What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-03-11 compared with 2024-03-13 · 1277 added, 1229 removed, 817 unchanged (75% of the section changed)

5 unchanged sentences

Recent Events

Recapitalization of Balance Sheet Debt:

the Prepackaged Chapter 11 Case

On November 12, 2024, in connection with the Prepackaged Chapter 11 Case (as defined below), we 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 0.75% unsecured Convertible Senior Notes due 2026 (the “Notes”), issued pursuant to an indenture (the “Indenture”), between the Company and U.S.

Bank National Association, as trustee, 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.

On November 13, 2024, we 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 (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.” None of our subsidiaries were debtors in the Chapter 11 proceedings.

On January 14, 2025 (the “Effective Date”), the conditions to the effectiveness of the Plan were satisfied or waived and the Plan became effective.

We emerged from the Prepackaged Chapter 11 Case on January 14, 2025.

In connection with the Prepackaged Chapter 11 Case, the ordinary course operations of Vroom, Inc.’s subsidiaries continued with minimal impact.

We emerged without any remaining Notes or long-term debt at the Vroom, Inc.

level, but still maintain UACC’s Warehouse Credit Facilities (as defined below), securitization debt, financing of beneficial interest in securitizations, and junior subordinated debentures.

The Prepackaged Chapter 11 Case was intended to address the impact of the Notes and their upcoming maturity, or any potential acceleration, while providing the potential for our stockholders to retain value in their investment, limiting disruption to our ongoing ordinary course operations, emerging as a public company without any long-term debt at the Vroom, Inc.

level, and maximizing the ability to utilize a substantial portion of our net operating losses.

See “Liquidity and Capital Resources” for more information on our Notes and the restructuring of our debt obligations as a result of the Prepackaged Chapter 11 Case, and Part I, Item 1A Risk Factors for risks associated with the Prepackaged Chapter 11 Case and our ability to realize its intended benefits.

Conversion of Common Stock

Immediately prior to the Effective Date, there were 1,822,577 outstanding shares of our common stock, $0.001 par value per share (the “Common Stock”).

We adopted an Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to, among other changes to our 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 5,163,109 outstanding shares of newly issued Common Stock as of the Effective Date (the “New Common Stock”).

Issuance of Warrants

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 364,516 shares of the New

Common Stock, at an exercise price of $60.95 per share, to stockholders of the Company in accordance with the Prepackaged Chapter 11 Case.

Each Warrant was immediately exercisable upon the issuance date and will expire five years from the issuance date.

2020 Incentive Award Plan

Pursuant to the Plan, our existing 2020 Incentive Award Plan (as amended from time to time, the “2020 Plan”), was amended 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 15% of the fully-diluted shares of New Common Stock as of immediately following the Effective Date, inclusive of the Warrants, the management incentive program and the converted existing equity awards:

10% will be allocated for awards of restricted stock units and 5% will be allocated for awards of stock options.

Going Concern

As described above, we filed the Prepackaged Chapter 11 Case to implement the transactions described herein.

As of January 14, 2025 we emerged from bankruptcy and continue to operate as a viable going concern.

The accompanying audited 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.

Nasdaq Notice of Delisting

On November 21, 2024, we received a notice from the Nasdaq Listing Qualifications Department that Nasdaq had determined to delist our Common Stock.

Nasdaq reached its decision that we were no longer suitable for listing pursuant to Nasdaq Listing Rules 5101, 5110(b), and IM-5101-1, as a result of our filing of the Prepackaged Chapter 11 Case on November 13, 2024.

On November 28, 2024, we requested a hearing before a Nasdaq Hearing Panel to appeal Nasdaq’s delisting determination.

During the pendency of our appeal, on December 2, 2024, our Common Stock was suspended from trading on Nasdaq and was quoted on an over-the-counter market.

Following our emergence from the Prepackaged Chapter 11 Case on January 14, 2025, all previously issued and outstanding equity interests in Vroom were cancelled and extinguished, all trading of our Common Stock ceased on the over-the-counter market, and Nasdaq issued a Moot Letter to cancel the hearing and close the matter.

After ongoing discussions with the Nasdaq Listing Qualifications staff, on February 20, 2025, our New Common Stock was relisted for trading on the Nasdaq Global Market.

Value Maximization Plan

On January 22, 2024, we announced that our Board had approved the Value Maximization Plan, pursuant to which we discontinued our ecommerce operations and are in the process of winding down our used vehicle dealership business in order to preserve liquidity and enable us to maximize stakeholder value through our remaining businesses.

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 2022 Vehicle Floorplan Facility.

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.

We also own and operate UACC, a leading automotive finance company that offers vehicle financing to its customers through third-party dealers under the UACC brand, and CarStory, an artificial intelligence-powered analytics and digital services platform 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.

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

As a result of the Value Maximization Plan, we estimate that we will incur total cash charges of approximately $16.5 million for severance and other personnel-related costs and approximately $15.0 million in contract and lease termination costs.

As part of a planned reduction-in-force under the Value Maximization Plan, 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.

We determined a triggering event existed as of December 31, 2023, resulting in long–lived asset impairment charges of $47.4 million.

The impairment charges consist of $23.9 million related to "Property and equipment, net", $22.2 million related to "Operating lease right-of-use assets", and $1.3 million related to "Other assets" on our consolidated balance sheet.

Refer to Note 7 — Property and Equipment, Net and Note 12 — Leases in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion.

Repayment of 2022 Vehicle Floorplan Facility

On January 19, 2024, we amended our 2022 Vehicle Floorplan Facility.

As a result of the amendment, borrowings under the 2022 Vehicle Floorplan Facility were suspended for future vehicle purchases and we were required to maintain 40% of our outstanding borrowings in cash.

In addition, all other financial covenants were eliminated.

As a result of the liquidation of our vehicle inventory, we repaid the remaining outstanding balance related to the 2022 Vehicle Floorplan Facility in full and the agreement has been terminated.

Nasdaq Notice and Reverse Stock Split

On December 21, 2023, we received written notice from The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that, for the last 30 consecutive business days, the bid price for our common stock had closed below the $1.00 per share

minimum bid price requirement for continued inclusion on the Nasdaq Global Select Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the "Minimum Bid Price Requirement").

On February 13, 2024, after obtaining stockholder approval, we effected a 1-for-80 reverse stock split (the "Reverse Stock Split"), and our stock began trading on a post-split adjusted basis on February 14, 2024.

On February 29, 2024, we were notified by the Nasdaq Listing Qualifications staff that the closing bid price of our common stock had been at $1.00 per share or greater for 11 consecutive business days, from February 14, 2024 to February 28, 2024.

Accordingly, the Company has regained compliance with Nasdaq Listing Rule 5450(a)(1) and this matter is now closed.

If our common stock again closes below the $1.00 per share minimum bid price required by Nasdaq for 30 consecutive business days, we would again receive another notice of non-compliance with Nasdaq's listing standards and face the risk of delisting.

All shares of the Company’s common stock, stock-based instruments, and per-share data included in this Annual Report on Form 10-K have been retroactively adjusted as though the Reverse Stock Split has been effected prior to all periods presented.

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.

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

Former Ecommerce Operations

Vroom's ecommerce 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.

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 described above, we are conducting an orderly wind-down of our ecommerce business starting in 2024.

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.

On January 22, 2024, we announced that our Board had approved the Value Maximization Plan, pursuant to which we commenced the Ecommerce Wind-Down in order to preserve liquidity and enable us to maximize stakeholder value through our remaining businesses.

We ceased transacting 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 our used vehicle inventory through wholesale channels, paid off our 2022 Vehicle Floorplan Facility, and conducted a reduction-in-force commensurate with the reduced operations.

On March 29, 2024, we substantially completed the Ecommerce Wind-Down.

We continue to take other actions to maximize stakeholder value by seeking to monetize our legacy ecommerce platform, reduce our outstanding commitments and preserve our liquidity.

The UACC and CarStory businesses continue to serve their third-party customers, with their operations substantially unaffected by the Ecommerce Wind-Down.

As a result of the Value Maximization Plan, we incurred total cash charges during 2024 of approximately $15.8 million for severance and other personnel-related costs and approximately $13.9 million in contract and lease termination costs.

As part of a planned reduction-in-force under the Value Maximization Plan, approximately 800 employees were

impacted, resulting in a reduction of approximately 93% of the employees not engaged in UACC’s or CarStory’s ongoing operations.

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, 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.

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.

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.

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 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.

Loss before provision for income taxes for UACC on a standalone basis was $41.2 million and $16.2 million for the years ended December 31, 2023 and 2022, respectively, including intercompany eliminations of $17.7 million and $6.2 million, respectively.

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 predictions.

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.

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.

In the year ended December 31, 2023 and prior periods, we managed and reported operating results through three reportable segments:

• Ecommerce (64.5% of 2023 revenue;

70.0% of 2022 revenue):

The Ecommerce segment represents retail sales of used vehicles through our ecommerce platform, revenue earned on vehicle financing originated by UACC or our third-party financing sources and sales of value-added products associated with those vehicles sales.

• Wholesale (11.7% of 2023 revenue;

15.1% of 2022 revenue):

The Wholesale segment represents sales of used vehicles through wholesale channels.

• Retail Financing (17.6% of 2023 revenue;

7.8% of 2022 revenue):

The Retail Financing segment represents UACC’s operations with its network of third-party dealership customers.

As a result of the Value Maximization Plan and the wind-down of our ecommerce operations, we will discontinue reporting our results through our Ecommerce and Wholesale segments starting in the first quarter of 2024.

Gross profit is defined as revenue less cost of sales for each segment.

Reflected below is a summary of segment revenue and segment gross profit for the years ended December 31, 2023 and 2022:

(in thousands)

Retail Financing

Total revenue

Gross profit (loss):

Retail Financing

Total gross profit

Key Operating and Financial Metrics

Prior to the wind-down of our ecommerce operations, including the periods presented in this Annual Report on Form 10-K, we regularly reviewed a number of metrics, including the following key operating and financial metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial forecasts and make strategic decisions.

We believe these operational measures were useful in evaluating our performance, in addition to our financial results prepared in accordance with U.S.

Generally Accepted Accounting Principles, or U.S.

You should read the key operating and financial metrics in conjunction with the following discussion of our results of operations and together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

We focused heavily on metrics related to unit economics as improved gross profit per unit was a key element of our growth and profitability strategies.

As a result of the Value Maximization Plan and the wind-down of our ecommerce operations, we have discontinued evaluating our business using these key operating and financial metrics in the first quarter of 2024.

The calculation of our key operating and financial metrics is straightforward and does not rely on significant projections, estimates or assumptions.

Nevertheless, each of our key operating and financial metrics has limitations because each focuses specifically on only one standard by which to evaluate our business, without taking into account other applicable standards, performance measures or operating trends by which our business could be evaluated.

Accordingly, no single metric should be viewed as the bellwether by which our business should be measured.

Rather, each key operating and financial metric should be considered in conjunction with other metrics and components of our results of operations, such as each of the other key operating and financial metrics and our revenues, inventory, loss from operations and segment results.

Ecommerce units sold

Vehicle gross profit per ecommerce unit

Product gross profit per ecommerce unit

Total gross profit per ecommerce unit

Average monthly unique visitors

Ecommerce average days to sale

Inventory turnover

Inventory days to supply

Ecommerce Units Sold

Ecommerce units sold is defined as the number of vehicles sold and shipped to customers through our ecommerce platform, net of returns under our Vroom 7-Day Return Program.

Ecommerce units sold exclude on-site sales of vehicles at Texas Direct Auto ("TDA") and through the Wholesale segment.

Each vehicle sale through our ecommerce platform also created the opportunity to leverage such sale to provide vehicle financing, sell value-added products and acquire trade-in vehicles from our customers, which we could either recondition and add to our inventory or sell through wholesale channels.

Vehicle Gross Profit per Ecommerce Unit

Vehicle Gross Profit per ecommerce unit, which we refer to as Vehicle GPPU, for a given period is defined as the aggregate retail sales price and delivery charges for all vehicles sold through our Ecommerce segment less the aggregate costs to acquire those vehicles, the aggregate costs of inbound transportation to the vehicle reconditioning centers ("VRCs") and the aggregate costs of reconditioning those vehicles in that period, divided by the number of ecommerce units sold in that period.

Product Gross Profit per Ecommerce Unit

Product Gross Profit per ecommerce unit, which we refer to as Product GPPU, for a given period is defined as the aggregate fees earned on sales of third-party vehicle financing and value-added products in that period, net of the reserves for chargebacks on such products in that period, divided by the number of ecommerce units sold in that period.

Because we were paid fees on the vehicle financing and value-added products we sold, our gross profit was equal to the revenue we generated from the sale of such products.

Starting in 2022, Product Gross Profit also included (i) interest income earned on finance receivables from Vroom customers to finance vehicle sales that we originated through UACC before the contracts are sold, (ii) interest income on finance receivables held in consolidated VIEs less the interest expense incurred on securitization debt, and when applicable (iii) gain on sales of securitized finance receivables, divided by the number of ecommerce units sold in that period.

Total Gross Profit per Ecommerce Unit

Total Gross Profit per ecommerce unit, which we refer to as Total GPPU, for a given period is calculated as the sum of Vehicle GPPU and Product GPPU.

Average Monthly Unique Visitors

Average monthly unique visitors is defined as the average number of individuals who access our ecommerce platform within a calendar month.

We calculate the average monthly unique visitors over any period by dividing the aggregate monthly unique visitors during such period by the number of months in that period.

Average monthly unique visitors is calculated using data provided by Google Analytics.

The computation of average monthly unique visitors excludes individuals who access our platform multiple times within a calendar month, counting such individuals only one time for purposes of the calculation.

If an individual accesses our ecommerce platform using different devices or different browsers on the same device within a given month, the first access through each such device or browser is counted as a separate monthly unique visitor.

Ecommerce Average Days to Sale

We define ecommerce average days to sale as the average number of days between our acquisition of vehicles and the final delivery of such vehicles to customers through our ecommerce platform.

We calculate average days to sale for a given period by dividing the aggregate number of days between the acquisition of all vehicles sold through our ecommerce platform during such period and final delivery of such vehicles to customers by the number of ecommerce units sold in that period.

Ecommerce average days to sale excludes vehicles sold on-site at TDA and through the Wholesale segment.

Inventory turnover

We calculate inventory turnover for a given period as total retail and wholesale cost of sales for the respective period annualized and divided by average inventory (computed using the current and immediately preceding quarter-end balances).

Inventory days to supply

We calculate inventory days to supply for a given period by dividing average inventory by total retail and wholesale cost of sales per day for the respective period.

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 valuations.

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.

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 leveraging our remaining assets to improve the profitability of the business and achieve three key

achieve pre-COVID Cumulative Net Losses (CNL) or lower, grow origination with pre-COVID CNL or lower, and lower operating cost.

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.

Non-GAAP Financial Measures

1 unchanged sentence

GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance:

EBITDA, Adjusted EBITDA, and Adjusted EBITDA excluding securitization gain.

EBITDA and Adjusted EBITDA.

These non-GAAP financial measures have limitations as analytical tools in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with U.S.

3 unchanged sentences

GAAP financial measures.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA excluding securitization gain are supplemental performance measures that our management uses to assess our operating performance and the operating leverage in our business.

Because EBITDA, Adjusted EBITDA, and Adjusted EBITDA excluding securitization gain facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA excluding securitization gain

We calculate EBITDA as net loss before interest expense, interest income, income tax expense and depreciation and amortization expense.

We calculate Adjusted EBITDA as EBITDA adjusted to exclude severance costs, gain on debt extinguishment, severe weather-related costs, long-lived asset impairment charges, goodwill impairment charge, realignment costs, acquisition related costs, and the acceleration of non-cash stock-based compensation.

Changes in fair value of financial instruments can fluctuate significantly from period to period and were previously related primarily to historical finance receivables and debt that have been securitized, and were acquired on February 1, 2022 from UACC.

As a result of market conditions at the time, the financial instruments related to the 2022-2 and 2023-1 securitization transactions are recognized on balance-sheet and accounted for under the fair value option.

See Note 17 — Financial Instruments and Fair Value Measurements to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

As a result, the majority of our finance receivables are now carried at fair value and a significant portion of the risk of loss associated with these finance receivables have been retained by UACC.

We therefore have determined we will no longer make any adjustments for such fluctuations in fair value to our Adjusted EBITDA results.

We have recast the prior periods presented to conform to current period presentation.

We may account for future securitizations as on balance sheet transactions depending on market conditions.

We calculate Adjusted EBITDA excluding securitization gain as Adjusted EBITDA adjusted to exclude the securitization gain from the sale of UACC's finance receivables as it provides a useful perspective on the underlying operating results and trends as well as a means to compare our period-over-period results.

The following table presents a reconciliation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA excluding securitization gain to net loss, which is the most directly comparable U.S.

EBITDA and Adjusted EBITDA are supplemental performance measures that our management uses to assess our operating performance and the operating leverage in our business.

Because EBITDA and Adjusted EBITDA facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes.

EBITDA and Adjusted EBITDA

We calculate EBITDA as net loss before interest expense on corporate debt, interest income on cash and cash equivalents, income tax expense and depreciation and amortization expense.

We calculate Adjusted EBITDA as EBITDA adjusted to exclude stock compensation expense, severance expense related to the continuing operations, bankruptcy costs (which represent professional fees incurred related to the bankruptcy prior to filing of the petition), 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), gain on debt extinguishment and long-lived asset impairment charges.

The following table presents a reconciliation of EBITDA and Adjusted EBITDA to net loss from continuing operations, which is the most directly comparable U.S.

GAAP measure:

(in thousands)

Net loss from continuing operations

Adjusted to exclude the following:

Interest expense

Interest income

Provision (benefit) for income taxes

Interest expense on corporate debt

Interest income on cash and cash equivalents

Provision for income taxes

Depreciation and amortization

Severance costs

Stock compensation expense

Bankruptcy costs (prepetition filing)

Reorganization items, net

Gain on debt extinguishment

Hail storm costs

Long-lived asset impairment charges

Goodwill impairment charge

Realignment costs

Acquisition related costs

Acceleration of non-cash stock-based compensation

Impairment charges

Adjusted EBITDA

Securitization gain

Adjusted EBITDA excluding securitization gain

Other Key Factors and Trends Affecting our Operating Results

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:

Ability to expand our dealer network to increase vehicle finance offerings

We intend to grow our automotive financing business.

UACC will continue to provide financing services to its existing dealer network and will seek to expand its network over time.

UACC provides funding that allows manufacturer-franchised and independent motor vehicle dealers to finance new and used vehicles.

Currently, UACC serves a nationwide network of thousands of dealers in 49 states.

UACC's credit programs are primarily designed to serve consumers who have limited access to traditional vehicle financing, although UACC intends to expand its offerings across a broader range of the credit spectrum going forward.

As of December 31, 2023, automobile contracts originated from Vroom customers or purchased from Vroom represented approximately 30% of UACC's total serviced loan portfolio.

If UACC is unable to replace the volume of automobile contracts it previously received from the Vroom ecommerce business, our business, financial condition, and results of operations could be materially adversely affected.

Ability to manage credit losses and enhance profitability at UACC

While credit losses are inherent in the automotive finance receivables business, several variables have affected UACC’s recent loss and delinquency rates, including rising interest rates, the current inflationary environment and vehicle depreciation.

UACC is currently experiencing higher loss severity and higher losses on its finance receivables, which has negatively impacted the fair value of our finance receivables and the losses recognized for the year ended December 31, 2023.

Higher than anticipated credit losses contributed to a pre-tax net loss at UACC of approximately $41.2 million for the year ended December 31, 2023, and are expected to continue to negatively impact our business in 2024, especially because UACC primarily operates in the non-prime sector of the market which is expected to have more volatility.

Prepackaged Chapter 11 Case

Even though we have emerged from bankruptcy, our Prepackaged Chapter 11 Case could have a material adverse effect on our business, financial condition, results of operations and liquidity.

For example, it could adversely affect our business and relationships with customers, vendors, contractors, employees or suppliers.

Furthermore, we may not realize any or all of the intended benefits of the Prepackaged Chapter 11 Case, the benefits may not be on the terms, in the manner, or during the time period we expect, and the costs incurred may exceed the intended benefits.

The occurrence of one or more of these events could have a material and adverse effect on our operations, financial condition and reputation and we cannot assure you that having been subject to bankruptcy proceedings will not adversely affect our operations in the future.

Additionally, other risks we face, as described in this Annual Report on Form 10-K, may be exacerbated by the impacts of our emergence from bankruptcy.

All of these factors could limit our ability to pursue growth strategies for our business in the near- to mid-term.

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 rising interest rates, the current inflationary environment and vehicle depreciation.

UACC is currently experiencing higher losses on its finance receivables, which has negatively impacted the fair value of our finance receivables and the losses recognized for the year ended December 31, 2024.

We expect this trend to continue to negatively impact our business into 2025.

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 our credit program, such as tightening credit, which is starting to return our delinquencies and expected portfolio performance on those vintages to normalized levels.

We also intend to leverage CarStory data to improve VIN-level valuations to support underwriting decisions and servicing operations.

Certain advance rates available to UACC on borrowings from the Warehouse Credit Facilities have decreased as a result of the increasing credit losses in UACC's portfolio and overall rising interest rates.

Any future decreases on available advance rates may have an adverse impact on our liquidity.

Ability to securitize UACC's loan portfolio

The success of UACC's business is highly dependent on the ability to securitize and sell the automotive finance receivables that it underwrites or acquires.

As a result of high interest rates, the current inflationary environment and vehicle depreciation in the used automotive industry, UACC is experiencing higher loss severity.

As a result, UACC may not be able to securitize its loan portfolio on favorable terms, or may not be able to sell the subordinate notes or residual certificates issued in its securitizations at a favorable price or at all.

If UACC fails to sell the subordinate notes or the residual interests, it will preclude us from recognizing the sale and result in the securitization trust being consolidated and therefore remaining on balance sheet.

In January 2023, UACC completed the 2023-1 securitization transaction, selling the investment grade rated asset-backed securities, and in April 2023, UACC sold the non-investment grade rated securities.

As a result of market conditions at the time, which led to unfavorable pricing, UACC retained the residual interests and we accounted for the 2023-1 securitization transaction as secured borrowings.

The related finance receivables and securitization debt remain on balance sheet.

In the future, we may account for UACC securitizations as on balance sheet transactions depending on the market conditions.

In addition, due to the increased loss severity, UACC elected to waive monthly servicing fees related to the 2022-2 securitization transaction in the first quarter of 2023.

The waiver of monthly servicing fees related to the 2022-2 securitization transaction resulted in consolidation of the related finance receivables and securitization debt on our financial statements.

Waiver of monthly servicing fees also resulted in reduced servicing income.

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 four 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.

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 four senior secured warehouse credit facility agreements (the “Warehouse Credit Facilities”) have decreased as a result of the increasing credit losses in UACC's portfolio and overall rising interest rates.

Any future decreases on available advance rates may have an adverse impact on our liquidity.

On March 8, 2025, we renewed one of our Warehouse Credit Facilities, with $200 million of borrowing capacity, now expiring in June 2026.

The remaining Warehouse Credit Facilities, with aggregate borrowing capacity of $625 million, expire between July and September 2025.

We are in ongoing discussions with the remaining 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—We may not generate sufficient liquidity to operate our business, and, UACC may be unable to continue to access or renew funding sources and obtain capital needed to maintain and grow its business.

In addition, due to UACC's increased credit losses, UACC may not be able to securitize its loan portfolio on favorable terms, or may not be able to sell the subordinate notes or residual certificates issued in its securitizations at a favorable price or at all.

As a result of market conditions at the time, UACC retained the residual interests for the 2023-1 and 2024-1 securitization transactions.

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 will seek 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, although UACC intends to expand its offerings across a broader range of the credit spectrum going forward and has launched a pilot program for near-prime consumers.

We also intend to drive dealer and customer engagement through technology innovations.

Used vehicle sales have historically been seasonal.

2 unchanged sentences

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 typically 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.

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” in our Annual Report.

Macroeconomic Factors

Both the United States and global economies are experiencing a sustained inflationary environment and the Federal Reserve’s efforts to tame inflation have led to increased interest rates, which affects automotive finance rates, reducing discretionary spending and making vehicle financing more costly and less accessible to many consumers.

In December 2023, the Federal Reserve announced that it expects to cut interest rates in 2024;

however it is too soon to know the degree to which rates may be cut and the impact it may have on the economy.

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 affects automotive finance rates and our borrowing rates, thereby reducing discretionary spending and making vehicle financing more costly and less accessible or desirable to many consumers.

While interest rate cuts were expected in 2024, only slight cuts were enacted in the latter half of the year.

Based on the January 2025 first policy meeting, the Federal Reserve interest rates remained unchanged.

We are not able to predict if, when, and to what degree rates may change in 2025 and the impact it may have on the economy.

In addition, the new Presidential administration has recently announced (and in some cases, partially delayed or rescinded) new tariffs on imports to the United States from European Union countries, Japan, Canada and Mexico, and such countries have announced plans to impose retaliatory tariffs.

Such significant tariffs on imports could have a major impact on the United States automotive industry, which depends heavily on cross border trade.

Should tariffs be implemented and sustained for an extended period of time, they would have 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 would exacerbate the impact, as could the uncertainty regarding whether tariffs will be implemented or sustained.

Steps taken by governments to implement tariffs on raw materials (including steel), automobiles, parts, and other products and materials have the potential to disrupt existing supply chains and impose additional costs on businesses in the automotive industry in the United States and globally.

While negotiations regarding tariffs are ongoing, if the resulting environment of retaliatory tariffs or other practices of additional trade restrictions or barriers increase automobile prices in the U.S., this could lead to 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.

Moreover, geopolitical conflicts and war, including those in Europe and the Middle East, have increased global economic and political uncertainty, which has caused dramatic fluctuations in global financial markets.

A significant escalation or expansion of economic disruption

could continue to impact consumer spending, broaden inflationary costs, and could have a material adverse effect on our results of operations.

