Vroom (NASDAQ: VRM) logs Q1 2026 loss as funding and credit risks loom
Vroom, Inc. reports a Q1 2026 net loss attributable to common shareholders of $19.6 million, or $3.77 per share, as it operates post‑restructuring with a new capital structure. Interest income was $42.5 million, largely from UACC’s auto finance receivables portfolio.
Total assets were $937.8 million as of March 31, 2026, including finance receivables at fair value of $804.6 million, cash of $14.5 million and restricted cash of $59.2 million. Long‑term debt totaled $578.0 million, primarily $551.0 million of securitization debt, plus $159.5 million drawn on warehouse credit facilities.
Vroom emerged from a prepackaged Chapter 11 case in January 2025 and adopted fresh start accounting, making pre‑ and post‑emergence periods not comparable. The company has three warehouse credit facilities with an aggregate borrowing limit of $600.0 million and $14.9 million of excess capacity, and expects renewals but highlights that failure to extend or meet covenants could materially affect liquidity. Common shares outstanding were 5,206,492 as of March 31, 2026 and 5,207,627 as of May 12, 2026.
Positive
- None.
Negative
- Ongoing losses and funding dependence. Vroom posted a Q1 2026 net loss of $19.6 million and explicitly warns that failure to renew or comply with covenants on its $600.0 million of warehouse credit facilities would have a material adverse effect on its financial condition, results of operations and liquidity.
Insights
Post‑bankruptcy Vroom remains loss‑making with meaningful funding risk.
Vroom has transitioned to a pure financing and data business through UACC and CarStory after winding down ecommerce. Q1 2026 generated $42.5 million of interest income, but credit losses and operating expenses drove a net loss of $19.6 million.
The balance sheet is now equity‑positive with $98.4 million of stockholders’ equity after the prepackaged Chapter 11 and fresh start accounting. However, leverage is high: securitization debt at fair value is $551.0 million, warehouse borrowings are $159.5 million, and cash is only $14.5 million with $59.2 million restricted.
Liquidity depends heavily on renewing $600.0 million of warehouse credit facilities maturing between June 2026 and April 2027 and maintaining covenant compliance. Management states it expects amendments and renewals at sufficient capacity, but also discloses that failure to extend or comply would have a material adverse effect on financial condition, results and liquidity.
Key Figures
Key Terms
Prepackaged Chapter 11 Case regulatory
fresh start accounting financial
variable interest entities financial
warehouse credit facilities financial
securitization debt financial
CarStory technical
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) |
|
(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 Exchange Act). Yes ☐ No
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes
As of May 12, 2026,
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 March 31, 2026 and December 31, 2025 (unaudited) |
5 |
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Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 (unaudited) |
6 |
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Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders' Equity for the Three Months Ended March 31, 2026 and 2025 (unaudited) |
8 |
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Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (unaudited) |
9 |
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Notes to Condensed Consolidated Financial Statements (unaudited) |
11 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
60 |
Item 3. |
Quantitative and Qualitative Disclosure About Market Risk |
69 |
Item 4. |
Controls and Procedures |
69 |
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Part II - Other information |
70 |
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Item 1. |
Legal Proceedings |
70 |
Item 1A. |
Risk Factors |
70 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
71 |
Item 3. |
Defaults Upon Senior Securities |
71 |
Item 4. |
Mine Safety Disclosures |
71 |
Item 5. |
Other Information |
71 |
Item 6. |
Exhibits |
72 |
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Signatures |
75 |
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, inflation, interest rates, Federal Reserve monetary policy, vehicle depreciation, international conflicts, energy price and supply chain disruptions, our ability to continue as a going concern and the sufficiency of our existing cash, 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) and the ongoing activities of and potential growth of our UACC and CarStory businesses, our Long-Term Strategic Plan (as defined herein), the amendment and renewal of the Warehouse Credit Facilities (as defined herein), availability and maturity of the Delayed Draw Facility, the Delayed Draw Notes and the 2030 Notes (each as defined herein), the Vroom Automotive Preferred Units (as defined herein), including distributions, conversion rights and redemption, our plans to optimize our dealer network and grow our automotive financing business, including through our Near-Prime Program, our technology initiatives, including our automated underwriting decision engine, custom credit-scoring model, Fast Lane dealer portal and AI-powered servicing tools, regulatory matters, seasonal fluctuations in our results of operations, our ability to reduce operating expenses and achieve profitability at UACC, CarStory revenue expectations, 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.
As used in this Quarterly Report on Form 10-Q, “Prepackaged Chapter 11 Case” refers to our filing of the voluntary proceeding under the Bankruptcy Code to be commenced by us in the United States Bankruptcy Court for the Southern District of Texas.
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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As of |
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As of |
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2026 |
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2025 |
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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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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, MEZZANINE EQUITY 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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Related party line of credit (Note 19) |
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Long-term debt (including securitization debt of consolidated VIEs of $ |
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Related party note (Note 19) |
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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 from discontinued operations |
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Total liabilities |
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Commitments and contingencies (Note 12) |
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Mezzanine equity |
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Preferred units, |
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— |
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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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Total liabilities, mezzanine equity 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 March 31, |
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Period from January 15 through March 31, |
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Period from January 1 through January 14, |
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2026 |
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2025 |
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2025 |
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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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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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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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( |
) |
Reorganization items, net |
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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 (loss) income from continuing operations |
$ |
( |
) |
|
$ |
( |
) |
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$ |
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|
Net (loss) income from discontinued operations |
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Net (loss) income |
$ |
( |
) |
|
$ |
( |
) |
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|
$ |
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|
Preferred stock dividends attributable to noncontrolling interests of subsidiary |
$ |
( |
) |
|
$ |
|
|
|
$ |
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||
Net (loss) income attributable to controlling interest and common shareholders |
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
|
|
(Continued on following page)
6
Table of Contents
VROOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(in thousands, except share and per share amounts)
(unaudited)
|
Successor |
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|
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Predecessor |
|
||||||
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Three months ended March 31, |
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Period from January 15 through March 31, |
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Period from January 1 through January 14, |
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2026 |
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2025 |
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2025 |
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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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( |
) |
||
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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Diluted |
$ |
( |
) |
|
$ |
( |
) |
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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.
7
Table of Contents
VROOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
(unaudited)
|
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Mezzanine Equity |
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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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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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$ |
— |
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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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— |
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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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— |
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— |
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||
Elimination of Predecessor equity balances |
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— |
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— |
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( |
) |
|
|
( |
) |
|
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( |
) |
|
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( |
) |
|
Issuance of successor equity |
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— |
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— |
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— |
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Issuance of stock warrants |
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— |
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— |
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— |
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— |
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— |
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||
Balance at January 14, 2025 (Predecessor) |
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|
— |
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$ |
— |
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$ |
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$ |
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|
$ |
— |
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$ |
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||||
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|||||||
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Mezzanine Equity |
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Common Stock |
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Additional |
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Total |
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|||||||||||||
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Shares |
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Amount |
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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) |
|
|||||||
Successor: |
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Balance at January 15, 2025 (Successor) |
|
|
— |
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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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||
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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|
|
— |
|
|
|
— |
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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, 2025 (Successor) |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Mezzanine Equity |
|
|
|
Common Stock |
|
|
Additional |
|
|
|
|
|
Total |
|
|||||||||||||
|
|
Shares |
|
|
Amount |
|
|
|
Shares |
|
|
Amount |
|
|
Paid-in Capital |
|
|
Accumulated Deficit |
|
|
Equity (Deficit) |
|
|||||||
Balance at December 31, 2025 (Successor) |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
Preferred units issued to noncontrolling interests of subsidiary, net of issuance costs |
|
|
|
|
$ |
|
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
||
Preferred stock dividends attributable to noncontrolling interests of subsidiary |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Vesting of restricted stock units |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at March 31, 2026 (Successor) |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
8
Table of Contents
VROOM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
Successor |
|
|
|
Predecessor |
|
||||||
|
|
Three months ended March 31, |
|
|
Period from January 15 through March 31, |
|
|
|
Period from January 1 through January 14, |
|
|||
|
|
2026 |
|
|
2025 |
|
|
|
2025 |
|
|||
Operating activities |
|
|
|
|
|
|
|
|
|
|
|||
Net (loss) income from continuing operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
|
|
Adjustments to reconcile net (loss) income to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
|||
Impairment charges |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|||
Losses on finance receivables and securitization debt, net |
|
|
|
|
|
|
|
|
|
|
|||
Losses on Warranties and GAP |
|
|
|
|
|
|
|
|
|
|
|||
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|||
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 provided by (used in) 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 |
|
|
( |
) |
|
|
( |
) |
|
|
|
( |
) |
Proceeds from preferred units issued to noncontrolling interests of subsidiary, net of issuance costs |
|
|
|
|
|
— |
|
|
|
|
— |
|
|
Other financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
— |
|
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)
9
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 |
|
$ |
— |
|
|
$ |
— |
|
|
|
$ |
|
|
Accrued and unpaid preferred stock dividends attributable to noncontrolling interests of subsidiary |
|
$ |
|
|
$ |
— |
|
|
|
$ |
— |
|
|
Cash paid for income taxes, net of (refunds) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
— |
|
See accompanying notes to these unaudited condensed consolidated financial statements.
10
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"). In February 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 unsecured Convertible Senior Notes due 2026 (the “2026 Notes”) 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 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). None of Vroom, Inc.’s subsidiaries were debtors in the Chapter 11 proceedings.
11
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 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
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, 2025, 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 notes included in the Annual Report on Form 10-K for the year ended December 31, 2025.
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 normal recurring adjustments necessary for the fair statement of the Company’s condensed consolidated balance sheet as of March 31, 2026, 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 March 31, 2025, are not necessarily indicative of the results expected for the current fiscal year or any other future periods.
12
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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
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.
Finance receivables for which the fair value option was elected under ASC 825 are classified as finance receivables at fair value.
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
13
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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.
Consolidated CFEs
The Company's securitization transactions are consolidated collateralized financing entities (CFEs) that are VIEs. Refer to Note 4 — Variable Interest Entities and Securitizations for further details.
|
|
Successor |
|
|
|
Predecessor |
|
||||||
|
|
Three months ended March 31, |
|
|
Period from January 15 through March 31, |
|
|
|
Period from January 1 through January 14, |
|
|||
|
|
2026 |
|
|
2025 |
|
|
|
2025 |
|
|||
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.
