What changed in this filing

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Item 1. Business

2025-03-11 compared with 2024-03-13 · 201 added, 97 removed, 69 unchanged (81% of the section changed)

Vroom, Inc., which was incorporated under the laws of the State of Delaware in 2012, is a holding company that conducts its operations through its subsidiaries.

completed its initial public offering (“IPO”) in June 2020 and its common stock trades on The Nasdaq Global Select Market (“Nasdaq”) under the symbol VRM.

completed its initial public offering (“IPO”) in June 2020.

On November 13, 2024, Vroom, Inc.

entered into a Restructuring Support Agreement (together with all exhibits and schedules thereto, the “RSA”) and commenced a voluntary proceeding (the “Prepackaged Chapter 11 Case”) under Chapter 11 of the United States Code, 11 U.S.C.

§§ 101-1532, as amended from time to time (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) under the name In re Vroom, Inc ., Case No.

24-90571 (CML).

On January 8, 2025, the Bankruptcy Court entered an order (a) approving the disclosure statement of Vroom, Inc.

(the "Debtor"), (b) confirming the Prepackaged Plan of Reorganization of Vroom, Inc.

under Chapter 11 of the Bankruptcy Code (the “Plan”), and (c) granting related relief (the “Confirmation Order”).

On January 14, 2025, 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 January 14, 2025.

On December 2, 2024, the Company’s common stock was suspended from trading on the Nasdaq Global Select Market as a result of our Prepackaged Chapter 11 Case.

On February 20, 2025, our common stock was relisted and began trading on the Nasdaq Global Market under the ticker symbol “VRM”.

Vroom is exploring the potential listing of its warrants (as described herein) on a national stock exchange.

Unless the context otherwise requires, references herein to “Vroom”, the "Company”, “we”, “us” or “our” refer to Vroom and its consolidated subsidiaries.

During the fiscal year ended December 31, 2023, the period covered by this Annual Report on Form 10-K, Vroom operated an end-to-end ecommerce platform to buy and sell used vehicles.

On January 22, 2024, we announced that the Board of Directors (the “Board”) of Vroom had approved a value maximization plan, pursuant to which the Company has discontinued its ecommerce operations and is in the process of winding 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”).

Vroom owns United Auto Credit Corporation (“UACC”), a leading automotive finance company that offers vehicle financing to its customers through third party dealers under the UACC brand, and CarStory (“CarStory”), a leader in AI-powered analytics and digital services for automotive retail.

The UACC and CarStory businesses will continue to serve their third-party customers, with their operations substantially unaffected by Vroom’s ecommerce wind-down .

The Company will seek to grow and enhance the profitability of the UACC and CarStory businesses going forward.

Prior to the adoption of the Value Maximization Plan, the Company’s platform combined automotive ecommerce, vehicle operations and data science and experimentation to bring all phases of the car buying and selling process to consumers wherever they are, offering an extensive selection of used vehicles, transparent pricing, competitive financing, and at-home pick-up and delivery.

Pursuant to the Value Maximization Plan, we are conducting an orderly wind-down of our ecommerce business.

Former Ecommerce Operations

Vroom’s ecommerce platform offered thousands of vehicles that had undergone detailed inspections, met proprietary reconditioning standards and were backed by a Vroom 90-day limited warranty.

The platform provided comprehensive and transparent information on each of the vehicles we sold and provided buyers with a personalized, intuitive interface with specific sorting, searching and filtering functionality.

The platform offered integrated, real-time financing solutions through strategic partnerships with automotive finance lenders and through our subsidiary, UACC.

For consumers looking to sell their vehicles, the platform offered the ease of online submission of basic vehicle information to receive an on-demand appraisal.

Vroom’s vehicle operations encompassed a vertically integrated approach to sourcing, transporting, reconditioning, delivering, and picking up vehicles.

Data science and experimentation was at the core of Vrooms operations, and we relied on data science, machine learning and A/B and multivariate testing to continually drive optimization and operating leverage across our ecommerce and vehicle operations.

Pursuant to the Value Maximization Plan, we are conducting an orderly wind-down of our ecommerce business.

We have suspended transactions through vroom.com, completed transactions for customers who had previously contracted with us to purchase or sell a vehicle, halted purchases of additional vehicles , sold substantially all of our used vehicle inventory through wholesale channels and paid off our vehicle floorplan financing facility dated November 4, 2022 ("2022 Vehicle Floorplan Facility") with Ally Bank and Ally Financial Inc.

We continue to take other actions to maximize the value of our remaining ecommerce assets, reduce our outstanding commitments and preserve our liquidity, and have been executing a reduction-in-force commensurate with our reduced operations .

