Q3 2023 Vroom Inc Earnings Call
Speaker 1: Good day and thank you for standing by. Welcome to the room third quarter 2023 conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Good day, and thank you for standing by welcome to the room third quarter 2023 conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Speaker 1: To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising you your hand is raised.
Ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising you. Your hand is raised to withdraw your question. Please press star one one again please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker.
Speaker 1: To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today. John Sandison, VP of Investor Relations. John , please go ahead.
John Sanderson VP of Investor Relations John Please go ahead.
Speaker 2: Thank you operator. Good morning everyone and welcome to room 3rd quarter 2023.
Operator, good morning, everyone welcome to <unk> third quarter 2023 earnings call joined.
Speaker 2: Joining us on the call today are Tom Short, Chief Executive Officer, and Bob Crickor React, Chief Financial Officer.
Joining us on the call today are Tom Schwartz, Chief Executive Officer, and Bob Krakowiak, Chief Financial Officer.
Speaker 2: Please note this call will be signed the tangibly webcast on the investor relations section of the company's corporate website at ir.vroom.com. The third quarter of 2023 earnings release and earnings presentation are also posted to the investor relations website.
Please note this call will be simultaneously webcast on the Investor Relations section of the company's corporate website at IR Dot group Dot com the.
The third quarter 2023 earnings release and earnings presentation are also posted to the Investor Relations website.
Speaker 2: Before we begin, please note that the discretion of the day includes four looking statements within the meaning of the federal securities laws, including but not limited to statements about rooms, operations, and future financial performance.
Before we begin please note that the discussion today includes forward looking statements within the meaning of the federal securities laws, including but not limited to statements about firms operations and future financial performance.
Speaker 2: These and other four looking statements are based on management's current assumptions and are neither promises nor guarantees and are subject to a number of risks, uncertainties, and other important factors that may cause actual results to different materials.
These and other forward looking statements are based on management's current assumptions and are neither promises nor guarantees and are subject to a number of risks uncertainties and other important factors that may cause actual results to differ materially.
Speaker 2: We direct you to the company's most recent FEC filings, including the risk factor section of Rooms Most Recent Form 10K for the year ended December 31st, 2022, as updated by our quarterly report of Form 10Q for the three months ended September 30th, 2023, for additional discussion of factors that could cause actual results to differ materially from those in the four looking states.
We direct you to the company's most recent SEC filings, including the risk factors section of <unk>. Most recent Form 10-K for the year ended December 31, 2022 as updated by our quarterly report on Form 10-Q for the three months ended September 32023 for additional discussion of factors that could cause actual.
Our results to differ materially from those in the forward looking statements.
Speaker 2: Please note further that today's discussion, including the four looking statements, speak only as of the date of the call, and in room assumes no obligations to update such statements based on future developments or otherwise.
Please note further that todays discussion, including the forward looking statements speak only as of the date of this call.
<unk> assumes no obligation to update such statements based on future developments or otherwise.
Speaker 2: The company may also discuss certain non-GAAT financial measures during today's call. You can find a presentation of the most directly comparable GAT measures and a reconciliation of those measures in the third quarter of 2023 earnings release and earnings presentation.
The company May also discuss certain non-GAAP financial measures. During today's call you can find a presentation of the most directly comparable GAAP measures and a reconciliation of those measures in the third quarter 2023 earnings release and earnings presentation.
Speaker 2: I'd like to now hand the conference over to Tom Short, Chief Executive Officer. Tom?
I'd like now hand, the conference over to Tom short Chief Executive Officer, Tom.
Speaker 3: Thank you, John , and thank you to all of our investors, analysts, roommates, UACC colleagues, and partners who are joining us today. Starting.
Thank you John and thank you to all of our investors analysts roommate UAC see colleagues and partners who are joining us today.
Starting on slide three.
Speaker 3: During the third quarter, we continued to work towards our goal of resuming growth, selling through age inventory and improving variable and fixed costs per unit, an alignment with our three key objectives and four strategic initiatives.
During the third quarter, we continued to work towards our goal of resuming growth selling through aged inventory and improving variable and fixed costs per unit and alignment with our three key objectives and for strategic initiatives.
Speaker 3: On slide four, our third quarter highlights. During the third quarter, we recognized an adjusted EBITDA loss of $64.5 million, an $8.2 million sequential increased loss.
On slide four our third quarter highlights during the third quarter, we recognized an adjusted EBITDA loss of $64 5 million and $8 $2 million sequential increase.
Speaker 3: Our results were negatively impacted by higher realized net losses and a negative mark to market of finance receivables originated in late 2022 and early 2023 at UACC due to unfavorable portfolio performance. We made changes in underwriting criteria earlier this year that we expect the lead to improve the linkancy trends.
