Vroom (VRMMQ) 1 Mar 222021 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Vroom Fourth Quarter and Full Year 2021 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your host today, Allen Miller, Investor Relations Officer. Please go ahead.

you. Thank and Fourth everyone, XXXX and to Call. Earnings welcome morning, Quarter Vroom's Fiscal Good

IR the posted are website XXXX Please earnings call Executive on of fiscal webcast us Joining today year Relations Investor The to Bob call be are website. section Chief presentation fourth on this and the Officer; company's Paul and Krakowiak, Financial ir.vroom.com. that earnings Officer. corporate the release note the will also simultaneously at and Chief Hennessy, quarter

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

I'd presentation Executive Hennessy, call the off quarter presentation. is comparable Officer. a the release find like in to yours. fiscal reconciliation a measures GAAP Paul to Chief of over can floor and the and year management fourth conference those now earnings hand measures directly XXXX and most The You of

full us a Welcome, off, for Their business. our fourth and of are XXXX as few their only Bob work levels outlining support allowed Allen. into our ago. to contributions highlight presentation I'd year and and like put it walk thank through members To have seemed performance dynamic to I'd scale ongoing reach to employees and our grow like you, a environment. I hard that quarter also the investors our Board we develop kick years recent to in Thank our and everyone. continue building our unattainable outlook. going to our

on start Slide X. Let's

us Tom I Before where expertise us our served recent President Senior Operating our shape Walmart, January, we Supply Tom Vice and of we wanted Chief joined hire Shortt, long-term in build of as system. dive into results, from operational helping rolling up Officer. brings robust his our out sleeves vision is to for already new a highlight as Chain he X years. Tom

roles great at on Prior Scientific Tom During I'm Office focused Tom here the served chain ACCO to Fisher leadership senior for Unisource, to ecommerce at in chain, Walmart, fit have him and Home a Walmart, which is his team. time us. supply ecstatic supply Depot, Brands, on Depot.

year-end We sold, our the growth. not triple-digit our customers' margins This fourth We $X our I heights year. transactional revenues doubling the year-over-year, key XXXX. That in surpassed ecommerce XX improved model. X. of XXXX, more enthusiasm targets of teams we profitability Vroom a reached our goals. markets, to a count highlight and unit only delivering ecosystem, year doubled exited the at reconditioning supply unit, delivered grew made and operations chain Ecommerce extraordinary demand our billion reflects execute acquisitions. our to accomplishments breadth want us, mile operational We further centers increased our expansion of in for versus growth We've exceeding step by consumer sourcing stage-setting year for back for of with scaling XX% program last strong entire Product on matched over new across hard We total In nearly our our new the by with to We year-over-year for of increased validating our terms in both XX profit Vehicle XXXX. gross but XX% Slide business. deliveries GPPU, ecommerce year business. in than to as along and target. XXXX. tremendous or XX% units the Moving the was worked end the per new own to of quarter,

I of acquire year. to insights. as pricing More was ability UACC, to mention pricing we company, our analytics exceed not beginning would we the the during time earlier We a pricing XX% instrumental strategy This Auto into marketing, came our exceptional in or fourth acquisition our at to delivery look and We're acquisition proven have XX% XXXX XXXX. pleased Corporation, back our recently, retail algorithms fully with platform expectations. vehicle to from conversion, lending. remiss successfully consumers, up that our the forward in customer transformation of units AI-powered consumers, leading the integrated this United from from dynamics. driving completed leveraging be captive of We new quarter Credit also acquisition data units in CarStory of sold directly experience

financing restricted $X year In capital to ensure million plan We to with notes. us base June, growth convertible the investment. also term steps These excluding through raised expanded Vroom. future we over well for continued to the ended cash, and XXXX. issuance of $XXX extended over for billion our growth and our We have floor $XXX expanded million positioned cash, availability and in recently the

on XXXX. comments high-level few a Now

unit business plan improving from new and in XXXX improve economics. will customer centers volatility transaction holistically financing and Our which capabilities scaling streamlined on reduce in-house experience, a the logistics, help our

year. from alleviating December captive and already compound financing and as improving We anticipate and to levels capacity we profitability rate constraints. these we medium-term sequential improvements exit improvement In the expect are first expect from We further from move progress. stabilizing tailwinds through quarter, we as the

move In let's in year-over-year than sold environment, XXX% was year. on Ecommerce more Ecommerce unit business. per as sold the as growth unit for as by we Vehicle growth with our processes vehicles nearly the efficient double and revenues brand as reconditioning as used XX% was XX% to a attribute gross awareness $X.X coupled the Now We This selling compounded Slide ASPs. units XXXX, ASPs strong the in growing we XXXX. over an increasing demand XXXX. GPPU fueled prices, methodologies prior billion well XX,XXX GPPU units, in X. In Ecommerce to turn, grew heightened across the capacity year-over-year. exceptional Product profit Vehicle increased pricing from in versus improved significant business pricing by extraordinarily to environment expansion more or primarily expanded average benefited increase increased in