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 2026 Notes received a pro rata share of
As of March 31, 2026, the Company had cash and cash equivalents of $
14
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 March 31, 2026, UACC has
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 delayed draw term loan facility (“Delayed Draw Facility”), which matures on
On August 29, 2025, the Company issued $
On November 25, 2025, Vroom, Inc. entered into a Note Purchase Agreement with Robert J. Mylod, Jr., the Independent Executive Chair of the board of directors of the Company. Pursuant to the Note Purchase Agreement, the Company issued Senior Secured Delayed Draw Notes due 2026 (the “Delayed Draw Notes”) in a maximum aggregate principal commitment amount of $
The accompanying 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 Prepackaged Chapter 11 Case and Long-Term Strategic Plan, available advance rates on and the renewal of the Warehouse Credit Facilities and delayed draw facility, 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 delayed draw facility, the delayed draw notes, 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.
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
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax
15
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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 Company
Accounting Standards Issued but Not Yet Adopted
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 consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of ASU 2025-06 on the consolidated financial statements.
In April 2026, the FASB issued ASU 2026-01, Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock. The amendments in this update improve GAAP by providing authoritative guidance for the initial measurement of PIK dividends on equity-classified preferred stock. Specifically, the amendments improve the decision usefulness of the financial reporting information provided to investors by (1) enhancing the comparability of financial information reported among entities that issue PIK dividends on equity-classified preferred stock and (2) providing additional information about the liquidation value of the preferred stock, which helps investors to understand the amount and preference of relative claims on an entity. The amendments also provide clear, cost-effective guidance that will
reduce complexity. ASU 2026-01 is effective for fiscal years beginning after December 15, 2026, and for interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of ASU 2026-01 on the consolidated financial statements.
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.
16
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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.
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 administer 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 March 31, 2026, and December 31, 2025, 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 March 31, 2026, and December 31, 2025, 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
17
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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.
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.
On February 5, 2026, UACC completed the 2026-1 securitization transaction, in which it issued approximately $
During the three months ended March 31, 2025, UACC completed the 2025-1 securitization transaction, in which it sold approximately $
18
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
UACC is the primary beneficiary of all securitization trusts, excluding 2022-1, 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 asset-backed securitization transactions 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. All of the consolidated securitization trusts meet the definition of a CFE and the Company has elected to apply the measurement alternative when consolidating these VIEs. Refer to Note 15 — Financial Instruments and Fair Value Measurements for further details.
UACC has three senior secured warehouse credit facilities as of March 31, 2026. Through trusts, UACC entered into warehouse facility agreements with certain banking institutions, primarily to finance the purchase and origination of finance receivables as well as to provide funding for general operating activities. These trusts are secured by eligible finance receivables which are pledged as collateral for the warehouse facilities. These trusts are consolidated VIEs. Refer to Note 10 — Warehouse Credit Facilities of Consolidated VIEs for further details.
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.
19
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
|
As of March 31, 2026 |
|
|||||||||
|
|
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 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
As of December 31, 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 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
1 Refer to Note 10 – Warehouse Credit Facilities of Consolidated VIEs for further details.
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 months ended March 31, 2024, the Company reported the ecommerce operations and used vehicle dealership business as discontinued operations.
20
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):
|
|
Three months ended March 31, |
|
|
Period from January 15 through March 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
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):
|
|
As of |
|
|
As of |
|
||
|
|
2026 |
|
|
2025 |
|
||
ASSETS |
|
|
|
|
|
|
||
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Other assets |
|
|
|
|
|
|
||
Assets from discontinued operations |
|
$ |
|
|
$ |
|
||
LIABILITIES |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued expenses |
|
|
|
|
|
|
||
Liabilities from discontinued operations |
|
$ |
|
|
$ |
|
||
21
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 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
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
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 will allocate 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.
22
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.
Based on the estimates and assumptions discussed below, the Company estimated the Successor’s equity value to be $
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.
23
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Intangible Assets
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):
24
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.
25
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
26
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Reorganization items, net in the Company's Condensed Consolidated Statements of Operations.
|
|
|
Predecessor |
|
|
|
|
|
Period from January 1 through January 14, |
|
|
|
|
|
2025 |
|
|
Net gain on settlement of debt |
|
|
$ |
|
|
Net loss on fresh start adjustments |
|
|
|
( |
) |
Net loss on reorganization adjustment of other assets |
|
|
|
( |
) |
Debt valuation adjustments |
|
|
|
— |
|
Professional fees |
|
|
|
( |
) |
Total reorganization items, net |
|
|
$ |
|
|
7. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
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 $
8. Intangible Assets, Net
Intangible assets, net consisted of the following (in thousands):
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||||||||||||||||
|
|
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 |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
27
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Amortization expense for intangible assets was $
The estimated amortization expense for intangible assets subsequent to March 31, 2026, consists of the following (in thousands):
Year Ending December 31: |
|
|
|
|
For remainder of 2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Thereafter |
|
|
|
|
|
|
$ |
|
|
9. Other Liabilities
The Company’s other liabilities consisted of the following (in thousands):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
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 |
|
$ |
|
|
$ |
|
||
28
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
10. Warehouse Credit Facilities of Consolidated VIEs
UACC has three senior secured warehouse facility agreements (the “Warehouse Credit Facilities”), through consolidated VIEs, with banking institutions as of March 31, 2026. The Warehouse Credit Facilities are collateralized by eligible finance receivables and available borrowings are computed based on a percentage of eligible finance receivables. As of March 31, 2026 and December 31, 2025, the Company had excess borrowing capacity of $
The terms of the Warehouse Credit Facilities include the following (in thousands):
|
|
Facility One |
|
|
Facility Two |
|
|
Facility Three |
|
|||
Execution date |
|
|
|
|
|
|
||||||
Commitment termination date |
|
|
|
|
|
|
||||||
Aggregate borrowings limit |
|
$ |
|
|
$ |
|
|
$ |
|
|||
As of March 31, 2026 |
|
|
|
|
|
|
|
|
|
|||
Aggregate principal balance of finance receivables pledged as collateral |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Outstanding balance |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Restricted cash |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
As of December 31, 2025 |
|
|
|
|
|
|
|
|
|
|||
Aggregate principal balance of finance receivables pledged as collateral |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Outstanding balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Restricted cash |
|
$ |
|
|
$ |
|
|
$ |
|
|||
As of March 31, 2026, and December 31, 2025, the Company's weighted average interest rate on the Warehouse Credit Facilities borrowings was approximately
During 2025 the Company renewed three of its previous four Warehouse Credit Facilities. The significant terms of the agreements remained unchanged except for certain reductions in advance rates and increases in minimum liquidity and tangible net worth requirements as well as a decrease of the aggregate borrowing limit under one of the facilities 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 March 31, 2026, and December 31, 2025, the Company was in compliance with all covenants related to the Warehouse Credit Facilities.
29
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):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Securitization debt of consolidated VIEs at fair value |
|
$ |
|
|
$ |
|
||
Financing of beneficial interest in securitizations |
|
|
|
|
|
|
||
Junior subordinated debentures |
|
|
|
|
|
|
||
Total debt |
|
$ |
|
|
$ |
|
||
Securitization Debt of Consolidated VIEs
The securitization debt was issued under UACC's securitization program. The Company elected to account for the securitization debt under the fair value option using the measurement alternative. 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 all securitization transactions, excluding 2022-1, 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 all securitization transactions, excluding 2022-1 and 2022-2. 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.
30
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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 March 31, 2026 |
|
|||||||||||||||
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-D |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2023-1-E |
|
|
|
|
|
% |
|
|
|
|
|
|||||
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 |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2026-1-A |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2026-1-B |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2026-1-C |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2026-1-D |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2026-1-E |
|
|
|
|
|
% |
|
|
|
|
|
|||||
Total rated notes at fair value |
|
|
|
$ |
|
|
|
|
$ |
|
|
$ |
|
|||
31
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
As of December 31, 2025 |
|
|||||||||||||||
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-D |
|
|
|
|
|
% |
|
|
|
|
|
|||||
United Auto Credit 2023-1-E |
|
|
|
|
|
% |
|
|
|
|
|
|||||
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 |
|
|
|
$ |
|
|
|
|
$ |
|
|
$ |
|
|||
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 $
The aggregate principal balance and the net carrying value of finance receivables pledged to the securitization debt consists of the following (in thousands):
|
|
As of March 31, |
|
|
As of December 31, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United Auto Credit 2026-1 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total finance receivables of CFEs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(1) For the Successor period, net carrying value is equal to fair value. |
|
|||||||||||||||
Financing of Beneficial Interests in Securitizations
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 March 31, 2026, UACC pledged $
32
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
debt balance. Pledged collateral levels are monitored and are generally maintained at an agreed-upon percentage of the fair value of the amounts borrowed during the life of the transactions. In the event of a decline in the fair value of the pledged collateral, UACC may be required to transfer cash or additional securities as pledged under this facility. At the termination of this agreement, UACC is obligated to return the amounts borrowed.
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. 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.
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 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.
33
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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 March 31, 2026, and December 31, 2025, there was
Common Stock
Effective as of January 14, 2025, the Company amended its certificate of incorporation to authorize the issuance of up to
Vroom Automotive Redeemable Preferred Stock
On January 16, 2026, Vroom Automotive, LLC, a Delaware limited liability company and an indirect subsidiary of Vroom, Inc., holding intellectual property licenses and other financial assets, authorized and issued to SPE Holdings 2026-1, a Delaware statutory trust (“SPE Holdings”),
As a result of the transaction, Vroom Inc. holds
The Series B Preferred Units are convertible into common units of Vroom Automotive at the option of the Counterparty at any time. The Series A Preferred Units are not convertible. The Vroom Automotive Preferred Units are redeemable at the holder’s option by providing written notice at least ninety days prior to the applicable redemption dates. The Series A Redemption Date is
The holders of each unit of the Series B Preferred Units are entitled to
In the event of a liquidation, dissolution or winding up of Vroom Automotive LLC, either voluntary or involuntary, or in the event of a deemed liquidation event, Series A Preferred Units are paid their respective full liquidation amount in preference to the holders of Series B Preferred Units or common units. After payment in full of the Liquidation Amount to the holders of Series A Preferred Units, holders of Series B Preferred Units are entitled to receive, in preference to all holders of common units, their respective full liquidation amount. After payment in full of the liquidation preferences of the Vroom Automotive Preferred Units, any remaining assets shall be distributed ratably to the holders of common units.
34
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The Company classifies the Vroom Automotive Preferred Units as mezzanine equity within the Company’s consolidated balance sheets because the instruments contain redemption rights and liquidation features, including a liquidation preference in the event of a deemed liquidation event, that are not solely within the Company’s control.
