Vroom Inc. said Tuesday its revenue and sales volume fell in the first quarter as the company kept working through a long-term business plan that prioritizes improving profitability. However, it narrowed its net loss year over year.
The online used-vehicle retailer reported a net loss of $75 million for the quarter ended March 31, slimmer than the $310.5 million lost in the first quarter of 2022. Revenue fell 79 percent to $196.5 million.
Tuesday marked one year since Vroom announced implementing that long-term plan, which included slowing the business down through 2022 to sell fewer used cars and trucks and instead focus on reducing costs, improving its title and registration processes and positioning to grow more sustainably.
"As we execute our strategy in 2023, we intend to resume growth, sell through aged inventory, improve variable cost per unit, continue to reduce fixed costs and continue to convert balance sheet items into cash all while living within our means," Vroom CEO Tom Shortt said during the company's earnings call on Wednesday.
In the first quarter, Vroom posted total gross profit per e-commerce vehicle of $2,552, up 45 percent from $1,763 in the year-earlier period. That total benefited from higher gross profit on newer vehicles and electric-vehicle inventory reserves taken in fourth-quarter 2022, Shortt said.
The company expects to sell through the vast majority of its aged inventory in the first half of the year, Shortt said. It now classifies "aged units" as vehicles it has held for more than 180 days. In the first quarter, 77 percent of vehicles the company sold were aged, Shortt said. Vroom previously defined aged units as vehicles it had held for more than 270 days.
Vroom expects a "significant portion" of its sales in second-quarter 2023 to be from aged vehicles, which will put pressure on gross profit per vehicle in that period, Shortt said. He said he expects that to smooth out in the second half of the year as Vroom begins selling a higher mix of newer vehicles that net more profit.
The company reduced its employee headcount in January and again in April, which it anticipates will generate $42 million of annualized cost savings.
Vroom shares slipped 10.6 percent to $0.82 in afternoon trading Wednesday.
First-quarter earnings highlights:
Q1 total revenue: $196.5 million, down 79 percent from the year-earlier period.
Q1 e-commerce revenue: $135.6 million, down 80 percent from the year-earlier period.
Q1 net income: Loss of $75 million, compared with a loss of $310.5 million in the year-earlier period.
Q1 e-commerce vehicles sold: 3,933, down 80 percent from 19,473 in the year-earlier period.
Q1 e-commerce gross profit per unit: $2,552, up 45 percent from the year-earlier period.