We will continue to actively monitor and develop responses to these disruptions, but depending on duration and severity, these trends could continue to negatively impact our business in 2024.

Components of Results of Operations

In connection with the Value Maximization Plan, in January 2024 we started to wind-down our ecommerce operations, including both retail and wholesale vehicle sales which also reduced associated product revenue.

Therefore, each of the retail vehicle revenue, wholesale vehicle revenue, and the associated product revenue described below will not be applicable to our results of operations going forward.

Retail vehicle revenue

Historically, we sold retail vehicles through both our ecommerce platform and TDA.

Revenue from vehicle sales, including any delivery charges, was recognized when vehicles were delivered to the customers or picked up at our TDA retail location, net of a reserve for estimated returns.

The number of units sold and the average selling price (“ASP”) per unit were the primary factors impacting our retail revenue stream.

Wholesale vehicle revenue

Historically, we sold vehicles that do not meet our Vroom retail sales criteria through wholesale channels.

Vehicles sold through wholesale channels were acquired from customers who traded-in their vehicles when making a purchase from us, from customers who sold their vehicle to us in direct-buy transactions, and from liquidation of vehicles previously listed for retail sale.

The number of wholesale vehicles sold and the ASP per unit were the primary drivers of wholesale revenue.

Product revenue

Historically, we generated revenue by financing vehicle sales through UACC, earning fees on sales of third-party financing, and sales of value-added products to our customers in connection with vehicle sales, such as vehicle service contracts, GAP protection and tire and wheel coverage.

We generate ecommerce product revenue from receivables generated by financing provided to Vroom customers through UACC.

We earn interest income on such finance receivables before the contracts are sold, interest income on finance receivables held in consolidated VIEs, and, when applicable, gain on the sales of securitized finance receivables.

We account for sales of finance receivables in accordance with ASC Topic 860, Transfers and Servicing of Financial Assets ("ASC 860") .

Refer to "Finance revenue" below for further details.

We also earned fees on third-party financing and value-added products pursuant to arrangements with the third parties that sold and administered these products.

For accounting purposes, we were an agent for these transactions and, as a result, we recognized fees on a net basis when the customer entered into an arrangement to purchase these products or obtain third-party financing, which was typically at the time of a vehicle sale.

Our gross profit on product revenue is equal to the revenue we generate.

Product revenue was affected by the number of vehicles sold, the attachment rate of value-added products and the amount of fees we receive on each product.

Product revenue also consisted of estimated profit-sharing amounts to which we were entitled based on the performance of third-party protection products once a required claims period has passed.

A portion of the fees we received was subject to chargeback in the event of early termination, default, or prepayment of the contracts by our customers.

We recognized product revenue net of reserves for estimated chargebacks.

Finance revenue

Our finance revenue is related to finance receivables originated or acquired by UACC through its network of third-party dealership customers and consists of interest income earned on finance receivables before the contracts are sold,

interest income earned on finance receivables held in consolidated VIEs, and, when applicable, gains on the sale of securitized finance receivables.

UACC acquires and services finance receivables from its network of third-party dealership customers and generates revenue through the sales of these financing receivables.

We account for sales of finance receivables in accordance with ASC Topic 860, Transfers and Servicing of Financial Assets ("ASC 860").

In order for transfers of the finance receivables to qualify as sales, the finance receivables being transferred must be legally isolated, may not be constrained by restrictions from further transfer, and must be deemed to be beyond our control.

For any securitization transactions that are accounted for as secured borrowings, we recognize interest income, which includes finance charges and servicing fees in accordance with the terms of the related customer agreements.

In February 2022, UACC completed the 2022-1 securitization transaction, which qualified as a sale, therefore we recorded a gain on the sale of the finance receivables.

The amount of the gain is equal to the fair value of the net proceeds received less the carrying amount of the finance receivables.

In July 2022, UACC sold a pool of finance receivables in the 2022-2 securitization transaction.

Originally, we concluded that we were not the primary beneficiary of the 2022-2 securitization trust, and therefore we did not consolidate the 2022-2 trust.

From January to March 2023, although not contractually required, UACC elected to waive its servicing fee on the 2022-2 securitization, due to higher-than-expected losses.

Since UACC has the power to direct the significant activities of the VIE, as it is the servicer, and additionally it absorbs the risk of loss, we concluded that we are the primary beneficiary of the VIE.

In March 2023, we accounted for the transaction as secured borrowings and consolidated the 2022-2 securitization trust.

The beneficial interest was then eliminated.

As a result of market conditions at the time, which led to unfavorable pricing, UACC retained the residual interests and we accounted for the 2023-1 securitization transaction as secured borrowings.

The related finance receivables and securitization debt remain on the balance sheet.

We may account for future securitizations as on balance sheet transactions depending on the market conditions.

Servicing income represents the annual fees earned on the outstanding principal balance of the finance receivables serviced.

Fees are earned monthly at an annual rate of approximately 4% for the 2022-1 securitization transaction and 3.25% for the 2022-2 and 2023-1 securitization transactions of the outstanding principal balance of the finance receivables serviced.

As a result of high interest rates, the current inflationary environment and vehicle depreciation in the used automotive industry, UACC is experiencing higher loss severity.

The increased loss severity could lead to reduced servicing income if UACC elects to waive monthly servicing fees going forward as it did in the first quarter of 2023.

See “Note 3—Revenue Recognition” and "Note 4 – Variable Interest Entities and Securitizations" to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Cost of sales

In connection with the Value Maximization Plan, we started to wind-down our ecommerce operations in January 2024.

Therefore, each of the retail cost of sales, wholesale cost of sales, and the associated product cost of sales described below will not be applicable to our results of operations going forward.

Retail cost of sales

Retail cost of sales primarily included the costs to acquire vehicles, inbound transportation costs and direct and indirect reconditioning costs associated with preparing vehicles for sale.

Costs to acquire vehicles were primarily driven by the inventory source, vehicle mix and general supply and demand conditions of the used vehicle market.

Inbound transportation costs included costs to transport the vehicle to our VRCs.

Reconditioning costs included parts, labor and third-party reconditioning costs directly attributable to the vehicle and allocated overhead costs.

Cost of sales also included any accounting adjustments to reflect vehicle inventory at the lower of cost or net realizable value.

Wholesale cost of sales

Wholesale cost of sales primarily included costs to acquire vehicles sold through wholesale channels as well as any accounting adjustments to reflect vehicle inventory at the lower of cost or net realizable value.

Product cost of sales

Product cost of sales consists of interest expense incurred on securitization debt related to finance receivables originated by UACC for Vroom customers.

Finance cost of sales

Finance cost of sales consists of interest expense incurred on securitization debt originated by UACC for its network of third-party dealership customers and collection expenses related to servicing finance receivables.

Total gross profit

Total gross profit is defined as total revenue less costs associated with such revenue.

Selling, general and administrative expenses

Our selling, general, and administrative expenses, which we refer to as SG&A expenses, historically consisted primarily of advertising and marketing expenses, outbound transportation costs, employee compensation, occupancy costs of our facilities, professional fees for accounting, auditing, tax, legal and consulting services and software and IT costs.

Going forward, we expect our SG&A expenses to decrease significantly as a result of the wind-down of our ecommerce operations.

Depreciation and amortization

Our depreciation and amortization expense primarily includes:

depreciation related to our leasehold improvements and logistics fleet;

amortization related to intangible assets in acquired businesses;

and capitalized internal use software costs incurred in the development of our platform and website applications.

Depreciation expense related to our Vroom VRC and the portion of depreciation expense for our proprietary logistics fleet related to inbound transportation is included in cost of sales in the consolidated statements of operations.

Impairment Charges

Impairment charges represent charges to write down the carrying amount of goodwill and other long-lived assets to fair value as well as lease impairment charges related to closing physical office locations and Sell Us Your Car® centers.

Gain on debt extinguishment

Gain on debt extinguishment represents the gain recognized from the repurchase of a portion of our outstanding Convertible Senior Notes due 2026 (the "Notes") in open-market transactions.

Interest expense

Our interest expense primarily includes (i) interest expense related to our 2022 Vehicle Floorplan Facility, which was used to finance our inventory, (ii) interest expense on our Notes, (iii) interest expense on UACC's Warehouse Credit Facilities, which are used to fund our finance receivables, and (iv) interest expense on UACC's financing of beneficial interests in securitizations.

Interest Income

Interest income primarily represents interest credits earned on cash deposits maintained in relation to our 2022 Vehicle Floorplan Facility as well as interest earned on cash and cash equivalents.

Other Loss, net

Other loss, net primarily represents realized and unrealized losses on finance receivables, securitization debt and beneficial interests in securitizations as well as recoveries from losses previously recognized on finance receivables.

A significant escalation or expansion of economic disruption could continue to impact consumer sentiment and spending, broaden inflationary costs, and could have a material adverse effect on our results of operations.

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 through 2025.

Results of Operations

We historically managed and reported operating results through three reportable segments.

As a result of the Value Maximization Plan and the wind-down of our ecommerce operations, we discontinued reporting our results through our Ecommerce and Wholesale segments starting in the first quarter of 2024.

The Company is now 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.

Certain prior year amounts have been reclassified to conform to the current year presentation related to discontinued operations and new financial statement presentation as a result of the Ecommerce Wind-Down, and the Company’s 1-for-80 reverse stock split in February 2024.

The following table presents our consolidated results of operations for the periods indicated:

(in thousands)

Retail vehicle, net

Wholesale vehicle

Total revenue

Cost of sales:

Retail vehicle

Wholesale vehicle

Total cost of sales

Total gross profit

Selling, general and administrative expenses

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 income:

Servicing income

Warranties and GAP income (loss), net

CarStory revenue

Gain on debt extinguishment

Total noninterest income

Compensation and benefits

Professional fees

Software and IT costs

Depreciation and amortization

Interest expense on corporate debt

Impairment charges

Loss from operations

Gain on debt extinguishment

Interest expense

Interest income

Other loss (income), net

Loss before provision (benefit) for income taxes

Provision (benefit) for income taxes

We have historically managed and reported operating results through three reportable segments:

• Ecommerce (64.5% of 2023 revenue;

70.0% of 2022 revenue):

• Wholesale (11.7% of 2023 revenue;

15.1% of 2022 revenue):

The Wholesale segment represents sales of used vehicles through wholesale channels.

• Retail Financing (17.6% of 2023 revenue;

7.8% of 2022 revenue):

The Retail Financing segment represents UACC’s operations with its network of third-party dealership customers.

Years Ended December 31, 2023 and 2022

The following table presents our Ecommerce segment results of operations for the periods indicated:

(in thousands, except unit

data and average days to sale)

Ecommerce units sold

Ecommerce revenue:

Vehicle revenue

Product revenue

Total ecommerce revenue

Ecommerce gross profit:

Vehicle gross profit

Product gross profit

Total ecommerce gross profit

Average vehicle selling price per ecommerce unit

Product revenue per ecommerce unit

Gross profit per ecommerce unit:

Vehicle gross profit per ecommerce unit

Product gross profit per ecommerce unit

Total gross profit per ecommerce unit

Ecommerce average days to sale

Ecommerce units

Ecommerce units sold decreased 21,877, or 55.7%, from 39,278 for the year ended December 31, 2022 to 17,401 for the year ended December 31, 2023.

This decrease was driven by our strategic decision to prioritize unit economics over unit sales volume starting in the second quarter of 2022, our decision to reduce vehicle acquisitions during the fourth quarter of 2023, pressure on servicing our demand as a result of reducing third-party sales support staff and scaling our internal sales team, as well as macroeconomic factors.

Ecommerce average days to sale increased from 131 days for the year ended December 31, 2022 to 217 days for the year ended December 31, 2023.

We undertook various initiatives to address the operational challenges created by our prior rapid growth from 2020 through the first quarter of 2022, in particular with titling and registration processes.

While these initiatives were designed to improve our transaction processing, enhance our customer experience, and

reduce our regulatory risk, they resulted in delays in listing vehicles for sale and caused a higher portion of our unit sales throughout 2023 to be from aged inventory, which increased the number of days between our acquisition of vehicles and the final delivery of such vehicles to customers.

Vehicle Revenue

Ecommerce vehicle revenue decreased $780.9 million, or 59.8%, from $1,304.8 million for the year ended December 31, 2022 to $523.9 million for the year ended December 31, 2023.

The decrease in ecommerce vehicle revenue was primarily attributable to the 21,877 decrease in ecommerce units sold, which decreased vehicle revenue by $726.8 million, and a decrease in ASP per unit, which decreased from $33,220 for the year ended December 31, 2022 to $30,110 for the year ended December 31, 2023 and decreased vehicle revenue by $54.1 million.

The decrease in ASP per unit was primarily due to significant market appreciation in the first half of 2022.

Product Revenue

Ecommerce product revenue decreased $7.2 million, or 12.1%, from $59.4 million for the year ended December 31, 2022 to $52.2 million for the year ended December 31, 2023.

The decrease in ecommerce product revenue was primarily attributable to the 21,877 decrease in ecommerce units sold, which decreased product revenue by $33.1 million, partially offset by an increase in product revenue per unit, which increased from $1,512 for the year ended December 31, 2022 to $3,001 for the year ended December 31, 2023 and increased product revenue by $25.9 million.

The increase in product revenue per unit was primarily due to an increase in interest income earned on finance receivables from Vroom customers originated or serviced by UACC as compared to the year ended December 31, 2022.

Vehicle Gross Profit

Ecommerce vehicle gross profit decreased $30.3 million, or 74.5%, from $40.6 million for the year ended December 31, 2022 to $10.3 million for the year ended December 31, 2023.

The decrease in vehicle gross profit was primarily attributable to the 21,877 decrease in ecommerce units sold, which decreased vehicle gross profit by $22.7 million.

Additionally, vehicle gross profit per unit decreased $439 from $1,033 for the year ended December 31, 2022 to $594 for year ended December 31, 2023, which decreased vehicle gross profit by $7.6 million.

The decrease was primarily driven by lower sales margin on aged inventory and higher reconditioning costs per unit related to an increased mix of higher mileage and aged vehicles along with significant parts inflation.

The decreases were partially offset by a lower inventory reserve as a result of a decrease in inventory levels as we continued to sell through our aged inventory.

As we made progress on our initiatives to address the operational challenges created by our prior rapid growth from 2020 through the first quarter of 2022, a higher portion of our unit sales in 2023 was from aged inventory, which negatively impacted our sales margin and GPPU.

Product Gross Profit

Ecommerce product gross profit decreased $10.5 million, or 17.7%, from $59.4 million for the year ended December 31, 2022 to $48.9 million for the year ended December 31, 2023.

The decrease in ecommerce product gross profit was primarily attributable to the 21,877 decrease in ecommerce units sold, which decreased product gross profit by $33.1 million, partially offset by a $1,297 increase in product gross profit per unit, which increased product gross profit by $22.6 million.

Product gross profit per unit increased from $1,512 for the year ended December 31, 2022 to $2,809 for the year ended December 31, 2023, primarily due to an increase in interest income earned, partially offset by interest expense on securitization debt related to Vroom customers' finance receivables originated or serviced by UACC.

The following table presents our Wholesale segment results of operations for the periods indicated:

(in thousands, except unit data)

Wholesale units sold

Wholesale revenue

Wholesale gross loss

Average selling price per unit

Wholesale gross loss per unit

Wholesale Units

Wholesale units sold decreased 13,782, or 66.0%, from 20,876 for the year ended December 31, 2022 to 7,094 for the year ended December 31, 2023, primarily driven by a decrease in wholesale units purchased from consumers and a lower number of trade-in vehicles associated with the decrease in the number of ecommerce units sold.

Wholesale Revenue

Wholesale revenue decreased $189.4 million, or 64.5%, from $293.5 million for the year ended December 31, 2022 to $104.1 million for the year ended December 31, 2023.

The decrease was primarily attributable to a 13,782 decrease in wholesale units sold, which decreased wholesale revenue by $193.8 million, partially offset by a higher ASP per wholesale unit, which increased wholesale revenue by $4.4 million.

Wholesale Gross Loss

Wholesale gross loss increased $23.8 million, or 223.5%, from $10.6 million for the year ended December 31, 2022 to $34.4 million for the year ended December 31, 2023.

The change was primarily attributable to a $4,334 increase in wholesale gross loss per unit from $509 for the year ended December 31, 2022 to $4,843 for the year ended December 31, 2023, which increased wholesale gross loss by $30.8 million, partially offset by a 13,782 decrease in wholesale units sold, which decreased wholesale gross loss by $7.0 million.

The increase in wholesale gross loss per unit was primarily driven by lower sales margins as a result of wholesale liquidations for aged inventory and vehicles damaged by hail storms in the second and third quarter of 2023 and a higher inventory reserve.

Retail Financing

The following table presents our Retail Financing segment results of operations for the periods indicated:

(in thousands)

Retail Financing revenue

Retail Financing gross profit

Retail Financing Revenue

Retail Financing revenue increased $4.4 million, or 2.9%, from $152.5 million for the year ended December 31, 2022 to $156.9 million for the year ended December 31, 2023.

The increase was primarily driven by an increase in interest and discount income from $78.6 million for the year ended December 31, 2022 to $140.6 million for the year ended December 31, 2023 related to income earned on finance receivables with third-party dealership customers as a result of new originations and the consolidation of the 2022-2 and 2023-1 securitization transactions.

The increase was

partially offset by the gain on sale of finance receivables of $45.6 million for the year ended December 31, 2022 related to the 2022-1 and 2022-2 securitization transactions.

Retail Financing Gross Profit

Retail Financing gross profit decreased $12.8 million, or 9.2%, from $138.4 million for the year ended December 31, 2022 to $125.6 million for the year ended December 31, 2023.

The decrease was primarily driven by the gain on sale of finance receivables of $45.6 million for the year ended December 31, 2022 related to the 2022-1 and 2022-2 securitization transactions.

Additionally, the decrease was a result of an increase in collection expenses related to servicing finance receivables originated or acquired by UACC and an increase in interest expense on securitization debt from $3.4 million for the year ended December 31, 2022 to $18.6 million for the year ended December 31, 2023.

The decrease was partially offset by an increase in interest and discount income earned on finance receivables with third-party dealership customers as a result of new originations and the consolidation of the 2022-2 and 2023-1 securitization transactions, as described above.

Selling, general and administrative expenses

Other expenses

Total expenses

Loss from continuing operations before reorganization items and provision for income taxes

Reorganization items, net

Loss from continuing operations before provision for income taxes

Provision for income taxes from continuing operations

Net loss from continuing operations

Net loss from discontinued operations

The UACC reportable segment represents UACC’s operations with its network of third-party dealership customers, including the purchases and servicing of vehicle retail installment sales 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.

Year Ended December 31, 2024 and 2023

(in thousands)

Compensation & benefits

Marketing expense

Outbound logistics (1)

Occupancy and related costs

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 income:

Servicing income

Warranties and GAP income, net

Total noninterest income

Compensation and benefits

Professional fees

Software and IT costs

Total selling, general & administrative expenses

(1) Outbound logistics primarily includes third-party transportation fees as well as cost related to operating our proprietary logistics network, including fuel, tolls, and maintenance expenses associated with vehicle deliveries.

Inbound transportation costs, from the point of acquisition to the relevant reconditioning facility, are included in cost of sales.

SG&A expenses decreased $225.7 million, or 39.9%, from $566.4 million for the year ended December 31, 2022 to $340.7 million for the year ended December 31, 2023.

The total decrease was primarily caused by:

• a $85.1 million decrease in compensation and benefits primarily as a result of workforce reductions;

• a $31.2 million decrease in marketing expense contemplated by our long-term roadmap, our previous business strategy for our ecommerce business;

• a $30.6 million decrease in outbound logistics costs attributable to the decrease in ecommerce units sold as well as a decrease in outbound logistics cost per ecommerce unit;

• a $13.3 million decrease in professional fees primarily related to costs incurred in connection with the UACC Acquisition during the first quarter of 2022 as well as a decrease in legal and other consulting fees;

• a $8.1 million decrease in software and IT costs primarily related to volume-based fees as a result of reduced headcount and more efficient targeted software use;

• a $5.4 million decrease in occupancy expense primarily as a result of physical office location closures from the second quarter of 2022 through the second quarter of 2023;

• a $52.1 million decrease in other SG&A expenses primarily due to a decrease in our non-recurring costs, including legal settlements and rental car expenses, as we worked to address our operational challenges created by our rapid growth from 2020 through the first quarter of 2022 as well as reduced fixed and variable costs contemplated by our long-term roadmap.

We expect SG&A expenses to decrease in the future driven by further reductions in both fixed and variable cost components as we wind-down our ecommerce business and complete our announced workforce reduction.

Depreciation and amortization

Depreciation and amortization expenses increased $4.5 million, or 11.7%, from $38.3 million for the year ended December 31, 2022 to $42.8 million for the year ended December 31, 2023.

The increase was primarily due to an additional month of amortization expense of intangible assets acquired as part of the UACC Acquisition for the year ended December 31, 2023 and amortization related to our capitalized internal use software costs incurred in the development of our platform and website applications.

Interest expense on corporate debt

Impairment charges

Impairment charges of $48.7 million for the year ended December 31, 2023 primarily consist of $47.4 million long–lived asset impairment charges as a result of a triggering event as of December 31, 2023.

Impairment charges of $211.9 million for the year ended December 31, 2022 represent an impairment charge to write down the carrying amount of the goodwill to fair value, lease impairment charges related to closing physical office locations, Stafford reconditioning facility and Sell Us Your Car® centers, and impairment of long-lived assets no longer in use.

Gain on debt extinguishment

Gain on debt extinguishment represents a gain of $37.9 million and $164.7 million for the years ended December 31, 2023 and 2022, respectively, related to the repurchase of $74.2 million and $254.3 million in aggregate principal balance of the Notes, net of deferred issuance costs, for $36.5 million and $90.2 million, respectively.

Other expenses

Total expenses

Adjusted EBITDA

Interest income on cash and cash equivalents

Stock compensation expense

Interest income

UACC acquires and services finance receivables from its network of third-party dealership customers and generates interest income, which consists of discount income and interest income.

Discount income represents the amortization of unearned discounts over the contractual life of the underlying finance receivables held for investment at fair value.

Discounts on the finance receivables held-for-sale are deferred until they are 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.

For securitization transactions that are accounted as a sale of finance receivables in accordance with ASC Topic 860, Transfers and Servicing of Financial Assets ("ASC 860"), we recognize a gain on sale of finance receivables.

There were no securitizations which were accounted for as sales in the periods presented.

Interest income increased $23.0 million, or 12.7%, to $204.0 million for the year ended December 31, 2024 from $181.0 million for the year ended December 31, 2023.

This increase was primarily a result of new originations, which increased the average loan portfolio in 2024 to $857.2 million from $783.4 million in 2023.

The increase in interest income

was partially offset by lower discount income during the year ended December 31, 2024 as a result of a smaller balance of finances receivables held for investment measured at fair value, with discount being amortized, as compared to finance receivables held for sale with discount deferred until receivables are sold.

The average outstanding balance of finance receivables held for investment at fair value was $235.9 million in 2024, as compared to $438.3 million in 2023.

The average outstanding balance of finance receivables held for sale was $621.3 million in 2024, as compared to $345.0 million in 2023.

Interest expense

Interest expense increased $4.7 million, or 11.7%, from $40.7 million for the year ended December 31, 2022 to $45.4 million for the year ended December 31, 2023.

Interest expense incurred on UACC's Warehouse Credit Facilities increased as a result of an increase in the outstanding balance.

The increase was offset by a decrease in interest expense related to a lower outstanding balance on the 2022 Vehicle Floorplan Facility, as well as a decrease in interest expense on the Notes due to the repurchase of a portion of the Notes during the second half of 2022 and during 2023.

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 increased $17.5 million or 41.7% to $59.4 million for the year ended December 31, 2024 from $41.9 million for the year ended December 31, 2023.

The increase was a result of higher interest expense incurred on the Warehouse Credit Facilities, which increased $9.4 million to $29.3 million for the year ended December 31, 2024 from $19.9 million for the year ended December 31, 2023.

The increase is attributable to a higher average outstanding balance in 2024 of $367.2 million as compared to $254.5 million in 2023, due to financing the larger finance receivables portfolio.

The increase in interest expense is also partially attributable to higher interest expense incurred on securitization debt, which increased $8.1 million to $30.1 million for the year ended December 31, 2024 from $22.0 million for the year ended December 31, 2023, as a result of overall higher interest rates.

Realized and unrealized losses, net of recoveries

Realized and unrealized losses, net of recoveries, primarily represents charge-offs of finance receivables held-for-sale, changes in the fair value of finance receivables for which the fair value option was selected under ASC 825, changes in the valuation allowance on the held-for-sale portfolio, changes in the fair value of securitization debt accounted in accordance with the measurement alternative under ASC 810-30, changes in the fair value of beneficial interest, as well as collection expenses related to servicing finance receivables.

Realized and unrealized losses, net of recoveries, increased $6.3 million or 6.8% to $98.6 million for the year ended December 31, 2024 from $92.4 million for the year ended December 31, 2023.

This increase was primarily driven by an increase in realized and unrealized losses on finance receivables as a result of a larger finance receivable portfolio, due to new originations as well as the consolidation of the 2022-2 securitization in the first quarter of 2023, which was previously off- balance sheet.

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 $3.5 million or 35.3% to $6.5 million for the year ended December 31, 2024 from $10.0 million for the year ended December 31, 2023, primarily driven by a lower balance of the 2022-1 securitization, which is off-balance sheet.

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 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 remained flat for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Other income increased $5.1 million or 159.7% to $8.3 million for the year ended December 31, 2024 from $3.2 million for the year ended December 31, 2023, primarily driven by higher income related to acquisition fees for originations of finance receivables at fair value, which is recognized in the period the finance receivables are originated.

Compensation and benefits

Compensation and benefits increased $8.6 million or 12.6% to $76.4 million for the year ended December 31, 2024 from $67.8 million for the year ended December 31, 2023.