Although we expect the ecommerce wind down to be substantially complete by the end of the first quarter of 2024, we may incur additional wind-down costs through the end of 2024.

The UACC and CarStory businesses will continue to serve their third-party customers, with their operations substantially unaffected by Vroom’s ecommerce wind-down .

The Company will seek to grow and enhance the profitability of the UACC and CarStory businesses going forward.

For more information about our former ecommerce operations, please refer to “Part I, Item 1.

Business” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 2, 2023.

UACC, which Vroom acquired in February 2022, is an indirect lender that offers vehicle financing to consumers through third-party dealers under the UACC brand, focusing primarily on the non-prime market.

Prior to Vroom’s wind-down of its ecommerce operations, UACC also offered vehicle financing to Vroom’s customers through its ecommerce platform.

Effective March 1, 2024, Tom Shortt, the Company’s Chief Executive Officer, serves as UACC’s President and Chief Executive Officer and Jon Sandison, the Company’s VP, Investor Relations and FP&A, serves as UACC’s Chief Financial Officer.

The Company owns and operates United Auto Credit Corporation (“UACC”), a leading automotive finance company that offers vehicle financing to consumers through third-party dealers under the UACC brand, and CarStory, LLC (“CarStory”), 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.

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”).

The Company ceased transacting through vroom.com, completed transactions for customers who had previously contracted with the Company to purchase or sell a vehicle, halted purchases of additional vehicles, sold its used vehicle inventory through wholesale channels, paid off its vehicle floorplan financing facility dated November 4, 2022 with Ally Bank and Ally Financial Inc.

(the “2022 Vehicle Floorplan Facility”), and conducted a reduction-in-force commensurate with the reduced operations.

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”).

As part of the Ecommerce Wind-Down, Vroom has ended all sales and marketing activities for its used vehicle operations.

On November 13, 2024, Vroom Inc.

filed the Prepackaged Chapter 11 Case seeking to, among other things, restructure its then outstanding $290 million of unsecured convertible notes due in 2026 (“Notes”) through a comprehensive transaction outlined in the RSA.

The Bankruptcy Court approved the Plan on January 8, 2025, and the Company emerged from the Prepackaged Chapter 11 Case on January 14, 2025.

Under the Plan, approximately $290 million in debt was discharged and all previously issued and outstanding equity interests in the Company were cancelled and extinguished.

The Company issued an aggregate of approximately (i) 5,163,109 shares of new common stock and (ii) 364,516 shares of warrants in accordance with the terms of the Plan and certain other agreements.

Neither UACC nor CarStory were party to the Company’s Prepackaged Chapter 11 Case.

no longer has material long-term debt, but UACC will continue to be obligated to debt that is related to asset-backed securitizations and their trust preferred securities.

The Company is focused on executing its Long-Term Strategic Plan (described below) following the restructuring.

UACC, which Vroom acquired in February 2022, is an indirect lender that offers vehicle financing under the UACC brand to consumers through third-party dealers, focusing primarily on the non-prime market.

Prior to Vroom’s Ecommerce Wind-Down, UACC also offered vehicle financing to Vroom Automotive’s customers through its ecommerce platform.

Tom Shortt, the Company’s Chief Executive Officer, serves as UACC’s President and Chief Executive Officer, Jon Sandison, the Company’s VP, Investor Relations and FP&A, serves as UACC’s Chief Financial Officer, and Stefano Balistreri serves as UACC's Chief Risk Officer.

UACC, which has been engaged in automotive finance since 1996, currently offers financing services to a nationwide network of thousands of manufacturer-franchised and independent motor vehicle dealers in 49 states, and we seek to expand that network over time.

UACC enables these dealers to finance their customers' purchases of new and used 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.

As of December 31, 2024, UACC serviced a portfolio of approximately 78,000 retail installment sales contracts with an aggregate principal outstanding balance of $1.0 billion.

Sales and Marketing

As an indirect lender, UACC’s marketing efforts are focused on selling to independent auto dealerships, rather than consumers.

UACC utilizes a combination of internal and field area sales managers to both solicit and enroll new dealerships, and to market its financing programs and products to existing dealership partners.

Prior to establishing a business relationship with an automobile dealership, UACC completes a review of the dealership’s operations, inventory, facilities, performance, and owner’s credit history.

UACC’s sales managers serve as the primary liaison with the dealerships.

Sales managers focus their efforts on educating dealership personnel on UACC's lending programs and how to combine specific consumer characteristics, collateral and deal structures to increase the probability of approval under UACC’s underwriting guidelines.

