 

1,315

 

 

$

 

952

 

 

 

72.4

%

 

$

 

1,314

 

 

$

 

1,360

 

 

$

 

(46

)

 

 

(3.4

)%

Product gross profit per ecommerce unit

 

 

 

1,939

 

 

 

 

1,245

 

 

 

 

694

 

 

 

55.7

%

 

 

 

1,386

 

 

 

 

1,107

 

 

 

 

279

 

 

 

25.2

%

Total gross profit per ecommerce unit

 

$

 

4,206

 

 

$

 

2,560

 

 

$

 

1,646

 

 

 

64.3

%

 

$

 

2,700

 

 

$

 

2,467

 

 

$

 

233

 

 

 

9.4

%

Ecommerce average days to sale

 

 

 

186

 

 

 

 

68

 

 

 

 

118

 

 

 

173.5

%

 

 

 

118

 

 

 

 

73

 

 

 

 

45

 

 

 

61.6

%

 

 

2

 


 

 

Results by Segment

 

 

 

Three Months Ended
September 30,

 

 

 

 

 

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

 

 

 

2022

 

 

2021(1)

 

 

Change

 

 

% Change

 

 

2022

 

 

2021(1)

 

 

Change

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except unit data)

 

 

 

 

 

 

 

 

(in thousands, except unit data)

 

 

 

 

 

 

 

Units:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ecommerce

 

 

6,428

 

 

 

19,683

 

 

 

(13,255

)

 

 

(67.3

)%

 

 

35,134

 

 

 

53,455

 

 

 

(18,321

)

 

 

(34.3

)%

Wholesale

 

 

3,128

 

 

 

9,760

 

 

 

(6,632

)

 

 

(68.0

)%

 

 

19,108

 

 

 

28,421

 

 

 

(9,313

)

 

 

(32.8

)%

All Other (2)

 

 

662

 

 

 

1,583

 

 

 

(921

)

 

 

(58.2

)%

 

 

3,408

 

 

 

3,358

 

 

 

50

 

 

 

1.5

%

Total units

 

 

10,218

 

 

 

31,026

 

 

 

(20,808

)

 

 

(67.1

)%

 

 

57,650

 

 

 

85,234

 

 

 

(27,584

)

 

 

(32.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ecommerce

 

$

225,441

 

 

$

701,678

 

 

$

(476,237

)

 

 

(67.9

)%

 

$

1,222,436

 

 

$

1,703,649

 

 

$

(481,213

)

 

 

(28.2

)%

Wholesale

 

 

47,604

 

 

 

131,306

 

 

 

(83,702

)

 

 

(63.7

)%

 

 

270,489

 

 

 

377,438

 

 

 

(106,949

)

 

 

(28.3

)%

Retail Financing (3)

 

 

40,654

 

 

 

 

 

 

40,654

 

 

 

100.0

%

 

 

120,005

 

 

 

 

 

 

120,005

 

 

 

100.0

%

All Other (4)

 

 

27,098

 

 

 

63,772

 

 

 

(36,674

)

 

 

(57.5

)%

 

 

126,622

 

 

 

168,677

 

 

 

(42,055

)

 

 

(24.9

)%

Total revenue

 

$

340,797

 

 

$

896,756

 

 

$

(555,959

)

 

 

(62.0

)%

 

$

1,739,552

 

 

$

2,249,764

 

 

$

(510,212

)

 

 

(22.7

)%

Gross profit (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ecommerce

 

$

27,034

 

 

$

50,383

 

 

$

(23,349

)

 

 

(46.3

)%

 

$

94,862

 

 

$

131,859

 

 

$

(36,997

)

 

 

(28.1

)%

Wholesale

 

 

(1,574

)

 

 

2,103

 

 

 

(3,677

)

 

 

(174.8

)%

 

 

(6,260

)

 

 

10,337

 

 

 

(16,597

)

 

 

(160.6

)%

Retail Financing (3)

 

 

35,954

 

 

 

 

 

 

35,954

 

 

 

100.0

%

 

 

109,637

 

 

 

 

 

 

109,637

 

 

 

