[10-Q] Vroom, Inc. Quarterly Earnings Report
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from to
Commission file number:
(Exact Name of Registrant as Specified in Its Charter)
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901112566 |
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(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip code)
(
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
☒ |
Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As of August 7, 2025,
Table of Contents
TABLE OF CONTENTS
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Page |
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Part I - Financial Information |
5 |
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Item 1. |
Financial Statements |
5 |
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Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 (unaudited) |
5 |
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Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) |
6 |
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Condensed Consolidated Statements of Changes in Stockholders' Equity for the Six Months Ended June 30, 2025 and 2024 (unaudited) |
9 |
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Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) |
10 |
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Notes to Condensed Consolidated Financial Statements (unaudited) |
12 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
57 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
85 |
Item 4. |
Controls and Procedures |
85 |
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Part II - Other information |
86 |
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Item 1. |
Legal Proceedings |
86 |
Item 1A. |
Risk Factors |
87 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
87 |
Item 3. |
Defaults Upon Senior Securities |
87 |
Item 4. |
Mine Safety Disclosures |
87 |
Item 5. |
Other Information |
87 |
Item 6. |
Exhibits |
88 |
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Signatures |
91 |
2
Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding the impact of macroeconomic and geopolitical factors including tariffs and other trade restrictions, the impact of the Prepackaged Chapter 11 Case (as defined herein), our ability to continue as a going concern, our future results of operations and financial condition, business strategy, and plans and objectives of management for future operations, including our Value Maximization Plan (as defined herein) the ongoing activities of and potential growth of our UACC and CarStory businesses, our Long-Term Strategic Plan (as defined herein), including our base, growth, and aggressive growth models, our ongoing compliance with, the amendment and renewal of the Warehouse Credit Facilities (as defined herein), and the timing of any of the foregoing are forward-looking statements. In some cases, forward-looking statements may be identified by words such as "anticipate," "believe," "contemplate," "continue," "could," "design," "estimate," "expect," "intend," "may," "plan," "potentially," "predict," "project," "should," "target," "will," "would," or the negative of these terms or other similar terms or expressions, although not all forward-looking statements contain these identifying words.
The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties, assumptions, and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including:
3
Table of Contents
Other sections of this Quarterly Report on Form 10-Q include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report or to conform these statements to actual results or to changes in our expectations. You should read this Quarterly Report on Form 10-Q and the documents that we reference or incorporate by reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this report with the understanding that our actual future results, levels of activity, performance, and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
4
Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
VROOM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)
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Successor |
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Predecessor |
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As of |
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As of |
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2025 |
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2024 |
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ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash (including restricted cash of consolidated VIEs of $ |
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Finance receivables at fair value (including finance receivables of consolidated VIEs of $ |
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Finance receivables held for sale, net (including finance receivables of consolidated VIEs of $ |
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— |
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Interest receivable (including interest receivables of consolidated VIEs of $ |
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Property and equipment, net |
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Intangible assets, net |
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Operating lease right-of-use assets |
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Other assets (including other assets of consolidated VIEs of $ |
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Assets from discontinued operations |
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— |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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Warehouse credit facilities of consolidated VIEs |
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$ |
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$ |
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Long-term debt (including securitization debt of consolidated VIEs of $ |
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Operating lease liabilities |
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Other liabilities (including other liabilities of consolidated VIEs of $ |
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Liabilities subject to compromise (Note 6) |
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— |
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Liabilities from discontinued operations |
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Total liabilities |
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Commitments and contingencies (Note 12) |
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Stockholders’ equity (deficit) : |
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Common stock, $ |
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Additional paid-in-capital |
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Accumulated deficit |
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( |
) |
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( |
) |
Total stockholders’ equity (deficit) |
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( |
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Total liabilities and stockholders’ equity (deficit) |
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$ |
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$ |
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See accompanying notes to these unaudited condensed consolidated financial statements.
5
Table of Contents
VROOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
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Successor |
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Predecessor |
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Three Months Ended June 30, |
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Three Months Ended June 30, |
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2025 |
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2024 |
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Interest income |
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$ |
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$ |
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Interest expense: |
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Warehouse credit facility |
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Securitization debt |
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Total interest expense |
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Net interest income |
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Realized and unrealized losses, net of recoveries |
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Net interest income after losses and recoveries |
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Noninterest income: |
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Servicing income |
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Warranties and GAP income, net |
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CarStory revenue |
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Other income |
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Total noninterest income |
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Expenses: |
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Compensation and benefits |
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Professional fees |
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Software and IT costs |
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Depreciation and amortization |
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Interest expense on corporate debt |
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Other expenses |
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Total expenses |
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Loss from continuing operations before provision for income taxes |
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( |
) |
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( |
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Provision (benefit) for income taxes from continuing operations |
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( |
) |
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Net loss from continuing operations |
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$ |
( |
) |
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$ |
( |
) |
Net income (loss) from discontinued operations |
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$ |
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$ |
( |
) |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Net loss per share attributable to common stockholders, continuing operations, basic and diluted |
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$ |
( |
) |
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$ |
( |
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Net income (loss) per share attributable to common stockholders, discontinued operations, basic and diluted |
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$ |
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$ |
( |
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Total net loss per share attributable to common stockholders, basic and diluted |
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$ |
( |
) |
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$ |
( |
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Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted |
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6
Table of Contents
VROOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(in thousands, except share and per share amounts)
(unaudited)
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Successor |
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Predecessor |
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Period from January 15 through June 30, |
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Period from January 1 through January 14, |
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Six Months Ended |
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2025 |
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2025 |
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2024 |
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Interest income |
$ |
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$ |
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$ |
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Interest expense: |
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Warehouse credit facility |
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Securitization debt |
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Total interest expense |
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Net interest income |
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Realized and unrealized losses, net of recoveries |
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Net interest income (loss) after losses and recoveries |
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( |
) |
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Noninterest income: |
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Servicing income |
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Warranties and GAP income (loss), net |
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( |
) |
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CarStory revenue |
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Other income |
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Total noninterest income |
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Expenses: |
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Compensation and benefits |
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Professional fees |
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Software and IT costs |
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Depreciation and amortization |
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Interest expense on corporate debt |
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Impairment charges |
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— |
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Other expenses |
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Total expenses |
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Loss from continuing operations before reorganization items and provision for income taxes |
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( |
) |
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( |
) |
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( |
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Reorganization items, net |
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— |
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— |
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(Loss) income from continuing operations before provision for income taxes |
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( |
) |
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( |
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Provision for income taxes from continuing operations |
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Net income (loss) from continuing operations |
$ |
( |
) |
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$ |
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$ |
( |
) |
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Net income (loss) from discontinued operations |
$ |
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$ |
( |
) |
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$ |
( |
) |
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Net (loss) income |
$ |
( |
) |
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$ |
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$ |
( |
) |
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7
Table of Contents
VROOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(in thousands, except share and per share amounts)
(unaudited)
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Successor |
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Predecessor |
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Period from January 15 through June 30, |
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Period from January 1 through January 14, |
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Six Months Ended |
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2025 |
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2025 |
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2024 |
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Net (loss) income per share attributable to common stockholders, basic: |
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Continuing operations |
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( |
) |
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( |
) |
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Discontinued operations |
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( |
) |
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( |
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Basic |
$ |
( |
) |
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$ |
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$ |
( |
) |
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Net (loss) income per share attributable to common stockholders, diluted: |
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Continuing operations |
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( |
) |
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( |
) |
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Discontinued operations |
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( |
) |
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( |
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Diluted |
$ |
( |
) |
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$ |
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$ |
( |
) |
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Weighted-average number of shares outstanding used to compute net (loss) income per share attributable to common stockholders: |
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Basic |
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Diluted |
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See accompanying notes to these unaudited condensed consolidated financial statements.
8
Table of Contents
VROOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
(unaudited)
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Common Stock |
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Additional |
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Total |
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Shares |
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Amount |
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Paid-in Capital |
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Accumulated Deficit |
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Equity (Deficit) |
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Predecessor: |
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Balance at December 31, 2023 (Predecessor) |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Stock-based compensation |
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— |
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$ |
— |
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$ |
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$ |
— |
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$ |
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Vesting of restricted stock units |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at March 31, 2024 (Predecessor) |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Stock-based compensation |
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— |
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$ |
— |
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$ |
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$ |
— |
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$ |
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Vesting of restricted stock units |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at June 30, 2024 (Predecessor) |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Common Stock |
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Additional |
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Total |
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Shares |
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Amount |
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Paid-in Capital |
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Accumulated Deficit |
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Equity (Deficit) |
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Predecessor: |
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Balance at December 31, 2024 (Predecessor) |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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Stock-based compensation |
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— |
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$ |
— |
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$ |
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$ |
— |
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$ |
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Vesting of restricted stock units |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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||
Elimination of Predecessor equity balances |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Issuance of Successor equity |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Issuance of stock warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Balance at January 14, 2025 (Predecessor) |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Successor: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at January 15, 2025 (Successor) |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Vesting of restricted stock units |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at March 31, 2025 (Successor) |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Vesting of restricted stock units |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2025 (Successor) |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
See accompanying notes to these unaudited condensed consolidated financial statements.
9
Table of Contents
VROOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
Successor |
|
|
|
Predecessor |
|
||||||
|
|
Period from January 15 through June 30, |
|
|
|
Period from January 1 through January 14, |
|
|
Six Months Ended |
|
|||
|
|
2025 |
|
|
|
2025 |
|
|
2024 |
|
|||
Operating activities |
|
|
|
|
|
|
|
|
|
|
|||
Net (loss) income from continuing operations |
|
$ |
( |
) |
|
|
$ |
|
|
$ |
( |
) |
|
Adjustments to reconcile net (loss) income to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
|||
Impairment charges |
|
|
|
|
|
|
— |
|
|
|
|
||
Profit share receivable |
|
|
( |
) |
|
|
|
— |
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|||
Losses on finance receivables and securitization debt, net |
|
|
|
|
|
|
|
|
|
|
|||
Losses on Warranties and GAP |
|
|
|
|
|
|
|
|
|
|
|||
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|||
Provision to record finance receivables held for sale at lower of cost or fair value |
|
|
— |
|
|
|
|
— |
|
|
|
( |
) |
Amortization of unearned discounts on finance receivables at fair value |
|
|
— |
|
|
|
|
( |
) |
|
|
( |
) |
Non-cash reorganization items, net |
|
|
— |
|
|
|
|
( |
) |
|
|
— |
|
Other, net |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|||
Finance receivables, held for sale |
|
|
|
|
|
|
|
|
|
|
|||
Originations of finance receivables, held for sale |
|
|
— |
|
|
|
|
( |
) |
|
|
( |
) |
Principal payments received on finance receivables, held for sale |
|
|
— |
|
|
|
|
|
|
|
|
||
Other |
|
|
— |
|
|
|
|
|
|
|
|
||
Interest receivable |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Other assets |
|
|
( |
) |
|
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Net cash provided by (used in) operating activities from continuing operations |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Net cash (used in) provided by operating activities from discontinued operations |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|||
Finance receivables, held for investment at fair value |
|
|
|
|
|
|
|
|
|
|
|||
Purchases of finance receivables, held for investment at fair value |
|
|
( |
) |
|
|
|
— |
|
|
|
— |
|
Principal payments received on finance receivables, held for investment at fair value |
|
|
|
|
|
|
|
|
|
|
|||
Principal payments received on beneficial interests |
|
|
|
|
|
|
|
|
|
|
|||
Purchase of property and equipment |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Net cash (used in) provided by investing activities from continuing operations |
|
|
( |
) |
|
|
|
|
|
|
|
||
Net cash provided by investing activities from discontinued operations |
|
|
|
|
|
|
— |
|
|
|
|
||
Net cash (used in) provided by investing activities |
|
|
( |
) |
|
|
|
|
|
|
|
||
Financing activities |
|
|
|
|
|
|
|
|
|
|
|||
Proceeds from borrowings under secured financing agreements |
|
|
|
|
|
|
— |
|
|
|
|
||
Principal repayment under secured financing agreements |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Proceeds from financing of beneficial interests in securitizations |
|
|
|
|
|
|
— |
|
|
|
|
||
Principal repayments of financing of beneficial interests in securitizations |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Proceeds from warehouse credit facilities |
|
|
|
|
|
|
|
|
|
|
|||
Repayments of warehouse credit facilities |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Other financing activities |
|
|
( |
) |
|
|
|
— |
|
|
|
( |
) |
Net cash provided by (used in) financing activities from continuing operations |
|
|
|
|
|
|
( |
) |
|
|
|
||
Net cash used in financing activities from discontinued operations |
|
|
— |
|
|
|
|
— |
|
|
|
( |
) |
Net cash provided by (used in) financing activities |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Cash, cash equivalents and restricted cash at the beginning of period |
|
|
|
|
|
|
|
|
|
|
|||
Cash, cash equivalents and restricted cash at the end of period |
|
$ |
|
|
|
$ |
|
|
$ |
|
|||
(Continued on following page)
10
Table of Contents
VROOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
(unaudited)
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|||
Cash paid for interest |
|
$ |
|
|
|
$ |
|
|
$ |
|
|||
Cash paid for reorganization items, net |
|
$ |
— |
|
|
|
$ |
|
|
$ |
— |
|
|
Cash paid for income taxes |
|
$ |
|
|
|
$ |
— |
|
|
$ |
|
||
See accompanying notes to these unaudited condensed consolidated financial statements.
11
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Description of Business and Basis of Presentation
Description of Business and Organization
Vroom, Inc. is a holding company that conducts its operations through its subsidiaries. Unless the context otherwise requires, references herein to “Vroom”, the "Company”, “we”, “us” or “our” refer to Vroom and its consolidated subsidiaries.
The Company was incorporated in Delaware on January 31, 2012, under the name BCM Partners III, Corp. On June 25, 2013, the Company changed its name to Auto America, Inc., and on July 9, 2015, the Company changed its name to Vroom, Inc.
In January 2021, the Company completed the acquisition of Vast Holdings, Inc. (d/b/a CarStory) ("CarStory"). On February 1, 2022 (the "Acquisition Date"), the Company completed the acquisition of Unitas Holdings Corp. (now known as Vroom Finance Corporation), including its wholly owned subsidiaries United PanAm Financial Corp. (now known as Vroom Automotive Financial Corporation) and United Auto Credit Corporation ("UACC").
UACC, a leading automotive finance company, offers vehicle financing to consumers through third-party dealers under the UACC brand, and CarStory, is an AI-powered analytics and digital services platform for automotive retail. The UACC and CarStory businesses continue to serve their third-party customers, with their operations substantially unaffected by the Ecommerce Wind-Down (as defined herein).
The Company previously operated an end-to-end ecommerce platform to buy and sell used vehicles through its subsidiary Vroom Automotive, LLC. On January 22, 2024, the Company announced that its Board of Directors (“Board”) had approved a value maximization plan, pursuant to which the Company wound down its used vehicle dealership business in order to preserve liquidity and enable the Company to maximize stakeholder value through its remaining businesses (the “Value Maximization Plan”). As of March 29, 2024, the Company substantially completed the wind-down of its ecommerce operations and used vehicle dealership business (the “Ecommerce Wind-Down”).
The accounting requirements for reporting the Company's ecommerce operations and used vehicle dealership business as a discontinued operation were met as of March 29, 2024. Accordingly, the condensed consolidated financial statements and notes to the condensed consolidated financial statements reflect the results of the Company's ecommerce operations and used vehicle dealership business as a discontinued operation for the periods presented. Refer to Note 5 — Discontinued Operations for further detail. The Company is now organized into
The Prepackaged Chapter 11 Case
On November 12, 2024, the Company (in the context of the Prepackaged Chapter 11 Case, the “Debtor”) entered into a Restructuring Support Agreement (together with all exhibits and schedules thereto, the “RSA”) with creditors holding the overwhelming majority of the aggregate outstanding principal amount of the Notes (as defined in Note 11 — Long Term Debt) and the largest shareholder. The RSA contemplated a comprehensive restructuring of the Company’s debt obligations and capital structure to be implemented through a prepackaged plan of reorganization (the “Plan”) to be implemented through the filing of the Prepackaged Chapter 11 Case (as defined below). Capitalized terms used in this section but not defined herein have the meanings ascribed to them in the RSA.
On November 13, 2024, the Company commenced a voluntary proceeding (the “Prepackaged Chapter 11 Case”) under Chapter 11 of the United States Code, 11 U.S.C. §§ 101-1532, as amended from time to (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) under the name “In re Vroom, Inc.” Case No. 24-90571 (CML). None of Vroom, Inc.’s subsidiaries were debtors in the Chapter 11 proceedings.
12
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
On January 14, 2025 (the “Effective Date”), the conditions to the effectiveness of the Plan were satisfied or waived and the Plan became effective. The Company emerged from the Prepackaged Chapter 11 Case on
Conversion of Common Stock
Immediately prior to the Effective Date, there were
Warrants to Purchase New Common Stock
On the Effective Date, the Company entered into a warrant agreement (the “Warrant Agreement”) with Equiniti Trust Company LLC, as warrant agent. In accordance with the Plan and pursuant to the Warrant Agreement, on the Effective Date, the Company issued warrants (the “Warrants”) to purchase an aggregate of
Going Concern
As described above, the Company filed the Prepackaged Chapter 11 Case to implement the transactions described herein. As of January 14, 2025, the Company emerged from the Prepackaged Chapter 11 Case and continues to operate as a viable going concern.
The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue to operate as a going concern, which contemplates that the Company will be able to realize assets and settle liabilities and commitments in the normal course of business for twelve months following the issuance date.
Basis of Presentation
The condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission regarding interim financial reporting. The consolidated balance sheet as of December 31, 2024, included herein, was derived from the audited consolidated financial statements as of that date. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Annual Report on Form 10-K for the year ended December 31, 2024.
Upon emergence from the Prepackaged Chapter 11 Case, the Company adopted fresh start accounting in accordance with FASB Codification Topic 852, Reorganizations ("ASC 852") and became a new entity for financial reporting purposes. As a result, the condensed consolidated financial statements after the Effective Date are not comparable with the condensed consolidated financial statements on or before that date as indicated by the “black line” division in the financial statements and footnote tables. References to “Successor” relate to the Company's financial position and results of operations after the Effective Date. References to “Predecessor” refer to the Company's financial position and results of operations on or before the Effective Date. Refer to Note 6 — Fresh Start Accounting for further details.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, and in management’s opinion, include all adjustments, which consist of only
13
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
normal recurring adjustments necessary for the fair statement of the Company’s condensed consolidated balance sheet as of June 30, 2025, and its results of operations for the periods presented. The results for the period from January 1, 2025, to January 14, 2025, and from January 15, 2025, to June 30, 2025, are not necessarily indicative of the results expected for the current fiscal year or any other future periods.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. On an ongoing basis, the Company evaluates its estimates, including, among others, those related to finance receivables, income taxes, stock-based compensation, contingencies, warranties and GAP (as defined below) income-related reserves, fair value measurements and useful lives of property and equipment and intangible assets. The Company bases its estimates on historical experience, market conditions, and on various other assumptions that are believed to be reasonable. Actual results may differ from these estimates.
Comprehensive Income and Loss
Cash and Cash Equivalents
Cash and cash equivalents include cash deposits at financial institutions and highly liquid investments with original maturities of three months or less. Outstanding checks that are in excess of the cash balances at certain financial institutions are included in “Other liabilities” in the consolidated balance sheets and changes in these amounts are reflected in operating cash flows in the consolidated statements of cash flows.
Restricted Cash
Restricted cash primarily includes UACC restricted cash. UACC collects and services finance receivables under the securitization transactions and warehouse credit facilities. These collections are restricted for use until properly remitted each month under the terms of the servicing agreement. UACC also maintains a reserve account for each securitization and warehouse credit facility to provide additional collateral for the borrowings. Refer to Note 10 — Warehouse Credit Facilities of Consolidated VIEs and Note 11 — Long Term Debt for further details.
Finance Receivables
Finance receivables consist of retail installment sale contracts purchased or acquired by UACC from its existing network of third-party dealership customers at a discount as well as retail installment sale contracts UACC offered to Vroom’s customers through its ecommerce platform prior to the Ecommerce Wind-Down.
The Company's finance receivables are generally secured by the vehicles being financed.
14
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Finance receivables for which the fair value option was elected under ASC 825 are classified as finance receivables at fair value.
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to account for all finance receivables as finance receivables held for investment at fair value. Prior to the accounting policy change, the Company's finance receivables at fair value included both finance receivables held for sale at fair value as well as finance receivables held for investment at fair value. The Company did not have any finance receivables held for sale at fair value as of June 30, 2025, and the aggregate principal balance and the fair value of the finance receivables held for investment was $
The Company reassesses the estimate for fair value at each reporting period with any changes reflected as a fair value adjustment and recorded in "Realized and unrealized losses, net of recoveries" in the condensed consolidated statements of operations. For all finance receivables at fair value, the Company recognizes the fees it charges to dealers upon acquisition as other income at the time of issuance of the finance receivables and recognizes the acquisition costs to underwrite the finance receivables as an expense in the period incurred. For finance receivables held for investment at fair value, any discounts are amortized over the contractual life of the underlying finance receivables and is recognized in realized and unrealized loss, net of recoveries on the condensed consolidated statement of operations.
Refer to Note 15 — Financial Instruments and Fair Value Measurements for further details.
Finance Receivables Held for Sale, Net
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to elect the fair value option for all finance receivables held for sale, net. The Company reports all finance receivables on a prospective basis as Finance Receivables at Fair Value. Refer to Note 6 — Fresh Start Accounting for further details.
The finance receivables that the Company intended to sell were classified as held for sale and recorded at the lower of cost or fair value. The Company intended to sell finance receivables through securitization transactions. Deferred acquisition costs and any discounts were deferred until the finance receivables were sold and were then recognized as part of the total gain or loss on sale. Refer to Note 3 — Revenue Recognition for further details.
Prior to the Effective Date, the Company recorded a valuation allowance to report finance receivables held for sale at the lower of cost or fair value. To determine the valuation allowance, finance receivables were evaluated collectively as they represent a large group of smaller-balance homogeneous loans. To the extent that actual experience differed from estimates, significant adjustments to the Company's valuation allowance were needed. Fair value adjustments were recorded in "Realized and unrealized losses, net of recoveries" in the consolidated statements of operations. Principal balances and corresponding deferred acquisition costs and discounts of finance receivables were charged-off when the Company was unable to sell the finance receivable and the related vehicle had been repossessed and liquidated, or the receivable had otherwise been deemed uncollectible. As of June 30, 2025, the Company did
Consolidated CFEs
The 2022-2, 2023-1, 2024-1, and 2025-1 securitization transactions are consolidated collateralized financing entities (CFEs) that are VIEs. Refer to Note 4 — Variable Interest Entities and Securitizations for further details.
15
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Successor |
|
|
|
Predecessor |
|
||||||||
|
|
Three Months Ended June 30, |
|
|
|
Three Months Ended June 30, |
|
|
|
Period from January 15 through June 30, |
|
|
|
Period from January 1 through January 14, |
|
|
Six Months Ended |
|
|||||
|
|
2025 |
|
|
|
2024 |
|
|
|
2025 |
|
|
|
2025 |
|
|
2024 |
|
|||||
Interest income |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|||||
Interest expense |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Realized and unrealized losses, net of recoveries |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Noninterest income (loss), net |
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
||
Reorganization items, net |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
The assets and liabilities of the CFEs are presented as part of "Restricted cash", “Finance receivables at fair value”, "Interest receivable", "Other Assets", "Long term debt", and "Other liabilities", respectively, on the consolidated balance sheets. Refer to Note 4 — Variable Interest Entities and Securitizations and Note 15 — Financial Instruments and Fair Value Measurements for further details.
Property and Equipment, Net
Property and equipment are recorded at cost less accumulated depreciation and amortization. Charges for repairs and maintenance that do not improve or extend the life of the respective assets are expensed as incurred. When assets are retired or otherwise disposed of, their costs and related accumulated depreciation are written off and any resulting gains or losses are recorded during the period.
Depreciation and amortization are calculated using the straight-line method over the following estimated useful lives of the assets:
Equipment |
|
Furniture and fixtures |
|
Leasehold improvements |
Lesser of useful life or lease term |
Internal-use software |
The Company capitalizes direct costs of materials and services utilized in developing or obtaining internal-use software. The Company also capitalizes payroll and payroll-related costs for employees who are directly associated with and who devote time to the development of software products for internal use, to the extent of the time spent directly on the project. Capitalization of costs begins during the application development stage and ends when the software is available for general use. Costs incurred during the preliminary project and post-implementation stages are charged to expense as incurred.
Additionally, the Company capitalizes implementation costs incurred in a cloud computing arrangement that is a service contract. The capitalized implementation costs related to a cloud computing arrangement are amortized over the term of the arrangement. Capitalized implementation costs are included in “Other assets” in the consolidated balance sheet and are amortized over the terms of the arrangements, which range between
Intangible Assets, net
The Company's intangible assets are amortized on a straight-line basis over the following estimated weighted average useful lives:
Developed technology |
|
Trademarks |
|
Customer relationships |
The Company periodically reassesses the useful lives of its definite-lived intangible assets when events or circumstances indicate that useful lives have significantly changed from the previous estimate.
16
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Leases
The Company determines if an arrangement is a lease at inception by evaluating if the asset is explicitly or implicitly identified or distinct, if the Company will receive substantially all of the economic benefit or if the lessor has an economic benefit and the ability to substitute the asset. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. The Company assesses whether the lease is an operating or finance lease at its inception. Operating lease liabilities are recognized at commencement date based on the present value of the lease payments over the lease term. As the rate implicit in the lease is generally not readily determinable for the Company’s operating leases, the discount rates used to determine the present value of the Company’s lease liabilities are based on the Company’s incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset is the initial lease liability adjusted for any prepayments, initial indirect costs incurred by the Company, and lease incentives. The Company's operating leases are included in "Operating lease right-of-use assets," and "Operating lease liabilities" on the consolidated balance sheets. The Company does not have any material leases, individually or in the aggregate, classified as a finance leasing arrangement. Additionally, leases with an initial term of 12 months or less are not recorded on the Company’s consolidated balance sheet and expenses for these leases are recognized on a straight-line basis over the lease term.