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
Stock Options
The stock-based compensation expense related to stock options was $
On March 12, 2025,
35
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
RSUs
The stock-based compensation expense related to RSUs was $
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. Additionally, the Company elected the fair value option for the financial assets and liabilities of UACC’s consolidated CFEs, beneficial interests in the 2022-1 securitization transaction and certain other finance receivables. 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. 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.
36
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following tables present the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands):
|
|
As of March 31, 2026 |
|
|||||||||||||
|
|
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 |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
As of December 31, 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 |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
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 consolidated CFEs in order to mitigate potential accounting mismatches between the carrying value of the financial assets and liabilities. To eliminate 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. 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.
37
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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.
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 1, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Transfer within Level 3 categories |
|
|
|
|
|
( |
) |
|
|
— |
|
|
Transfers into Level 3 |
|
|
— |
|
|
|
— |
|
|
|
|
|
Losses included in realized and unrealized losses |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Losses included in Warranties and GAP |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Issuances, net of discount |
|
|
— |
|
|
|
|
|
|
— |
|
|
Paydowns |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Other |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Fair value as of March 31, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|||||||||||
38
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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 March 31, 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 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
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. During the three months ended March 31, 2026, transfers into Level 3 liabilities related to not achieving consensus pricing from third-party broker dealers on the 2022-2 E rated notes related to the securitization debt of consolidated CFEs.
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 (in thousands):
|
Successor |
|
|
|
Predecessor |
|
||||||
|
Three months ended March 31, |
|
|
Period from January 15 through March 31, |
|
|
|
Period from January 1 through January 14, |
|
|||
|
2026 |
|
|
2025 |
|
|
|
2025 |
|
|||
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" |
$ |
|
|
$ |
|
|
|
$ |
|
|||
39
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following table presents other relevant data related to the finance receivables carried at fair value (in thousands):
As of March 31, 2026 |
|
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) |
|
$ |
|
|
|
$ |
|
|
||
As of December 31, 2025 |
|
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 March 31, 2026 |
|
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, 2025 |
|
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 |
|
$ |
|
|
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, Financing of Beneficial Interests in Securitizations, and related party lines of credit were 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.
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 March 31, 2026 and December 31, 2025 and are classified within Level 3 of the fair value hierarchy.
Convertible Senior Notes: The fair value of the 2030 Notes, which are not carried at fair value on the Company's consolidated balance sheets, approximated their carrying value as of March 31, 2026 and December 31, 2025.
40
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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
The Company is 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 officer (“CEO”). During the period from January 15, 2025, to March 31, 2025, the CODM changed the 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.
41
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 |
|
||||||||||||||||||||||||
|
Three months ended March 31, |
|
|
|
Period from January 15 through March 31, |
|
||||||||||||||||||||
|
2026 |
|
|
|
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 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 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Preferred stock dividends attributable to noncontrolling interests of subsidiary |
|
( |
) |
|
— |
|
|
— |
|
|
( |
) |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted net income (loss) |
$ |
( |
) |
$ |
( |
) |
|
|
|
|
|
|
$ |
( |
) |
$ |
|
|
|
|
|
|||||
42
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
|
Predecessor |
|
||||||||||
|
Period from January 1 through January 14, |
|
||||||||||
|
2025 |
|
||||||||||
|
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 |
|
— |
|
|
|
|
— |
|
|
|
||
|
|
|
|
|
|
|
|
|
||||
Preferred stock dividends attributable to noncontrolling interests of subsidiary |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Adjusted net loss |
$ |
( |
) |
$ |
( |
) |
|
|
|
|
||
43
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The reconciliation between reportable segment Adjusted net (loss) income to consolidated loss from continuing operations as follows (in thousands):
|
|
Successor |
|
|
|
Predecessor |
|
||||||
|
|
Three months ended March 31, |
|
|
Period from January 15 through March 31, |
|
|
|
Period from January 1 through January 14, |
|
|||
|
|
2026 |
|
|
2025 |
|
|
|
2025 |
|
|||
Adjusted net income (loss) |
|
|
|
|
|
|
|
|
|
|
|||
UACC |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
( |
) |
CarStory |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Total |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Stock compensation expense |
|
|
( |
) |
|
|
( |
) |
|
|
|
( |
) |
Severance expense |
|
|
— |
|
|
|
( |
) |
|
|
|
( |
) |
Impairment charges |
|
|
— |
|
|
|
( |
) |
|
|
|
— |
|
Corporate income (loss) from continuing operations |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
Reorganization items |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Preferred stock dividends attributable to noncontrolling interests of subsidiary |
|
|
|
|
|
— |
|
|
|
|
— |
|
|
Net (loss) income 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.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law. The OBBBA includes, among other provisions, changes affecting (i) the deductibility and/or amortization of domestic research or experimental expenditures for taxable years beginning after December 31, 2024, (ii) the timing and availability of certain clean energy tax incentives (including an accelerated phase-out for certain credits for projects beginning after June 30, 2026), and (iii) certain international tax rules impacting foreign income and the calculation of Foreign-Derived Intangible Income (“FDII”), among other cross-border considerations. The Company evaluated the relevant provisions of the OBBBA and determined that the OBBBA did not have a material impact on the Company’s consolidated financial statements.
The Company’s effective tax rate from continuing operations 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 2019 and prior. The Company is not currently under audit for any U.S. federal or state income tax audits.
The Company has
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
44
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 U.S. 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 March 31, |
|
|
Period from January 15 through March 31, |
|
|
|
Period from January 1 through January 14, |
|
|||
(in thousands, except share and per share amounts) |
|
2026 |
|
|
2025 |
|
|
|
2025 |
|
|||
Net (loss) income from continuing operations |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
|
|
Net income (loss) from discontinued operations |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
Net (loss) income |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
|
|
Preferred stock dividends attributable to noncontrolling interests of subsidiary |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
||
Net (loss) income attributable to controlling interest and common shareholders |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|||
45
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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 March 31, |
|
|
|
As of January 14, |
|
||||||
|
|
2026 |
|
|
2025 |
|
|
|
2025 |
|
|||
Convertible 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 2026 Notes |
|
|
|
|
Diluted |
|
|
|
|
Potentially dilutive common shares assumed conversion of debt using the if-converted method.
19. Related Party Transactions
Related Party Line of Credit
On March 8, 2025, Vroom, Inc., UACC and its indirect subsidiary Darkwater Funding LLC, as co-borrowers, entered into a credit agreement for a $
On November 25, 2025, Vroom, Inc. entered into a Note Purchase Agreement with Robert J. Mylod, Jr., the Independent Executive Chair of the board of directors of the Company. Pursuant to the Note Purchase Agreement, the Company issued the Delayed Draw Notes in a maximum aggregate principal commitment amount of $
Related Party Convertible Notes due 2030
46
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
On August 29, 2025, the Company issued the 2030 Notes. The 2030 Notes were issued pursuant to a Note Purchase Agreement with Annox Capital, LLC and Robert J. Mylod, Jr, the Managing Partner of Annox Capital, LLC and the Independent Executive Chair of the board of directors of the Company.
The 2030 Notes bear interest at a rate of
Each $
The Company may settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.
If the Company undergoes a fundamental change (as defined in the Note Purchase Agreement), subject to certain conditions, holders of the 2030 Notes may require the Company to repurchase for cash all or any portion of the 2030 Notes at a repurchase price equal to the principal amount of the 2030 Notes plus any accrued and unpaid interest. In addition, if specific corporate events occur prior to the maturity date or if the Company issues a notice of redemption, the Company will increase the conversion rate by pre-defined amounts for a holder who elects to convert their 2030 Notes in connection with such a corporate event.
The Company accounts for the 2030 Notes as a single liability-classified instrument measured at amortized cost. As of March 31, 2026 and December 31, 2025, the net carrying value was $
The 2030 Notes were issued at par value and fees associated with the issuance of these 2030 Notes were immaterial. The interest expense was $
19. Subsequent Event
On May 14, 2026, the Company entered into an Exchange and Subscription Agreement (the “Exchange Agreement”) with the investors party thereto and a collateral agent, pursuant to which the Company agreed to co-issue, as joint and several obligations, up to $
47
Table of Contents
VROOM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The outstanding notes to be exchanged consist of $
The Notes bear interest at
The Exchange Agreement and the Notes provide for a delayed draw facility under which Additional Notes may be issued from time to time up to the remaining commitment amount, subject to specified funding conditions. The Company, on behalf of the Company, or the investors may elect to fund under the facility, with subsequent draws funded pro rata by the holders and evidenced by separate Additional Notes. The proceeds of any Additional Notes issued after the closing are required to be used for working capital and other general corporate purposes of the Company.
The conversion price for each Note will equal
Upon a fundamental change, holders may require the Company to repurchase their Notes for the principal amount to be repurchased plus accrued and unpaid interest. The Notes also require mandatory ratable redemption in specified circumstances, including certain non-permitted asset sales, casualty or condemnation events, debt issuances and liens, subject to the exceptions and limitations set forth in the Notes.
48
Table of Contents
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, 2025 (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
Exchange Agreement
On May 14, 2026, the Company entered into an Exchange and Subscription Agreement (the “Exchange Agreement”) with the investors party thereto and a collateral agent, pursuant to which the Company agreed to co-issue, as joint and several obligations, up to $50.0 million aggregate principal amount of Senior Secured Delayed Draw Convertible Notes due 2032 (the “Notes”). At the closing, certain investors will exchange $28.5 million aggregate principal amount of outstanding notes of the Company, together with accrued and unpaid interest thereon through the closing date, for Notes to be issued by the Company, leaving $21.5 million of remaining delayed draw commitments under the facility. The outstanding notes to be exchanged consist of $10.0 million of 5.000% Convertible Senior Notes due 2030, $10.5 million of Senior Secured Delayed Draw Notes due 2026 and $8.0 million of notes outstanding under the delayed draw term loan facility with Mudrick Capital Management, L.P. Upon delivery for cancellation at the closing, the outstanding notes will be cancelled and the liens securing such notes will be released, discharged and terminated.
The Notes bear interest at 5.0% per annum, payable quarterly, and mature on June 30, 2032. The Notes are secured by a first priority lien on substantially all assets of the Company, subject to permitted liens, and rank senior in right of payment to all unsecured indebtedness and junior lien indebtedness of each Issuer.
The Exchange Agreement and the Notes provide for a delayed draw facility under which Additional Notes may be issued from time to time up to the remaining commitment amount, subject to specified funding conditions. The Company, on behalf of the Company, or the investors may elect to fund under the facility, with subsequent draws funded pro rata by the holders and evidenced by separate Additional Notes. The proceeds of any Additional Notes issued after the closing are required to be used for working capital and other general corporate purposes of the Company.