Our results were negatively impacted by higher realized net losses, and a negative mark to market of finance receivables.
Originated in late 2022, and early 2023 at UAC fee due to unfavorable portfolio performance. We made changes in underwriting criteria earlier. This year that we expect to lead to improved delinquency trends.
Speaker 3: E-commerce units grew approximately 11% sequentially. As we pivot the business towards growth, we remain focused on reducing variable and fixed costs per unit while driving the right mix of marketing spend, unit growth rate, and GPPU.
E Commerce units grew approximately 11% sequentially as we pivot the business towards growth, we remain focused on reducing variable and fixed cost per unit, while driving the right mix of marketing spend and unit growth rate and GPU.
Speaker 3: E-commerce GPPU increase from $2,954 to $3,144 sequentially benefiting from an increase in mix of unaged units sold within the quarter.
E Commerce, GPU increase from $2954 to $3144 sequentially benefiting from an increase in mix of an aged units sold within the quarter.
Speaker 3: We are making progress in our long-term roadmap and our four strategic initiatives.
We are making progress on our long term roadmap and our four strategic initiatives, we reduced our adjusted SG&A of $3 $1 million sequentially on an 11% increase in unit volume.
Speaker 3: We reduced our adjusted SGNA $3.1 million sequentially on an 11% increase in unit volume.
Speaker 3: We are updating the range of our full year 2023 guidance to an adjusted EBITDA loss of $225 million to $245 million. Primarily driven by the higher realized losses and negative mark the market at UACC as previously discussed.
We are updating the range of our full year 2023 guidance to an adjusted EBITDA loss of $225 million to $245 million, primarily driven by the higher realized losses and negative mark to market at UHC as previously discussed.
Speaker 3: Additionally, we are updating our year-end cash and cash equivalence guidance to a range of 137 million to 162 million dollars.
Additionally, we are updating our year end cash and cash equivalents guidance to a range of 137 million to $162 million.
Speaker 3: Moving to slide five. During investor day in May of 22, we outlined the unit economic drivers behind our four strategic initiatives that we believe are key to building a profitable business. We have been providing quarterly updates on the progress on each driver. For Q3.
Moving to slide five during.
During Investor day in May of 'twenty, two we outlined the unit economic drivers behind our four strategic initiatives that we believe are key to building a profitable business, we have been providing quarterly updates on the progress on each driver for Q3.
Speaker 3: UPPU was $3,144. It was $190 to quench the improvement, primarily driven by an improved mix of unaged and aged units.
GPU was $3144 a $190 sequential improvement primarily driven by an improved mix of on H H units.
Speaker 3: During the third quarter as a result of legacy title issued, 34% of our unit sold were held greater than 180 days compared to 80% in the second quarter, 77% in the first quarter, 75% in the fourth quarter of 22, and 49% in the third quarter of 20.
During the third quarter as a result of legacy title issued 34% of our units sold were held greater than 180 days compared to 80% in the second quarter, 77% in the first quarter, 75% in the fourth quarter of <unk> 22, and 49% in the third quarter of 2000.
Speaker 3: We expect the Quentall Reduction Armics of Age Units and expect improved GPPU as a result.
We expect sequential reduction in our mix of H units and expect improved GPU as a result.
Speaker 3: Next, expect our fourth quarter mix to be less than 20% from age units.
We expect our fourth quarter mix to be less than 20% from aged units, our GPU of an aged units or units. We've owned less than 180 days was comparable to our third quarter of 2022 GPU of $4206. We continue to see.
Speaker 3: Our GPPU of ON-AGE units, where units we've owned less than 180 days, was comparable to our third quarter of 2022 GPPU of $4,206.
Speaker 3: We continue to see strong product GPPU as we develop and grow our captive financing capability.
Strong products GPU, as we develop and grow our captive financing capabilities.
Speaker 3: We reduced our all-in logistics costs per unit by 7% sequin-
We've reduced our all in logistics cost per unit by 7% sequentially.
Speaker 3: We recovered $48 million of cash and inventory in the third quarter by selling through age units and financing a higher percentage of our inventory under our four-planned facility.
We recovered $48 million of cash and inventory in the third quarter by selling through aged units in financing a higher percentage of our inventory under our floor plan facility.
Speaker 3: Our selling costs per unit increased by 1% as we completed the full in sourcing of our sales function.
Our selling cost per unit increased by 1% as we completed the full in sourcing of our sales function.
Speaker 3: We reduce our titling, registration and support costs per unit by 15% sequent-
We reduced our titling registration and support cost per unit by 15% sequentially.
Speaker 3: We reduce our marketing costs per unit by 13% sequent.