The UACC sales manager serves as a consultant for the dealership to enable and encourage positive dealer loan performance while providing an enhanced consumer experience.

While UACC primarily services independent used auto dealerships, we plan to expand our offering to be more competitive with manufacturer-franchised dealers.

UACC establishes relationships with dealers utilizing both external and internal sales representatives.

External sales representatives live and operate in their local market, with the ability to personally visit dealerships.

Internal sales representatives work either remotely or in one of the three hubs (located in Newport Beach, California;

Fort Worth, Texas;

and Buffalo, New York) and may interface with dealerships outside of their physical location.

Both internal and external sales representatives enroll dealers, explain UACC’s programs, and offer support throughout the enrollment, application and funding processes.

As part of the enrollment process, a new dealer is required to enter into a dealer agreement with UACC that defines the parties’ respective rights and obligations.

Under the applicable dealer agreement, the dealer assigns the consumer contracts to UACC, which assumes the responsibility of administering, servicing and collecting the amounts due from the customer to UACC.

The dealer agrees that it will (i) only assign consumer contracts to UACC that meet the criteria established by UACC, and (ii) repurchase any consumer contracts that do not meet such criteria or for other reasons outlined in the dealer agreement.

For example, UACC's dealer agreement typically requires the selling dealership to buy back a motor vehicle retail installment contract if the consumer fails to timely make the first scheduled payment.

Throughout the lifetime of a dealer partnership, UACC closely monitors dealer loan performance across a number of metrics, along with utilizing data from both internal and external sources.

These can include, but are not limited to, dealer loan return on assets, loss to liquidation, customer delinquencies, dealership volumes, and fraudulent deals or documentation.

These metrics are used to calculate a dealer grade, which impacts the pricing and availability of consumer loans for a dealer.

Dealers have access to their scorecard, displaying their grade and performance trends so that they may take steps to improve, where applicable.

At its discretion, UACC may suspend or terminate its relationship with any dealership.

Lending Programs

UACC enables dealers to finance their customers’ purchases of new and used automobiles, medium- and light-duty trucks, and vans with competitive financing terms.

Historically, the credit programs offered by UACC were primarily designed to serve consumers who have limited access to traditional motor vehicle financing.

UACC is in the early stages of indirectly offering more competitive vehicle financing services to consumers with slightly higher, or “near-prime,” credit scores compared to its historical customer base.

UACC primarily offers four distinct programs, with varying credit, pricing and stipulation parameters, depending on eligibility:

• Preferred Program :

the standard program for most non-prime applicants.

Due to the expected high default risk of this consumer base, compensating risk factors are heavily leveraged:

ability-to-pay requirements, asset quality, cash down payments, number of open vehicle loans, restricted term lengths, and limited amount financed;

• Bankruptcy Program :

applicants with open bankruptcies and applicants with discharged bankruptcy within one year of application (subject to other qualifications);

• Commercial Program :

Non-passenger vehicles with gross vehicle weight rating of 14,500 lbs.

or less (subject to other qualifications);

• Near Prime Program :

applicants with a minimum FICO of 600 and additional credit history requirements.

Due to the uniqueness of the programs as well as credit and asset quality of the customer and collateral respectively, limits for advance, loan term, stipulations, and pricing fluctuate to balance varying risk factors.

UACC’s underwriting process begins when UACC accepts a consumer credit application from one of its approved dealerships.

Upon receipt, required information is entered into UACC's underwriting system for review and disposition by UACC's automated underwriting decisioning engine in accordance with UACC’s established underwriting guidelines.

Upon receipt, required information is entered into UACC's underwriting system for review and disposition by UACC’s automated underwriting decision engine in accordance with UACC’s established underwriting guidelines.

Any exceptions to the guidelines are reviewed in accordance with our policies and procedures.

Because UACC serves consumers who are typically unable to meet the credit standards imposed by most traditional motor vehicle financing sources, it may charge higher interest rates than most traditional motor vehicle financing sources.

UACC verifies the accuracy of information submitted through credit applications and retail installment sales contracts.

Verifications are assigned based on risk modeling and completed via a combination of first-party verifications and third-party data sources.

Verifications may include customer identity, customer interviews, proof of residence, verification of employment, proof of income, collateral/vehicle valuation, verification of insurance, and other stipulated requirements resulting from risk factors inherent within each credit application.

Verifications are assigned based on risk modeling within each program and completed via a combination of first-party verifications and third-party data sources.