of higher Our is loan product Product gross profit balances. higher of as strong unit as execution well average result per team a our

transactions. new X. of consumer-sourced units Let's in while a increased earnings the growth a doubled Transaction absolute unit quadrupled. are more than reaching sales at we for in ecommerce units plus We take retail-grade and nearly in to total Slide XXX,XXX. our trade-ins. and purchases look sold our consumer-sourced high relative XXXX, on as deeper terms remote XXXX, focusing call, ecommerce define Similar these We ecommerce trend year last our unit on

increase off. year. million visitation in a Our of of reached by investments We record more XXXX X.X in unique monthly marketing the has visitors paid than website end average the

us recently, year-over-year. XX% increased We will help our our More seen Super awareness. brand awareness you the brand by also advertisement build further long-term on may Bowl, which have

facility, operations XXXX, XX third-party our with Moving on our initial with the locations. X we centers in Slide total to XXXX reconditioning on us Starting XX target exceeded new centers, ahead quarter. our fourth supply brings additions X, including well targets. putting of we reconditioning reconditioning, to chain XX This us opened new of in own our

shortages evolving Our the to incremental XX% environment the competitive during costs continue increase capacity we a fourth future, In reconditioning reconditioning capacity. the dynamics effect to of quarter. of labor in year-over-year as the continued efforts we expand constraints Still, in our pandemic. resulted and will address faced the reconditioning in immediate a

already XX% of target hub also the the quarter. of we in mile our number questions for This with year well acquisition locations. the about reconditioning expand towards quarter, long-term of XX% partners, the rate of put last our a recently have Having as XXXX, us we of to mile host exited the ecommerce one hub very target a the hit we our over of you fourth using few potential last We last experience deliveries exit to Turning goal may impact last year of mile our prior deliveries in ahead intend who XX%. by realize of mile. program. this announced XXXX a our In mile last our of experience work

We are and that studying third-party with working increased expanded our and providers proprietary on capacity can include capacity. a situation combination the solutions of

how today. is say situation much to and Given new the is, more fluid not there

fulsome Day presentation spring. to approach Analyst expect more in provide a our We our of view the at

more target increased kickstarted to continuous Slide X. hard focus need on a of the process. a model, outlining love already optimize our as and sales strategies business. undergo deliver we why efficient, about with key for of of customer scalable strategy. experience merchandising experience. Moving plan. that transaction working A/B growth to streamlined vital this Starting Recent part XXXX are customer and testing to the we're fast, we That's experience, a consumer-facing want system. our this Customers the has our our tactics I number We've to a talk

features, e-signature more. implementing also streamline plan end in We new solutions. the for back capabilities workflow to digital including by the sales investing account also have We're and functionality automation funnel, the new enhance

fully the digital lending customers our staff. solution will incorporating our sales captive process a and and lending help simplify for Additionally,

gross the transactions We a record-breaking We year quarter. each recap profit Slide our of operational triple-digit X. fulfilled on exceeded with expanded level unit. Let's unit targets. We step-up We delivered per growth.

acquisitions, forward UACC. and recently, moved closed We most on also strategic acquisition completing of the CarStory, X with

We in are building XXXX. a platform strong, sustainable

transaction to to drive focus efficiency and experience profitability. enhanced speed We are improve customer going and the on improving

We take and will hold. test initiatives as small new big scale

will to economic Bob? expand capacity experience, user across our a review call performance will our and with program guidance. will and in I'll we drive to turn a We chain This financial portfolio, that, our captive in and enhancements, reconditioning. financing streamlined supply improvement. include the faster Bob more ongoing over unit and conversion With logistics UACC begin to and investment

quarter, Thanks, financial on XX. Paul. with the the unit revenue provide Slide some for summary of in growth I'll ahead during of the start We and quarter and guidance the coming context outsized drove expectations. fourth

expectations year-end adjustments higher unit on the line. per we Starting vehicles reconditioning headwinds However, increased faced units of XX% quarter and to XXX% This and the with Fourth our retail premium for well year-over-year to profit higher as revenues fourth as top and quarter million. for growth related we or sequentially. as sequentially and increased for due experienced unit higher-than-expected to as our gross as $XXX the ecommerce higher reserves. pressure depreciation X% from surpassed X% inventory Wholesale accruals costs revenues. guidance well year-over-year XX,XXX programs of high-end warranty price Total outperformed