The increase was primarily a result of the following:

retention bonuses granted to retain key employees;

allocation of incremental data and technology departments' time to UACC as a result of a shift in focus of the business;

severance expense related to the termination of certain UACC employees;

and a decrease in deferred acquisition costs as a result of accounting for the origination of all new finance receivables at fair value, with acquisition costs being expensed in the period incurred rather than deferred.

Professional fees

Professional fees decreased $1.9 million or 35.0% to $3.5 million for the year ended December 31, 2024 from $5.4 million for the year ended December 31, 2023, primarily as a result of additional professional fees incurred during the first quarter of 2023 as a result of the completion of the 2023-1 securitization transaction, as the 2023-1 securitization debt is carried at fair value the associated debt issuance costs were expensed as incurred.

As the 2024-1 securitization debt is carried at amortized costs, the associated debt issuance costs are capitalized and amortized over the life of the debt.

Impairment charges

Impairment charges increased $5.2 million for the year ended December 31, 2024 related to impairment of capitalized internal-use software that no longer has a planned future use of $2.7 million as well as lease impairment charges of $2.5 million.

Other expenses

Other expenses increased $1.6 million or 21.1% to $9.5 million for the year ended December 31, 2024 from $7.8 million for the year ended December 31, 2023, primarily as a result of a loss on the repurchase of the non-investment grade securities related to the 2022-2 securitization transaction, a decrease in deferred acquisition costs as a result of accounting for the origination of all new finance receivables at fair value, with acquisition costs being expensed in the period incurred rather than deferred, and an increase in dealer incentives.

Adjusted EBITDA

Adjusted EBITDA loss increased $6.6 million to $29.8 million for the year ended December 31, 2024 from $23.2 million for the year ended December 31, 2023, primarily as a result of the $0.7 million decrease in net interest income after losses and recoveries and the $7.3 million increase in expenses after EBITDA adjustments, including compensation and benefits, professional fees, impairment charges, and other expenses, as discussed above, partially offset by a $1.4 million increase in non-interest income after EBITDA adjustments, as discussed above.

(in thousands)

Noninterest income:

CarStory revenue

Total noninterest income

Compensation and benefits

Professional fees

Software and IT costs

Depreciation and amortization

Other expenses

Total expenses

Adjusted EBITDA

Interest income on cash and cash equivalents

Stock compensation expense

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 $0.8 million or 6.3% to $11.6 million for the year ended December 31, 2024 from $12.4 million for the year ended December 31, 2023, primarily as a result of a change in the scope of service and data provided to our customers.

Compensation and benefits

Compensation and benefits increased $1.3 million or 15.0% to $10.3 million for the year ended December 31, 2024 from $9.0 million for the year ended December 31, 2023.

The increase was primarily a result of retention bonuses granted to retain key employees.

Adjusted EBITDA

Adjusted EBITDA decreased $2.5 million or 73.2% to $0.9 million for the year ended December 31, 2024 as compared to $3.4 million for the year ended December 31, 2023 primarily as a result of the decrease in revenue and increase in expenses discussed above.

(in thousands)

Interest income

Interest income increased $1.8 million, or 9.3%, from $19.4 million for the year ended December 31, 2022 to $21.2 million for the year ended December 31, 2023.

The increase in interest income was primarily driven by higher interest rates earned on cash and cash equivalents.

Other loss, net

Other loss, net increased $65.1 million, or 150.8%, from $43.2 million for the year ended December 31, 2022 to $108.3 million for the year ended December 31, 2023.

The increase in other loss was primarily driven by an increase in realized and unrealized losses on finance receivables as a result of a larger loan portfolio as well as higher loss rates on our overall portfolio as of December 31, 2023 as compared to December 31, 2022.

Realized and unrealized losses, net of recoveries

Net interest income after losses and recoveries

Noninterest (loss) income:

Warranties and GAP loss, net

Gain on debt extinguishment

Total noninterest (loss) income

Compensation and benefits

Professional fees

Software and IT costs

Interest expense on corporate debt

Other expenses

Total expenses

Corporate activities do not constitute a reportable segment.

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, 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 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 consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Warranties and GAP loss, net, increased $8.2 million to $10.4 million for the year ended December 31, 2024 from $2.2 million for the year ended December 31, 2023, primarily as a result of a revised estimate of proceeds we expect to recover.

Gain on debt extinguishment

Gain on debt extinguishment represents a gain of $37.9 million for the year ended December 31, 2023, related to the repurchase of $74.2 million in aggregate principal balance of the Notes, net of deferred issuance costs, for $36.5 million.

Other income primarily represents interest earned on cash and cash equivalents.

Other income decreased $3.6 million or 66.6% to $1.8 million for the year ended December 31, 2024 from $5.5 million for the year ended December 31, 2023, primarily driven by lower cash and cash equivalent balances and lower interest rates earned on cash and cash equivalents.

Compensation and benefits

Compensation and benefits expense increased $0.7 million or 6.9% to $10.6 million for the year ended December 31, 2024 from $9.9 million for the year ended December 31, 2023, primarily as a result of severance expense related to the departure of certain executives and retention bonuses granted to retain key employees subsequent to the Ecommerce Wind-Down.

Professional fees

Professional fees decreased $0.4 million or 5.0% to $8.4 million for the year ended December 31, 2024 from $8.8 million for the year ended December 31, 2023, primarily as a result of reduced audit, legal, and consulting fees as a result of the reduced size of the business, partially offset by legal fees associated with the bankruptcy planning prior to filing the Prepackaged Chapter 11 Case (post-filing professional fees incurred related to the bankruptcy are included in reorganization items, net).

Software and IT costs

Software and IT costs decreased $4.8 million or 51.9% to $4.5 million for the year ended December 31, 2024 from $9.3 million for the year ended December 31, 2023, primarily as a result of more efficient targeted software use as well as renegotiating and right-sizing our Software and IT contracts.

Other expenses

Other expenses decreased $2.9 million or 30.9% to $6.4 million for the year ended December 31, 2024 from $9.3 million for the year ended December 31, 2023, primarily related to a decrease in public company related insurance costs as we renegotiated our insurance policies during the third quarter of 2023 and 2024 as a result of the reduced scale of the business.

Liquidity and Capital Resources

On January 14, 2025, we emerged from the Prepackaged Chapter 11 Case, as discussed above under "Recent Events".

On the Effective Date, each holder of the Notes received a pro rata share of 92.94% of the New Common Stock (subject to dilution) and all of the Company’s outstanding obligations under the Notes and the Indenture were deemed fully satisfied and discharged.

no longer has long-term debt, but UACC has securitization debt and its trust preferred securities.

As of December 31, 2024, we had cash and cash equivalents of $29.3 million and restricted cash of $49.0 million.

Restricted cash primarily includes restricted cash required under UACC's securitization transactions and Warehouse Credit Facilities of $49.1 million and cash deposits required under our 2022 Vehicle Floorplan Facility of $22.7 million.

Prior to the wind-down of our ecommerce operations, our primary source of liquidity was cash generated through financing activities.

Restricted cash primarily includes restricted cash required under UACC's securitization transactions and Warehouse Credit Facilities of $48.1 million.

Prior to the Ecommerce Wind-Down, our primary source of liquidity was cash generated through financing activities.

Additionally, we had excess borrowing capacity of $28.2 million under UACC's Warehouse Credit Facilities as of December 31, 2024.

On January 19, 2024, we amended our 2022 Vehicle Floorplan Facility.

In addition, all other financial covenants were eliminated.

As a result of the

liquidation of our vehicle inventory, we repaid all amounts outstanding under the 2022 Vehicle Floorplan Facility in full and the agreement has been terminated.

As a result of the liquidation of our vehicle inventory as part of the Ecommerce Wind-Down, we repaid all amounts outstanding under the 2022 Vehicle Floorplan Facility in full and the agreement has been terminated.

We expect to use our cash and cash equivalents to finance our future capital requirements and UACC’s Warehouse Credit Facilities to fund our finance receivables.

Certain advance rates available to UACC on borrowings from the Warehouse Credit Facilities have decreased as a result of the increased credit losses in UACC's portfolio.

Any future decreases on available advance rates may have an adverse impact on our liquidity.

As of February 29, 2024, we had cash and cash equivalents of approximately $94.0 million.

We anticipate that our existing cash and cash equivalents and UACC's Warehouse Credit Facilities will be sufficient to support the Company for at least the next twelve months from the date of this Annual Report on Form 10-K.

In addition to our ongoing cash requirements, our liquidity will also be used to fund costs related to the announced wind-down of our ecommerce operations, primarily in relation to severance and early contract and lease termination payments.

Such payments could be significant and have a material effect on our cash flows from operations.

Our future capital requirements will depend on many factors, including our ability to successfully implement the Value Maximization Plan and realize its benefits, available advance rates on our Warehouse Credit Facilities, our ability to complete additional securitization transactions at terms favorable to us, and our future credit losses.

We have no significant debt maturities due until July 2026 and the payments on our securitization debt are funded by cashflows on the finance receivables within the securitization trusts.

Convertible Senior Notes

On June 18, 2021, we issued $625.0 million aggregate principal amount of the Notes pursuant to an indenture between us and U.S.

Bank National Association, as trustee (the “Indenture”).

The Notes bear interest at a rate of 0.75% per annum, payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2022.

The Notes will mature on July 1, 2026, subject to earlier repurchase, redemption or conversion.

The total net proceeds from the offering, after deducting commissions paid to the initial purchasers and debt issuance costs, were approximately $608.9 million.

During the year ended December 31, 2023, the conditions allowing holders of the Notes to convert were not met.

During the year ended December 31, 2023, we repurchased $74.2 million in aggregate principal amount of the Notes, net of deferred issuance costs, for $36.5 million, respectively, in open-market transactions.

We recognized a gain on extinguishment of debt of $37.9 million for the year ended December 31, 2023.

As a result of these repurchases and repurchases made in 2022, as of December 31, 2023, $286.8 million aggregate principal amount of the Notes remain outstanding, net of deferred issuance costs of $3.7 million.

Subject to market conditions and availability, we may continue to opportunistically repurchase Notes from time to time to reduce our outstanding indebtedness at a discount.

Refer to Note 13 — Long Term Debt of our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, for further discussion.

Finance Receivables

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 two

years and we typically renew those facilities in the ordinary course.

On March 8, 2025, we renewed one of our Warehouse Credit Facilities, with $200 million of borrowing capacity, now expiring in June 2026.

The remaining Warehouse Credit Facilities, with aggregate borrowing capacity of $625 million, have terms expiring between July and September 2025.

See Note 10, Warehouse Credit Facilities and Consolidated VIEs, to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

We are having ongoing discussions with the remaining lenders under the Warehouse Credit Facilities regarding amended facilities that would 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.

Failure to secure sufficient warehouse borrowing capacity beyond the expiration of the remaining facilities in 2025 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”).

The Delayed Draw Facility allows for multiple drawdowns by each co-borrower, subject to satisfaction of usual and customary conditions precedent.

The Delayed Draw Facility bears interest at a rate of Term SOFR +850 bps, payable quarterly in arrears, with a full payment-in-kind option.

Interest is also payable upon any payment of principal.

The co-borrowers’ obligations under the Delayed Draw Facility will be collateralized by asset backed residual certificates in certain UACC securitization trusts.

The Delayed Draw Facility matures on December 31, 2026;

however, borrowings can be prepaid at any time, in whole or in part, without penalty or premium.

Once amounts are repaid they may not be reborrowed.

The Delayed Draw Facility includes certain usual and customary covenants with respect to the co-borrowers’ activities and the collateral.

Upon our emergence from bankruptcy on January 14, 2025, we continue to operate as a viable going concern.

Our future capital requirements will depend on many factors, including our ability to realize the intended benefits of the Value Maximization Plan, Prepackaged Chapter 11 Case, and our Long-Term Strategic Plan, available advance rates on and the amendment and renewal of the remaining Warehouse Credit Facilities, our ability to meet the requirements for continued listing on the Nasdaq Global Market, our ability to complete additional securitization transactions on favorable terms, and future credit losses.

We anticipate that our existing cash and cash equivalents, our credit agreement with Mudrick Capital Management, L.P., 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 Annual Report on Form 10-K.

Securitization Transactions

Subject to market conditions, we plan to sell finance receivables originated by UACC through asset-backed securitization transactions.

In January 2023, UACC sold approximately $238.7 million of investment grade rated asset-backed securities in the 2023-1 auto loan securitization transaction for proceeds of $237.8 million.

On April 19, 2023, UACC sold the non-investment grade rated securities related to the 2023-1 securitization transaction for $23.1 million.

The securitization trust is collateralized by finance receivables with an aggregate principal balance of $326.4 million.

As a result of market conditions at the time, which led to unfavorable pricing, UACC retained the residual interests, and we accounted for the 2023-1 securitization transaction as secured borrowings.

In the year ended December 31, 2022, UACC sold $523.7 million of rated asset-backed securities and $49.6 million of residual certificates in 2022-1 and 2022-2 auto loan securitization transactions for proceeds of $582.9 million.

The securitization trusts are collateralized by finance receivables with an aggregate principal balance of $603.5 million and have a carrying value of $534.6 million at the time of sale.

During the second quarter of 2024, UACC completed the 2024-1 securitization transaction, in which it sold approximately $300.0 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 $297.2 million.

The trust is collateralized by finance receivables with an aggregate principal balance of $380.1 million as of April 30, 2024.

These finance receivables are serviced by UACC.

As a result of market conditions, UACC retained the residual interests, which required us to account for the 2024-1 securitization as secured borrowings and remain on balance sheet pending the sale of such retained interests.

We also repurchased $4.2 million of the non-investment grade securities related to the 2022-2 securitization transaction for $4.8 million.

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.

Depending on market conditions, future securitization transactions may be accounted for as secured borrowings and remain on balance sheet.

As a result of high interest rates, the current inflationary environment and vehicle depreciation in the used automotive industry, UACC is experiencing higher loss severity.

The increased loss severity could lead to reduced servicing income if UACC elects to waive monthly servicing fees going forward as it did in the first quarter of 2023.

The waiver of monthly servicing fees related to the 2022-2 securitization transaction resulted in consolidation of the related finance receivables and securitization debt on our financial statements.

Refer to Note 4 — Variable Interest Entities and Securitizations to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, for further discussion.

UACC Risk Retention Financing Facility

On May 3, 2023, UACC entered into a Risk Retention Financing Facility enabling it to finance asset-backed securities issued in its securitization transactions and held by UACC pursuant to applicable risk retention rules.

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.

1 unchanged sentence

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 .

During the second quarter of 2024, UACC pledged an additional $15.8 million of its retained beneficial interest in the 2024-1 securitization transaction as collateral under the Risk Retention Financing Facility, and received proceeds of $15.6 million, with expected repurchase dates ranging from August 2026 to November 2030 at the initial closing date.

Warehouse Credit Facilities

UACC has four senior secured warehouse facility agreements the (“Warehouse Credit Facilities”) with banking institutions.

UACC has four 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.

The aggregate borrowing limit is $825.0 million with maturities between June 2025 and September 2025.

As of December 31, 2023, outstanding borrowings related to the Warehouse Credit Facilities were $421.3 million and we were in compliance with all covenants related to the Warehouse Credit Facilities.

Failure to satisfy these and or any other requirements contained within the agreements would restrict access to the Warehouse Credit Facilities and could have a material adverse effect on our financial condition, results of operations and liquidity.

On March 8, 2025, we renewed one of our Warehouse Credit Facilities, with $200 million of borrowing capacity, now expiring June 2026.

The aggregate borrowing limit and significant terms of the agreement remained unchanged except for an increase in the minimum liquidity covenant.

The remaining Warehouse Credit Facilities, with aggregate borrowing capacity of $625 million, expire between July and September 2025.

We are in ongoing discussions with the remaining lenders to extend the terms beyond the current expiration dates and expect facilities to be amended and renewed at sufficient borrowing capacity.

The aggregate borrowing limit under the Warehouse Credit Facilities is $825.0 million with maturities between July 2025 and June 2026.

As of December 31, 2024, outstanding borrowings related to the Warehouse Credit Facilities were $359.9 million and we were in compliance with all covenants under the terms of the Warehouse Credit Facilities.

Failure to satisfy these or any other requirements contained within the agreements would restrict access to the Warehouse Credit Facilities and could have a material adverse effect on our financial condition, results of operations and liquidity.

Certain breaches of covenants may also result in acceleration of the repayment of borrowings prior to the scheduled maturity.

1 unchanged sentence

Operating Leases

Prior to the wind-down of our ecommerce operations, we entered into various noncancelable operating lease agreements for office space, the Company’s reconditioning facility, the TDA retail location, the Company’s Sell Us Your Car centers, regional logistics hubs, parking lots, other facilities, and equipment used in the normal course of business, and, as of December 31, 2023 operating lease obligations were $33.9 million, with $10.7 million payable within 12 months.

As of December 31, 2023, UACC had an additional operating lease that has not yet commenced with future lease payments of approximately $1.2 million.

The lease is expected to commence over the next 12 months with initial lease terms of approximately 7 years.

As a result of the Value Maximization Plan, we have been negotiating early terminations of our lease obligations.

As of March 8, 2024, we have reduced our aggregate future operating lease obligations by $4.9 million.

Our ongoing lease obligations will depend on the outcomes of discussions and negotiations (a number of which are currently ongoing) with counterparties to the leases we still intend to terminate or modify.

We entered into various noncancelable operating lease agreements for office space and equipment used in the normal course of business, and, as of December 31, 2024 operating lease obligations were $11.1 million, with $2.9 million payable within 12 months.

See "Note 12—Leases,” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further detail of our obligations and the timing of expected future payments.

2 unchanged sentences

(in thousands)

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash

Net cash used in operating activities from continuing operations

Net cash provided by investing activities from continuing operations

Net cash (used in) provided by financing activities from continuing operations

Net cash provided by (used in) operating activities from discontinued operations

Net cash provided by (used in) investing activities from discontinued operations

Net cash used in financing activities from discontinued operations

Net decrease in cash, cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

1 unchanged sentence

Operating Activities

Net cash flows used in operating activities increased by $424.6 million, from $109.1 million for the year ended December 31, 2022 to $533.7 million for the year ended December 31, 2023.

For the year ended December 31, 2022, the cash used in operating activities was partially offset by the proceeds from the sale of finance receivables held for sale related to the 2021-2 and 2022-2 securitization transactions of $509.6 million.

The remaining increase in net cash used in operating activities is due to a change in working capital of $155.1 million, primarily related to the change in inventory levels.

The increases were partially offset by a $149.3 million decrease in net loss after reconciling adjustments for the year ended December 31, 2023, as compared to the year ended December 31, 2022, a decrease of originations of finance receivables held for sale of $43.4 million, and an increase in principal payments received on finance receivables held for sale of $41.3 million

As the 2023-1 securitization transaction was accounted for as secured borrowings, the proceeds are included as a financing activity in our consolidated statement of cash flows.

We financed a majority of our inventory with the 2022 Vehicle Floorplan Facility.

In accordance with U.S.

GAAP, we report all cash flows arising in connection with the 2022 Vehicle Floorplan Facility as a financing activity in our consolidated statement of cash flows.

Net cash flows used in operating activities from continuing operations decreased by $306.2 million, from $482.0 million for the year ended December 31, 2023 to $175.8 million for the year ended December 31, 2024.

The decrease was primarily due to a $178.0 million decrease in originations of finance receivables held for sale, as a result of no longer originating loans for legacy Vroom customers after the Ecommerce Wind-Down, an increase in principal payments received on finance receivables held for sale of $80.9 million, a $31.1 million improvement in net loss from continuing operations after reconciling adjustments, and changes in working capital of $13.0 million.

Investing Activities

Net cash flows from investing activities changed $337.4 million, from net cash used in investing activities of $164.2 million for the year ended December 31, 2022 to net cash provided by investing activities of $173.2 million for the year ended December 31, 2023.

The change was primarily a result of the UACC Acquisition in February 2022 which resulted in cash outflow of $267.5 million during the year ended December 31, 2022, a decrease in purchases of finance receivables at fair value of $53.1 million, an increase in principal payments received on finance receivables at fair value of $42.4 million, and the consolidation of the 2022-2 securitization transaction which resulted in a cash inflow of $11.4 million during the year ended December 31, 2023.

The changes were partially offset by a decrease in proceeds from the sale of finance receivables at fair value for the 2022-1 and 2022-2 securitization transactions of $43.3 million, which resulted in a cash inflow during the year ended December 31, 2022.

Net cash flows provided by investing activities from continuing operations decreased by $70.4 million, from $185.3 million for the year ended December 31, 2023 to $114.9 million for the year ended December 31, 2024.

The decrease is primarily due to a $58.8 million decrease in principal payments received on finance receivables at fair value as well as the consolidation of the 2022-2 securitization transaction which resulted in a cash inflow of $11.4 million during the year ended December 31, 2023.

Financing Activities

Net cash flows from financing activities changed $566.8 million, from net cash used in financing activities of $469.5 million for the year ended December 31, 2022 to net cash provided by financing activities of $97.3 million for the year ended December 31, 2023.

The change was primarily related to proceeds from borrowings under secured financing arrangements of $262.0 million, an increase in net cash inflow of $136.0 million related to our Warehouse Credit Facilities, a decrease in net repayments of $110.0 million related to our 2022 Vehicle Floorplan Facility, a decrease in the repurchase of convertible senior notes of $53.7 million, and proceeds from financing beneficial interests in securitizations of $24.5 million for the year ended December 31, 2023.

The changes were partially offset by an increase in principal repayments under secured financing agreements and financing beneficial interests in securitizations of $15.6 million and $8.7 million, respectively.

Net cash flows provided by financing activities from continuing operations decreased $238.0 million, from $223.2 million for the year ended December 31, 2023 to $14.8 million used in financing activities for the year ended December 31, 2024.

The decrease was primarily related to a $251.0 million decrease in net cashflows related to our Warehouse Credit Facilities, as a result of fewer borrowings related to no longer originating loans for legacy Vroom customers and higher repayments following the 2024-1 securitization transaction, a $13.4 million decrease in net cashflows from financing of beneficial interests in securitizations, and a $9.0 million decrease in net cashflows from secured financing agreements.

These decreases were partially offset by $36.5 million in repurchases of the Notes during the year ended December 31, 2023.

Critical Accounting Policies and Estimates

1 unchanged sentence

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 income taxes, the realizability of inventory, stock-based compensation, revenue-related reserves, as well as impairment of goodwill and long-lived assets.

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.

1 unchanged sentence

The critical accounting policies that reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements include those described in Note 2—Summary of Significant Accounting Policies and Note 3—Revenue Recognition to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Finance Receivables at Fair Value

The valuation of finance receivables at fair value, for which the Company elected the fair value option in accordance with ASC 825 but are not related to consolidated CFEs, is derived from a model that estimates the present value of future cash flows.

We estimate the present value of these future cash flows using a valuation model consisting of developed estimates that rely on unobservable assumptions third-party market participants would use in determining fair value, including prepayment speed, default rate, recovery rate, as well as certain macroeconomics events we believe market participants would consider relevant.

All these assumptions are primarily based on historical performance.

These valuation models are calculated by combining similarly priced loans and vintages to determine a stream of expected cash flows which are then discounted.

The individual discounted pools of cash flows are then aggregated to determine the total expected discounted cash flows on the outstanding receivable at a given measurement period.

The estimates for the aforementioned assumptions significantly affect the reported amount (and changes thereon) of our finance receivables at fair value on our consolidated balance sheets and consolidated statements of operations.

Recently Issued and Adopted Accounting Pronouncements

5 unchanged sentences

Report of Independent Registered Public Accounting Firm PCAOB ID 49

Report of Independent Registered Public Accounting Firm PCAOB ID 238

Consolidated Balance Sheets as of December 31, 2024 and 2023

4 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Vroom, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Vroom, Inc.

(debtor-in-possession) and its subsidiaries (the Company) as of December 31, 2024, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the year then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Discontinued Operations

As discussed in Note 1, Value Maximization Plan , and Note 5 to the consolidated financial statements, in 2024 the Board of Directors approved a value maximization plan, pursuant to which the Company discontinued its ecommerce operations and used vehicle dealership business.

Bankruptcy and Subsequent Event

As discussed in Note 1, The Prepackaged Chapter 11 Case and Conversion of Common Stock , Note 2, Bankruptcy , and Note 6 to the consolidated financial statements, Vroom, Inc.

(the Debtor) filed a voluntary petition on November 13, 2024 with the United States Bankruptcy Court for the Southern District of Texas for relief under the provisions of Chapter 11 of the United States Code Bankruptcy Code.

The conditions to the effectiveness of the Debtor’s plan of reorganization were satisfied or waived and on January 14, 2025 the plan of reorganization became effective, and the Debtor emerged from bankruptcy.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Fair Value of Finance Receivables and Finance Receivables Held for Sale

The Company’s finance receivables at fair value, that are not financial assets of consolidated collateralized financing entities, totaled $289,428 thousand at December 31, 2024.

In addition, the Company’s finance receivables held for sale, which are recorded at the lower of cost or fair value, totaled $318,192 thousand at December 31, 2024.

As discussed in Notes 2 and 16 to the consolidated financial statements, the Company estimates the fair value of finance receivable at fair value, that are not financial assets of consolidated financing entities, and finance receivables held for sale utilizing valuation models that include discounted cash flow models, incorporating key inputs including prepayment speeds, default rates, recovery rates and discount rates.

We identified the valuation of finance receivables at fair value and finance receivables held for sale as a critical audit matter due to the significant judgement required by management in determining assumptions, including the prepayment speed, default rate, recovery rate and discount rate.

Our audit procedures related to the valuation of finance receivables as of December 31, 2024 included the following procedures, amongst others:

• We tested the data utilized in determining the assumptions related to prepayment speed, default rate and discount rate used in the valuation model for a selection of loans, obtaining and inspecting loan origination documents and supporting documentation for loan activity.

• We evaluated the appropriateness of the valuation assumptions and the valuation model by inquiry of the Company’s third-party valuation expert.

• With the assistance of our valuation specialists, we evaluated the reasonableness of the valuation methodology and significant assumptions used, including whether the significant assumptions were appropriate and consistent with available external market and industry data.