Verifications may include customer identity, proof of residence, verification of employment, proof of income, collateral/vehicle valuation, verification of insurance, proof of trade, and other stipulated requirements resulting from risk factors inherent within each credit application.

Credit analysts conduct customer interviews for some applications based on risk modeling.

Customer interviews are used to verify customer identity and to resolve any questions that may arise during the verification process.

UACC utilizes a predominantly paperless process for the review and purchase of the resulting retail installment sales contracts.

Following underwriting approval of a credit application, each dealer delivers a completed motor vehicle retail installment sales contract and other required documentation to UACC.

The majority of contracts and other required documentation is uploaded to UACC’s online dealer portal (“UACC Dealer Portal”) and available for immediate review by funding staff.

Some required documentation is mailed via courier or US Postal Service, and these packages are scanned, indexed and available promptly for review by the funding department.

Upon receipt of contract documentation, a UACC funding analyst will check to ensure that all required documentation has been received and has been fully and properly completed.

In order to validate the risk assessment completed at the time of underwriting, the funding analyst will then complete verification of information provided by the applicant in conjunction with information from third-party data providers.

In the event of missing documentation or the discovery of inaccurate information, the funding analyst will initiate corrective action as appropriate.

Ancillary Products

UACC finances the purchase of ancillary products that provide potential protection to consumers during their ownership experience.

As of December 31, 2024, UACC finances the purchase of Vehicle Service Contracts ("VSCs") and Guaranteed Asset Protection ("GAP").

VSCs provide protection for consumers by paying for the cost of certain covered mechanical-related issues with the vehicle.

UACC works with third-party administrators to underwrite and administer the program and service claims.

retail price of the VSC is included in the total amount financed and is itemized on the retail installment contract.

Dealers earn a commission on the sale of each VSC, though each VSC is cancellable by the customer through its term.

UACC earns a fee on the sale of each VSC and earns income from the finance charges earned from the additional amounts financed through the life of the financing.

At the time of funding, UACC pays premiums to administrators on each VSC financed.

UACC may also receive a share of profits from the third-party administrators based on the performance of the portfolio of VSCs financed.

GAP helps protect customers’ vehicle purchases in instances in which the customer’s vehicle experiences a total loss due to damage or theft and the outstanding amount owed exceeds the settlement amount covered by the customer’s insurance policy.

UACC sells, administers and services our own GAP product.

The retail price of the GAP is included in the total amount financed and is itemized on the retail installment contract.

Dealers earn a commission on the sale of each GAP product, though each GAP is cancellable by the customer through the life of financing.

UACC earns income from the finance charges earned from the additional amounts financed through the life of the loan.

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.

Servicing activities consist primarily of collecting and processing customer payments, responding to customer inquiries, initiating contact with customers who are delinquent in payment of an installment, maintaining the security interests in the financed vehicles and, when necessary, arranging for the repossession and liquidation of the financed vehicles and pursuit of deficiencies.

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 December 31, 2023, UACC serviced a portfolio of approximately 79,000 retail installment sales contracts with an aggregate principal outstanding balance of $1.1 billion.

To fund UACC’s automotive finance operations, eligible retail installment sales contracts that UACC originates or purchases are pledged to lenders under warehouse credit facilities and typically sold to third-party investors via securitization transactions, with UACC continuing to service the finance receivables underlying those contracts.

In such securitization transactions, UACC conveys a pool of automotive finance receivables to a special purpose vehicle, typically a trust that, in turn, issues certain securities.

The securities issued by the special purpose vehicle are collateralized by the pool of automotive finance receivables.

In exchange for the transfer of finance receivables to the special purpose vehicle, UACC receives the cash proceeds from the sale of the securities.

CarStory is a leader in AI-powered analytics and digital services for automotive retail.

CarStory offers its digital retailing 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.

CarStory drives automotive retail innovation by aggregating, optimizing and distributing data from thousands of automotive sources.

CarStory tracks over three and a half million unique vehicle identification numbers (“VINs”) listed for sale every day.

This data is aggregated with demand insights from millions of consumer sessions and VIN data from CarStory's proprietary VIN database to generate accurate price and sales .

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.

In addition to its data analytics and digital services, CarStory powers white labeled storefronts for automotive marketplaces and finance companies.

In developing its white label capabilities, CarStory also has developed a variety of consumer-focused functions designed to enhance the customer experience and drive conversion.

CarStory's data and data science assets create significant opportunity for automotive AI product development, with over 200 million VINs, over three billion photos and price and price elasticity models.

As an indirect lender, UACC's marketing efforts are focused on selling to dealerships, rather than consumers.

