Vroom, Inc.

And welcome to Vroom's third quarter 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. I would now like to hand the call over to Liam Harrington, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Vroom's third quarter 2022 earnings call. Joining us on the call today are Tom Short, Chief Executive Officer, and Bob Krakowiak, Chief Financial Officer. Please note, this call will be simultaneously webcast on the investor relations section of the company's corporate website at ir.vroom.com. The third quarter 2022 earnings release and earnings presentation are also posted to the investor relations website. 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 Vroom's operations and future financial performance. 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. We direct you to the company's most recent SEC filings, including the risk factors section of Vroom's most recent Form 10-K for the year ended December 31st, 2021, as updated by our quarterly report on Form 10-Q, for the three months ending September 30th, 2022, for additional discussion of factors that could cause actual results to differ materially. Please note further that today's discussion, including the forward-looking statements, speak only as of the date of this call, and Vroom assumes no obligation to update such statements. The company may also discuss certain non-GAAP financial measures during today's call. You can find a presentation of the most directly comparable gap measures and a reconciliation of those measures in the third quarter 2022 earnings release and management presentation. I'd like to now hand the conference over to Tom Short, Chief Executive Officer. Tom?

Thank you, Liam, and thank you to all the investors, analysts, Vroomates, UACC colleagues, and third-party partners who are joining us today to discuss Vroom's third quarter earnings. Starting on slide three, we introduced our long-term roadmap in our May 26th Investor Day, where we highlighted our mid-term goal, which is a break-even business, and our long-term goal of a 5% to 10% adjusted EBITDA margin business. As we mentioned on Investor Day, we've made the choice to slow down. We slowed down with the intent to continue improving our customer experience. We plan to live within our means while we prioritize unit economics, profitability, and liquidity over growth. As previously announced, our roadmap relies on four focused strategic initiatives. First, build a well-oiled transaction machine. Our transaction machine includes titling and registration, selling, e-commerce, and marketing. During Q3, we made improvements toward our goal of building a well-oiled titling and registration machine and we began building a well-oiled sales machine. Second, build a well-oiled metal machine, how we buy, move, recondition, sell, deliver, and price vehicles. Our goal is to optimize the end-to-end supply chain by synchronizing how we buy, move, recondition, and deliver vehicles to reduce cycle times, reduce supply chain costs, improve inventory turns, and improve customer delivery times. During Q3, we continued to make improvements in building our well-oiled metal machine, and we began transitioning our Stafford Reconditioning Center to the TDA Service Center location. Third, build a regional operating model, leveraging our national brand. We intend to sell nationally, but operate more regionally around our reconditioning centers and transportation hubs. We expect to build density in regions to drive marketing and supply chain economics while improving customer delivery time. We have a significant opportunity to reduce the number of miles our vehicles travel and reduce inbound and outbound transportation costs. From Q1 to Q3, we have reduced the average number of miles our vehicles travel by 18%. Fourth, builder captive financing offerings. We intend to expand our captive finance offering for Broom customers, which we believe will improve conversion rates and improve unit economics, while also improving the customer experience. We also intend to continue to grow the UACC third-party dealer business, which contributes to our consolidated EBITDA. On slide four, our third quarter highlights. We improved adjusted EBITDA, excluding non-recurring expenses, by $20 million, or 26% sequentially. Our e-commerce gross profit per unit, or GPPU, was $4,206, reflecting progress toward our long-term goal. We reduced adjusted SG&A by $21 million sequentially as we continue to reduce variable and fixed costs. We realized a $16 million securitization gain at UACC despite a challenging market. We reduced our restricted cash by $59 million, primarily driven by the improvements in titling and registration. We are making progress on our long-term roadmap and our four strategic initiatives. We continue to make improvements in transaction processing, including titling and registration. As we've mentioned, our goal is to become best in class in titling and registration. 98% of customers received their registrations before the expiration of their initial temporary tag in the month of October. I'm really proud of the improvements our roommates and UACC colleagues have made to registration. We began the transition of our Stafford Reconditioning Center to the TDA Service Center location, which will lower our fixed costs. Our long-term roadmap plan to slowly insource the sales function over time. In Q2, we started insourcing with a small sales class to build our internal capabilities, and that initial class has met our expectations. In the back half of August, we experienced a large unexpected staff reduction at one of our third party sales partners. We reacted quickly to accelerate hiring additional classes of internal sales staff. It takes time to hire and train new selling resources and additional time for them to reach peak effectiveness. We've been successful in hiring additional classes and expect to be fully staffed in Q1 2023. While we had planned a slower and smoother transition to insource our sales function, we believe this transition will reduce our selling cost per unit earlier than initially planned. We have been focused on reducing variable and fixed costs and will continue this focus. We repurchased $56 million base value of our convertible notes for $18 million, reducing our leverage. Given our focus on profitability and liquidity over growth, the unexpected reduction in selling resources during the quarter, and the macroeconomic environment, we currently expect to be below our forecasted e-commerce unit range for the year, better than the midpoint of our forecasted adjusted EBITDA loss range, and near the midpoint of our previously forecasted liquidity range. On slide five. During Investor Day, we outlined these key unit economic drivers behind our four strategic initiatives that we believe will build a profitable business model. This slide is an update to our Q3 operational progress on our four strategic initiatives by financial lever. For the product and vehicle GPPU, we achieved $4,206 e-commerce GPPU driven by our pricing initiatives and captive financing operations. UACC completed its second securitization since our acquisition and UACC's 14th securitization overall, demonstrating UACC's ability to leverage its substantial capital market experience to opportunistically deploy securitization transactions and maintain capital flexibility even in a challenging market. Logistics. We reduced our all-in logistics costs by $5 million sequentially. Inventory. As we continue to improve the titling process, we expect this to increase the number of vehicles we list for sale and reduce the number of vehicles listed as coming soon. We expect this will improve our inventory terms. Sales. We reduced our sales costs by $1.3 million sequentially. We began our sales pilot and launched new e-commerce initiatives. Titling and registration. We've seen significant improvement in our titling and registration process with 98% of customers receiving their registration before the expiration of their initial temporary tag in the month of October. As we continue to improve our titling process, we are receiving titles of aged vehicles that had not been listed for sale due to the delay in obtaining the titles. As we receive these titles of aged vehicles and list them for sale, we expect pressure on Q4 GPP-U. We reduced our titling, registration, and support costs by $5.9 million sequentially. Marketing. We reduced our marketing costs $4 million sequentially and continue to focus on improving marketing return on investment and conversion. Fixed costs. We reduce our fixed costs $4 million sequentially, and we continue to focus on additional fixed cost reduction. These variable and fixed cost sequential changes represent the $21 million sequential reduction in adjusted SG&A mentioned earlier. Lastly, our advanced analytics team, functional business teams, and tech teams continue to build data assets, analytical assets, and tech assets that we believe in the long term will provide a competitive advantage across titling and registration, pricing, conversion, vehicle and product margin, and supply chain costs. Slide six, unit trends. While we don't plan to share monthly unit numbers going forward, we felt it was important to share how the events impacted our monthly unit volume. In July, as registrations and our customer experience continued to improve, we took steps to normalize unit sales, which increased unit sales from July to August by 36%. As mentioned earlier, in the back half of August, we experienced a large, unexpected staff reduction at one of our third-party sales partners. Customer contracts were down 32% during the four weeks after the Salesforce reduction compared to the prior four weeks. We expect the transition of our sales function as well as challenging economic conditions to impact units in Q4. We expect our sales function to be fully staffed in Q1 2023. I'll turn it over to Bob now to go through our financial performance in the third quarter and our forward outlook. Bob?