Vroom, Inc. · NASDAQ:VRM
Vroom — Investor Day (May 2022)
80 slides from Vroom's investor day presentation, May 2022
Slide 1: Investor Day: Our Long-Term Roadmap and Financial Goals
Investor Day Our Long-Term Roadmap and Financial Goals May 2022
Slide 2: 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 limitati
Slide 3: Presenters
Tom Shortt Bob Krakowiak Ravi Gandhi Rachel Mahoney CEO, Vroom CFO, Vroom Co-President & CMO, Vroom CFO, United Auto Credit Corp.
Slide 4: Agenda and Speakers
Liam Harrington | VP & FP&A Investor Relations Tom Shortt | CEO Ravi Gandhi | Co-President & CFO UACC Bob Krakowiak | CFO Tom Shortt | CEO Tom Shortt | CEO & Ravi Gandhi | Co-President & CFO UACC 5 minutes Tom Shortt | CEO & Rachel Mahoney | CMO Tom Shortt | CEO 5 minutes Tom Shortt | CEO & Bob Krak
Slide 5: Build the world's premier platform to research, discover, buy and sell vehicles
Build the world’s premier platform to research, discover, buy and sell vehicles
Slide 6: There is a significant market opportunity
There is a significant market opportunity <2% $841B <1% CarMax <8% Vroom Other Top 100 16% Dealers $686B $636B $385B 50% $359B Peer to Peer 40m 40% $267B Units Remaining Dealers $118B 0.9% Used Grocery New Home Personal Apparel Furniture Total Retail Used Auto Auto Auto Improve- Care ment Source: Ed
Slide 7: We've built a national brand
We’ve built a national brand Vroom Aided Brand Awareness(1) 39% 33% 20% 15% 2019 2020 2021 Q1 2022 1. Aided brand awareness is based on the following survey question: “Including any of the companies you may have already mentioned, which of the companies that buy or sell used cars have you heard of.
Slide 8: We've been focused on driving growth
We’ve been focused on driving growth 74,698 $ in millions $2,442 +89% 34,488 +82% +117% $915 18,945 $588 10,006 $301 FY 2018 FY 2019 FY 2020 FY 2021 FY 2018 FY 2019 FY 2020 FY 2021 $2,242 $2,206 FY 2018 FY 2019 FY 2020 FY 2021 $1,696 $1,765 (8.5%) (10.7%) (10.7%) FY 2018 FY 2019 FY 2020 FY 2021 (12.
Slide 9: Improve customer experience while living within our means
We aim to improve the customer experience while we live within our means, prioritize profitability and liquidity, and drive unit economics 1. Prioritize unit economics Build a well-oiled transaction machine over growth Build a well-oiled metal machine 2. Significantly reduce operating expenses Build
Slide 10: Build a well-oiled machine and then resume growth
We have proven we can grow, we will now focus on building a well-oiled machine and then resume growth Ecommerce Units 74,698 Regional Operating Model Well-Oiled Transaction Machine 34,488 Well-Oiled Metal Machine 18,945 Well-Oiled 10,006 Metal Captive Financing Machine FY 2018 FY 2019 FY 2020 FY 202
Slide 11: 4 strategic initiatives to drive unit economic improvements
4 strategic initiatives designed to drive unit economic improvements across the P&L EBITDA Grow UACC third-party dealer business Grow EBITDA Originate and securitize Vroom loans through UACC Improve product finance margin Product GPPU Grow consumer value added products Improve product margin Optimiz
Slide 12: Introducing UACC
vroom introducing vacc
Slide 13: Vision, knowledge, and experience to execute
Vision, knowledge, and experience to execute 25+ years average industry experience ~14 years average management tenure 500+ active FTE Jim Vagim Ravi Gandhi 4.4 Google rating CEO & Co-President Co-President & CFO (2,000+ reviews)
Slide 14: UACC has a strong business model
UACC has a strong business model (Focused on unit economics) ● 10+ years of capital markets ● $500mm in loan origination ● $65-$75mm expected EBITDA experience in 2022(1) ● $2.8bn of securitized collateral ● Goal to grow EBITDA at 7% ● 8,500+ third-party dealers CAGR in the future ● 100+ nationally
