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New York-based Vroom said in the filing that it plans to raise $100 million, but as our partner MarketWatch notes, that number is often a placeholder that Vroom will update as it gets closer to listing its shares.
The company said it plans to list its common stock on the Nasdaq Global Market under the symbol “VRM.”
In a year where going public is a less than popular (and potentially even risky) move, Vroom must be confident in demand for its business.
I’ve covered the company’s most recent funding rounds so am familiar with what it has been up to. In December, Vroom raised $254 million in a Series H round of funding. Washington, D.C.-based Durable Capital Partners LP led the round. Funds and accounts advised by T. Rowe Price Associates Inc., L Catterton and other unnamed investors also participated.
That investment came nearly one year after the company’s $146 million Series G raise (led by publicly traded AutoNation). The Series H round brought Vroom’s total known raised to date to $721 million since its inception in 2013, according to Crunchbase data. The startup declined to disclose its valuation, but The Wall Street Journal reported the company was valued at $1.5 billion as of December 2019.
Vroom sells used, reconditioned cars directly to consumers via its website and app. The company picks up cars from sellers and delivers to buyers via what it describes as a “private-seller acquisition model” built on a mobile-enabled user interface. It also offers financing, warranty and insurance products. For more details on what it does, and how, read my story here.
In its filing, Vroom reported a first-quarter net loss of $27.1 million, which was down from $41.1 million in the 2019 first quarter. Meanwhile, Vroom’s revenue climbed to $375.8 million, up from $235.1 million a year ago.
Vroom said its revenue comes primarily from its retail vehicle sales, which accounted for $308.7 million in the first quarter.
In 2019, revenue totaled $1.19 billion compared to $855.4 million in 2018. The company’s net loss for the year was also up, rising to $143 million compared to $85.2 million.
The company noted that “while it is too soon to measure the long-term impact of the COVID-19 pandemic on consumer behavior, in a survey conducted after the onset of the COVID-19 pandemic, consumers expressed a stronger preference for transacting online rather than offline.”
However, it also said the COVID-19 pandemic negatively impacted sales in March. Specifically, the company saw a 15 percent decline in total ecommerce revenue between March 11 and March 31, 2020, “due to a decrease in consumer demand” as compared to the 20 days prior to March 11.
In response, in late March Vroom reduced vehicle prices “in order to drive vehicle sales and quickly reduce the amount of inventory that was purchased pre-COVID-19.” It all also paused all vehicle acquisitions other than trade-ins.
Those efforts led to demand returning to pre-COVID-19 levels, the company said, but at “a greatly reduced gross profit per unit.”
Vroom also noted that earlier this month, it placed about one-third of its workforce on furlough and implemented an across-the-board salary reduction for our non-furloughed salaried employees. In December, the company had about 700 employees.
As of April 30, 2020, Vroom had $156.4 million in cash and cash equivalents.
Illustration: Li-Anne Dias
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