• We evaluated the consistency by which management has applied significant valuation assumptions related to prepayment speed, default rate, recovery rate and discount rate.

Long-lived Asset Impairment

As discussed in Note 2 to the consolidated financial statements, the Company determined a long-lived asset impairment evaluation triggering event existed as of December 31, 2024, indicating that the carrying amount of the United Auto Credit Corporation (UACC) asset group may not be recoverable.

The Company compared the sum of estimated undiscounted future cash flows attributable to the UACC asset group to the UACC asset group’s carrying value, and determined that, as the sum of the estimated undiscounted future cash flows exceeded the carrying value, no impairment charges were necessary as a result of the triggering event that existed as of December 31, 2024.

We identified the long-lived asset impairment analysis related to the UACC asset group as a critical audit matter due to the significant judgement required by management in determining the estimated undiscounted future cash flows, including assumptions related to the forecasted net interest income, the forecasted earnings before tax, and the estimated residual value.

Auditing management’s assumptions involved a high degree of auditor judgment and an increase in audit effort, including the use of valuation specialists, due to the impact management’s assumptions could have on the accounting estimate.

Our audit procedures related to the UACC asset group long-lived asset impairment analysis as of December 31, 2024, included the following procedures, amongst others:

• We evaluated the reasonableness of assumptions related to forecasted net interest income and forecasted earnings before tax used in the undiscounted future cash flows by comparing the forecasts to the UACC asset group’s historical results.

• With the assistance of our valuation specialists, we evaluated the reasonableness of the inputs into management’s estimate of the residual value of the UACC asset group, including whether the inputs into the estimated residual value were appropriate and consistent with available external market data.

We have served as the Company's auditor since 2024.

/s/ RSM US LLP

Los Angeles, California

March 11, 2025

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Vroom, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Vroom, Inc.

and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, of changes in stockholders’ equity and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in In ternal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

Opinion on the Financial Statements

We have audited the consolidated balance sheet of Vroom, Inc.

(debtor-in-possession) and its subsidiaries (the “Company”) as of December 31, 2023, and the related consolidated statements of operations, of changes in stockholders’ equity and of cash flows for the year then ended, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Emphasis of Matter

As discussed in Note 1 – Value Maximization Plan to the consolidated financial statements, in 2024, the Board of Directors approved a value maximization plan, pursuant to which the Company discontinued its ecommerce operations and is winding down its used vehicle dealership business.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the

transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Retail Vehicle, Net Revenues

As described in Note 3 to the consolidated financial statements, the Company’s revenue for the year ended December 31, 2023 included retail vehicle, net revenues of $566.0 million.

The Company recognizes revenue for used vehicle sales generally at a point in time when the vehicles are delivered to the customer or picked up by the customer.

The revenue recognized by the Company includes the agreed upon transaction price, including any delivery charges and document fees stated within the customer contract.

The principal consideration for our determination that performing procedures relating to the recognition of retail vehicle, net revenues is a critical audit matter is a high degree of auditor effort in performing procedures related to recognition of the Company’s retail vehicle, net revenues.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the recording of revenue at the transaction price when the used vehicle has been delivered to the customer or picked up by the customer.

These procedures also included, among others (i) testing a sample of retail vehicle, net revenue transactions by obtaining and inspecting source documents, such as customer contracts, delivery documents, and cash receipts and (ii) testing the timing of revenue recognition for a sample of retail vehicle, net revenue transactions before December 31, 2023 by obtaining and inspecting source documents, such as customer contracts and delivery documents.

As discussed in Note 1 to the consolidated financial statements, in 2024, the Board of Directors approved a value maximization plan, pursuant to which the Company discontinued its ecommerce operations and wound down its used vehicle dealership business.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 13, 2024

We have served as the Company’s auditor since 2016.

March 13, 2024, except for the effects of discontinued operations discussed in Note 5, the effects of the revision discussed in Note 20, the change in composition of reportable segments discussed in Note 17, and the change in the manner in which the Company accounts for segments discussed in Note 2 to the consolidated financial statements, as to which the date is March 11, 2025

We served as the Company's auditor from 2016 to 2024.

(DEBTOR-IN-POSSESSION)

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

Current Assets:

Cash and cash equivalents

Restricted cash (including restricted cash of consolidated VIEs of $ 48.1 million and $ 49.1 million, respectively)

Accounts receivable, net of allowance of $ 11.2 million and $ 21.5 million, respectively

Finance receivables at fair value (including finance receivables of consolidated VIEs of $ 467.3 million and $ 341.4 million, respectively)

Finance receivables held for sale, net (including finance receivables of consolidated VIEs of $ 310.0 million and $ 457.2 million, respectively)

Beneficial interests in securitizations

Prepaid expenses and other current assets (including other current assets of consolidated VIEs of $ 25.2 million and $ 11.7 million, respectively)

Total current assets

Finance receivables at fair value (including finance receivables of consolidated VIEs of $ 329.6 million and $ 119.6 million, respectively)

Interest receivable (including interest receivables of consolidated VIEs of $ 13.3 million and $ 13.7 million, respectively)

Property and equipment, net

2 unchanged sentences

Other assets (including other assets of consolidated VIEs of $ 10.8 million and $ 13.3 million, respectively)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

Accrued expenses (including accrued expenses of consolidated VIEs of $ 4.0 million and $ 1.5 million, respectively)

Vehicle floorplan

Assets from discontinued operations

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

Warehouse credit facilities of consolidated VIEs

Current portion of long-term debt (including current portion of securitization debt of consolidated VIEs at fair value of $ 163.5 million and $ 47.2 million, respectively)

Deferred revenue

Operating lease liabilities, current

Other current liabilities

Total current liabilities

Long-term debt, net of current portion (including securitization debt of consolidated VIEs of $ 150.6 million and $ 32.6 million at fair value, respectively)

Operating lease liabilities, excluding current portion

Other long-term liabilities (including other long-term liabilities of consolidated VIEs of $ 10.4 million and $ 7.4 million, respectively)

Long-term debt (including securitization debt of consolidated VIEs of $ 210.7 million at amortized cost and $ 142.6 million at fair value as of December 31, 2024 and $ 314.1 million at fair value as of December 31, 2023)

Operating lease liabilities

Other liabilities (including other liabilities of consolidated VIEs of $ 13.8 million and $ 14.3 million, respectively)

Liabilities subject to compromise (Note 6)

Liabilities from discontinued operations

Total liabilities

Commitments and contingencies (Note 13)

Stockholders’ equity:

Stockholders’ (deficit) equity:

Common stock, $ 0.001 par value;

500,000,000 shares authorized as of December 31, 2023 and 2022;

1,791,286 and 1,727,525 shares issued and outstanding as of December 31, 2023 and 2022, respectively

500,000,000 shares authorized as of December 31, 2024 and December 31, 2023;

1,822,532 and 1,791,286 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively

Additional paid-in-capital

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

Total stockholders’ (deficit) equity

Total liabilities and stockholders’ (deficit) equity

See accompanying notes to these consolidated financial statements .

(DEBTOR-IN-POSSESSION)

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

Retail vehicle, net

Wholesale vehicle

Total revenue

Cost of sales:

Retail vehicle

Wholesale vehicle

Total cost of sales

Total gross profit

Selling, general and administrative expenses

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 income:

Servicing income

Warranties and GAP income (loss), net

CarStory revenue

Gain on debt extinguishment

Total noninterest income

Compensation and benefits

Professional fees

Software and IT costs

Depreciation and amortization

Interest expense on corporate debt

Impairment charges

Loss from operations

Gain on debt extinguishment

Interest expense

Interest income

Other loss (income), net

Loss before provision (benefit) for income taxes

Provision (benefit) for income taxes

Net loss per share attributable to common stockholders, basic and diluted

Other expenses

Total expenses

Loss from continuing operations before reorganization items and provision for income taxes

Reorganization items, net

Loss from continuing operations before provision for income taxes

Provision for income taxes from continuing operations

Net loss from continuing operations

Net loss from discontinued operations

Net loss per share attributable to common stockholders, continuing operations, basic and diluted

Net loss per share attributable to common stockholders, discontinued operations, basic and diluted

Total net loss per share attributable to common stockholders, basic and diluted

Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted

See accompanying notes to these consolidated financial statements.

(DEBTOR-IN-POSSESSION)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

1 unchanged sentence

Stockholders’

Equity (Deficit)

Balance at December 31, 2022

1 unchanged sentence

Vesting of restricted stock units

Restricted stock units in accordance with purchase agreement

Issuance of common stock related to at-the-market offering, net of offering costs

Balance at December 31, 2023

1 unchanged sentence

Vesting of restricted stock units

Issuance of common stock related to at-the-market offering, net of offering costs

Balance at December 31, 2024

See accompanying notes to these consolidated financial statements .

(DEBTOR-IN-POSSESSION)

CONSOLIDATED STATEMENTS OF CASH FLOWS

1 unchanged sentence

Operating activities

Net loss from continuing operations

Adjustments to reconcile net loss to net cash used in operating activities:

Impairment charges

Profit share receivable

Gain on debt extinguishment

1 unchanged sentence

Amortization of debt issuance costs

Realized gains on securitization transactions

Deferred taxes

Losses on finance receivables and securitization debt, net

Losses on Warranties and GAP

Stock-based compensation expense

Provision to record inventory at lower of cost or net realizable value

Provision for bad debt

Provision to record finance receivables held for sale at lower of cost or fair value

Amortization of unearned discounts on finance receivables at fair value

Reorganization items

Changes in operating assets and liabilities:

2 unchanged sentences

Principal payments received on finance receivables, held for sale

Proceeds from sale of finance receivables held for sale, net

Accounts receivable

Prepaid expenses and other current assets

Accounts payable

Accrued expenses

Deferred revenue

Interest receivable

Other liabilities

Net cash used in operating activities from continuing operations

Net cash provided by (used in) operating activities from discontinued operations

Net cash used in operating activities

Investing activities

Finance receivables at fair value

Purchases of finance receivables at fair value

Principal payments received on finance receivables at fair value

Proceeds from sale of finance receivables at fair value, net

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

Consolidation of VIEs

1 unchanged sentence

Purchase of property and equipment

Acquisition of business, net of cash acquired of $ 47.9 million

Net cash provided by (used in) investing activities

Net cash provided by investing activities from continuing operations

Net cash provided by (used in) investing activities from discontinued operations

Net cash provided by investing activities

Financing activities

Proceeds from the issuance of common stock in at-the-market offering, net of offering costs

Proceeds from borrowings under secured financing agreements

Proceeds from borrowings under secured financing agreements, net of issuance costs

Principal repayment under secured financing agreements

1 unchanged sentence

Principal repayments of financing of beneficial interests in securitizations

Proceeds from vehicle floorplan

Repayments of vehicle floorplan

Proceeds from warehouse credit facilities

1 unchanged sentence

Repurchases of convertible senior notes

Proceeds from the issuance of common stock in at-the-market offering, net of offering costs

Other financing activities

Net cash provided by (used in) financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash

Net cash (used in) provided by financing activities from continuing operations

Net cash used in financing activities from discontinued operations

Net cash (used in) provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at the beginning of period

1 unchanged sentence

(Continued on following page)

(DEBTOR-IN-POSSESSION)

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

2 unchanged sentences

Cash paid for interest

Cash paid for professional fees for services rendered in connection with the Chapter 11 proceedings

Cash paid for income taxes

4 unchanged sentences

Reclassification of finance receivables held for sale to finance receivables at fair value, net

Fair value of beneficial interests received in securitization transactions

See accompanying notes to these consolidated financial statements .

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Description of Business and Organization

Vroom, Inc., and its wholly owned subsidiaries (collectively, the "Company”), was an end-to-end ecommerce platform to buy and sell used vehicles.

In December 2015, the Company acquired Houston-based Left Gate Property Holding, LLC (d/b/a Texas Direct Auto and Vroom).

The acquisition included the Company's proprietary vehicle reconditioning center, the Texas Direct Auto ("TDA") dealership, and Sell Us Your Car® centers.

Left Gate Property Holding, LLC was renamed Vroom Automotive, LLC in March 2021, and was the primary operating entity for the Company's purchases and sales of used vehicles.

In January 2021, the Company acquired Vast Holdings, Inc.

Vroom, Inc., through its wholly owned subsidiaries (collectively, the "Company”), is a leading automotive finance company that offers vehicle financing to consumers through third-party dealers and an artificial intelligence ("AI")-powered analytics and digital services platform supporting the automotive industry.

In January 2021, the Company completed the acquisition of Vast Holdings, Inc.

(d/b/a CarStory).

2 unchanged sentences

(now known as Vroom Automotive Financial Corporation) and United Auto Credit Corporation ("UACC").

Starting in 2022, the Company was organized into three reportable segments:

Ecommerce, Wholesale and Retail Financing.

The Ecommerce reportable segment represented retail sales of used vehicles through the Company’s ecommerce platform, revenue earned on vehicle financing originated by UACC or the Company's third-party financing sources and sales of value-added products associated with those vehicles sales.

The Wholesale reportable segment represented sales of used vehicles through wholesale channels.

The Retail Financing reportable segment represented UACC’s operations with its network of third-party dealership customers, which primarily consists of the purchases and servicing of vehicle installment contracts, but excludes financing of vehicle sales to Vroom customers.

As a result of the Value Maximization Plan and the wind-down of the ecommerce operations, as described below, the Company will discontinue reporting its results through the Ecommerce and Wholesale segments starting in the first quarter of 2024.

The Company was incorporated in Delaware on January 31, 2012 under the name BCM Partners III, Corp.

2 unchanged sentences

Value Maximization Plan

On January 19, 2024, the Board of Directors of Vroom approved a value maximization plan, pursuant to which the Company discontinued its ecommerce operations and is 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”).

The Company has suspended transactions through vroom.com, completed transactions for customers who had previously contracted to purchase or sell a vehicle, halted purchases of additional vehicles, sold all of its used vehicle inventory through wholesale channels and paid off its floorplan financing facility.

The Company continues to take other actions to maximize the value of its remaining ecommerce assets, reduce its outstanding commitments and preserve its liquidity, and has been executing a reduction-in-force commensurate with its reduced operations.

The Company expects the ecommerce wind down to be substantially complete by the end of the first quarter of 2024, but may incur additional wind-down costs through the end of 2024.

The Company also owns and operates UACC, an automotive finance company, and CarStory, an artificial intelligence-powered analytics and digital services platform for automotive retail.

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

As a result of the Value Maximization Plan, the Company estimates that it will incur total cash charges of approximately $ 16.5 million for severance and other personnel-related costs and approximately $ 15.0 million in other contract and lease termination costs.

As part of a planned reduction-in-force under the Value Maximization Plan, the Company anticipates 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 determined a triggering event existed as of December 31, 2023, resulting in long–lived asset impairment charges of $ 47.4 million.

The impairment charges consist of $ 23.9 related to "Property and equipment, net",

The Company was previously 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 discontinued its ecommerce operations and 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 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").

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 consolidated financial statements and notes to the 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 two reportable segments:

UACC and CarStory.

The UACC reportable segment represents UACC’s operations with its network of third-party dealership customers, including the purchase and servicing of vehicle retail installment sales contracts.

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

the UACC reportable segment also includes the runoff of these previously originated contracts.

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.

Refer to Note 17 — Segment Information for further detail.

The Prepackaged Chapter 11 Case

On November 12, 2024, Vroom Inc.

(the "Company", and 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 Notes (as defined in Note 11, Long Term Debt) and the largest shareholder.

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 (the “Bankruptcy Code”) in

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ 22.2 million related to "Operating lease right-of-use assets", and $ 1.3 million related to "Other assets" on the Company's consolidated balance sheets.

Refer to Note 7 — Property and Equipment, Net and Note 12 — Leases for further details.

Reverse Stock Split

On February 13, 2024, the Company effected a 1-for-80 reverse stock split of the Company’s common stock.

All shares of the Company’s common stock, stock-based instruments and per-share data included in these consolidated financial statements have been retroactively adjusted as though the stock split has been effected prior to all periods presented.

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.

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 January 14, 2025 .

Conversion of Common Stock

Immediately prior to the Effective Date, there were 1,822,577 outstanding shares of the Company’s common stock, $ 0.001 par value per share (the “Common Stock”).

The Company has adopted an Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to, among other changes to the Company’s prior amended and restated certificate of incorporation, effect an automatic conversion of the Common Stock at a ratio of 1-for-5 .

Going Concern

As described above, the Company filed the Prepackaged Chapter 11 Case to implement the transactions described herein.

As of January 14, 2025 the Company emerged from bankruptcy and continues to operate as a viable going concern.

The accompanying audited consolidated financial statements have been prepared on the basis that the Company will continue to operate as a going concern, which contemplates that the Company will be able to realize assets and settle liabilities and commitments in the normal course of business for twelve months following the issuance date.

Basis of Presentation

1 unchanged sentence

generally accepted accounting principles (“U.S.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Principles of Consolidation

5 unchanged sentences

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 income taxes, the realizability of inventory, stock-based compensation, contingencies, revenue-related reserves, fair value measurements and useful lives of property and equipment and intangible assets.

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.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comprehensive Loss

1 unchanged sentence

Accordingly, net loss and comprehensive loss are the same for the periods presented.

Revenue Recognition

Revenue consists of retail used vehicle sales, wholesale used vehicle sales, financing vehicle sales through UACC, fees earned on sales of third-party financing and value-added products to customers in connection with vehicles sales, and other revenues.

Refer to Note 3 – Revenue Recognition for a discussion of the Company’s significant accounting policies related to revenue recognition.

Cost of sales

Cost of sales primarily includes the cost to acquire used vehicles, inbound transportation costs and direct and indirect reconditioning costs associated with preparing vehicles for resale.

Reconditioning costs include parts, labor and third-party reconditioning costs directly attributable to the vehicle and allocated overhead costs.

Cost of sales also includes any necessary adjustments to reflect vehicle inventory at the lower of cost or net realizable value.

As a result of the UACC acquisition, cost of sales also includes interest expense incurred on securitization debt related to finance receivables originated by UACC for Vroom customers as well as interest expense incurred on securitization debt originated by UACC for its network of third-party dealership customers and collection expenses related to servicing finance receivables.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash and Cash Equivalents

2 unchanged sentences

Restricted Cash

Restricted cash primarily includes cash deposits required under the Company’s 2022 Vehicle Floorplan Facility as explained in Note 10 – Vehicle Floorplan Facility and UACC restricted cash.

UACC collects and services receivables under the securitization transactions and warehouse credit facilities.

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 detail.

Accounts Receivable, Net

Accounts receivable, net of an allowance for doubtful accounts, includes amounts due from customers and from third-party financial institutions related to vehicle purchases.

The allowance for doubtful accounts is estimated based upon historical experience, age of the balances, current economic conditions and other factors and is evaluated as of each reporting date.

Increases and decreases in the allowance for doubtful accounts are recorded in “Selling, general and administrative expenses” in the consolidated statements of operations.

The allowance for doubtful accounts was $ 11.2 million, $ 21.5 million and $ 8.5 million as of December 31, 2023, 2022, and 2021, respectively.

For the year ended December 31, 2023, the provision for bad debt was $ 4.1 million and write-offs were $ 14.4 million.

For the year ended December 31, 2022, the provision for bad debt was $ 13.4 million and write-offs were immaterial.

Finance Receivables

Finance receivables consist of installment contracts the Company originates through UACC to finance the vehicles it sells, as well as installment contracts acquired by UACC from its existing network of third-party dealership customers.

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 over 90 days delinquent are considered nonaccrual finance receivables.

Interest income is subsequently recognized only to the extent cash payments are received.

Finance receivables may be restored to accrual status when a customer settles all delinquency balances and future interest and principal payments are reasonably assured.

Interest income is subsequently recognized only to the extent cash payments are received until the consumer is able to make periodic interest and principal payments in accordance with the finance receivable terms.

Finance Receivables Held for Sale, Net

1 unchanged sentence

The Company intends to sell finance receivables through securitization transactions.

Finance receivables classified as held for sale are recorded at the lower of cost or fair value.

Deferred acquisition costs and any discounts or premiums are deferred until the finance receivables are sold and are then recognized as part of the total gain or loss on sale and recorded in “Finance Revenue” and "Product, net" in the consolidated statements of operations.

Finance receivables classified as held for sale, for which the fair value option has not been elected, are recorded at the lower of cost or fair value.

Deferred acquisition costs and any discounts are deferred until the finance receivables are sold and are then recognized as part of the total gain or loss on sale.

Refer to Note 3 – Revenue Recognition.

The Company records a valuation allowance to report finance receivables at the lower of amortized cost basis or fair value.

The Company records a valuation allowance to report finance receivables at the lower of cost or fair value.

To determine the valuation allowance, finance receivables are evaluated collectively as they represent a large group of smaller-balance homogeneous loans.

To the extent that actual experience differs from estimates, significant adjustments to the Company's valuation allowance may be needed.

Fair value adjustments are recorded in "Other loss (income), net" in the consolidated statements of operations.

Principal balances of finance receivables are charged-off when the Company is unable to sell the finance receivable and the related vehicle has been repossessed and liquidated or the receivable has otherwise been deemed uncollectible.

As of December 31, 2023 and 2022, the valuation allowance

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

for finance receivables classified as held for sale was $ 33.8 million and $ 10.5 million, respectively.

Fair value adjustments are recorded in "Realized and unrealized losses, net of recoveries" in the consolidated statements of operations.

Principal balances and corresponding deferred acquisition costs and discounts of finance receivables are charged-off when the Company is unable to sell the finance receivable and the related vehicle has been repossessed and liquidated or the receivable has otherwise been deemed uncollectible.

As of December 31, 2024 and 2023, the valuation allowance for finance receivables classified as held for sale was $ 31.1 million and $ 33.8 million, respectively.

Refer to No te 16 – Financial Instruments and Fair Value Measurements .

Finance Receivables at Fair Value

Finance receivables at fair value represent finance receivables that the Company does not intend to sell in the immediate future and for which the fair value option was elected.

Fair value adjustments are recorded in "Other loss (income), net" in the consolidated statements of operations.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Finance receivables for which the fair value option was elected under ASC 825 are classified as finance receivables at fair value.

Finance receivables at fair value include both finance receivables held for sale at fair value as well as finance receivables held for investment at fair value.

Finance receivables held for sale at fair value represent finance receivables that the Company intends to sell, as described above, but elected the fair value option.

The aggregate principal balance and the fair value of the finance receivables held for sale at fair value was $ 365.0 million and $ 320.6 million, respectively, and the aggregate principal balance and the fair value of the finance receivables held for investment at fair value was $ 211.2 million and $ 183.2 million, respectively as of December 31, 2024 .

The Company did no t have any finance receivables held for sale at fair value as of December 31, 2023.

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 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 receivable and recognizes the acquisition costs to underwrite the finance receivables as an expense in the period incurred.

For finance receivables held for sale at fair value, any discounts are deferred until the finance receivables are sold.

For finance receivables held for investment at fair value, any discounts are amortized over the contractual life of the underlying finance receivables.

Refer to Note 16 – Financial Instruments and Fair Value Measurements.

Consolidated CFEs

The Company elected the fair value option upon consolidation of the assets and liabilities of its variable interest entities ("VIEs") related to the 2021-1, 2022-2 and 2023-1 securitization transactions.

The 2022-2, 2023-1, and 2024-1 securitization transaction VIEs are consolidated collateralized financing entities (CFEs).

Refer to Note 4 – Variable Interest Entities and Securitizations.

These VIEs are consolidated collateralized financing entities (CFEs) and are accounted for using the measurement alternative in accordance with ASU 2014-13, Measuring the Financial Assets and Liabilities of a Consolidated Collateralized Financing Entity (“ASU 2014-13").

During the years ended December 31, 2023 and 2022, the Company recognized the following revenue and expenses associated with these CFEs in the consolidated statements of operations:

Finance revenue

Product revenue

Finance cost of sales

Product cost of sales

Other loss, net

The assets and liabilities of the CFEs are presented as part of the current and noncurrent “Finance receivables at fair value”, “Current portion of long term debt”, and "Long term debt, net of current portion", respectively, on the consolidated balance sheets.

During the years ended December 31, 2024 and 2023, the Company recognized the following revenue and expenses associated with these CFEs in the consolidated statements of operations (in thousands):

Interest income

Interest expense

Realized and unrealized losses, net of recoveries

Noninterest income (loss), 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 16 – Financial Instruments and Fair Value Measurements for further details.

Inventory consists primarily of used vehicles and parts and accessories and is stated at the lower of cost or net realizable value.

Inventory cost is determined by specific identification and includes acquisition cost, direct and indirect reconditioning costs and inbound transportation expenses.

Net realizable value represents the estimated selling price less costs to complete, dispose and transport the vehicles.

The Company recognizes any necessary adjustments to reflect inventory at the lower of cost or net realizable value through adjustments to “Retail vehicle cost of sales” in the consolidated statements of operations.

Property and Equipment, Net

2 unchanged sentences

When assets are retired or otherwise disposed of, their costs and related accumulated depreciation are written off and any resulting gains or losses are recorded during the period.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Depreciation and amortization are calculated using the straight-line method over the following estimated useful lives of the assets:

1 unchanged sentence

Furniture and fixtures

3 to 15 years

Logistics fleet

Leasehold improvements

2 unchanged sentences

1 to 10 years

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company capitalizes direct costs of materials and services utilized in developing or obtaining internal-use software.

5 unchanged sentences

Capitalized implementation costs are included in “Other assets” in the consolidated balance sheet and are amortized over the terms of the arrangements, which range between 1 and 10 years.

The Company regularly reviews long-lived assets for impairment when events or changes in circumstances indicate the carrying amount of an asset group may not be recoverable.

The Company compares the sum of estimated undiscounted future cash flows expected to result from the use of the asset group to the carrying value of the asset group.

When the carrying value of the asset group exceeds its estimated undiscounted future cash flows, the Company recognizes an impairment charge for the amount by which the carrying value of the asset group exceeds the fair value of the asset group.