drove demand quarter, spend. we increased high During marketing with the

units due were These as for reconditioning below the also Roughly performed partners over The grew warranty acquired well The and accounts. the variance $XX variance approximately GPPU. fourth turn, profit-sharing GPPU during increased of struggle by came by quarter subject continue was and to November remainder higher are million environment. constrained units is volumes higher our profit. explained sales. costs accrual guidance. due supply year-end drove quarter, guidance We to in the well strategy. Wholesale higher third depreciation vehicle nature, above expected adjustments of the X/X We as on was the variance mentioned. the of half optimize to and levels and marketing and due Approximately retail brand below to of long-term spend, is be ecommerce profit unit ecommerce our driven the our to increased not Total pressure quarter guidance $XX,XXX our inventory expectations to warranty supported below GPPU. $XXX due the our remainder EBITDA loss recurring and year-over-year, GPPU costs our guidance. the Omicron retail put inventories the XXX% expectations. with staffing price We in This, auction increased transitory chain for in previously to ecommerce Adjusted as December which was impact our versus gross gross reasons increased was to to to and accrual units believe variance million ecommerce reconditioning $XXX of I in a to

months discussing go note, to spend results fourth X. the this on time more I acquisition first February UACC guidance. Before our like estimated since would includes some into X I detail quarter on closed Please quarter, of from

approximately $XXX XX,XXX focus GPPU units expect to higher-profit We towards and on million restoring we as Ecommerce ecommerce in transactions. XX,XXX Vehicle revenue

not improved adjusted For QX and quarter. are QX, March. in $XXX lowest first changes customer presenting increases change in the XXXX. pandemic time, the in used EBITDA for by $X,XXX loss market, experience, rate and costs offset as market, we conditions We be GPPU the current guidance UACC economic These was and this third-party anticipate anticipate our ecommerce employees from fourth will EBITDA at to December, due the fuel partially we increased million by investments in GPPU of to The quarter. year from approximately versus level we car improve wholesale which the during At pricing EBITDA carriers. February is in the for headwinds driven full reconditioning during in the

currently the UACC will believe I of impact the the lending. full not are year do to announcement. implications improve We do acquisition are we as providing GPPU want we captive transition operations each although finalizing to continue assessing improve our that we to and ADESA guidance, emphasize of that quarter and recent the

will our become improve throughout customer and year We our as improve leverage also we to continue more experience. SG&A believe the efficient

are also sequential of after EBITDA We XXXX. quarter the believe positioned for we improvement first

vehicle increased increased vehicles, in and and higher with driven and sold with with hosting resulting GPPU to in proactive outlook. Wholesale year-over-year our the quarter. through average financial in year-over-year primarily in Product Ecommerce attachment to increased reflects loss. to will loan to favorable a in improvements as XX well as coupled prior market sizes average more performance. our to consumer-sourced came execute explained the unit market GPPU Please Senior as million. of for prices. future. Slide the coupled $XXX was Consistent remained driven units XXX% We elevated details I year-over-year per higher a XX, on forward of auction in the prices benefit wholesale $XXX selling unit Product Ecommerce be by increased growth higher fourth in ahead GPPU management was per present at GPPU pricing in strategies XX% sharply contracted decreasing at practices. look ASPs, remained Day in wholesale was higher of strong year-over-year We from This elevated. $XXX increase turn continue Ecommerce business XX% higher teams $XXX increase sharing by Ecommerce earlier. profitability rates demand units, for primarily quarters XX% will X,XXX increased used company's the product near our the XX% Wholesale revenues a summary Vehicle to trade-ins, to market an Higher Investor with our Slide spring. XXXX, Wholesale prices a increased broader improved by as reasons $X,XXX. sequentially. year-over-year from increase performance. as expectations. Ecommerce our units go year-over-year our ecommerce On Wholesale I'll units, The year-over-year Ecommerce driven

Turning XX. Slide to

at Let's performance SG&A for year. look the

sourced units Per show plus ecommerce transaction. defined ecommerce annual SG&A as units from we retail-grade sold Here, ecommerce transactions per are consumers.

booked from was $X,XXX $X,XXX leverage transaction logistics we of approximate per for Our on an headwind. per SG&A transaction. rate rate in $X,XXX per $XXX on transaction market SG&A in costs XX% underlying approximately was XXXX, an Pressure improvement XXXX. Net, spend inflation

investments pleased highs in our across transaction in handle are our to operations We levels. new leverage see to

February financial provide this want providing today, not We million. Slide to are $XXX at a important a we on key UACC full on few While profile of updates acquisition of approximately the acquisition on this we XX. closed for beginning

and off-balance We accounting anticipate since sheet by also an We acquired recently closed transaction receivables gain of to purchase first million being adjustments. in securitization subject finance net final UACC's a $XXX Vroom. sold