Slide 15: UACC has a track record of strong financial performance
UACC has a track record of strong financial performance $ in millions $ in millions 50.9 56.2 Millions 16.3 20.0 23.8 13.6 6.6 12.0 2018 2019 2020 2021 2018 2019 2020 2021 Serviced portfolio at year-end ($ in millions) 44.8% 636 584 552 481 21.9% 21.7% 12.8% 2018 2019 2020 2021 2018 2019 2020 2021 Y
Slide 16: Driving strong liquidity and cash flow
Driving strong liquidity and cash flow 120 400 350 350 350 300 300 77 250 250 250 250 250 Millions Millions 200 43 150 30 32 100 50 0 2018 2019 2020 2021 March 2022 UACST UACST UACST UACST UACST UACST UACST 2017-1 2018-1 2018-2 2019-1 2020-1 2021-1 2022-1 Borrowed Available Total Ability to deploy s
Slide 17: Vroom and UACC combination creates value for dealers and customers
The combination of Vroom and UACC creates value for dealers and customers ✓ 4.4-star Google rated Customer Service Customers ✓ With proprietary data, offer customers future opportunities to build credit ✓ Access to sell wholesale purchased inventory Improved Third-party UACC Dealers ✓ Sell aged inve
Slide 18: 1Q 2022 Recap
vroom 2022 1Q 2022 Recap
Slide 19: Beat 1Q 2022 guidance for all four key metrics
Beat 1Q 2022 guidance for all four key performance metrics ($ in millions) Total Revenues $924 million ✓ Ecommerce Units 19,473 ✓ Ecommerce GPPU $1,763 ✓ $(107) $(30) $(137) 1Q 2022 Remove: UACC 1Q 2022 Adjusted EBITDA Financing Impact Adjusted EBITDA Adjusted EBITDA (1) ($107) million ✓ (ex. UACC)
Slide 20: Improved run-rate expected vs. 1Q
Improved run-rate expected vs. 1Q, Implied run-rate of ($80) to ($67) ($ in millions) Adj. EBITDA 2Q-4Q 2022E (ex. non- $(221) ($241)-($201) recurring) $(22) Divide by 3 ÷3 Implied quarterly run- $(350) $(107) rate ($80)-($67) (ex. non-recurring) FY 2022E Exclude: Exclude: 2Q-4Q 2022E Adjusted EBITD
Slide 21: Working capital summary
Cash and cash equivalents $600.7 Restricted cash 196.8 AR 103.9 Inventory 741.4 Finance receivables 132.6 All other current assets 84.1 Current assets $1,859.4 AP $52.2 Accrued expenses 139.2 Floorplan 569.9 Securitization 138.9 All other current liabilities 117.1 Current liabilities $1,017.3 Net wo
Slide 22: Forecasting ~$500 million in liquidity at year end
Forecasting ~$500 million in liquidity at year end (1) (2) ($ in millions) $601 ($268)-($218) $17-$42 $450-$565 $125-$150 • Provides flexibility in near term and ability ($45)-($35) to drive future growth $10-$15 ~$10 • Potential to upsize and extend term to support future growth • Working capital e
Slide 23: Key Unit Economic Drivers
vroom key unit economic drivers
Slide 24: Historical financials in dollars and per unit
A subset of our historical financials in dollars and on a per unit basis Ecommerce vehicle gross profit $82,745 $11,581 $1,108 $595 Ecommerce product gross profit 82,001 22,739 1,098 1,168 Total ecommerce gross profit $164,746 $34,320 $2,206 $1,763 SG&A (1) (547,823) (182,341) (7,334) (9,364) All ot
Slide 25: 4 strategic initiatives to drive unit economic improvements
4 strategic initiatives designed to drive unit economic improvements across the P&L EBITDA Grow UACC third-party dealer business Grow EBITDA Originate and securitize Vroom loans through UACC Improve product finance margin Product GPPU Grow consumer value added products Improve product margin Optimiz
Slide 26: Ecommerce GPPU
vroom build a well-oiled metal machine Ecommerce GPPU
Slide 27: Pricing algorithms developed using 15+ years of CarStory data