We reduced our marketing cost per unit by 13% sequentially.
Speaker 3: We reduce our fixed cost per unit by 15% sequentially.
We reduced our fixed cost per unit by 15% sequentially.
Speaker 3: Lastly, our advanced analytics team, functional business teams, and tech team continue to build data assets, analytical assets, and tech assets that we believe in the long term will provide a competitive advantage across tight-only registration, pricing, conversion, unit and product margin, and supply chain.
Lastly, our advanced analytics team functional business teams and tech team continue to build data assets analytical assets and tech asset that we believe in the long term will provide a competitive advantage across titling and registration pricing conversion unit in product margin and supply chain.
Yes.
Speaker 3: Turning to slide six. I'm very pleased with what our roommates and UACC colleagues have delivered over the past.
Turning to slide six I am very pleased with what our roommates a new ACC colleagues have delivered over the past year as mentioned previously we expect the headwinds experienced in this quarter related to UAC portfolio performance to ease as the tightening in underwriting criteria made earlier this year as expected.
Speaker 3: As mentioned previously, we expect the headwinds experience in this quarter related to UACC portfolio performance. To ease, as the tightening and underwriting criteria made earlier this year is expected to lead to improve the link-in-c trend.
To lead to improved delinquency trends.
Speaker 3: We have improved e-commerce TPPU the last four quarters as we sell through our age inventory. We continue to make progress on our long-term roadmap. We are resuming growth while we continue improving our operations and reducing fixed and variable costs. We expect GPPU to normalize when we sell through the remainder of our age dimmin-
We have improved ecommerce GPU the last four quarters as we sell through our aged inventory, we continue to make progress on our long term roadmap. We are resuming growth, while we continue improving our operations and reducing fixed and variable costs, we expect GPU to normalize when we sell through the remainder of our aged inventory.
Speaker 4: Now I will turn it over to Bob to discuss third quarter result in greater detail. Bob? Thanks, Tom. I'll start with...
Now I will turn it over to Bob to discuss third quarter results in greater detail Bob.
Thanks, Tom.
I'll start with a summary of our financial performance on slide eight.
Speaker 4: All comparisons are against the prior quarter unless otherwise noted.
All comparisons are against the prior quarter unless otherwise noted.
Total revenue of $236 million increased 5% and e-commerce units increased 11%.
Speaker 4: As mentioned in our call, S. Quarter, we are in the early stages of ramping up the business while remaining focused on positive unity economic.
As mentioned on our call last quarter, we are in the early stages of ramping up the business, while remaining focused on positive unit economics.
Speaker 4: E-commerce GPU increased 6% to 3,144 dollars.
E Commerce, GPU increased 6% to $3144.
Speaker 4: As we expected and discussed during the second quarter earnings call, we realized the negative impact of selling through age vehicles, which was a
As we expected and discussed during the second quarter earnings call, we realized a negative impact of selling through aged vehicles.
Which was approximately $5 million.
Speaker 4: This impact was offset by a higher portion of unit sold within the quarter being unaged or health less than 180 days.
This impact was offset by a higher portion of units sold within the quarter being on age or health Westwood 180 days.
Speaker 4: Adjusted EVA dye loss increased $8.2 million or 15% to a loss of $64.5 million.
Adjusted EBITDA loss increased $8 $2 million or 15% to a loss of $64 5 million.
This increased loss was driven by higher realized net losses, and an unfavorable mark to market on finance receivables at UHC.
Speaker 4: and an unfavorable mark to mark an unfinanced receivables at UACC.
Speaker 4: This headwind is partially offset by higher e-commerce growth profit as a result of higher unit volume and GPPU improve.
This headwind was partially offset by higher E. Commerce gross profit as a result of higher unit volume and GPU improvement.
Speaker 4: On the expense side, we further reduced our fixed and variable operating costs.
On the expense side, we further reduced our fixed and variable operating costs. Despite higher unit volume as we continue to pursue our three key objectives and more focused strategic initiatives.
Speaker 4: as we continue to pursue our three key objectives and four focus strategic initiatives.
Speaker 4: We remain focused on maximizing our liquidity and strengthening our balance.
We remain focused on maximizing our liquidity and strengthening our balance sheet.
Speaker 4: As we continue to sell through the remaining agent inventory and begin to ramp up unit
As we continued to sell through the remaining aged inventory and began to ramp up unit acquisitions, we recovered approximately $48 million of cash and inventory quarter over quarter.
Speaker 4: We recovered approximately $48 million of cash in inventory quarter over quarter.
Speaker 4: This recovery significantly reduced our cash pern for the quarter, as cash and cash equivalents were reduced by $29.3 million sequentially during the third quarter. Let's move to slide nine.