The Company incurred impairment charges related to operating lease right-of-use assets of $
Long-lived asset impairment
The Company regularly reviews long-lived assets for impairment when events or changes in circumstances indicate the carrying amount of an asset group may not be recoverable. The Company compares the sum of estimated undiscounted future cash flows expected to result from the use of the asset group to the carrying value of the asset group. When the carrying value of the asset group exceeds its estimated undiscounted future cash flows, the Company recognizes an impairment charge for the amount by which the carrying value of the asset group exceeds the fair value of the asset group.
As a result of filing the Prepackaged Chapter 11 Case on November 13, 2024, the Company determined a triggering event existed as of December 31, 2024, indicating the carrying amount of the Company's asset groups may not be recoverable. Therefore, the Company performed an evaluation of its assets for impairment. For the UACC asset group, as the carrying value of the asset group did not exceed the estimated undiscounted future cash flows, the asset group was deemed recoverable, and no impairment charges were recognized. For the CarStory asset group, the carrying value of the asset group exceeded the estimated undiscounted future cash flows, however, it did not exceed the estimated fair value, as such, no impairment charges were recognized. The Company determined there were no triggering events as of June 30, 2025.
Income Taxes
The Company accounts for income taxes under the asset and liability method. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as for operating loss and tax credit carry forwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which the Company expects to recover or settle those temporary differences. The Company recognizes the effect of a change in tax rates on deferred tax assets and liabilities in the results of operations in the period that includes the enactment date. The Company reduces the measurement of a deferred tax asset, if necessary, by a valuation allowance if it is more likely than not that the Company will not realize some or all of the deferred tax asset. The Company accounts for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon technical merits, it is more likely than not that the position will be sustained upon
17
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
examination. Potential interest and penalties associated with unrecognized tax positions are recognized in income tax expense.
On July 4, 2025, new U.S tax legislation was signed into law (known as the "One Big Beautiful Bill Act" or "OBBBA") which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. The Company is currently evaluating the impact of the new legislation but does not expect it to have a material impact on the results of operations.
Stock-Based Compensation
The Company recognizes the cost of employee services received in exchange for stock awards based on the fair value of those awards at the date of grant over the requisite service period. The Company accounts for forfeitures as they occur. For awards earned based on performance or upon occurrence of a contingent event, if the award is deemed probable of being earned, related compensation expense is recorded over the estimated service period. If an award is not considered probable of being earned, no amount of stock-based compensation is recognized. To the extent the estimate of awards considered probable of being earned changes, the amount of stock-based compensation recognized will also change.
The Company uses the Black-Scholes-Merton (“Black-Scholes”) option pricing model to determine the fair value of its stock options. Estimating the fair value of stock options requires the input of subjective assumptions, including the estimated fair value of the Company’s common stock, the expected life of the options, stock price volatility, which is determined based on the historical volatilities of several publicly listed peer companies as the Company has only a short trading history for its common stock, the risk-free interest rate and expected dividends. The assumptions used in the Company’s Black-Scholes option-pricing model represent management’s best estimates and involve a number of variables, uncertainties and assumptions and the application of management’s judgment, as they are inherently subjective.
Concentration of Credit Risk and Significant Customers
The Company’s principal financial instruments subject to potential concentration of credit risk are cash and cash equivalents and finance receivables. The Company’s cash balances are maintained at various large, reputable financial institutions. Deposits held with financial institutions may at times exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and, therefore, management believes they bear minimal risk. The Company’s cash equivalents primarily consist of money market funds that hold investments in highly liquid U.S. government securities. Concentration of credit risk with respect to finance receivables is generally mitigated by a large consumer base.
Liquidity
On January 14, 2025, the Company emerged from the Prepackaged Chapter 11 Case, as discussed in Note 1 — Description of Business and Basis of Presentation. On the Effective Date, each holder of the Notes received a pro rata share of
As of June 30, 2025, the Company had cash and cash equivalents of $
18
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
and generated losses from operations and the Company’s primary source of liquidity has been cash generated through financing activities.
As of June 30, 2025, UACC had
Failure to secure warehouse borrowing capacity beyond their expiration or failure to satisfy the covenants therein and or any other requirements contained within the agreements would restrict access to the Warehouse Credit Facilities and would have a material adverse effect on the financial condition, results of operations and liquidity of the Company. Certain breaches of covenants may also result in acceleration of the repayment of borrowings prior to the scheduled maturity. Refer to Note 10 — Warehouse Credit Facilities of Consolidated VIEs for further details.
On March 8, 2025, Vroom, Inc., UACC and its indirect subsidiary Darkwater Funding LLC, as co-borrowers, entered into a credit agreement for a $
The Company expects to use cash and cash equivalents to finance future capital requirements and UACC’s Warehouse Credit Facilities to fund finance receivables. Certain advance rates available to UACC on borrowings from the Warehouse Credit Facilities have decreased and any future decreases on available advance rates may have an adverse impact on the Company's liquidity.
Upon the Company's emergence from Prepackaged Chapter 11 Case on January 14, 2025, the Company continues to operate as a viable going concern. The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue to operate as a going concern, which contemplates that it will be able to realize assets and settle liabilities and commitments in the normal course of business for twelve months following the issuance date.
The Company’s future capital requirements will depend on many factors, including the ability to realize the intended benefits of the Value Maximization Plan, Prepackaged Chapter 11 Case, and Long-Term-Strategic Plan, available advance rates on and the renewal of the Warehouse Credit Facilities, the ability to meet the requirements for continued listing on the Nasdaq Global Market, the ability to complete additional securitization transactions on terms favorable to the Company, and future credit losses. The Company anticipates that existing cash and cash equivalents, the credit agreement with Mudrick Capital Management, L.P., and UACC's Warehouse Credit Facilities will be sufficient to support the Company’s ongoing operations and obligations, for at least the next twelve months from the date of issuance of the condensed consolidated financial statements.
Net (Loss) Income Per Share Attributable to Common Stockholders
Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Under the two-class method, net loss is attributed to common stockholders and participating securities based on their participation rights. Under the two-class method, the net loss attributable to common stockholders is not allocated to the preferred stock as the holders of the Company’s preferred stock do not have a contractual obligation to share in the Company’s losses. Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. For periods in which the
19
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Company reports net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
Accounting Standards Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures of significant segment expenses. The Company
Accounting Standards Issued but Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. The guidance will be effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its condensed consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE), which requires additional disclosure of the nature of expenses included in the income statement in response to longstanding requests from investors for more information about an entity’s expenses. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The guidance will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its condensed consolidated financial statements and related disclosures.
3. Revenue Recognition
The Company’s revenue is disaggregated within the condensed consolidated statements of operations and is generated from consumers throughout the United States.
Interest Income
The Company’s interest income is related to finance receivables originated by UACC for its network of third-party dealership customers and vehicle financing UACC offered to Vroom’s customers through its ecommerce platform prior to the Ecommerce Wind-down.
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to recognize discount income on finance receivables held for investment at fair value as a component of "Realized and unrealized losses, net of recoveries". In the Predecessor periods discount income on finance receivables held for investment at fair value was recognized as a component of "Interest income" on the Company’s condensed consolidated statement of operations. The discount income represents the amortization of unearned acquisition discounts over the contractual life of the underlying finance receivables using the interest method. Interest income on each automotive finance receivable is calculated based on the finance receivable’s outstanding principal balance multiplied by the contractual interest rate.
An account is considered delinquent if a scheduled payment has not been received by the date such payment was contractually due. Interest income deemed uncollectible is reversed at the time the finance receivable is charged off. Finance receivables over 90 days delinquent are considered nonaccrual finance receivables. Income is subsequently recognized only to the extent cash payments are received until the borrower is able to make periodic interest and principal payments in accordance with the finance receivable terms.
20
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Servicing Income
Servicing income represents the annual fees earned on the outstanding principal balance of the finance receivables serviced as well as late charges, collection payments, and other fees. Fees are earned monthly at an annual rate of approximately
Warranties and GAP income, net
Prior to the Ecommerce Wind-Down, the Company offered third-party financing and third-party value-added products such as vehicle service contracts, guaranteed asset protection (“GAP”) and tire and wheel coverage, to its used vehicle customers pursuant to arrangements with the third parties that sell and administered these products and are responsible for their fulfillment.
UACC also offers third-party vehicle service contracts and United Auto Credit GAP to consumers who obtain financing through UACC. United Auto Credit GAP is a debt waiver product that is underwritten directly by UACC. It provides protection for consumers who purchase the product by waiving the difference between the actual cash value of the consumer’s vehicle and the balance of the consumer’s contract, subject to the terms and conditions of the United Auto Credit GAP, in the event of a total loss resulting from collision or theft. The total fees are earned over the contractual life of the related finance receivables on straight-line basis.
The Company concluded that it is an agent for any transactions with third-parties because it does not control the products before they are transferred to the consumer. The Company recognizes revenue on a net basis when the consumer enters into an arrangement for the products.
A portion of the fees earned on third-party financing and value-added products are subject to chargebacks in the event of early termination, default, or prepayment of the contracts by end-customers. The Company’s exposure for these events is limited to the fees that it receives. An estimated refund liability for chargebacks against the revenue recognized from sales of these products is recorded in the period in which the related revenue is recognized and is based primarily on the Company’s historical chargeback experience. The Company updates its estimates at each reporting date. As of June 30, 2025, and December 31, 2024, the Company’s reserve for chargebacks was $
The Company also is contractually entitled to receive profit-sharing revenues based on the performance of the vehicle service policies once a required claims period has passed. The Company recognizes profit-sharing revenues to the extent it is probable that it will not result in a significant revenue reversal. The Company estimates the revenue based on historical claims and cancellation data from its customers, as well as other qualitative assumptions. The Company reassesses the estimate at each reporting period with any changes reflected as an adjustment to warranties and GAP income in the period identified. As of June 30, 2025, and December 31, 2024, the Company recognized $
CarStory Revenue
CarStory generates advertiser, publisher and other user service revenue. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been performed, collection of the fees is reasonably assured, the fees are fixed or determinable, and no significant obligations by the Company remain. Generally, this results in revenues billed and recorded monthly in the month that services were performed and earned.
Deferred revenue includes advances received from customers in excess of revenue recognized.
21
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The Company may collect sales taxes and other taxes and government fees from customers on behalf of governmental authorities at the time of sale as required. These taxes are accounted for on a net basis and are not included in revenues or cost of sales.
4. Variable Interest Entities and Securitizations
A VIE is an entity that either (i) has insufficient equity to finance its activities without additional subordinated financial support, or (ii) has equity investors who lack the characteristics of a controlling financial interest. The Company consolidates VIEs for which it is the primary beneficiary. The Company is the primary beneficiary of a VIE when it has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. Assets recognized as a result of consolidating VIEs do not represent additional assets that could be used to satisfy claims against the Company's general assets. Liabilities recognized as a result of consolidating VIEs do not represent additional claims on the Company's general assets, rather they represent claims against the specific assets of the consolidated VIEs.
UACC has the power to direct significant activities of its VIEs when it has the ability to exercise discretion in the servicing of financial assets or control investment decisions. UACC generally retains a portion of the economic interests in UACC-sponsored asset-backed securitization transactions, which could be retained in the form of a portion of the senior interests, the subordinated interests, residual interests, or servicing rights.
UACC has developed a securitization program that involves selling finance receivables to securitization trusts through the private issuance of asset-backed securities which are collateralized by the finance receivables. UACC establishes and sponsors these transactions which create and pass along risks to the variable interest holders, specifically, consumer credit risk and pre-payment risk.
The securitization trusts established in connection with asset-backed securitization transactions are VIEs. For each VIE that UACC establishes in its role as sponsor of securitization transactions, the Company performs an analysis to determine if it is the primary beneficiary of the VIE.
UACC has no obligation to repurchase or replace any securitized asset that subsequently becomes delinquent in payment or otherwise is in default, except when representations and warranties about the eligibility of the securitized assets are breached, or when certain changes are made to the underlying asset contracts. Securitization investors have no recourse to UACC or its other assets and have no right to require UACC to repurchase the investments. UACC has no obligation to provide liquidity or contribute cash or additional assets to the VIEs and does not guarantee any asset-backed securities.
During the six months ended June 30, 2025, UACC completed the 2025-1 securitization transaction, in which it issued approximately $
In 2024, UACC completed the 2024-1 securitization transaction, in which it issued rated asset-backed securities, for proceeds of $
UACC is the primary beneficiary of the 2025-1, 2024-1, 2023-1, and 2022-2 securitization trusts, as it has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. UACC also retained a portion of the economic interests in the 2025-1, 2024-1, and 2023-1, asset-backed securitization transactions,
22
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
in the form of residual interests in accordance with Regulation RR of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Risk Retention Rules"). The Risk Retention Rules require the Company to retain at least
The VIE model allows for a measurement alternative when a reporting entity elects the fair value option and consolidates a collateralized financing entity (“CFE”). This measurement alternative eliminates the accounting mismatch that may arise from measurement differences between the CFE’s financial assets and third-party financial liabilities in earnings and attributes those earnings to the controlling equity interest in the condensed consolidated income statement. The 2025-1, 2023-1, and 2022-2 securitization trusts consolidated by UACC meet the definition of a CFE and the Company has elected to apply the measurement alternative when consolidating these VIEs. Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Successor made an accounting policy election to apply the measurement alternative to the 2024-1 CFE. Refer to Note 15 — Financial Instruments and Fair Value Measurements for further details.
As of June 30, 2025, UACC had
23
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Creditors or beneficial interest holders of VIEs for which the Company is the primary beneficiary generally have recourse only to the assets and cash flows of the VIEs and do not have recourse to the Company.
|
|
Successor |
|
|||||||||
|
|
As of June 30, 2025 |
|
|||||||||
|
|
Securitization Vehicles |
|
|
Warehouse |
|
|
Total |
|
|||
Assets: |
|
|
|
|
|
|
|
|
|
|||
Restricted cash |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Finance receivables at fair value |
|
|
|
|
|
|
|
|
|
|||
Interest receivable |
|
|
|
|
|
|
|
|
|
|||
Other assets |
|
|
|
|
|
|
|
|
|
|||
Total Assets |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Liabilities: |
|
|
|
|
|
|
|
|
|
|||
Securitization debt at fair value |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Warehouse credit facilities |
|
|
— |
|
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
|
|
|
|
|||
Total Liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
Predecessor |
|
|||||||||
|
|
As of December 31, 2024 |
|
|||||||||
|
|
Securitization Vehicles |
|
|
Warehouse |
|
|
Total |
|
|||
Assets: |
|
|
|
|
|
|
|
|
|
|||
Restricted cash |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Finance receivables at fair value |
|
|
|
|
|
|
|
|
|
|||
Finance receivables held for sale |
|
|
|
|
|
|
|
|
|
|||
Interest receivable |
|
|
|
|
|
|
|
|
|
|||
Other assets |
|
|
|
|
|
|
|
|
|
|||
Total Assets |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Liabilities: |
|
|
|
|
|
|
|
|
|
|||
Securitization debt at fair value |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Warehouse credit facilities |
|
|
— |
|
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
|
|
|
|
|||
Total Liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
1 Refer to Note 10 – Warehouse Credit Facilities of Consolidated VIEs for further details.
UACC establishes securitization trusts to purchase finance receivables. The securitization trusts issue asset-backed securities, which are collateralized by the finance receivables that UACC sells to the securitization trusts. Upon sale of the finance receivables to the securitization trusts, the Company recognizes a gain or loss on sales of finance receivables if it determines it qualifies for sale accounting treatment and it is not the primary beneficiary of the VIE or accounts for these securitization transactions as secured borrowings when it is the primary beneficiary.
In February 2022, UACC sold a pool of finance receivables in the 2022-1 securitization transaction. UACC retained the servicing rights to these finance receivables and receives an "at market" servicing fee. UACC retained an insignificant amount of the asset-backed securities issued in the securitization in order to comply with Risk Retention Rules. The 2022-1 securitization trust is a VIE that the Company does not consolidate. As the servicer, UACC retained the power to direct the activities that are most significant to the entities, however, the Company concluded that it is not the primary beneficiary of the 2022-1 securitization trust because UACC retained interests in the VIE are insignificant. The
24
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
beneficial interest retained by UACC included rated notes and unrated residual certificates issued by the 2022-1 securitization trust.
As of June 30, 2025, and December 31, 2024, the assets UACC retains in the unconsolidated VIEs were approximately $
The following table summarizes the amortized cost, the carrying amount, which is the fair value, and the maximum exposure to losses of UACC's assets related to the unconsolidated VIE (in thousands):
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|
Successor |
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|
|
Predecessor |
|
||||||||||||||||||
|
|
As of June 30, 2025 |
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|
|
As of December 31, 2024 |
|
||||||||||||||||||
|
|
Aggregate Principal Balance |
|
|
Carrying Value |
|
|
Total Exposure |
|
|
|
Aggregate Principal Balance |
|
|
Carrying Value |
|
|
Total Exposure |
|
||||||
Rated notes |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Certificates |
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Other assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total unconsolidated VIEs |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total exposure represents the estimated loss UACC would incur under severe, hypothetical circumstances, such as if the value of the interests in the securitization trusts and any associated collateral declined to zero. The Company believes the possibility of this is remote. As such, the total exposure presented above is not an indication of the Company's expected losses.
5. Discontinued Operations
As discussed in Note 1 — Description of Business and Basis of Presentation, the Ecommerce Wind-Down was substantially completed as of March 29, 2024. The Company's ecommerce operations were previously a reportable segment and the exit represents a strategic shift that had a major effect on the Company's operations and financial results. Therefore, in accordance with ASC 205, as of and for the three and six months ended June 30, 2024, the Company reported the ecommerce operations and used vehicle dealership business as discontinued operations.
During the three and six months ended June 30, 2024, the Company incurred charges of approximately $
25
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following table summarizes the major income and expense line items from discontinued operations as reported in the condensed consolidated statements of operations (in thousands):
|
|
Successor |
|
|
|
Predecessor |
|
|
Successor |
|
|
|
Predecessor |
|
||||
|
|
Three Months Ended June 30, |
|
|
|
Three Months Ended June 30, |
|
|
Period from January 15, to |
|
|
|
Six Months Ended |
|
||||
|
|
2025 |
|
|
|
2024 |
|
|
2025 |
|
|
|
2024 |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Retail vehicle, net |
|
$ |
|
|
|
$ |
|
|
$ |
|
|
|
$ |
|
||||
Wholesale vehicle |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product, net |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
||
Total revenue |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
||
Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Retail vehicle |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wholesale vehicle |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|||
Total cost of sales |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|||
Total gross profit (loss) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
||
Selling, general and administrative expenses |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
||
Gain (loss) on disposal of long lived assets |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) from operations |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Income (loss) before provision for income taxes |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
||
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) from discontinued operations |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
||
Net income (loss) from discontinued operations for the period from January 1, 2025, to January 14, 2025, was not material.
The following table summarizes the major classes of assets and liabilities from discontinued operations as reported in the condensed consolidated balance sheets (in thousands):
|
|
Successor |
|
|
|
Predecessor |
|
||
|
|
As of |
|
|
|
As of |
|
||
|
|
2025 |
|
|
|
2024 |
|
||
ASSETS |
|
|
|
|
|
|
|
||
Property and equipment, net |
|
$ |
|
|
|
$ |
|
||
Other assets |
|
|
|
|
|
|
|
||
Assets from discontinued operations |
|
$ |
|
|
|
$ |
|
||
LIABILITIES |
|
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
|
$ |
|
||
Accrued expenses |
|
|
|
|
|
|
|
||
Liabilities from discontinued operations |
|
$ |
|
|
|
$ |
|
||
26
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
6. Fresh Start Accounting
As discussed in Note 1 — Description of Business and Basis of Presentation, on November 13, 2024, the Company commenced the Prepackaged Chapter 11 Case. On January 14, 2025, the Effective Date, the conditions to the effectiveness of the Plan were satisfied or waived and the Plan became effective. On
The Company adopted an Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to, among other changes to its prior amended and restated certificate of incorporation, effect an automatic conversion of the
On the Effective Date, the Company entered into the Warrant Agreement with Equiniti Trust Company LLC, as warrant agent. In accordance with the Plan and pursuant to the Warrant Agreement, on the Effective Date, the Company issued the Warrants to purchase an aggregate of
In connection with the emergence from the Prepackaged Chapter 11 Case and in accordance with ASC Topic 852, the Company qualified for and adopted fresh start accounting on the Effective Date. The Company was required to adopt fresh start accounting because (i) the holders of existing voting shares of the Predecessor received less than
Reorganization Value
In accordance with ASC Topic 852, with the application of fresh start accounting, the Company allocates the equity value to its individual assets and liabilities based on their estimated fair values in conformity with ASC Topic 820, Fair Value.
As set forth in the Plan and the disclosure statement, the value of the Successor Company was assigned to its equity and estimated to be between $
The DCF analysis is a forward-looking enterprise valuation methodology that estimates fair value by calculating the present value of expected future cash flows to be generated plus a present value of the estimated terminal value. The Company established an estimate of future cash flows through December 31, 2029, based on the financial projections and assumptions utilized in the Company’s disclosure statement to the Plan, which were derived from earnings forecasts and assumptions regarding growth and profit projections. A terminal value was calculated using the constant growth method based on the projected cash flows for the final year of the forecast period. The cash flow assumptions used in the DCF analysis reflected the Company’s best estimates at the time the analysis was prepared.
27
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The selected public companies analysis is based on the enterprise values of selected publicly traded companies that have operating and financial characteristics comparable in certain respects to the Company. Under this methodology, certain financial multiples that measure financial performance and value are calculated for the selected company. A reference range was determined utilizing such multiples and is applied to certain of the Company's financial metrics to imply an estimated equity value for the business.
The following table reconciles the enterprise value to the estimated fair value of the Successor Common Stock as of the Effective Date (in thousands, except per share data):
Enterprise value |
|
$ |
|
|
Plus: |
|
|
|
|
Cash and cash equivalents |
|
|
|
|
Restricted cash |
|
|
|
|
Less: |
|
|
|
|
Warehouse credit facilities of consolidated VIEs |
|
|
|
|
Long-term debt |
|
|
|
|
Fair value of Successor Equity |
|
$ |
|
|
Less: |
|
|
|
|
Successor warrants |
|
|
( |
) |
Fair value of Successor common stock |
|
$ |
|
|
Shares issued upon emergence |
|
|
|
|
Per share value |
|
$ |
|
|
The reconciliation of the Company’s enterprise value to reorganization value as of the Effective Date is as follows: (in thousands):
Enterprise value |
|
$ |
|
|
Plus: |
|
|
|
|
Cash and cash equivalents |
|
|
|
|
Restricted cash |
|
|
|
|
Other liabilities |
|
|
|
|
Reorganization value of Successor assets |
|
$ |
|
|
The enterprise value and corresponding equity value are dependent upon achieving the future financial results set forth in the Company’s projections, as well as the realization of certain other assumptions. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond the Company’s control. Accordingly, the Company cannot assure that the estimates, assumptions, valuations or financial projections will be realized and actual results could vary materially.
The results of the Company's analysis indicated that the principal assets requiring fair value adjustments on the Effective Date include finance receivables held for sale, identified intangible assets and leased assets. Further detail regarding the valuation process is described below.
Finance receivables held for sale, net
As of the Effective Date, the finance receivables held for sale, net were reclassified to finance receivables at fair value, refer to Note 2 — Summary of Significant Accounting Policies for further details. To estimate the fair value of the finance receivables the Company utilized the valuation methodologies which are used to value finance receivables at fair value on a recurring basis. Refer to the Fair Value of Financial Instruments Not Carried at Fair Value section in Note 15 — Financial Instruments and Fair Value Measurements for further details.