Vroom’s pricing algorithms are developed using 15+ years of CarStory data (Focused on unit economics) CarStory brought to Vroom Data science models for: Predictive pricing for: 15+ years of for-sale data: ● Retail pricing ● Market ● 230M+ VINs ● Deposit probability ● Buying ● 2.8B photos ● Acquisiti
Slide 28: Optimize pricing to improve vehicle GPPU
Opportunity to optimize pricing to improve vehicle GPPU while driving turns 0.0 24,000 0.0 4,800 Probability Vehicle Still Listed Probability Vehicle Still Listed 4,300 23,000 0.2 0.2 Vehicle List Price $ 3,800 22,000 Vehicle GPPU $ 3,300 0.4 0.4 21,000 2,800 0.6 0.6 2,300 20,000 1,800 0.8 0.8 19,00
Slide 29: Optimize assortment to improve vehicle GPPU
Opportunity to optimize assortment to improve vehicle GPPU while driving turns 2,100 0.0 37,000 0.0 Probability Vehicle Still Listed 36,000 Probability Vehicle Still Listed 1,900 0.2 0.2 35,000 Vehicle List Price $ Vehicle GPPU $ 1,700 34,000 0.4 0.4 1,500 33,000 0.6 32,000 0.6 1,300 31,000 0.8 0.8
Slide 30: Product GPPU varies by vehicle
Product GPPU varies by vehicle and is an input into assortment and pricing algorithms Product GPPU 1 2 3 4 5 6 7 8 9 10 11 11 Vehicles - specific year, make, model Illustrative.
Slide 31: Pricing standard deviation across top 60 DMAs
Pricing standard deviation >$500 across top 60 DMAs ● In high-priced markets $36,000 • Cannot acquire unit National at target margin $34,000 Retail Price • Limits ability to source regionally $32,000 National Acquisition ● In low-priced markets $30,000 Price • Overpay for acquisition $28,000 • Retai
Slide 32: Sales margins vary by vehicle price points
Sales margins vary by vehicle price points(1) Sales Margin Low Mid High Selling Price Illustrative. 1. Sales margin is defined as sales price less acquisition price.
Slide 33: Ecommerce vehicle GPPU improvement goals
Ecommerce vehicle GPPU improvement goals Ecommerce vehicle GPPU $1,100 $1,200 - $1,300 Pricing and assortment optimization Product GPPU Total GPPU Improvement Goal $1,100 $1,200 - $1,300 Logistics Selling, titling & registration Marketing Fixed Total SG&A Reduction Goal all metrics denominated in ec
Slide 34: Build our captive finance offering
vroom build our captive finance offering Product GPPU
Slide 35: Moving from indirect to captive lending
We are moving from indirect to captive lending and intend to utilize forward flow and securitization transactions for financing flexibility ● Partial control ● Full control & flexible ● Semi-customized ● Superior economics ● Full credit spectrum Consumer Near- Sub- Prime + Prime Prime Partner Partne
Slide 36: Increase attach rate of existing and new value-added products
We have opportunity to increase our attach rate of existing products and add additional value- added products ~$950 ● Optimize attach rates and profit on current product portfolio ~$780 • Warranty $595 • GAP $538 • Everyday bundle ● Expand portfolio with new products 50% Peer to Peer • Maintenance •
Slide 37: Product GPPU improvement goals
Product GPPU improvements goals Ecommerce Vehicle GPPU $1,100 $1,200 - $1,300 Pricing and assortment optimization Product GPPU $700 $1,200 - $1,300 UACC, new value-added products and increase attach rates Total GPPU Improvement Goal $1,800 $2,400 - $2,600 Logistics Selling, titling & registration Ma
Slide 38: SG&A and Logistics
vroom build a well-oiled metal machine SG&A and Logistics
Slide 39: Our current supply chain is slow and high cost
Our current supply chain is slow and high cost Primarily Third Party Third Party Carrier / Customer Customer VRC Carrier Vroom Fleet ● National sourced ● 5-15 days ● Regional capacity imbalance ● 5-15 days ● National assortment ● High cost ● ~10-25 days ● High cost Supply Chain: ● Volatile service ●
Slide 40: Future supply chain to be fast and lower cost