The conversion price for each Note will equal 120% of the applicable reference price, determined at signing for Notes issued at the closing and at the applicable funding notice date for any Additional Notes. Subject to specified limitations, holders may convert their Notes on and after April 1, 2032, and the Notes may also become convertible in connection with certain specified corporate events. The Company may settle conversions in shares of common stock, cash or a combination thereof.
Upon a fundamental change, holders may require the Company to repurchase their Notes for the principal amount to be repurchased plus accrued and unpaid interest. The Notes also require mandatory ratable redemption in specified circumstances, including certain non-permitted asset sales, casualty or condemnation events, debt issuances and liens, subject to the exceptions and limitations set forth in the Notes.
Issuance of Preferred Stock Units
On January 16, 2026, Vroom Automotive, LLC, a Delaware limited liability company and an indirect subsidiary of Vroom Inc. issued to SPE Holdings 2026-1, a Delaware statutory trust (“SPE Holdings”), 15,000 newly issued Series A preferred units and 7,500 newly issued Series B preferred units (collectively, the "Vroom Automotive Preferred Units") for aggregate gross proceeds of $22.5 million, pursuant to a Preferred Unit Purchase Agreement.
49
Table of Contents
The Vroom Automotive Preferred Units will be entitled to receive a quarterly preferential distribution, equal to the liquidation preference of such Vroom Automotive Preferred Units multiplied by a variable distribution rate, which will reset on each quarterly distribution date in an amount equal to the ninety (90) day average of the Secured Overnight Financing Rate (SOFR) plus a spread of 8.25% for Series A Preferred Units and 9% for Series B Preferred Units. The Series B Preferred Units are convertible into common units of Vroom Automotive at the option of the Counterparty at any time. The Series A Preferred Units are not convertible.
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 the CarStory business, a leader in AI-powered analytics and digital services supporting the automotive industry.
UACC
UACC is an indirect lender that offers vehicle financing to consumers through a network of motor vehicle dealers under the UACC brand, focusing primarily on the non-prime market. Our non-prime credit programs aim to broaden access to vehicle ownership for individuals who would not otherwise qualify for financing. UACC’s financing is intended to help consumers build credit and ultimately be eligible for more traditional sources of financing. 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 March 31, 2026, UACC serviced a portfolio of approximately 76,000 retail installment sales contracts with an aggregate principal outstanding balance of approximately $930.0 million.
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 258 million vehicle identification numbers ("VINs"), 204 million window stickers, 4.2 billion vehicle photos and 415 million sales cycles, along with price and price elasticity models. CarStory receives data for over 4.1 million unique VINs listed for sale every day, resulting in CarStory having data for an estimated 80% 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
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patented neural-net algorithm can provide a highly accurate market price (the “CarStory Real Market Price”) for vehicle valuations by accounting for factors that averages often miss, such as local market dynamics and dealer performance.
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 announcing the Value Maximization Plan in January 2024, the Company has pivoted to executing a long-term strategic plan ("Long-Term Strategic Plan") that leverages our core assets, including Vroom and CarStory technology, to improve the profitability of the business through four strategic initiatives:
We remain focused on returning the UACC business to profitability by improving cumulative net loss (“CNL”), origination cost per funded contract, servicing cost per contract, and fixed costs.
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.
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.
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
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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 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 less preferred stock dividends attributable to noncontrolling interests of subsidiary, 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 March 31, |
|
|
Period from January 15 through March 31, |
|
|
|
Period from January 1 through January 14, |
|
|
|||
|
|
2026 |
|
|
2025 |
|
|
|
2025 |
|
|
|||
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|||
Net (loss) income from continuing operations |
|
$ |
(19,046 |
) |
|
$ |
(6,450 |
) |
|
|
$ |
45,090 |
|
|
Preferred stock dividends attributable to noncontrolling interests of subsidiary |
|
|
(571 |
) |
|
|
— |
|
|
|
|
— |
|
|
Adjusted to exclude the following: |
|
|
|
|
|
|
|
|
|
|
|
|||
Stock compensation expense |
|
|
1,427 |
|
|
|
491 |
|
|
|
|
144 |
|
|
Severance expense |
|
|
— |
|
|
|
21 |
|
|
|
|
4 |
|
|
Bankruptcy costs (prepetition filing and post-emergence) |
|
|
— |
|
|
|
913 |
|
|
|
|
— |
|
|
Reorganization items, net |
|
|
— |
|
|
|
— |
|
|
|
|
(51,036 |
) |
|
Impairment charges |
|
|
— |
|
|
|
4,156 |
|
|
|
|
— |
|
|
Adjusted net loss |
|
$ |
(18,190 |
) |
|
$ |
(869 |
) |
|
|
$ |
(5,798 |
) |
|
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Non-GAAP Combined Three Months Ended March 31, 2025
Our financial results for the periods from January 1, 2025 through January 14, 2025 are referred to as those of the “Predecessor” period. Our financial results for the periods from January 15, 2025 through March 31, 2025 are referred to as those of the “Successor” periods. Our results of operations as reported in our 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 March 31, 2025 separately, management views our operating results for the three months ended March 31, 2025 by combining the results of the applicable Predecessor and Successor periods because such presentation provides the most meaningful comparison of our results to other periods. We believe we cannot adequately benchmark the operating results of the period from January 15, 2025 through March 31, 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 three months ended March 31, 2025. The combined results for the three months ended March 31, 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 March 31, 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 three months ended March 31, 2025 (prepared on a Non-GAAP basis) and three months ended March 31, 2026 (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:
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 consolidated financial statements after the Effective Date are not comparable with the 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 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 higher interest rates, the current inflationary environment and vehicle depreciation, which has negatively impacted the fair value of our finance receivables and the losses recognized. While we expect long term improvements in our finance receivable portfolio, we expect some downward trends to continue to negatively impact our business into 2026. 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 tighten our credit program. We initially saw some improvements with the 2023 and 2024 vintages as a result of these changes. Subsequently, macroeconomic factors have negatively impacted these vintages. This unfavorable loan performance continued on 2025 originations, resulting in us making further refinements to our credit program in order to improve performance. We also intend to leverage CarStory data to improve VIN-level valuations to support underwriting decisions and servicing
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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
UACC has three senior secured warehouse credit facility agreements (the “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. There can be no assurance that UACC will be able to complete additional securitizations in the future, particularly if the securitization markets become constrained.
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 Warehouse Credit Facilities have decreased and any future decreases on available advance rates may have an adverse impact on our liquidity. Events in our industry or in industries adjacent to ours could make it more difficult for UACC to obtain financing. For example, in September 2025, an unrelated subprime auto lender declared bankruptcy. Subsequently, federal authorities alleged that the bankruptcy was due to fraudulent activity. We continue to evaluate our controls to ensure appropriate pledging of collateral balances continues to be effective.
As of March 31, 2026, we had three of our Warehouse Credit Facilities, with an aggregate borrowing capacity of $600 million, expiring in June 2026, August 2026 and April 2027, respectively. We are in ongoing discussions with the warehouse lenders to extend the terms beyond the current expiration dates and expect facilities to be amended and renewed at sufficient borrowing capacity. However, there can be no assurance that adequate additional financing will be available to us on acceptable terms, or at all.
See "Part I, Item 1A. Risk Factors—Risks Related to Our Financial Conditions, Results of Operations, Liquidity and Indebtedness—We may not generate sufficient liquidity to operate our business." in our Annual Report on Form 10-K for the year ended December 31, 2025.
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 intends 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. In mid-2024, we began indirectly offering competitive vehicle financing services to consumers with slightly higher, or “near-prime,” credit scores compared to our historical customer base. The Near-Prime Program is still in its early stages and a small percentage of our portfolio. 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
54
Table of Contents
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 “Part I, Item 1A. Risk Factors—Risks Related to Our Financial Condition, Results of Operations, Liquidity and Indebtedness—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, 2025.
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 affect automotive finance rates and our borrowing rates, thereby reducing discretionary spending and impacting consumer sentiment and making vehicle financing more costly and less accessible or desirable to many consumers. While interest rates were cut slightly in 2025, based on the March 2026 meeting, the Federal Reserve officials voted to keep interest rates steady. 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 implemented significant tariffs on imports to the United States, including tariffs on automobiles, auto parts, steel, and aluminum. Although a February 2026 Supreme Court ruling struck down certain tariffs imposed under the International Emergency Economic Powers Act, the administration has moved to reimpose and maintain tariffs under alternative legal authorities. While the U.S. has reached trade agreements with certain countries that reduced tariff rates on some automotive goods, tariffs on imports from other countries, including Canada and Mexico, remain elevated. Many countries have imposed retaliatory tariffs as well as other trade restrictions and retaliatory measures. Such significant tariffs, restrictions or other retaliatory measures have had, and could continue to 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. Additionally, fragility in the supply chain exacerbated by tariffs and other industry concerns, such as restrictions related to rare earth minerals, increases the risk of production disruptions in the automotive industry. Steps taken by governments to implement tariffs or other restrictions on raw materials (including steel, aluminum and rare earth minerals), automobiles, parts, and other products and materials have disrupted existing supply chains and imposed 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, the resulting environment of tariffs and other trade restrictions or barriers have increased automobile prices in the U.S. and caused volatility, this could lead to negative consumer sentiment and in turn, decreased consumer demand for automobiles, and in turn, decreased demand for motor vehicle contracts financed through UACC, which has negatively impacted and could continue to negatively impact our results of operations, cash flows, and financial condition.
Moreover, events in our industry or in industries adjacent to ours could make it more difficult for UACC to obtain financing. For example, in September 2025, an unrelated subprime auto lender declared bankruptcy. Subsequently, federal authorities alleged that the bankruptcy was due to fraudulent activity. We continue to evaluate our controls to ensure appropriate pledging of collateral balances continues to be effective.
Further, geopolitical conflicts and war, including those in Europe and the ongoing conflict in 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. For example, recent escalations of conflict have caused oil and gasoline inflation, and may reduce consumer purchasing power, and increase default rates within the UACC portfolio, while heightening the risk of cyberattacks. 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.
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Table of Contents
Results of Operations
The Company is 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.
