Online used-vehicle retailer Vroom’s net loss widened to almost $130 million in the fourth quarter, but the company posted major revenue gains and said it sold a record number of vehicles via e-commerce.
Vroom reported total revenue of $934.5 million in the quarter, more than double the figure in the year-earlier period. A large chunk of that was e-commerce revenue, which more than doubled to nearly $739 million.
Wholesale revenue rose 62 percent to $121.5 million. The company attributed that to growth in average vehicle selling price, which increased from $10,733 to $13,903 — primarily because of market appreciation.
Vroom said it sold 21,243 e-commerce vehicles in the fourth quarter, up 93 percent from the year-earlier period. It sold 74,698 e-commerce vehicles in all of 2021, up from 34,488 the previous year.
That improvement was fueled in part by growing brand awareness in an “exceptional” demand environment, Vroom CEO Paul Henessy told investors and analysts during a Tuesday earnings call.
Revenue and vehicles sold in the quarter exceeded expectations, but Vroom felt pressure when it came to gross profit per vehicle, CFO Robert Krakowiak said. Constraints included higher price depreciation for premium vehicles, heftier reconditioning costs and year-end adjustments related to “accrual for warranty programs and inventory reserves.”
The company’s adjusted earnings before income taxes, interest, depreciation and amortization widened to a loss of $120 million in the quarter, nearly double from the year-earlier period.
Implications of ADESA U.S. sale
Vroom said it is assessing how its recent acquisition of United Auto Credit Corp. — an auto lender it is adding as its captive finance arm — will affect it in the upcoming quarters.
The company is also considering the implications of Carvana’s planned $2.2 billion purchase of ADESA U.S., KAR Global’s auction giant.
“We want to be really thoughtful about how we characterize the impact of ADESA, what it means to us overall, and of course, we’re thinking deeply about that,” Hennessy said. “Roughly between 20 and 24 percent or so of our [reconditioning] capacity currently sits with ADESA.”
It’s Vroom’s understanding that Carvana will repurpose ADESA’s depth of reconditioning for its own use. Hennessy said his company is working with ADESA to see what the short-term impacts will be.
“We’re confident that there is a solution in our third-party channel, with Manheim and others, and we’re confident, as we run our own factory, that we’ve got an opportunity to expand our own capacity,” Hennessy said.
Q4 results
Vroom announced these financial results for the fourth quarter and full year:
Q4 total revenue: $934.5 million, more than double the $405.8 million posted in the year-earlier period
Q4 net loss: $129.8 million, wider than Vroom’s $60.7 million loss a year earlier
Q4 e-commerce vehicles sold: 21,243, up from 11,022 a year earlier
2021 total revenue: $3.18 billion, more than double 2020’s $1.35 billion
2021 net loss: $371 million, wider than Vroom’s $202.8 million loss in 2020
2021 e-commerce vehicles sold: 74,698, up from 34,488 in 2020