Refer to Note 7 — Property and Equipment, Net for further details on impairment tests performed.

Goodwill and Intangible Assets

Goodwill represents the excess of the consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed in business combinations.

Goodwill is tested for impairment annually as of October 1 or whenever events or changes in circumstances indicate that an impairment may exist.

The Company has three reporting units:

Ecommerce, Wholesale and Retail Financing.

In performing its goodwill impairment test, the Company first reviews qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If, after assessing qualitative factors, the Company determines that it is more likely than not that the fair value of a reporting unit is more than its carrying amount, then performing the quantitative test is unnecessary and the Company’s goodwill is not considered to be impaired.

However, if based on the qualitative assessment the Company concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or if the Company elects to bypass the optional qualitative assessment as provided for under U.S.

GAAP, the Company proceeds with performing the quantitative impairment test.

Refer to Note 8 — Goodwill and Intangible Assets for further details on the impairment tests performed.

Intangible Assets

The Company's intangible assets are amortized on a straight-line basis over the following estimated weighted average useful lives:

2 unchanged sentences

The Company periodically reassesses the useful lives of its definite-lived intangible assets when events or circumstances indicate that useful lives have significantly changed from the previous estimate.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company determines if an arrangement is a lease at inception by evaluating if the asset is explicitly or implicitly identified or distinct, if the Company will receive substantially all of the economic benefit or if the lessor has an economic benefit and the ability to substitute the asset.

6 unchanged sentences

The operating lease ROU asset is the initial lease liability adjusted for any prepayments, initial indirect costs incurred by the Company, and lease incentives.

The Company's operating leases are included in "Operating lease right-of-use assets," "Operating lease liabilities, current," and "Operating lease liabilities, excluding current portion" on the consolidated balance sheets.

The Company's operating leases are included in "Operating lease right-of-use assets," and "Operating lease liabilities" on the consolidated balance sheets.

The Company does not have any material leases, individually or in the aggregate, classified as a finance leasing arrangement.

Additionally, leases with an initial term of 12 months or less are not recorded on the Company’s consolidated balance sheet and expenses for these leases are recognized on a straight-line basis over the lease term.

Long-lived asset impairment

The Company regularly reviews long-lived assets for impairment when events or changes in circumstances indicate the carrying amount of an asset group may not be recoverable.

1 unchanged sentence

Refer to Note 12 — Leases for further details on impairment tests performed.

Vehicle Floorplan

The vehicle floorplan payable (the “Vehicle Floorplan Facility”) reflects amounts borrowed to finance the purchase of specific vehicle inventories.

Portions of the Vehicle Floorplan Facility are settled on a daily basis depending on the Company’s sales and purchasing activity.

The Vehicle Floorplan Facility is collateralized by vehicle inventories and certain other assets of the Company.

Borrowings and repayments are presented separately and classified as financing activities within the consolidated statements of cash flows.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As a result of filing of the Prepackaged Chapter 11 Case on November 13, 2024, the Company determined a triggering event existed as of December 31, 2024, indicating the carrying amount of our asset groups may not be recoverable.

Therefore, the Company performed an evaluation of its assets for impairment.

For the UACC asset group, as the carrying value of the asset group did not exceed the estimated undiscounted future cash flows, the asset group was deemed recoverable and no impairment charges were recognized.

For the CarStory asset group, the carrying value of the asset group exceeded the estimated undiscounted future cash flows, however, it did not exceed the estimated fair value, as such, no impairment charges were recognized.

The Company accounts for income taxes under the asset and liability method.

7 unchanged sentences

The Company recognizes the cost of employee services received in exchange for stock awards based on the fair value of those awards at the date of grant over the requisite service period.

The Company accounts for forfeitures as they

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company accounts for forfeitures as they occur.

For awards earned based on performance or upon occurrence of a contingent event, if the award is deemed probable of being earned, related compensation expense is recorded over the estimated service period.

4 unchanged sentences

The assumptions used in the Company’s Black-Scholes option-pricing model represent management’s best estimates and involve a number of variables, uncertainties and assumptions and the application of management’s judgment, as they are inherently subjective.

Business Combinations

The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date.

The Company’s estimates are inherently uncertain and subject to refinement.

During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill.

The Company will continue to collect information and reevaluate these estimates and assumptions quarterly and record any adjustments to the Company’s preliminary estimates to goodwill provided that the Company is within the measurement period.

Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments will be recorded to the Company’s consolidated statement of operations.

Advertising costs are expensed as incurred and are included within “Selling, general and administrative expenses” in the consolidated statements of operations.

Advertising expenses were $ 48.4 million and $ 79.7 million for the years ended December 31, 2023 and 2022 , respectively.

Shipping and Handling

Logistics costs related to inbound transportation from the point of acquisition to the relevant reconditioning facility are included in cost of sales when the related used vehicle is sold.

Logistics costs not included in cost of sales are accounted for as costs to fulfill contracts with customers and are included in “Selling, general and administrative expenses” in the consolidated statements of operations and were $ 8.5 million and $ 39.0 million for the years ended December 31, 2023 and 2022 , respectively.

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 accounts receivable, which are unsecured.

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.

3 unchanged sentences

government securities.

Concentration of credit risk with respect to accounts receivable is generally mitigated by a large customer base.

For the years ended December 31, 2023 and 2022, no customer represented 10% or more of the Company’s revenues and no customer represented more than 10% of the Company’s accounts receivable as of December 31, 2023 and 2022 .

Concentration of credit risk with respect to finance receivables is generally mitigated by a large consumer base.

UACC’s customers, in this instance, are the third-party automotive dealers through which it purchases or acquires retail installment sale contracts for consumers.

CarStory’s customers are dealers, automotive financial services

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

companies and others in the automotive industry who purchase CarStory’s digital retailing services.

For the years ended December 31, 2024 and 2023, no customer represented 10% or more of the Company’s revenues and no customer represented more than 10% of the Company’s accounts receivable as of December 31, 2024 and 2023 .

The Company applied FASB Codification Topic 852, Reorganizations ("ASC 852") in preparing the 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, up to and including the period of emergence from Chapter 11, 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 consolidated statements of operations.

In addition, prepetition obligations that were impacted by the Chapter 11 process have been classified on the consolidated balance sheets as of December 31, 2024 as liabilities subject to compromise.

These liabilities are reported at the amounts which were allowed by the Bankruptcy Court, even if they may be settled for lesser amounts.

Refer to Note 6 — Prepackaged Chapter 11 Case.

During the bankruptcy proceedings, the Company was operating as debtor-in-possession in accordance with the applicable provisions of the Bankruptcy Code.

In general, as a debtor-in-possession under the Bankruptcy Code, the Debtor was authorized to continue to operate as an ongoing business, but would not have been able to engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.

The Company emerged from the Prepackaged Chapter 11 Case on January 14, 2025.

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 Notes received a pro rata share of 92.94 % of the New Common Stock (subject to dilution) and all of the Company’s outstanding obligations under the Notes and the Indenture were deemed fully satisfied and discharged.

no longer has long-term debt, but UACC has securitization debt and their trust preferred securities.

As of December 31, 2024, the Company had cash and cash equivalents of $ 29.3 million and restricted cash of $ 49.0 million.

Restricted cash primarily includes restricted cash required under UACC's securitization transactions and Warehouse Credit Facilities of $ 49.1 million and cash deposits required under our 2022 Vehicle Floorplan Facility of $ 22.7 million.

Restricted cash primarily includes restricted cash required under UACC's securitization transactions and Warehouse Credit Facilities of $ 48.1 million.

The Company has historically had negative cash flows and generated losses from operations and the Company’s primary source of liquidity has been cash generated through financing activities.

As of February 29, 2024 the Company had cash and cash equivalents of approximately $ 94.0 million.

In January 2024, the Company announced its Value Maximization Plan to discontinue its ecommerce operations and wind-down its used vehicle dealership business, refer to Note 1 — Description of Business and Basis of Presentation — Value Maximization Plan.

On January 19, 2024, the Company amended its agreement with Ally Bank and Ally Financial Inc.

(together, “Ally”) dated November 4, 2022.

As a result of the amendment, the floorplan was suspended for future vehicle purchases and the Company was required to maintain 40 % of our outstanding borrowings in cash.

In addition, all other financial covenants were eliminated.

As a result of the liquidation of the Company's vehicle inventory, the Company repaid all amounts outstanding under the 2022 Vehicle Floorplan Facility in the first quarter of 2024 and the agreement was terminated.

In addition to the Company's ongoing cash requirements, the Company's liquidity will also be used to fund the announced wind-down of its ecommerce operations which is expected to result in the payment of $ 16.5 million in severance related benefits and $ 15.0 million in early contract and lease termination costs.

UACC has four warehouse credit facilities with an aggregate borrowing limit of $ 825.0 million as of December 31, 2023.

As of December 31, 2023 , outstanding borrowings related to the Warehouse Credit Facilities were $ 421.3 million and excess borrowing capacity was $ 56.9 million.

As of December 31, 2023, t he Company was in compliance with all covenants related to the Warehouse Credit Facilities.

Failure to satisfy these and or any other requirements contained within the agreements would restrict access to the Warehouse Credit Facilities and could have a material adverse effect on the financial condition of the Company, results of operations and liquidity.

In January 2024, the Company announced its Value Maximization Plan pursuant to which it discontinued its ecommerce operations and wound-down its used vehicle dealership business.

Refer to Note 1 — Description of Business and Basis of Presentation — Value Maximization Plan.

As a result of the liquidation of the Company's vehicle inventory as part of the Ecommerce Wind-Down, the Company repaid all amounts outstanding under the 2022 Vehicle Floorplan Facility in the first quarter of 2024 and the agreement was terminated.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2024 , UACC has four warehouse credit facilities with an aggregate borrowing limit of $ 825.0 million and outstanding borrowings related to the Warehouse Credit Facilities were $ 359.9 million and excess borrowing capacity was $ 28.2 million.

The terms of the facilities generally mature within two years and the Company typically renews the facilities in the ordinary course.

On March 8, 2025, the Company renewed one of its Warehouse Credit Facilities, now expiring in June 2026.

The remaining Warehouse Credit Facilities have terms expiring between July and September 2025.

Refer to Note 10 — Warehouse Credit Facilities and Consolidated VIEs.

The Company is having ongoing discussions with the remaining lenders to extend the terms beyond the current expiration dates and expects facilities to be amended and renewed at sufficient borrowing capacity.

As of December 31, 2024, the Company was in compliance with all covenants related to the Warehouse Credit Facilities.

Failure to secure sufficient warehouse borrowing capacity beyond the expiration of the remaining facilities in 2025 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 discussion.

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 related party as they are a 76.5 % shareholder of the Company, for a $ 25.0 million delayed draw term loan facility (“Delayed Draw Facility”).

The Delayed Draw Facility allows for multiple drawdowns by each co-borrower, subject to satisfaction of usual and customary conditions precedent.

The Delayed Draw Facility bears interest at a rate of Term SOFR + 850 bps, payable quarterly in arrears, with a full payment-in-kind option.

Interest is also payable upon any payment of principal.

The co-borrowers’ obligations under the Delayed Draw Facility will be collateralized by asset backed residual certificates in certain UACC securitization trusts.

The Delayed Draw Facility matures on December 31, 2026 ;

however, borrowings can be prepaid at any time, in whole or in part, without penalty or premium.

Once amounts are repaid they may not be reborrowed.

The Delayed Draw Facility includes certain usual and customary covenants with respect to the co-borrowers’ activities and the collateral.

The Company expects to use cash and cash equivalents to finance future capital requirements and UACC’s Warehouse Credit Facilities to fund finance receivables.

Certain advance rates available to UACC on borrowings from the Warehouse Credit Facilities have decreased as a result of the increasing credit losses in UACC’s portfolio and overall rising interest rates.

Any future decreases on available advance rates may have an adverse impact on our liquidity.

The Company’s future capital requirements will depend on many factors, including the ability to successfully implement the Value Maximization Plan and realize its benefits, available advance rates on the Warehouse Credit Facilities, our ability to complete additional securitization transactions at terms favorable to us, and our future credit losses.

The Company anticipates that existing cash and cash equivalents and UACC's Warehouse Credit Facilities will be sufficient to support the Company’s ongoing operations and obligations, inclusive of the wind-down of the ecommerce operations, for at least the next twelve months from the date of issuance of the consolidated financial statements.

Certain advance rates available to UACC on borrowings from the Warehouse Credit Facilities have decreased as a result of the increasing credit losses in UACC’s portfolio.

Any future decreases on available advance rates may have an adverse impact on the Company's liquidity.

Upon our emergence from bankruptcy on January 14, 2025, the Company continues to operate as a viable going concern.

The accompanying audited 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 Value Maximization Plan, Prepackaged Chapter 11 Case, and Long-Term-Strategic Plan, available advance rates on and the amendment and renewal of the remaining Warehouse Credit Facilities, the ability to meet the requirements for continued listing on the Nasdaq Global Market, 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 credit agreement with Mudrick Capital Management, L.P., 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 consolidated financial statements.

Net Loss Per Share Attributable to Common Stockholders

1 unchanged sentence

Under the two-class method, net loss is attributed to common stockholders and participating securities based on their participation rights.

Under the two-class method, the net loss attributable to common stockholders is not allocated to the preferred stock as the holders of the Company’s preferred stock do not have a contractual obligation to share in the Company’s losses.

Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

For periods in which the

Under the two-class method, the net loss

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company reports net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

attributable to common stockholders is not allocated to the preferred stock as the holders of the Company’s preferred stock do not have a contractual obligation to share in the Company’s losses.

For periods in which the Company reports net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Accounting Standards Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which enhances and simplifies various aspects of the income tax accounting guidance including the elimination of certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The Company adopted the guidance on January 1, 2021 which did no t have a material impact on the Company’s consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies the issuer’s accounting for convertible debt instruments and amended certain guidance related to the computation of earnings per share for convertible instruments and contracts in an entity’s own equity.

The Company early adopted the new guidance effective January 1, 2021 .

There was no impact on the date of adoption.

During the year ended December 31, 2021, the Company issued convertible notes.

Refer to Note 13 – Long Term Debt for further discussion.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

1 unchanged sentence

The Company adopted the guidance on January 1, 2023 , which did no t have a material impact on the Company's consolidated financial statements and related disclosures.

Accounting Standards Issued But Not Yet 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 guidance will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and requires retrospective application to all periods presented upon adoption, with early adoption permitted.

The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and related disclosures.

The Company adopted the guidance for fiscal year beginning January 1, 2024 , on a retroactive basis, which did no t have a material impact on the Company's consolidated financial statements and related disclosures.

Refer to Note 17 — Segment Information.

Accounting Standards Issued But Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

1 unchanged sentence

The guidance will be effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

T he Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and related disclosures.

The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and related disclosures.

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 condensed consolidated financial statements and related disclosures.

Revenue Recognition

The Company recognizes revenue upon transfer of control of goods or services to customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

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.

The Company’s revenue is disaggregated within the consolidated statements of operations and is generated from customers throughout the United States.

The Company’s revenue is disaggregated within the 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.

Interest income also includes discount income on finance receivables held for investment at fair value, which 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.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Retail Vehicle Revenue

The Company sold used vehicles to its retail customers through its ecommerce platform and TDA retail location.

The transaction price for used vehicles is a fixed amount as set forth within the customer contract at the time of sale.

Customers frequently trade-in their existing vehicle to apply toward the transaction price of a used vehicle.

Trade-in vehicles represent non-cash consideration which the Company measures at fair value based on external and internal market data for each specific vehicle.

The Company satisfies its performance obligation and recognizes revenue for used vehicle sales generally at a point in time when the vehicles are delivered to the customer for ecommerce sales or picked up by the customer for TDA sales.

The revenue recognized by the Company includes the agreed upon transaction price, including any delivery charges and document fees stated within the customer contract.

Revenue excludes any sales taxes, title and registration fees, and other government fees that are collected from customers.

The Company receives payment for used vehicle sales directly from the customer at the time of sale or arranges financing within a short period of time following the sale.

Payments received prior to delivery of used vehicles are recorded as “Deferred revenue” within the consolidated balance sheets.

The Company offers a return program for used vehicle sales and establishes a provision for estimated returns based on historical information and current trends.

The reserve for estimated returns is presented gross on the consolidated balance sheets, with an asset recorded in “Prepaid expenses and other current assets” and a refund liability recorded in “Other current liabilities.”

Wholesale Vehicle Revenue

The Company sold vehicles that do not meet its retail sales criteria through wholesale channels.

Vehicles sold through wholesale channels are acquired from customers who trade-in their vehicles when making a purchase from the Company, from customers who sell their vehicles to the Company in direct-buy transactions, and from liquidation of vehicles previously listed for retail sale.

The transaction price for wholesale vehicles is a fixed amount.

The Company satisfies its performance obligation and recognizes revenue for wholesale vehicle sales at a point in time when the vehicle is sold.

The transaction price is typically due and collected within a short period of time following the vehicle sales.

Product Revenue

The Company’s product revenue consists of income from financing vehicle sales for Vroom customers through UACC and fees earned on selling third-party financing and value-added products, such as vehicle service contracts, guaranteed asset protection (“GAP”) and tire and wheel coverage.

As a result of the UACC Acquisition (as defined below), the Company generates ecommerce product revenue by providing Vroom customers with automotive financing solutions through its captive financing operation.

The Company earns interest income on finance receivables before they are sold, interest income on finance receivables held in consolidated VIEs and gains on the sale of finance receivables.

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 4 % for the 2022-1 securitization transaction and 3.25 % for the 2022-2, 2023-1, and 2024-1 securitization transactions of the outstanding principal balance of the finance receivables serviced.

Late charges and other fees are calculated at predetermined amounts or percentages of overdue finance receivable balances and are recorded on a cash basis.

From January to March 2023, UACC waived the monthly servicing fees related to the 2022-2 securitization transaction, which resulted in consolidation of the 2022-2 VIE.

Servicing fees related to the 2022-2, 2023-1, and 2024-1 securitization transactions are eliminated in consolidation.

Refer to Note 4 – Variable Interest Entities and Securitizations.

The Company also sells third-party financing and value-added products pursuant to arrangements with the third parties that provide these products and are responsible for their fulfillment.

The Company concluded that it is an agent for these transactions because it does not control the products before they are transferred to the customer.

The Company recognizes product revenues on a net basis when the customer enters into an arrangement for the products, which is typically at the time of a used vehicle sale.

Customers may enter into a retail installment sales contract to finance the purchase of used vehicles.

The Company sells these contracts on a non-recourse basis to various financial institutions.

The Company receives a fee from the financial institution based on the difference between the interest rate charged to the customer that purchased the used vehicle and the interest rate set by the financial institution.

These fees are recognized upon sale and assignment of the installment sales contract to the financial institution, which occurs concurrently at the time of a used vehicle sale.

Warranties and GAP income

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 administered 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 is subject to chargebacks in the event of early termination, default, or prepayment of the contracts by end-customers.

The Company’s exposure for these

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

events is limited to the fees that it receives.

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 December 31, 2023 and 2022, the Company’s reserve for chargebacks was $ 6.2 million and $ 8.2 million, respectively, of which $ 3.3 million and $ 4.4 million, respectively, are included within “Accrued expenses” and $ 2.9 million and $ 3.8 million, respectively, are included in “Other long-term liabilities.”

As of December 31, 2024 and December 31, 2023, the Company’s reserve for chargebacks was $ 9.1 million and $ 11.8 million, respectively, which are included within “Other liabilities.”

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.

1 unchanged sentence

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 revenues in the period identified.

As of December 31, 2023 and 2022, the Company recognized $ 20.6 million and $ 22.5 million, respectively, related to cumulative profit-sharing payments to which it expects to be entitled, of which $ 2.3 million and $ 1.6 million, respectively, are included within “Prepaid expenses and other current assets” and $ 18.3 million and $ 20.9 million, respectively, are included within “Other assets.”

Finance Revenue

The Company’s finance revenue is related to finance receivables originated by UACC for its network of third-party dealership customers and consists of interest income earned on finance receivables before they are sold, interest income earned on finance receivables held in consolidated VIEs, and gains on the sale of finance receivables.

Refer to Note 4 – Variable Interest Entities and Securitizations.

Interest income deemed uncollectible is reversed at the time the finance receivable is charged off.

An account is considered delinquent if a scheduled payment has not been received by the date such payment was contractually due.

Finance receivables over 90 days delinquent are considered nonaccrual finance receivables.

Late charges and other fees are calculated at predetermined amounts or percentages of overdue finance receivable balances and are recorded on a cash basis.

Servicing income represents the annual fees earned on the outstanding principal balance of the finance receivables serviced.

Fees are earned monthly at an annual rate of approximately 4 % for the 2022-1 securitization transaction and 3.25 % for the 2022-2 and 2023-1 securitization transactions of the outstanding principal balance of the finance receivables serviced.

From January to March 2023, UACC waived the monthly servicing fees related to the 2022-2 securitization transaction, which resulted in consolidation of the 2022-2 VIE.

Refer to Note 4 – Variable Interest Entities and Securitizations.

Contract Costs

The Company has elected, as a practical expedient, to expense sales commissions when incurred because the amortization period would have been less than one year.

These costs are recorded within “Selling, general and administrative expenses” in the consolidated statements of operations.

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 December 31, 2024 and December 31, 2023, the Company recognized $ 11.0 million and $ 22.3 million, respectively, related to cumulative profit-sharing payments to which it expects to be entitled, which are included within “Other assets."

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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.

Variable Interest Entities and Securitizations

4 unchanged sentences

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

2 unchanged sentences

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.

In February and July 2022, UACC completed the 2022-1 and 2022-2 securitization transactions, respectively, and in January 2023, UACC completed the 2023-1 securitization transaction.

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.

For all securitization transactions consummated prior to the Acquisition Date, the Company consolidated VIEs and accounted for these transactions as secured borrowings.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

1 unchanged sentence

UACC has no obligation to provide liquidity or contribute cash or additional assets to the VIEs and does not guarantee any asset-backed securities.

In January 2023, UACC completed the 2023-1 securitization transaction, in which it sold approximately $ 238.7 million of rated asset-backed securities, for proceeds of $ 237.8 million.

In April 2023, UACC sold the non-investment grade securities related to the 2023-1 securitization transaction for $ 23.1 million.

UACC still retains the residual interests related to the 2023-1 securitization transaction.

The trust is collateralized by finance receivables with an aggregate principal balance of $ 326.4 million.

In 2024, UACC completed the 2024-1 securitization transaction, in which it sold approximately $ 300.0 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 $ 297.2 million.

The trust is collateralized by finance receivables with an aggregate principal balance of $ 380.1 million as of April 30, 2024.

These finance receivables are serviced by UACC and UACC receives an "at market" servicing fee.

As a result of market conditions, the Company retained the residual interests, therefore the 2024-1 securitization was accounted for as secured borrowings and remains on balance sheet pending the sale of such retained interests.

The Company also repurchased $ 4.2 million of the non-investment grade securities related to the 2022-2 securitization transaction for $ 4.8 million.

In 2023, UACC completed the 2023-1 securitization transaction, in which it sold rated asset-backed non-investment grade securities, for proceeds of $ 260.9 million.

UACC still retains the residual interests related to the 2023-1 securitization transaction and therefore consolidated the 2023-1 VIE and accounted for this transaction as a secured borrowing.

The trust is collateralized by finance receivables with an aggregate principal balance of $ 326.4 million as of January 31, 2023.

These finance receivables are serviced by UACC.

The Company consolidated the 2023-1 VIE and accounted for this transaction as a secured borrowing.

UACC retained the servicing rights to these finance receivables and receives an "at market" servicing fee.

UACC is the primary beneficiary of the 2024-1 and 2023-1 securitization trusts, 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.

11 unchanged sentences

The beneficial interest was then eliminated.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The VIE model allows for a measurement alternative when a reporting entity elects the fair value option and consolidates a collateralized financing entity (“CFE”).

2 unchanged sentences

Refer to Note 16 – Financial Instruments and Fair Value Measurements for further detail.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UACC has four senior secured warehouse credit facilities.

3 unchanged sentences

Refer to Note 10 – Warehouse Credit Facilities of Consolidated VIEs for further details on the warehouse facilities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

2 unchanged sentences

Securitization Vehicles

Current Assets:

Restricted cash

1 unchanged sentence

Finance receivables held for sale

Other current assets

Total Current Assets

Finance receivables at fair value

Current Liabilities:

Current portion of securitization debt

Interest receivable

Securitization debt

Warehouse credit facilities

Accrued expenses

Total Current Liabilities

Securitization debt, net of current portion

Other liabilities

2 unchanged sentences

Securitization Vehicles

Current Assets:

Restricted cash

1 unchanged sentence

Finance receivables held for sale

Other current assets

Total Current Assets

Finance receivables at fair value

Current Liabilities:

Current portion of securitization debt

Interest receivable

Securitization debt

Warehouse credit facilities

Accrued expenses

Total Current Liabilities

Securitization debt, net of current portion

Other liabilities

6 unchanged sentences

UACC retained the servicing rights to these finance receivables and receives an "at market" servicing fee.

UACC retained an

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

insignificant amount of the asset-backed securities issued in the securitization in order to comply with Risk Retention Rules.

UACC retained an insignificant amount of the asset-backed securities issued in the securitization in order to comply with Risk Retention Rules.

The 2022-1 securitization trust is a VIE that the Company does not consolidate.

As the servicer, UACC retained the power to direct the activities that are most significant to the entities, however, the Company concluded that it is not the primary beneficiary of the 2022-1 securitization trust because UACC retained interests in the VIE are insignificant.

As the servicer, UACC retained

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the power to direct the activities that are most significant to the entities, however, the Company concluded that it is not the primary beneficiary of the 2022-1 securitization trust because UACC retained interests in the VIE are insignificant.

The beneficial interest retained by UACC included rated notes and unrated residual certificates issued by the 2022-1 securitization trust.

In July 2022, UACC completed the 2022-2 securitization transaction, as discussed above, and recognized a gain on sale for the year ended December 31, 2022.