$XXX capital further February providing in do of half million, UACC expect our unused XXXX. finance second to securitization We business. access lines to securitization captive warehouse Post of another has grow the to transaction, the

Finally, an extension leverage in from balance with approximately modest cash, acquisition on ability to to floor XXXX with for upsized opportunities We future scale. working March UACC forward-flow and closing, we transactions XX. UACC's our over ABS million. to Slide capital on level In sheet. XXXX. further a for restricted liquidity We We $XXX year-end million liquidity the and billion the see plan incremental new XXXX of let's excluding cash before through we review at add ended ended our $XXX efficiencies, closed to million, $XXX $X.X

face consumers and will in and new unit we have deliver constraints, with we that improvement believe growth, sequential EBITDA. SG&A we sourcing. highs record consumer GPPU, In to capacity near-term we reach increased While in our leverage XXXX, sales

profitable We for continue that, Thank I are your for business growth. and to you. position the With questions. ready Paul

[Operator Instructions].

first Rajat from JPMorgan. the Gupta with question line of Our comes

the first contingency I one Great. just couple, a first was and -- the on had one planning.

have implies UACC, The converts. post a cash quarterly XQ roughly million cash You $XXX $XXX in million burn $XXX million. guide of in

acquisition, plan environment? is get due an follow-up. business owning guide the such still shares the first the rerate uncertainty tough So a already I if labor GPPU. on The fund And it fourth in for if Spending given how comfortable seems, the an here, pretty share quarter, logistics, are And quarter you second -- environment? weak do to the capacity quarter stock the not the have elevated. is how is to And there to do sufficient investors ADESA right? levels

Rajat. Sure, Thanks question. the for

year. the outlined I So you've ended think we that

QX think important want with burn EBITDA -- rate. emphasize of investors that I to see our things one first the really trough is to I emphasize that of for we is as all, Rajat, So the

volumes, We XXXX. we UACC. see and our sequential improvement throughout expect We $X.XXX several cash. To spent liquidity. in million We $XXX your year improvement the billion point, with on unit revenue to for ended GPPU in opportunities

We under plan have capacity terms opportunities to floor improve the continue current -- improve and increase facility. to

working There's We modest and capital significant efficiency. adding working also have to to opportunities improve on leverage UACC. capital, opportunities then

believe impact Investor cash look investments at how through and specifics at centers. than And have to we after the the take our talk the more about the If really at reconditioning a spring get look we'll potential vehicle enough -- Vroom-operated you for ADESA Day impact of and at in we XXXX. to of acceleration and announcement reconditioning that going that's strategy look our we

So that, we'll have more that Rajat, say at about time. to

it. looking forward Yes, the Got details to Analyst the at Day.

was The question puzzling. The on just pretty is number GPPU. fourth quarter other

You in guided mid-November.

was surprising that, like of like situations. impact. miscalculation And exactly vehicle CarStory a just we the at it's data degree. these have premium the curious, type acquisition to was was GPPU that there in either anticipated meant really does been of So this Our drive the of not inventory? sort depreciation was avoid acquisition not to suggest pricing kind some like I'm tracking this drop-off here sharp to sense of the on least, that

So -- going better. look environment and any get pricing it the doesn't is like to

comfortable will do how not the get the of year? persist through headwinds that we remainder So GPPU the

Yes.

questions. the for thanks Rajat, So

guidance. versus GPPU more Let on during me give a the fourth our little detail quarter

provide it So you bit guidance, more miss I'll the but in of comments, I look miss -- talked a little about about and if detail. half at versus my the

quarter there we it during decision. about third So $XX,XXX were premium for purchased that -- we sales, was the and the -- vehicle in vehicles was was quarter over miss -- market to made so -- it half auction fourth due that a the of

capacity our So we've about reconditioning been constraints. talking

had in that we we sure of decision make a that the going were in work-in-process we plenty the inventory all facilities. So to quarter recon made third

down. lot quarter with were bought with facilities we the and inventory sure getting we So full pandemic in of all because to third the were curve the facilities make balls a those that closing thrown time

seeing demand of really lot So we and -- we a were for were units.

in we and did the And and we the system, a units over economy in many November -- vehicles hand decision miss. the was vehicles Those were of dealt. poorly December. performed that GPPU as on were to So $XX,XXX we through vehicle mix depreciation period, see GPPU inventory. able We half invest made given that premium pull to time substantial in it for during the about

onetime supply that we So due We the primarily programs. for rate booked warranty to year-end well been X a as reconditioning a had that our Rajat, hikes was costs talking accrual around constraints accrual sharing chain profit our other with to carriers. about with a item due half, extended increased the we've -- We factors. as had really

