The auto and truck dealership e-commerce platform, Vroom Inc. (VRM) said on May 9, that it has initiated a realignment plan, while it posted earnings for Q1 2022. Additionally, the company also appointed Tom Shortt as the new CEO after the previous one left to pursue other opportunities.
The quarterly earnings which exceeded the company’s guidance on all key metrics also surpassed analysts’ expectations. Consequently, the beat earnings and realignment plan had investors cheering over the stock in the late trading session.
Thus, after a decline of 20.00% in regular trading, VRM rallied in the after-hours and increased by 18.51%. After registering a new 52-week low of $1.0800 in the regular session, the stock surged up to $1.2799 in the following session. An active number of 1.89 million shares were exchanged in the after-hours on Monday.
VRM’s Q1 Overview
The car dealer’s Q1 2022 total revenue increased to $923.8 million while the e-commerce revenue reached $675.3 million. This marks an increase of 56.3% in the total revenue and 59.9% for e-commerce. Hence, the total revenue surpassed the consensus estimate by 5.59%.
On the other hand, VRM’s loss from operations was $315.9 million while the net loss expanded to $310.5 million. Thus, the quarterly loss of 71 cents per share beat the consensus estimate of a loss of $1.03 per share for the quarter. This represents a nice earning surprise of 31.07%.
Moreover, the total gross profit figure stood at $81.6 million with an improvement of 125.7%. The total units sold went up by 20.7% while e-commerce units sold increased by 25.6% and the wholesale units sold were up 17.0%.
The Realignment Plan
The company said on Monday that its board has approved a realignment plan to position VRM for long-term profitable growth. The realignment plan includes unit economics prioritization, operating expenses reductions, and liquidity maximization. For this, the company plans to reduce targeted unit sales in order to focus on the sustainable sales margin, regionalization of business and operations, and employee lay-off.
Following the complete realignment, VRM expects cost reductions of $135-$165 million with operating improvements through the rest of the year.
VRM’s Outlook
VRM is expecting e-commerce unit sales of 45,000-55,000 for the full year of 2022, with adjusted EBITDA in the range of $(375) and $(325) million. The company also said that it expects year-end liquidity of $450-$565 million.
While the company did not provide its revenue and earnings estimates, the consensus figures for the full year are a loss of $3.54 on revenue of $3.82 billion.