During the year ended December 31, 2022, the Company sold $ 523.7 million of rated asset-backed securities and $ 49.6 million of residual certificates through securitization transactions.

The total gain related to finance receivables sold pursuant to securitization transactions was $ 45.6 million for the year ended December 31, 2022.

As of December 31, 2024 and 2023, the assets UACC retains in the unconsolidated VIEs were approximately $ 2.2 million and $ 4.5 million, respectively, and are included in "Beneficial interests in securitizations" in the Company's consolidated balance sheet.

1 unchanged sentence

These securities are interests in securitization trusts, thus there are no contractual maturities.

In the year ended December 31, 2023, the Company entered into a Risk Retention Financing Facility to finance the majority of its retained beneficial interests in securitizations.

During 2023, the Company entered into a Risk Retention Financing Facility to finance the majority of its retained beneficial interests in securitizations.

Refer to Note 11 – Long Term Debt for further detail.

12 unchanged sentences

As such, the total exposure presented above is not an indication of the Company's expected losses.

UACC Acquisition

On February 1, 2022 , the Company completed the acquisition (the "UACC Acquisition") of 100 % of Unitas Holdings Corp., a Delaware corporation, including its wholly owned subsidiaries United PanAm Financial Corp.

Unitas Holdings Corp.

(now known as Vroom Finance Corporation), United PanAm Financial Corp.

(now known as Vroom Automotive Financial Corporation) and UACC, as well as their other subsidiaries, are now wholly owned subsidiaries of the Company.

This acquisition accelerated the Company's strategy of establishing a captive financing arm and underwriting vehicle financing for its customers, the results of which are included within the Ecommerce reporting segment.

UACC will also continue its current operations with its network of third-party dealership customers, including the purchases and servicing of vehicle installment contracts, which constitutes the separate Retail Financing reporting segment.

The cash consideration transferred was approximately $ 315.4 million at the Acquisition Date, inclusive of immaterial measurement period adjustments.

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 year ended December 31, 2024, the Company reported the ecommerce operations and used vehicle dealership business as discontinued operations and recast prior periods to reflect this presentation.

During the year ended December 31, 2024 , the Company incurred charges of approximately $ 15.8 million for severance and other personnel-related costs and approximately $ 13.9 million for contract and lease termination costs as a result of the Ecommerce Wind-Down recorded in "Net loss from discontinued operations" in the consolidated statements of operations.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the fair value of the identified assets acquired and liabilities assumed as of the Acquisition Date, inclusive of immaterial measurement period adjustments (in thousands):

The following table summarizes the major income and expense line items from discontinued operations as reported in the consolidated statements of operations (in thousands):

Retail vehicle, net

Wholesale vehicle

Total revenue

Cost of sales:

Retail vehicle

Wholesale vehicle

Total cost of sales

Total gross profit

Selling, general and administrative expenses

Loss (gain) on disposal of long lived assets

Depreciation and amortization

Impairment charges

Loss from operations

Interest expense

Interest income

Loss before provision for income taxes

Provision (benefit) for income taxes

Net loss from discontinued operations

The following table summarizes the major classes of assets and liabilities from discontinued operations as reported in the consolidated balance sheets:

Property and equipment, net

Assets from discontinued operations

Accounts payable

Accrued expenses

Vehicle floorplan

Deferred revenue

Operating lease liabilities

Other liabilities

Liabilities from discontinued operations

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Prepackaged Chapter 11 Case

As discussed in Note 1 – Description of Business and Basis of Presentation, on November 13, 2024, the Company, and in the context of the Prepackaged Chapter 11 Case, the Debtor, commenced the Prepackaged Chapter 11 Case.

On January 14, 2025, the Company emerged from bankruptcy.

On June 18, 2021, the Company issued $ 625.0 million aggregate principal amount of 0.75 % unsecured Convertible Senior Notes due 2026 (the “Notes”), including $ 75.0 million aggregate principal amount of such notes pursuant to the exercise in full of the overallotment option granted to the initial purchasers.

The Notes were issued pursuant to an indenture (the “Indenture”), between the Company and U.S.

Bank National Association, as trustee.

The filing of the Prepackaged Chapter 11 Case constituted an event of default, resulting in the immediate acceleration of the Company’s obligations to pay approximately $ 291.6 million in outstanding principal and interest under the Indenture.

On January 14, 2025, by operation of the Plan, all outstanding obligations under the Notes and the Indenture were deemed fully satisfied and discharged.

Under Chapter 11, certain pre-petition claims that are not fully secured and that have at least a possibility of not being repaid at the full claim amount are presented as liabilities subject to compromise on the Company’s consolidated balance sheet as of December 31, 2024.

Contractual interest on prepetition debt obligations is equal to reported interest expense.

Upon emergence from bankruptcy on January 14, 2025, the Company converted 364,516 shares (after the automatic conversion of the Common Stock at a ratio of 1-for-5 ) of old Common Stock into New Common Stock, issued an additional 4,798,593 shares of Common Stock related to the conversion of the Notes, and provided the option for existing equityholders to purchase an additional 364,516 in new warrants.

As the Company reports net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders because potentially dilutive common shares are not assumed to have been issued as their effect is anti-dilutive.

ASC 852 requires that, for periods including and after the filing of a Chapter 11 petition, the consolidated financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business.

The following table sets forth, as of December 31, 2024, information about the amounts presented as liabilities subject to compromise in the consolidated balance sheet (in thousands):

Convertible senior notes

Total liabilities subject to compromise

Additionally, certain expenses resulting from and recognized during the bankruptcy proceedings are recorded in Reorganization items, net in the consolidated statement of operations.

Reorganization items, net consisted of the following (in thousands):

Debt valuation adjustments

Professional fees

Total reorganization items, net

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The financial statements below represent the condensed financial statements of the Debtor as of December 31, 2024 and for the year ended December 31, 2024:

(DEBTOR-IN-POSSESSION)

CONDENSED BALANCE SHEETS

(in thousands, except share and per share amounts)

Cash and cash equivalents

Restricted cash

Finance receivables at fair value

Finance receivables, held for sale

Intangible assets

Total assets acquired

Warehouse credit facilities

Long term debt

Deferred tax liability

Investments in subsidiaries

LIABILITIES AND STOCKHOLDERS’ EQUITY

Other liabilities

Total liabilities assumed

Net assets acquired

The estimated fair value of the finance receivables that were designated as held for sale were determined using the discounted cash flow method under the income approach.

The Company determined the fair value of these finance receivables utilizing sales prices based on an estimated securitization transaction, adjusted for transaction costs, risk and a normal profit margin associated with securitization transactions.

The significant assumptions used in the valuation were discount rate, prepayment rate, cumulative net losses, weighted average interest rate and recovery rate.

Such fair value measurement of finance receivables held for sale is considered Level 3 of the fair value hierarchy.

The Company acquired two types of finance receivables that are accounted for under the fair value option:

(i) those that were sold in one of the securitization transactions that UACC completed in 2019, 2020 or 2021, and (ii) those that were not eligible to be sold in future securitization transactions.

The estimated fair value of the finance receivables that were previously sold were valued using the measurement alternative by reference to the fair value of the securitization debt.

See Note 17 – Financial Instruments and Fair Value Measurements for more information regarding the measurement alternative and the fair value of these finance receivables.

The fair value of the ineligible finance receivables was determined using a discounted cash flow method under the income approach.

The significant assumptions used in the valuation were discount rate and recovery rate.

Such fair value measurement of finance receivables accounted for under the fair value option is considered Level 3 of the fair value hierarchy.

The estimated fair value of the securitization debt of consolidated VIEs was determined using the discounted cash flow method under the income approach.

The significant assumption used in the valuation was the yield.

Such fair value measurement of securitization debt is considered Level 3 of the fair value hierarchy.

The estimated fair value of the warehouse credit facilities of consolidated VIEs approximated its carrying value due to the proximity of the Acquisition Date to the payoff date.

These notes were acquired on February 1, 2022, as part of the UACC Acquisition and were paid off with the proceeds from the 2022-1 securitization transaction that UACC completed on February 16, 2022.

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill which is not deductible for tax purposes.

Goodwill is primarily attributable to the workforce of the acquired business as well as benefits related to integrating UACC’s financing operations to establish a captive financing arm and underwrite vehicle financing for the Company's customers.

All of the goodwill was assigned to the Ecommerce reporting unit.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the identifiable intangible assets acquired and their estimated weighted average useful life at the date of acquisition (in thousands):

Weighted Average Useful Life

Purchased technology

Customer relationships

Purchased technology represents the fair value of UACC’s proprietary technology used to support all aspects of their business including underwriting, servicing, and risk management.

The estimated fair value of the purchased technology was determined using a relief-from-royalty method under the income approach.

The significant assumptions used in the relief-from-royalty method include estimates about future expected cash flows from the purchased technology, including the revenue growth rates, the royalty rate, the obsolescence factor and the discount rate.

Customer relationships represents UACC's relationship with its network of dealer customers.

UACC has expertise in the non-prime credit dealer market serving as the key link between independent dealerships and consumers.

UACC has developed expertise and robust relationships in the independent dealer market as demonstrated by its active dealership network.

The estimated fair value of the customer relationships was determined using a multi-period excess earnings method under the income approach.

The significant assumptions used in the multi-period excess earnings method include estimates about future expected cash flows from the customer relationships, including pre-tax income margins and the discount rate.

Trade name represents the value of the UACC trade name.

The UACC brand is an important factor in the marketing of UACC’s services to prospective dealership customers.

The fair value of the trade name acquired was determined using a relief-from-royalty method under the income approach.

The significant assumptions used in the relief-from-royalty method include future expected cash flows from the trade name, the royalty rate, and the discount rate.

The fair values assigned to assets acquired and liabilities assumed are based on management’s estimates and assumptions.

The allocation of the total consideration transferred to the assets acquired, including intangible assets and goodwill, as well as the liabilities assumed was final as of December 31, 2022.

The transaction costs associated with the UACC Acquisition were $ 5.7 million for the year ended December 31, 2022, and are included within "Selling, general and administrative expenses" in the consolidated statement of operations.

The aggregate revenue and net income of UACC consolidated into the Company’s financial statements from the date of the acquisition was $ 167.8 million and $ 26.7 million for the year ended December 31, 2022, respectively.

Unaudited Pro Forma Information

The unaudited pro forma financial information in the table below summarizes the combined results of the Company and UACC, as though the companies had been combined on January 1, 2021.

The pro forma adjustments include incremental amortization of intangible assets, adjustments to reflect non-recurring acquisition-related costs of $ 5.7 million as of the beginning of the 2021 annual reporting period, a non-recurring tax adjustment of $ 24.1 million for the year ended December 31, 2022.

The pro forma information is presented for informational purposes only and may not be indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2021 or that may occur in the future, and does not reflect future synergies, integration costs, or other such costs or savings.

The pro forma information for the years ended December 31, 2022 is as follows (in thousands):

Year Ended December 31,

Total revenue

Due to affiliates

Long-term debt

Liabilities subject to compromise

Total liabilities

Total stockholders’ equity

Total liabilities and stockholders’ equity

(DEBTOR-IN-POSSESSION)

CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

Noninterest income:

Gain on debt extinguishment

Total noninterest income

Professional fees

Interest expense on corporate debt

Other expenses

Total expenses

Loss from continuing operations before reorganization items and provision for income taxes

Reorganization items, net

Loss from continuing operations before provision for income taxes

Provision for income taxes from continuing operations

Net loss from continuing operations

Net loss from discontinued operations

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inventory consisted of the following (in thousands):

Parts and accessories

Total inventory

As of December 31, 2023 and 2022, “Inventory” includes an adjustment of $ 21.8 million and $ 24.2 million, respectively, to record the balances at the lower of cost or net realizable value.

(DEBTOR-IN-POSSESSION)

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

Operating activities

Net cash (used in) provided by operating activities from continuing operations

Net cash provided by (used in) operating activities from discontinued operations

Net cash (used in) provided by operating activities

Investing activities

Net cash provided by investing activities from continuing operations

Financing activities

Repurchases of convertible senior notes

Proceeds from the issuance of common stock in at-the-market offering, net of offering costs

Net cash provided by (used in) financing activities from continuing operations

Net 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

Property and Equipment, Net

1 unchanged sentence

Furniture and fixtures

Logistics fleet

Leasehold improvements

3 unchanged sentences

Depreciation and amortization expense was $ 2.1 million and $ 2.1 million for the years ended December 31, 2024 and 2023, respectively.

Depreciation and amortization expense included within “Cost of sales” in the consolidated statements of operations was $ 0.7 million and $ 0.4 million for the years ended December 31, 2023 and 2022 respectively.

Implementation costs capitalized and accumulated amortization related to the Company’s cloud computing arrangements were $ 0.6 million and $ 0.2 million as of December 31, 2023 , respectively, and $ 7.7 million and $ 4.6 million as of December 31, 2022, respectively, and were included within “Other assets” in the consolidated balance sheets.

Amortization expense of $ 1.8 million and $ 2.3 million was included within “Selling, general and administrative expenses” in the consolidated statements of operations for the years ended December 31, 2023 and 2022, respectively.

The Company determined a triggering event existed as of December 31, 2023, resulting in impairment charges for "Property and equipment, net" and "Other assets" of $ 23.9 million and $ 1.3 million, respectively, related to the Company's internal-use software, implementation costs for cloud computing arrangements, and other miscellaneous furniture and equipment that no longer have a planned future use.

Additionally, the Company incurred impairment charges for "Property and equipment, net" and "Other assets" of $ 0.3 million and $ 3.4 million, respectively, for the year ended December 31, 2022, related to the Company's internal-use software and implementation costs for cloud computing arrangements that are no longer in use.

The Company recorded impairment charges for "Property and equipment, net" of $ 2.8 million for the year ended December 31, 2024, respectively, related to the Company's internal-use software that no longer have a planned future use.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and Intangible Assets

The following table summarizes the activity in the carrying value of goodwill by reporting unit for the year ended December 31, 2022 (in thousands):

Balance as of December 31, 2021

Goodwill impairment charge

Balance as of December 31, 2022

There was no goodwill as of December 31, 2023 and 2022.

As of March 31, 2022, a quantitative interim goodwill impairment assessment was performed over the Company's reporting units due to further sustained declines in the Company's and comparable companies' stock prices during the three months ended March 31, 2022.

The Company estimated the fair value of the Ecommerce, Wholesale, and TDA reporting units using the discounted cash flow method under the income approach.

The significant assumptions used in the valuation include revenue growth rates, future gross profit margins and operating expenses used to calculate projected future cash flows, determination of the weighted average cost of capital, and future economic and market conditions.

The terminal value is based on an exit revenue multiple which requires significant assumptions regarding the selection of appropriate multiples that consider relevant market trading data.

The Company bases its estimates and assumptions on its knowledge of the automotive and ecommerce industries, recent performance, expectations of future performance and other assumptions the Company believe to be reasonable.

The Company determined that the estimated fair value of the Ecommerce, Wholesale, and TDA reporting units was less than their carrying amounts.

The Company recorded a goodwill impairment charge of $ 201.7 million in the consolidated statements of operations for the year ended December 31, 2022.

Refer to Note 5 – Acquisition for more information related to the acquisition that occurred in the year ended December 31, 2022.

Intangible Assets

12 unchanged sentences

Total intangible assets

Refer to Note 5 – Acquisition for more information related to the acquisition that occurred in the year ended December 31, 2022.

Amortization expense for intangible assets was $ 27.0 million and $ 27.0 million for the years ended December 31, 2024 and 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The estimated amortization expense for intangible assets subsequent to December 31, 2024, consists of the following (in thousands):

Year Ending December 31:

Accrued Expenses and Other Current Liabilities

The Company’s accrued expenses consisted of the following (in thousands):

Accrued marketing expenses

Vehicle related expenses

Other Liabilities

The Company’s other liabilities consisted of the following (in thousands):

Warranty and GAP liabilities

Dealer related liabilities

Accrued compensation and benefits

Accrued professional services

Accrued legal settlements (1)

Accrued software and IT costs

Interest payable

Total accrued expenses

(1) Accrued legal settlements are primarily related to legal challenges stemming from operational challenges created by the Company's prior rapid growth, which resulted in additional costs incurred, including legal settlements.

The Company’s other current liabilities consisted of the following (in thousands):

Vehicle payable

Reserve for estimated returns

Insurance payable

Total other current liabilities

Vehicle Floorplan Facility

In November 2022, the Company amended its floorplan facility with Ally Bank and Ally Financial (the “2022 Vehicle Floorplan Facility”).

The 2022 Vehicle Floorplan Facility provides a committed credit line of up to $ 500.0 million which is scheduled to mature on March 31, 2024 .

The amount of credit available to the Company on a monthly basis equals the product of (1) the greater of five times the aggregate number of retail units sold during the most recent month for which information is available or the aggregate number of retail units sold during the five most recent months for which information is available and (2) the greater of the average outstanding floorplan balance of all vehicles on the floorplan as of the immediately preceding month-end or the average monthly outstanding floorplan balance of all vehicles on the floorplan as of month-end for the immediately preceding five months.

As of December 31, 2023, the borrowing capacity of the 2022 Vehicle Floorplan Facility was $ 253.6 million, of which $ 102.4 million was unutilized.

As of December 31, 2022, the borrowing capacity of the 2022 Vehicle Floorplan Facility was $ 343.9 million, of which $ 66.9 million was unutilized.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additionally, the Company may elect to increase its monthly credit line availability by an additional $ 25.0 million during any four months in the period from November 1, 2022 through March 31, 2024, subject to the maximum $ 500.0 million credit limit.

The 2022 Vehicle Floorplan Facility allows for more flexibility in the Company's borrowing capacity.

Consistent with the terms of the 2020 Vehicle Floorplan Facility, the Company and Vroom Automotive, LLC have provided Ally with a guaranty of payment of all amounts owed under the 2022 Vehicle Floorplan Facility as well as a security interest in all or substantially all tangible, intangible, and other personal property of Vroom, Inc., to secure obligations under the 2022 Vehicle Floorplan Facility.

The 2022 Vehicle Floorplan Facility bears interest at a rate equal to the Prime Rate, announced per annum by Ally Bank, plus 175 basis points.

Additionally, the Company is subject to amended covenants and events of default.

The Company is required to maintain a certain level of equity in the vehicles that are financed, to maintain at least 20.0 % of the credit line in cash and cash equivalents, and to maintain a minimum required balance with Ally of at least 15.0 % of the daily floorplan principal balance outstanding.

The Company was required to pay a commitment fee upon execution of the 2022 Vehicle Floorplan Facility.

As of December 31, 2023 and 2022, outstanding borrowings on the vehicle floorplan facilities were $ 151.2 million and $ 277.0 million, respectively.

Cash deposits required under the vehicle floorplan facilities of $ 22.7 million and $ 34.6 million are classified as "Restricted cash" within the consolidated balance sheets as of December 31, 2023 and 2022, respectively.

Interest expense incurred by the Company for the vehicle floorplan facilities was $ 19.5 million and $ 26.8 million for the years ended December 31, 2023 and 2022 , respectively, which are recorded within “Interest expense” in the consolidated statements of operations.

The weighted average interest rate on the vehicle floorplan borrowings was 10.25 % and 9.25 % as of December 31, 2023 and 2022, respectively.

As of December 31, 2023 and 2022, the Company was in compliance with all covenants related to the vehicle floorplan facilities.

In connection with the vehicle floorplan facilities, the Company entered into credit balance agreements with Ally Bank and Ally Financial that permit the Company to deposit cash with the bank for the purpose of reducing the amount of interest payable for borrowings.

Interest credits earned by the Company were $ 13.2 million and $ 15.9 million for the years ended December 31, 2023 and 2022, respectively, which are recorded within “Interest income” in the consolidated statements of operations.

On January 19, 2024, the Company amended its 2022 Vehicle Floorplan Facility.

As a result of the amendment, borrowings under the 2022 Vehicle Floorplan Facility were suspended for future vehicle purchases and the Company was required to maintain 40 % of its outstanding borrowings in cash.

In addition, all other financial covenants were eliminated.

As a result of the liquidation of the Company's vehicle inventory, the Company repaid the remaining outstanding balance related to the 2022 Vehicle Floorplan Facility in full and the agreement has been terminated.

Total other liabilities

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10 unchanged sentences

November 18, 2022

Maturity date

Commitment termination date

July 21, 2025

16 unchanged sentences

As of December 31, 2024 and 2023, the Company was in compliance with all covenants related to the Warehouse Credit Facilities.

The Company’s leasing activities primarily consist of real estate leases for its operations, including office space, the Company’s reconditioning facility, the Company’s Sell Us Your Car centers, parking lots, other facilities and equipment used in the normal course of business.

The real estate leases have terms ranging from three months to nine years .

The Company assesses whether each lease is an operating or finance lease at the lease commencement date.

The Company does not have any material leases, individually or in the aggregate, classified as a finance leasing arrangement.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of December 31, 2023, the Company had an additional operating lease that has not yet commenced with future lease payments of approximately $ 1.2 million.

The lease is expected to commence over the next 12 months with an initial lease term of approximately 7 years.

The Company’s real estate leases often require it to make payments for maintenance in addition to rent as well as payments for real estate taxes and insurance.

Maintenance, real estate taxes, and insurance payments are generally variable costs which are based on actual expenses incurred by the lessor.

Therefore, these amounts are not included in the consideration of the contract when determining the right-of-use asset and lease liability but are reflected as variable lease expenses.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Leases with an initial term of 12 months or less are not recorded on the Company’s consolidated balance sheet and expense for these leases are recognized on a straight-line basis over the lease term.

Options to extend or terminate leases

Certain of the Company’s real estate leases include one or more options to renew , with renewal terms that can extend the lease term from one to five years .

The exercise of lease renewal options is at the Company’s sole discretion.

If it is reasonably certain that the Company will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of the Company’s right-of-use assets and lease liabilities.

The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Lease term and discount rate

The weighted-average remaining lease term and discount rate for the Company’s operating leases, excluding short-term operating leases, were 5.1 years and 7.1 % as of December 31, 2023 , respectively, and 4.2 years and 5.8 % as of December 31, 2022, respectively.

As the rate implicit in the lease is generally not readily determinable for the Company’s operating leases, the discount rates used to determine the present value of the Company’s lease liabilities are based on the Company’s incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term.

The incremental borrowing rate for a lease is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment.

The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Lease costs and activity

The Company’s lease costs and activity for the years ended December 31, 2023 and 2022 were as follows (in thousands):

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

Net lease cost

Other information

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Right-of-use assets obtained in exchange for operating lease liabilities

The Company incurred impairment charges related to operating lease right-of-use assets of $ 23.5 million for the year ended December 31, 2023, with $ 22.2 million related to the wind-down of the Company's ecommerce operations that resulted in a triggering event as of December 31, 2023 and $ 1.3 million related the closing of a physical office location.

The Company incurred impairment charges related to operating lease right-of-use assets of $ 6.5 million for the year ended December 31, 2022, related to costs associated with planned facility closures that will continue to be incurred under the contract for its remaining term without economic benefit to the Company.

Refer to Note 18 — Restructuring Activities for further detail.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Maturity of Lease Liabilities

The maturity of the Company’s lease liabilities on an undiscounted cash flow basis and a reconciliation to the operating lease liabilities recognized on the Company’s consolidated balance sheet as of December 31, 2023 were as follows (in thousands):

Total lease payments

Present value of lease liabilities

Operating lease liabilities, current

Operating lease liabilities, noncurrent

Total operating lease liabilities

Long Term Debt

Debt instruments, excluding the 2022 Vehicle Floorplan Facility, which is discussed in Note 10 — Vehicle Floorplan Facility, and warehouse credit facilities of consolidated VIEs, which are discussed in Note 11 — Warehouse Credit Facilities of Consolidated VIEs, consisted of the following (in thousands):

Current portion of securitization debt of consolidated VIEs

Current portion of financing of beneficial interest in securitizations

Total current portion of 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):

Convertible senior notes

Securitization debt of consolidated VIEs, net of current portion

Securitization debt of consolidated VIEs at fair value

Securitization debt of consolidated VIEs at amortized cost

Financing of beneficial interest in securitizations

Junior subordinated debentures

Long term debt, net of current portion

Upon filing of the Prepackaged Chapter 11 Case, the convertible senior notes were reclassified to liabilities subject to compromise.

See Note 6 — Prepackaged Chapter 11 Case for further details.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Convertible Senior Notes

On June 18, 2021, the Company issued $ 625.0 million aggregate principal amount of the Notes, including $ 75.0 million aggregate principal amount of such notes pursuant to the exercise in full of the overallotment option granted to the initial purchasers.

The Notes were issued pursuant to an indenture (the “Indenture”), between the Company and U.S.

Bank National Association, as trustee.

The Notes bear interest at a rate of 0.75% per annum, payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2022 .

The Notes will mature on July 1, 2026 , subject to earlier repurchase, redemption or conversion.

On November 13, 2024, the Company commenced the Prepackaged Chapter 11 Case, pursuant to which each holder of an Allowed Unsecured Notes Claim (as defined therein) received, in full and final satisfaction, settlement, discharge and release of, and in exchange for, its Allowed Unsecured Notes Claim, its pro rata share of 92.94 % of the New Common Stock (subject to dilution by the New Warrants, the MIP, and the Post-Effective Date Equity Awards, all terms as defined therein).

The Indenture provided that, as a result of the filing of the Prepackaged Chapter 11 Case, the principal, premium, if any, accrued and unpaid interest and any other monetary obligations due thereunder would be immediately due and payable.

However, any enforcement of such payment obligations was stayed as a result of the filing of the Prepackaged Chapter 11 Case and was subject to the applicable provisions of the Bankruptcy Code.

On January 14, 2025, the Effective Date, by operation of the Plan, all outstanding obligations under the Notes and the Indenture were deemed fully satisfied and discharged.

At this time, approximately $ 290.5 million in aggregate principal amount of the Notes were outstanding.

Prior to the Effective Date, the Notes bore interest at a rate of 0.75% per annum, payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2022 .