We expect our future supply chain to be fast and lower cost Primarily Third Party Third Party Carrier / Customer Customer VRC Carrier Vroom Fleet ● National sourced ● 5-15 days ● Regional capacity imbalance ● 5-15 days ● National assortment ● High cost ● ~10-25 days ● High cost Supply Chain: ● Volat
Slide 41: We sell vehicles nationally
We sell vehicles nationally Customer to VRC 81 $283 Vroom VRC to Hub 3,000 $2,035 3P Portland Hub to Customer 115 $300 Vroom Total 3,196 $2,618 Note: mileage shown from Customer to VRC and Hub to Customer are one way; Vroom cost based on round-trip mileage. Orlando
Slide 42: We sell vehicles up and down the coasts
We sell vehicles up and down the coasts Customer to VRC 148 $301 3P VRC to Hub 980 $1,041 3P Brielle Hub to Customer 52 $195 Vroom Total 1,180 $1,537 Note: mileage shown from Customer to VRC and Hub to Customer are one way; Vroom cost based on round-trip mileage. Summerfield
Slide 43: We sell vehicles regionally
We sell vehicles regionally Customer to VRC 67 $150 3P Auburn VRC to Hub 446 $191 Vroom Hub to Customer 44 $132 Vroom Total 557 $473 Note: mileage shown from Customer to VRC and Hub to Customer are one way; Vroom cost based on round-trip mileage. Titusville
Slide 44: We sell vehicles locally
We sell vehicles locally Customer to VRC 45 $115 3P VRC to Hub 66 $191 3P Hub to Customer 17 $85 Vroom Total 127 $391 Note: mileage shown from Customer to VRC and Hub to Customer are one way; Vroom cost based on round-trip mileage. Redlands San Diego
Slide 45: Driving mix towards regional and local deliveries
Driving mix towards regional and local deliveries improves unit economics % of Total 15% 30% 30% 25% 1,113 (Current) % of Total 5% 10% 20% 65% 588 (Long-Term) Change (10)% (20)% (10)% 40% (47)% Note: end to end mileage per vehicle. National Coastal Regional Local
Slide 46: Variable shipping fee based on distance
Recently implemented variable shipping fee based on distance to offset logistics costs Coastal National Search Page 8 - $999 Search Page 12 - $2,999
Slide 47: Variable shipping fee reduces mileage and improves GPPU
Variable shipping fee reduces mileage and improves GPPU while providing customers choice 125 200 100 150 75 Index Index 100 50 50 25 0 0 2 4 6 8 10 12 14 16 18 2 4 6 8 10 12 14 16 18 Week Week
Slide 48: Vroom linehauls drive unit economics
Vroom linehauls drive unit economics 200 $150 $75 $67 $336 78% 400 $300 $150 $133 $472 68% 600 $450 $225 $200 $608 63% 800 $600 $300 $267 $744 60% 1,000 $750 $375 $333 $880 57% 1,200 $900 $450 $400 $1,016 56% 1,400 $1,050 $525 $467 $1,152 54% 1,600 $1,200 $600 $533 $1,288 53% 1,800 $1,350 $675 $600
Slide 49: Example vehicle flow path
Example Auburn Customer to VRC 67 $150 $150 0% VRC to Hub 446 $191 $695 72% Hub to Customer 44 $132 $132 0% Total 557 $473 $977 52% Vehicle Flow Path Titusville ● Purchased in Auburn, GA ● Reconditioned in Atlanta ● Transported via Vroom Logistics to Orlando Hub (7 cars) ● Delivered in Titusville, F
Slide 50: Regional operating model improves customer experience
Building a regional operating model dramatically improves the customer experience 96 90 59 20 Delivered Delivered Delivered Delivered Within Same Day Within 1 Business Day Within Target (2) 2 Business Days 1. Represents a small pilot in a limited geography. 2. Target is defined as 2 day delivery or
Slide 51: Well-oiled metal machine to improve supply chain speed and reduce markdowns
Building a well-oiled metal machine is expected to improve the speed of the supply chain and reduce markdowns Days of Supply Days of Supply A B C D E F A B C D E F Body Type Body Type Average markdown Both graphs on this page are for illustrative purposes only.