Intangible Assets
28
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The identified intangible assets of $
For the technology-based intangibles that were valued using the relief from royalty income approach, the royalty rate was estimated to be
Lease Liabilities and Right of Use Assets
The present value of lease liabilities was measured as the present value of the remaining lease payments, as if the leases were new leases as of the Effective Date. The Company used its incremental borrowing rate (“IBR”) as the discount rate in determining the present value of the remaining lease payments using a fundamental credit rating analysis. Based upon the corresponding lease terms, the IBRs ranged between approximately
Consolidated Balance Sheet
The adjustments set forth in the following condensed consolidated balance sheet as of January 14, 2025 reflect the effects of the transactions contemplated by the Plan and executed on the Effective date (reflected in the column “Reorganization Adjustments”), and fair value and other required accounting adjustments resulting from the adoption of fresh start accounting (reflected in the column “Fresh Start Accounting Adjustments”), (in thousands):
29
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
|
As of January 14, 2025 |
|
|||||||||||||||||
|
|
|
|
|
Reorganization |
|
|
|
|
Fresh Start Accounting |
|
|
|
|
|
|
||||
|
|
Predecessor |
|
|
Adjustments |
|
|
Notes |
|
Adjustments |
|
|
Notes |
|
Successor |
|
||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
|
||
Finance receivables at fair value |
|
|
|
|
|
— |
|
|
|
|
|
|
|
7 |
|
|
|
|||
Finance receivables held for sale, net |
|
|
|
|
|
— |
|
|
|
|
|
( |
) |
|
7 |
|
|
— |
|
|
Interest receivable |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
— |
|
|
|
|
|
( |
) |
|
8 |
|
|
|
||
Intangible assets, net |
|
|
|
|
|
— |
|
|
|
|
|
( |
) |
|
9 |
|
|
|
||
Operating lease right-of-use assets |
|
|
|
|
|
— |
|
|
|
|
|
|
|
10 |
|
|
|
|||
Other assets |
|
|
|
|
|
( |
) |
|
1 |
|
|
( |
) |
|
11 |
|
|
|
||
Assets from discontinued operations |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
( |
) |
|
|
|
$ |
( |
) |
|
|
|
$ |
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warehouse credit facilities of consolidated VIEs |
|
$ |
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
|
||
Long-term debt |
|
|
|
|
|
— |
|
|
|
|
|
|
|
12 |
|
|
|
|||
Operating lease liabilities |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
|
||
Liabilities subject to compromise |
|
|
|
|
|
( |
) |
|
2 |
|
|
— |
|
|
|
|
|
— |
|
|
Liabilities from discontinued operations |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|||
Stockholders’ (deficit) equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common stock - Predecessor |
|
|
|
|
|
( |
) |
|
3 |
|
|
— |
|
|
|
|
|
— |
|
|
Common stock - Successor |
|
|
— |
|
|
|
|
|
4 |
|
|
— |
|
|
|
|
|
|
||
Additional paid-in-capital - Predecessor |
|
|
|
|
|
( |
) |
|
5 |
|
|
— |
|
|
|
|
|
— |
|
|
Additional paid-in-capital - Successor |
|
|
— |
|
|
|
|
|
6 |
|
|
— |
|
|
|
|
|
|
||
Warrants - Successor |
|
|
— |
|
|
|
|
|
6 |
|
|
— |
|
|
|
|
|
|
||
Accumulated deficit |
|
|
( |
) |
|
|
|
|
2,13 |
|
|
( |
) |
|
13 |
|
|
— |
|
|
Total stockholders’ (deficit) equity |
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
||
Total liabilities and stockholders’ equity |
|
$ |
|
|
$ |
( |
) |
|
|
|
$ |
( |
) |
|
|
|
$ |
|
||
Reorganization adjustments
1. Represents write-off of prepaid asset related to predecessor directors and officers insurance tail policy.
2. Represents the settlement of the Company's pre-petition Convertible Notes, as of the Effective date, which is calculated as follows (in thousands):
Convertible note |
|
$ |
|
|
Accrued interest on convertible senior note |
|
|
|
|
Liabilities subject to compromise |
|
|
|
|
Issuance of |
|
|
|
|
Gain on settlement of liabilities subject to compromise |
|
$ |
|
(1) Note the total issuances of Successor equity in the amount of $
3. Represents the cancellation of Predecessor common stock.
4. Represents the issuance of Successor common stock.
5. Represents the cancellation of Predecessor additional paid-in capital.
30
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
6. Represents the fair value of
Fresh Start Adjustments
7. Represents reclassification of finance receivables held for sale to finance receivables at fair value due to a change in Accounting Policy in accordance with fresh start accounting. Upon reclassification, the finance receivables were adjusted to fair value.
8. Represents a fair value adjustment to property, plant and equipment, net.
9. Represents a fair value adjustment to intangible assets, net.
10. Represents a fair value adjustment to record the initial measurement of the operating lease right-of-use assets to the amount of the operating lease liabilities in accordance with fresh start accounting.
11. Represents a fair value adjustment to other assets, which includes the write-off of debt issuance costs of warehouse credit facilities.
12. Represents an adjustment to long-term debt, which includes the write-off of debt issuance costs of $
13. Represents the cumulative impact, as of the Effective Date, to accumulated deficit from the reorganization adjustments and fresh start accounting adjustments.
Adjustment to Predecessor common stock and additional paid-in-capital |
|
$ |
|
|
Gain on settlement of liabilities subject to compromise |
|
|
|
|
Warrants and common stock issued to Predecessor equity holders |
|
|
( |
) |
Reorganization adjustment to total assets |
|
|
( |
) |
Cumulative impact to accumulated deficit |
|
$ |
|
Reorganization items, net
The Company applied ASC 852 in preparing the condensed consolidated financial statements starting on the Prepackaged Chapter 11 Case petition date. ASC 852 requires the financial statements, for the periods subsequent to the petition date and up to and including the Effective Date, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain charges incurred during the bankruptcy proceedings, such as legal and professional fees incurred directly as a result of the bankruptcy proceeding, the write-off of deferred financing costs and discount on debt subject to compromise and other related charges are recorded as Reorganization items, net in the Condensed Consolidated Statements of Operations.
Certain expenses resulting from and recognized during the Company's bankruptcy proceedings, gains on the settlement of liabilities under the Plan and the net impact of fresh start accounting adjustments are recorded in
31
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Reorganization items, net in the Company's Condensed Consolidated Statements of Operations.
|
|
Successor |
|
|
|
Predecessor |
|
||||||
|
|
Three Months Ended June 30, |
|
|
|
Period from January 1 through January 14, |
|
|
Three Months Ended June 30, |
|
|||
|
|
2025 |
|
|
|
2025 |
|
|
2024 |
|
|||
Net gain on settlement of debt |
|
$ |
— |
|
|
|
$ |
|
|
$ |
— |
|
|
Net loss on fresh start adjustments |
|
|
— |
|
|
|
|
( |
) |
|
|
— |
|
Net loss on reorganization adjustment of other assets |
|
|
— |
|
|
|
|
( |
) |
|
|
— |
|
Professional fees |
|
|
— |
|
|
|
|
( |
) |
|
|
— |
|
Total reorganization items, net |
|
$ |
— |
|
|
|
$ |
|
|
$ |
— |
|
|
7. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
|
|
Successor |
|
|
|
Predecessor |
|
||
|
|
June 30, |
|
|
|
December 31, |
|
||
|
|
2025 |
|
|
|
2024 |
|
||
Equipment |
|
$ |
|
|
|
$ |
|
||
Furniture and fixtures |
|
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
|
||
Internal-use software |
|
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
Accumulated depreciation and amortization |
|
|
( |
) |
|
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
|
$ |
|
||
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company recorded property and equipment at fair value as of the Effective Date, as discussed in Note 6 — Fresh Start Accounting for further details.
Depreciation and amortization expense was $
The Company recorded impairment charges for "Property and equipment, net" of $
8. Intangible Assets, Net
Intangible assets, net consisted of the following (in thousands):
32
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
|
Successor |
|
|
|
Predecessor |
|
||||||||||||||||||
|
|
June 30, 2025 |
|
|
|
December 31, 2024 |
|
||||||||||||||||||
|
|
Gross Carrying Value |
|
|
Accumulated Amortization |
|
|
Carrying Value |
|
|
|
Gross Carrying Value |
|
|
Accumulated Amortization |
|
|
Carrying Value |
|
||||||
Developed and purchased technology |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Customer relationships |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Trademarks and trade names |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total intangible assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Amortization expense for intangible assets was $
The estimated amortization expense for intangible assets subsequent to June 30, 2025, consists of the following (in thousands):
Year Ending December 31: |
|
|
|
|
For remainder of 2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Thereafter |
|
|
|
|
|
|
$ |
|
|
9. Other Liabilities
The Company’s other liabilities consisted of the following (in thousands):
|
|
Successor |
|
|
|
Predecessor |
|
||
|
|
June 30, |
|
|
|
December 31, |
|
||
|
|
2025 |
|
|
|
2024 |
|
||
Warranty and GAP liabilities |
|
$ |
|
|
|
$ |
|
||
Dealer related liabilities |
|
|
|
|
|
|
|
||
Accrued compensation and benefits |
|
|
|
|
|
|
|
||
Accrued professional services |
|
|
|
|
|
|
|
||
Accrued software and IT costs |
|
|
|
|
|
|
|
||
Interest payable |
|
|
|
|
|
|
|
||
Insurance payable |
|
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
|
||
Total other liabilities |
|
$ |
|
|
|
$ |
|
||
33
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
10. Warehouse Credit Facilities of Consolidated VIEs
As of June 30, 2025, UACC had
As of June 30, 2025, the terms of the Warehouse Credit Facilities included the following (in thousands):
|
|
Facility One |
|
|
Facility Two |
|
|
Facility Three |
|
|
Facility Four |
|
||||
Execution date |
|
|
|
|
|
|
|
|
||||||||
Commitment termination date |
|
|
|
|
|
|
|
|
||||||||
Aggregate borrowings limit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of June 30, 2025 (Successor) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Aggregate principal balance of finance receivables pledged as collateral |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Outstanding balance |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Restricted cash |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
As of December 31, 2024 (Predecessor) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Aggregate principal balance of finance receivables pledged as collateral |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Outstanding balance |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Restricted cash |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
As of June 30, 2025, and December 31, 2024, the Company's weighted average interest rate on the Warehouse Credit Facilities borrowings was approximately
On March 8, 2025, the Company renewed Facility Two, now expiring June 2026. The aggregate borrowing limit and significant terms of the agreement remained unchanged except for an increase in the minimum liquidity covenant. On March 28, 2025, the Company renewed Facility Four, now expiring in April 2027. The aggregate borrowing limit under this facility decreased from $
The Company's ability to utilize its Warehouse Credit Facilities is primarily conditioned on the satisfaction of certain legal, operating, administrative and financial covenants contained within the agreements. These include covenants that require UACC to maintain a minimum tangible net worth, minimum liquidity levels, specified leverage ratios and certain indebtedness levels. Failure to satisfy these or any other requirements contained within the agreements would restrict access to the Warehouse Credit Facilities. Certain breaches of covenants may also result in acceleration of the repayment of borrowings prior to the scheduled maturity. As of June 30, 2025, and December 31, 2024, the Company was in compliance with all covenants related to the Warehouse Credit Facilities.
34
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
11. Long Term Debt
Debt instruments, excluding warehouse credit facilities of consolidated VIEs, which are discussed in Note 10 — Warehouse Credit Facilities of Consolidated VIEs, consisted of the following (in thousands):
|
|
Successor |
|
|
|
Predecessor |
|
||
|
|
June 30, |
|
|
|
December 31, |
|
||
|
|
2025 |
|
|
|
2024 |
|
||
Securitization debt of consolidated VIEs at fair value |
|
$ |
|
|
|
$ |
|
||
Securitization debt of consolidated VIEs at amortized cost |
|
|
— |
|
|
|
|
|
|
Financing of beneficial interest in securitizations |
|
|
|
|
|
|
|
||
Junior subordinated debentures |
|
|
|
|
|
|
|
||
Total debt |
|
$ |
|
|
|
$ |
|
||
Convertible Senior Notes
On June 18, 2021, the Company issued $
On November 13, 2024, the Company commenced the Prepackaged Chapter 11 Case. On the Effective Date, the conditions to the effectiveness of the Plan were satisfied or waived and the Plan became effective. On January 14, 2025, the Company emerged from the Prepackaged Chapter 11 Case. On the Effective Date, each holder of the Notes received a pro rata share of
The filing of the Prepackaged Chapter 11 Case constituted an event of default, resulting in the immediate acceleration of the Company’s obligations to pay approximately $
Prior to the Effective Date,
The Company accounted for the Notes as a single liability-classified instrument measured at amortized cost. As a result of filing the bankruptcy petition, the Company wrote off the remaining unamortized debt discount and debt issuance costs of $
The Notes were issued at par value and fees associated with the issuance of these Notes were amortized to interest expense using the effective interest method over the contractual term of the Notes. The interest expense was $
35
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Securitization Debt of Consolidated VIEs
The securitization debt was issued under UACC's securitization program. The Company elected to account for the 2022-2, 2023-1, and 2025-1 securitization debt under the fair value option using the measurement alternative. Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to apply the measurement alternative to the 2024-1 securitization debt. Fair value adjustments are recorded in "Realized and unrealized losses, net of recoveries" in the condensed consolidated statements of operations. Refer to Note 15 — Financial Instruments and Fair Value Measurements. For the 2022-2, 2023-1, 2024-1, and 2025-1 securitization transactions, the Company consolidated the VIEs and accounted for these transactions as secured borrowings. Refer to Note 4 — Variable Interest Entities and Securitizations for further discussion.
UACC retained the residual interests in the 2023-1, 2024-1, and 2025-1 securitization transactions. UACC also retains the servicing rights for all finance receivables that were securitized; therefore, it is responsible for the administration and collection of the amounts owed under the contracts. In the first quarter of 2023, UACC waived its servicing fees related to the 2022-2 securitization and subsequently consolidated the 2022-2 trust. The securitization agreements also require certain funds to be held in restricted cash accounts to provide additional collateral for the borrowings or to be applied to make payments on the securitization debt. Restricted cash under the various agreements totaled approximately $
Wholly owned bankruptcy remote subsidiaries of UACC were formed to facilitate the above asset-backed financing transactions. Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would not be included in any bankruptcy filing by its parent or affiliates. All of the assets of these subsidiaries have been pledged as collateral for the related debt. None of the assets of these subsidiaries are available to pay other creditors of the Company or its affiliates.
The securitization debt issued is included in "Long-term debt" on the condensed consolidated balance sheet. The securitization debt of consolidated VIEs consisted of the following (in thousands):
As of June 30, 2025 (Successor) |
|
|||||||||||||||
Series |
|
Final Scheduled Payment Date |
|
Initial Principal |
|
|
Contractual Interest Rate |
|
Outstanding Principal |
|
|
Fair Value |
|
|||
United Auto Credit 2022-2-D |
|
|
$ |
|
|
% |
$ |
|
|
$ |
|
|||||
United Auto Credit 2022-2-E |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2023-1-C |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2023-1-D |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2023-1-E |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2024-1-B |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2024-1-C |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2024-1-D |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2024-1-E |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2025-1-A |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2025-1-B |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2025-1-C |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2025-1-D |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2025-1-E |
|
|
|
|
|
% |
|
|
|
|
|
|||||
Total rated notes at fair value |
|
|
|
$ |
|
|
|
|
$ |
|
|
$ |
|
|||
36
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
As of December 31, 2024 (Predecessor) |
|
|||||||||||||||
Series |
|
Final Scheduled Payment Date |
|
Initial Principal |
|
|
Contractual Interest Rate |
|
Outstanding Principal |
|
|
Fair Value |
|
|||
United Auto Credit 2022-2-C |
|
|
$ |
|
|
% |
$ |
|
|
$ |
|
|||||
United Auto Credit 2022-2-D |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2022-2-E |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2023-1-C |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2023-1-D |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2023-1-E |
|
|
|
|
|
% |
|
|
|
|
|
|||||
Total rated notes at fair value |
|
|
|
$ |
|
|
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
United Auto Credit 2024-1-A |
|
|
$ |
|
|
% |
$ |
|
|
|
|
|||||
United Auto Credit 2024-1-B |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2024-1-C |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2024-1-D |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2024-1-E |
|
|
|
|
|
% |
|
|
|
|
|
|||||
Total rated notes at amortized cost |
|
|
|
$ |
|
|
|
|
$ |
|
|
|
|
|||
Unamortized debt issuance costs |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|||
Net carrying value |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|||
The final scheduled payment date represents legal maturity of the remaining balance sheet securitization debt. Securitization debt is expected to become due and to be paid prior to those dates, based on amortization of the finance receivables pledged to the Trusts. Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance, are $
In February 2024, UACC exercised its option to repurchase the 2021-1 securitization debt for a total redemption price of $
The aggregate principal balance and the net carrying value of finance receivables pledged to the securitization debt consists of the following (in thousands):
|
|
Successor |
|
|
|
Predecessor |
|
||||||||||
|
|
As of June 30, |
|
|
|
As of December 31, |
|
||||||||||
|
|
2025 |
|
|
|
2024 |
|
||||||||||
|
|
Aggregate Principal Balance |
|
|
Net Carrying Value (1) |
|
|
|
Aggregate Principal Balance |
|
|
Net Carrying Value |
|
||||
United Auto Credit 2022-2 |
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
United Auto Credit 2023-1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
United Auto Credit 2024-1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
United Auto Credit 2025-1 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Total finance receivables of CFEs |
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
||||
(1) For the Successor period, net carrying value is equal to fair value. |
|
||||||||||||||||
37
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Risk Retention Financing Facility
On May 3, 2023, UACC entered into a Risk Retention Financing Facility enabling it to finance a portion of its asset-backed securities issued in its securitization transactions and held by UACC, pursuant to applicable Risk Retention Rules. Under this facility, UACC sells such retained interests and agrees to repurchase them on a future date. As of June 30, 2025, UACC pledged $
The outstanding balance of this facility, net of unamortized debt issuance costs, was $
Junior Subordinated Debentures
On July 31, 2003, UACC issued junior subordinated debentures (trust preferred securities) of $
12. Commitments and Contingencies
Litigation
From time to time, the Company is involved in various claims and legal actions that arise in the ordinary course of business and an unfavorable resolution of any of these matters could materially affect the Company’s future results of operations, cash flows or financial position. On November 13, 2024, the Company commenced the Prepackaged Chapter 11 Case under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court, under the name In re Vroom, Inc., Case No. 24-90571 (CML).
On January 8, 2025, the Bankruptcy Court entered an order (a) approving the Debtor’s disclosure statement, (b) confirming the Prepackaged Plan of Reorganization of Vroom, Inc. under Chapter 11 of the Bankruptcy Code (the “Plan”), and (c) granting related relief. On January 14, 2025, the conditions to the effectiveness of the Plan were satisfied or waived and the Plan became effective, and the Company emerged from the Prepackaged Chapter 11 Case.
Additionally, from time to time, the Company is involved in various claims and legal actions that arise in the ordinary course of business and an unfavorable resolution of any of these matters could materially affect the Company’s future results of operations, cash flows or financial position. The Company is also party to various disputes that the Company considers routine and incidental to its business. The Company does not expect the results of any of these routine actions to have a material effect on the Company’s business, results of operations, financial condition, or cash flows. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Legal fees are expensed as incurred.
Beginning in March 2021, multiple putative class actions were filed in the U.S. District Court for the Southern District of New York by certain of the Company’s stockholders against the Company and certain of the Company’s officers alleging violations of federal securities laws. The lawsuits were captioned Zawatsky et al. v. Vroom, Inc. et al., Case No.
38
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
21-cv-2477; Holbrook v. Vroom, Inc. et al., Case No. 21-cv-2551; and Hudda v. Vroom, Inc. et al., Case No. 21-cv-3296. All three of the lawsuits asserted similar claims under Sections 10(b) and 20(a) of the Exchange Act, and SEC Rule 10b-5. In each case, the named plaintiff(s) sought to represent a proposed class of all persons who purchased or otherwise acquired the Company’s securities during a period from June 9, 2020 to March 3, 2021 (in the case of Holbrook and Hudda), or November 11, 2020 to March 3, 2021 (in the case of Zawatsky). In August 2021, the Court consolidated the cases under the new name In re: Vroom, Inc. Securities Litigation, Case No. 21-cv-2477, appointed a lead plaintiff and lead counsel and ordered a consolidated amended complaint to be filed. The court-appointed lead plaintiff subsequently filed a consolidated amended complaint that reasserts claims under Sections 10(b) and 20(a) of the Exchange Act, and SEC Rule 10b-5 against the Company and certain of the Company’s officers, and added new claims under Sections 11, 12 and 15 of the Securities Act against the Company, certain of its officers, certain of its directors, and the underwriters of the Company’s September 2020 secondary offering. On March 19, 2025, the Court entered an order granting Vroom’s motion to dismiss all claims, and the plaintiffs elected not to file a motion to amend their complaint. Thereafter, on May 30, 2025, the Court entered a final judgment of dismissal, for which the time period to appeal has expired. Accordingly, the cases have been closed.
In August 2021, November 2021, January 2022, and February 2022, various Company stockholders filed purported shareholder derivative lawsuits on behalf of the Company in the U.S. District Court for the Southern District of New York against certain of the Company’s officers and directors, and nominally against the Company, alleging violations of the federal securities laws and breaches of fiduciary duty to the Company and/or related violations of Delaware law based on the same general course of conduct alleged in In re: Vroom, Inc. Securities Litigation. All four lawsuits have been consolidated under the case caption In re Vroom, Inc. Shareholder Derivative Litigation, Case No. 21-cv-6933, and the court has approved the parties’ stipulation that the cases would remain stayed pending final resolution of In re: Vroom, Inc. Securities Litigation. The stockholders who filed these lawsuits have voluntarily dismissed their claims and these cases have been closed.
In April 2022 and April 2024, two of the Company’s stockholders filed separate purported shareholder derivative lawsuits on behalf of the Company in the U.S. District Court for the District of Delaware against certain of the Company’s officers and directors, and nominally against the Company, alleging violations of the federal securities law and breaches of fiduciary duty to the Company and/or related violations of Delaware law based on the same general course of conduct alleged in In re: Vroom, Inc. Securities Litigation. The case filed in April 2022 is captioned Godlu v. Hennessy et al., Case No. 22-cv-569, the case filed in April 2024 is captioned Hudda v. Hennessy et al. Case No. 24-cv-4499., and the court in each has approved the parties’ stipulations that each case would remain stayed pending final resolution of In re: Vroom, Inc. Securities Litigation. The stockholders who filed these lawsuits have voluntarily dismissed their claims and these cases have been closed.
In April 2022, the Attorney General of Texas filed a petition on behalf of the State of Texas in the District Court of Travis County, Texas against the Company, alleging violation of the Texas Deceptive Trade Practices − Consumer Protection Act, Texas Business and Commerce Code § 17.41 et seq., based on alleged deficiencies and other issues in the Company’s marketing of used vehicles and fulfillment of customer orders, including the titling and registration of sold vehicles. According to the petition, 80% of the customer complaints referenced in the petition were received in the 12 months prior to April 2022. The petition is captioned State of Texas v. Vroom Automotive LLC, and Vroom Inc., Case No. D-1-GN-001809. In May 2022, Vroom Automotive, LLC and the Attorney General of the State of Texas agreed to a temporary injunction in which Vroom Automotive, LLC agreed to adhere to its existing practice of possessing title for all vehicles it sells or advertises as available for sale on its ecommerce platform. In December 2023, Vroom, Inc., Vroom Automotive, LLC and the Attorney General of the State of Texas reached a final agreement to resolve all claims in the petition, without any admission of wrongdoing by either Vroom entity. Under the agreement, the Company agreed to pay a total of $
As previously disclosed, the Company has been subject to audits, requests for information, investigations and other inquiries from its regulators. These regulatory matters could continue to progress into legal proceedings as well as enforcement actions. The Company has incurred fines in certain states and could continue to incur fines, penalties, restitution, or alterations in the Company's business practices, which in turn, could lead to increased business expenses, additional limitations on the Company's business activities and further reputational damage, although to date such
39
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
expenses have not had a material adverse effect on the Company’s financial condition, cash flows, or results of operations.
Other Matters
The Company enters into agreements with third parties in the ordinary course of business that may contain indemnification provisions. In the event that an indemnification claim is asserted, the Company’s liability, if any, would be limited by the terms of the applicable agreement. Historically, the Company has not incurred material costs to defend lawsuits or settle claims related to indemnification provisions.
13. Preferred Stock and Stockholders’ Equity
Preferred Stock
On January 14, 2025, the Company amended its certificate of incorporation to authorize the issuance of up to
As of June 30, 2025, and December 31, 2024, there was
Common Stock
Effective as of January 14, 2025, the Company amended its certificate of incorporation to authorize the issuance of up to
14. Stock-based Compensation
On May 28, 2020, the Company adopted the 2020 Incentive Award Plan (“the 2020 Plan”), which authorized the issuance of (i) up to
Pursuant to the Plan, the 2020 Plan was further amended on January 14, 2025, to increase the number of shares reserved for issuance under the 2020 Plan to account for the proposed post-emergence management incentive program, which accounts for
On May 20, 2022, the Company adopted the 2022 Inducement Award Plan (the “Inducement Award Plan”). Awards under the Inducement Award Plan may only be granted to a newly hired employee who has not previously been an employee or a member of the Board or an employee who is being rehired following a bona fide period of non-employment by the Company, in each case as a material inducement to the employee’s entering into employment. An aggregate of
40
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The Inducement Award Plan continues to govern awards granted and outstanding under that plan but no new awards may be granted under that plan.
Stock Options
The Company recognized $
On March 12, 2025,
RSUs
The Company recognized $
Certain of the Company’s RSU grants are subject to acceleration upon a change of control and termination within
15. Financial Instruments and Fair Value Measurements
U.S. GAAP defines fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. These estimates are subjective in nature and involve uncertainties and matters of judgment and therefore cannot be determined with precision. U.S. GAAP establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and establishes the following three levels of inputs that may be used to measure fair value:
Level 1—Quoted prices in active markets for identical assets or liabilities
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted market prices in markets that are not active; or model-derived valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities
Items Measured at Fair Value on a Recurring Basis
The Company holds certain financial assets that are required to be measured at fair value on a recurring basis. Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to elect the fair value option for all finance receivables on a prospective basis. Additionally, the Company elected the fair value option for the financial assets and liabilities of UACC’s consolidated CFEs, and
41
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
beneficial interests in the 2022-1 securitization transaction. Under the fair value option allowable under ASC 825, “Financial Instruments” (“ASC 825”), the Company may elect to measure at fair value financial assets and liabilities that are not otherwise required to be carried at fair value. Subsequent changes in fair value for designated items are reported in earnings.
The following tables present the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands):
|
|
Successor |
|
|||||||||||||
|
|
As of June 30, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
CFE assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Finance receivables at fair value |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Finance receivables at fair value |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Other assets (beneficial interests in securitizations) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total financial assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
CFE liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securitization debt of consolidated VIEs |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Total financial liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Predecessor |
|
|||||||||||||
|
|
As of December 31, 2024 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
CFE assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Finance receivables at fair value |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Finance receivables at fair value |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Other assets (beneficial interests in securitizations) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total financial assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
CFE liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securitization debt of consolidated VIEs |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Total financial liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Valuation Methodologies of Financial Instruments Measured at Fair Value on a Recurring Basis
The following is a description of the valuation methodologies used for financial instruments carried at fair value. These methodologies are applied to financial assets and liabilities across the fair value levels discussed above, and it is the observability of the inputs used that determines the appropriate level in the fair value hierarchy for the respective asset or liability.
Money Market Funds: Money market funds primarily consist of investments in highly liquid U.S. treasury securities, with original maturities of three months or less and are classified as Level 1. The Company determines the fair value of cash equivalents based on quoted prices in active markets.