This recovery significantly reduced our cash burn for the quarter as cash and cash equivalents were reduced by $29 $3 million sequentially during the third quarter.
Let's move to slide nine.
Which provides a bridge from second quarter 2023 to <unk> third quarter 2023, adjusted EBITDA as well as cash and liquidity.
Speaker 4: To third quarter 2023, adjusted evidda, as well as cash
Speaker 4: e-commerce gross profit improves sequentially by approximately $2 million.
E Commerce gross profit improved sequentially by approximately $2 million sequential unit growth along with a higher mix of <unk> units sold within the quarter drove this improvement.
Speaker 4: sequential unit growth along with a higher mix of unaged units sold within the quarter droves improved.
Speaker 4: Additionally, despite higher unit volume, we reduced our adjusted SNA spending by $3 million sequin
Additionally, despite higher unit volume, we reduced our adjusted SG&A spending by $3 million sequentially.
Speaker 4: primarily driven by continued improvements in our marketing cost per unit.
This was primarily driven by continued improvements in our marketing cost per unit.
Speaker 4: As mentioned previously, we experienced higher net losses and an unfavorable market related to the loan portfolio performance at UACC, resulting in a $13.3 million headwind for the court.
As mentioned previously we experienced higher net losses, and an unfavorable mark to market related to loan portfolio performance at ACC, resulting in a $13 $3 million headwind for the quarter.
Speaker 4: in total for the quarter of just an eva da loss increased by approximately $8.2 million.
In total for the quarter adjusted EBITDA loss increased by approximately $8 $2 million.
Moving to liquidity.
Speaker 4: Third quarter adjusted EBITDA loss and net interest expense are the primary drivers of cash utilization within the quarter.
Third quarter, adjusted EBITDA loss and net interest expense are the primary drivers of cash utilization within the quarter.
Speaker 4: As discussed in the second quarter call, we expected to recover cash in inventory as we sold-
As discussed in our second quarter call, we expected to recover cash and inventory as we sold through H units.
Speaker 4: We released $48 million of cash and inventory within the quarter.
We released $48 million of cash and inventory within the quarter.
Speaker 4: This was partially offset by a restricted cash increase of $14 million due to inventory growth.
This was partially offset by restricted cash increase of $14 million due to inventory growth.
Speaker 4: These factors resulted in $209 million of cash and cash equivalents on the balance sheet at quarter end, which was within the range of our expectations.
These factors resulted in $209 million of cash and cash equivalents on the balance sheet at quarter end, which was within the range of our expectations.
Speaker 4: Additionally, it is important to understand that earnings from the UACC business have been used to pay down warehouse lines. We could draw against these lines.
Additionally, it is important to understand that earnings from the ACG business have been used to pay down warehouse lines.
We could draw against these lines as a source of liquidity.
Speaker 4: At the end of the third quarter, there was approximately $73 million of available liquidity at UACC, which, when combined with our cash balance, resulted in approximately $282 million of total available liquidity. We remain focused.
At the end of the third quarter, there was approximately $73 million of available liquidity at ACC, which when combined with our cash balance resulted in approximately $282 million of total available liquidity.
We remain focused on capturing balance sheet opportunities to improve our available liquidity.
Speaker 4: Next, let's turn to our full year cash and cash equivalents and liquidity outlook on slide 10.
Next let's turn to our full year cash and cash equivalents and liquidity outlook on slide 10.
Speaker 4: This morning we are updating our 2023 year in cash and cash equivalents forecast to a range of 137 million to 162 million dollars.
This morning, we are updating our 2023 year end cash and cash equivalents forecast to a range of $137 million to $162 million. Additionally.
Speaker 4: Additionally, we expect approximately $60 million of available liquidity at UACC at the end of the fourth quarter.
Additionally, we expect approximately $60 million of available liquidity at <unk> at the end of the fourth quarter.
Speaker 4: We continue to hold the residual certificates associated with our securitization completed earlier this year.
We continue to hold the residual certificates associated with our securitization completed earlier this year.
Speaker 4: If we decide to sell those certificates in the fourth quarter, we estimate that proceeds from the transaction could contribute up to an additional $20 million of liquidity.
If we decide to sell those certificates in the fourth quarter, we estimate that proceeds from the transaction could contribute up to an additional $20 million of liquidity.
Speaker 4: As a result, our year-end midpoint liquidity could be up to $230 million. Thank you for your time and attention this morning. With that,
As a result, our euro at midpoint liquidity could be up to $230 million.
Thank you for your time and attention. This morning with that I'll turn it back to Tom for a few closing remarks, Tom Thanks.