UACC utilizes a combination of internal and field sales managers to both solicit the enrollment of new dealerships and to market its financing programs and products to existing dealerships.

UACC's sales managers serve as the primary liaison with its dealerships.

Prior to establishing a business relationship with an automobile dealership, UACC completes a review of the dealership's operations, inventory, facilities, and owner’s credit history.

CarStory has not actively engaged in marketing activities since being acquired by Vroom in 2021.

As part of the wind-down of its ecommerce business, Vroom has ended all sales and marketing activities for its used vehicle operations.

Because UACC has historically focused 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.

UACC segments consumer accounts for collection activity based on the stage of delinquency.

Outbound collection efforts utilize a combination of manual (human) and automated (digital) campaigns.

Automated campaigns include outbound telephone dialer campaigns, e-mail campaigns, text messaging campaigns, and push notifications via the UACC native mobile app.

When customers encounter temporary disruptions in employment or otherwise experience temporary disruptions in their ability to make payments, collection representatives may offer solutions to assist customers in navigating these life events.

Extensions and due date changes are solutions that may be offered to address temporary disruptions.

UACC uses a network of national and regional third-party suppliers to recover vehicles assigned for repossession.

Upon recovery, some customers demonstrate a sufficient level of commitment to reinstate their account.

UACC liquidates repossessed inventory through a network of third-party auto auctions.

UACC utilizes the CarStory Real Market Price (defined below) as a reference for evaluating price floors for vehicle sales.

Following the sale of a repossessed vehicle, the net sale proceeds are applied to the remaining balance of the contract.

Any balance remaining after application of the net sale proceeds is recorded as a loss or charged-off.

Charged-off UACC accounts are transferred to UACC’s recovery department for additional collections work to recover the charged-off balance.

Securitizations

To fund UACC’s automotive finance operations, eligible retail installment sales contracts that UACC originates or purchases are pledged to lenders under warehouse credit facilities and typically sold to third-party investors via private securitization transactions targeted to institutional investors and other financial institutions.

In such securitization transactions, UACC conveys a pool of retail installment sales contracts to a special purpose vehicle ("SPV"), typically a trust, which, in turn, issues one or more classes of securities backed by such pool of retail installment sales contracts.

While the SPVs are included in our consolidated financial statements, they are separate legal entities, and the assets held by any particular SPV are legally owned by them and are not available to our creditors, the creditors of UACC or creditors of our other SPVs.

Payments to securitization investors are primarily made from cash flows on the related pool of retail installment sales contracts.

Such payments are not made by Vroom or UACC (except for certain repurchases as described below) and are not based on Vroom or UACC’s creditworthiness.

UACC continues to service each pool of retail installment sales contracts in accordance with its customary servicing practices and procedures.

In such capacity UACC collects payments on retail installment sales contracts that are in turn transferred to an independent third-party trustee for further distribution to the applicable investors.

UACC also prepares a monthly servicer’s certificate that tracks the performance of each pool of retail installment sales contracts, including collections, distributions, delinquencies, and losses on such retail installment sales contracts.

Each retail installment sales contract contributed to an SPV must satisfy certain selection criteria based on factors such as location of the obligor, contract term, payment schedule, interest rate, and whether the contracts are active and in good standing (for instance, when the obligor is not more than 30-days delinquent on monthly payment or bankrupt).

UACC does not make any representations or warranties regarding the future performance of the retail installment sales contracts.

Upon the breach of one of these representations or warranties (subject to any applicable cure period) that materially and adversely affects the investors' interest, UACC is obligated to repurchase the affected retail installment sales contract from the SPV.

In exchange for the transfer of retail installment sales contracts to the SPV, UACC receives the cash proceeds from the sale of the securities.

Since 2012, UACC has completed 16 securitization transactions with over $3 billion in issued securities.

The automotive financing industry is large and highly competitive.

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As a result, UACC competes with other financing sources on the basis of the approved structure, minimum customer requirements and stipulations, types of vehicles financed, dealer fees, dealer incentives, levels of service, and distribution (accessibility to UACC’s program via credit application technology platforms).

We believe that we can obtain from our dealership network sufficient automobile contracts for purchase at attractive prices by consistently applying reasonable underwriting criteria and making timely purchases of qualifying automobile contracts, however, there can be no assurance that we will be able to do so.

however, there can be no assurance that we will be able to do so.

The used vehicle industry typically experiences an increase in sales early in the calendar year and reaches its highest point late in the first quarter and early in the second quarter.

Vehicle sales then level off through the rest of the year, with the lowest level of sales in the fourth quarter.

This seasonality has historically corresponded with the timing of income tax refunds.