Financial assets and liabilities of CFEs: In accordance with ASC 825, the Company has elected the fair value option, for the eligible financial assets and liabilities of the 2022-2, 2023-1, and 2025-1 consolidated CFEs in order to mitigate potential accounting mismatches between the carrying value of the financial assets and liabilities. To eliminate
42
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
potential measurement differences, the Company elected the measurement alternative included in ASC 810-30, allowing the Company to measure both the financial assets and liabilities of a qualifying CFE using the fair value of either the CFE’s financial assets or liabilities, whichever is more observable. Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to apply the measurement alternative to the 2024-1 consolidated CFE. Under the measurement alternative prescribed by ASC 810-30, the Company recognizes changes in the CFE’s net assets, including changes in fair value adjustments and net interest earned, in its condensed consolidated statements of operations.
The Company is required to determine whether the fair value of the financial assets or the fair value of the financial liabilities of the eligible CFEs are more observable, but in either case, the methodology results in the fair value of the financial assets of the securitization trust being equal to the fair value of their liabilities. The Company determined that the fair value of the liabilities of the securitization CFEs are more observable, since market prices of their liabilities are based on non-binding quoted prices provided by broker dealers who make markets in similar financial instruments. The assets of the securitization CFEs are not readily marketable, and their fair value measurement requires information that may be limited in availability.
In determining the fair value of the securitization debt of consolidated CFEs, the broker dealers consider contractual cash payments and yields expected by market participants. Broker dealers also incorporate common market pricing methods, including a spread measurement to the treasury curve or interest rate swap curve as well as underlying characteristics of the particular security including ratings, coupon, collateral type and seasoning or age of the security. When the Company obtains prices from multiple broker dealers for the same security and has a consensus among them, it deems these fair values to be based on observable valuation inputs and classified as Level 2 of the fair value hierarchy. Where a third-party broker dealer quote is not available, an internal model is utilized using unobservable inputs or if the Company has multiple quotes that are not within determined range, it classifies the securitization debt as Level 3 of the fair value hierarchy.
The financial assets of the consolidated CFEs are an aggregate value derived from the fair value of the CFEs liabilities. The Company determined that CFEs finance receivables in their entirety should be classified as Level 3 of the fair value hierarchy.
Finance receivables at fair value: Finance receivables at fair value represent finance receivables for which the Company elected the fair value option in accordance with ASC 825. The Company estimates the fair value of these receivables using a discounted cash flow model and incorporates key inputs that include prepayment speed, default rate, recovery rate, as well as certain macroeconomics events the Company believes market participants would consider relevant.
Beneficial interests in securitization: Beneficial interests in securitization relate to the 2022-1 securitization completed in February 2022 and include rated notes as well as certificates. The Company elected the fair value option on its beneficial interests in the 2022-1 securitization.
Beneficial interests may initially be classified as Level 2 if the transactions occur within close proximity to the end of each respective reporting period. Subsequently, similar to the securitization debt described above, fair value is determined by requesting a non-binding quote from broker dealers, or by utilizing market acceptable valuation models, such as discounted cash flows. Broker dealer quotes may be based on an income approach, which converts expected future cash flows to a single present value amount, with specific consideration of inputs relevant to particular security types. Such inputs may include ratings, collateral types, geographic concentrations, underlying loan vintages, delinquencies and defaults, loss severity assumptions, prepayments, and maturities. When the volume or level of market activity for a security is limited, certain inputs used to determine fair value may not be observable in the market. Broker dealer quotes may also be based on a market approach that considers recent transactions involving identical or similar securities. When the Company obtains prices from multiple broker dealers for the same security and has a consensus among them, it deems these fair values to be based on observable valuation inputs and classified as Level 2 of the fair value hierarchy. Where a third-party broker dealer quote is not available, the Company utilizes an internally developed model using unobservable inputs. If internally developed models are utilized or if the Company has multiple quotes that are not within a consensus range of each other, the Company deems these securities to be classified as Level 3 of the fair value hierarchy.
43
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Changes in Level 3 Recurring Fair Value Measurements
The following table presents a reconciliation of the financial assets, which were measured at fair value on a recurring basis using Level 3 inputs (in thousands):
Successor |
|
Finance Receivables of Consolidated CFEs |
|
|
Finance Receivables at Fair Value |
|
|
Securitization Debt of Consolidated CFEs |
|
|||
Fair value as of January 15, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Transfer within Level 3 categories |
|
|
|
|
|
( |
) |
|
|
— |
|
|
Losses included in realized and unrealized losses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Losses included in Warranties and GAP |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Issuances, net of discount |
|
|
— |
|
|
|
|
|
|
— |
|
|
Paydowns |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Other |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Fair value as of June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|||||||||||
Predecessor |
|
Finance Receivables of Consolidated CFEs |
|
|
Finance Receivables at Fair Value |
|
|
Securitization Debt of Consolidated CFEs |
|
|||
Fair value as of January 1, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reclassification of finance receivables due to a change in Accounting Policy |
|
|
|
|
|
|
|
|
— |
|
||
Transfer within Level 3 categories |
|
|
( |
) |
|
|
|
|
|
— |
|
|
Losses included in realized and unrealized losses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Losses included in Warranties and GAP |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Issuances, net of discount |
|
|
— |
|
|
|
|
|
|
— |
|
|
Paydowns |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Other |
|
|
|
|
|
( |
) |
|
|
— |
|
|
Fair value as of January 14, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Predecessor |
|
Finance Receivables of Consolidated CFEs |
|
|
Finance Receivables at Fair Value |
|
||
Fair value as of January 1, 2024 |
|
$ |
|
|
$ |
|
||
Transfer within Level 3 categories |
|
|
|
|
|
( |
) |
|
Losses included in realized and unrealized losses |
|
|
( |
) |
|
|
( |
) |
Losses included in Warranties and GAP |
|
|
( |
) |
|
|
( |
) |
Issuances, net of discount |
|
|
— |
|
|
|
|
|
Paydowns |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
|
||
Fair value as of June 30, 2024 |
|
$ |
|
|
$ |
|
||
The Company's transfers between levels of the fair value hierarchy are assumed to have occurred at the beginning of the reporting period on a quarterly basis. There were no transfers between levels of the fair value hierarchy for all the periods presented.
44
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Other Relevant Data for Financial Assets and Liabilities for which FVO Was Elected
The following table presents the gains or losses, recorded in "Realized and unrealized losses, net of recoveries" in the condensed consolidated statements of operations related to the eligible financial instruments for which the fair value option was elected, as well as other relevant items that are included in "Realized and unrealized losses, net of recoveries" (in thousands):
|
|
Successor |
|
|
|
Predecessor |
|
||
|
|
Three Months Ended June 30, |
|
|
|
Three Months Ended June 30, |
|
||
|
|
2025 |
|
|
|
2024 |
|
||
Finance receivables at fair value |
|
$ |
|
|
|
$ |
|
||
Finance receivables held for sale, net |
|
|
— |
|
|
|
|
|
|
Debt of securitized VIEs at fair value |
|
|
( |
) |
|
|
|
( |
) |
Collection expenses |
|
|
|
|
|
|
|
||
Recoveries |
|
|
( |
) |
|
|
|
( |
) |
Other |
|
|
|
|
|
|
( |
) |
|
Total net loss included in "Realized and unrealized losses, net of recoveries" |
|
$ |
|
|
|
$ |
|
||
|
Successor |
|
|
|
Predecessor |
|
||||||
|
Period from January 15 through June 30, |
|
|
|
Period from January 1 through January 14, |
|
|
Six Months Ended June 30, |
|
|||
|
2025 |
|
|
|
2025 |
|
|
2024 |
|
|||
Finance receivables at fair value |
$ |
|
|
|
$ |
|
|
$ |
|
|||
Finance receivables held for sale, net |
|
— |
|
|
|
|
|
|
|
|
||
Debt of securitized VIEs at fair value |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Collection expenses |
|
|
|
|
|
|
|
|
|
|||
Recoveries |
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
|
|
|
( |
) |
||
Total net loss included in "Realized and unrealized losses, net of recoveries" |
$ |
|
|
|
$ |
|
|
$ |
|
|||
The following table presents other relevant data related to the finance receivables carried at fair value (in thousands):
As of June 30, 2025 (Successor) |
|
Finance Receivables of CFEs at Fair Value |
|
|
|
Finance Receivables at Fair Value |
|
|
||
Aggregate unpaid principal balance included within finance receivables that are reported at fair value |
|
$ |
|
|
|
$ |
|
|
||
Aggregate fair value of finance receivables that are reported at fair value |
|
$ |
|
|
|
$ |
|
|
||
Unpaid principal balance of receivables within finance receivables that are reported at fair value and are on nonaccrual status (90 days or more past due) |
|
$ |
|
|
|
$ |
|
|
||
Aggregate fair value of receivables carried at fair value that are on nonaccrual status (90 days or more past due) |
|
$ |
|
|
|
$ |
|
|
||
45
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
As of December 31, 2024 (Predecessor) |
|
Finance Receivables of CFEs at Fair Value |
|
|
|
Finance Receivables at Fair Value |
|
|
||
Aggregate unpaid principal balance included within finance receivables that are reported at fair value |
|
$ |
|
|
|
$ |
|
|
||
Aggregate fair value of finance receivables that are reported at fair value |
|
$ |
|
|
|
$ |
|
|
||
Unpaid principal balance of receivables within finance receivables that are reported at fair value and are on nonaccrual status (90 days or more past due) |
|
$ |
|
|
|
$ |
|
|
||
Aggregate fair value of receivables carried at fair value that are on nonaccrual status (90 days or more past due) |
|
$ |
|
|
|
$ |
|
|
||
All finance receivables of CFEs are pledged to the CFEs trusts.
The following table presents other relevant data related to securitization debt of consolidated VIEs carried at fair value (in thousands):
As of June 30, 2025 (Successor) |
|
Securitization debt of consolidated VIEs at Fair Value |
|
|
Aggregate unpaid principal balance of rated notes of securitized VIEs |
|
$ |
|
|
Aggregate fair value of rated notes of securitized VIEs |
|
$ |
|
|
As of December 31, 2024 (Predecessor) |
|
Securitization debt of consolidated VIEs at Fair Value |
|
|
Aggregate unpaid principal balance of rated notes of securitized VIEs |
|
$ |
|
|
Aggregate fair value of rated notes of securitized VIEs |
|
$ |
|
|
46
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Fair Value of Financial Instruments Not Carried at Fair Value
The carrying amounts of restricted cash and other liabilities approximate fair value due to their short-term nature. The carrying value of the Warehouse Credit Facilities was determined to approximate fair value due to its short-term duration and variable interest rates that approximate prevailing interest rates as of each reporting period.
Finance receivables held for sale, net: For finance receivables eligible to be sold in a securitization, the Company determined the fair value of these finance receivables utilizing sales prices based on estimated securitization transactions, adjusted for transformation costs, risk and a normal profit margin associated with securitization transactions. Such fair value measurement is considered Level 3 of the fair value hierarchy. Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy election to elect the fair value option for all finance receivables held for sale, net. As of June 30, 2025, the Company did
For finance receivables sold in a securitization, the Company determined the fair value of these finance receivables by estimating the proceeds that would be generated from selling the notes and the residual interests in the securitization trust. The fair value of the notes was determined utilizing non-binding quoted prices provided by broker dealers, as discussed above, and the Company used a discounted cash flow model to estimate the fair value of the residual interests in the trust. Such fair value measurement is considered Level 3 of the fair value hierarchy. As of June 30, 2025, there were
|
|
|
Predecessor |
|
|
|
Inputs as of December 31, |
Unobservable inputs |
|
|
2024 |
Cumulative net loss |
|
|
|
Recoveries |
|
|
|
Discount Rate |
|
|
In addition, the Company also had finance receivables that were no longer eligible to be sold in a securitization. As of June 30, 2025, there were
|
|
|
Predecessor |
|
|
|
Inputs as of December 31, |
Unobservable inputs |
|
|
2024 |
Cumulative net loss |
|
|
|
Recoveries |
|
|
|
Discount Rate |
|
|
47
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Securitization Debt: Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, the Company made an accounting policy change to elect the fair value option and apply the measurement alternative to the 2024-1 securitization debt. As of December 31, 2024, the 2024-1 securitization debt was not carried at fair value on the Company's condensed consolidated balance sheet.
|
|
|
Predecessor |
|
|
|
|
|
December 31, |
|
|
|
|
|
2024 |
|
|
|
|
|
(in thousands) |
|
|
Carrying value |
|
|
$ |
|
|
Fair value |
|
|
$ |
|
|
Financing of beneficial interests in securitizations: The fair value of the debt associated with financing of beneficial interests in securitizations, which are not carried at fair value on the Company's condensed consolidated balance sheets, approximated their carrying value as of June 30, 2025 and December 31, 2024 and are classified within Level 3 of the fair value hierarchy.
Junior Subordinated Debentures: The fair value of the junior subordinated debentures, which are not carried at fair value on the Company's condensed consolidated balance sheets, approximated their carrying value as of June 30, 2025 and December 31, 2024 and are classified within Level 3 of the fair value hierarchy.
Convertible Senior Notes:
|
|
|
Predecessor |
|
|
|
|
|
December 31, |
|
|
|
|
|
2024 |
|
|
|
|
|
(in thousands) |
|
|
Carrying value |
|
|
$ |
|
|
Fair value |
|
|
$ |
|
|
The Company did not have Convertible Senior Notes as of June 30, 2025. Refer to Note 11— Long Term Debt for further details.
Fresh start accounting: In accordance with ASC Topic 852, with the application of fresh start accounting, the Company allocated the reorganization value to its individual assets and liabilities based on their estimated fair values in conformity with ASC Topic 805, Business Combinations. Refer to Note 6 — Fresh Start Accounting for further details.
16. Segment Information
As a result of the Ecommerce Wind-Down during the three months ended March 31, 2024, the Company revised its reportable segments. The Company is now organized into
The Company determined its operating segments based on how the chief operating decision maker (“CODM”) reviews the Company’s operating results in assessing performance and allocating resources. The Company’s CODM is the chief executive office (“CEO”). During the period from January 15, 2025, to June 30, 2025, the CODM changed the
48
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
profitability measure reviewed for the Company's segment from Adjusted EBITDA to Adjusted net income (loss). The CODM reviews Adjusted net income (loss) for each of the reportable segments.
The UACC reportable segment represents UACC’s operations with its network of third-party dealership customers, including the purchases and servicing of vehicle installment contracts. The segment also includes the runoff portfolio of retail installment sale contracts originated for Vroom or purchased from Vroom prior to the Ecommerce Wind-Down.
The CarStory reportable segment represents sales of AI-powered analytics and digital services to automotive dealers, automotive financial services companies and others in the automotive industry.
49
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Information about the Company’s reportable segments and corporate activities are as follows (in thousands):
|
Successor |
|
|
|
Predecessor |
|
||||||||||||||||||||
|
Three Months Ended June 30, |
|
|
|
Three Months Ended June 30, |
|
||||||||||||||||||||
|
2025 |
|
|
|
2024 |
|
||||||||||||||||||||
|
UACC |
|
CarStory |
|
Corporate |
|
Total |
|
|
|
UACC |
|
CarStory |
|
Corporate |
|
Total |
|
||||||||
Interest income |
$ |
|
$ |
— |
|
$ |
— |
|
$ |
|
|
|
$ |
|
$ |
— |
|
$ |
( |
) |
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Warehouse credit facility |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
||||
Securitization debt |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
||||
Total interest expense |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
||||
Net interest income |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
( |
) |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Realized and unrealized losses (gains), net of recoveries |
|
|
|
— |
|
|
( |
) |
|
|
|
|
|
|
|
— |
|
|
( |
) |
|
|
||||
Net interest income after losses and recoveries |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Noninterest (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Servicing income |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
||||
Warranties and GAP income, net |
|
|
|
— |
|
|
( |
) |
|
|
|
|
|
|
|
— |
|
|
( |
) |
|
|
||||
CarStory revenue |
|
— |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
||||
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total noninterest (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Professional fees |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Software and IT costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
||||||
Interest expense on corporate debt |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Provision (benefit) for income taxes from continuing operations |
|
— |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted net income (loss) |
$ |
( |
) |
$ |
|
|
|
|
|
|
|
$ |
( |
) |
$ |
( |
) |
|
|
|
|
|||||
50
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
Successor |
|
|
|
Predecessor |
|
||||||||||||||||||||
|
Period from January 15 through June 30, |
|
|
|
Period from January 1 through January 14, |
|
||||||||||||||||||||
|
2025 |
|
|
|
2025 |
|
||||||||||||||||||||
|
UACC |
|
CarStory |
|
Corporate |
|
Total |
|
|
|
UACC |
|
CarStory |
|
Corporate |
|
Total |
|
||||||||
Interest income |
$ |
|
$ |
— |
|
$ |
— |
|
$ |
|
|
|
$ |
|
$ |
— |
|
$ |
( |
) |
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Warehouse credit facility |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
||||
Securitization debt |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
||||
Total interest expense |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
||||
Net interest income |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
( |
) |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Realized and unrealized losses, net of recoveries |
|
|
|
— |
|
|
( |
) |
|
|
|
|
|
|
|
— |
|
|
( |
) |
|
|
||||
Net interest income (loss) after losses and recoveries |
|
|
|
— |
|
|
|
|
|
|
|
|
( |
) |
|
— |
|
|
|
|
( |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Noninterest (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Servicing income |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
||||
Warranties and GAP income, net |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
( |
) |
|
|
|||||
CarStory revenue |
|
— |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
||||
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total noninterest (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Professional fees |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Software and IT costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
||||||
Interest expense on corporate debt |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|||||
Impairment charges |
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|||
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Provision for income taxes from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted net income (loss) |
$ |
( |
) |
$ |
|
|
|
|
|
|
|
$ |
( |
) |
$ |
( |
) |
|
|
|
|
|||||
51
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
Predecessor |
|
||||||||||
|
Six Months Ended |
|
||||||||||
|
2024 |
|
||||||||||
|
UACC |
|
CarStory |
|
Corporate |
|
Total |
|
||||
Interest income (expense) |
$ |
|
$ |
— |
|
$ |
( |
) |
$ |
|
||
|
|
|
|
|
|
|
|
|
||||
Interest expense: |
|
|
|
|
|
|
|
|
||||
Warehouse credit facility |
|
|
|
— |
|
|
— |
|
|
|
||
Securitization debt |
|
|
|
— |
|
|
— |
|
|
|
||
Total interest expense |
|
|
|
— |
|
|
— |
|
|
|
||
Net interest income (loss) |
|
|
|
— |
|
|
( |
) |
|
|
||
|
|
|
|
|
|
|
|
|
||||
Realized and unrealized losses, net of recoveries |
|
|
|
— |
|
|
|
|
|
|||
Net interest income (loss) after losses and recoveries |
|
|
|
— |
|
|
( |
) |
|
|
||
|
|
|
|
|
|
|
|
|
||||
Noninterest (loss) income: |
|
|
|
|
|
|
|
|
||||
Servicing income |
|
|
|
— |
|
|
— |
|
|
|
||
Warranties and GAP income (loss), net |
|
|
|
— |
|
|
( |
) |
|
( |
) |
|
CarStory revenue |
|
— |
|
|
|
|
— |
|
|
|
||
Other income |
|
|
|
|
|
|
|
|
||||
Total noninterest (loss) income |
|
|
|
|
|
( |
) |
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Expenses: |
|
|
|
|
|
|
|
|
||||
Compensation and benefits |
|
|
|
|
|
|
|
|
||||
Professional fees |
|
|
|
|
|
|
|
|
||||
Software and IT costs |
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
— |
|
|
|
|||
Interest expense on corporate debt |
|
|
|
— |
|
|
|
|
|
|||
Impairment charges |
|
|
|
— |
|
|
— |
|
|
|
||
Other expenses |
|
|
|
|
|
|
|
|
||||
Total expenses |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Provision for income taxes from continuing operations |
|
|
|
|
|
— |
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Adjusted net loss |
$ |
( |
) |
$ |
( |
) |
|
|
|
|
||
52
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The reconciliation between reportable segment Adjusted net loss to consolidated net loss from continuing operations as follows (in thousands):
|
Successor |
|
|
|
Predecessor |
|
|
Successor |
|
|
|
Predecessor |
|
||||||||
|
Three Months Ended June 30, |
|
|
|
Three Months Ended June 30, |
|
|
Period from January 15 through June 30, |
|
|
|
Period from January 1 through January 14, |
|
|
Six Months Ended |
|
|||||
|
2025 |
|
|
|
2024 |
|
|
2025 |
|
|
|
2025 |
|
|
2024 |
|
|||||
Adjusted net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
UACC |
$ |
( |
) |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
( |
) |
|
$ |
( |
) |
CarStory |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Total |
$ |
( |
) |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Stock compensation expense |
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Severance expense |
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Impairment charges |
|
— |
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
— |
|
|
|
( |
) |
Corporate income (loss) from continuing operations |
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Reorganization items |
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
Net loss from continuing operations |
$ |
( |
) |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
|
|
$ |
( |
) |
|
17. Income Taxes
The Company computes income taxes using the liability method. This method requires recognition of deferred tax assets and liabilities, measured by enacted rates, attributable to temporary differences between the financial statements and the income tax basis of assets and liabilities. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that certain deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those specific jurisdictions prior to the dates on which such net operating losses expire. The Company maintained a full valuation allowance against its net deferred tax assets because the Company has determined that it is more likely than not that these assets will not be fully realized based on a current evaluation of expected future taxable income and the Company being in a cumulative 3-year loss position.
The Company’s effective tax rate from continuing operations for the three months ended June 30, 2025 and 2024 was (
The Company is subject to tax in the United States and many state and local jurisdictions. The Company, with certain exceptions, is no longer subject to income tax examinations by U.S. federal, state and local for tax years 2018 and prior. The Company is not currently under audit for any US federal or state income tax audits.
The Company has
On July 4, 2025, new U.S tax legislation was signed into law (known as the "One Big Beautiful Bill Act" or "OBBBA") which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. The Company is currently evaluating the impact of the new legislation but does not expect it to have a material impact on the results of operations.
The Internal Revenue Code (“IRC”) Section 382 provides for a limitation of the annual use of net operating loss and tax credit carryforwards following certain ownership changes (as defined by the IRC Section 382). The Company completed a Section 382 study and determined that the Company has undergone five ownership changes, the most
53
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
recent of which occurred on the Effective Date. The IRC Section 382 limitations arising as a result of these ownership changes generally limit the use of the net operating losses generated before the applicable ownership change. However, an exception to the IRC Section 382 limitation applies when, among other requirements, so-called “qualified creditors” and shareholders of a corporation in a title 11 Case receive, in respect of their claims and interests, as applicable, at least 50% of the vote and value of the stock of the corporation pursuant to a confirmed chapter 11 plan (the “382(l)(5) Exception”). The Company expects that the 382(l)(5) Exception applied to the ownership change occurring on the Effective Date and, accordingly, that the Company may not have any limitation on its utilization of federal NOL carryforwards generated prior to emergence from the Prepackaged Chapter 11 Case (other than limitations which existed before the commencement of the Prepackaged Chapter 11 Case). However, the Company may be limited in its utilization of its federal NOL carryforwards generated before the Effective Date if it triggers another ownership change within two years after the Effective Date.
On the Effective Date, the Company consummated its Prepackaged Chapter 11 Case. For US tax purposes the Company would be required to recognize cancellation of debt income (“CODI”) in the amount equal to the excess of the adjusted issue price of the debt discharged over the value of any new debt or equity that was issued. However, IRC Section 108 provides that CODI may be excluded from gross income to the extent that the debt is discharged in a title 11 Case. In lieu of recognizing CODI, IRC Section 108 requires the Company to reduce its tax attributes, including net operating losses, capital losses, tax credits, depreciable assets, investment in subsidiaries and other investments, in the amount of the CODI that is excluded from gross income.
18. Net Income (Loss) Per Share
The following table sets forth the computation of basic and diluted net income (loss) per share attributable to common stockholders:
|
|
Successor |
|
|
|
Predecessor |
|
||
|
|
Three Months Ended June 30, |
|
|
|
Three Months Ended June 30, |
|
||
(in thousands, except share and per share amounts) |
|
2025 |
|
|
|
2024 |
|
||
Net (loss) income from continuing operations |
|
$ |
( |
) |
|
|
$ |
( |
) |
Net income (loss) from discontinued operations |
|
$ |
|
|
|
$ |
( |
) |
|
Net (loss) income |
|
$ |
( |
) |
|
|
$ |
( |
) |
Net (loss) income per share attributable to common stockholders, basic: |
|
|
|
|
|
|
|
||
Net loss per share attributable to common stockholders, continuing operations, basic and diluted |
|
|
( |
) |
|
|
|
( |
) |
Net income (loss) per share attributable to common stockholders, discontinued operations, basic and diluted |
|
|
|
|
|
|
( |
) |
|
Total net loss per share attributable to common stockholders, basic and diluted |
|
$ |
( |
) |
|
|
$ |
( |
) |
Weighted-average number of shares outstanding used to compute net (loss) income per share attributable to common stockholders, basic and diluted: |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
54
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
|
Successor |
|
|
|
Predecessor |
|
||||||
|
|
Period from January 15 through June 30, |
|
|
|
Period from January 1 through January 14, |
|
|
Six Months Ended |
|
|||
(in thousands, except share and per share amounts) |
|
2025 |
|
|
|
2025 |
|
|
2024 |
|
|||
Net (loss) income from continuing operations |
|
$ |
( |
) |
|
|
$ |
|
|
$ |
( |
) |
|
Net income (loss) from discontinued operations |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Net (loss) income |
|
$ |
( |
) |
|
|
$ |
|
|
$ |
( |
) |
|
Net (loss) income per share attributable to common stockholders, basic: |
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Discontinued operations |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Basic |
|
$ |
( |
) |
|
|
$ |
|
|
$ |
( |
) |
|
Net (loss) income per share attributable to common stockholders, diluted: |
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Discontinued operations |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Diluted |
|
$ |
( |
) |
|
|
$ |
|
|
$ |
( |
) |
|
Weighted-average number of shares outstanding used to compute net (loss) income per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
|
|
|
|
|
|
|
|
|||
Diluted |
|
|
|
|
|
|
|
|
|
|
|||
The following potentially dilutive shares were not included in the calculation of diluted shares outstanding for the periods presented as the effect would have been anti-dilutive:
|
|
Successor |
|
|
|
Predecessor |
|
||||||
|
|
As of June 30, |
|
|
|
As of January 14, |
|
|
As of June 30, |
|
|||
|
|
2025 |
|
|
|
2025 |
|
|
2024 |
|
|||
Convertible senior notes |
|
|
— |
|
|
|
|
|
|
|
|
||
Stock options |
|
|
|
|
|
|
|
|
|
|
|||
Restricted stock units |
|
|
|
|
|
|
|
|
|
|
|||
Total |
|
|
|
|
|
|
|
|
|
|
|||
The following table sets forth a reconciliation from basic to diluted weighted-average number of shares outstanding used to compute net (loss) income per share attributable to common stockholders:
|
|
Predecessor |
|
|
|
|
Period from January 1 through January 14, |
|
|
|
|
2025 |
|
|
Weighted-average number of shares outstanding used to compute net (loss) income per share attributable to common stockholders: |
|
|
|
|
Basic |
|
|
|
|
Convertible senior notes |
|
|
|
|
Diluted |
|
|
|
|
Potentially dilutive common shares assumed conversion of debt using the if-converted method.