Speaker 3: Thanks, Bob. Now, turning to slide 11, we introduced our long-term roadmap at our May of 2022 Investor Day, where we highlighted our midterm goal of a break-even EBITDA business and our long-term goal of a 5 to 10% adjusted EBITDA margin business.
Thanks, Bob now turning to slide 11, we introduced our long term road map at our May of 2022, Investor Day, where we highlighted our mid term goal of a breakeven EBITDA business and our long term goal of a 5% to 10% adjusted EBITDA margin business.
Speaker 3: As we indicated on investment day, implementing order of magnitude change is rarely a direct route. We adjust the specifics of this route from time to time when we believe it makes sense to do so in the pursuit of long-term profitability.
As we indicated on Investor day, implementing order of magnitude change is rarely a direct route we adjust the specifics of this route from time to time, when we believe it makes sense to do so in the pursuit of long term profitability.
Speaker 3: Since that day, we have made significant progress on building a well-oiled transaction machine, building a well-oiled metal machine, and building
Since that day, we have made significant progress on building, a well oiled transaction machine building, a well oiled metal machine and building our captive finance offering.
Speaker 3: We have significantly improved our customer experience and dramatically improved our sales to customers net promoter score by 80 full percentage.
We have significantly improved our customer experience and dramatically improved our sales to customers net promoter score by 84 percentage points.
Speaker 3: We have transformed virtually every aspect of the business and we are now ready to pursue raising capital to scale the
We have transformed virtually every aspect of the business and we are now ready to pursue raising capital to scale the business.
Speaker 3: Since Investor Day, we have had headwinds we did not anticipate and few, if any, tailwinds.
Since Investor Day, we've had headwinds we did not anticipate and few if any tailwind.
Speaker 3: First, our legacy titling and registration issues resulted in significant costs, including customer rental car expenses, customer concessions, losses from customer buybacks, significant aged inventory which has impacted GPPU, and legal and regulatory.
First our legacy titling and registration issues resulted in significant cost, including customer rental car expenses customer concessions losses from customer buybacks significant aged inventory, which has impacted GPU and legal and regulatory costs.
Speaker 3: We ended 2022 with a significant portion of our inventory greater than 180 days old while used vehicles depreciated in 2020.
We ended 2022 with a significant portion of our inventory greater than 180 days old while used vehicles depreciated in 2022.
Speaker 3: We've spent most of 2023 selling down age units that were greater than 180 days old, causing significant pressure on GPPU in 2020.
We spent most of 2023 selling down aged units that were greater than 180 days old, causing significant pressure on GPU in 2023.
Speaker 3: Second, we purchased UACC in early 2022 with the strategy of executing securitization transactions, selling the residual certificates, and recognizing a gain on sale on each transaction.
Second we purchased you ACC in early 2022 with the strategy of executing securitization transaction selling the residual certificates and recognizing a gain on sale on each transaction.
Speaker 3: During 2022, we executed two securitization transactions in which we sold the residual certificates and recognized gain on asset sale of $46 million.
During 2022, we executed two securitization transactions in which we sold the residual certificates and recognized gain on asset sale of $46 million.
Speaker 3: Since 2022, several macroeconomic factors, including high inflation, higher interest
Since 2020 to several macroeconomic factors, including high inflation higher interest rates degraded credit performance and volatility in used vehicle valuations impacted our performance at UAC, including the following.
Speaker 3: Degraded credit performance and volatility and used vehicle valuation impacted our performance at UACC, including the following.
Speaker 3: Inflation increased significantly in 2022 and continues ahead of the Fed's target in 2023, impacting consumer purchasing power.
Inflation increased significantly in 2022 and continues ahead of the fed's target in 2023 impacting consumer purchasing power.
Speaker 3: Interest rates have increased significantly since we bought UE.
Interest rates have increased significantly since we bought <unk> in may of 2020 to the fed funds rate was 77 basis points up from less than 10 basis points since April of 2020.
Speaker 3: In May of 2022, the Fed funds rate was 77 basis points up from less than 10 basis points since April of 2020.
Speaker 3: The Fed funds rate is currently at 5.33%. The last time it was that high was in February of 2001.
The fed funds rate is currently at 533%. The last time. It was that high was in February of 2001.
Speaker 3: This sizable increase in interest rates had an adverse impact on UACC's business.
This sizable increase in interest rates had an adverse impact on <unk> business.
Speaker 3: Used cars are less affordable and used car payments are at all-time high.
Used cars or less affordable and used car payments are at all time highs.
Speaker 3: Our warehouse interest rates have increased approximately 500 basis points, increasing our cost of funds and compressing our spirit.
Our warehouse interest rates have increased approximately 500 basis point increase in our cost of funds and compressing our spreads.