100.0

%

All Other (4)

 

 

5,917

 

 

 

5,603

 

 

 

314

 

 

 

5.6

%

 

 

17,089

 

 

 

15,197

 

 

 

1,892

 

 

 

12.4

%

Total gross profit

 

$

67,331

 

 

$

58,089

 

 

$

9,242

 

 

 

15.9

%

 

$

215,328

 

 

$

157,393

 

 

$

57,935

 

 

 

36.8

%

Gross profit (loss) per unit (5):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ecommerce

 

$

4,206

 

 

$

2,560

 

 

$

1,646

 

 

 

64.3

%

 

$

2,700

 

 

$

2,467

 

 

$

233

 

 

 

9.4

%

Wholesale

 

$

(503

)

 

$

215

 

 

$

(718

)

 

 

(334.0

)%

 

$

(328

)

 

$

364

 

 

$

(692

)

 

 

(190.1

)%

 

(1)
In the second quarter of 2022, we reevaluated our reporting segments based on relative revenue and gross profit and significance in our long term strategy. As a result of that analysis, we determined to no longer report TDA as a separate operating segment. As of June 30, 2022, we are organized into three reportable segments: Ecommerce, Wholesale, and Retail Financing. We reclassified TDA revenue and TDA gross profit from the TDA reportable segment to the “All Other” category to conform to current year presentation.
(2)
All Other units consist of retail sales of used vehicles from TDA.
(3)
The Retail Financing segment represents UACC’s operations with its network of third-party dealership customers as of the closing of the UACC acquisition in February 2022.
(4)
All Other revenues and gross profit consist of retail sales of used vehicles from TDA and fees earned on sales of value-added products associated with those vehicles sales and the CarStory business.
(5)
Gross profit per unit metrics exclude the Retail Financing gross profit and All Other gross profit.

 

 

3

 


 

SG&A

 

 

 

Three Months Ended
September 30,

 

 

 

 

 

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

2021

 

 

Change

 

 

% Change

 

 

 

2022

 

 

 

2021

 

 

Change

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

Compensation & benefits

 

$

 

55,694

 

 

$

 

53,900

 

 

$

1,794

 

 

 

3.3

%

 

$

 

199,111

 

 

$

 

145,580

 

 

$

53,531

 

 

 

36.8

%

Marketing expense

 

 

 

14,945

 

 

 

 

35,214

 

 

 

(20,269

)

 

 

(57.6

)%

 

 

 

69,818

 

 

 

 

88,267

 

 

 

(18,449

)

 

 

(20.9

)%

Outbound logistics

 

 

 

4,945

 

 

 

 

22,717

 

 

 

(17,772

)

 

 

(78.2

)%

 

 

 

39,925

 

 

 

 

57,987

 

 

 

(18,062

)

 

 

(31.1

)%

Occupancy and related costs

 

 

 

6,041

 

 

 

 

4,635

 

 

 

1,406

 

 

 

30.3

%

 

 

 

17,408

 

 

 

 

12,599

 

 

 

4,809

 

 

 

38.2

%

Professional fees

 

 

 

6,459

 

 

 

 

7,694

 

 

 

(1,235

)

 

 

(16.1

)%

 

 

 

26,585

 

 

 

 

15,951

 

 

 

10,634

 

 

 

66.7

%

Software and IT costs

 

 

 

11,277

 

 

 

 

7,232

 

 

 

4,045

 

 

 

55.9

%

 

 

 

33,406

 

 

 

 

19,367

 

 

 

14,039

 

 

 

72.5

%

Other

 

 

 

35,282

 

 

 

 

17,326

 

 

 

17,956

 

 

 

103.6

%

 

 

 

89,374

 

 

 

 

41,731

 

 

 

47,643

 

 

 

114.2

%

Total selling, general & administrative expenses

 

$

 

134,643

 

 

$

 

148,718

 

 

$

(14,075

)

 

 

(9.5

)%

 

$

 

475,627

 

 

$

 

381,482

 

 

$

94,145

 

 

 

24.7

%

 

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 EBITDA excluding non-recurring costs to address operational and customer experience issues;
Adjusted EBITDA excluding securitization gain;
Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues;
Non-GAAP net loss;
Non-GAAP net loss per share;
Non-GAAP net loss excluding securitization gain; and
Non-GAAP net loss per share excluding securitization gain.