55
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
19. Related Party Transactions
On March 8, 2025, Vroom, Inc., UACC and its indirect subsidiary Darkwater Funding LLC, as co-borrowers, entered into a credit agreement for a $
20. Subsequent Events
On July 7, 2025, the Company's Warrants commenced trading on the OTCQX Best Market under the symbol "VRMWW".
On
Refer to Note 10 — Warehouse Credit Facilities of Consolidated VIEs for further details related to the Company’s Warehouse Credit Facilities.
56
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. As discussed in the section titled "Special Note Regarding Forward-Looking Statements," the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below and in the section titled "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”), as updated by reference into the section titled "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Recent Events
Recapitalization of Balance Sheet Debt: the Prepackaged Chapter 11 Case
On November 13, 2024, we commenced a voluntary proceeding (the "Prepackaged Chapter 11 Case") under Chapter 11 of the United States Code, 11 U.S.C. §§ 101-1532, as amended from time to in the United States Bankruptcy Court for the Southern District of Texas under the name “In re Vroom, Inc.” None of our subsidiaries were debtors in the Chapter 11 proceedings.
On January 14, 2025 (the “Effective Date”), the conditions to the effectiveness of the prepackaged plan of reorganization (the “Plan”) were satisfied or waived and the Plan became effective. We emerged from the Prepackaged Chapter 11 Case on January 14, 2025. On February 20, 2025, our common stock was re-listed for trading on the Nasdaq Global Market.
In connection with the Prepackaged Chapter 11 Case, the ordinary course operations of Vroom, Inc.’s subsidiaries continued with minimal impact. We emerged without any remaining Notes or long-term debt at the Vroom, Inc. level, but still maintain UACC’s Warehouse Credit Facilities (as defined below), securitization debt, risk retention financing in securitizations, and junior subordinated debentures.
The Prepackaged Chapter 11 Case was intended to address the impact of the Notes and their upcoming maturity, or any potential acceleration, while providing the potential for our stockholders to retain value in their investment, limiting disruption to our ongoing ordinary course operations, emerging as a public company without any long-term debt at the Vroom, Inc. level, and maximizing the ability to utilize a substantial portion of our net operating losses. See “Liquidity and Capital Resources” for more information on our Notes and the restructuring of our debt obligations as a result of the Prepackaged Chapter 11 Case, and Part I, Item 1A Risk Factors for risks associated with the Prepackaged Chapter 11 Case and our ability to realize its intended benefits.
Conversion of Common Stock
Immediately prior to the Effective Date, there were 1,822,577 outstanding shares of our common stock, $0.001 par value per share (the “Common Stock”). We adopted an Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to, among other changes to our prior amended and restated certificate of incorporation, effect an automatic conversion of the Common Stock at a ratio of 1-for-5. As a result of the automatic conversion and the issuance of shares of Common Stock pursuant to the Plan, there were approximately 5,163,109 outstanding shares of newly issued Common Stock as of the Effective Date (the “New Common Stock”).
Issuance of Warrants
On the Effective Date, we entered into a warrant agreement (the “Warrant Agreement”) with Equiniti Trust Company LLC, as warrant agent. In accordance with the Plan and pursuant to the Warrant Agreement, on the Effective Date, we issued warrants (the “Warrants”) to purchase an aggregate of 364,516 shares of the New Common Stock, at an exercise price of $60.95 per share, to our stockholders in accordance with the Prepackaged Chapter 11 Case. Each
57
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Warrant was immediately exercisable upon the issuance date and will expire five years from the issuance date. On July 7, 2025, the Warrants commenced trading on the OTCQX Best Market under the symbol “VRMWW”.
Going Concern
As of January 14, 2025 we emerged from the Prepackaged Chapter 11 Case and continue to operate as a viable going concern.
The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that we will continue to operate as a going concern, which contemplates that we will be able to realize assets and settle liabilities and commitments in the normal course of business for twelve months following the issuance date.
Overview
Vroom owns United Auto Credit Corporation, a leading automotive finance company that offers vehicle financing to consumers through third-party dealers under the UACC brand, and CarStory, a leader in AI-powered analytics and digital services for automotive retail.
UACC
UACC, which Vroom acquired in February 2022, is an indirect lender that offers vehicle financing under the UACC brand to consumers through third-party dealers, focusing primarily on the non-prime market. Prior to the Ecommerce Wind-Down, UACC also offered vehicle financing to Vroom’s customers through its ecommerce platform.
UACC, which has been engaged in automotive finance since 1996, currently offers financing services to a nationwide network of thousands of independent motor vehicle dealers and manufacturer-franchised dealers in 49 states, and we seek to optimize that network over time. UACC enables these dealers to finance their customers' purchases of automobiles, medium and light-duty trucks and vans with competitive financing terms. The credit programs offered by UACC are primarily designed to serve consumers who have limited access to traditional motor vehicle financing.
In addition to its financing expertise, the UACC platform brings with it extensive application processing, underwriting and servicing capabilities. UACC services the retail installment sales contracts it originates or purchases and will continue to service the contracts it originated or purchased for customers of Vroom’s former ecommerce business. Because UACC focuses primarily on the non-prime market, it generally sustains a higher level of delinquencies and credit losses than that experienced by traditional motor vehicle financing sources. As of June 30, 2025, UACC serviced a portfolio of approximately 79,000 retail installment sales contracts with an aggregate principal outstanding balance of $1.0 billion.
CarStory
CarStory offers AI-powered analytics and digital services to dealers, automotive financial services companies and others in the automotive industry, which use CarStory’s solutions to enhance their customer experience and drive increased vehicle purchases.
Leveraging computer vision and AI, CarStory has curated a comprehensive used vehicle information database, including over 246 million vehicle identification numbers ("VINs"), 188 million window stickers, 4 billion vehicle photos and 393 million sales cycles, along with price and price elasticity models. CarStory receives data for over three and a half million unique VINs listed for sale every day, resulting in CarStory having data for an estimated 90% of U.S. consumer vehicles. This data is aggregated with demand insights from millions of consumer sessions and data from CarStory’s proprietary VIN database to generate more accurate vehicle valuations.
CarStory helps dealers optimize their pricing by leveraging data science models for retail pricing that provide predictive pricing for marketing, buying, selling and VIN-level features. Unlike simple averages, we believe CarStory’s patented neural-net algorithm can provide a highly accurate market price (the “CarStory Real Market Price”) for vehicle valuations. We believe that the CarStory Real Market Price accounts for factors that averages often miss, such as local market dynamics and dealer performance.
58
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
In addition to its data analytics and AI-based pricing solutions, CarStory creates and powers digital experiences for end consumers, including automotive marketplaces, vehicle market reports, and trade-in and appraisal products. CarStory's digital experiences are designed with user behavior data to engage consumers and drive more consumers to vehicle purchase decisions.
Long-term Strategic Plan
Since the announcement of the Value Maximization Plan in January 2024, we have been focused on building a long-term strategic plan leveraging our remaining assets to improve the profitability of the business and achieve three key objectives: achieve pre-COVID Cumulative Net Losses ("CNL") or lower, grow origination with pre-COVID CNL or lower, and lower operating cost.
In order to achieve these objectives, we are focused on four strategic initiatives:
Non-GAAP Financial Measures
In addition to our results determined in accordance with U.S. GAAP, we believe certain non-GAAP financial measures are useful in evaluating our operating performance.
In the period from January 15, 2025, to June 30, 2025, we changed one of the measures that we review to evaluate our performance from Adjusted EBITDA to Adjusted net income (loss). Adjusted net income (loss) is a supplemental performance measure that our management uses to assess our operating performance and the operating leverage in our business. Adjusted net income (loss) facilitates internal comparisons of our historical operating performance on a more consistent basis, therefore we use this measure for business planning purposes.
Management believes Adjusted net income (loss) is a better indication of our profitability on a Non-GAAP basis as we no longer have significant depreciation and amortization expenses as a result of the fresh start accounting and we recorded our intangible assets at fair value upon emergence from the Prepackaged Chapter 11 Case. Additionally, due to the elimination of our long-term debt in the Prepackaged Chapter 11 Case we have significantly lower interest expense.
Adjusted net income (loss) has limitations as an analytical tool because it does not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP. Additionally, it may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for those comparative purposes. Because of these limitations, this non-GAAP financial measure should be considered along with other operating and financial performance measures presented in accordance with U.S. GAAP. The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for, or superior to, financial
59
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
information prepared and presented in accordance with U.S. GAAP. We have reconciled this non-GAAP financial measure with the most directly comparable U.S. GAAP financial measure below.
Adjusted net loss
We calculate Adjusted net loss as net income (loss) from continuing operations adjusted for stock compensation expense, severance expense, bankruptcy costs (which represent professional fees incurred related to the bankruptcy prior to filing of the petition and post-emergence), reorganization items, net (which relate to certain charges incurred during the bankruptcy proceedings, such as legal and professional fees incurred directly as a result of the bankruptcy proceeding, the write-off of deferred financing costs and discount on debt subject to compromise and other related charges), operating lease right-of-use assets impairment and long-lived asset impairment charges.
The following table presents a reconciliation of Adjusted net loss to net income (loss) from continuing operations, which is the most directly comparable U.S. GAAP measure (in thousands):
|
|
Successor |
|
|
|
Predecessor |
|
||
|
|
Three Months Ended June 30, |
|
|
|
Three Months Ended June 30, |
|
||
|
|
2025 |
|
|
|
2024 |
|
||
Net loss from continuing operations |
|
$ |
(8,932 |
) |
|
|
$ |
(19,104 |
) |
Adjusted to exclude the following: |
|
|
|
|
|
|
|
||
Stock compensation expense |
|
|
1,836 |
|
|
|
|
2,446 |
|
Severance expense |
|
|
367 |
|
|
|
|
1,685 |
|
Adjusted net loss |
|
$ |
(6,729 |
) |
|
|
$ |
(14,973 |
) |
|
|
Successor |
|
|
|
Predecessor |
|
|
Non-GAAP Combined |
|
|
Predecessor |
|
||||
|
|
Period from January 15 through June 30, |
|
|
|
Period from January 1 through January 14, |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
||||
|
|
2025 |
|
|
|
2025 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|||||||
Net income (loss) from continuing operations |
|
$ |
(15,382 |
) |
|
|
$ |
45,090 |
|
|
$ |
29,708 |
|
|
$ |
(63,781 |
) |
Adjusted to exclude the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock compensation expense |
|
|
2,327 |
|
|
|
|
144 |
|
|
|
2,471 |
|
|
|
3,770 |
|
Severance expense |
|
|
388 |
|
|
|
|
4 |
|
|
|
392 |
|
|
|
1,685 |
|
Bankruptcy costs (post-emergence) |
|
|
913 |
|
|
|
|
— |
|
|
|
913 |
|
|
|
— |
|
Reorganization items, net |
|
|
— |
|
|
|
|
(51,036 |
) |
|
|
(51,036 |
) |
|
|
— |
|
Impairment charges |
|
|
4,156 |
|
|
|
|
— |
|
|
|
4,156 |
|
|
|
2,752 |
|
Adjusted net loss |
|
$ |
(7,598 |
) |
|
|
$ |
(5,798 |
) |
|
$ |
(13,396 |
) |
|
$ |
(55,574 |
) |
60
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Non-GAAP Combined Six Months Ended June 30, 2025
Our financial results for the periods from January 1, 2025 through January 14, 2025 and the three and six months ended June 30, 2024 are referred to as those of the “Predecessor” periods. Our financial results for the periods from January 15, 2025 through June 30, 2025 and the three months ended June 30, 2025 are referred to as those of the “Successor” periods. Our results of operations as reported in our Condensed Consolidated Financial Statements for these periods are prepared in accordance with U.S. GAAP. Although U.S. GAAP requires that we report our results for the period from January 1, 2025 through January 14, 2025 and the period from January 15, 2025 through June 30, 2025 separately, management views our operating results for the six months ended June 30, 2025 by combining the results of the applicable Predecessor and Successor periods because such presentation provides the most meaningful comparison of our results to prior periods. We believe we cannot adequately benchmark the operating results of the period from January 15, 2025 through June 30, 2025 against any of the previous periods reported in our Condensed Consolidated Financial Statements without combining it with the period from January 1, 2025 through January 14, 2025, and do not believe that reviewing the results of this period in isolation would be useful in identifying trends in or reaching conclusions regarding our overall operating performance. Management believes that the key performance metrics for the Successor period when combined with the Predecessor period provide more meaningful comparisons to other periods and are useful in identifying current business trends. Accordingly, in addition to presenting our results of operations as reported in our Condensed Consolidated Financial Statements in accordance with U.S. GAAP, the tables and discussion below also present the combined results for the six months ended June 30, 2025. The combined results for the six months ended June 30, 2025 represent the sum of the reported amounts for the Predecessor period from January 1, 2025 through January 14, 2025 and the Successor period from January 15, 2025 through June 30, 2025. These combined results are not considered to be prepared in accordance with U.S. GAAP and have not been prepared as pro forma results per applicable regulations. The combined operating results do not reflect the actual results we would have achieved absent our emergence from the Prepackaged Chapter 11 Case and are not necessarily indicative of future results. Accordingly, the results for the combined six months ended June 30, 2025 (prepared on a Non-GAAP basis) and six months ended June 30, 2024 (prepared on a GAAP basis) may not be comparable, particularly for statement of operations line items significantly impacted by the Reorganization transactions and the impact of fresh start accounting.
Key Factors and Trends Affecting our Operating Results
Our financial condition and results of operations have been, and will continue to be, affected by a number of factors and trends, including the following:
Prepackaged Chapter 11 Case
Even though we have emerged from the Prepackaged Chapter 11 Case, our Prepackaged Chapter 11 Case could have a material adverse effect on our business, financial condition, results of operations and liquidity. For example, it could adversely affect our business and relationships with customers, vendors, contractors, employees or suppliers. Furthermore, we may not realize any or all of the intended benefits of the Prepackaged Chapter 11 Case, the benefits may not be on the terms, in the manner, or during the time period we expect, and the costs incurred may exceed the intended benefits. The occurrence of one or more of these events could have a material and adverse effect on our operations, financial condition and reputation and we cannot assure you that having been subject to bankruptcy proceedings will not adversely affect our operations in the future. Additionally, other risks we face, as described in our Annual Report on Form 10-K for the year ended December 31, 2024, may be exacerbated by the impacts of our emergence from the Prepackaged Chapter 11 Case. All of these factors could limit our ability to pursue growth strategies for our business in the near- to mid-term.
Fresh Start Accounting
Upon emergence from the Prepackaged Chapter 11 Case, we adopted fresh start accounting in accordance with FASB Codification Topic 852, Reorganizations ("ASC 852") and became a new entity for financial reporting purposes. As a result, the condensed consolidated financial statements after the Effective Date are not comparable with the condensed consolidated financial statements on or before that date as indicated by the “black line” division in the financial statements and footnote tables, which emphasizes the lack of comparability between amounts presented. References to “Successor” relate to our financial position and results of operations after the Effective Date. References to “Predecessor” refer to our
61
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
financial position and results of operations on or before the Effective Date. For further information on comparability of Predecessor and Successor periods, see discussion within Results of Operations section below.
Ability to manage credit losses
While credit losses are inherent in the automotive finance receivables business, several variables have negatively affected UACC’s recent loss and delinquency rates, including rising interest rates, the current inflationary environment and vehicle depreciation. However, UACC has seen some improvement in our more recently issued finance receivable vintages, leading to lower losses as the more seasoned finance receivables are replaced with new originations, which has positively impacted the fair value of our finance receivables and the losses recognized for the six months ended June 30, 2025. Some of this is driven by seasonality and the current rate environment. While we expect long term improvements in our finance receivable portfolio, we expect some downward trends to continue to negatively impact our business for the remainder of 2025. UACC primarily operates in the non-prime sector of the market which tends to have more volatility. In 2020 and 2021, COVID related stimulus and used vehicle appreciation resulted in significantly lower delinquencies and subsequent losses. In late 2022 and 2023, delinquencies and loss rates rose as a result of the aforementioned factors and, in response, we implemented changes to our credit program, such as tightening credit, which is starting to return our delinquencies and expected portfolio performance on those vintages to normalized levels. We also intend to leverage CarStory data to improve VIN-level valuations to support underwriting decisions and servicing operations. Certain advance rates available to UACC on borrowings from the Warehouse Credit Facilities have decreased and any future decreases on available advance rates may have an adverse impact on our liquidity.
Enhance profitability at UACC
In addition to higher credit losses, UACC’s ability to achieve profitability has been negatively affected by increased operating expenses and productivity challenges. Also, we have identified vulnerabilities in certain IT systems and determined additional investment will be needed to update and secure those systems. We are undertaking a number of initiatives designed to reduce operating expenses, introduce improved processes, and reporting metrics across UACC’s operations, invest in IT systems, improve origination and servicing productivity, and leverage CarStory data to improve underwriting and servicing performance. We intend to grow UACC’s business profitably by reducing credit losses, increasing UACC’s market share, and streamlining its operations.
Ability to continue to access capital
As of June 30, 2025, UACC had four Warehouse Credit Facilities, which are primarily used to finance the origination of finance receivables as well as to provide funding for general operating activities. UACC has also developed a securitization program that involves selling finance receivables to securitization trusts through the private issuance of asset-backed securities which are collateralized by the finance receivables.
The success of UACC's business is highly dependent on the ability to continue to access capital through both its warehousing arrangements and securitization program. As a result of fluctuating interest rates, the current inflationary environment and vehicle depreciation in the used automotive industry, UACC is experiencing higher loss severity. Certain advance rates available to UACC on borrowings from UACC’s senior secured warehouse credit facility agreements (the “Warehouse Credit Facilities”) have decreased and any future decreases on available advance rates may have an adverse impact on our liquidity.
In March 2025, we renewed two of our Warehouse Credit Facilities, Facility Two and Facility Four, with an aggregate borrowing capacity of $400 million, now expiring in June 2026 and April 2027, respectively. Warehouse Credit Facility One, which had a borrowing capacity of $200 million, expired on July 21, 2025, pursuant to its terms, and we elected not to renew this commitment on the basis that borrowing capacity from our other Warehouse Credit Facilities is sufficient to support our current operational needs. Following the expiration of Warehouse Credit Facility One, UACC now has three senior secured Warehouse Credit Facilities. We expect to renew Warehouse Credit Facility Three prior to its expiration on August 29, 2025. There can be no assurance that adequate additional financing will be available to us on acceptable terms, or at all, if needed. See "Risk Factors—We may not generate sufficient liquidity to operate our business, and, UACC may be unable to continue to access or renew funding sources and obtain capital needed to maintain and grow its business" in our Annual Report on Form 10-K for the year ended December 31, 2024.
62
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Ability to optimize our dealer network to increase vehicle finance offerings
We intend to moderately grow our automotive financing business while focusing on achieving profitability. UACC will seek to optimize its dealer network over time. UACC provides funding that allows independent motor vehicle dealers and manufacturer-franchised dealers to finance vehicles for their customers. Currently, UACC serves a nationwide network of thousands of dealers in 49 states. UACC's credit programs are primarily designed to serve consumers in the non-prime market, who have limited access to traditional vehicle financing, although UACC intends to expand its offerings across a broader range of the credit spectrum going forward and has launched a pilot program for near-prime consumers. We also intend to drive dealer and customer engagement through technology innovations.
Seasonality
Used vehicle sales have historically been seasonal. The used vehicle industry typically experiences an increase in sales early in the calendar year and reaches its highest point late in the first quarter and early in the second quarter. Vehicle sales then level off through the rest of the year, with the lowest level of sales in the fourth quarter. This seasonality has historically corresponded with the timing of income tax refunds, which are an important source of funding for vehicle purchases. Consistent with market trends, UACC generally experiences increased funding activity during the first quarter through tax season. Delinquencies also tend to be lower during the first quarter through tax season and higher during the latter half of the year. See “Risk Factors—Risks Related to Our Financial Condition and Results of Operations—We may experience seasonal and other fluctuations in our quarterly results of operations, which may not fully reflect the underlying performance of our business” in our Annual Report on Form 10-K for the year ended December 31, 2024.
Macroeconomic Factors
The United States and global economies have recently and are continuing to experience a sustained inflationary environment. The Federal Reserve’s efforts to tame inflation have led to increased interest rates, which affects automotive finance rates and our borrowing rates, thereby reducing discretionary spending and making vehicle financing more costly and less accessible or desirable to many consumers. While interest rate cuts were expected in 2024, only slight cuts were enacted in the latter half of that year. Based on the July 2025 meeting, the Federal Reserve interest rates remained unchanged. We are not able to predict if, when, and to what degree rates may change and the impact it may have on the economy and our business.
In addition, the current U.S. Presidential administration has announced (and in some cases, partially delayed or rescinded) new tariffs on imports to the United States from other countries. Many countries have announced plans to impose retaliatory tariffs as well as other trade restrictions and retaliatory measures. Such significant tariffs, restrictions or other retaliatory measures could have a major impact on the United States automotive industry, which depends heavily on cross border trade. Should additional tariffs be implemented and sustained by the United States and other countries for an extended period of time, they would have a significant adverse effect, including financial, on the automotive industry. Further, any additional restrictions by the United States or other governments would exacerbate the impact, as could the uncertainty regarding the magnitude or duration of these measures. Steps taken by governments to implement tariffs on raw materials (including steel), automobiles, parts, and other products and materials have the potential to disrupt existing supply chains and impose additional costs on businesses in the automotive industry in the United States and globally. While negotiations regarding tariffs and other restrictions are ongoing and changing rapidly, if the resulting environment of retaliatory tariffs or other practices of additional trade restrictions or barriers increase automobile prices in the U.S. or cause volatility, this could lead to negative consumer sentiment and decreased consumer demand for automobiles, and in turn, decreased demand for motor vehicle contracts financed through UACC, which would negatively impact our results of operations, cash flows, and financial condition.
Moreover, geopolitical conflicts and war, including those in Europe and the Middle East, have increased global economic and political uncertainty, which has caused dramatic fluctuations in global financial markets. Ongoing economic and political disruption, or a significant escalation or expansion of such disruption could continue to impact consumer sentiment and spending, broaden inflationary costs, and could have a material adverse effect on our results of operations.
63
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
We will continue to actively monitor and develop responses to these disruptions, including the developing role that geopolitical, climate, and labor concerns are playing in trade relations, but depending on the duration and severity of such events, these trends could continue to negatively impact our business through 2025.
Results of Operations
We historically managed and reported operating results through three reportable segments. As a result of the Value Maximization Plan and the wind-down of our ecommerce operations, we discontinued reporting our results through our Ecommerce and Wholesale segments starting in the first quarter of 2024. We are now organized into two reportable segments: UACC and CarStory.
Corporate activities are presented in "corporate" and do not constitute a reportable segment. These activities include costs not directly attributable to the segments and are primarily related to costs associated with corporate and governance functions, including executive functions, corporate finance, legal, human resources, information technology, cyber security and other shared costs. Certain shared costs, including corporate administration, are allocated to segments based upon specific allocation of expenses. Corporate activities also include the runoff of legacy Vroom third party vehicle service and GAP policies sold prior to the Ecommerce Wind-Down.
