VRM

Business Context and Reporting Period

This Form 10-K covers the fiscal year ended December 31, 2025, for Vroom, Inc. The Company emerged from a Prepackaged Chapter 11 bankruptcy on January 14, 2025, adopting "fresh start accounting" which renders historical financial data non-comparable to post-emergence results. Following the wind-down of its ecommerce vehicle dealership business in 2024, Vroom now operates two primary segments: United Auto Credit Corporation (UACC), a non-prime automotive lender, and CarStory, an AI-powered automotive data analytics platform.

Key Financial Metrics

Note: 2025 figures combine Predecessor (Jan 1–Jan 14) and Successor (Jan 15–Dec 31) periods for management comparison purposes, though GAAP reporting separates them.

Material Changes vs. Prior Period

• Profitability Improvement: Net loss decreased by approximately $112 million year-over-year, driven by a $61.6 million reduction in total expenses and a $51.0 million gain on debt settlement during the bankruptcy reorganization.
• Expense Reduction: Total expenses dropped 34.1% to $119.2 million, primarily due to a 84.8% decrease in depreciation and amortization (resulting from fresh start accounting write-downs of intangible assets) and a 24.9% decrease in compensation and benefits.
• Revenue Decline: Total revenue decreased 5.2%. Interest income fell 11.4% due to lower finance receivable balances and accounting policy changes. CarStory revenue declined 36.7% due to the loss of a major customer and changes in service scope.
• Capital Structure: Approximately $290 million of unsecured convertible notes were discharged in bankruptcy. The Company issued new common stock and warrants to creditors and existing shareholders.

Guidance, Outlook, and Risks

Strategic Outlook: Management is executing a "Long-Term Strategic Plan" focused on returning UACC to profitability by improving credit loss metrics, reducing origination costs, and leveraging AI for underwriting. The Company expects to continue incurring losses in 2026 as it invests in technology and manages credit portfolio performance.

Liquidity: As of December 31, 2025, the Company held $10.4 million in unrestricted cash. Liquidity is heavily dependent on the renewal of three Warehouse Credit Facilities (expiring in 2026 and 2027) and the ability to execute securitization transactions. Management believes current resources are sufficient for the next 12 months.

Key Risks:

• Credit Losses: UACC is experiencing increasing credit losses and delinquencies in its non-prime portfolio, exacerbated by high interest rates and vehicle depreciation.
• Funding Access: Advance rates on warehouse facilities have decreased due to credit performance. Failure to renew these facilities or access the securitization market could severely impact operations.
• Regulatory: Ongoing compliance examinations by state regulators (e.g., Massachusetts Division of Banks) may result in penalties.
• Concentrated Ownership: Mudrick Capital Management, L.P. owns approximately 76.5% of the outstanding common stock, giving it significant control over corporate governance.

Investor Verification Checklist

• Warehouse Facility Renewals: Verify the status of negotiations to extend the three Warehouse Credit Facilities expiring in 2026 and 2027.
• Credit Loss Trends: Monitor UACC's cumulative net loss (CNL) and delinquency rates to assess the effectiveness of new underwriting models.
• CarStory Revenue Stability: Confirm if the Company has replaced the revenue lost from the major customer departure in 2025.
• Related Party Transactions: Review terms of the $22.5 million preferred unit issuance and related party notes to assess dilution and interest rate exposure.
• Regulatory Penalties: Track the outcome of the Massachusetts Division of Banks examination for potential financial penalties.