56
Table of Contents
The following table presents our consolidated results of operations for the periods indicated:
|
|
Successor |
|
|
|
Predecessor |
|
|
Non-GAAP Combined |
|
|
Non-GAAP |
|
|
Non-GAAP |
|
|||||||||
|
|
Three months ended March 31, |
|
|
Period from January 15 through March 31, |
|
|
|
Period from January 1 through January 14, |
|
|
Three months ended March 31, |
|
|
|
|
|
|
|
||||||
|
|
2026 |
|
|
2025 |
|
|
|
2025 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
||||||
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest income |
|
$ |
42,476 |
|
|
$ |
37,157 |
|
|
|
$ |
7,183 |
|
|
$ |
44,340 |
|
|
$ |
(1,864 |
) |
|
|
(4.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Warehouse credit facility |
|
|
3,439 |
|
|
|
4,618 |
|
|
|
|
1,017 |
|
|
|
5,635 |
|
|
|
(2,196 |
) |
|
|
(39.0 |
)% |
Securitization debt |
|
|
8,620 |
|
|
|
6,548 |
|
|
|
|
1,178 |
|
|
|
7,726 |
|
|
|
894 |
|
|
|
11.6 |
% |
Total interest expense |
|
|
12,059 |
|
|
|
11,166 |
|
|
|
|
2,195 |
|
|
|
13,361 |
|
|
|
(1,302 |
) |
|
|
(9.7 |
)% |
Net interest income |
|
|
30,417 |
|
|
|
25,991 |
|
|
|
|
4,988 |
|
|
|
30,979 |
|
|
|
(562 |
) |
|
|
(1.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Realized and unrealized losses, net of recoveries |
|
|
24,683 |
|
|
|
11,100 |
|
|
|
|
6,792 |
|
|
|
17,892 |
|
|
|
6,791 |
|
|
|
38.0 |
% |
Net interest income (loss) after losses and recoveries |
|
|
5,734 |
|
|
|
14,891 |
|
|
|
|
(1,804 |
) |
|
|
13,087 |
|
|
|
(7,353 |
) |
|
|
(56.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Servicing income |
|
|
1,139 |
|
|
|
1,254 |
|
|
|
|
192 |
|
|
|
1,446 |
|
|
|
(307 |
) |
|
|
(21.2 |
)% |
Warranties and GAP income, net |
|
|
2,686 |
|
|
|
4,079 |
|
|
|
|
307 |
|
|
|
4,386 |
|
|
|
(1,700 |
) |
|
|
(38.8 |
)% |
CarStory revenue |
|
|
1,333 |
|
|
|
2,392 |
|
|
|
|
432 |
|
|
|
2,824 |
|
|
|
(1,491 |
) |
|
|
(52.8 |
)% |
Other income |
|
|
2,041 |
|
|
|
2,481 |
|
|
|
|
113 |
|
|
|
2,594 |
|
|
|
(553 |
) |
|
|
(21.3 |
)% |
Total noninterest income |
|
|
7,199 |
|
|
|
10,206 |
|
|
|
|
1,044 |
|
|
|
11,250 |
|
|
|
(4,051 |
) |
|
|
(36.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Compensation and benefits |
|
|
19,146 |
|
|
|
16,067 |
|
|
|
|
2,823 |
|
|
|
18,890 |
|
|
|
256 |
|
|
|
1.4 |
% |
Professional fees |
|
|
4,520 |
|
|
|
5,347 |
|
|
|
|
297 |
|
|
|
5,644 |
|
|
|
(1,124 |
) |
|
|
(19.9 |
)% |
Software and IT costs |
|
|
3,161 |
|
|
|
2,402 |
|
|
|
|
457 |
|
|
|
2,859 |
|
|
|
302 |
|
|
|
10.6 |
% |
Depreciation and amortization |
|
|
1,340 |
|
|
|
575 |
|
|
|
|
1,057 |
|
|
|
1,632 |
|
|
|
(292 |
) |
|
|
(17.9 |
)% |
Interest expense on corporate debt |
|
|
1,212 |
|
|
|
480 |
|
|
|
|
176 |
|
|
|
656 |
|
|
|
556 |
|
|
|
84.8 |
% |
Impairment charges |
|
|
— |
|
|
|
4,156 |
|
|
|
|
— |
|
|
|
4,156 |
|
|
|
(4,156 |
) |
|
|
(100.0 |
)% |
Other expenses |
|
|
2,408 |
|
|
|
2,370 |
|
|
|
|
371 |
|
|
|
2,741 |
|
|
|
(333 |
) |
|
|
(12.1 |
)% |
Total expenses |
|
|
31,787 |
|
|
|
31,397 |
|
|
|
|
5,181 |
|
|
|
36,578 |
|
|
|
(4,791 |
) |
|
|
(13.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loss from continuing operations before reorganization items and provision for income taxes |
|
|
(18,854 |
) |
|
|
(6,300 |
) |
|
|
|
(5,941 |
) |
|
|
(12,241 |
) |
|
|
(6,613 |
) |
|
|
54.0 |
% |
Reorganization items, net |
|
|
— |
|
|
|
— |
|
|
|
|
51,036 |
|
|
|
51,036 |
|
|
|
(51,036 |
) |
|
|
(100.0 |
)% |
(Loss) income from continuing operations before provision for income taxes |
|
|
(18,854 |
) |
|
|
(6,300 |
) |
|
|
|
45,095 |
|
|
|
38,795 |
|
|
|
(57,649 |
) |
|
|
(148.6 |
)% |
Provision for income taxes from continuing operations |
|
|
192 |
|
|
|
150 |
|
|
|
|
5 |
|
|
|
155 |
|
|
|
37 |
|
|
|
23.9 |
% |
Net (loss) income from continuing operations |
|
$ |
(19,046 |
) |
|
$ |
(6,450 |
) |
|
|
$ |
45,090 |
|
|
$ |
38,640 |
|
|
$ |
(57,686 |
) |
|
|
(149.3 |
)% |
Net (loss) income from discontinued operations |
|
$ |
(12 |
) |
|
$ |
99 |
|
|
|
$ |
(4 |
) |
|
$ |
95 |
|
|
$ |
(107 |
) |
|
|
(112.6 |
)% |
Net (loss) income |
|
$ |
(19,058 |
) |
|
$ |
(6,351 |
) |
|
|
$ |
45,086 |
|
|
$ |
38,735 |
|
|
$ |
(57,793 |
) |
|
|
(149.2 |
)% |
Preferred stock dividends attributable to noncontrolling interests of subsidiary |
|
|
(571 |
) |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
(571 |
) |
|
|
100.0 |
% |
Net (loss) income attributable to controlling interest and common shareholders |
|
$ |
(19,629 |
) |
|
$ |
(6,351 |
) |
|
|
$ |
45,086 |
|
|
$ |
38,735 |
|
|
$ |
(58,364 |
) |
|
|
(150.7 |
)% |
57
Table of Contents
Segments
Non-GAAP Combined Three Months Ended March 31, 2025
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 March 31, 2025 (Successor) Period, which we refer to as the three months ended March 31, 2025, in order to provide some comparability of such information to the three months ended March 31, 2026. See "Non-GAAP Financial Measures" above.
58
Table of Contents
Three Months Ended March 31, 2026 and 2025
UACC
|
Successor |
|
|
|
Predecessor |
|
|
Non-GAAP Combined |
|
|
Non-GAAP |
|
|
Non-GAAP |
|
||||||||||
|
Three months ended March 31, |
|
|
|
Period from January 15 through March 31, |
|
|
|
Period from January 1 through January 14, |
|
|
Three months ended March 31, |
|
|
|
|
|
|
|
||||||
|
2026 |
|
|
|
2025 |
|
|
|
2025 |
|
|
2025 |
|
|
Change |
|
|
% Change |
|
||||||
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income |
$ |
42,476 |
|
|
|
$ |
37,157 |
|
|
|
$ |
7,254 |
|
|
$ |
44,411 |
|
|
$ |
(1,935 |
) |
|
|
(4.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Warehouse credit facility |
|
3,439 |
|
|
|
|
4,618 |
|
|
|
|
1,017 |
|
|
|
5,635 |
|
|
|
(2,196 |
) |
|
|
(39.0 |
)% |
Securitization debt |
|
8,620 |
|
|
|
|
6,548 |
|
|
|
|
1,178 |
|
|
|
7,726 |
|
|
|
894 |
|
|
|
11.6 |
% |
Total interest expense |
|
12,059 |
|
|
|
|
11,166 |
|
|
|
|
2,195 |
|
|
|
13,361 |
|
|
|
(1,302 |
) |
|
|
(9.7 |
)% |
Net interest income |
|
30,417 |
|
|
|
|
25,991 |
|
|
|
|
5,059 |
|
|
|
31,050 |
|
|
|
(633 |
) |
|
|
(2.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Realized and unrealized losses, net of recoveries |
|
24,823 |
|
|
|
|
12,691 |
|
|
|
|
7,647 |
|
|
|
20,338 |
|
|
|
4,485 |
|
|
|
22.1 |
% |
Net interest income (loss) after losses and recoveries |
|
5,594 |
|
|
|
|
13,300 |
|
|
|
|
(2,588 |
) |
|
|
10,712 |
|
|
|
(5,118 |
) |
|
|
(47.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Servicing income |
|
1,139 |
|
|
|
|
1,254 |
|
|
|
|
192 |
|
|
|
1,446 |
|
|
|
(307 |
) |
|
|
(21.2 |
)% |
Warranties and GAP income, net |
|
2,765 |
|
|
|
|
3,571 |
|
|
|
|
390 |
|
|
|
3,961 |
|
|
|
(1,196 |
) |
|
|
(30.2 |
)% |
Other income |
|
2,007 |
|
|
|
|
2,235 |
|
|
|
|
66 |
|
|
|
2,301 |
|
|
|
(294 |
) |
|
|
(12.8 |
)% |
Total noninterest income |
|
5,911 |
|
|
|
|
7,060 |
|
|
|
|
648 |
|
|
|
7,708 |
|
|
|
(1,797 |
) |
|
|
(23.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Compensation and benefits |
|
16,737 |
|
|
|
|
13,694 |
|
|
|
|
2,398 |
|
|
|
16,092 |
|
|
|
645 |
|
|
|
4.0 |
% |
Professional fees |
|
3,364 |
|
|
|
|
3,069 |
|
|
|
|
172 |
|
|
|
3,241 |
|
|
|
123 |
|
|
|
3.8 |
% |
Software and IT costs |
|
2,965 |
|
|
|
|
2,086 |
|
|
|
|
367 |
|
|
|
2,453 |
|
|
|
512 |
|
|
|
20.9 |
% |
Depreciation and amortization |
|
1,235 |
|
|
|
|
479 |
|
|
|
|
817 |
|
|
|
1,296 |
|
|
|
(61 |
) |
|
|
(4.7 |
)% |
Interest expense on corporate debt |
|
761 |
|
|
|
|
480 |
|
|
|
|
85 |
|
|
|
565 |
|
|
|
196 |
|
|
|
34.7 |
% |
Impairment charges |
|
— |
|
|
|
|
3,479 |
|
|
|
|
— |
|
|
|
3,479 |
|
|
|
(3,479 |
) |
|
|
(100.0 |
)% |
Other expenses |
|
1,967 |
|
|
|
|
1,670 |
|
|
|
|
262 |
|
|
|
1,932 |
|
|
|
35 |
|
|
|
1.8 |
% |
Total expenses |
|
27,029 |
|
|
|
|
24,957 |
|
|
|
|
4,101 |
|
|
|
29,058 |
|
|
|
(2,029 |
) |
|
|
(7.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Provision for income taxes from continuing operations |
|
— |
|
|
|
|
39 |
|
|
|
|
— |
|
|
|
39 |
|
|
|
(39 |
) |
|
|
(100.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Preferred stock dividends attributable to noncontrolling interests of subsidiary |
|
(571 |
) |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
(571 |
) |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted net loss |
$ |
(14,976 |
) |
|
|
$ |
(834 |
) |
|
|
$ |
(5,910 |
) |
|
$ |
(6,744 |
) |
|
$ |
(8,232 |
) |
|
|
122.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stock compensation expense |
$ |
1,118 |
|
|
|
$ |
302 |
|
|
|
$ |
127 |
|
|
$ |
429 |
|
|
$ |
689 |
|
|
|
160.7 |
% |
Severance |
$ |
— |
|
|
|
$ |
21 |
|
|
|
$ |
4 |
|
|
$ |
25 |
|
|
$ |
(25 |
) |
|
|
(100.0 |
)% |
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
59
Table of Contents
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 $1.9 million, or 4.4%, to $42.5 million for the three months ended March 31, 2026 from $44.4 million for the three months ended March 31, 2025. This decrease was primarily a result of lower finance receivable balances. The loan portfolio decreased to $804.6 million as of March 31, 2026, from $858.2 million as of March 31, 2025.