64
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following table presents our condensed consolidated results of operations for the periods indicated (in thousands):
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
|
||||
|
|
Three Months Ended June 30, |
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
||||
|
|
2025 |
|
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
$ |
45,748 |
|
|
|
$ |
51,862 |
|
|
$ |
(6,114 |
) |
|
|
(11.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warehouse credit facility |
|
|
3,259 |
|
|
|
|
6,986 |
|
|
|
(3,727 |
) |
|
|
(53.3 |
)% |
Securitization debt |
|
|
9,883 |
|
|
|
|
7,995 |
|
|
|
1,888 |
|
|
|
23.6 |
% |
Total interest expense |
|
|
13,142 |
|
|
|
|
14,981 |
|
|
|
(1,839 |
) |
|
|
(12.3 |
)% |
Net interest income |
|
|
32,606 |
|
|
|
|
36,881 |
|
|
|
(4,275 |
) |
|
|
(11.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized and unrealized losses, net of recoveries |
|
|
19,500 |
|
|
|
|
18,729 |
|
|
|
771 |
|
|
|
4.1 |
% |
Net interest income after losses and recoveries |
|
|
13,106 |
|
|
|
|
18,152 |
|
|
|
(5,046 |
) |
|
|
(27.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Servicing income |
|
|
1,259 |
|
|
|
|
1,587 |
|
|
|
(328 |
) |
|
|
(20.7 |
)% |
Warranties and GAP income, net |
|
|
3,645 |
|
|
|
|
1,378 |
|
|
|
2,267 |
|
|
|
164.5 |
% |
CarStory revenue |
|
|
1,846 |
|
|
|
|
2,913 |
|
|
|
(1,067 |
) |
|
|
(36.6 |
)% |
Other income |
|
|
2,067 |
|
|
|
|
3,141 |
|
|
|
(1,074 |
) |
|
|
(34.2 |
)% |
Total noninterest income |
|
|
8,817 |
|
|
|
|
9,019 |
|
|
|
(202 |
) |
|
|
(2.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits |
|
|
21,091 |
|
|
|
|
27,176 |
|
|
|
(6,085 |
) |
|
|
(22.4 |
)% |
Professional fees |
|
|
2,013 |
|
|
|
|
1,488 |
|
|
|
525 |
|
|
|
35.3 |
% |
Software and IT costs |
|
|
3,420 |
|
|
|
|
4,036 |
|
|
|
(616 |
) |
|
|
(15.3 |
)% |
Depreciation and amortization |
|
|
742 |
|
|
|
|
7,232 |
|
|
|
(6,490 |
) |
|
|
(89.7 |
)% |
Interest expense on corporate debt |
|
|
698 |
|
|
|
|
1,549 |
|
|
|
(851 |
) |
|
|
(54.9 |
)% |
Other expenses |
|
|
2,832 |
|
|
|
|
4,961 |
|
|
|
(2,129 |
) |
|
|
(42.9 |
)% |
Total expenses |
|
|
30,796 |
|
|
|
|
46,442 |
|
|
|
(15,646 |
) |
|
|
(33.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss from continuing operations before provision for income taxes |
|
|
(8,873 |
) |
|
|
|
(19,271 |
) |
|
|
10,398 |
|
|
|
54.0 |
% |
Provision (benefit) for income taxes from continuing operations |
|
|
59 |
|
|
|
|
(167 |
) |
|
|
226 |
|
|
|
135.3 |
% |
Net loss from continuing operations |
|
$ |
(8,932 |
) |
|
|
$ |
(19,104 |
) |
|
$ |
10,172 |
|
|
|
53.2 |
% |
Net income (loss) from discontinued operations |
|
$ |
413 |
|
|
|
$ |
(2,084 |
) |
|
$ |
2,497 |
|
|
|
119.8 |
% |
Net loss |
|
$ |
(8,519 |
) |
|
|
$ |
(21,188 |
) |
|
$ |
12,669 |
|
|
|
59.8 |
% |
65
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
|
Successor |
|
|
|
Predecessor |
|
|
Non-GAAP Combined |
|
|
Predecessor |
|
|
Non-GAAP |
|
|
Non-GAAP |
|
||||||
|
|
Period from January 15 through June 30, |
|
|
|
Period from January 1 through January 14, |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
|
|
|
|
|
|
||||||
|
|
2025 |
|
|
|
2025 |
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest income |
|
$ |
82,905 |
|
|
|
$ |
7,183 |
|
|
$ |
90,088 |
|
|
$ |
102,939 |
|
|
$ |
(12,851 |
) |
|
|
(12.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Warehouse credit facility |
|
|
7,877 |
|
|
|
|
1,017 |
|
|
|
8,894 |
|
|
|
16,457 |
|
|
|
(7,563 |
) |
|
|
(46.0 |
)% |
Securitization debt |
|
|
16,431 |
|
|
|
|
1,178 |
|
|
|
17,609 |
|
|
|
12,864 |
|
|
|
4,745 |
|
|
|
36.9 |
% |
Total interest expense |
|
|
24,308 |
|
|
|
|
2,195 |
|
|
|
26,503 |
|
|
|
29,321 |
|
|
|
(2,818 |
) |
|
|
(9.6 |
)% |
Net interest income |
|
|
58,597 |
|
|
|
|
4,988 |
|
|
|
63,585 |
|
|
|
73,618 |
|
|
|
(10,033 |
) |
|
|
(13.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Realized and unrealized losses, net of recoveries |
|
|
30,600 |
|
|
|
|
6,792 |
|
|
|
37,392 |
|
|
|
49,548 |
|
|
|
(12,156 |
) |
|
|
(24.5 |
)% |
Net interest income after losses and recoveries |
|
|
27,997 |
|
|
|
|
(1,804 |
) |
|
|
26,193 |
|
|
|
24,070 |
|
|
|
2,123 |
|
|
|
8.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Servicing income |
|
|
2,513 |
|
|
|
|
192 |
|
|
|
2,705 |
|
|
|
3,606 |
|
|
|
(901 |
) |
|
|
(25.0 |
)% |
Warranties and GAP income, net |
|
|
7,724 |
|
|
|
|
307 |
|
|
|
8,031 |
|
|
|
(8,264 |
) |
|
|
16,295 |
|
|
|
197.2 |
% |
CarStory revenue |
|
|
4,238 |
|
|
|
|
432 |
|
|
|
4,670 |
|
|
|
5,892 |
|
|
|
(1,222 |
) |
|
|
(20.7 |
)% |
Other income |
|
|
4,548 |
|
|
|
|
113 |
|
|
|
4,661 |
|
|
|
5,925 |
|
|
|
(1,264 |
) |
|
|
(21.3 |
)% |
Total noninterest income |
|
|
19,023 |
|
|
|
|
1,044 |
|
|
|
20,067 |
|
|
|
7,159 |
|
|
|
12,908 |
|
|
|
180.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Compensation and benefits |
|
|
37,158 |
|
|
|
|
2,823 |
|
|
|
39,981 |
|
|
|
51,286 |
|
|
|
(11,305 |
) |
|
|
(22.0 |
)% |
Professional fees |
|
|
7,360 |
|
|
|
|
297 |
|
|
|
7,657 |
|
|
|
4,831 |
|
|
|
2,826 |
|
|
|
58.5 |
% |
Software and IT costs |
|
|
5,822 |
|
|
|
|
457 |
|
|
|
6,279 |
|
|
|
8,658 |
|
|
|
(2,379 |
) |
|
|
(27.5 |
)% |
Depreciation and amortization |
|
|
1,317 |
|
|
|
|
1,057 |
|
|
|
2,374 |
|
|
|
14,858 |
|
|
|
(12,484 |
) |
|
|
(84.0 |
)% |
Interest expense on corporate debt |
|
|
1,178 |
|
|
|
|
176 |
|
|
|
1,354 |
|
|
|
2,940 |
|
|
|
(1,586 |
) |
|
|
(53.9 |
)% |
Impairment charges |
|
|
4,156 |
|
|
|
|
— |
|
|
|
4,156 |
|
|
|
2,752 |
|
|
|
1,404 |
|
|
|
51.0 |
% |
Other expenses |
|
|
5,202 |
|
|
|
|
371 |
|
|
|
5,573 |
|
|
|
9,416 |
|
|
|
(3,843 |
) |
|
|
(40.8 |
)% |
Total expenses |
|
|
62,193 |
|
|
|
|
5,181 |
|
|
|
67,374 |
|
|
|
94,741 |
|
|
|
(27,367 |
) |
|
|
(28.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loss from continuing operations before provision for income taxes |
|
|
(15,173 |
) |
|
|
|
(5,941 |
) |
|
|
(21,114 |
) |
|
|
(63,512 |
) |
|
|
42,398 |
|
|
|
66.8 |
% |
Reorganization items, net |
|
|
— |
|
|
|
|
51,036 |
|
|
|
51,036 |
|
|
|
— |
|
|
|
51,036 |
|
|
|
100.0 |
% |
Income (loss) from continuing operations before provision for income taxes |
|
|
(15,173 |
) |
|
|
|
45,095 |
|
|
|
29,922 |
|
|
|
(63,512 |
) |
|
|
93,434 |
|
|
|
147.1 |
% |
Provision (benefit) for income taxes from continuing operations |
|
|
209 |
|
|
|
|
5 |
|
|
|
214 |
|
|
|
269 |
|
|
|
(55 |
) |
|
|
(20.4 |
)% |
Net income (loss) from continuing operations |
|
$ |
(15,382 |
) |
|
|
$ |
45,090 |
|
|
$ |
29,708 |
|
|
$ |
(63,781 |
) |
|
$ |
93,489 |
|
|
|
146.6 |
% |
Net income (loss) from discontinued operations |
|
$ |
512 |
|
|
|
$ |
(4 |
) |
|
$ |
508 |
|
|
$ |
(25,025 |
) |
|
$ |
25,533 |
|
|
|
102.0 |
% |
Net income (loss) |
|
$ |
(14,870 |
) |
|
|
$ |
45,086 |
|
|
$ |
30,216 |
|
|
$ |
(88,806 |
) |
|
$ |
119,022 |
|
|
|
134.0 |
% |
Segments
66
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Non-GAAP Combined Six Months Ended June 30, 2025 and June 30, 2024
The Successor Period and the Predecessor Periods are distinct reporting periods as a result of our emergence from the Prepackaged Chapter 11 Case on January 14, 2025. References in these results of operations to the change and the percentage change combine the period from January 1, 2025, to January 14, 2025 (Predecessor) with the period from January 15, 2025 to June 30, 2025 (Successor) Period, which we refer to as the six months ended June 30, 2025, in order to provide some comparability of such information to the six months ended June 30, 2024. See "Non-GAAP Financial Measures" above.
Three Months Ended June 30, 2025 and 2024
UACC
|
Successor |
|
|
|
|
|
Predecessor |
|
|
|
|
|
|
|
||||
|
Three Months Ended June 30, |
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
||||
|
2025 |
|
|
|
|
|
2024 |
|
|
Change |
|
|
% Change |
|
||||
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
||||
Interest income |
$ |
45,748 |
|
|
|
|
|
$ |
52,389 |
|
|
$ |
(6,641 |
) |
|
|
(12.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warehouse credit facility |
|
3,259 |
|
|
|
|
|
|
6,986 |
|
|
|
(3,727 |
) |
|
|
(53.3 |
)% |
Securitization debt |
|
9,883 |
|
|
|
|
|
|
7,995 |
|
|
|
1,888 |
|
|
|
23.6 |
% |
Total interest expense |
|
13,142 |
|
|
|
|
|
|
14,981 |
|
|
|
(1,839 |
) |
|
|
(12.3 |
)% |
Net interest income |
|
32,606 |
|
|
|
|
|
|
37,408 |
|
|
|
(4,802 |
) |
|
|
(12.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized and unrealized losses, net of recoveries |
|
20,922 |
|
|
|
|
|
|
19,582 |
|
|
|
1,340 |
|
|
|
6.8 |
% |
Net interest income after losses and recoveries |
|
11,684 |
|
|
|
|
|
|
17,826 |
|
|
|
(6,142 |
) |
|
|
(34.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Servicing income |
|
1,259 |
|
|
|
|
|
|
1,587 |
|
|
|
(328 |
) |
|
|
(20.7 |
)% |
Warranties and GAP income, net |
|
3,673 |
|
|
|
|
|
|
1,640 |
|
|
|
2,033 |
|
|
|
124.0 |
% |
Other income |
|
1,978 |
|
|
|
|
|
|
2,098 |
|
|
|
(120 |
) |
|
|
(5.7 |
)% |
Total noninterest income |
|
6,910 |
|
|
|
|
|
|
5,325 |
|
|
|
1,585 |
|
|
|
29.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits |
|
17,443 |
|
|
|
|
|
|
20,539 |
|
|
|
(3,096 |
) |
|
|
(15.1 |
)% |
Professional fees |
|
1,433 |
|
|
|
|
|
|
575 |
|
|
|
858 |
|
|
|
149.2 |
% |
Software and IT costs |
|
2,688 |
|
|
|
|
|
|
2,605 |
|
|
|
83 |
|
|
|
3.2 |
% |
Depreciation and amortization |
|
628 |
|
|
|
|
|
|
5,630 |
|
|
|
(5,002 |
) |
|
|
(88.8 |
)% |
Interest expense on corporate debt |
|
698 |
|
|
|
|
|
|
629 |
|
|
|
69 |
|
|
|
11.0 |
% |
Other expenses |
|
2,152 |
|
|
|
|
|
|
3,054 |
|
|
|
(902 |
) |
|
|
(29.5 |
)% |
Total expenses |
|
25,042 |
|
|
|
|
|
|
33,032 |
|
|
|
(7,990 |
) |
|
|
(24.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefit for income taxes from continuing operations |
|
— |
|
|
|
|
|
|
(234 |
) |
|
|
234 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted net loss |
$ |
(5,334 |
) |
|
|
|
|
$ |
(8,289 |
) |
|
$ |
2,955 |
|
|
|
35.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock compensation expense |
$ |
1,106 |
|
|
|
|
|
$ |
865 |
|
|
$ |
241 |
|
|
|
27.8 |
% |
Severance |
$ |
7 |
|
|
|
|
|
$ |
493 |
|
|
$ |
(486 |
) |
|
|
(98.6 |
)% |
67
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Interest income
UACC acquires and services finance receivables from its network of third-party dealership customers and generates interest income. Prior to our Prepackaged Chapter 11 Case this consisted of discount income and interest income. However, upon emergence and on the Effective Date, we made an accounting policy election to recognize discount income as a component of 'Realized and unrealized losses, net of recoveries' on a prospective basis. Discount income represents the amortization of unearned discounts over the contractual life of the underlying finance receivables held for investment at fair value. We also made an accounting policy election to elect the fair value option on all finance receivables and classify them as held for investment. Discounts on the finance receivables held-for-sale were previously deferred until they were sold.
For securitization transactions that are accounted for as secured borrowings, we recognize interest income in accordance with the terms of the related retail installment sale contracts. Interest income also includes the runoff portfolio of retail installment sale contracts originated for Vroom or purchased from Vroom prior to the Ecommerce Wind-Down.
Interest income decreased $6.7 million, or 12.7%, to $45.7 million for the three months ended June 30, 2025, from $52.4 million for the three months ended June 30, 2024. This decrease was primarily a result of the accounting policy change which resulted in lower discount income as well as a decrease driven by a lower finance receivable balance. The loan portfolio decreased to $849.0 million as of June 30, 2025, from $880.6 million as of June 30, 2024.
Interest expense
Interest expense primarily includes interest expense on UACC's Warehouse Credit Facilities and interest expense incurred on securitization debt.
Interest expense decreased $1.9 million, or 12.3%, to $13.1 million for the three months ended June 30, 2025 from $15.0 million for the three months ended June 30, 2024, primarily as a result of lower interest expense incurred on the Warehouse Credit Facilities, which decreased $3.7 million to $3.3 million for the three months ended June 30, 2025 from $7.0 million for the three months ended June 30, 2024. The decrease was offset by higher interest expense incurred on securitization debt, which increased $1.9 million to $9.9 million for the three months ended June 30, 2025, from $8.0 million for the three months ended June 30, 2024. The decrease of interest expense incurred on the Warehouse Credit Facilities is attributable to a lower outstanding balance of $205.8 million as of June 30, 2025 as compared to $270.8 million as of June 30, 2024, due to repayments of the Warehouse Credit Facilities in connection with completion of the 2025-1 securitization, as well as a decrease in the weighted average interest rates, which decreased from 7.19% to 5.99% in the respective periods. The increase of interest expense incurred on securitization debt is attributable to a higher outstanding balance of $526.7 million as of June 30, 2025, as compared to $472.2 million as of June 30, 2024, as well as overall higher interest rates on securitization debt.
Realized and unrealized losses, net of recoveries
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, we made an accounting policy election to report discount income as a component of "Realized and unrealized losses, net of recoveries". We also made an accounting policy election to elect the fair value option for all finance receivables held for sale on a prospective basis. Realized and unrealized losses, net of recoveries, represents changes in the fair value of finance receivables for which the fair value option was selected, changes in the fair value of securitization debt , changes in the fair value of beneficial interests, as well as collection expenses related to servicing finance receivables. Prior to emergence from the Prepackaged Chapter 11 Case, when we still had finance receivables held for sale, realized and unrealized losses, net of recoveries also represented charge-offs of finance receivables held for sale and changes in the valuation allowance on the held for sale portfolio.
Realized and unrealized losses, net of recoveries, increased by $1.3 million or 6.8% to $20.9 million for the three months ended June 30, 2025, from $19.6 million for the three months ended June 30, 2024, primarily driven by higher losses on finance receivables, partially offset by the change in accounting policy related to discount income, which reduced the credit losses in the current period.
68
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Servicing income
Servicing income primarily represents the annual fees earned as a percentage of the outstanding principal balance of the finance receivables sold that were accounted for as off-balance sheet securitizations. When our securitizations are accounted for as secured borrowings, the servicing income we receive is eliminated in consolidation. In addition, we also earn other income generated from servicing our finance receivables portfolio, including late and other fees.
Servicing income decreased by $0.3 million or 20.7% to $1.3 million for the three months ended June 30, 2025 from $1.6 million for the three months ended June 30, 2024, primarily driven by a lower balance of the 2022-1 securitization, which is accounted for as an off-balance sheet securitization.
Warranties and GAP income, net
UACC earns fees by selling third-party value-added products, such as vehicle service contracts. UACC is also contractually entitled to receive profit-sharing based on the performance of the vehicle service contract policies once a required claims period has passed. UACC recognizes a profit-share to the extent it is probable that it will not result in a significant revenue reversal. We estimate the revenue based on historical claims and cancellation data from its consumers, as well as other qualitative assumptions.
United Auto Credit GAP is a debt waiver product that provides protection for consumers who purchase the product by waiving the difference between the actual cash value of the consumer’s vehicle and the balance of the consumer’s finance receivable, subject to the terms and conditions of the United Auto Credit GAP, in the event of a total loss resulting from collision or theft. The total fees are earned over the contractual life of the related financial receivables on straight-line basis.
Warranties and GAP income, net increased by $2.1 million or 124.0% to $3.7 million for the three months ended June 30, 2025, as compared to $1.6 million for the three months ended June 30, 2024, primarily as a result of lower cancellation and claim losses, along with funding more contracts with GAP and warranty products, and charging higher fees in the current year period.
Other income
Other income decreased $0.1 million or 5.7% to $2.0 million for the three months ended June 30, 2025, from $2.1 million for the three months ended June 30, 2024.
Compensation and benefits
Compensation and benefits decreased $3.1 million or 15.1% to $17.4 million for the three months ended June 30, 2025, from $20.5 million for the three months ended June 30, 2024. The decrease was primarily a result of lower salary expense as a result of fewer employees as we continued right-sizing our workforce, lower severance expense related to the termination of certain employees in the prior year period, and an increase in internal software capitalization as we continue to invest in building our technology assets.
Professional fees
Professional fees increased by $0.8 million or 149.2% to $1.4 million for the three months ended June 30, 2025, from $0.6 million for the three months ended June 30, 2024, primarily as a result of an increase in legal and audit services.
Software and IT costs
Software and IT costs decreased $0.1 million or 3.2% to $2.7 million for the three months ended June 30, 2025, from $2.6 million for the three months ended June 30, 2024, primarily as a result of more efficient targeted software use as well as renegotiating and right-sizing our Software and IT contracts.
69
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Depreciation and amortization
Depreciation and amortization decreased $5.0 million or 88.8% to $0.6 million for the three months ended June 30, 2025 from $5.6 million for the three months ended June 30, 2024, primarily as a result of lower intangible assets upon emergence from our Prepackaged Chapter 11 Case, leading to lower amortization expense in the current year period.
Other expenses
Other expenses decreased $0.9 million or 29.5% to $2.2 million for the three months ended June 30, 2025, from $3.1 million for the three months ended June 30, 2024, primarily as a result of a loss on the repurchase of the non-investment grade securities related to the 2022-2 securitization transaction in the prior year period.
Adjusted net loss
Adjusted net loss decreased $3.0 million or 35.6% to $(5.3) million for the three months ended June 30, 2025, from $(8.3) million for the three months ended June 30, 2024, primarily as a result of a decrease of $8.0 million in expenses, which was in turn primarily driven by a $5.0 million decrease in depreciation and amortization expense and a $3.1 million decrease in compensation and benefits, an increase of $2.1 million in income from warranties and GAP products, and a decrease of $1.9 million in interest expense. These were partially offset by a $6.7 million decrease in interest income.
CarStory
|
Successor |
|
|
|
|
|
Predecessor |
|
|
|
|
|
|
|
||||
|
Three Months Ended June 30, |
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
||||
|
2025 |
|
|
|
|
|
2024 |
|
|
Change |
|
|
% Change |
|
||||
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|||||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
CarStory revenue |
$ |
1,846 |
|
|
|
|
|
$ |
2,913 |
|
|
$ |
(1,067 |
) |
|
|
(36.6 |
)% |
Other income |
|
35 |
|
|
|
|
|
|
190 |
|
|
|
(155 |
) |
|
|
(81.6 |
)% |
Total noninterest income |
|
1,881 |
|
|
|
|
|
|
3,103 |
|
|
|
(1,222 |
) |
|
|
(39.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits |
|
1,581 |
|
|
|
|
|
|
2,461 |
|
|
|
(880 |
) |
|
|
(35.8 |
)% |
Professional fees |
|
(67 |
) |
|
|
|
|
|
80 |
|
|
|
(147 |
) |
|
|
(183.8 |
)% |
Software and IT costs |
|
3 |
|
|
|
|
|
|
21 |
|
|
|
(18 |
) |
|
|
(85.7 |
)% |
Depreciation and amortization |
|
114 |
|
|
|
|
|
|
1,602 |
|
|
|
(1,488 |
) |
|
|
(92.9 |
)% |
Other expenses |
|
136 |
|
|
|
|
|
|
55 |
|
|
|
81 |
|
|
|
147.3 |
% |
Total expenses |
|
1,767 |
|
|
|
|
|
|
4,219 |
|
|
|
(2,452 |
) |
|
|
(58.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for income taxes from continuing operations |
|
33 |
|
|
|
|
|
|
28 |
|
|
|
5 |
|
|
|
17.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted net income (loss) |
$ |
124 |
|
|
|
|
|
$ |
(1,068 |
) |
|
$ |
1,192 |
|
|
|
111.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock compensation expense |
$ |
43 |
|
|
|
|
|
$ |
76 |
|
|
$ |
(33 |
) |
|
|
(43.3 |
)% |
CarStory revenue
CarStory generates advertiser, publisher and other user service revenue by offering its AI-powered analytics and digital retailing services to dealers, automotive financial services companies and others in the automotive industry.
CarStory revenue decreased $1.1 million or 36.6% to $1.8 million for the three months ended June 30, 2025, from $2.9 million for the three months ended June 30, 2024, primarily as a result of the loss of a major customer.
70
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Compensation and benefits
Compensation and benefits decreased $0.9 million or (35.8)% to $1.6 million for the three months ended June 30, 2025, from $2.5 million for the three months ended June 30, 2024. The decrease was primarily a result of an increase in the allocation of CarStory resources to UACC.
Depreciation and amortization
Depreciation and amortization decreased $1.5 million or 92.9% to $0.1 million for the three months ended June 30, 2025 from $1.6 million for the three months ended June 30, 2024, primarily as a result lower intangible assets upon emergence from our Prepackaged Chapter 11 Case, leading to lower amortization expense in the current year period.
Adjusted net income (loss)
Adjusted net income (loss) increased $1.2 million or 111.6% to $0.1 million adjusted net income for the three months ended June 30, 2025 as compared to $(1.1) million adjusted net loss for the three months ended June 30, 2024 primarily due to lower depreciation and amortization expense as a result of lower intangible assets upon emergence from the Prepackaged Chapter 11 Case.
Corporate
|
Successor |
|
|
|
|
|
Predecessor |
|
|
|
|
|
|
|
||||
|
Three Months Ended June 30, |
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
||||
|
2025 |
|
|
|
|
|
2024 |
|
|
Change |
|
|
% Change |
|
||||
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|||||||
Interest expense |
$ |
— |
|
|
|
|
|
$ |
(527 |
) |
|
$ |
527 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized and unrealized losses, net of recoveries |
|
(1,422 |
) |
|
|
|
|
|
(853 |
) |
|
|
(569 |
) |
|
|
66.8 |
% |
Net interest loss after losses and recoveries |
|
1,422 |
|
|
|
|
|
|
325 |
|
|
|
1,096 |
|
|
|
336.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warranties and GAP loss, net |
|
(28 |
) |
|
|
|
|
|
(262 |
) |
|
|
234 |
|
|
|
89.3 |
% |
Other income |
|
54 |
|
|
|
|
|
|
853 |
|
|
|
(799 |
) |
|
|
(93.7 |
)% |
Total noninterest income |
|
26 |
|
|
|
|
|
|
591 |
|
|
|
(565 |
) |
|
|
(95.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits |
|
2,067 |
|
|
|
|
|
|
4,176 |
|
|
|
(2,109 |
) |
|
|
(50.5 |
)% |
Professional fees |
|
647 |
|
|
|
|
|
|
833 |
|
|
|
(186 |
) |
|
|
(22.3 |
)% |
Software and IT costs |
|
729 |
|
|
|
|
|
|
1,410 |
|
|
|
(681 |
) |
|
|
(48.3 |
)% |
Interest expense on corporate debt |
|
— |
|
|
|
|
|
|
920 |
|
|
|
(920 |
) |
|
|
(100.0 |
)% |
Other expenses |
|
544 |
|
|
|
|
|
|
1,852 |
|
|
|
(1,308 |
) |
|
|
(70.6 |
)% |
Total expenses |
|
3,987 |
|
|
|
|
|
|
9,191 |
|
|
|
(5,204 |
) |
|
|
(56.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for income taxes from continuing operations |
|
26 |
|
|
|
|
|
|
39 |
|
|
|
(13 |
) |
|
|
(33.3 |
)% |
Corporate activities do not constitute a reportable segment. These activities include costs not directly attributable to the segments and are primarily related to costs associated with corporate and governance functions, including executive functions, finance and accounting, legal, human resources, information technology, cyber security and other shared costs. Certain shared costs, including corporate administration, are allocated to segments based upon a specific allocation of expenses. Corporate activities also include the runoff of legacy Vroom warranty and GAP policies sold prior
71
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
to the Ecommerce Wind-Down as well as certain Vroom contracts, primarily Software and IT related, that have been renegotiated and right-sized to account for reduced headcount following the Ecommerce Wind-down.