And a And to QX. a more, that started of you lower we going we accrual. an found to and had in that on that -- than basis. we analysis And regular we at to And people we do claims claim onetime result grew rate the up those that referencing a was it's adjustment started what over reserve So quarter for that make work a we fourth really up, was that our something to our that, when analysis, amortize attributed And an as to earlier of back perform to going you adjustment. quite sales we booked faster saw were and a purchases well, we to in and a actuarial was go what addition that had continue of inventory that's inventories the their in the I -- they to vehicles, the on we grew that accrual and Rajat, fact rate or using vehicles. make driving sell. a the market make we as our then more cost bit,

over that your growth hit and amortized take more you it So when smaller GPPU. you to buy you sell, than a vehicles rate, gets

the that's to from actual our walk guidance. those $XXX the performance are I -- So the mean, on

from Fadem Wells And our Zach Fargo. of line question comes the next with

lost your business? other any this your you capacity Manheim more sufficient third runs And about to talk what's you parties Specifically, or believe being impact in your there through current a talk do is reconditioning ownership year? own to how plans at then of facilities little of offset could Could ADESA? the you separately, to here? ADESA's And on much change open

Sure. Zach, question. for Thanks it's Paul. the

Here's the announced ago. days the deal. think couple it way a ADESA One, we about got of

want And we're about to us thoughtful deeply means characterize course, that. be overall. ADESA, between we we of XX% to really So thinking impact it the about how of Roughly what and look, so currently XX% ADESA. that repurpose over or understanding of time, their sits predominantly our with going And it's the for reconditioning own use. our capacity ADESA is Carvana, to

And so our we're working channel and with confident, we the run own confident And ADESA time team now to near-term our own looks in are. an capacity. others. we've our We're line impacts factory, on there the opportunity that expand and solutions with what that like is we're that as third-party got what Manheim

that. thinking about we're deeply So

much our associated our we that's Day those parties, ready and we're capital overall be with the again, our when position. we many make other I a of those. discussions as of and us And say in point, going better think and study own past, are, the to and locations. at balance to and our reconditioning with for our to a then, with through sense as expense We're associated kind our of not in those line Investor of continue lot but to outcomes think of how far time capacity mentioned our own on walk this distribution And way. we'll you analysis the locations, in the as the I've

right but right going the opportunistic of then relief to the be sized level we on with location, we're right directionally, opportunity own capacity the around think facilities. our them I and

all on -- table, that. So is of we're that and the working we're through

And one it. for Bob. also Got

the comments improve EBITDA that gradually year. and should On the through GPPU

of specific all, be your as of on -- could helpful the business UACC GPPU the QX, through flow impact with the terms path then And that to and layer it of impact how to parse Omicron improvement First EBITDA? year. in starting you remainder acquisition transaction the you as would QX, then could in glide in the if in you units it'd GPPU the disruption both of out well expect and ABS

Yes, Zach.

much So for thank so you question. the

we relationship our to there respect impact and of that's listed a result inventory have our some sales well. impacted, have we hard weather been is been our specifically pretty January. disruption of were amount in and course. had well to so -- January, ability have sale Omicron, So in in we volume, as we for with Omicron in of specific a with addition hit And the February -- as as, between also available as We

of haven't terms the UACC, quarter as just respect the then our really, on UACC. of I constraints overall your and really impact. our want margin detail to focus just so on capacity And a on the us, a in getting In up But our getting the of the question -- on margin maintaining our to reconditioning, QX. quantified factor, with give well overall we for little bit weather for overall impact, first the combination guidance it's the reconditioning as

QX. estimates -- have did purchase our put respect not So we the with final we so accounting we do in adjustments results the for UACC, some include for but to guidance

we familiar of thing part that's did a realize adjustment have the -- important securitizations, the we to one And So February. on securitization fair that in as subject not benefit accounting. for you February to value and full we of of is those purchase is that will are securitization because with a gain in that get

current the will sold be that the And market to where -- -- about securitization that will about that QX we the of little in we're cadence nuance a transaction. back won't terms of XX% million that part And of fair gain on have are the the of the And of based numbers value. another for of in QX for as that, The on So $XX second the out market UACC transaction. a with had we've of gain $XX about year. got of securitization that we're UACC February, that expecting result million in market finance in receivables second EBITDA what's in we'll -- terms same be conditions, -- as be are securitization? our a we we expecting the in the in in half

Baird. line And question our comes with of from the Colin Sebastian next

as I guess two me well. for

But terms particular you I been In respect out I past talk not the in on know to through year, full the where bit, giving year you the of guidance of based increasing from a operating capital market about couple and any with of and factors expect which, a broader can maybe year, whether perspective the at think, position of that that in issues logistics, point. you're marketing this to can leverage break you're spending the the be and And of the in have liquidity over then some additional end unit trends at quarters. you that course raises. expecting per maybe given

