Vroom, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The filing was signed March 13, 2024. Unless noted otherwise, financial figures below are for FY2023 compared with FY2022.
Business context and major strategic change
During FY2023, Vroom operated an online used-vehicle business alongside UACC, its non-prime indirect auto lender, and CarStory, an automotive analytics and digital-services business. On January 22, 2024, Vroom announced its Value Maximization Plan: discontinue ecommerce and wind down the used-vehicle dealership business to preserve liquidity, while continuing UACC and CarStory. Vroom suspended transactions on its website, stopped vehicle purchases, liquidated substantially all used-vehicle inventory through wholesale channels, and repaid its vehicle floorplan facility. It expected the wind-down to be substantially complete by the end of Q1 2024, with costs potentially continuing through year-end.
Financial performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $893.2 million | $1,948.9 million |
| Gross profit | $161.9 million (18.1% margin) | $244.8 million (12.6% margin) |
| Operating loss | $270.2 million | $571.8 million |
| Net loss | $365.5 million | $451.9 million |
| Adjusted EBITDA | $(277.2) million | $(345.6) million |
| Cash used in operating activities | $533.7 million | $109.1 million |
- Revenue fell 54.2%, driven primarily by lower vehicle volume: ecommerce units sold declined 55.7% to 17,401, and wholesale units sold declined 66.0% to 7,094. Ecommerce and wholesale operations are being discontinued.
- Total gross profit fell 33.8%. Ecommerce gross profit was $59.2 million versus $100.0 million; wholesale recorded a $34.4 million gross loss versus a $10.6 million loss. Retail Financing gross profit was $125.6 million versus $138.4 million.
- UACC revenue rose 2.9% to $156.9 million, but its Retail Financing gross profit declined 9.2%. UACC reported a $41.2 million standalone pretax loss for 2023, including intercompany eliminations.
- SG&A declined 39.9% to $340.7 million, mainly reflecting lower compensation, marketing, logistics, and other costs. Other loss, net increased to $108.3 million, principally due to higher losses on finance receivables.
- FY2023 net loss includes $48.7 million of impairment charges and a $37.9 million gain from repurchasing debt below par. FY2022 included $211.9 million of impairment charges and a $164.7 million debt-extinguishment gain.
- Operating cash use increased substantially year over year. The company cited working-capital changes, including inventory movements, and FY2022 proceeds from finance-receivable sales as important drivers of the comparison.
Balance sheet, debt, and liquidity
- At December 31, 2023, cash and cash equivalents were $135.6 million and restricted cash was $73.2 million. Cash and cash equivalents were approximately $94.0 million at February 29, 2024.
- Reported total assets were $1.475 billion, total liabilities $1.353 billion, and stockholders’ equity $122.2 million. Accumulated deficit was $1.966 billion.
- At December 31, 2023, consolidated debt carrying value was $626.6 million, excluding the vehicle floorplan and warehouse facilities. Separately, Vroom disclosed $151.2 million of floorplan borrowings, $421.3 million under UACC warehouse facilities, and $314.1 million of securitization debt; its disclosed consolidated principal indebtedness was approximately $1.199 billion. The floorplan facility was repaid in full and terminated in Q1 2024.
- Convertible notes carry a 0.75% coupon and mature July 1, 2026. At year-end, $290.5 million principal remained outstanding (the balance-sheet carrying value was $286.8 million, net of issuance costs). Vroom repurchased $74.2 million principal during 2023 for $36.5 million.
- UACC’s four warehouse facilities had an $825.0 million aggregate borrowing limit, $421.3 million outstanding, and $56.9 million of excess borrowing capacity at year-end; maturities fall between June and September 2025. The filing says certain advance rates had decreased amid higher credit losses and interest rates.
- Management stated that existing cash and UACC’s warehouse facilities were expected to support ongoing operations and obligations, including the wind-down, for at least 12 months from the financial-statement issuance date. It also cautioned that liquidity depends on wind-down costs, UACC credit performance, advance rates, and access to securitization markets.
Changes, outlook, risks, and contingencies
- The wind-down plan carries estimated one-time costs of approximately $31.5 million: $16.5 million for severance and related personnel costs and $15.0 million for contract and lease terminations. Approximately 800 employees were expected to be affected. The company recorded $47.4 million of long-lived asset impairments associated with the triggering event at December 31, 2023.
- UACC’s non-prime portfolio is experiencing higher credit losses and loss severity, which management expected to continue to pressure results in 2024. Higher losses may also reduce warehouse advance rates and make securitizations harder or more expensive. Vroom retained residual interests in its 2023-1 securitization, which remained accounted for as secured borrowings.
- About 30% of UACC’s serviced loan portfolio at year-end related to Vroom customers or contracts purchased from Vroom. The ecommerce shutdown therefore creates a need to replace that loan flow through third-party dealers.
- Management provided no clear numerical operating or earnings guidance for 2024 in the filing. Its outlook emphasizes completing the wind-down, preserving cash, and seeking to improve UACC and CarStory profitability.
- The FTC stated in February 2024 that it had reason to believe Vroom violated several consumer-protection rules and was authorized to negotiate a stipulated order. The company said it intended to work cooperatively; potential liability was not estimable at that stage.
- A Texas settlement approved in December 2023 requires $3.0 million in civil penalties and attorneys’ fees, payable in installments in September 2024 and September 2025, and a permanent injunction covering certain practices. Securities class and derivative litigation also remain pending; Vroom disputes the claims.
- After a 1-for-80 reverse stock split, Vroom regained Nasdaq’s $1 minimum-bid-price compliance in February 2024. Continued listing remains a risk; delisting could trigger noteholder rights to seek repayment at par.
- The auditor issued unqualified opinions on the financial statements and internal control over financial reporting. Management also concluded that disclosure controls and internal controls were effective as of December 31, 2023.
Most important facts for investors to verify
- Cash burn since year-end, actual wind-down costs and timing, and whether liquidity remains adequate after severance, lease exits, and other commitments.
- UACC delinquency, loss-severity, charge-off, and recovery trends; changes in warehouse advance rates; and the availability and economics of future securitizations.
- Progress in replacing Vroom-related originations with third-party dealer business, and whether UACC and CarStory can generate sustainable profitability.
- Remaining debt balances and maturity/refinancing plans, especially the July 2026 convertible notes and 2025 warehouse-facility maturities.
- Resolution and financial exposure from the FTC matter, pending securities and derivative litigation, and other regulatory or consumer claims.
- Nasdaq continued-listing compliance and any further share issuance or dilution under the ATM program or equity plans.