Speaker 3: Volatility in use vehicle valuations caused vehicle book values to increase significantly in 2021 and then decrease in 2020.
Volatility in used vehicle valuations caused vehicle book values to increase significantly in 2021, and then decrease in 2022.
Speaker 3: This increased credit losses as vehicle recoveries were adversely impacted in default rates increase.
This increased credit losses as vehicle recoveries were adversely impacted in default rates increased.
Speaker 3: Due to these current market conditions and investors return expectations, UACC has elected the hold. It's 2023-1 residual certificate.
Due to these current market conditions and investors return expectations you ACC has elected to hold its 2023 dash one residual certificates.
Speaker 3: Despite these headwinds, we have made significant progress on our long-term roadmap. Over the last 15 months from the second quarter of 22 to the third quarter of 23, UACC has increased its room loan originations and is currently originating over 40% of room customer loans.
Spice. These headwinds we have made significant progress on our long term road map over the last 15 months from the second quarter of 'twenty two to the third quarter of 23 UAC has increased its room loan originations and is currently originating over 40% of room customer loans we.
Speaker 3: We improve product GPU by approximately $1,200.
Proved product GPU by approximately $200.
Speaker 3: leveraging our car story assets we have invested 18 months developing our pricing engine and for 2023 year-to-date generated greater than $4,200 $400 GPPU on an age unit or units held less than 180 days.
Leveraging our car story assets, we have invested 18 months developing our pricing engine and for 2023 year to date generated greater than $4200 GPU on an aged units or units held less than 180 days.
Speaker 3: We shelter the majority of age units caused by legacy titling registration.
We sold through the majority of aged units caused by legacy titling registration issues.
Speaker 3: We've reduced our all-in logistics costs per unit by 18% and reduced all-in logistics costs by $40 million a year.
We have reduced our all in logistics cost per unit by 18% and reduced all in logistics cost by $40 million annualized.
Speaker 3: We increase the percent of pickup and deliveries on the broom fleet.
We increased the percent of pickups and deliveries on the Vroom fleet.
Speaker 3: We reduced cash in inventory by $85 million.
We reduced cash and inventory by $85 million.
Speaker 3: We improved inventory turns 24% and reduced inventory by $295 million.
We improved inventory turns 24% and reduced inventory by $295 million.
Speaker 3: We reduced our leverage by repurchasing approximately $292.5 million at face value of our convertible note for approximately $103.4 million including an accrued interest with a weighted average repurchase price of approximately $0.35 on the dollar. We completed in-
We reduced our leverage by repurchasing approximately $292 $5 million at face value of our convertible notes for approximately $103 4 million, including accrued interest with a weighted average repurchase price of approximately 35 cents on the dollar.
We completed in sourcing our sales function.
Speaker 3: We improved our net promoter score for sale to customers by 84% of
We improved our net promoter score for sales to customers by 84 percentage points.
Speaker 3: We've made significant progress on our goal to be best in class and title and registration, including during 2022, we introduced our digital title bold and focus on significantly improving title and registrations for our customers.
We have made significant progress on our goal to be best in class and title and registration, including during 2022, we introduced our digital title bolt and focused on significantly improving titling them registrations for our customers.
Speaker 3: We reduced our titling registration support costs per unit by 46% and reduced annualized costs by $78 million.
We reduced our title and registration and support cost per unit by 46% and reduced annualized costs by $78 million.
Speaker 3: 99.7% of our customers received their registrations before the expiration of their initial temporary tag in September 2020.
99, 7% of our customers received their registrations before the expiration of their initial temporary tag in September 2023.
Speaker 3: We partnered with the State of West Virginia to launch its National Digital Pidels Clearing.
We partnered with the state of West Virginia to launch its national digital titles clearinghouse.
Speaker 3: As the only retailer with access to this new digital system, room will be able to transfer out-of-state titles into the company's name and significantly reduce the timeline for processing.
As the only retailer with access to this new digital system room will be able to transfer out of state titles into the company's name and significantly reduced the timeline for processing them.
Speaker 3: We reduced our annualized marketing costs by $22 million while we worked to optimize the mix of unit growth, pricing and marketing.
We have reduced our annualized marketing costs by $22 million, while we worked to optimize the mix of unit growth pricing and marketing spend.
Speaker 3: We reduced annualized fixed cost by $59 million.
We reduced annualized fixed cost by $59 million.
Speaker 3: We have reduced our annualized run rate cost by $235 million since the second quarter of 22, and by $440 million since the first quarter of 2022.
We have reduced our annualized run rate cost by $235 million since the second quarter of 2002 and by $440 million.
The first quarter of 2022.