Slide 52: Hubs positioned close to population
Hubs positioned close to population 25 miles 24% 50 miles 46% 75 miles 56% 100 miles 65% 200 miles 90% Vroom Hub As of May 2022.
Slide 53: SG&A – Logistics improvement goals
SG&A – Logistics improvement goals Ecommerce Vehicle GPPU $1,100 $1,200 - $1,300 Pricing and assortment optimization Product GPPU $700 $1,200 - $1,300 UACC, new value-added products and increase attach rates Total GPPU Improvement Goal $1,800 $2,400 - $2,600 Logistics $800 $1,000 - $1,300 Reduce mil
Slide 54: SG&A - Selling, Titling & Registration
SG&A - Selling, Titling & Registration
Slide 55: Optimize our sales channels
Optimize our sales channels • Continue to partner with our onshore outsourcing channel • Grow our nearshore outsourcing channel • Expand our internal sales channel
Slide 56: Vroom.com enhancements drive self-service
Vroom.com enhancements drive self-service -- driving unit economics 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 75.0% 30.0% 60.0% 20.0% 42.5% 36.9% 10.0% 16.9% 0.7% 0.0% 2019 2020 2021 2022 Mid-Term Goal Long-Term Goal Digital Salesperson
Slide 57: Customer selling and buying vehicle process
Customer Selling Vehicle Vroom Customer Pickup Customer Vroom payoff Title Vroom Processing Customer and / or Lienholder 70% bank-financed Title Recorded and filed Customer Buying Vehicle Vroom.com Customer Registration Registration DMV Vroom Vehicle Delivery Lienholder Title & Contract Customer Fun
Slide 58: Current registration process is high touch and high cost
Our current registration process is “high touch,” inefficient and high cost at our current scale TODAY Total Touches: 17 Physical Doc Vault Deal Complete Sent to Team received Assigned Compile More materials Add documents Docs complete Title clerk review QA Review Send for Registration Not assigned
Slide 59: Reduce registration touches by 40% mid-term and 80% long-term
We’ve made short-term improvements and believe Mid-Term we can reduce touches by 40% and our goal in the long-term is to reduce touches by 80% TODAY Total Touches: 17 Physical Doc Vault Deal Complete Sent to Team received Assigned More materials Add documents Docs complete Title clerk review QA Revi
Slide 60: Digital Title Vault
We recently implemented our Digital Title Vault Vehicles Ready OCR Engine Generates coordinates and text to List extraction Listed for-sale Extracted Sample Text "CERTIFICATE OF TITLE", "VEHICLE IDENTIFICATION YES NUMBER“ : “1C4BJWFG5FLxxxxxx” “MAKE” : “JEEP”, “YEAR” : “2015”, Pass “MODEL” : “WRANGL
Slide 61: Selling, titling & registration improvement goals
SG&A - Selling, titling & registration improvement goals Ecommerce Vehicle GPPU $1,100 $1,200 - $1,300 Pricing and assortment optimization Product GPPU $700 $1,200 - $1,300 UACC, new value-added products and increase attach rates Total GPPU Improvement Goal $1,800 $2,400 - $2,600 Logistics $800 $1,0
Slide 62: SG&A - Marketing
vroom sg&a-marketing
Slide 63: Build brand awareness, grow organic traffic, optimize paid media
Build brand awareness, grow organic search traffic and optimize paid media campaigns to improve direct traffic 2019 2020 2021 Q1 2022 Mid-term Long- 2019 2020 2021 2022 Mid-term Long- All Other Sources Direct / Organic term Forecast term Sources
Slide 64: UACC subprime expertise increases conversion
The integration of UACC and its subprime expertise enables opportunity to increase conversion Subprime Prime Subprime Prime
Slide 65: Top-of-funnel traffic enables rapid A/B testing
Vroom.com’s top-of-funnel traffic allows for rapid A/B testing to increase digital conversion +13% Clicks
Slide 66: Regional operating model supports higher conversion
Our regional operating model enables faster delivery, supporting higher conversion Faster delivery provides the Prime Auburn opportunity to drive sales conversion Titusville Represents a small pilot in a limited geography.