Warranties and GAP loss, net
Prior to the Ecommerce Wind-Down, we offered value-added products to our customers pursuant to arrangements with the third parties that sell and administer these products as well as estimated profit-sharing amounts to which we are entitled based on the performance of third-party protection products once a required claims period has passed. A portion of the fees we received are subject to chargeback in the event of early termination, default, or prepayment of the contracts by our customers. Warranties and GAP loss, net recorded within Corporate, relates to the runoff of policies sold prior to the Ecommerce Wind-Down.
See “Note 3 — Revenue Recognition” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Warranties and GAP loss, net increased $0.3 million or 89.3% to income of $28 thousand for the three months ended June 30, 2025, from a loss of $0.3 million for the three months ended June 30, 2024, primarily as a result of a revised estimate of proceeds we expect to recover as a result of the Ecommerce Wind-Down that was recorded in the prior year period.
Other income
Other income primarily represents interest earned on cash and cash equivalents. Other income decreased $0.8 million or 93.7% to $0.1 million for the three months ended June 30, 2025, from $0.9 million for the three months ended June 30, 2024, primarily driven by lower cash and cash equivalent balances.
Compensation and benefits
Compensation and benefits expense decreased $2.1 million or 50.5% to $2.1 million for the three months ended June 30, 2025 from $4.2 million for the three months ended June 30, 2024, primarily as a result of lower expense due to the departure of certain key executives and retention bonuses granted to retain key employees paid out in the prior year period subsequent to the Ecommerce Wind-Down.
Professional fees
Professional fees decreased $0.2 million or 22.3% to $0.6 million for the three months ended June 30, 2025, from $0.8 million for the three months ended June 30, 2024.
Software and IT costs
Software and IT costs decreased $0.7 million or 48.3% to $0.7 million for the three months ended June 30, 2025, from $1.4 million for the three months ended June 30, 2024, primarily as a result of more efficient targeted software use as well as renegotiating and right-sizing our Software and IT contracts.
Interest expense on corporate debt
Interest expense on corporate debt decreased $0.9 million or 100.0% to none for the three months ended June 30, 2025, from $0.9 million for the three months ended June 30, 2024, primarily related to the extinguishment of our Notes that were converted to equity as part of our Prepackaged Chapter 11 Case.
Other expenses
Other expenses decreased $1.4 million or 70.6% to $0.5 million for the three months ended June 30, 2025 from $1.9 million for the three months ended June 30, 2024, primarily related to a decrease in public-company related insurance costs as we renegotiated our insurance policies as a result of the reduced scale of the business.
72
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Six Months Ended June 30, 2025 and 2024
UACC
|
Successor |
|
|
|
|
|
Predecessor |
|
|
Non-GAAP Combined |
|
|
Predecessor |
|
|
Non-GAAP |
|
|
Non-GAAP |
|
||||||
|
Period from January 15 through June 30, |
|
|
|
|
|
Period from January 1 through January 14, |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
|
|
|
|
|
|
||||||
|
2025 |
|
|
|
|
|
2025 |
|
|
2025 |
|
|
2024 |
|
|
Change |
|
|
% Change |
|
||||||
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest income |
$ |
82,905 |
|
|
|
|
|
$ |
7,254 |
|
|
$ |
90,159 |
|
|
$ |
103,930 |
|
|
$ |
(13,771 |
) |
|
|
(13.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Warehouse credit facility |
|
7,877 |
|
|
|
|
|
|
1,017 |
|
|
|
8,894 |
|
|
|
16,457 |
|
|
|
(7,563 |
) |
|
|
(46.0 |
)% |
Securitization debt |
|
16,431 |
|
|
|
|
|
|
1,178 |
|
|
|
17,609 |
|
|
|
12,864 |
|
|
|
4,745 |
|
|
|
36.9 |
% |
Total interest expense |
|
24,308 |
|
|
|
|
|
|
2,195 |
|
|
|
26,503 |
|
|
|
29,321 |
|
|
|
(2,818 |
) |
|
|
(9.6 |
)% |
Net interest income |
|
58,597 |
|
|
|
|
|
|
5,059 |
|
|
|
63,656 |
|
|
|
74,609 |
|
|
|
(10,953 |
) |
|
|
(14.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Realized and unrealized losses, net of recoveries |
|
33,612 |
|
|
|
|
|
|
7,647 |
|
|
|
41,259 |
|
|
|
47,343 |
|
|
|
(6,084 |
) |
|
|
(12.9 |
)% |
Net interest income (loss) after losses and recoveries |
|
24,985 |
|
|
|
|
|
|
(2,588 |
) |
|
|
22,397 |
|
|
|
27,266 |
|
|
|
(4,869 |
) |
|
|
(17.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Servicing income |
|
2,513 |
|
|
|
|
|
|
192 |
|
|
|
2,705 |
|
|
|
3,606 |
|
|
|
(901 |
) |
|
|
(25.0 |
)% |
Warranties and GAP income, net |
|
7,244 |
|
|
|
|
|
|
390 |
|
|
|
7,634 |
|
|
|
3,250 |
|
|
|
4,384 |
|
|
|
134.9 |
% |
Other income |
|
4,213 |
|
|
|
|
|
|
66 |
|
|
|
4,279 |
|
|
|
4,568 |
|
|
|
(289 |
) |
|
|
(6.3 |
)% |
Total noninterest income |
|
13,970 |
|
|
|
|
|
|
648 |
|
|
|
14,618 |
|
|
|
11,424 |
|
|
|
3,194 |
|
|
|
28.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Compensation and benefits |
|
31,137 |
|
|
|
|
|
|
2,398 |
|
|
|
33,535 |
|
|
|
39,327 |
|
|
|
(5,792 |
) |
|
|
(14.7 |
)% |
Professional fees |
|
4,502 |
|
|
|
|
|
|
172 |
|
|
|
4,674 |
|
|
|
1,451 |
|
|
|
3,223 |
|
|
|
222.1 |
% |
Software and IT costs |
|
4,774 |
|
|
|
|
|
|
367 |
|
|
|
5,141 |
|
|
|
5,702 |
|
|
|
(561 |
) |
|
|
(9.8 |
)% |
Depreciation and amortization |
|
1,107 |
|
|
|
|
|
|
817 |
|
|
|
1,924 |
|
|
|
11,651 |
|
|
|
(9,727 |
) |
|
|
(83.5 |
)% |
Interest expense on corporate debt |
|
1,178 |
|
|
|
|
|
|
85 |
|
|
|
1,263 |
|
|
|
1,100 |
|
|
|
163 |
|
|
|
14.8 |
% |
Impairment charges |
|
3,479 |
|
|
|
|
|
|
— |
|
|
|
3,479 |
|
|
|
2,752 |
|
|
|
727 |
|
|
|
26.4 |
% |
Other expenses |
|
3,822 |
|
|
|
|
|
|
262 |
|
|
|
4,084 |
|
|
|
5,577 |
|
|
|
(1,493 |
) |
|
|
(26.8 |
)% |
Total expenses |
|
49,999 |
|
|
|
|
|
|
4,101 |
|
|
|
54,100 |
|
|
|
67,560 |
|
|
|
(13,460 |
) |
|
|
(19.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Provision for income taxes from continuing operations |
|
39 |
|
|
|
|
|
|
— |
|
|
|
39 |
|
|
|
202 |
|
|
|
(163 |
) |
|
|
(80.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted net loss |
$ |
(6,168 |
) |
|
|
|
|
$ |
(5,910 |
) |
|
$ |
(12,078 |
) |
|
$ |
(24,795 |
) |
|
$ |
12,717 |
|
|
|
51.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stock compensation expense |
$ |
1,282 |
|
|
|
|
|
$ |
127 |
|
|
$ |
1,408 |
|
|
$ |
1,033 |
|
|
$ |
375 |
|
|
|
36.3 |
% |
Severance |
$ |
24 |
|
|
|
|
|
$ |
4 |
|
|
$ |
28 |
|
|
$ |
493 |
|
|
$ |
(465 |
) |
|
|
(94.4 |
)% |
Interest income
Interest income decreased $13.7 million, or 13.2%, to $90.2 million for the six months ended June 30, 2025, from $103.9 million for the six months ended June 30, 2024. This decrease was primarily a result of the accounting policy change which resulted in lower discount income as well as a decrease driven by a lower finance receivable balance. The loan portfolio decreased to $849.0 million as of June 30, 2025, from $880.6 million as of June 30, 2024.
Interest expense
73
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Interest expense decreased $2.8 million, or 9.6%, to $26.5 million for the six months ended June 30, 2025 from $29.3 million for the six months ended June 30, 2024, primarily as a result of lower interest expense incurred on the Warehouse Credit Facilities, which decreased $7.6 million to $8.9 million for the six months ended June 30, 2025 from $16.5 million for the three months ended June 30, 2024. The decrease was offset by higher interest expense incurred on securitization debt, which increased $4.7 million to $17.6 million for the six months ended June 30, 2025, from $12.9 million for the six months ended June 30, 2024. The decrease of interest expense incurred on the Warehouse Credit Facilities is attributable to a lower outstanding balance of $205.8 million as of June 30, 2025 as compared to $270.1 million as of June 30, 2024, due to repayments of the Warehouse Credit Facilities in connection with completion of the 2025-1 securitization, as well as a decrease in the weighted average interest rates, which decreased from 7.19% to 5.99% in the respective periods. The increase of interest expense incurred on securitization debt is attributable to a higher outstanding balance of $526.7 million as of June 30, 2025, as compared to $472.2 million as of June 30, 2024, as well as overall higher interest rates on securitization debt.
Realized and unrealized losses, net of recoveries
Realized and unrealized losses, net of recoveries, decreased by $6.0 million or 12.9% to $41.3 million for the six months ended June 30, 2025, from $47.3 million for the six months ended June 30, 2024, primarily driven by lower losses on finance receivables as well as discount income being recognized as a component of Realized and unrealized losses, net of recoveries.
Servicing income
Servicing income decreased by $0.9 million or 25.0% to $2.7 million for the six months ended June 30, 2025 from $3.6 million for the six months ended June 30, 2024, primarily driven by a lower balance of the 2022-1 securitization, which is accounted for as an off-balance sheet securitization.
Warranties and GAP income, net
Warranties and GAP income, net increased by $4.3 million or 134.9% to $7.6 million for the six months ended June 30, 2025, from $3.3 million for the six months ended June 30, 2024 primarily as a result of lower cancellation and claim losses, along with funding more contracts with GAP and warranty products and charging higher fees in the current year period.
Other income
Other income decreased $0.3 million or 6.3% to $4.3 million for the six months ended June 30, 2025, from $4.6 million for the six months ended June 30, 2024.
Compensation and benefits
Compensation and benefits decreased $5.8 million or 14.7% to $33.5 million for the six months ended June 30, 2025, from $39.3 million for the six months ended June 30, 2024. The decrease was primarily a result of lower salary expense as a result of fewer employees as we continue right-sizing our workforce, lower severance expense related to the termination of certain employees in the prior year period, and an increase in internal software capitalization as we continue to invest in building our technology assets.
Professional fees
Professional fees increased by $3.2 million or 222.1% to $4.7 million for the six months ended June 30, 2025, from $1.5 million for the six months ended June 30, 2024, primarily as a result of an increase in legal and audit services.
Software and IT costs
Software and IT costs decreased $0.6 million or 9.8% to $5.1 million for the six months ended June 30, 2025, from $5.7 million for the six months ended June 30, 2024, primarily as a result of more efficient targeted software use as well as renegotiating and right-sizing our Software and IT contracts.
74
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Depreciation and amortization
Depreciation and amortization decreased $9.8 million or 83.5% to $1.9 million for the six months ended June 30, 2025 from $11.7 million for the six months ended June 30, 2024, primarily as a result of lower intangible assets upon emergence from our Prepackaged Chapter 11 Case, leading to lower amortization expense in the current year period.
Impairment charges
Impairment charges increased $0.7 million or 26.4% to $3.5 million related to lease impairment charges incurred during the six months ended June 30, 2025, as compared to $2.8 million of capitalized internal-use software related impairment charges incurred during the six months ended June 30, 2024.
Other expenses
Other expenses decreased $1.5 million or 26.8% to $4.1 million for the six months ended June 30, 2025, from $5.6 million for the six months ended June 30, 2024, primarily as a result of changing the existing dealer incentives program and recording a loss on the repurchase of the non-investment grade securities related to the 2022-2 securitization transaction in the prior year period.
Adjusted net loss
Adjusted net loss decreased $12.7 million or 51.3% to $(12.1) million for the six months ended June 30, 2025, from $(24.8) million for the six months ended June 30, 2024, primarily as a result of a decrease of $13.5 million in expenses, which was in turn primarily driven by a $9.8 million decrease in depreciation and amortization expense, a $5.8 million decrease in compensation and benefits, a $6.0 million decrease in realized and unrealized losses, net of recoveries, an increase of $4.3 million in income from warranties and GAP products, and a decrease of $2.8 million in interest expense. These were partially offset by a $13.8 million decrease in interest income.
CarStory
75
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
Successor |
|
|
|
|
|
Predecessor |
|
|
Non-GAAP Combined |
|
|
Predecessor |
|
|
Non-GAAP |
|
|
Non-GAAP |
|
||||||
|
Period from January 15 through June 30, |
|
|
|
|
|
Period from January 1 through January 14, |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
|
|
|
|
|
|
||||||
|
2025 |
|
|
|
|
|
2025 |
|
|
2025 |
|
|
2024 |
|
|
Change |
|
|
% Change |
|
||||||
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|||||||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
CarStory revenue |
$ |
4,238 |
|
|
|
|
|
$ |
432 |
|
|
$ |
4,670 |
|
|
$ |
5,892 |
|
|
$ |
(1,222 |
) |
|
|
(20.7 |
)% |
Other income |
|
97 |
|
|
|
|
|
|
13 |
|
|
|
110 |
|
|
|
363 |
|
|
|
(253 |
) |
|
|
(69.7 |
)% |
Total noninterest income |
|
4,335 |
|
|
|
|
|
|
445 |
|
|
|
4,780 |
|
|
|
6,255 |
|
|
|
(1,475 |
) |
|
|
(23.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Compensation and benefits |
|
2,941 |
|
|
|
|
|
|
326 |
|
|
|
3,267 |
|
|
|
4,674 |
|
|
|
(1,407 |
) |
|
|
(30.1 |
)% |
Professional fees |
|
(67 |
) |
|
|
|
|
|
13 |
|
|
|
(54 |
) |
|
|
202 |
|
|
|
(256 |
) |
|
|
(126.7 |
)% |
Software and IT costs |
|
3 |
|
|
|
|
|
|
2 |
|
|
|
5 |
|
|
|
188 |
|
|
|
(183 |
) |
|
|
(97.3 |
)% |
Depreciation and amortization |
|
210 |
|
|
|
|
|
|
240 |
|
|
|
450 |
|
|
|
3,207 |
|
|
|
(2,757 |
) |
|
|
(86.0 |
)% |
Other expenses |
|
274 |
|
|
|
|
|
|
20 |
|
|
|
294 |
|
|
|
173 |
|
|
|
121 |
|
|
|
69.9 |
% |
Total expenses |
|
3,361 |
|
|
|
|
|
|
601 |
|
|
|
3,962 |
|
|
|
8,444 |
|
|
|
(4,482 |
) |
|
|
(53.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Provision for income taxes from continuing operations |
|
49 |
|
|
|
|
|
|
5 |
|
|
|
54 |
|
|
|
67 |
|
|
|
(13 |
) |
|
|
(19.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income (loss) |
$ |
963 |
|
|
|
|
|
$ |
(153 |
) |
|
$ |
810 |
|
|
$ |
(1,980 |
) |
|
$ |
2,790 |
|
|
|
140.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stock compensation expense |
$ |
30 |
|
|
|
|
|
$ |
8 |
|
|
$ |
38 |
|
|
$ |
276 |
|
|
$ |
(238 |
) |
|
|
(86.3 |
)% |
CarStory revenue
CarStory revenue decreased $1.2 million or 20.7% to $4.7 million for the six months ended June 30, 2025, from $5.9 million for the six months ended June 30, 2024 primarily as a result of a change in the scope of service and data provided to our customers, and the loss of a major customer.
Compensation and benefits
Compensation and benefits decreased $1.4 million or 30.1% to $3.3 million for the six months ended June 30, 2025, from $4.7 million for the six months ended June 30, 2024. The decrease was primarily a result of an increase in the allocation of CarStory resources to UACC.
Depreciation and amortization
Depreciation and amortization decreased $2.7 million or 86.0% to $0.5 million for the six months ended June 30, 2025 from $3.2 million for the six months ended June 30, 2024, primarily as a result lower intangible assets upon emergence from our Prepackaged Chapter 11 Case, leading to lower amortization expense in the current year period.
Adjusted net income (loss)
Adjusted net income (loss) increased $2.8 million or 140.9% to $0.8 million for the six months ended June 30, 2025 as compared to $2.0 million for the six months ended June 30, 2024 primarily due to lower depreciation and amortization expense as a result of lower intangible assets upon emergence from the Prepackaged Chapter 11 Case and lower compensation and benefits of $1.4 million, which were offset by lower noninterest income of $1.5 million.
76
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Corporate
|
Successor |
|
|
|
|
|
Predecessor |
|
|
Non-GAAP Combined |
|
|
Predecessor |
|
|
Non-GAAP |
|
|
Non-GAAP |
|
||||||
|
Period from January 15 through June 30, |
|
|
|
|
|
Period from January 1 through January 14, |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
|
|
|
|
|
|
||||||
|
2025 |
|
|
|
|
|
2025 |
|
|
2025 |
|
|
2024 |
|
|
Change |
|
|
% Change |
|
||||||
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest income (expense) |
$ |
— |
|
|
|
|
|
$ |
(71 |
) |
|
$ |
(71 |
) |
|
$ |
(991 |
) |
|
$ |
920 |
|
|
|
92.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Realized and unrealized losses (gains), net of recoveries |
|
(3,012 |
) |
|
|
|
|
|
(855 |
) |
|
|
(3,867 |
) |
|
|
2,205 |
|
|
|
(6,072 |
) |
|
|
(275.4 |
)% |
Net interest income after losses and recoveries |
|
3,012 |
|
|
|
|
|
|
784 |
|
|
|
3,796 |
|
|
|
(3,196 |
) |
|
|
6,992 |
|
|
|
218.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noninterest (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Warranties and GAP income (loss), net |
|
480 |
|
|
|
|
|
|
(83 |
) |
|
|
397 |
|
|
|
(11,514 |
) |
|
|
11,911 |
|
|
|
103.4 |
% |
Other income |
|
238 |
|
|
|
|
|
|
34 |
|
|
|
272 |
|
|
|
994 |
|
|
|
(722 |
) |
|
|
(72.6 |
)% |
Total noninterest (loss) income |
|
718 |
|
|
|
|
|
|
(49 |
) |
|
|
669 |
|
|
|
(10,520 |
) |
|
|
11,189 |
|
|
|
106.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Compensation and benefits |
|
3,080 |
|
|
|
|
|
|
99 |
|
|
|
3,179 |
|
|
|
7,285 |
|
|
|
(4,106 |
) |
|
|
(56.4 |
)% |
Professional fees |
|
2,925 |
|
|
|
|
|
|
112 |
|
|
|
3,037 |
|
|
|
3,178 |
|
|
|
(141 |
) |
|
|
(4.4 |
)% |
Software and IT costs |
|
1,045 |
|
|
|
|
|
|
88 |
|
|
|
1,133 |
|
|
|
2,768 |
|
|
|
(1,635 |
) |
|
|
(59.1 |
)% |
Interest expense on corporate debt |
|
— |
|
|
|
|
|
|
91 |
|
|
|
91 |
|
|
|
1,840 |
|
|
|
(1,749 |
) |
|
|
(95.1 |
)% |
Impairment expense |
|
677 |
|
|
|
|
|
|
— |
|
|
|
677 |
|
|
|
— |
|
|
|
677 |
|
|
|
100.0 |
% |
Other expenses |
|
1,106 |
|
|
|
|
|
|
89 |
|
|
|
1,195 |
|
|
|
3,666 |
|
|
|
(2,471 |
) |
|
|
(67.4 |
)% |
Total expenses |
|
8,833 |
|
|
|
|
|
|
479 |
|
|
|
9,312 |
|
|
|
18,737 |
|
|
|
(9,425 |
) |
|
|
(50.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Provision for income taxes from continuing operations |
|
121 |
|
|
|
|
|
|
— |
|
|
|
121 |
|
|
|
— |
|
|
|
121 |
|
|
|
100.0 |
% |
Warranties and GAP income (loss), net
Warranties and GAP income (loss), net increased $11.9 million or 103.4% to income of $0.4 million for the six months ended June 30, 2025, from a loss of $11.5 million for the six months ended June 30, 2024, primarily as a result of a revised estimate of proceeds we expect to recover as a result of the Ecommerce Wind-Down that was recorded in the prior year period.
Other income
Other income decreased $0.7 million or 72.6% to $0.3 million for the six months ended June 30, 2025, from $1.0 million for the six months ended June 30, 2024, primarily driven by lower cash and cash equivalent balances.
Compensation and benefits
Compensation and benefits expense decreased $4.1 million or (56.4)% to $3.2 million for the six months ended June 30, 2025 from $7.3 million for the six months ended June 30, 2024, primarily as a result of lower expense due to the departure of certain key executives and retention bonuses granted to retain key employees paid out in the prior year period subsequent to the Ecommerce Wind-Down.
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VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Software and IT costs
Software and IT costs decreased $1.7 million or 59.1% to $1.1 million for the six months ended June 30, 2025, from $2.8 million for the six months ended June 30, 2024, primarily as a result of more efficient targeted software use as well as renegotiating and right-sizing our Software and IT contracts.
Interest expense on corporate debt
Interest expense on corporate debt decreased $1.7 million or 95.1% to $0.1 million for the six months ended June 30, 2025, from $1.8 million for the six months ended June 30, 2024, due to the extinguishment of our Notes that were converted to equity as part of our Prepackaged Chapter 11 Case.
Other expenses
Other expenses decreased $2.5 million or 67.4% to $1.2 million for the six months ended June 30, 2025 from $3.7 million for the six months ended June 30, 2024, primarily related to a decrease in public-company related insurance costs as we renegotiated our insurance policies as a result of the reduced scale of the business.
Liquidity and Capital Resources
On January 14, 2025, we emerged from the Prepackaged Chapter 11 Case, as discussed above under "Recent Events". On the Effective Date, each holder of the Notes received a pro rata share of 92.94% of the New Common Stock (subject to dilution) and all of the Company’s outstanding obligations under the Notes and the Indenture were deemed fully satisfied and discharged. Vroom, Inc. no longer has long-term debt, but UACC has debt in connection with its securitizations, Warehouse Credit Facilities, risk retention financing facility for its beneficial interests in securitizations and its trust preferred securities.
As of June 30, 2025, we had cash and cash equivalents of $14.3 million and restricted cash of $52.9 million. Restricted cash primarily includes restricted cash required under UACC's securitization transactions and Warehouse Credit Facilities of $52.0 million. Prior to the Ecommerce Wind-Down, our primary source of liquidity was cash generated through financing activities. Additionally, we had excess borrowing capacity of $16.6 million under UACC's Warehouse Credit Facilities as of June 30, 2025 and $25.0 million available under our Delayed Draw Facility (as defined below).
We expect to use our cash and cash equivalents to finance our future capital requirements and UACC’s Warehouse Credit Facilities to fund our finance receivables. Certain advance rates available to UACC on borrowings from the Warehouse Credit Facilities have decreased and any future decreases on available advance rates may have an adverse impact on our liquidity.
UACC relies on borrowings under the Warehouse Credit Facilities to finance the origination of finance receivables as well as to provide funding for general operating activities. The terms of those facilities generally mature within one to two years and we typically renew those facilities in the ordinary course. In March 2025, we renewed two of our Warehouse Credit Facilities, Facility Two and Facility Four, with an aggregate borrowing capacity of $400 million, now expiring in June 2026 and April 2027, respectively. Warehouse Credit Facility One, which had a borrowing capacity of $200.0 million, expired on July 21, 2025, pursuant to its terms, and we elected not to renew this commitment on the basis that borrowing capacity from our other Warehouse Credit Facilities is sufficient to support our current operational needs. Following the expiration of Warehouse Credit Facility One, UACC now has three senior secured Warehouse Credit Facilities. We expect to renew Warehouse Credit Facility Three prior to its expiration on August 29, 2025. There can be no assurance that adequate additional financing will be available to us on acceptable terms, or at all. Failure to retain sufficient warehouse borrowing capacity would have a material adverse effect on our ability to finance UACC’s lending operations and our results of operations and liquidity. Refer to Note 10 — Warehouse Credit Facilities and Consolidated VIEs to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.
On March 8, 2025, Vroom, Inc., UACC and its indirect subsidiary Darkwater Funding LLC, as co-borrowers, entered into a credit agreement with Mudrick Capital Management, L.P. (“Lender”), who as of January 14, 2025 was a 76.5% shareholder of the Company, for a $25.0 million delayed draw term loan facility (“Delayed Draw Facility”). The
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VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Delayed Draw Facility allows for multiple drawdowns by each co-borrower, subject to satisfaction of usual and customary conditions precedent. The Delayed Draw Facility bears interest at a rate of Term SOFR +850 bps, payable quarterly in arrears, with a full payment-in-kind option. Interest is also payable upon any payment of principal. The co-borrowers’ obligations under the Delayed Draw Facility will be collateralized by asset backed residual certificates in certain UACC securitization trusts. The Delayed Draw Facility matures on December 31, 2026; however, borrowings can be prepaid at any time, in whole or in part, without penalty or premium. Once amounts are repaid they may not be reborrowed. The Delayed Draw Facility includes certain usual and customary covenants with respect to the co-borrowers’ activities and the collateral.
Upon our emergence from bankruptcy on January 14, 2025, we continue to operate as a viable going concern. The accompanying audited consolidated financial statements have been prepared on the basis that we will continue to operate as a going concern, which contemplates that we will be able to realize assets and settle liabilities and commitments in the normal course of business for twelve months following the issuance date.