Interest expense
Interest expense primarily includes interest expense on UACC's Warehouse Credit Facilities, interest expense incurred on securitization debt, and interest expense on financing of beneficial interests in securitizations.
Interest expense decreased $1.3 million or 9.7% to $12.1 million for the three months ended March 31, 2026 from $13.4 million for the three months ended March 31, 2025. The decrease was a result of lower interest expense incurred on the Warehouse Credit Facilities, which decreased $2.2 million to $3.4 million for the three months ended March 31, 2026 from $5.6 million for the three months ended March 31, 2025. The decrease was a result of a decrease in the weighted average interest rate to 5.27% for the three months ended March 31, 2026 from 5.95% for the three months ended March 31, 2025 as well as a lower average outstanding balance during in Q1 2026 as compared to Q1 2025 given the timing of the paydown of the warehouse credit facilities post completion of the securitization transaction, which occurred in the beginning of February 2026 as compared to the middle of March 2025. The decrease in interest expense was partially offset by higher interest expense incurred on securitization debt, which increased $0.9 million to $8.6 million for the three months ended March 31, 2026 from $7.7 million for the three months ended March 31, 2025, as a result of higher average interest rates on the 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, 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 $4.5 million or 22.1% to $24.8 million for the three months ended March 31, 2026 from $20.3 million for the three months ended March 31, 2025, primarily driven by higher than expected defaults leading to an increase in realized and unrealized losses in the period.
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 $0.3 million or 21.2% to $1.1 million for the three months ended March 31, 2026 from $1.4 million for the three months ended March 31, 2025.
Warranties and GAP income
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
60
Table of Contents
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. The Company estimates 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 decreased $1.2 million or 30.2% to $2.8 million for the three months ended March 31, 2026 from $4.0 million for the three months ended March 31, 2025, primarily as a result of higher GAP cancellation and claim losses and lower warranty and GAP premium volumes due to a decrease in contracts funded in the current year period.
Other Income
Other income decreased $0.3 million or 12.8% to $2.0 million for the three months ended March 31, 2026 from $2.3 million for the three months ended March 31, 2025.
Compensation and benefits
Compensation and benefits increased $0.6 million or 4.0% to $16.7 million for the three months ended March 31, 2026 from $16.1 million for the three months ended March 31, 2025. The increase was primarily a result of allocation of incremental data and technology departments' time to UACC as a result of a shift in focus of the business.
Professional fees
Professional fees increased $0.2 million or 3.8% to $3.4 million for the three months ended March 31, 2026 from $3.2 million for the three months ended March 31, 2025.
Software and IT costs
Software and IT costs increased $0.5 million or 20.9% to $3.0 million for the three months ended March 31, 2026 from $2.5 million for the three months ended March 31, 2025, primarily as a result of an increase in software subscription fees and web services.
Depreciation and amortization
Depreciation and amortization decreased $0.1 million or 4.7% to $1.2 million for the three months ended March 31, 2026 from $1.3 million for the three months ended March 31, 2025.
Interest expense on corporate debt
Interest expense on corporate debt increased $0.2 million or 34.7% to $0.8 million for the three months ended March 31, 2026 from $0.6 million for the three months ended March 31, 2025.
Impairment charges
Impairment charges decreased $3.5 million related to lease impairment charges incurred during the three months ended March 31, 2025.
Other expenses
Other expenses increased $0.1 million or 1.8% to $2.0 million for the three months ended March 31, 2026 from $1.9 million for the three months ended March 31, 2025.
61
Table of Contents
Adjusted net loss
Adjusted net loss increased $8.3 million to $15.0 million for the three months ended March 31, 2026 from $6.7 million for the three months ended March 31, 2025, primarily due to lower net interest income after losses and recoveries, lower warranties and GAP income, net, higher compensation and benefit expense and higher software and IT costs, as discussed above.
CarStory
|
Successor |
|
|
|
Predecessor |
|
|
Non-GAAP Combined |
|
|
Non-GAAP |
|
|
Non-GAAP |
|
||||||||||
|
Three months ended March 31, |
|
|
|
Period from January 15 through March 31, |
|
|
|
Period from January 1 through January 14, |
|
|
Three months ended March 31, |
|
|
|
|
|
|
|
||||||
|
2026 |
|
|
|
2025 |
|
|
|
2025 |
|
|
2025 |
|
|
Change |
|
|
% Change |
|
||||||
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
CarStory revenue |
$ |
1,333 |
|
|
|
$ |
2,392 |
|
|
|
$ |
432 |
|
|
$ |
2,824 |
|
|
$ |
(1,491 |
) |
|
|
(52.8 |
)% |
Other income |
|
34 |
|
|
|
|
62 |
|
|
|
|
13 |
|
|
|
75 |
|
|
|
(41 |
) |
|
|
(54.7 |
)% |
Total noninterest income |
|
1,367 |
|
|
|
|
2,454 |
|
|
|
|
445 |
|
|
|
2,899 |
|
|
|
(1,532 |
) |
|
|
(52.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Compensation and benefits |
|
1,243 |
|
|
|
|
1,360 |
|
|
|
|
326 |
|
|
|
1,686 |
|
|
|
(443 |
) |
|
|
(26.3 |
)% |
Professional fees |
|
52 |
|
|
|
|
— |
|
|
|
|
13 |
|
|
|
13 |
|
|
|
39 |
|
|
|
300.0 |
% |
Software and IT costs |
|
2 |
|
|
|
|
— |
|
|
|
|
2 |
|
|
|
2 |
|
|
|
— |
|
|
|
0.0 |
% |
Depreciation and amortization |
|
105 |
|
|
|
|
96 |
|
|
|
|
240 |
|
|
|
336 |
|
|
|
(231 |
) |
|
|
(68.8 |
)% |
Other expenses |
|
93 |
|
|
|
|
138 |
|
|
|
|
20 |
|
|
|
158 |
|
|
|
(65 |
) |
|
|
(41.1 |
)% |
Total expenses |
|
1,495 |
|
|
|
|
1,594 |
|
|
|
|
601 |
|
|
|
2,195 |
|
|
|
(700 |
) |
|
|
(31.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Provision for income taxes from continuing operations |
|
26 |
|
|
|
|
16 |
|
|
|
|
5 |
|
|
|
21 |
|
|
|
5 |
|
|
|
23.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income (loss) |
$ |
(130 |
) |
|
|
$ |
839 |
|
|
|
$ |
(153 |
) |
|
$ |
686 |
|
|
$ |
(816 |
) |
|
|
(119.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stock compensation expense |
$ |
24 |
|
|
|
$ |
(5 |
) |
|
|
$ |
8 |
|
|
$ |
3 |
|
|
$ |
21 |
|
|
|
698.8 |
% |
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 $1.5 million or 52.8% to $1.3 million for the three months ended March 31, 2026 from $2.8 million for the three months ended March 31, 2025, 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 $0.5 million or 26.3% to $1.2 million for the three months ended March 31, 2026 from $1.7 million for the three months ended March 31, 2025. The decrease was primarily a result of an increase in the allocation of CarStory resources to UACC.
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Table of Contents
Depreciation and amortization
Depreciation and amortization decreased $0.2 million or 68.8% to $0.1 million for the three months ended March 31, 2026 from $0.3 million for the three months ended March 31, 2025.
Adjusted net (loss) income
Adjusted net (loss) income changed $0.8 million or 119.0% to $0.1 million loss for the three months ended March 31, 2026 as compared to $0.7 million income for the three months ended March 31, 2025 primarily due to a decrease in revenue, partially offset by lower compensation and benefit expense, as discussed above.