The Notes had a maturity date of July 1, 2026 , subject to earlier repurchase, redemption or conversion.

The total net proceeds from the offering, after deducting commissions paid to the initial purchasers and debt issuance costs paid to third-parties, were approximately $ 608.9 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Each $ 1,000 principal amount of the Notes will initially be convertible into 0.2232 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $ 4,480.29 per share, subject to adjustment upon the occurrence of specified events.

The Notes are convertible, at the option of the noteholders, on or after April 1, 2026.

Prior to April 1, 2026 , the Notes are convertible only under the following circumstances:

• During any fiscal quarter commencing after the fiscal quarter ending on September 30, 2021 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price of the Notes on each applicable trading day;

• During the five consecutive business day period after any ten consecutive trading day period in which the trading price per $ 1,000 principal amount of the Notes for each day of that ten consecutive trading day period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the conversion rate of the Notes on such trading day;

• If the Company calls any or all of the Notes for redemption;

• Upon the occurrence of specific corporate events such as a change in control or certain beneficial distributions to common stockholders (as set forth in the Indenture).

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.

The Company may not redeem the Notes prior to July 6, 2024.

On or after July 6, 2024, the Company may redeem all or any portion of the Notes for cash equal to 100 % of the principal amount of the Notes being redeemed plus any accrued and unpaid interest if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period.

If the Company undergoes a fundamental change (as defined in the Indenture), subject to certain conditions, holders of the Notes may require the Company to repurchase for cash all or any portion of their Notes at a repurchase price equal to 100 % of the principal amount of the 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 Notes in connection with such a corporate event.

During the years ended December 31, 2023 and 2022, the conditions allowing holders of the Notes to convert were not met.

In 2023, the Company repurchased $ 74.2 million in aggregate principal amount of the Notes, net of deferred issuance costs, for $ 36.5 million in open-market transactions.

The Company recognized a gain on extinguishment of debt of $ 37.9 million for the year ended December 31, 2023.

In 2022, the Company repurchased $ 254.3 million in aggregate principal amount of the Notes, net of deferred issuance costs, for $ 90.2 million in open-market transactions.

The Company recognized a gain on extinguishment of debt of $ 164.7 million for the year ended December 31, 2022.

The Company accounts for the Notes as a single liability-classified instrument measured at amortized cost.

As of December 31, 2023 , the unamortized debt discount and debt issuance costs was $ 3.7 million and the net carrying value was $ 286.8 million.

As a result of filing the bankruptcy petition, the Company wrote off the remaining unamortized debt discount and debt issuance costs of $ 2.4 million, recorded within "Reorganization items, net" on the consolidated statements of operations.

The net carrying value was $ 290.5 million as of December 31, 2024.

A s of December 31, 2023, the unamortized debt discount and debt issuance costs was $ 3.7 million and the net carrying value was $ 286.8 million.

The Notes were issued at par value and fees associated with the issuance of these Notes are amortized to interest expense using the effective interest method over the contractual term of the Notes.

Prior to the filing of the bankruptcy petition, the Notes were issued at par value and fees associated with the issuance of these Notes were amortized to interest expense using the effective interest method over the contractual term of the Notes.

The interest expense for the years ended December 31, 2024 and 2023 were $ 3.4 million and $ 4.3 million, respectively.

The effective interest rate of the Notes is 1.3 %.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The effective interest rate of the Notes was 1.3 % as of December 31, 2024.

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 "Other loss, net" in the consolidated statements of operations.

The Company elected to account for the 2022-2 and 2023-1 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 16 – Financial Instruments and Fair Value Measurements.

The 2024-1 securitization debt is measured at amortized cost.

For the 2022-2, 2023-1 and 2024-1 securitization transactions, 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.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Upon the issuance of the securitization debt for the 2023-1 and 2024-1 securitization transactions, UACC retained the residual interests.

8 unchanged sentences

None of the assets of these subsidiaries are available to pay other creditors of the Company or its affiliates.

The securitization debt issued is included in “Current portion of long term debt” and "Long term debt, net of current portion" on the consolidated balance sheet.

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):

4 unchanged sentences

Outstanding Principal

United Auto Credit 2022-2-C

United Auto Credit 2022-2-D

January 10, 2028

United Auto Credit 2022-2-E

April 10, 2029

United Auto Credit 2023-1-C

July 10, 2028

United Auto Credit 2023-1-D

July 10, 2028

United Auto Credit 2023-1-E

September 10, 2029

Total rated notes at fair value

United Auto Credit 2024-1-A

August 10, 2026

United Auto Credit 2024-1-B

June 10, 2027

United Auto Credit 2024-1-C

October 10, 2029

United Auto Credit 2024-1-D

November 12, 2029

United Auto Credit 2024-1-E

November 12, 2030

Total rated notes at amortized cost

Unamortized debt issuance costs

Net carrying value

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2023

Final Scheduled Payment Date

Initial Principal

Contractual Interest Rate

Outstanding Principal

Net Carrying Value

United Auto Credit 2021-1-D

June 10, 2026

United Auto Credit 2021-1-E

June 10, 2026

United Auto Credit 2021-1-F

18 unchanged sentences

Total rated notes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2022

Final Scheduled Payment Date

Initial Principal

Contractual Interest Rate

Outstanding Principal

United Auto Credit 2021-1-C

June 10, 2026

United Auto Credit 2021-1-D

June 10, 2026

United Auto Credit 2021-1-E

June 10, 2026

United Auto Credit 2021-1-F

September 10, 2027

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 $ 147.6 million in 2024, $ 91.8 million in 2025, $ 47.8 million in 2026, $ 26.8 million in 2027 and $ 4.1 million in 2028.

Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance, are $ 161.4 million in 2025, $ 96.8 million in 2026, and $ 108.1 million in 2027.

In February 2024, UACC exercised its option to repurchase the 2021-1 securitization debt for a total redemption price of $ 35.6 million.

The aggregate principal balance and the fair value of finance receivables pledged to the securitization debt consists of the following (in thousands):

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 December 31,

Aggregate Principal Balance

Net Carrying Value

Aggregate Principal Balance

Net Carrying Value

United Auto Credit 2021-1

1 unchanged sentence

United Auto Credit 2023-1

United Auto Credit 2024-1

Total finance receivables of CFEs

3 unchanged sentences

In its initial transaction under this facility, UACC pledged $ 24.5 million of its retained beneficial interests as collateral, and received proceeds of $ 24.1 million, with expected repurchase dates ranging from March 2025 to September 2029 .

The securitization trusts will distribute payments related to UACC's pledged beneficial interests in securitizations directly to the lender, which will reduce the beneficial interests in securitizations and the related debt balance.

Following the completion of the 2024-1 securitization transaction, the Company pledged an additional $ 15.8 million of its retained beneficial interests as collateral under the Risk Retention Financing Facility, and received proceeds of $ 15.6 million, with expected repurchase dates ranging from August 2026 to November 2030 at the initial closing date.

The securitization trusts will

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

distribute payments related to UACC's pledged beneficial interests in securitizations directly to the lender, which will reduce the beneficial interests in securitizations and the related 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.

1 unchanged sentence

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 $ 15.4 million as of December 31, 2023, with $ 8.9 million included in "Current portion of long term debt" and $ 6.5 million included in "Long-term debt, net of current portion" on the consolidated balance sheet.

As of December 31, 2023 , the fair value of the collateral pledged under this facility was $ 15.8 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The outstanding balance of this facility, net of unamortized debt issuance costs, was $ 17.7 million and $ 15.4 million as of December 31, 2024 and December 31, 2023, respectively, and is included in "Long-term debt" on the consolidated balance sheet.

As of December 31, 2024 and December 31, 2023, the fair value of the collateral pledged under this facility was $ 18.3 million and $ 15.8 million, respectively.

Junior Subordinated Debentures

4 unchanged sentences

however, they can be called at par any time at the Company’s discretion.

The Company’s leasing activities primarily consist of real estate leases for its operations, primarily related to office space and equipment used in the normal course of business.

The real estate leases have terms ranging from two to eight years .

The Company assesses whether each lease is an operating or finance lease at the lease commencement date.

The Company does not have any material leases, individually or in the aggregate, classified as a finance leasing arrangement.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company’s real estate leases often require it to make payments for maintenance in addition to rent, as well as payments for real estate taxes and insurance.

Maintenance, real estate taxes, and insurance payments are generally variable costs which are based on actual expenses incurred by the lessor.

Therefore, these amounts are not included in the consideration of the contract when determining the right-of-use asset and lease liability but are reflected as variable lease expenses.

Options to extend or terminate leases

Certain of the Company’s real estate leases include one or more options to renew , with renewal terms that can extend the lease term from one to five years .

The exercise of lease renewal options is at the Company’s sole discretion.

The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Lease term and discount rate

The weighted-average remaining lease term and discount rate for the Company’s operating leases, excluding short-term operating leases, were 6.0 years and 7.9 % as of December 31, 2024 , respectively, and 5.6 years and 7.6 % as of December 31, 2023, respectively.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Lease costs and activity

The Company’s lease costs and activity for the years ended December 31, 2024 and 2023 were as follows (in thousands):

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

Net lease cost

Other information

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Right-of-use assets obtained in exchange for operating lease liabilities

The Company incurred impairment charges related to operating lease right-of-use assets of $ 2.4 million for the year ended December 31, 2024, related to costs associated with planned facility closures that will continue to be incurred under the contract for its remaining term without economic benefit to the Company.

Maturity of Lease Liabilities

Total lease payments

Present value of lease liabilities

Operating lease liabilities

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

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.

On November 13, 2024, the Company commenced the Prepackaged Chapter 11 Case under Chapter 11 of the Bankruptcy Code in 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 Debtor’s disclosure statement, (b) confirming the Prepackaged Plan of Reorganization of Vroom, Inc.

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

On January 14, 2025, the conditions to the effectiveness of the Plan were satisfied or waived and the Plan became effective, and the Company emerged from the Prepackaged Chapter 11 Case.

Additionally, from time to time, 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.

25 unchanged sentences

All four derivative suits remain in preliminary stages and there have been no substantive developments in any matter.

In April 2022, one of the Company’s stockholders filed a purported shareholder derivative lawsuit on behalf of the Company in the U.S.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In April 2022 and April 2024, two of the Company’s stockholders filed separate purported shareholder derivative lawsuits on behalf of the Company in the U.S.

District Court for the District of Delaware against certain of the Company’s officers and directors, and nominally against the Company, alleging violations of the federal securities law and breaches of fiduciary duty to the Company and/or related violations of Delaware law based on the same general course of conduct alleged in In re:

Securities Litigation.

The case is captioned Godlu v.

The case filed in April 2022 is captioned Godlu v.

Hennessy et al., Case No.

22-cv-569, and the court has

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

approved the parties’ stipulation that the case would remain stayed pending final resolution of In re:

22-cv-569, the case filed in April 2024 is captioned Hudda v.

Hennessy et al.

24-cv-4499., and the court in each has approved the parties’ stipulations that each case would remain stayed pending final resolution of In re:

Securities Litigation.

This lawsuit remains in preliminary stages and there have been no substantive developments.

Both lawsuits remain in preliminary stages and there have been no substantive developments.

The Company expects that the claims asserted in all six of the above derivative suits will be dismissed because the claims asserted in these cases were released by the January 8, 2025 order of the U.S.

Bankruptcy Court for the Southern District of Texas confirming the Company’s plan of reorganization.

In January 2022, the Company received a non-public civil investigative demand from the Federal Trade Commission (“FTC”), seeking the production of information related to certain of the Company's business practices and the Company responded to those information requests.

3 unchanged sentences

and the FTC’s Pre-Sale Availability Rule, 16 C.F.R.

The FTC advised the Company that it is authorized to negotiate a stipulated order and the Company intends to work cooperatively with the FTC towards a resolution.

Because the matter is at an early stage and the outcome of any complex legal proceeding is inherently unpredictable and subject to significant uncertainties, the Company cannot determine at present whether any potential liability would have a material adverse effect on the Company’s financial condition, cash flows, or results of operations.

On May 6, 2024, Vroom, Inc., Vroom Automotive, LLC and the FTC reached an agreement to resolve the FTC’s allegations without any admission of wrongdoing by either Vroom entity, subject to final approval by the FTC and the court.

Under the agreement, the Company agreed to pay a total of $ 1 million in customer redress and abide permanently by an injunction.

The FTC issued its final approval of the agreement on July 2, 2024, and a mutually-agreed upon order reflecting the agreement was entered by the Court on July 10, 2024.

The case is captioned Federal Trade Commission v.

et al., Case No.

4:24-cv-02496.

In April 2022, the Attorney General of Texas filed a petition on behalf of the State of Texas in the District Court of Travis County, Texas against the Company, alleging violation of the Texas Deceptive Trade Practices − Consumer Protection Act, Texas Business and Commerce Code § 17.41 et seq., based on alleged deficiencies and other issues in the Company’s marketing of used vehicles and fulfilment of customer orders, including the titling and registration of sold vehicles.

3 unchanged sentences

D-1-GN-001809.

In May 2022, Vroom Automotive, LLC the Attorney General of the State of Texas agreed to a temporary injunction in which Vroom Automotive, LLC agreed to adhere to its existing practice of possessing title for all vehicles it sells or advertises as available for sale on its ecommerce platform.

In May 2022, Vroom Automotive, LLC and the Attorney General of the State of Texas agreed to a temporary injunction in which Vroom Automotive, LLC agreed to adhere to its existing practice of possessing title for all vehicles it sells or advertises as available for sale on its ecommerce platform.

In December 2023, Vroom, Inc., Vroom Automotive, LLC and the Attorney General of the State of Texas reached a final agreement to resolve all claims in the petition, without any admission of wrongdoing by either Vroom entity.

Under the agreement, the Company will pay a total of $ 2 million in civil penalties and $ 1 million in attorneys' fees, with the first half due in September 2024 and the remaining half due in September 2025, and abide permanently by an injunction of certain operational practices that were previously implemented.

The agreement was approved by the District Court of Travis County on December 13, 2023.

In July 2022 and August 2022, respectively, certain plaintiffs filed two putative class action lawsuits in the District Court of Cleveland County, Oklahoma and the New York State Supreme Court, respectively, against Vroom, Inc., and Vroom Automotive LLC as defendants, alleging, among other things, deficiencies in Vroom’s titling and registration of sold vehicles:

Blake Sonne, individually and on behalf of all others similar situated, v.

Vroom Automotive, LLC and Vroom, Inc., No.

CJ-2022-822 and Emely Reyes Martinez, on behalf of all others similarly situated, v.

Vroom Automotive, LLC and Vroom Inc .

The Company removed the cases to the U.S.

District Court for the Western District of Oklahoma (Case No.

22-cv-761) and the U.S.

District Court for the Southern District of New York (Case No.

22-cv-7631), respectively, and filed motions to compel arbitration of all claims in both cases.

In September 2023, Vroom's motions to compel arbitration were granted in both cases, and the court actions stayed pending the outcome of any arbitration proceeding over the respective plaintiffs' individual claims.

On February 9, 2024, the parties filed a joint stipulation to dismiss the Sonne matter with prejudice.

As previously disclosed, the Company has been subject to audits, requests for information, investigations and other inquiries from its regulators relating to increased customer complaints concerning the same or similar matters alleged in the State of Texas petition.

Under the agreement, the Company agreed to pay a total of $ 2 million in civil penalties and $ 1 million in attorneys' fees, with the first half due and paid in September 2024 and the remaining half due in September 2025, and abide permanently by an injunction of certain operational practices that were previously implemented.

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.

Nasdaq Notice

On December 21, 2023, the Company received written notice from The Nasdaq Stock Market LLC (“Nasdaq”) notifying it that, for the last 30 consecutive business days, the bid price for the Company's common stock had closed

Nasdaq Notice of Delisting

On November 21, 2024, the Company received a notice from the Nasdaq Listing Qualifications Department that Nasdaq had determined to delist the Company’s Common Stock.

Nasdaq reached its decision that the Company was no longer suitable for listing pursuant to Nasdaq Listing Rules 5101, 5110(b), and IM-5101-1, as a result of the Company’s

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

below the $ 1.00 per share minimum bid price requirement for continued inclusion on the Nasdaq Global Select Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the "Minimum Bid Price Requirement").

On February 13, 2024 after obtaining stockholder approval, the Company effected a 1-for-80 reverse stock split (the "Reverse Stock Split"), and the Company's stock began trading on a post-split adjusted basis on February 14, 2024.

On February 29, 2024, the Company was notified by the Nasdaq Listing Qualifications staff that the closing bid price of its common stock had been at $ 1.00 per share or greater for 11 consecutive business days, from February 14, 2024 to February 28, 2024.

Accordingly, the Company has regained compliance with Nasdaq Listing Rule 5450(a)(1) and this matter is now closed.

If the Company's common stock again closes below the $ 1.00 per share minimum bid price required by Nasdaq for 30 consecutive business days, the Company would again receive another notice of non-compliance with Nasdaq's listing standards and face the risk of delisting.

All shares of the Company’s common stock, stock-based instruments, and per-share data included in these consolidated financial statements have been retroactively adjusted as though the Reverse Stock Split has been effected prior to all periods presented.

filing of the Prepackaged Chapter 11 Case on November 13, 2024.

On November 28, 2024, the Company requested a hearing before a Nasdaq Hearing Panel.

During the pendency of our appeal, on December 2, 2024, the Common Stock was suspended from trading on Nasdaq and was quoted on an over-the-counter market.

Following the Company’s emergence from the Prepackaged Chapter 11 Case on January 14, 2025, all previously issued and outstanding equity interests in Vroom were cancelled and extinguished, all trading of the Common Stock ceased on the over-the-counter market, and Nasdaq issued a Moot Letter to cancel the hearing and close the matter.

On February 20, 2025, the New Common Stock was relisted for trading on the Nasdaq Global Market.

Other Matters

6 unchanged sentences

As of December 31, 2024 , there was no preferred stock issued or outstanding.

On January 14, 2025, the Company amended its certificate of incorporation to authorize the issuance of up to 5,000,000 shares of preferred stock, $ 0.001 par value per share, there was no preferred stock issued or outstanding.

On February 13, 2024, the Company amended its certificate of incorporation to effect a 1-for-80 reverse stock split of shares of the Company’s outstanding Common Stock, such that every 80 shares of Common Stock became one of Common Stock .

1 unchanged sentence

Each share of Common Stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.

At-the-market Offering

On December 1, 2023, the Company entered into an equity distribution agreement with Virtu Americas LLC to sell shares of the Company’s common stock, par value $ 0.001 per share, with aggregate gross sales proceeds of up to $ 50.0 million, from time to time, through an “at-the-market” equity offering program (the "ATM offering").

As of December 31, 2023, the Company has up to $ 47.5 million remaining in aggregate gross proceeds that can be issued through the ATM offering.

As previously disclosed, effective as of January 14, 2025, the Company amended its certificate of incorporation to authorize the issuance of up to 250,000,000 shares of Common Stock, $ 0.001 par value per share as well as effect an automatic conversion of the Common Stock at a ratio of 1-for-5 , which is referred to as New Common Stock.

Stock-based Compensation

1 unchanged sentence

Awards may be issued in the form of restricted stock units, restricted stock, stock appreciation rights, and stock options.

As of December 31, 2023, the Company has registered an additional

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

137,647 shares of the Company's common stock to be issued pursuant to the 2020 Plan.

As of December 31, 2024, the Company has registered an additional 264,299 shares of the Company's common stock to be issued pursuant to the 2020 Plan.

Effective as of June 13, 2024, the stockholders approved an amendment to the 2020 Plan to increase the number of authorized shares by 350,000 shares.

As of December 31, 2024 , there were 458,470 shares available for future issuance under the 2020 Plan.

1 unchanged sentence

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 37,500 shares of the Company’s common stock are reserved for issuance under the Inducement Award Plan.

As of December 31, 2023 , there were 30,668 shares available for future issuance under the Inducement Award Plan.

Stock Options

The following table summarizes stock option activity for the year ended December 31, 2023:

Exercise Price

Contractual Life

Outstanding as of December 31, 2022

Forfeited / cancelled

Outstanding as of December 31, 2023

Vested and exercisable as of December 31, 2022

Vested and exercisable as of December 31, 2023

The Company recognized $ 0.8 million and $ 1.5 million of stock-based compensation expense related to stock options for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023 and 2022, the Company had $ 0.6 million and $ 1.6 million, respectively, of unrecognized stock-based compensation expense that is expected to be recognized over a weighted-average period of 1.2 years and 1.9 years, respectively.

There were no options exercised during the year ended December 31, 2023, and the aggregate intrinsic value of options outstanding and options exercisable as of December 31, 2023 was not material.

On May 9, 2022 and May 20, 2022, 7,500 stock options having a fair value of $ 66.40 per share were granted to the CEO and an aggregate of 8,125 stock options having a grant date fair value of $ 91.20 per share were granted to certain members of key management, respectively.

The exercise price of the stock options is $ 600.00 per share.

The stock options vest ratably over a three-year period subject to continued employment through each applicable vesting date.

The grant date fair value of stock options granted during the year ended December 31, 2022 was estimated at the time of grant using the Black-Scholes option-pricing model and utilized the following assumptions:

Fair value of common stock (per share)

Expected term (in years)

Risk-free interest rate

Expected volatility

Dividend yield

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

aggregate of 37,500 shares of the Company’s common stock are reserved for issuance under the Inducement Award Plan.

As of December 31, 2024 , there were 32,444 shares available for future issuance under the Inducement Award Plan.

The following table summarizes restricted stock unit ("RSUs") activity for the year ended December 31, 2024:

8 unchanged sentences

Unvested and outstanding as of December 31, 2024

The Company recognized $ 9.2 million, $ 10.5 million, and $ 11.2 million of stock-based compensation expense related to RSUs for the years ended December 31, 2023 and 2022, respectively.

The Company recognized $ 5.8 million and $ 6.9 million of stock-based compensation expense related to RSUs for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023 , the Company had $ 1.2 million and $ 4.5 million, respectively, of unrecognized stock-based compensation expense that is expected to be recognized over a weighted-average period of 0.7 and 1.1 years, respectively.

On May 9, 2022, 15,000 RSUs having a grant date fair value of $ 86.40 per share were granted to the CEO and on May, 20, 2022, an aggregate of 39,875 RSUs having a grant date fair value of $ 116.00 per share were granted to certain members of the management team.

On July 25, 2022, 1,750 RSUs having a grant date fair value of $ 131.20 per share were granted to a member of the management team.

The RSUs were issued under the 2020 Plan and will vest on the third anniversary of the grant date, subject to continued employment through that date.

The vesting of the RSUs will accelerate in one-third increments if the Company's common stock achieves a closing price at or above $ 600.00 per share for twenty consecutive trading days during the three-year vesting period;

a closing price at or above $ 1,200.00 per share for twenty consecutive trading days in the second or third years of the vesting period ;

and a closing price at or above $ 1,680.00 per share for twenty consecutive trading days during the third year of the vesting period.

As of December 31, 2023, the accelerated vesting conditions were not met.

Certain of the Company’s RSU grants are subject to acceleration upon a change of control and termination within 12 months, and upon death, disability, retirement and certain “good leaver” circumstances.

10 unchanged sentences

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, certain of UACC’s finance receivables that are ineligible

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to be sold as of the Acquisition Date, and certain other finance receivables.

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.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands):

5 unchanged sentences

Finance receivables at fair value

Beneficial interests in securitizations

Other assets (beneficial interests in securitizations)

Total financial assets

9 unchanged sentences

Finance receivables at fair value

Beneficial interests in securitizations

Other assets (beneficial interests in securitizations)

Total financial assets

11 unchanged sentences

Financial assets and liabilities of CFEs:

The Company elected the fair value option for the assets and liabilities of its consolidated VIEs related to securitization transactions that were deemed to be CFEs.

In accordance with ASC 825, the Company has elected the fair value option, for the eligible financial assets and liabilities of the 2022-2 and 2023-1 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

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 consolidated statements of operations.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company elected the measurement alternative included in ASU 2014-13, 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 ASU 2014-13, the Company recognizes changes in the CFE’s net assets, including changes in fair value adjustments and net interest earned, in its consolidated statements of operations.

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.

4 unchanged sentences

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 classified the securitization debt as Level 3 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.

2 unchanged sentences

Finance receivables at fair value represent finance receivables for which the Company elected the fair value option in accordance with ASC 825.

These receivables primarily relate to finance receivables that the Company does not intend to sell in the immediate future due to various factors such as:

delinquencies, bankruptcy, etc.

The Company estimates the fair value of these receivables using a discounted cash flow model and incorporates key inputs that include performance rate, default rate, recovery rate, and weighted average coupon rates, as well as certain macroeconomics events the Company believes market participants would consider relevant.

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.

Beneficial interests in securitization:

6 unchanged sentences

Broker dealer quotes may be based on an income approach, which converts expected future cash flows to a single present value amount, with specific consideration of inputs relevant to particular security types.

Such inputs may include ratings, collateral types, geographic concentrations, underlying loan vintages, delinquencies and defaults, loss severity assumptions, prepayments, and weighted average coupons and maturities.

Such inputs may include ratings, collateral types, geographic concentrations, underlying loan vintages, delinquencies and defaults, loss severity assumptions, prepayments, and maturities.

When the volume or level of market activity for a security is limited, certain inputs used to determine fair value may not be observable in the market.

2 unchanged sentences

Where a third-party broker dealer quote is not available, the Company utilizes an internally developed model using unobservable inputs.

If internally developed models are utilized or if the

If internally developed models are utilized or if the Company has multiple quotes that are not within a consensus range of each other, the Company deems these securities to be classified as Level 3 of the fair value hierarchy.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company has multiple quotes that are not within a consensus range of each other, the Company deems these securities to be classified as Level 3 of the fair value hierarchy.