Consistent with market trends, UACC generally experiences increased funding activity during the first quarter through tax season.

Delinquencies also tend to be lower during the first quarter through tax season and higher during the latter half of the year.

See “Risk Factors—Risks Related to Our Financial Condition and Results of Operations—We may experience seasonal and other fluctuations in our quarterly results of operations, which may not fully reflect the underlying performance of our business.”

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 245 million vehicle identification numbers ("VINs"), 183 million window stickers, 3.9 billion vehicle photos and 370 million sales cycles, along with price and price elasticity models.

CarStory receives data for over three and a half million unique VINs listed for sale every day, resulting in CarStory having data for an estimated 90% of U.S.

consumer vehicles.

This data is aggregated with demand insights from millions of consumer sessions and data from CarStory’s proprietary VIN database to generate more accurate vehicle valuations .

CarStory helps dealers optimize their pricing by leveraging data science models for retail pricing that provide predictive pricing for marketing, buying, selling and VIN-level features.

Unlike simple averages, we believe CarStory’s patented neural-net algorithm can provide a highly accurate market price (the “CarStory Real Market Price”) for vehicle

We believe that the CarStory Real Market Price accounts 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.

The automotive data and service business is large and very competitive.

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We compete with other companies to attract customers to our marketplace and dealers to our digital solutions.

Since being acquired by Vroom, CarStory has conducted limited marketing activities and focused on serving its existing customers and continuing to develop its used vehicle database and data science models for retail pricing.

Long-Term Strategic Plan

Since the announcement of the Value Maximization Plan in January 2024, we have been focused on building a long-term strategic plan (“Long-Term Strategic Plan”) leveraging our remaining assets to improve the profitability of the business and achieve three key objectives:

• Achieve pre-COVID Cumulative Net Losses (“CNL”) or lower;

• Grow origination with pre-COVID CNL or lower;

• Lower operating costs.

In order to achieve these objectives, we are focused on four strategic initiatives:

• Build a world class lending program :

Focus on using advanced models and analytics to predict losses and drive profitable growth, bringing subprime CNL to pre-COVID levels.

Expand the Near-Prime Program to enable UACC to become a more significant partner to dealers.

• Build a world class sales and marketing program :

Attract and retain the best dealers and drive deeper dealer engagement to enable growth.

Improve the Fast Lane, a portal built to provide the dealer with everything they need from application through contracting.

• Build operational excellence in originations :

Enhance systemic capabilities and decisioning for a more efficient process.

Integrate Vroom patent-pending AI agent into UACC’s funding process to reduce costs, improve accuracy, and reduce fraud.

Build a pre-verification automated engine to improve dealer service, improve credit quality and increase capture rates.

• Build operational excellence in servicing :

Utilize data science, advanced analytics and technology to enable an improved approach to servicing effectiveness.

Utilize the native consumer mobile app, which was launched in September 2024, to improve customer engagement and communication and target more on-time payments.

As part of our Long-Term Strategic Plan, we developed three indicative models:

(1) the Base model;

(2) the Growth model;

and (3) the Aggressive Growth model.

Each model is intended to successively build on the potential success of the prior model.

The success and timing of the execution of the three key objectives and four strategic initiatives determine which model we will pursue over time.

The Base model achieves CNL, origination cost per funded contract and servicing cost per account at pre-COVID levels in order to return the UACC business to profitability.

We also may leverage the CarStory Real Market Price for vehicle valuations in underwriting and servicing as well as continue to integrate existing Vroom and CarStory technology into our UACC Dealer Portal.

If we are successful in achieving these milestones, we will pursue the Growth model, which shares the same targets as the Base model.

Additionally, we would look to expand our Near-Prime Program to about 10% of our origination mix and begin to grow in the manufacturer-franchised dealer market.

We would expect this migration up the credit spectrum to allow us to reduce our servicing cost per account and allow us to add new features and functions to our UACC Dealer Portal.

Finally, if we are progressing well on the objectives of our Growth model, we would pursue our Aggressive Growth model.

This indicative model would aim to expand our Near-Prime Program to approximately 20% of our origination mix, further reduce our cost per serviced account, and feature further expansion into the franchise dealer market.

Human Capital Management

As of December 31, 2023, the Company employed a total of 1,682 employees, of which 1,675 were full-time employees.

The total consisted of 1,468 employees across 34 states in the United States and 214 employees based in Belgrade, Serbia.

UACC employed 683 workers, of which 677 were full-time.

CarStory employed 219 workers, 213 of which are based in Serbia, with the balance in the US.