Yes.

for question. Colin, the So thanks

So looking in the trough we what -- year. we be what's and are on capital. time, need pretty terms this going in to we're in at the progression, cadence be the I the before to do versus of able be point to the continue view to recon assessing terms work our -- overall of EBITDA to of to that ratable is that on rate a in question, -- prior EBITDA going to impact still more as terms There's going the that at of And forward terms build of that strategy going we the throughout EBITDA of performance. view, at quarter we we're said we terms are our so as first in in that

there's done more until to spring. some to Day I'd to more Investor do we be work about that have on at opportunity And comments like my the withhold we'll an say still that, and So it that. on needs in that

of then from liquidity this And Okay. exit sort commentary year? any rate on

Yes.

rate need comment it -- it a our on is the we going liquidity accelerates -- that's if to and provide just at that answer. as because we well reconditioning -- different that the in own to a Obviously, provide exit work have reconditioning to make to of that's centers. have the don't I do a what this going So our investment strategy different on point

for ADESA us opportunity So over going what is to the until the had to -- understand -- materialize XX on next what withhold I'd days. how like the we've our to announcement the that

Wedbush our Basham And Seth line comes next the Securities. with question from of

had situation About hiccup My which you sequential in to to recurring. caused GPPU. additional you a a prevent to and relative guardrails big happens is lead to missteps in from the those And put what different. management, safeguards such a is guardrails GPPU management. some massive inventory first today's year ago, expectations? in question inventory on your safeguards a But situation guys and to bit in Obviously, decline

Yes.

our In of credit environment, had year and I units in we're spectrums. of capacity, bought various depreciated think that to Last sales are that downward And in highest related those has sales buying to the in of on inventory as that an environment. different ready for units time. operation manage we for Bob dealing to the sale mentioned And price work aged we situations, some to remarks, pricing across particular unprecedented finished with into us depreciation, absolute and faster. units them. all two actually in pressure progress car customers reasons there types affordability move created used which this to his was appropriately an And that put our get particular goods Seth.

we so And that. did

there the again, again, in And increase. per are inventory is. again, look, Bob different kinds we think control will unit, articulated gross series of And on management. why hear, for of So you'll see safeguards and move as forward have that reasons I and I are year, a situations. The two very profit throughout

safeguards that I And say so would the in place. are

at we quarter for driven that's Omicron you other Or why explanations purchases on clear, first be to are in back GPPU. by guidance when improve way decline units to just inventory besides for cutting And sequential and and expect there Okay. sales, unit decline to that to try you the look your ecommerce your weather?

December of November, result at for then were reconditioning more of a Yes, number referenced my want be current it not October, you to first X capacity GPPU around both in that GPPU if and as the constraints weather this came are cutting factors one. Again, quarter. the Omicron, I it's was as quarter, back I look one. the we at not vehicles and mentioned reconditioning -- inventory earlier on fourth September. I comments, our down we the around that -- down. constraints, was with the number two, a purchases lines clear available trending really situation, along of with sale mean, on result the it's -- in for just And It's basically -- that I

for in So us quarter for December. to lower our get fourth to started get us base. the were at lowest point to a to -- the $X,XXX, during at We we

focused we're back working way and margin. our we're our up, maintaining on So

the really unit QX. other for reason reduction the that's in So

of comes our Blair. from with question William next line And Sharon the Zackfia

operational? would cut come providers self-inflicted. or a just up kind third-party your the elevated And also last is new out missed situation, ramp have Sorry a logistics was cost just very if then part times. to of car between see starting versus kind logistics what understand is second us just your update own And could And on to on you fluidity facility few it that line basis? are goal on -- X facility costs basis. per you could how start could of is But a there? on recon you quickly down very, delta the I But of the hoping, costs a this secondarily, your I given owned car owned at And questions I sight the quarters, to capacity us an of utilization what of a midterm and that be reasonable line update facility? of -- myself, on been the get per the you where at ADESA give

question, Sharon. the for Thanks Great.

to costs. X. facility with those difference are internal the overall the third-party between cost third-party our our and of line see versus We relatively So costs don't first all, between costs on in a significant our respect facility,

look you Stafford, when ability to part net you the work the that's average what Sharon, add and issue running run roughly our today. We're have into, is expand to we're impact. both rate If the of trip, expand that absolutely increase at and to one that ability at doing. inbound and and assessing capacity, The running the we it's capacity. you -- do outbound, that is with you was owned respect facility double shifts point, the at the to

several work at a investment? the in as began in -- the talked So -- what mile we look of been haul to those process that's especially is then the mileage investment, over that the last logistics. for you And pulling have net that to investing we've We've terms the part that making we get line investing quarters, And of our in If in inbound course, We've about and, haul, delivery. been in doing. of of that. we're past vehicles haul result impact efficiencies. line of line logistics cost,