 

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.

 

4

 


 

EBITDA, Adjusted EBITDA, Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues, Adjusted EBITDA excluding securitization gain, Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues, Non-GAAP net loss, Non-GAAP net loss per share, Non-GAAP net loss excluding securitization gain, and Non-GAAP net loss per share excluding securitization gain are supplemental performance measures that our management uses to assess our operating performance and the operating leverage in our business. Because each of these non-GAAP financial measures facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes.

 

EBITDA

 

We calculate EBITDA as net loss before interest expense, interest income, income tax expense and depreciation and amortization expense.

 

Adjusted EBITDA

 

We calculate Adjusted EBITDA as EBITDA adjusted to exclude realignment costs, acquisition related costs, change in fair value of finance receivables, gain on debt extinguishment, goodwill impairment charge and other costs, which relate to the write off of the upfront shares issued as part of the Rocket Auto agreement and previously recognized within "Other assets". Changes in fair value of finance receivables can fluctuate significantly from period to period and relate primarily to historical loans and debt which have been securitized, and acquired on February 1, 2022 from UACC. Our ongoing business model is to originate or purchase finance receivables with the intent to sell which we recognize at the lower of cost or fair value. Therefore, these historical finance receivables acquired, which are accounted for under the fair value option, will experience fluctuations in value from period to period. We believe it is appropriate to remove this temporary volatility from our Adjusted EBITDA results to better reflect our ongoing business model. Additionally, these historical finance receivables acquired from UACC are expected to run-off within approximately 12 months.

 

Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues

 

We calculate Adjusted EBITDA excluding non-recurring costs to address operational and customer experience issues as Adjusted EBITDA adjusted to exclude the non-recurring costs incurred to address operational and customer experience issues, including rental cars for our customers and legal settlements with customers and state DMVs. While we expect to continue to incur these costs over the next few quarterly periods, we do not expect these costs to continue to be incurred once our operational issues have been resolved.

 

Adjusted EBITDA excluding securitization gain

 

We calculate Adjusted EBITDA excluding securitization gain as Adjusted EBITDA adjusted to exclude the securitization gain from the sale of UACC's finance receivables, and believe that it provides a useful perspective on the underlying operating results and trends and a means to compare our period-over-period results.

 

Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues

 

We calculate Adjusted EBITDA excluding securitization gain and non-recurring costs to address operational and customer experience issues as Adjusted EBITDA adjusted to exclude the securitization gain from the sale of UACC’s finance receivables and the non-recurring costs incurred to address operational and customer experience issues.

 

5

 


 

The following table presents a reconciliation of the foregoing non-GAAP financial measures to net loss, which is the most directly comparable U.S. GAAP measure:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

(in thousands)

 

Net loss

 

$

(51,127

)

 

$

(98,122

)

 

$

(476,675

)

 

$

(241,118

)

Adjusted to exclude the following:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

9,704

 

 

 

7,028

 

 

 

28,617

 

 

 

14,720

 

Interest income

 

 

(5,104

)

 

 

(2,930

)

 

 

(12,991

)

 

 

(7,288

)

(Benefit) provision for income taxes

 

 

899

 

 

 

29

 

 

 

(22,085

)

 

 

379

 

Depreciation and amortization

 

 

9,995

 

 

 

3,469

 

 

 

28,005

 

 

 

9,497

 

EBITDA

 

$

(35,633

)

 

$

(90,526

)

 

$

(455,129

)

 

$

(223,810

)

Realignment costs

 

$

3,243

 

 

$

 

 

$

12,772

 

 

$

 

Acquisition related costs

 

 

 

 

 

3,412

 

 

 

5,653

 

 

 

3,412

 

Change in fair value of finance receivables

 

 

(3,012

)

 

 

 

 

 

4,455

 

 

 

 

Goodwill impairment charge

 

 

 

 

 

 

 

 

201,703