Slide 67: Build robust CRM to drive incremental transactions
Build robust CRM to drive incremental transactions with minimal additional spend Lookalikes: browsers, high- Web analytics value customers Segmentation: funnel stages, Leads & in-market location, propensity Loan status: recent auto loan Third-party expirations Repeat customers: length of Customer da
Slide 68: Strengthen brand and traffic, increase conversion, leverage analytics
Strengthen our brand and traffic, increase conversion, and leverage customer analytics to drive marketing effectiveness 2021 1Q 2022 Mid-Term Long-Term
Slide 69: SG&A – Marketing improvement goals
SG&A – Marketing improvement goals Ecommerce Vehicle GPPU $1,100 $1,200 - $1,300 Pricing and assortment optimization Product GPPU $700 $1,200 - $1,300 UACC, new value-added products and increase attach rates Total GPPU Improvement Goal $1,800 $2,400 - $2,600 Logistics $800 $1,000 - $1,300 Reduce mil
Slide 70: Our Long-Term Roadmap
vroom ourlong-term roadmap
Slide 71: 4 strategic initiatives to drive unit economic improvements
4 strategic initiatives designed to drive unit economic improvements across the P&L EBITDA Grow UACC third-party dealer business Grow EBITDA Originate and securitize Vroom loans through UACC Improve product finance margin Product GPPU Grow consumer value added products Improve product margin Optimiz
Slide 72: Strategic initiatives improve unit economics toward long-term goals
We believe our 4 strategic initiatives can improve unit economics beginning in 2022 and annually as we drive towards our long-term goals Ecommerce Vehicle GPPU $1,100 $1,200 - $1,300 Pricing and assortment optimization Product GPPU $700 $1,200 - $1,300 UACC, new value-added products and increase att
Slide 73: Strategic initiatives to build a profitable business model
4 strategic initiatives intended to build a profitable business model Ecommerce vehicle gross profit $1,108 $595 $1,100 $1,200 $1,300 $1,695 $1,795 $1,895 Ecommerce product gross profit 1,098 1,168 700 1,200 1,300 1,868 2,368 2,468 Total ecommerce gross profit $2,206 $1,763 $1,800 $2,400 $2,600 $3,5
Slide 74: Q&A
vroom q&a
Slide 75: Appendix
vroom appendix
Slide 76: EBITDA and Adjusted EBITDA definitions and reconciliation
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 acquisition related costs, change in fair value of finance receivables, goodwill impairment charges, t
Slide 77: Adjusted EBITDA Margin computation
We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenue. The computation of Adjusted EBITDA Margin is as follows: Three Months Ended Year Ended March 31, Decem ber 31, 2022 2021 2020 2019 2018 (in thousands) Adjusted EBITDA $ (107,399) $ (340,245) $ (170,489) $ (127,664) $ (7
Slide 78: UACC Pre-Tax Return on Equity
UACC Pre-tax Return on Equity (“Pre-Tax ROE”) is a non-GAAP measure that is derived from amounts included in UACC consolidated GAAP financial statements. We calculate Pre-Tax ROE as income before provision for income tax divided by equity. We believe that UACC Pre-Tax ROE is a useful measure to both
Slide 79: UACC available liquidity
We calculate UACC's available liquidity as cash and cash equivalents (excluding restricted cash) less cash in transit plus cash that can be drawn down on from our warehouse credit facilities by pledging eligible finance receivables. We believe reporting available liquidity provides investors with a
Slide 80: UACC EBITDA reconciliation
We calculate UACC EBITDA as net loss before interest expense, interest income, income tax expense and depreciation and amortization expense. UACC EBITDA is a supplemental performance measure that our management uses to assess our operating performance and the operating leverage in our business. Beca