Speaker 3: I'm very proud of what our roommates and UACC colleagues have achieved in executing our long-term roadmap. And I continue to be excited about the long-term opportunity ahead of us.
I am very proud of what our roommates in new ACC colleagues have achieved in executing our long term road map and I continue to be excited about the long term opportunity ahead of us. Thank.
Speaker 3: Thank you for your time today and operator. We are ready for questions.
Thank you for your time today, and operator, we are ready for questions.
Speaker 1: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Speaker 1: To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.
Please standby, while we compile the Q&A roster.
Speaker 1: Our first question comes from Rajat Gupta of J.P. Morgan. Rajat, please go ahead with your question.
Okay.
Our first question comes from Richard <unk>.
J P Morgan.
Please go ahead with your question.
Speaker 5: Great, thanks for digging the questions. I had the first question on UACC.
Great. Thanks for taking the questions.
First question on USB C.
Speaker 5: If I look at the other loss item in income statement, it's gone from 5 million to 5 million last quarter last year and third quarter to 33 million.
If I look at the other loss item in the income statement, it's gone from 5 million to $5 million last quarter last year in the third quarter to $33 million alright.
Speaker 5: You mentioned like coating million of the sequential move from 2Q was due to the higher realizing unrealized losses, but it still seems like a very big number.
Alright, you mentioned like $13 million of the sequential move from <unk> was due to higher realized and unrealized losses, but it still seems like a very big number.
Speaker 5: Did you help us understand how we should expect that other loss item to?
Could you help us understand how we should expect.
Other loss item too.
Speaker 5: progress in the near term and also within that 33 million.
Progress in the near term and also within that 33 million.
Speaker 5: How much of it is tied to the UACC third-party portfolio versus the room portfolio? And I have a quick follow-up.
How much of it is tied to the USCC third party portfolio versus the room portfolio and I have a quick follow up thanks, yes.
Speaker 4: Yeah, Rajat, so thank you for your question. So that number is really, it's a combination of two things. So it's first of all, it's the...
Yes rich.
So thank you for your question. So that number is really it's a combination of.
Two things so first of all it's the.
Speaker 4: What Tom had mentioned before is the increased losses in the market on the UACC portfolio and on the residual portfolio for 2023-1 but it's also the additional
What Tom had mentioned before it's the increased losses in the mark to market on the ACC portfolio.
On the residual portfolio for 2023, one but it's also the additional.
Speaker 4: loans that have been originated as well since 2023 one in January of this year so that you know that's the primary driver and then in terms of the breakout between room and UACC we don't we don't break out that detail.
Loans that have been originated as well.
Since the since the 2023 one in January of this year so that.
That's the primary driver and then in terms of the breakout between room and you ACC, we don't we don't break out that detail.
Speaker 5: direct and so until what's flowing through the product GPU Is basically just the interest income on those loans? That's correct
Got it.
And so what's flowing through the product GPU.
It's basically just the interest income on those loans.
Speaker 5: Got it, got it. And the fall of it, I'm more like a broader question. And we look at the fourth quarter guidance in the exit trade on EBITDA losses.
That's correct.
Got it got it.
Uh huh.
All of them tomorrow for like a broader question.
If you look at the fourth quarter guidance.
The exit rate on EBITDA losses.
Speaker 5: you know, dial in some cat-packs and some cash interest. I mean, it's still pretty material, you know, 40, 40, 40 millionish per quarter, 40, 50 millionish per quarter of like cash per inch, which at the current liquidity profile would give you around four at max five quarters of bandwidth.
The island from Capex and from cash interest.
It's still a pretty material 40, $40 $40 million per quarter.
My initial per quarter of cash burn.
Which at the current liquidity profile would give you around four macs five quarters of bandwidth.
Speaker 5: How do you plan to navigate in case we do have a choppy or backdrop, maybe more credit losses in the near term? How do you navigate that backdrop? Are you considering any other?
How do you plan to navigate in case, we do have like a choppy backdrop, maybe more credit losses in the near term like how do you navigate that backdrop I mean are you considering.
Considering any other.
Speaker 5: recapitalization or restructuring options of the balance sheet, you know, like we've seen a phone for peers in both the US and UK. Thanks.
Recapitalization or restructuring options off the balance sheet like we have seen a filter peers.
And but the U S and U K.
Yes.
Speaker 3: Hey, Rizad, it's Tom. Thanks for the question. Yeah, we actually announced today that we are going to pursue raising capital to scale the business. And so we are going to pursue that.
Hey reside at Tom Thanks for the question, Yes, we actually announced today that we are going to pursue raising capital to scale the business and so we are going to pursue that relative to just the ongoing performance of the business. This has been a challenging year as we work through the remaining entitling registration issues, it's really in.