So fleet. inbound efficiencies we result in our of with investments significant a a as the made are we've that amount line our expecting shipments on of logistics Vroom haul

question of line the Securities. our with from And next Naved comes Khan Truist

on I made had guardrail a earlier. comment question the guys that inventory you

growth your So X than the across called all across units out on you quarter faster segments. GPPU. fourth the inventory more forecast And yet impact sold were board, for the the of

out off. to your vehicles projection kind terms overextended you're you're that buying of vehicles of inventory is wrong of That you in what are acquisition? type it forecast going sell is of when that just So more? is on just it maybe kind Or the

hand like were the of were we situation. It's do reconditioning vehicles. dealt more the definitely trying that we current of not feel to I with No, types Yes. a we're optimize wrong that buying really difficult

were story over a country, story we looking itself. recon what is by center So and each doing were the -- individual was all there's a -- was we

So not third-party you that at were facilities full our operating partners. some capacity have with

bring conversations have get we we and more in about more So reconditioning. vehicles can with we them can

lot sure adequate that have got have -- we perspective. sure in we terms -- thrown we disruptions. adequate to a to -- unit because strong get really have from at capacity we we So bring we've an demand of overall make more we made that work what in going made because decisions us really going And weren't we're width to was

allowed Inventory we unit at a goes to -- amortized an So imbalance bought reserve had that we every us is book reserve really, our the it lot to sell. rate we And a our faster than an what the buy grew And units those we sales LTM gets to when more up. because there, grew. that do over increase there's inventory.

So reserve really issue it's caused situation more of else. a a as -- than of anything the in a reconditioning this -- more result more this increase of transient that it's the

you're as be And from drawdown kind improve to a for even ties until should So but as that the we work then had through a there? I the this, for question. levels inventory of and not maybe know we on you bigger 'XX. maybe into the question CapEx maybe question guiding year, levels expect well liquidity I stabilize full

So should we XXXX how think growth? about CapEx

it's the are then an at way the general in should it's -- is, our year think making it XXXX, And investment million. CapEx this our we about On you Yes. for ledger -- XXXX, for company. you if look look -- system so a for you around at $XX level

reconditioning general And that say still a more And growth for and Day -- it the our that ledger. additional support as still Investor -- captive. project capital piece other of we've the that this significant the are a there's to to Vroom-owned Day. more then be talk and through, So UACC at we'll about able facilities to in And for additional have at to got working some investments is then we'll we're convert to investments in spring. potential about well we that Investor

Got it. clarification quick on And a just UACC.

sense? line, line, just are us run it financial profile standalone had, going you So the basis? And on from top of it also was bottom give to kind both some to as business a what

Yes.

the pretax $XX all, be part -- we're every at of business. time the to -- profit at every excited basically, for to UACC time of at I'll as the more So a it's going family going have look year had some go UACC's just bit more the about performance, a and million. was first UACC. spent comment look of They've if people Vroom. group a of and just team great to little great -- UACC's opportunity of And you if transformational truly last you weeks thrilled visit. on us. a It's I be I couple we ago, over there I -- a time There's with

about excited extremely we're opportunity. that So

challenging the of vehicles. terms We've continue then see of subprime we've seen appreciation at has segment In the subprime the rates we beginning with they've a price seen ticking bit price little appreciation, up. seen of And business, the top their are on year. been -- to interest

up, They've with So is to But the affordability challenging. large with we to continue our continue to a of just were the opportunity. financing seasonality a the we across more us dealers the to grow that X,XXX afford country. what that dealer $X,XXX They from tax an captive comparable business which, do to that a economics increase the vehicle when base. to said, becoming due would into that's And the we've then seen GPPUs and ticked base. them couple benefits in we them we'll believe lender, fully going we'll to weeks get a captive They're perspective. we've Carvana dealer a opportunity got converting season. and have of grow to plan is think for last But transitioned fully has, the $XXX have which

from next And John Instructions]. with Jefferies. line question our of Colantuoni comes [Operator the

And a I to GPPU in sequential a as work you of cadence on the improvement Or these transitory start we through with should see unit XQ XXXX. each expectation just the see quarter? headwinds? a e-comm Is have quick you'll of and that a wanted kind gradual then in basis recovery sales I follow-up.

