VRM

Business Context and Reporting Period

This Form 10-K covers the fiscal year ended December 31, 2024, for Vroom, Inc. The company underwent a fundamental transformation during the reporting period and immediately thereafter. In January 2024, Vroom announced a "Value Maximization Plan," winding down its end-to-end ecommerce used vehicle dealership business (discontinued operations) to preserve liquidity. The company now operates solely through two segments: United Auto Credit Corporation (UACC), an automotive finance company, and CarStory, an AI-powered analytics platform.

On November 13, 2024, Vroom filed a Prepackaged Chapter 11 bankruptcy case to restructure approximately $290 million in unsecured convertible notes. The company emerged from bankruptcy on January 14, 2025, adopting fresh start accounting. All previous equity was cancelled and extinguished, replaced by new common stock and warrants. The company was relisted on the Nasdaq Global Market on February 20, 2025.

Key Financial Metrics

Note: The filing text does not provide a clear value for total revenue from continuing operations in a single line item, but Interest Income was $201.8 million and Noninterest Income was $26.4 million for 2024.

Material Changes vs. Prior Period

• Bankruptcy and Recapitalization: The most significant change is the emergence from Chapter 11 bankruptcy. Approximately $290 million in convertible notes were discharged. The parent company now holds no long-term debt, though UACC retains significant securitization and warehouse debt.
• Discontinued Operations: The ecommerce wind-down resulted in a net loss of $26.9 million in 2024, a significant improvement from the $279.5 million loss in 2023. This segment is no longer active.
• Segment Performance:
  • UACC: Adjusted EBITDA loss widened to $(29.8) million from $(23.2) million, driven by increased credit losses and higher interest expenses due to rising rates and a larger portfolio.
  • CarStory: Adjusted EBITDA declined to $0.9 million from $3.4 million due to a decrease in revenue and increased compensation costs.
• Liquidity: Cash and cash equivalents decreased significantly to $29.3 million from $135.6 million, reflecting the costs of the wind-down and bankruptcy proceedings.

Guidance, Outlook, and Risks

Outlook and Strategy: Management is executing a "Long-Term Strategic Plan" focused on three objectives: achieving pre-COVID Cumulative Net Losses (CNL) or lower, growing originations with pre-COVID CNL, and lowering operating costs. The company has developed Base, Growth, and Aggressive Growth models contingent on meeting these milestones.

Key Risks and Contingencies:

• Liquidity and Funding: UACC relies on Warehouse Credit Facilities (expiring mid-to-late 2025) and securitization markets. Advance rates have decreased due to rising credit losses. Failure to renew facilities could materially impact operations.
• Credit Losses: UACC is experiencing increasing credit losses in its non-prime portfolio due to inflation, interest rates, and vehicle depreciation. This trend is expected to continue into 2025.
• Going Concern: While the company emerged as a going concern, it maintains a full valuation allowance on deferred tax assets and has a history of losses. Future profitability is not assured.
• Concentrated Ownership: Mudrick Capital Management, L.P. owns approximately 76.5% of the outstanding common stock, giving it significant control over corporate governance.
• Regulatory and Legal: The company faces ongoing regulatory scrutiny (FTC, Texas AG) and litigation, though many claims were released in the bankruptcy plan.

Investor Verification Checklist

• Debt Renewal Status: Verify the renewal status of UACC's Warehouse Credit Facilities expiring in 2025, as failure to renew poses an existential liquidity risk.
• Credit Loss Trends: Monitor UACC's Cumulative Net Loss (CNL) rates and delinquency metrics to assess if they are trending toward pre-COVID levels as targeted.
• Fresh Start Accounting: Review the reorganization value and fair value adjustments applied to assets and liabilities post-January 14, 2025, as historical financials are no longer comparable.
• Securitization Market Access: Confirm UACC's ability to sell residual interests in securitization trusts to achieve off-balance sheet treatment and reduce leverage.
• Ownership Structure: Acknowledge the controlling interest of Mudrick Capital Management and its influence on strategic direction and board composition.