Speaker 3: relative to just the ongoing performance of the business. You know, this has been a challenging year as we work through the remaining title and registration issues. It's really impacted our GPPU all year, but we feel like we're well positioned going forward into 2024 and that we've got a very strong operating business. We're very pleased with the customer experience that we're delivering. We focus on really improving all our unit economic.
<unk>, our GPU all year, but we feel like we're well positioned going forward into 2024 and that we've got a very strong operating business. We're very pleased with the customer experience that we're delivering we focused on really improving all our unit economics, and we think that positions us really well for 2020.
Speaker 3: And we think that positions us really well for 2024. And then on top of that, we do want to grow the business at a faster rate. And so we did announce that we are just now at the beginning stages of pursuing additional capital.
Four and then on top of that we do want to grow the business at a faster rate and so we did announce that we are just now at the beginning stages of pursuing additional capital.
Speaker 5: Got it in form would that take? I view Disclose any more details around that.
Got it and form would that take.
Sure.
Uh huh.
Disclose any more details around that.
Speaker 4: Yeah, not at this time, obviously, you know, it could be a private investment, it could be additional convertible debts, it could be at the market offering, rights offering, but again, we're at the very beginning stages and we'll update you, you know, down the road as we have more information. Yeah, and just one more thing, Rajat, I wanted to add to you, you know, at the tail end of the last question you had asked about.
Yes, not at this time, obviously, you know it could be a private investment it could be additional convertible debt it could be.
At the market offering rights offering, but again, we're at the very beginning stages and we will update you know down the road as we have more information.
One more thing was that I wanted to add to your at the tail end of the last question you had asked about.
Speaker 4: So we've made a number of UACC has made a number of changes to the underwriting standards since the Abyssey 2023-1. And obviously it takes time for those changes to cycle through, but in terms of what we're seeing so far, based upon those initial underwriting changes, they've made we have seen improvement in the portfolio, but that'll take time to materialize in our results.
So we have made we've made a number of uac's. He has made a number of changes to their underwriting standards since they've issued 2023, one and obviously it takes time for those changes to cycle through.
But in terms of what we're seeing so far based upon those initial underwriting changes they've made we have seen an improvement in the portfolio, but that will take time to materialize in our results.
Got it.
Thanks for the color.
Thank you.
Speaker 1: As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.
As a reminder to ask a question you will need to press Star one line and your telephone.
And wait for your name to be announced.
Speaker 1: Our next question comes from Colin Sebastian of Baird. Colin, please go ahead with your question.
Our next question comes from Colin Sebastian of Baird. Colin. Please go ahead with your question.
Speaker 6: Thanks. This is a recent one for Colin. I guess you guys did just address the capital plans and you're not going to provide any further detail on that, but maybe you could touch on where you're at in the Asian inventory.
Thanks. This is Ross on for Colin.
I guess you guys did just address the capital plans.
And youre not going to provide any further detail on that but maybe you could touch on.
Where you're at in the aged inventory.
Speaker 6: process right now. I know you guys were hoping to finish most of that by the end of the year and the amount of age units is gonna be down in Q4 versus Q3. So how does that shape up heading into 2024? Are you gonna be mostly work through the age of inventory or is there still gonna be more work to do next year? And that's just potentially more tailwind or less headwind. Thank you.
Process right now I know you guys were hoping to finish most of that by the end of the year.
The amount of units is going to be down in Q4 versus Q3. So.
How does that shape up heading into 2024 are you going to be mostly worked through the aged inventory or is there still going to be more work to do next year.
And thats, just potentially more tailwind or less headwinds. Thanks.
Speaker 3: Yeah, I would say that we're down to just a few hundred cars or last that we consider aged. And you know, as we said, each month this year we've continued to improve the mix. So while we said less than 20% for the quarter, we think each month sequentially in the quarter will go down. We may have a little bit left at the end of the year, but nothing that we would view as material going into 2024.
Yes, I would say that we're down to just a few hundred cars or less that we consider aged and as we said each month. This year. We've continued to improve the mix. So while we said less than 20% for the quarter. We think each month sequentially in the quarter will go down we may have a little bit left.
At the end of the year, but nothing that we would view as material going into 2024.
Okay got it thank you.
Thank you Ray Thanks, Jason.
I am showing no further questions at this time I would now like to turn it back to Tom <unk> for closing remarks, Tom.
Speaker 3: Thanks everyone, we appreciate your time today and have a fantastic day.
Thanks, everyone. We appreciate your time today and have a fantastic day.
Okay.
Speaker 1: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Okay.
Yeah.
Okay.
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Okay.
Okay.
Okay.