that take one. I'll Yes,

amount in addition locations were of last way from up end in about each We now reconditioning combine we our from start the for if took our XX% you means, integration building both we that in for and this originally XX and these to economics going this on unit last growth, the then quarter-over-quarter ability year. this blocks minimis deliveries that from And to think point, you to long-term to we investment building articulated well, now then of past is instance, XX be quarter-over-quarter. I by in to and that we're the work locations from thesis of year, own consumers, mile handled units, XXXX the Bob our our And of over fourth string and pretty cars which went these consumers, like from UACC, that the a think when has think about momentum sold XX% business did put leverage. quarter cars SG&A you the deliveries over acquired are again, one de last to mile. with in a are together number buy our were and

than And gradual so of we're to -- again, that. we're you'll improvement V-shaped recovery see unit. think rather I in all investing deliver gross And profit per

the first And That's on does if And clarify, the to $X,XXX the helpful. ecomm include quarter, then... that in just it And that? quantify maybe recent GPPU, you securitization? does, if can

the $X,XXX. not It securitization the in would doesn't Include GPPU. doesn't. That impact It

and also consumer purchases trade-ins, for does just direct of that that remote definition. correct? want units ecomm definition just to I not use units QX Is that includes clarify, ecomm the guidance Okay. then And the also new

retail ecommerce separate were one just No, sale. for straight-up think sold is to ecommerce that transaction different cars And versus ecommerce total used are are There against in we that transactions. of purchases versus want the a I you ecomm units referencing X the nomenclatures.

of over be mean, up done ramp the when where good It -- for I was spent now just into news to ramping we're course distinction going on the a up -- are -- comping. is costs terms year. to side. also important the consumer-sourced -- SG&A. last in we've a it the with zone associated an lot heading of us consumer is of the there we've lot last But we're of source And the a over vehicles the course

much high our than will at it look has units -- just continue a that the we to that will to look from year. the is look you and number relative source -- we the in If are doesn't anomaly. you tell quadrupled has more at able a whole it buying just transactions, when been high sell, we year that them we've to so over of it and because apples-to-apples you'll be there if the it comparison to directly number, an because be up just see the number the last market. vehicles total consumer be And just the consumers, been purchased directly sold, last story This doing at costs vehicles auction you'll

reason just lot look That along are I there's obviously, makes a I bumps might to there But you're transitory question. headwinds been some you there mean, sense. obviously just that one nature. -- I'm is squeeze facing high-level the of growth, improve And model to why And want you're And a being margin model is I to little in any the a that why way. curious, think those Just I'll plenty partnering that's end the create so sold? mean, of -- a units want business? to the ancillary pivot of bit, and generating to a business just your marketplace unit maybe profile there. with dealerships core start not I

when and we to had to our open I model, is pivot Vroom good very and and need don't of That's being running then what and because quick can we as a you vehicles which in would to allowing the network, broadly, driving to investing But Yes. transactions Look, the see are nodes we that. when that our model. carry the advertise transactions? feel thing something at, add Quite on a that's that we own attractive think all issues, model. and experimented that on to we for you in profitability, dealerships the is economics the very build really said, participate scale we've continue path we'll our about and that you a the the the process, on. streamlined of third like this the a unit do transaction with very, trucks space when transaction and And that, associated deliver current playbook of parties, that premium running. we're network, And logistics stimulating demand be leverage transitory experimentation laser-focused have recon third-party we talked to creates versus see distributed That that and paying we're opposite. evaluate

we the from forward path because here. been enthusiastic can model the see I've I with as think we're as

comes Yruma with And KeyBanc. of next the our from Ed line question

expensive does And for on? the change This you Ed. the offer now what Hanley is How example, change to on cars pivot less you addition does that you For can Samantha make an UACC of buy? vehicles? can

early in question. up opportunity UACC, were open on, We've this acquiring of the great we a Yes, to going said process when Vroom. lot is of for a

comes on gone reasons versus us predominantly the which franchise we've of to lower-priced we've one that what demand in actually cars us both think record the into print, the the place. I that and be subprime is prime to turned business for UACC to actually first what that out business, brought brought a

benefit drive that because it convert we're have will unit It yes, to be UACC then the So profit. drives aggregate traffic. and conversion tools to because going improvement be economic traffic north drives that gross to of converting we'll able

-- drives for our you So it and process then as an there's lender. if system, just streamlined an end-to-end about also think a integrated customers

conversion. drive will too, that, So

UACC. to in benefit we start then, of have. in lot expect of TAM so, And And more a market, prices normalized -- we of selling would we over amount a that opportunity will there's in average the doing and decline. our So expand time,

very bullish UACC yes, So acquisition. -- we're the on we remain

to questions no to Hennessy turn would for any showing at further further remarks. back And time. this I'm I And the over Paul conference like

thanks call. got work ahead we've to for Thanks, in everyone. hard their Great. thanks, special the Thank and of XXXX. you, and us our of employees of of all XXXX for all everyone, hard in all work the And joining

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

disconnect. have You Everyone, may now a great day.