Vroom Inc. said Tuesday its revenues, sales and total gross profit per e-commerce vehicle all tumbled in the fourth quarter, a period in which the company continued pulling back on growth in favor of improving its per-vehicle economics and other business processes.
The online used-vehicle retailer reported a net profit of $24.8 million for the quarter ended Dec. 31, though that was primarily driven by a $127 million gain on debt extinguishment due to its repurchase of convertible notes, which "more than offset the impact" of lower sales and lower profit per vehicle, Vroom CFO Bob Krakowiak said on a Wednesday earnings call.
That net income is compared with Vroom's $129.8 million net loss in the same period a year earlier and its net loss of $51.1 million in the third quarter of 2022.
Vroom said its revenue tumbled in the quarter to $209.3 million, down 78 percent compared with the year-earlier period.
Earlier in 2022, Vroom undertook a business realignment plan to trim its vehicle sales volume to focus on increasing gross profit per vehicle sold and making its sales margins more sustainable.
The company's volume of vehicles sold plunged to 4,144 in the quarter, down 81 percent from 21,243 vehicles sold in the year-earlier period and down 36 percent from 6,428 vehicles sold in the third quarter. Vroom's total gross profit per vehicle was $1,233, down 20 percent from $1,548 in the year-earlier period and down 71 percent from a record $4,206 in the third quarter.
In a news release, Vroom CEO Tom Shortt said the quarter-over-quarter per-vehicle profit decline occurred because of three things — increased industrywide market depreciation, higher inventory reserves primarily driven by automakers' electric vehicle price decreases and its sales of aged vehicles increasing. Thirty-six percent of used cars and trucks Vroom sold in the fourth quarter were aged inventory it had held for more than 270 days, Shortt said.
Vroom improved its titling process to end the year with 87 percent of vehicles available for sale or pending sale compared with 52 percent at the end of the third quarter. However, that increased the age of both Vroom's inventory available for sale and inventory sold, Shortt said.
"During 2023, we expect to resume growth, sell through aged vehicles, improve variable cost per unit and reduce fixed costs," Shortt said in the news release.
Sharon Zackfia, a consumer equity research analyst at William Blair, wrote in a research note published Tuesday that Vroom "accelerated its progress" in cutting expenses in the fourth quarter. Vroom reported reducing those to $90.8 million, down 33 percent from the third quarter.
Shares of Vroom fell 7.88 percent to $0.97 in morning trading Wednesday.
Q4 revenue: $209.3 million, down 78 percent from the year-earlier period.
Q4 e-commerce revenue: $141.8 million, down 81 percent from the year-earlier period.
Q4 net income: $24.8 million profit, compared with a loss of $129.8 million in the year-earlier period.
Q4 e-commerce vehicles sold: 4,144, down 81 percent from the year-earlier period.
2022 revenue: $1.95 billion, down 39 percent from 2021.
2022 e-commerce revenue: $1.36 billion, down 44 percent from 2021.
2022 net income: $451.9 million loss, compared with a loss of $370.9 million in 2021.
2022 e-commerce vehicles sold: 39,278, down 48 percent from 2021.