Corporate
|
Successor |
|
|
|
Predecessor |
|
|
Non-GAAP Combined |
|
|
Non-GAAP |
|
|
Non-GAAP |
|
||||||||||
|
Three months ended March 31, |
|
|
|
Period from January 15 through March 31, |
|
|
|
Period from January 1 through January 14, |
|
|
Three months ended March 31, |
|
|
|
|
|
|
|
||||||
|
2026 |
|
|
|
2025 |
|
|
|
2025 |
|
|
2025 |
|
|
Change |
|
|
% Change |
|
||||||
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income (expense) |
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
(71 |
) |
|
$ |
(71 |
) |
|
$ |
71 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Realized and unrealized losses (gains), net of recoveries |
|
(140 |
) |
|
|
|
(1,591 |
) |
|
|
|
(855 |
) |
|
|
(2,446 |
) |
|
|
2,306 |
|
|
|
94.3 |
% |
Net interest income after losses and recoveries |
|
140 |
|
|
|
|
1,591 |
|
|
|
|
784 |
|
|
|
2,375 |
|
|
|
(2,235 |
) |
|
|
(94.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noninterest (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Warranties and GAP income (loss), net |
|
(79 |
) |
|
|
|
508 |
|
|
|
|
(83 |
) |
|
|
425 |
|
|
|
(504 |
) |
|
|
(118.6 |
)% |
Other income |
|
— |
|
|
|
|
184 |
|
|
|
|
34 |
|
|
|
218 |
|
|
|
(218 |
) |
|
|
(100.0 |
)% |
Total noninterest (loss) income |
|
(79 |
) |
|
|
|
692 |
|
|
|
|
(49 |
) |
|
|
643 |
|
|
|
(722 |
) |
|
|
(112.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Compensation and benefits |
|
1,166 |
|
|
|
|
1,013 |
|
|
|
|
99 |
|
|
|
1,112 |
|
|
|
54 |
|
|
|
4.9 |
% |
Professional fees |
|
1,104 |
|
|
|
|
2,278 |
|
|
|
|
112 |
|
|
|
2,390 |
|
|
|
(1,286 |
) |
|
|
(53.8 |
)% |
Software and IT costs |
|
194 |
|
|
|
|
316 |
|
|
|
|
88 |
|
|
|
404 |
|
|
|
(210 |
) |
|
|
(52.0 |
)% |
Interest expense on corporate debt |
|
451 |
|
|
|
|
— |
|
|
|
|
91 |
|
|
|
91 |
|
|
|
360 |
|
|
|
395.6 |
% |
Impairment charges |
|
— |
|
|
|
|
677 |
|
|
|
|
— |
|
|
|
677 |
|
|
|
(677 |
) |
|
|
(100.0 |
)% |
Other expenses |
|
348 |
|
|
|
|
562 |
|
|
|
|
89 |
|
|
|
651 |
|
|
|
(303 |
) |
|
|
(46.5 |
)% |
Total expenses |
|
3,263 |
|
|
|
|
4,846 |
|
|
|
|
479 |
|
|
|
5,325 |
|
|
|
(2,062 |
) |
|
|
(38.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Provision for income taxes from continuing operations |
|
166 |
|
|
|
|
95 |
|
|
|
|
— |
|
|
|
95 |
|
|
|
71 |
|
|
|
74.7 |
% |
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, 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 a specific allocation of expenses. Corporate activities also include the runoff of legacy Vroom warranty and GAP policies sold prior 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) income, 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
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Table of Contents
prepayment of the contracts by our customers. Warranties and GAP income, 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) income, net, changed $0.5 million to a loss of $0.1 million for the three months ended March 31, 2026 from income of $0.4 million for the three months ended March 31, 2025, primarily as a result of a decrease in profit-sharing income as the legacy Vroom policies continue to runoff.
Compensation and benefits
Compensation and benefits expense increased $0.1 million or 4.9% to $1.2 million for the three months ended March 31, 2026 from $1.1 million for the three months ended March 31, 2025.
Professional fees
Professional fees decreased $1.3 million or 53.8% to $1.1 million for the three months ended March 31, 2026 from $2.4 million for the three months ended March 31, 2025, primarily as a result of consulting and legal fees incurred during the three months ended March 31, 2025 associated with fresh-start accounting and bankruptcy related items.
Software and IT costs
Software and IT costs decreased $0.2 million or 52.0% to $0.4 million for the three months ended March 31, 2026 from $0.4 million for the three months ended March 31, 2025.
Interest expense on corporate debt
Interest expense on corporate debt increased $0.4 million to $0.5 million for the three months ended March 31, 2026 from $0.1 million for the three months ended March 31, 2025.
Other expenses
Other expenses decreased $0.4 million or 46.5% to $0.3 million for the three months ended March 31, 2026 from $0.7 million for the three months ended March 31, 2025.
Liquidity and Capital Resources
On January 14, 2025, we emerged from the Prepackaged Chapter 11 Case. On the Effective Date, each holder of the 2026 Notes received a pro rata share of 92.94% of the Common Stock (subject to dilution) and all of the Company’s outstanding obligations under the 2026 Notes and the Indenture were deemed fully satisfied and discharged.
As of March 31, 2026, we had cash and cash equivalents of $14.5 million and restricted cash of $59.2 million. Restricted cash primarily includes restricted cash required under UACC's securitization transactions and Warehouse Credit Facilities of $59.1 million. Additionally, we had excess borrowing capacity of $14.9 million under UACC's Warehouse Credit Facilities as of March 31, 2026 and $27.0 million available under our Delayed Draw Facility (as defined below). We have historically had negative cash flows and generated losses from operations and our primary source of liquidity has been cash generated through financing activities.
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. As of March 31, 2026, we had three Warehouse Credit Facilities, with an aggregate borrowing capacity of $600.0 million and outstanding borrowings of $159.5 million, expiring in June 2026, August 2026 and April 2027, respectively. We are in ongoing discussions with the warehouse lenders to extend the terms beyond the current expiration dates and expect facilities to be amended and renewed at sufficient borrowing capacity. However, there can be no assurance that adequate additional financing will be available to us on acceptable terms, or at all. Refer to Note 10 — Warehouse Credit Facilities and Consolidated VIEs to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Failure to retain
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Table of Contents
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.
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”). On October 9, 2025 the maximum facility amount was amended from $25.0 million to $35.0 million effective as of September 30, 2025. The Delayed Draw Facility matures on December 31, 2026. As of March 31, 2026, we have drawn $8.0 million against the Delayed Draw Facility. Refer to Note 19 — Related Party Transactions to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
On August 29, 2025, we issued $10.0 million aggregate principal amount of 2030 Notes to support our long-term business strategy. The 2030 Notes were issued pursuant to a Note Purchase Agreement with Annox Capital, LLC and Robert J. Mylod, Jr., the Managing Partner of Annox Capital, LLC and the Independent Executive Chair of the board of directors of the Company. Refer to Note 19 — Related Party Transactions to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, for further discussion.
On November 25, 2025, Vroom, Inc. entered into a Note Purchase Agreement with Robert J. Mylod, Jr., the Independent Executive Chair of the board of directors of the Company. Pursuant to the Note Purchase Agreement, the Company issued Senior Secured Delayed Draw Notes due 2026 (the “Delayed Draw Notes”) in a maximum aggregate principal commitment amount of $10.5 million, which matures on November 25, 2026. As of March 31, 2026, the Company drew $10.5 million against the Delayed Draw Notes. Refer to Note 19 — Related Party Transactions to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
On January 16, 2026, Vroom Automotive, LLC issued to SPE Holdings 15,000 newly issued Series A preferred units and 7,500 newly issued Series B preferred units for aggregate gross proceeds of $22.5 million.
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.
Our future capital requirements will depend on many factors, including our ability to realize the intended benefits of the Prepackaged Chapter 11 Case and our Long-Term Strategic Plan, available advance rates on the Warehouse Credit Facilities, our ability to complete additional securitization transactions on favorable terms, and future credit losses. We anticipate that our existing cash and cash equivalents, the delayed draw facility, the delayed draw notes, 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. On February 5, 2026, UACC completed the 2026-1 securitization transaction, in which it issued approximately $225.0 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 $224.1 million. The trust is collateralized by finance receivables with an aggregate principal balance of $274.9 million as of February 5, 2026. 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 2026-1 securitization as secured borrowings and the assets and liabilities of the trust remain on balance sheet.
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.
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Table of Contents
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 March 31, 2026, UACC pledged $27.6 million of its retained beneficial interests as collateral, and the outstanding borrowings related to this risk retention financing facility were $16.8 million with expected repurchase dates ranging from June 2027 to October 2031. The securitization trusts will distribute payments related to UACC's pledged beneficial interests in securitizations directly to the lenders, which will reduce the beneficial interests in securitizations and the related debt balance.
Warehouse Credit Facilities
UACC has three senior secured warehouse credit facility agreements the (“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.
During 2025 we renewed three of our previous four Warehouse Credit Facilities. The significant terms of the agreements remained unchanged except for certain reductions in advance rates and increases in minimum liquidity and tangible net worth requirements as well as a decrease of the aggregate borrowing limit under one of the facilities from $225.0 million to $200.0 million. On July 21, 2025, the remaining Warehouse Credit Facility, which had a borrowing capacity of $200 million, expired pursuant to its terms and was not extended or renewed. We believe that our borrowing capacity from our other Warehouse Credit Facilities is sufficient to support our current operational needs and therefore elected not to renew this commitment. The remaining Warehouse Credit Facilities expire in June 2026, August 2026 and April 2027, respectively. We are in ongoing discussions with the warehouse lenders to extend the terms beyond the current expiration dates and expect facilities to be amended and renewed at sufficient borrowing capacity. However, there can be no assurance that adequate additional financing will be available to us on acceptable terms, or at all.
The aggregate borrowing limit under the Warehouse Credit Facilities as of March 31, 2026 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 March 31, 2026, outstanding borrowings related to the Warehouse Credit Facilities were $159.5 million and we were in compliance with all covenants under the terms of the Warehouse Credit Facilities. Refer to Note 10 — 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.
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Table of Contents
Cash Flows from Operating, Investing, and Financing Activities
The following table summarizes our cash flows for the three months ended March 31, 2026 and 2025:
|
|
|
Successor |
|
|
|
Predecessor |
|
|
Non-GAAP Combined |
|
|||||||
|
|
|
Three months ended March 31, |
|
|
Period from January 15 through March 31, |
|
|
|
Period from January 1 through January 14, |
|
|
Three months ended March 31, |
|
||||
|
|
|
2026 |
|
|
2025 |
|
|
|
2025 |
|
|
2025 |
|
||||
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
||||
Net cash provided by (used in) operating activities from continuing operations |
|
|
$ |
18,275 |
|
|
$ |
17,289 |
|
|
|
$ |
(5,804 |
) |
|
$ |
11,485 |
|
Net cash (used in) provided by investing activities from continuing operations |
|
|
|
(29,049 |
) |
|
|
(48,334 |
) |
|
|
|
2,981 |
|
|
|
(45,353 |
) |
Net cash provided by (used in) financing activities from continuing operations |
|
|
|
18,042 |
|
|
|
36,987 |
|
|
|
|
(13,898 |
) |
|
|
23,089 |
|
Net cash provided by (used in) operating activities from discontinued operations |
|
|
|
133 |
|
|
|
(452 |
) |
|
|
|
(207 |
) |
|
|
(659 |
) |
Net cash provided by investing activities from discontinued operations |
|
|
|
— |
|
|
|
637 |
|
|
|
|
— |
|
|
|
637 |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
|
7,401 |
|
|
|
6,127 |
|
|
|
|
(16,928 |
) |
|
|
(10,801 |
) |
Cash and cash equivalents and restricted cash at beginning of period |
|
|
|
66,298 |
|
|
|
61,441 |
|
|
|
|
78,369 |
|
|
|
78,369 |
|
Cash and cash equivalents and restricted cash at end of period |
|
|
$ |
73,699 |
|
|
$ |
67,568 |
|
|
|
$ |
61,441 |
|
|
$ |
67,568 |
|
Operating Activities
Net cash flows provided by operating activities from continuing operations increased by $6.8 million, from $11.5 million for the three months ended March 31, 2025 to $18.3 million for the three months ended March 31, 2026. The increase was primarily due to a $14.3 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 $1.3 million change in working capital, partially offset by a decrease in principal payments received on finance receivables held for sale of $6.5 million and a $2.4 million decrease in net (loss) income from continuing operations after reconciling adjustments.