The balance were employed as part of the Vroom ecommerce

As of December 31, 2024, the Company employed a total of 710 employees across its operations, of which 704 were full time.

None of our employees is represented by a labor union.

We consider our relationships with our employees to be good and have not experienced any interruptions of operations due to labor disagreements.

In January and April 2023, as part of our continued focus on reducing variable and fixed costs, we conducted reductions in force across the Vroom business.

During the year, we also undertook several smaller reductions to further streamline the business.

In January 2024, in connection with the wind-down of our ecommerce operations, we began a significant reduction in force across the entire Vroom business .

We anticipate that approximately 800 employees will be impacted upon substantial completion of the wind-down, resulting in a reduction of approximately 93% of the employees not engaged in UACC’s or CarStory’s ongoing operations.

The Company maintains positive employee relations and has not experienced any operational disruptions due to labor disputes.

Beginning in January 2024, the Company implemented significant workforce reductions in order to reduce costs and streamline the business.

As part of the Ecommerce Wind-Down, Vroom Automotive, LLC implemented a reduction in force affecting 774 workers, impacting approximately 90% of its workforce.

UACC underwent multiple reductions during 2024, primarily in Servicing, Technology, Accounting and HR departments.

Intellectual Property

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As of the date of this Annual Report on Form 10-K, CarStory has 32 issued or allowed U.S.

patents with expirations through 2039 and seven pending U.S.

patents with expirations through 2039 and eight pending U.S.

patent applications, and Vroom has one pending nonprovisional patent.

We own 25 registrations for trademarks in the United States owned by Vroom, Vast (CarStory's parent entity) and UACC, collectively, with renewal deadlines through 2033, including Vroom®, V & Design®, Get In®, Sell Us Your Car®, VroomProtect®, Texas Direct®, CarStory®, Vast® and United Auto Credit®;

and we hold 54 registered trademarks in Australia, Brazil, China, Colombia, Chile, Argentina, the European Union, the United Kingdom, Japan, Singapore, Mexico, Canada, South Korea and Peru, including for the Vroom® trademark with renewal deadlines through 2033 and we also have a number of pending trademark applications in the U.S.

We own 28 registrations for trademarks in the United States owned by Vroom, Vast (CarStory's parent entity) and UACC, collectively, with renewal deadlines through 2034, including Vroom®, V & Design®, Get In®, Sell Us Your Car®, VroomProtect®, CarStory®, Vast® and United Auto Credit®;

and we hold 87 registered trademarks in Australia, Brazil, China, Colombia, Chile, Argentina, the European Union, the United Kingdom, Japan, Singapore, Mexico, Canada, South Korea and Peru, including for the Vroom® trademark with renewal deadlines through 2035 and we also have pending trademark applications in the U.S.

and certain foreign jurisdictions.

We continually review our branding strategies and technology development efforts to assess the existence, registrability, and patentability of new intellectual property.

We will work to preserve the value of our Vroom® intellectual property rights where appropriate following the wind-down of our ecommerce operations.

We will work to preserve the value of our Vroom® intellectual property rights where appropriate following the Ecommerce Wind-Down.

Intellectual property laws, procedures and restrictions provide only limited protection and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated.

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These laws mandate certain disclosures with respect to finance charges on automobile contracts and impose certain other restrictions.

Most states regulate retail installment sales, including setting a maximum interest rate, caps on certain fees, or maximum amounts financed.

Most states regulate retail installment sales, including setting a maximum interest

rate, caps on certain fees, or maximum amounts financed.

Certain states require UACC to have a sales finance license, consumer credit license, or similar applicable license.

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In addition, UACC is subject to supervision and examination by the Consumer Financial Protection Bureau (“CFPB”), a federal agency created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).

products and services, and to issue rules requiring enhanced disclosures for consumer financial products or services.

The CFPB has rulemaking, supervisory and enforcement authority over UACC and is specifically authorized, among other things, to take actions to prevent companies from engaging in “unfair, deceptive or abusive” acts or practices in connection with consumer financial products and services, and to issue rules requiring enhanced disclosures for consumer financial products or services.

The CFPB also has authority to interpret, enforce and issue regulations implementing enumerated consumer laws, including certain laws that apply to UACC.

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In addition, the Federal Trade Commission has jurisdiction to investigate aspects of our business.

From time to time, we are subject to routine investigations by state and federal regulators.

From time to time, we are subject to investigations by state and federal regulators.

We expect that regulatory investigations by both state and federal agencies will continue, and there can be no assurance that the results of such investigations will not have a material adverse effect on UACC.