Our future capital requirements will depend on many factors, including our ability to realize the intended benefits of the Value Maximization Plan, Prepackaged Chapter 11 Case, and our Long-Term Strategic Plan, available advance rates on and the renewal of the Warehouse Credit Facilities, our ability to meet the requirements for continued listing on the Nasdaq Global Market, our ability to complete additional securitization transactions on favorable terms, and future credit losses. We anticipate that our existing cash and cash equivalents, our credit agreement with Mudrick Capital Management L.P., and UACC's Warehouse Credit Facilities will be sufficient to support our ongoing operations and obligations for at least the next twelve months from the issuance date of this Quarterly Report on Form 10-Q.
Securitization Transactions
Subject to market conditions, we plan to sell finance receivables originated by UACC through asset-backed securitization transactions. During the first quarter of 2025, UACC completed the 2025-1 securitization transaction, in which it issued approximately $307.8 million of rated asset-backed securities in an auto finance receivable securitization transaction from a securitization trust, established and sponsored by UACC for proceeds of $306.5 million. The trust is collateralized by finance receivables with an aggregate principal balance of $382.1 million as of March 12, 2025. These finance receivables are serviced by UACC and UACC receives an "at market" servicing fee. UACC retained the residual interests, which required us to account for the 2025-1 securitization as secured borrowings and the assets and liabilities of the trust remain on balance sheet.
Finance receivables are serviced by UACC. UACC retains at least 5% of the notes and residual certificates sold as required by applicable risk retention rules and generally uses the proceeds of the securitization transactions to pay down outstanding debt under its Warehouse Credit Facilities.
Refer to Note 4 — Variable Interest Entities and Securitizations to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, for further discussion.
Risk Retention Financing Facility
On May 3, 2023, UACC entered into a Risk Retention Financing Facility enabling it to finance a portion of the asset-backed securities issued in its securitization transactions and held by UACC pursuant to applicable risk retention rules. Under this facility, UACC sells such retained interests and agrees to repurchase them at fair value on a future date. As of June 30, 2025, UACC pledged $31.7 million of its retained beneficial interests as collateral, and the outstanding borrowings related to this risk retention financing facility were $26.8 million with expected repurchase dates ranging from June 2027 to October 2031. The securitization trusts will distribute payments related to UACC's pledged beneficial
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VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
interests in securitizations directly to the lenders, which will reduce the beneficial interests in securitizations and the related debt balance.
Warehouse Credit Facilities
As of June 30, 2025, UACC has four senior secured Warehouse Credit Facilities with banking institutions. The Warehouse Credit Facilities are collateralized by eligible finance receivables and available borrowings are computed based on a percentage of eligible finance receivables.
In March 2025, we renewed Facility Two, now expiring in June 2026. The aggregate borrowing limit and significant terms of the agreement remained unchanged except for an increase in the minimum liquidity covenant. In March 2025, we also renewed Facility Four, now expiring in April 2027. The aggregate borrowing limit under this facility decreased from $225.0 million to $200.0 million and all other significant terms of the agreement remained unchanged. Warehouse Credit Facility One, which had a borrowing capacity of $200.0 million, expired on July 21, 2025, pursuant to its terms, and we elected not to renew this commitment on the basis that borrowing capacity from our other Warehouse Credit Facilities is sufficient to support our current operational needs. Following the expiration of Warehouse Credit Facility One, UACC now has three senior secured Warehouse Credit Facilities. We expect to renew Warehouse Credit Facility Three prior to its expiration on August 29, 2025.
The aggregate borrowing limit under the Warehouse Credit Facilities as of June 30, 2025 was $800.0 million, and as of the date of this Quarterly Report on Form 10-Q was $600.0 million. Our ability to utilize the Warehouse Credit Facilities is primarily conditioned on the satisfaction of certain legal, operating, administrative and financial covenants contained within the agreements. These include covenants that require UACC to maintain a minimum tangible net worth, minimum liquidity levels, and specified leverage ratios. Failure to satisfy these and or any other requirements contained within the agreements would restrict access to or cause us to be in default of the terms of the Warehouse Credit Facilities and could have a material adverse effect on our financial condition, results of operations and liquidity. Certain breaches of covenants or events of default may also result in acceleration of the repayment of borrowings prior to the scheduled maturity. As of June 30, 2025, outstanding borrowings related to the Warehouse Credit Facilities were $205.8 million and we were in compliance with all covenants under the terms of the Warehouse Credit Facilities. Refer to Note 10 —
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VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Warehouse Credit Facilities of Consolidated VIEs to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, for further discussion.
Cash Flows from Operating, Investing, and Financing Activities
The following table summarizes our cash flows for the six months ended June 30, 2025 and 2024:
|
|
|
Successor |
|
|
|
|
Predecessor |
|
|
Non-GAAP Combined |
|
|
Predecessor |
|
||||
|
|
|
Period from January 15 through June 30, |
|
|
|
|
Period from January 1 through January 14, |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
||||
|
|
|
2025 |
|
|
|
|
2025 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
||||
Net cash provided by (used in) operating activities from continuing operations |
|
$ |
|
35,245 |
|
|
|
$ |
|
(5,804 |
) |
$ |
|
29,441 |
|
$ |
|
(125,997 |
) |
Net cash (used in) provided by investing activities from continuing operations |
|
|
|
(66,927 |
) |
|
|
|
|
2,981 |
|
|
|
(63,946 |
) |
|
|
66,018 |
|
Net cash provided by (used in) financing activities from continuing operations |
|
|
|
37,496 |
|
|
|
|
|
(13,898 |
) |
|
|
23,598 |
|
|
|
20,282 |
|
Net cash (used in) provided by operating activities from discontinued operations |
|
|
|
(729 |
) |
|
|
|
|
(207 |
) |
|
|
(936 |
) |
|
|
82,820 |
|
Net cash provided by investing activities from discontinued operations |
|
|
|
637 |
|
|
|
|
|
— |
|
|
|
637 |
|
|
|
10,834 |
|
Net cash used in financing activities from discontinued operations |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
(151,178 |
) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
|
5,722 |
|
|
|
|
|
(16,928 |
) |
|
|
(11,206 |
) |
|
|
(97,221 |
) |
Cash and cash equivalents and restricted cash at beginning of period |
|
|
|
61,441 |
|
|
|
|
|
78,369 |
|
|
|
78,369 |
|
|
|
208,819 |
|
Cash and cash equivalents and restricted cash at end of period |
|
$ |
|
67,163 |
|
|
|
$ |
|
61,441 |
|
$ |
|
67,163 |
|
$ |
|
111,598 |
|
Operating Activities
Net cash flows provided by (used in) operating activities from continuing operations increased by $155.4 million, from $(126.0) million net cash utilized in operating activities for the six months ended June 30, 2024 to $29.4 million net cash provided by operating activities for the six months ended June 30, 2025. The reduction of cash used in operating activities was primarily due to a $217.3 million decrease in originations of finance receivables held for sale. As a result of emerging from the Prepackaged Chapter 11 Case and applying fresh start accounting, our finance receivables are originated and accounted for as held for investment at fair value and are classified as investing activities prospectively. The increase in net cash flows provided by operating activities was also due to a $13.4 million improvement in net income (loss) from continuing operations after reconciling adjustments, offset by an decrease in principal payments received on finance receivables held for sale of $79.4 million.
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VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Investing Activities
Net cash flows provided by (used in) investing activities from continuing operations decreased by $129.9 million, from $66.0 million net cash provided by investing activities for the six months ended June 30, 2024 to $(63.9) million net cash utilized in investing activities for the six months ended June 30, 2025. The decrease in cash provided by investing activities was primarily due to a $223.1 million increase in originations of finance receivables held for investment, offset by a $96.0 million increase in principal payments received on finance receivables at fair value as compared to the six months ended June 30, 2024. As a result of emerging from the Prepackaged Chapter 11 Case and applying fresh start accounting, our finance receivables are originated and accounted for as held for investment at fair value and are classified as investing activities prospectively.
Financing Activities
Net cash flows provided by financing activities from continuing operations increased by $3.3 million, from $20.3 million for the six months ended June 30, 2024, to $23.6 million for the six months ended June 30, 2025. The increase was primarily related to an $11.2 million increase in net cash flows from the borrowings under secured financing agreements related to the 2025-1 securitization, offset by a $4.4 million and $2.2 million decrease in net cash flows related to higher repayments on our Warehouse Credit Facilities and secured financing agreements, respectively, as compared to the six months ended June 30, 2024.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses and related disclosures. On an ongoing basis, we evaluate our estimates, including, among others, those related to finance receivables, income taxes, stock-based compensation, contingencies, warranties and GAP income-related reserves, fair value measurements and useful lives of property and equipment and intangible assets. We base our estimates on historical experience, market conditions and on various other assumptions that are believed to be reasonable. Actual results may differ from these estimates.
The critical accounting policies that reflect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements include those described in Note 2—Summary of Significant Accounting Policies and Note 3—Revenue Recognition to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Except as described below, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.
Bankruptcy
We applied FASB Codification Topic 852, Reorganizations ("ASC 852") in preparing the consolidated financial statements starting on the Prepackaged Chapter 11 Case petition date. ASC 852 requires the financial statements, for the periods subsequent to the petition date and up to and including the Effective Date, which includes the period of emergence from Chapter 11 to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain charges incurred during the bankruptcy proceedings, such as legal and professional fees incurred directly as a result of the bankruptcy proceeding, the write-off of deferred financing costs and discount on debt subject to compromise and other related charges are recorded as Reorganization items, net in the Consolidated Statements of Operations and Comprehensive Loss.
In connection with our emergence from the Prepackaged Chapter 11 Case and in accordance with ASC Topic 852, we qualified for and adopted fresh start accounting on the Effective Date. We were required to adopt fresh start accounting because (i) the holders of existing voting shares of the Predecessor received less than 50% of the voting shares of the Successor Company, and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims. In accordance with ASC Topic 852, with the application of fresh start accounting, we allocated the reorganization value to our individual assets and liabilities (except for deferred
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Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
income taxes) based on their estimated fair values in conformity with ASC Topic 805, Business Combinations. The amount of deferred taxes was determined in accordance with ASC Topic 740, Income Taxes. The Effective Date fair values of our assets and liabilities differed materially from their recorded values as reflected on the historical balance sheets. Refer to Note 6 – Fresh Start Accounting for further details.
The results of our analysis indicated that the principal assets requiring fair value adjustments on the Effective Date included finance receivables held for sale, identified intangible assets and leased assets. The finance receivables held for sale include both finance receivables that are held in a collateralized financing entity ("CFE") and those that are not held in a CFE.
Fresh Start Accounting
Finance Receivables at Fair Value
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, we made an accounting policy election to elect the fair value option for all finance receivables held for sale, net. The finance receivables held for sale, net were reclassified to finance receivables at fair value. The valuation of finance receivables at fair value, for which we elected the fair value option in accordance with ASC 825 but are not related to consolidated CFEs, is derived from a model that estimates the present value of future cash flows. We estimate the present value of these future cash flows using a valuation model consisting of developed estimates that rely on unobservable assumptions third-party market participants would use in determining fair value, including prepayment speed, default rate, recovery rate, as well as certain macroeconomics events we believe market participants would consider relevant. All these assumptions are primarily based on historical performance. These valuation models are calculated by combining similarly priced loans and vintages to determine a stream of expected cash flows which are then discounted. The individual discounted pools of cash flows are then aggregated to determine the total expected discounted cash flows on the outstanding receivable at a given measurement period.
The estimates for the aforementioned assumptions significantly affect the reported amount (and changes thereon) of our finance receivables at fair value on our consolidated balance sheets and consolidated statements of operations.
Financial assets and liabilities of CFEs
Upon emergence from the Prepackaged Chapter 11 Case, and application of fresh start accounting, we made an accounting policy election to apply the measurement alternative to the 2024-1 consolidated CFE.
We are required to determine whether the fair value of the financial assets or the fair value of the financial liabilities of the 2024-1 CFE are more observable, but in either case, the methodology results in the fair value of the financial assets of the securitization trust being equal to the fair value of their liabilities. We determined that the fair value of the liabilities of the 2024-1 securitization CFE are more observable, since market prices of their liabilities are based on non-binding quoted prices provided by broker dealers who make markets in similar financial instruments. The assets of the 2024-1 securitization CFE are not readily marketable, and their fair value measurement requires information that may be limited in availability.
In determining the fair value of the 2024-1 securitization debt, the broker dealers consider contractual cash payments and yields expected by market participants. Broker dealers also incorporate common market pricing methods, including a spread measurement to the treasury curve or interest rate swap curve as well as underlying characteristics of the particular security including ratings, coupon, collateral type and seasoning or age of the security. When we obtain prices from multiple broker dealers for the same security and have a consensus among them, we deem these fair values to be based on observable valuation inputs and classified as Level 2 of the fair value hierarchy. Where a third-party broker dealer quote is not available, an internal model is utilized using unobservable inputs or if we have multiple quotes that are not within determined range, we classify the securitization debt as Level 3 of the fair value hierarchy.
The financial assets of the 2024-1 consolidated CFE are an aggregate value derived from the fair value of the CFEs liabilities. We determined that finance receivables, in the 2024-1 CFE, in their entirety should be classified as Level 3 of the fair value hierarchy.
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VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Intangible Assets
The identified intangible assets of $14.2 million, which principally consisted of technology, trade names and trademarks, and customer relationships were estimated based on either the cost approach, relief from royalty or multi-period excess earnings methods. Significant assumptions for identified intangibles included royalty rates, discount rates, margins, attrition rates, revenue growth rates, and economic lives. Such fair value measurement of intangible assets is considered Level 3 of the fair value hierarchy.
For the technology-based intangibles that were valued using the relief from royalty income approach, the royalty rate was estimated to be 5.0% and the discount rate 25%. For the technology-based intangibles that were valued using the cost approach, the margin was estimated to be 8.5%. For trade names and trademarks valued under the relief from royalty income approach, the royalty rate was estimated to be 0.5% and the discount rate 25%. For customer related intangible assets that were valued using the multi-period excess earnings method, the attrition rate was estimated to be 10% and the discount rate 25%.
Lease Liabilities and Right of Use Assets
The present value of lease liabilities was measured as the present value of the remaining lease payments, as if the leases were new leases as of the Effective Date. We used our incremental borrowing rate (“IBR”) as the discount rate in determining the present value of the remaining lease payments using a fundamental credit rating analysis. Based upon the corresponding lease terms, the IBRs ranged between approximately 6.2% - 7.6%. Right of use asset values were estimated based on the lease liability.
Recently Issued and Adopted Accounting Pronouncements
Refer to “Note 2 — Summary of Significant Accounting Policies” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a discussion about new accounting pronouncements adopted and not yet adopted as of the date of this report.
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VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Item 3. Quantitative and Qualitative Disclosure About Market Risk
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item 3.
Item 4. Controls and Procedures
Limitations on effectiveness of controls and procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2025.
Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of June 30, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarterly period ended June 30, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are subject to legal proceedings in the normal course of operating our business and an unfavorable resolution of any of these matters could materially affect the Company's future results of operations, cash flows or financial position. The outcome of litigation, regardless of the merits, is inherently uncertain.
On November 13, 2024, we commenced a voluntary proceeding (the "Prepackaged Chapter 11 Case") under Chapter 11 of the United States Code, 11 U.S.C. §§ 101-1532, as amended from time to time (the "Bankruptcy Code"), in the United States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court") under the name In re Vroom, Inc., Case No. 24-90571 (CML).
On January 8, 2025, the Bankruptcy Court entered an order (a) approving our disclosure statement, (b) confirming the Prepackaged Plan of Reorganization of Vroom, Inc. under Chapter 11 of the Bankruptcy Code (the "Plan"), and (c) granting related relief. On January 14, 2025, the conditions to the effectiveness of the Plan were satisfied or waived and the Plan became effective, and we emerged from the Prepackaged Chapter 11 Case.
Beginning in March 2021, multiple putative class actions were filed in the U.S. District Court for the Southern District of New York by certain of the Company’s stockholders against the Company and certain of the Company’s officers alleging violations of federal securities laws. The lawsuits were captioned Zawatsky et al. v. Vroom, Inc. et al., Case No. 21-cv-2477; Holbrook v. Vroom, Inc. et al., Case No. 21-cv-2551; and Hudda v. Vroom, Inc. et al., Case No. 21-cv-3296. All three of the lawsuits asserted similar claims under Sections 10(b) and 20(a) of the Exchange Act, and SEC Rule 10b-5. In each case, the named plaintiff(s) sought to represent a proposed class of all persons who purchased or otherwise acquired the Company’s securities during a period from June 9, 2020 to March 3, 2021 (in the case of Holbrook and Hudda), or November 11, 2020 to March 3, 2021 (in the case of Zawatsky). In August 2021, the Court consolidated the cases under the new name In re: Vroom, Inc. Securities Litigation, Case No. 21-cv-2477, appointed a lead plaintiff and lead counsel and ordered a consolidated amended complaint to be filed. The court-appointed lead plaintiff subsequently filed a consolidated amended complaint that reasserts claims under Sections 10(b) and 20(a) of the Exchange Act, and SEC Rule 10b-5 against the Company and certain of the Company’s officers, and added new claims under Sections 11, 12 and 15 of the Securities Act against the Company, certain of its officers, certain of its directors, and the underwriters of the Company’s September 2020 secondary offering. On March 19, 2025, the Court entered an order granting Vroom's motion to dismiss all claims, and the plaintiffs elected not to file a motion to amend their complaint. Thereafter, on May 30, 2025, the Court entered a final judgment of dismissal, for which the time period to appeal has expired. Accordingly, the cases have been closed.
In August 2021, November 2021, January 2022, and February 2022, various Company stockholders filed purported shareholder derivative lawsuits on behalf of the Company in the U.S. District Court for the Southern District of New York against certain of the Company’s officers and directors, and nominally against the Company, alleging violations of the federal securities laws and breaches of fiduciary duty to the Company and/or related violations of Delaware law based on the same general course of conduct alleged in In re: Vroom, Inc. Securities Litigation. All four lawsuits have been consolidated under the case caption In re Vroom, Inc. Shareholder Derivative Litigation, Case No. 21-cv-6933, and the court has approved the parties’ stipulation that the cases would remain stayed pending final resolution of In re: Vroom, Inc. Securities Litigation. The stockholders who filed these lawsuits have voluntarily dismissed their claims and these cases have been closed.
In April 2022 and April 2024, two of the Company’s stockholders filed separate purported shareholder derivative lawsuits on behalf of the Company in the U.S. District Court for the District of Delaware against certain of the Company’s officers and directors, and nominally against the Company, alleging violations of the federal securities law and breaches of fiduciary duty to the Company and/or related violations of Delaware law based on the same general course of conduct alleged in In re: Vroom, Inc. Securities Litigation. The case filed in April 2022 is captioned Godlu v. Hennessy et al., Case No. 22-cv-569, the case filed in April 2024 is captioned Hudda v. Hennessy et al. Case No. 24-cv-4499., and the court in each has approved the parties’ stipulations that each case would remain stayed pending final resolution of In re: Vroom, Inc. Securities Litigation. The stockholders who filed these lawsuits have voluntarily dismissed their claims and these cases have been closed.
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VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
In April 2022, the Attorney General of Texas filed a petition on behalf of the State of Texas in the District Court of Travis County, Texas against the Company, alleging violation of the Texas Deceptive Trade Practices − Consumer Protection Act, Texas Business and Commerce Code § 17.41 et seq., based on alleged deficiencies and other issues in the Company’s marketing of used vehicles and fulfillment of customer orders, including the titling and registration of sold vehicles. According to the petition, 80% of the customer complaints referenced in the petition were received in the 12 months prior to April 2022. The petition is captioned State of Texas v. Vroom Automotive LLC, and Vroom Inc., Case No. D-1-GN-001809. In May 2022, Vroom Automotive, LLC and the Attorney General of the State of Texas agreed to a temporary injunction in which Vroom Automotive, LLC agreed to adhere to its existing practice of possessing title for all vehicles it sells or advertises as available for sale on its ecommerce platform. In December 2023, Vroom, Inc., Vroom Automotive, LLC and the Attorney General of the State of Texas reached a final agreement to resolve all claims in the petition, without any admission of wrongdoing by either Vroom entity. Under the agreement, the Company agreed to pay a total of $2 million in civil penalties and $1 million in attorneys' fees, with the first half due in September 2024 and the remaining half due in September 2025, and abide permanently by an injunction of certain operational practices that were previously implemented.
As previously disclosed, we have been subject to audits, requests for information, investigations and other inquiries from our regulators. These regulatory matters could continue to progress into legal proceedings as well as enforcement actions. We have incurred fines in certain states and could continue to incur fines, penalties, restitution, or alterations in our business practices, which in turn, could lead to increased business expenses, additional limitations on our business activities and further reputational damage, although to date such expenses have not had a material adverse effect on the Company’s financial condition, cash flows, or results of operations.
Item 1A. Risk Factors
Our operations and financial results are subject to various risks and uncertainties including those disclosed under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to our risk factors described in our Annual Report. If any of those risks or others not specified materialize, our business, financial condition and results of operations could be materially and adversely affected. In that case, the trading price of our common stock could decline and you could lose all or part of your investment in our common stock.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a) Disclosure in lieu of reporting on a Current Report on Form 8-K.
None.
(b) Material changes to the procedures by which security holders may recommend nominees to the board of directors
None.
(c) Insider Trading Arrangements and Policies
87
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VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
During the three months ended June 30, 2025, no director or officer of the Company
Item 6. Exhibits
INDEX TO EXHIBITS
Exhibit Number |
|
Exhibit Description |
|
Form |
|
File No. |
|
Exhibit |
|
Filing Date |
|
Filed Herewith |
Furnished Herewith |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1 |
|
Agreement and Plan of Merger, dated as of October 11, 2021, by and among Vroom, Inc., Vroom Finance Corporation, Unitas Holdings Corp. and Fortis Advisors LLC, solely in its capacity as the equityholders' representative |
|
8-K |
|
001-39315 |
|
2.1 |
|
October 12, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.2 |
|
Prepackaged Plan of Reorganization for Vroom, Inc. Under Chapter 11 of the Bankruptcy Code |
|
8-K |
|
001-39315 |
|
2.1 |
|
January 15, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
Restated Certificate of Incorporation of Vroom, Inc. |
|
10-K |
|
001-39315 |
|
3.2
|
|
March 11, 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2 |
|
Certificate of Change of Registered Agent and/or Registered Office. |
|
10-K
|
|
001-39315 |
|
3.1
|
|
March 11, 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.3 |
|
Amended and Restated Bylaws of Vroom, Inc. |
|
8-K |
|
001-39315 |
|
3.2 |
|
January 15, 2025
|
|
|
|
4.1 |
|
Eighth Amended and Restated Investors’ Rights Agreement, dated as of November 21, 2019, by and among Vroom, Inc. and certain holders of its capital stock |
|
S-1/A |
|
333-238482 |
|
4.2 |
|
May 18, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1 |
|
Warehouse Agreement, dated as of November 18, 2022, by and among VFS Near Prime Trust I, as borrower, United Auto Credit Corporation, as servicer and custodian, a paying agent, the lender parties thereto, and Fifth Third, National Association, as administrative agent, as amended on March 28, 2025 |
|
10-Q |
|
001-39315 |
|
10.6 |
|
May 14, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2 |
|
Purchase Agreement by and between United Auto Credit Financing LLC, as purchaser, and United Auto Credit Corporation, as seller, dated as of February 28, 2025 |
|
10-Q |
|
001-39315
|
|
10.8 |
|
May 14, 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
10.3# |
|
Indenture, dated as of February 28, 2025, by and between United Auto Credit Securitization Trust 2025-1 and Computershare Trust Company, N.A. |
|
10-Q |
|
001-39315 |
|
10.9# |
|
May 14, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4# |
|
Amended and Restated Trust Agreement by and among United Auto Financing LLC, as depositor, Computershare Trust Company, N.A., as certificate registrar and certificate paying agent, and Computershare Delaware Trust Company, as owner trustee, dated as of February 28, 2025 |
|
10-Q
|
|
001-39315
|
|
10.10# |
|
May 14, 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5 |
|
Custodian Agreement by and between United Auto Credit Corporation, as custodian, and Computershare Trust Company, N.A., as indenture trustee, dated as of February 28, 2025 |
|
10-Q |
|
001-39315
|
|
10.11 |
|
May 14, 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6 |
|
Sale and Servicing Agreement by and among United Auto Credit Securitization Trust 2025-1, as issuer, United Auto Credit Financing LLC, as depositor, United Auto Credit Corporation, as servicer, and Computershare Trust Company, N.A., as backup servicer and indenture trustee, dated as of February 28, 2025 |
|
10-Q |
|
001-39315 |
|
10.12 |
|
May 14, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7 |
|
Letter Agreement, dated as of May 12, 2025, by and between Jonathan Sandison and Vroom Inc.
|
|
10-Q |
|
001-39315 |
|
10.13 |
|
May 14, 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8 |
|
Separation Agreement, dated as of May 15, 2025, between Agnieszka Zakowicz and Vroom, Inc. |
|
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1 |
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2 |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section |
|
|
|
|
|
|
|
|
|
X |
|
89
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
|
302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1 |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2 |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document |
|
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
|
|
|
|
|
|
|
|
X |
|
# Certain portions of this exhibit (indicated by "[***]") have been omitted pursuant to Regulation S-K, Item (601)(b)(10).
90
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
Vroom, Inc. |
|
|
|
|
|
Date: August 7, 2025 |
|
By: |
/s/ Thomas H. Shortt |
|
|
|
Thomas H. Shortt |
|
|
|
Chief Executive Officer |
|
|
|
(principal executive officer) |
|
|
|
|
|
|
|
|
Date: August 7, 2025 |
|
By: |
/s/ Jonathan Sandison |
|
|
|
Jonathan Sandison |
|
|
|
Chief Financial Officer |
|
|
|
(principal financial officer) |
91