Changes in Level 3 Recurring Fair Value Measurements

2 unchanged sentences

Finance Receivables at Fair Value

Securitization Debt of Consolidated CFEs

Fair value as of January 1, 2024

Reclassification of finance receivables held for sale to finance receivables at fair value

Transfer within Level 3 categories

Consolidation of VIEs

Losses included in other income

Transfers into Level 3

Losses included in realized and unrealized losses

Losses included in Warranties and GAP

Issuances, net of discount

2 unchanged sentences

Finance Receivables at Fair Value

Securitization Debt of Consolidated CFEs

Fair value as of January 1, 2023

Acquired in business combination

Transfer out of Level 3

Reclassification of finance receivables held for sale to finance receivables at fair value, net

Transfer within Level 3 categories

Losses included in other income

Consolidation of VIEs

Losses included in realized and unrealized losses

Losses included in Warranties and GAP

Issuances, net of discount

Fair value as of December 31, 2023

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 year ended December 31, 2024, 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.

During the year ended December 31, 2023, $ 180.7 million of finance receivables related to the 2022-2 securitization transaction were consolidated and classified as Level 3 and $ 248.1 million of finance receivables held for sale related to the 2023-1 securitization transaction were reclassified to Level 3 finance receivables of consolidated CFEs.

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, except for assets and liabilities acquired during the prior period as described below.

During the year ended December 31, 2022, transfers out of Level 3 liabilities related to securitization debt of consolidated CFEs.

The transfer out of Level 3 was the result of achieving consensus pricing from third-party broker dealers who utilize market observable inputs to price the liabilities.

Upon acquisition, the Company utilized unobservable pricing information and an internal discounted cash flows model to value the CFEs liabilities.

The Company obtained consensus broker dealers quotes as of December 31, 2022.

For the CFEs liabilities acquired during the period, the transfer was presumed to occur immediately after the Acquisition Date.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Relevant Data for Financial Assets and Liabilities for which FVO Was Elected

The following table presents the gains or losses recorded in "Other loss (income), net" in the consolidated statements of operations related to the eligible financial instruments for which the fair value option was elected (in thousands):

The following table presents the gains or losses recorded in "Realized and unrealized losses, net of recoveries" in the consolidated statements of operations related to the eligible financial instruments for which the fair value option was elected (in thousands):

Year Ended December 31,

5 unchanged sentences

Debt of securitized VIEs

Total net loss included in " Other loss (income), net"

Total net loss included in "Realized and unrealized losses, net of recoveries"

The following table presents other relevant data related to the finance receivables carried at fair value (in thousands):

23 unchanged sentences

Aggregate fair value of rated notes of securitized VIEs

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Financial Instruments Not Carried at Fair Value

The carrying amounts of restricted cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short-term nature.

The carrying value of the 2022 Vehicle Floorplan Facility and the Warehouse Credit Facilities was determined to approximate fair value due to its short-term duration and variable interest rate that approximates prevailing interest rates as of each reporting period.

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 was determined to approximate fair value due to its short-term duration and variable interest rate that approximates prevailing interest rates as of each reporting period.

Finance receivables held for sale, net:

For finance receivables eligible to be sold in a securitization, the Company determines the fair value of these finance receivables utilizing sales prices based on estimated securitization transactions, adjusted for transformation costs, risk and a normal profit margin associated with securitization transactions.

Such fair value measurement of finance receivables held for sale, net is considered Level 3 of the fair value hierarchy.

Such fair value measurement is considered Level 3 of the fair value hierarchy.

As of December 31, 2024, the carrying value and fair value of these finance receivables held for sale, net were $ 114.6 million.

As of December 31, 2023, the Company determined that all of these finance receivables should be marked to their fair value of $ 468.8 million based on the results of the Company's lower of amortized cost basis or fair value analysis.

As of December 31, 2022, the carrying value and fair value of the finance receivables held for sale, net were $ 299.2 million and $ 299.9 million, respectively.

In addition, from time to time the Company may mark certain receivables, that are no longer eligible to be sold in a securitization, classified as held for sale to fair value on a non-recurring basis.

As of December 31, 2023 and 2022 , there were $ 34.8 million and $ 22.4 million of these finance receivables that were marked to fair value on a non-recurring basis, respectively.

These are finance receivables that became delinquent and no longer meet the expected securitization sales criteria.

The Company uses a discounted cash flow model to estimate the present value of future recoveries for finance receivables.

Such fair value measurement of finance receivables held for sale, net is considered Level 3 of the fair value hierarchy.

For finance receivables that were securitized, the Company determines the fair value of these finance receivables by estimating the proceeds that would be generated from selling the notes and the residual interests in the securitization trust.

The fair value of the notes was determined utilizing non-binding quoted prices provided by broker dealers, as discussed above, and the Company uses a discounted cash flow model to estimate the fair value of the residual interests in the trust.

Such fair value measurement is considered Level 3 of the fair value hierarchy.

As of December 31, 2024, the carrying value and fair value of these finance receivables held for sale, net were $ 178.8 million and $ 183.3 million, respectively.

As of December 31, 2023, there were no finance receivables held for sale that were securitized.

The significant unobservable inputs utilized in the discounted cashflow model include the following:

Inputs as of December 31,

Unobservable inputs

Cumulative net loss

Discount Rate

In addition, the Company has finance receivables that are currently ineligible to be sold in a securitization.

As of December 31, 2024 and 2023 , the carrying value and fair value of these finance receivables held for sale, net were $ 24.8 million and $ 34.8 million, respectively.

These are finance receivables that became delinquent and currently do not meet the securitization criteria.

The Company uses a discounted cash flow model to estimate the fair value of future recoveries for these finance receivables.

Such fair value measurement is considered Level 3 of the fair value hierarchy.

The significant unobservable inputs utilized in the discounted cashflow model include the following:

Inputs as of December 31,

Unobservable inputs

Cumulative net loss

19.3 % - 33.2 %

20.6 % - 27.3 %

26.3 % - 47.2 %

12.7 % - 20.1 %

Discount Rate

Convertible Senior Notes:

1 unchanged sentence

Carrying value

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Securitization Debt:

The fair value of the 2024-1 securitization debt, which is not carried at fair value on the accompanying condensed consolidated balance sheets, was determined utilizing non-binding quoted prices provided by broker dealers, as discussed above, and classified as Level 2 of the fair value hierarchy.

Carrying value

Financing of beneficial interests in securitizations:

The fair value of the financing of beneficial interests in securitizations, which are not carried at fair value on the accompanying consolidated balance sheets, approximated their carrying value as of December 31, 2023 and are classified within Level 3 of the fair value hierarchy.

The fair value of the financing of beneficial interests in securitizations, which are not carried at fair value on the accompanying consolidated balance sheets, approximated their carrying value as of December 31, 2024 and December 31, 2023 and are classified within Level 3 of the fair value hierarchy.

Junior Subordinated Debentures:

The fair value of the junior subordinated debentures, which are not carried at fair value on the accompanying consolidated balance sheets, approximated their carrying value as of December 31, 2024 and 2023 and are classified within Level 3 of the fair value hierarchy.

Fair Value of Financial Instruments on a Nonrecurring Basis

Assets and liabilities acquired as part of a business combination and goodwill attributable to each of the Company's reporting units are recorded at fair value on a nonrecurring basis.

Refer to Note 5 – Acquisition and Note 8 – Goodwill and Intangible Assets for additional information.

Restructuring Activities

On May 5, 2022, the Company approved the Realignment Plan, which was designed to position the Company for long-term profitable growth by prioritizing unit economics, reducing operating expenses and maximizing liquidity.

In connection with the Realignment Plan, the Company reduced headcount across the organization and closed its New York City, Detroit, and one of its Houston office locations as well as several Sell Us Your Car® center facilities.

Additionally, the Company streamlined TDA's operations and closed its service center.

The service center was

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

repurposed to replace the reconditioning facility in Stafford, Texas, which was also closed.

The Company also restructured its network of logistics hubs in order to align with reduced unit volume and its regional operating model.

The restructuring activities associated with the Realignment Plan were substantially completed during 2022.

On January 18, 2023, the Company executed a reduction-in- force as part of the continued focus on reducing variable and fixed costs.

The Company reduced Vroom’s headcount by approximately 275 employees based on the assessment of the Company's business needs, key initiatives, and long-term success and profitable growth.

For the year ended December 31, 2023, the Company incurred expenses of approximately $ 4.1 million, primarily consisting of severance.

On April 26, 2023, as part of the Company’s ongoing reexamination of all facets of the business, the Company implemented an organizational restructuring that included a reduction-in- force.

The Company reduced Vroom’s headcount by approximately 120 employees and incurred total expenses of approximately $ 2.3 million for the year ended December 31, 2023, primarily consisting of severance costs, as a result of this reduction -in-force.

The following table summarizes the components of the restructuring and related charges:

Year Ended December 31,

Total Charges Incurred to Date

Charges by activity:

Severance and termination benefits (1)

Impairment of operating lease right-of-use assets (2)

Other costs (3)

Total restructuring and related charges

(1) Severance and termination costs consist of severance costs provided to employees who have been terminated as well outplacement costs and COBRA benefits.

(2) Impairment of operating lease right-of-use assets consist of costs associated with planned facility closures that will continue to be incurred under the contract for its remaining term without economic benefit to the Company.

(3) Other costs incurred to date consist of legal expenses incurred in connection with the Realignment Plan and acceleration of depreciation of property and equipment related to the planned facility closures.

Severance and termination benefits and other costs are included in "Selling, general, and administrative expenses" and impairment of operating lease right-of-use assets are included in "Impairment charges" in the consolidated statements of operations for the years ended December 31, 2023 and 2022.

The following table is a reconciliation of the beginning and ending restructuring liability for the years ended December 31, 2023 and 2022:

Balance as of December 31, 2021

Accrual and accrual adjustments

Cash payments

Balance as of December 31, 2022

Accrual and accrual adjustments

Cash payments

Balance as of December 31, 2023

The restructuring liability for severance and termination benefits is reflected in "Accrued Expenses" in the consolidated balance sheet as of December 31, 2023 and 2022.

Segment Information

The Company has three reportable segments:

Ecommerce, Wholesale, and Retail Financing.

As a result of the Ecommerce Wind-Down during the three months ended March 31, 2024, the Company revised its reportable segments.

The Company is now organized into two reportable segments:

UACC and CarStory.

Corporate activities are presented in "corporate" and do not constitute a reportable segment.

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 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.

The Company retrospectively restated segment results for the comparative period to conform to the new presentation.

No operating segments have been aggregated to form the reportable segments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As a result of the Value Maximization Plan and the wind-down of the ecommerce operations, the Company will discontinue reporting its results through the Ecommerce and Wholesale segments starting in the first quarter of 2024.

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 CODM reviews revenue and gross profit for each of the reportable segments.

Gross profit is defined as revenue less cost of sales incurred by the segment.

The Company’s CODM is the chief executive office (“CEO”).

The CODM reviews Adjusted EBITDA for each of the reportable segments.

Adjusted EBITDA is defined as net loss before interest expense on corporate debt, interest income on cash and cash equivalents, income tax expense, depreciation and amortization expense, stock compensation expense, bankruptcy costs, reorganization items, severance expense related to the continuing operations, gain on debt extinguishment and long-lived asset impairment charges, incurred by the segment.

All expense categories on the consolidated statement of operations are significant and there are no other significant segment expenses that would require disclosure.

There are no intra-entity sales and no significant expense categories regularly provided to the CODM beyond those disclosed in the consolidated statement of operations.

The CODM manages the business using consolidated expense information, adjusted for items that are non-recurring or not core to the Company’s operating business as disclosed above, as well as regularly provided budgeted or forecasted expense information for each operating segment.

The CODM does not evaluate operating segments using asset information as these are managed on an enterprise-wide group basis.

Accordingly, the Company does no t report segment asset information.

As of December 31, 2023 and 2022, long-lived assets were predominantly located in the United States.

The Ecommerce reportable segment represents retail sales of used vehicles through the Company’s ecommerce platform, revenue earned on vehicle financing originated by UACC or the Company's third-party financing sources and sales of value-added products associated with those vehicles sales.

The Wholesale reportable segment represents sales of used vehicles through wholesale channels.

The Retail Financing reportable segment represents UACC’s operations with its network of third-party dealership customers, including the purchases and servicing of vehicle installment contracts.

Revenues within the "All Other" category consist of retail sales of used vehicles from TDA and fees earned on sales of value-added products associated with those vehicles sales and the CarStory business.

Information about the Company’s reportable segments are as follows (in thousands):

Year Ended December 31, 2023

Retail Financing

Revenues from external customers

Year Ended December 31, 2022

Retail Financing

Revenues from external customers

The reconciliation between reportable segment gross profit to consolidated loss before provision for income taxes is as follows (in thousands):

Reconciliation to consolidated total revenue

Total reportable segment revenue

All Other revenues

Consolidated total revenue

Reconciliation to consolidated loss before (benefit) provision for income taxes

Total reportable segment gross profit

All Other gross profit

Selling, general and administrative expenses

As of December 31, 2024 and December 31, 2023, long-lived assets were predominantly located in the United States.

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.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

Information about the Company’s reportable segments and corporate activities are as follows (in thousands):

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

Gain on debt extinguishment

Total noninterest (loss) income

Compensation and benefits

Professional fees

Software and IT costs

Depreciation and amortization

Interest expense on corporate debt

Impairment charges

Gain on debt extinguishment

Interest expense

Interest Income

Other loss, net

Consolidated loss before provision (benefit) for income taxes

Other expenses

Total expenses

Adjusted EBITDA

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The reconciliation between reportable segment Adjusted EBITDA to consolidated loss from continuing operations before provision for income taxes is as follows (in thousands):

Adjusted EBITDA by Segment

Interest expense on corporate debt

Interest income on cash and cash equivalents

Depreciation and amortization

Stock compensation expense

Impairment charges

Corporate loss from continuing operations before reorganization items and provision for income taxes

Loss from continuing operations before reorganization items and provision for income taxes

Income Tax Provision

Domestic and foreign pretax income (loss) are as follows for the years ended December 31, 2023 and 2022 (in thousands):

The components of the provision for income taxes are as follows (in thousands):

Domestic and foreign pretax income (loss) from continuing operations are as follows for the years ended December 31, 2024 and 2023 (in thousands):

The components of the provision for income taxes from continuing operations are as follows (in thousands):

State and local

4 unchanged sentences

Provision (benefit) for income taxes

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was signed into law.

2 unchanged sentences

Tax Rate Reconciliation

The Company’s effective tax rate for the years ended December 31, 2023 and 2022 was ( 0.17 )% and 4.17 %, respectively.

The increase in effective tax rate for the year ended December 31, 2022 was primarily driven by a deferred tax benefit recorded for the decrease of Valuation Allowance resulting from the acquisition of Unitas Holdings Corp.

(now known as Vroom Finance Corporation) that occurred during the December 31, 2022 period, of $ 23.9 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the provision for income taxes at the statutory rate to the amount reflected in the consolidated statements of operations is as follows (in thousands):

The Company’s effective tax rate from continuing operations for the years ended December 31, 2024 and 2023 was ( 0.62 )% and ( 0.76 )%, respectively.

A reconciliation of the provision for income taxes from continuing at the statutory rate to the amount reflected in the consolidated statements of operations is as follows (in thousands):

Income taxes at statutory rate

2 unchanged sentences

Permanent differences

Goodwill impairment

Deferred tax adjustment for acquisition of business

Change in valuation allowance

Provision (benefit) for income taxes

Provision for income taxes

Deferred Tax Assets (Liabilities)

4 unchanged sentences

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.

As of December 31, 2023, 2022 , and 2021, the valuation allowance balance was $ 358.7 million, $ 258.8 million and $ 216.0 million, respectively.

Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant components of the Company’s deferred tax assets and liabilities from continuing operations are as follows (in thousands):

As of December 31,

1 unchanged sentence

Net operating loss carryforwards

Inventory reserves

Warranty Chargeback reserves

Stock-based compensation

1 unchanged sentence

Unrealized Gains/Losses

Allowance for Doubtful Accounts

Total deferred tax assets

7 unchanged sentences

Net deferred income taxes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2024, 2023 , and 2022, the consolidated valuation allowance balance for both continuing and discontinued operations was $ 400.2 million, $ 358.7 million and $ 258.8 million, respectively and the consolidated change in valuation allowance for both continuing and discontinued operations was $ 41.5 million and $ 99.9 million for the years ended December 31, 2024 and 2023, respectively.

Net Operating Losses

10 unchanged sentences

These changes will substantially limit the use of the net operating losses generated before the change in control.

The Company acquired Unitas Holdings Corp.

(now known as Vroom Finance Corporation) on February 1, 2022 in a stock acquisition, refer to Note 5 – Acquisition for additional information.

The NOLs and other tax attributes acquired are subject to Section 382 limitations.

Uncertain Tax Positions

2 unchanged sentences

To date, no interest or penalties have been accrued in relation to uncertain tax positions.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net Loss Per Share

1 unchanged sentence

(in thousands, except share and per share amounts)

Net loss from continuing operations

Net loss from discontinued operations

Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

Net loss per share attributable to common stockholders, continuing operations, basic and diluted

Net loss per share attributable to common stockholders, discontinued operations, basic and diluted

Total net loss per share attributable to common stockholders, basic and diluted

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:

3 unchanged sentences

Restricted stock units

Revised Consolidated Financial Statements Information

In March 2024, in connection with the Ecommerce Wind-Down, the Company identified errors related to an overstatement of credit balances in other current liabilities and accounts payable as of and prior to December 31, 2023.

The Company incorrectly recorded approximately $ 1.4 million of other current liabilities and $ 4.1 million of accounts payable, instead of a reduction in operating expenses of $ 5.5 million, of which $ 4.6 million related to annual periods prior to 2023.

The Company evaluated the impact of these errors and concluded that they are not material to any previously issued annual or interim consolidated financial statements.

As a result of these errors, the Company has revised the consolidated financial statements as of December 31, 2023 and for the year then ended.

The Company has reflected these revisions in its 2024 Quarterly Reports on Form 10-Q and in its 2024 Annual Report on Form 10-K.

The following table (in thousands) sets forth the Company’s consolidated results of operations for the year ended December 31, 2023, which have been retrospectively adjusted for the impact of the immaterial errors identified as well as new financial statement presentation and discontinued operations presentation related to the Ecommerce Wind-Down.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2023

Discontinued Operations

Presentation Reclasses (1)

As Recasted and Revised

Total revenue

Total cost of sales

Total gross profit

Selling, general and administrative expenses

Depreciation and amortization

Impairment charges

Loss from operations

Gain on debt extinguishment

Interest expense

Interest income

Other loss (income), net

Interest income

Total interest expense

Net interest income

Realized and unrealized losses, net of recoveries

Net interest income after losses and recoveries

Total noninterest (loss) income

Total expenses

Loss before provision (benefit) for income taxes

Provision (benefit) for income taxes

Net loss from continuing operations

Net loss from discontinued operations

Total net loss

Net loss per share attributable to common stockholders, continuing operations, basic and diluted

Net loss per share attributable to common stockholders, discontinued operations, basic and diluted

Total net loss per share attributable to common stockholders, basic and diluted

Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted

(1) Reflects revised presentation as a result of the Ecommerce Wind-Down.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The impacts to our Consolidated Balance Sheet as of December 31, 2023 were as follows (in thousands):

As of December 31, 2023

Discontinued Operations

Presentation Reclasses (1)

As Recasted and Revised

Current Assets:

Cash and cash equivalents

Restricted cash

Accounts receivable, net of allowance

Finance receivables at fair value

Finance receivables held for sale, net

Beneficial interests in securitizations

Prepaid expenses and other current assets

Total current assets

Finance receivables at fair value

Property and equipment, net

Intangible assets, net

Operating lease right-of-use assets

Interest Receivable

Other assets (including other assets of consolidated VIEs of $ 1.8 million)

Assets from discontinued operations

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

Accrued expenses

Vehicle floorplan

Warehouse credit facilities of consolidated VIEs

Current portion of long-term debt

Deferred revenue

Operating lease liabilities, current

Other current liabilities

Total current liabilities

Long-term debt, net of current portion

Operating lease liabilities, excluding current portion

Other long-term liabilities

Liabilities from discontinued operations

Total liabilities

Commitments and contingencies

Stockholders’ equity:

Common stock, $ 0.001 par value;

500,000,000 shares authorized as of December 31, 2023;

1,791,286 shares issued and outstanding as of December 31, 2023

Additional paid-in-capital

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

(1) Reflects revised presentation as a result of the Ecommerce Wind-Down.

There is no impact to our Consolidated Statements of Changes in Stockholders’ Equity for the year ended December 31, 2023 other than the impact to accumulated deficit as a result of the changes in net loss as presented above and as a result of impacts for periods prior to 2023 decreasing opening accumulated deficit as of December 31, 2022 by $ 4.6 million.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There is no impact to net cash used in (provided by) operating activities;

investing activities or financing activities in our Consolidated Statements of Cash Flows.

Subsequent Event

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 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 January 14, 2025 .

In connection with the Company's emergence from bankruptcy 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 Company received less than 50 % of the voting shares of the Successor Company, and (ii) the reorganization value of the assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims.

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.

In accordance with ASC Topic 852, with the application of fresh start accounting, the Company will allocate the reorganization value to its individual assets and liabilities based on their estimated fair values in conformity with ASC Topic 805, Business Combinations.

The reorganization value represents the fair value of the Successor Company's assets before considering liabilities.

As a result of the application of fresh start accounting and the effects of the implementation of the Plan, the consolidated financial statements after January 14, 2025 will not be comparable with the consolidated financial statements as of or prior to that date.

Conversion of Common Stock

Immediately prior to the Effective Date, there were 1,822,577 outstanding shares of the Company’s Common Stock.

The Company has adopted an Amended and Restated Certificate of Incorporation to, among other changes to the Company’s 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 5,163,109 outstanding shares of New Common Stock as of the Effective Date.

2020 Incentive Award Plan

Pursuant to the Plan, the Company’s existing 2020 Incentive Award Plan (as amended from time to time, the “2020 Plan”), was amended 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 15 % of the fully-diluted shares of New Common Stock as of immediately following the Effective Date, inclusive of the Warrants, the management incentive program and the converted existing equity awards:

10 % will be allocated for awards of restricted stock units and 5 % will be allocated for awards of stock options.

Amendment to Articles of Incorporation or Bylaws

On January 14, 2025, the Board adopted (i) the Company’s Certificate of Incorporation to, among other changes to the Company’s prior amended and restated certificate of incorporation, effect the automatic conversion of Common Stock and (ii) the Amended and Restated Bylaws (the “Bylaws”).

Set forth below are the principal changes to the Certificate of Incorporation and Bylaws.

Capital Stock.

The Company’s authorized capital stock consists of 255,000,000 shares, consisting of (i) 250,000,000 shares of Common Stock, $ 0.001 par value per share;

and (ii) 5,000,000 shares of Preferred Stock, $ 0.001 par value per share.

(DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Certificate of Incorporation and the Bylaws grant stockholders of the Company the power to (i) alter, amend, change or repeal any provision of the Certificate of Incorporation and (ii) adopt, amend, alter or repeal the Bylaws, in each case, by the affirmative vote of the holders of a majority of the voting power of the stock outstanding and entitled to vote thereon, subject to certain ownership limits by the Company’s significant stockholder, Mudrick Capital Management, L.P.

and its affiliates (collectively, the “Significant Stockholder”).

The Certificate of Incorporation and the Bylaws provide that any and all actions required or permitted to be taken by the stockholders of the Company may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing are signed by holders of at least the minimum number of votes necessary to take such action at a meeting, subject to certain ownership limits by the Significant Stockholder.

Board of Directors.

The Certificate of Incorporation and the Bylaws grant stockholders of the Company the power to (i) remove the entire Board or any individual director, with or without cause and (ii) fill any vacancy or newly created directorship in the Board, in each case, by the affirmative vote of the holders of a majority of the voting power of the stock outstanding and entitled to vote thereon, subject to certain ownership limits by the Significant Stockholder.

Limitation of Liability and Indemnification of Officers .

The Certificate of Incorporation provides that no senior officers shall be personally liable to the Company or the shareholders for monetary damages for breach of fiduciary duty as an officer to the fullest extent permitted by the DGCL.

Special Stockholder Meetings.

The Certificate of Incorporation provides that the Secretary of the Corporation may request a special meeting at the request of the holders of at least a majority of the outstanding shares of capital stock of the Corporation, subject to certain ownership limits by the Significant Stockholder.

Corporate Opportunities.

The Certificate of Incorporation provides that, to the fullest extent permitted by law, the Company will renounce any interest or expectancy in any business opportunity, transaction or matter in which the Significant Stockholder, any of its officers, directors, partners or employees and any portfolio company in which any of the foregoing have an equity interest (other than the Company) (each, a “Specified Party”) participates or seeks or desires to participate, and each such Specified Party with have no duty to present such corporate opportunity to the Company.

Credit Agreement with Mudrick Capital Management, L.P

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 related party as they are a 76.5 % shareholder of the Company, for a $ 25.0 million delayed draw term loan facility (“Delayed Draw Facility”).

The Delayed Draw Facility allows for multiple drawdowns by each co-borrower, subject to satisfaction of usual and customary conditions precedent.

The Delayed Draw Facility bears interest at a rate of Term SOFR + 850 bps, payable quarterly in arrears, with a full payment-in-kind option.

Interest is also payable upon any payment of principal.

The co-borrowers’ obligations under the Delayed Draw Facility will be collateralized by asset backed residual certificates in certain UACC securitization trusts.

The Delayed Draw Facility matures on December 31, 2026 ;

however, borrowings can be prepaid at any time, in whole or in part, without penalty or premium.

Once amounts are repaid they may not be reborrowed.

The Delayed Draw Facility includes certain usual and customary covenants with respect to the co-borrowers’ activities and the collateral.

Warehouse Credit Facility Renewal

On March 8, 2025, we renewed one of our Warehouse Credit Facilities, now expiring June 2026.

The aggregate borrowing limit and significant terms of the agreement remained unchanged except for an increase in the minimum liquidity covenant.

Refer to Note 10 — Warehouse Credit Facilities of Consolidated VIEs.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

1 unchanged sentence

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 7. Management’s Discussion and Analysis