The advertising, sale, purchase, financing and transportation of used vehicles are regulated by every state in which we previously operated our ecommerce business, and by the U.S.

Vroom’s prior ecommerce business, including the advertising, sale, purchase, financing and transportation of used vehicles, was regulated by every state in which we previously operated our ecommerce business, and by the U.S.

federal government.

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From time to time, our ecommerce business was subject to audits, requests for information, investigations and other inquiries from our regulators related to customer complaints.

As we encountered operational challenges in keeping up with our rapid growth from 2020 through the first quarter of 2022, we experienced an increase in customer complaints, leading to an increase in such regulatory inquiries.

We have endeavored to promptly respond to any such inquiries and cooperate with our regulators.

We previously held automotive dealer licenses and motor vehicle sales finance licenses or retail installment seller licenses in multiple states.

As a result of the wind-down of the ecommerce business and cessation of our used automotive dealer operations, we are in the process of terminating such licenses.

As a result of the Ecommerce Wind-Down, we have terminated nearly all such licenses.

In addition to the laws and regulations described above, our facilities and business operations are subject to laws and regulations relating to environmental protection, occupational health and safety, and other broadly applicable business regulations.

We also are subject to laws and regulations involving taxes, tariffs, privacy and data security, anti-spam, pricing, content protection, electronic contracts and communications, mobile communications, consumer protection, information-reporting requirements, unencumbered internet access to our platform, the design and operation of websites and internet neutrality.

We also are subject to laws and regulations affecting public companies, including securities laws and Nasdaq listing rules.

For a discussion of the various risks we face from regulation and compliance matters, see “Risk Factors—Risks Related to Cybersecurity and Privacy—Failure to comply with federal, state and local laws and regulations relating to privacy, data protection and consumer protection, or the expansion of current or the enactment of new laws or regulations relating to privacy, data protection and consumer protection, as well as our actual or perceived failure to protect such information could harm our reputation and could adversely affect our business, financial condition and results of operations”;

“Risk Factors—Risks Related to Cybersecurity and Privacy—Our CarStory business relies on artificial intelligence to facilitate the automotive retail experience.

If our use of artificial intelligence results in inaccurate data, regulatory scrutiny, privacy concerns or is otherwise unsuccessful, it could adversely affect our business, results of operations, and financial condition”;

“Risk Factors—Risks Related to Cybersecurity and Privacy—Any actual or perceived failure to comply with the evolving regulatory frameworks around the development and use of AI could adversely affect our business, results of operations, and financial condition”;

“Risk Factors—Risks Related to Laws and Regulations——We operate in a highly regulated industry and are subject to a wide range of federal, state and local laws and regulations.

Failure to comply with these laws and regulations could have a material adverse effect on our business, financial condition and results of operations”;

“—If we fail to comply with the Telephone Consumer Protection Act, we may face significant damages, which could harm our business, financial condition and results of operations”;

and “—Government regulation of

the internet and ecommerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business, financial condition and results of operations”.

Used vehicle sales are seasonal.

The used vehicle industry typically experiences an increase in sales early in the calendar year and reaches its highest point late in the first quarter and early in the second quarter.

Vehicle sales then level off through the rest of the year, with the lowest level of sales in the fourth quarter.

This seasonality has historically corresponded with the timing of income tax refunds, which are an important source of funding for vehicle purchases.

Additionally, used vehicles depreciate at a faster rate in the last two quarters of each year and a slower rate in the first two quarters of each year.

However, the past few years have not followed typical depreciation trends and there remains continued uncertainty surrounding market trends.

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.

We also are subject to evolving laws and regulations involving artificial intelligence, taxes, tariffs, privacy and data security, anti-spam, pricing, content protection, electronic contracts and communications, mobile communications, consumer protection, information-reporting requirements, unencumbered internet access to our platform, the design and operation of websites and internet neutrality.

We also are subject to laws and regulations affecting public companies, including securities laws and national securities exchange listing rules.

New and changing laws, regulations, executive orders, other governmental actions, and changing enforcement priorities, including due changing presidential administrations, may also create uncertainty about how laws and regulations will be interpreted and applied.

Legal and regulatory changes and other actions that materially adversely affect our business may be announced with little or no advance notice we may not be able to effectively mitigate all adverse impacts from such measures.

Differing interpretations of such legal obligations can expose us to significant fines, government investigations, litigation and reputational harm.

If we are found to have violated laws, regulations, or executive orders, it could materially adversely affect our business, reputation, results of operations and financial condition.

Refer to the section titled “Risk Factors” for a discussion of the various risks we face from regulation and compliance matters.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business