Investing Activities
Net cash flows used in investing activities from continuing operations decreased $16.4 million, from $45.4 million for the three months ended March 31, 2025 to $29.0 million for the three months ended March 31, 2026. The decrease was primarily due to a $9.6 million increase in principal payments received on finance receivables at fair value as well as a $7.0 million decrease in originations of finance receivables held for investment.
Financing Activities
Net cash flows provided by financing activities from continuing operations decreased $5.1 million, from $23.1 million for the three months ended March 31, 2025 to $18.0 million for the three months ended March 31, 2026. The decrease was primarily related to a $97.7 million decrease in net cash flows from secured financing agreements and a $16.2 million decrease in net cash flows from financing of beneficial interests in securitizations. These decreases were partially offset by a $86.6 million increase in net cash flows from the borrowings under our Warehouse Credit Facilities and a $21.2 million increase related to the issuance of Vroom Automotive Preferred Units.
67
Table of Contents
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of 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.
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, 2025.
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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Table of Contents
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 March 31, 2026.
Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of March 31, 2026, 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 March 31, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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Table of Contents
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.
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.
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 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, 2025. There have been no material changes to our risk factors described in our Annual Report, other than as described below. 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.
General business and economic conditions, and risks related to the larger automotive ecosystem, including consumer demand, could reduce our sales and profitability, which could have a material adverse effect on our business, financial condition and results of operations.
Our business is affected by general business and economic conditions. The global economy often experiences periods of instability, and this volatility may lead to high unemployment and a lack of available credit, which may in turn lead to increased delinquencies, defaults, repossessions and losses on motor vehicle contracts financed through UACC and could materially and adversely affect our business, financial condition and results of operations. For example, in 2025, the non-prime automotive financing industry faced challenges relating to increasing delinquencies and defaults, lowered recoveries, and other factors, leading some of UACC’s competitors to cease new loan originations, file bankruptcy, or otherwise significantly alter their operations.
Purchases of new and used vehicles are typically discretionary for consumers and have been, and may continue to be, affected by negative trends in the economy and other factors, including inflation and fluctuating interest rates, the impact of tariffs (as described further below), the cost of energy and gasoline, the availability and cost of consumer credit, reductions in consumer confidence and fears of recession, stock market volatility, increases or changes in regulation and unemployment levels. The current inflationary environment has led to both overall price increases and pronounced price increases in certain sectors, including gasoline prices. Moreover, the Federal Reserve’s efforts to tame inflation have led to, and may continue to lead to, increased interest rates, which affects automotive finance rates, making vehicle financing more costly and less accessible to many consumers. Additionally, increased environmental regulation has made, and may in the future make, used vehicles more expensive and less desirable for consumers.
Our business may be impacted by the imposition of tariffs and other trade barriers, which make it more costly for automobile manufacturers and sellers to export and import vehicles and raw materials, and increase the price consumers in the U.S. pay for vehicles. In recent years, the U.S. government has renegotiated or terminated certain existing bilateral
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or multi-lateral trade agreements. In addition, the Presidential administration has implemented significant tariffs on imports to the United States from various countries, including those from the European Union, Japan, China, Canada and Mexico. While the U.S. has reached trade agreements with certain countries that reduced tariff rates on some automotive goods, tariffs on imports from other countries, including Canada and Mexico, remain elevated. Such significant tariffs and other restrictions have had, and may continue to have, a major impact on the United States automotive industry, which depends heavily on cross border trade. These tariffs have had a significant adverse effect, including financial, on the automotive industry. Further, any additional tariffs in the United States or retaliatory tariffs imposed by other governments could 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 disrupted existing supply chains and imposed additional costs on businesses in the automotive industry in the United States and globally. While negotiations regarding tariffs are ongoing and changing rapidly, the resulting environment of retaliatory trade or other practices of additional trade restrictions or barriers increase automobile prices in the U.S. and caused volatility, which has led to, and could continue to lead to, further 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. In addition, geopolitical conflicts and armed hostilities have further heightened macroeconomic uncertainty and could compound the adverse effects described above.
In February 2026, the United States and Israel launched coordinated military strikes against Iran, which retaliated with missile attacks across the region. Although we do not have material operations in the Middle East, the ongoing conflict and any further escalation, has and could continue to lead to significant disruption of global energy supplies and increases in global energy prices, which could reduce consumer demand for used vehicles and apply downward pressure on average vehicle values, particularly given the seasonal nature of our business. The conflict could also heighten inflationary pressures on our operating costs and the broader supply chain, adversely affect global supply chains, energy markets, commodity prices, currency exchange rates, interest rates, financial markets and overall macroeconomic conditions. Such disruptions could increase our borrowing costs under UACC’s variable-rate Warehouse Credit Facilities and other variable-rate obligations, including our junior subordinated debentures, reduce the availability or increase the cost of debt financing through UACC’s securitization program and warehouse facilities, and adversely impact consumer spending patterns in markets in which we operate. While the impacts of the conflict between the United States, Israel and Iran may have an adverse effect on our business, financial condition and results of operations, we are unable to predict the extent or nature of these impacts at this time.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no sales of unregistered securities during the period covered by this Quarterly Report on Form 10-Q.
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.
Exchange and Subscription Agreement
On May 14, 2026, the Company entered into an Exchange and Subscription Agreement (the “Exchange Agreement”) with the investors party thereto and a collateral agent, pursuant to which the Company agreed to co-issue, as joint and several obligations, up to $50.0 million aggregate principal amount of Senior Secured Delayed Draw Convertible Notes due 2032 (the “Notes”). At the closing, certain investors will exchange $28.5 million aggregate principal amount of outstanding notes of the Company, together with accrued and unpaid interest thereon through the closing date, for Notes to be issued by the Company, leaving $21.5 million of remaining delayed draw commitments under the facility. The outstanding notes to be exchanged consist of $10.0 million of 5.000% Convertible Senior Notes due 2030, $10.5 million of Senior Secured Delayed Draw Notes due 2026 and $8.0 million of notes outstanding under the delayed draw
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term loan facility with Mudrick Capital Management, L.P. Upon delivery for cancellation at the closing, the outstanding notes will be cancelled and the liens securing such notes will be released, discharged and terminated.
The Notes bear interest at 5.0% per annum, payable quarterly, and mature on June 30, 2032. The Notes are secured by a first priority lien on substantially all assets of the Company, subject to permitted liens, and rank senior in right of payment to all unsecured indebtedness and junior lien indebtedness of each Issuer.
The Exchange Agreement and the Notes provide for a delayed draw facility under which Additional Notes may be issued from time to time up to the remaining commitment amount, subject to specified funding conditions. The Company, on behalf of the Company, or the investors may elect to fund under the facility, with subsequent draws funded pro rata by the holders and evidenced by separate Additional Notes. The proceeds of any Additional Notes issued after the closing are required to be used for working capital and other general corporate purposes of the Company.
The conversion price for each Note will equal 120% of the applicable reference price, determined at signing for Notes issued at the closing and at the applicable funding notice date for any Additional Notes. Subject to specified limitations, holders may convert their Notes on and after April 1, 2032, and the Notes may also become convertible in connection with certain specified corporate events. The Company may settle conversions in shares of common stock, cash or a combination thereof.
Upon a fundamental change, holders may require the Company to repurchase their Notes for the principal amount to be repurchased plus accrued and unpaid interest. The Notes also require mandatory ratable redemption in specified circumstances, including certain non-permitted asset sales, casualty or condemnation events, debt issuances and liens, subject to the exceptions and limitations set forth in the Notes.
(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
During the three months ended March 31, 2026, 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
|
|
|
|
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Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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# |
|
Preferred Unit Purchase Agreement, dated as of January 16, 2026 by and among the Company, Vroom Automotive LLC and SPE Holdings 2026-1 |
|
8-K
|
|
001-39315
|
|
10.1 |
|
January 21, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2# |
|
Second Amended and Restated Limited Liability Company Agreement of Vroom Automotive LLC, dated as of January 16, 2026 |
|
8-K |
|
001-39315 |
|
10.2 |
|
January 21, 2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3# |
|
Custodian Agreement by and between United Auto Credit Corporation, as custodian, and an indenture trustee, dated as of January 31, 2026 |
|
10-K |
|
001-39315 |
|
10.53 |
|
March 26, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4# |
|
Indenture, dated as of January 31, 2026, by and between United Auto Credit Securitization Trust 2026-1 and the Indenture Trustee |
|
10-K |
|
001-39315 |
|
10.54 |
|
March 26, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5# |
|
Purchase Agreement by and between United Auto Credit Financing LLC, as purchaser and United Auto Credit Corporation as seller, dated as of January 31, 2026 |
|
10-K |
|
001-39315 |
|
10.55 |
|
March 26, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6# |
|
Amended and Restated Trust Agreement by and among United Auto Financing LLC, as depositor, a certificate registrar and certificate paying agent, and an owner trustee, dated as of January 31, 2026 |
|
10-K |
|
001-39315 |
|
10.56 |
|
March 26, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7# |
|
Sale and Servicing Agreement by and between United Auto Credit Corporation, as custodian and an indenture trustee, dated as of January 31, 2026 |
|
10-K |
|
001-39315 |
|
10.57 |
|
March 26, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8 |
|
Exchange and Subscription Agreement by and between Vroom, Inc. and the Investors, dated as of May 14, 2026 |
|
|
|
|
|
|
|
|
|
X |
|
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Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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).
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Table of Contents
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: May 14, 2026 |
|
By: |
/s/ Thomas H. Shortt |
|
|
|
Thomas H. Shortt |
|
|
|
Chief Executive Officer |
|
|
|
(principal executive officer) |
|
|
|
|
|
|
|
|
Date: May 14, 2026 |
|
By: |
/s/ Jonathan R. Sandison |
|
|
|
Jonathan R. Sandison |
|
|
|
Chief Financial Officer |
|
|
|
(principal financial officer) |
75